This week, we kick off by discussing Ben Smith’s bombshell post ”The group chats that changed America,” that exposed the private chats that nudged Silicon Valley’s money crowd into Trump’s orbit.
Then we hop to DC’s Hill-and-Valley Forum, where the mantra was industrial renaissance or bust. The race with China, AI’s essential energy demands, and the need to reshore American manufacturing were the talk of the forum. Fear of China loomed over the entire forum and only whispers of tariffs crossed the lips of attendees and speakers alike.
In the back half, Eric and Madeline are joined by Lux Capital’s Josh Wolfe, fresh off his on-stage appearance at the Hill and Valley Forum. Wolfe predicts two flashpoints the commentariat is ignoring: a terror-fertile Sahel and a China-courting Latin America. He spars with Eric Newcomer and Madeline Renbargner over Trump’s tariffs, friend-shoring versus reshoring, and whether founder-led startups like Anduril can out-maneuver bloated primes. If you think that the only great power game is Taiwan, Wolfe widens the aperture to central Africa and the Americas.
Timecodes
00:00 - Intro
01:10 - Silicon Valley’s Most Important Group Chats
08:18 - Hill and Valley’s “America First” Victory Lap
16:20 - Josh Wolfe on America’s Next War
00:00:00
Welcome to the newcomer podcast. I'm Eric Newcomer.
00:00:03
I'm here with Madeline Renbarger.
00:00:05
Tom is sick. It was like I'm hard to work on
00:00:08
the draft. He's doing doing work, but we're
00:00:11
we're not making him jump on the podcast.
00:00:13
You were in DC yesterday for the Hill and Valley Forum.
00:00:17
We're going to have Josh Wolf from Lux in the second-half of
00:00:20
the episode. Before we get into it though, we
00:00:23
have to talk about the drama. The drama in Silicon Valley.
00:00:27
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Solutions. Talking of course about the
00:01:12
group chats. Madeline, what is the state of
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your group chats? My group chats, I, I'm not in as
00:01:18
many group chats with, you know, world leaders and billionaires.
00:01:21
Eric, have you ever been out? No cabal, no cabal group chats.
00:01:24
Eric Thornberg, who sort of kick started some of this
00:01:27
conversation, announced some of them on Twitter.
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And I tried to get in, but no, I think I was exactly the type of
00:01:32
person they were trying to keep out of the group chats.
00:01:36
You know, obviously I have my what?
00:01:38
I have MSM talking. I have a small thread we call
00:01:42
MSM talking points. Another one, you know, debate
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club with reporters. Anyway, let's let's give the
00:01:47
context on the story. You want to give the quick sort
00:01:50
of rundown just so people have that.
00:01:51
Ben Smith published a story about, you know, the group chats
00:01:54
that changed America, which was basically group chats kind of
00:01:57
really spearheaded, you know, by Aaron Torberg and Marc
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Andreessen and the Andreessen crew, you know, putting all of
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these Silicon Valley leaders together with influential people
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in Washington. And his conclusion is that it
00:02:10
really led to this moment that we have now politically with,
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you know, Trump coming back and Silicon Valley is kind of all
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gathering in boosterism of Trump.
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And that pitch. Part of it is that these chats
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are, you know, behind closed doors with the most powerful
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people in the world. They're not they're not building
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in public. And they began because backlash
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to the the wokeism and the scolding on Twitter.
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Exactly. I think they would say, oh,
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cancellations and wokeness started this and then we got
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chased off the Internet. We created group chats.
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I mean I think a key one. Just being chased off or, you
00:02:45
know, just like choosing to leave, you know, like.
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I listen, I've been the loudest on say what you can't say.
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Like isn't bravery there? This is a class of people who
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talks about sort of manly virtues, you know, and bravery
00:03:00
is a big one. And then they are not, they
00:03:02
don't have the courage to say what they actually want to say.
00:03:05
You know, it was such a game of like, oh, I, what can I, I, I
00:03:08
don't know what I can't say. And then they go to the group
00:03:11
chats. I mean, you can talk to your
00:03:13
friends in private. And in some ways people are
00:03:15
like, did you know about this? It's like, oh, I knew they had
00:03:17
group chats. And certainly we knew when the
00:03:19
Silicon Valley Bank crisis that some of these group chats were
00:03:22
key to passing the message along.
00:03:23
And I think we put that either in the podcast or some stories.
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That was kind of that. I mean, that was kind of an open
00:03:29
secret at the time, right? Like how everyone reacted, you
00:03:31
know, like, we kind of knew about them, but we just weren't
00:03:34
in them. Yeah.
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I mean, Ben Smith's story in some ways, you know, you add
00:03:39
mystique to these things. It's like, oh, a bunch of people
00:03:41
talking in a thread, you know, not that shocking, but then it
00:03:45
is. It was it was definitely
00:03:47
interesting to see and that I didn't know like, for instance,
00:03:50
that it's funny that Mark Cuban ends up being the great advocate
00:03:53
for Democrats like he's I. Know out.
00:03:56
There, but he's not like our best policy mind necessarily.
00:04:00
I don't know, I I do think sometimes he's like conservative
00:04:03
LED discussion groups sort of pick, you know, it's like Jason
00:04:07
Calacanis is the best we have to put on the all in podcast to
00:04:10
respond to David Sacks. Like often it's not, we're not
00:04:14
sending our best. You know, they're not, they're
00:04:17
not picking among the most sophisticated thinkers.
00:04:20
They're they're picking people who are going to play nice.
00:04:23
And you know, a big point from the group chat story, which just
00:04:26
sort of Marc Andreessen and people like being like this.
00:04:28
You need to stay on message like, and we're going to leave
00:04:31
if you don't like it has this great image of, you know, David
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Sacks and I think Joe Lonsale leaving a group chat.
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It kind of forms its own groupthink within the group
00:04:40
chat, right? Like that was the conclusion I
00:04:42
got. You know, where it's like you're
00:04:44
mad about the groupthink on your other platform, but joining a
00:04:48
group chat of your, you know, people who have intellectual
00:04:51
debates but are all kind of within one set parameter.
00:04:54
You don't really have the like, iconoclastic leftists in this
00:04:58
group chat. It's still kind of your network.
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So how much of that is just furthering the group think you
00:05:04
claim to protest? To me, they read as they exist
00:05:08
to workshop compelling arguments and reasons that could be used
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to further a sort of established conclusion that you need to be
00:05:16
sort of against the Democrats. And so then it's like, if you
00:05:19
can come up with good arguments for us to use that hit
00:05:23
Democrats, like welcome. But if you're really just going
00:05:26
back to the sort of core argument of sort of Trump versus
00:05:29
the Democrats, then you're wasting our time.
00:05:33
It it's sort of more evidence that Twitter is not real life,
00:05:36
that like people are not sort of sincerely putting their views on
00:05:40
on Twitter and everything. But, you know, I think we've
00:05:43
known that for a while. Do you feel like they have the
00:05:46
same level of influence now that the the chats are kind of
00:05:49
mainstream and that's that's the whole culture like it's broken
00:05:53
through now? Their secret, How are we
00:05:55
supposed to know? No well, I think right after it
00:05:59
came out we're in a brief period of like, oh, you know, follow on
00:06:02
VCs like I need to get in the chats.
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So I don't know, there's a spurt of enthusiasm and like people
00:06:07
want to be relevant. I mean, I Andreessen hired Eric
00:06:11
Torenberg, you know, to I think create more chats.
00:06:15
They'd had Sriram, you know, who's now in the Trump
00:06:18
administration making chats too. So I think this sort of
00:06:22
community building through private discussion groups, I
00:06:25
mean, why see, you know, has always had book face.
00:06:28
So private, private groups where people are keeping secrets
00:06:32
pretty well is it's not totally new.
00:06:34
So no, I I think this continues. I mean, hopefully if only the
00:06:38
Trump people can rattle eradicate cancel culture, then
00:06:41
they'll start seeing what they think online.
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But. Only we can abolish woke and
00:06:47
then real discourse can make it back into the arena.
00:06:50
We're obviously, you know, at newcomer and as reporters, fans
00:06:53
of building in public. I'd love to either be added to
00:06:56
the group chats, but more importantly, I would love the
00:06:58
conversations to just be had. Like I like when people just say
00:07:01
what they're doing. And I think that kind of candor
00:07:04
and open dialogue. Obviously people are afraid of
00:07:06
it, but it feels like we've switched to a degree where it's
00:07:10
like, who gets to say? I do think the.
00:07:12
Shortcoming of the media and like our or not even the media,
00:07:17
but sort of the environment is that if you're an important
00:07:19
person and you put a take on Twitter, it seems like you're
00:07:23
like fully baked opinion. And if you're sort of in a group
00:07:27
chat with friends, you're sort of talking through your opinions
00:07:30
and formulating them. And so how do we make a sort of
00:07:35
Twitter for tentative thoughts and a Twitter for this is my,
00:07:40
you know, established take? Even from the like the left,
00:07:44
there's no room for breathing, you know?
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And some like prominent left figures have been cancelled for
00:07:50
being not left enough when they're just, you know, out in
00:07:53
the shit, you know, and trying to talk through ideas and
00:07:55
workshop stuff. And if it's not fully baked,
00:07:57
they get come forward too, you know.
00:07:58
So I think like it's it, it is worth it to have a place where
00:08:02
you can do that openly and, you know, workshop what you're
00:08:05
thinking and be able to freely post.
00:08:07
Chatter baked. Baked, right.
00:08:09
I mean, we tweet like headline da, da, da, da, da da.
00:08:11
You know, I don't know. Yeah, I do think chats are good
00:08:15
for ideas that you're formulating.
00:08:18
You were in DC yesterday for the Hill and Valley Forum.
00:08:22
What? What was the mood there?
00:08:24
The mood was really celebratory, Eric.
00:08:27
I mean, it felt like honestly, the on stage panels were a bit
00:08:31
of a victory lap for the Silicon Valley China Hawks and defense
00:08:36
founders who, you know, have been pushing this agenda of, you
00:08:39
know, how tech and national security can work really well
00:08:41
together, should work really well together.
00:08:43
Everyone in the room was really in consensus on ideas that, you
00:08:46
know, event Co host Jacob Helberg has been pushing for
00:08:49
both and, you know, as an advisor to Palantir and then in
00:08:52
his own work lobbying in Congress for, you know, China
00:08:55
hawkishness and better synchronicity between cutting
00:08:59
innovation in Silicon Valley and defense and government
00:09:03
operations. I mean, really, it felt like
00:09:05
that idea theology has kind of like become the mainstream in
00:09:09
Silicon Valley, Like everyone there is totally bought in.
00:09:12
If you zoom out last year at Hillen Valley, we were saying,
00:09:16
man, they're trying to normalize Trump.
00:09:17
They snuck Trump in. We were a little bit like, oh,
00:09:21
they're trying to make it OK to be a Republican.
00:09:24
On the one hand, it seems a little more like they've got a
00:09:26
mix of sort of Democrats and Republicans.
00:09:28
On the other hand, it's like Trump won.
00:09:31
It's you can't normalize him anymore.
00:09:33
It's like he's governing. So they there was clearly just
00:09:35
like the victory lap on, you know, we're in charge.
00:09:38
We get to set the mood. But we did end our story with
00:09:42
the like, you know what, it felt like morning in America.
00:09:45
But if you look outside, you know, it's like the world is not
00:09:48
as bright necessarily as it seems in the room.
00:09:52
Do they talk about like the markets and how they can
00:09:55
idealize tariffs and say, oh, we should be competing with China
00:10:00
on stronger footing? But then as implemented, the
00:10:03
tariffs are like insane and going to cause a ton of problems
00:10:06
and it's sort of a nearing train wreck.
00:10:08
Very hard to deny that the situation is going to get worse,
00:10:12
not better unless situation changes soon.
00:10:15
Or did they, did they touch on any of that?
00:10:18
The tariffs did come up because one of the biggest themes of the
00:10:20
day was reshoring American manufacturing.
00:10:23
Like, in addition to, you know, defense and space investing,
00:10:26
there's was a huge emphasis in the panels about how important
00:10:29
it is that startups be at the forefront of setting up, you
00:10:32
know, this new manufacturing core in America.
00:10:36
And so in a sense, the tariffs came up because that's kind of a
00:10:40
part of the policy to do that. It was muted skepticism from the
00:10:44
people who were a little bit more, you know, hesitant to say
00:10:47
that these were a good idea. They were not saying, oh, the
00:10:51
markets are, that we're about to enter a recession and that all
00:10:55
our enthusiasm could be dampened by no, no, OK.
00:10:59
Yeah. Which felt, which always, which
00:11:00
felt a little bit, you know, just the better narrative of the
00:11:03
event. It was clearly successful, but
00:11:05
it was so bizarre to, you know, be in this kind of bubble
00:11:08
inside. A theory, you know, part part of
00:11:12
investing and being a good investor is making sure you have
00:11:15
follow on capital, right. And so there's sort of a
00:11:18
rational cult like behavior that you get into Silicon Valley
00:11:22
where you're like, I need to make sure if I take this risky
00:11:25
defense tech investment, somebody else will be the dumb
00:11:29
money after me or at least sort of have conviction that there
00:11:32
will be more money until it finally gets to where it needs
00:11:35
to be. And so these events, they all
00:11:38
need to psychologically brainwash themselves.
00:11:41
All right, we all, it's, it's sort of a group sharing that
00:11:44
we're all going to lock in, we're going to do defense tech.
00:11:47
We're going to be hawkish on China.
00:11:48
We fully divested from China. America is coming back.
00:11:51
It needs the cult like behavior, which in some ways is a positive
00:11:55
sign for the category because they're saying we're all going
00:11:58
to dump money into defense tech, circumstances be damned.
00:12:03
You mentioned, you know, I, I love Emil Michael and Bill
00:12:06
Gurley, but Emil, you know, X Travis Kalanick, deputy, former
00:12:10
Uber guy from much of my coverage, sort of took a subtle
00:12:14
dig at Gurley and Benchmark on stage.
00:12:16
What was that? You know, Meal's now Under
00:12:17
Secretary of Defense and was on a panel with Kevin Wheel from
00:12:20
Open AI and. So you don't lose your petty
00:12:22
gripes. You don't.
00:12:24
You don't lose your petty feuds when you become Under Secretary
00:12:26
of Defense. Yeah.
00:12:28
I mean, it was basically just, you know, there's been the
00:12:30
Bloomberg reporting that benchmarks invested in Chinese
00:12:32
company Manus AI's. Arfur Arfur.
00:12:34
Rock Scoop. Yes, and I've rock scoop that,
00:12:37
Bloomberg confirmed. And they did not.
00:12:39
Credit they didn't credit. We credit our for rock if he's
00:12:42
first. I don't think Bloomberg
00:12:43
mentioned him. I think the rest of the tech
00:12:46
press kind of just like. Treats him like he's just a
00:12:49
chipster, like he's right, he's getting it right.
00:12:52
Almost at the time. It's one thing if he's like,
00:12:55
sort of. Anyway, yeah, keep going.
00:12:57
Anyway, Benchmark. Emil was just kind of like, you
00:12:59
know, there's not, it's not like there's not a plethora of U.S.
00:13:01
companies doing AI to investing right now, you know, So it was,
00:13:05
I would say it was like, you know, subtle, but not so subtle.
00:13:08
Sorry, he was shitting on benchmarks investment in Manus
00:13:13
and say, no, he could have found it, could have found U.S.
00:13:15
companies. And I, I mean, we said this in
00:13:17
the story. What's more contrarian than
00:13:19
being pro China? You know, a lot of these people
00:13:22
self criticize VC's for not being contrarian.
00:13:25
And then what? It would be truly contrarian, a
00:13:27
little sort of like Comfort with China from Benchmark, which I
00:13:31
think is an interesting theme. It's strange to have that
00:13:33
posture when you're on top, you know, I don't know.
00:13:36
I think like there's still was certainly, you know, I would say
00:13:39
a boogeyman in China that really like covered almost every single
00:13:43
panel. It was very, you know, that was
00:13:45
the tone in this circle in particular.
00:13:47
And I think honestly more broadly in Silicon Valley now,
00:13:50
that's just established to be the case.
00:13:53
Yeah, I want to hear the first principles reasoning from Josh
00:13:56
Wolf, who we'll talk to in a second from Lux.
00:14:00
Josh was actually one of the voices that was like a little
00:14:02
more moderating on the tariffs for sure.
00:14:04
We should be, you know, ramping up this onshoring before we put
00:14:08
the hammer down entirely, you know, and try like targeted
00:14:11
efforts rather than blanket price increases on all of this
00:14:15
before we have the technology really here.
00:14:17
So that was, you know, refreshing to hear.
00:14:19
The whole point of the tariffs is supposed to be, I mean,
00:14:23
there's an American resilience and sort of National Defense
00:14:25
part, and that's important. But for the Trump people, it's
00:14:28
about jobs and what sort of American life works.
00:14:32
Like where, where was the Silicon Valley set salivating
00:14:37
over robots at this event? Or what was the balance between
00:14:40
excitement over robots and human American workers getting jobs
00:14:44
because of all of this? That was also a thing where I
00:14:47
feel like, OK, you're having both, you know, like, where did
00:14:50
you land on this? Where's the reality?
00:14:52
But I think people were very on message about the robotics boom
00:14:57
in factories enhances our workers to do be more productive
00:15:01
rather than they'll totally take all the jobs.
00:15:04
Jensen Wong spoke on stage from NVIDIA and, you know, touted his
00:15:07
plan to invest 500 billion in ship manufacturing in the US
00:15:11
over the next few years. And within that, you know, he
00:15:13
was talking about all the work that will come from skilled
00:15:17
laborers modeling the factory with digital twins to, you know,
00:15:20
ramp out, you know, solve all the problems before they get on
00:15:24
the floor and then have all those jobs to be manufacturing
00:15:27
chips. And that being, you know, really
00:15:28
important for our trade workers to bring in, you know, and also
00:15:31
just, you know, building the factories themselves will take a
00:15:33
lot of American labor. So that was kind of the, I would
00:15:36
say, the party line of the event about how this would work.
00:15:39
I do still feel like it wasn't really answered how all of this
00:15:43
will happen when all the raw materials are tariffed out of
00:15:47
existence coming into the country, but.
00:15:50
If we don't have the minerals from China, we're in big
00:15:52
trouble. Excited to hear from Josh.
00:15:55
He was on stage at Hill and Valley.
00:15:58
Any What should people know about what he said on stage
00:16:00
before we start grilling him? Yeah.
00:16:02
Josh moderated a panel with Senator Jack Reed.
00:16:05
And Josh's panel was all about autonomy and National Defense
00:16:09
against China with Senator Jack Reed and case our units from
00:16:12
Applied Intuition and where AI technology and robotic intersect
00:16:17
with national security and how all of that is really relevant
00:16:20
going forward. So happy to chat more about that
00:16:22
too. Josh, good to see you again.
00:16:24
Thanks so much for coming on. Great to see you both how you
00:16:27
doing? For for those of us who were not
00:16:29
at Hilton Valley, do you want to just say what was your like core
00:16:31
message on your panel or what do you, what do you think you were
00:16:34
trying to get across? Well, our our core message was
00:16:36
very focused because I had an amazing entrepreneur that we
00:16:38
back from the beginning, Caster Eunice, who was the founder of
00:16:41
replied intuition. I got to tell you, we've got
00:16:43
hundreds of companies that we've invested in.
00:16:44
It is, I believe, the only actual cash flow positive
00:16:48
business, which is just insane. He's a, he's a crazy operator.
00:16:51
He is all focused on autonomy for a VS for commercial sector
00:16:55
and then for defense, because it's effectively the same thing.
00:16:57
If you're trying to figure out how to get a car to be
00:17:00
autonomously navigated and you're trying to figure out how
00:17:02
to get a tank or a plane or something else, you know, it's
00:17:04
vehicles and, and things that are moving.
00:17:06
So a big focus on our center, which was also with Senator Reed
00:17:08
from Rhode Island, was how do you balance American
00:17:13
competitiveness? How do you balance the fact that
00:17:16
these things are effectively these things being autonomous
00:17:18
vehicles, data centers on wheels and the security and
00:17:22
vulnerability because those are threat factors that adversaries,
00:17:24
particularly China, but you could also think about Iran,
00:17:27
North Korea, Russia want to penetrate.
00:17:29
Kassar had just gotten back from China, so he was able to sort of
00:17:32
report out. He would tell you that the AV
00:17:34
industry and the EV industry there are not only huge but but
00:17:38
but winning. He also talked about the
00:17:40
surveillance state experience being there, like how different
00:17:44
it is technologically. Yeah, that.
00:17:46
I mean, that's no surprise. I think the last time I was in
00:17:48
Beijing, Shanghai, Hangzhou was 2019, right before COVID, maybe
00:17:52
it was really 2020. I think it's the last time I'll
00:17:54
be able to go for a while until there's regime change, which may
00:17:56
not happen in my lifetime just because of how outspoken I am on
00:17:59
the Chinese Communist Party. But I remember when my wife was
00:18:02
saying, you know, make sure you use separate phones and all this
00:18:04
kind of stuff. And you know, and I do and I
00:18:06
did. But the second you land, you
00:18:08
know, it's fingerprints, facial ID like you're captured and
00:18:11
you're tracked everywhere. And that's only improved.
00:18:14
And that was really before the rise of the data capture was
00:18:17
there, but the AI and the algos to do identification were just
00:18:20
coming to Fort. So, you know, that's one of the
00:18:22
great things that I think people think that technology is always
00:18:25
this great democratizing force, and it's going to give people
00:18:27
more expression and more freedom and more access and more
00:18:30
connectivity, and it can do that.
00:18:32
But not necessarily. Yeah, but anybody can also be
00:18:35
used as a tool of oppression. Private companies there, as you
00:18:38
know, are mandated to be part of the military civil fusion, which
00:18:42
is if you make something the government, you know, has
00:18:44
effective full margin rights to basically just say that's going
00:18:46
to be used by us to make sure we advance whatever principles we
00:18:49
need to advance here or abroad. What in some ways this event was
00:18:53
cheering the a military civil fusion of American companies
00:18:57
with U.S. government? Or how do you, as someone sort
00:18:59
of troubled about that in China, how do you see sort of the US
00:19:03
taking sort of a different, more noble path while making sure
00:19:07
that the government is getting the best technology it can?
00:19:11
Well, it's something Castor and I, the center we're talking
00:19:13
about, which is, you know, there's a few lines in our
00:19:16
Constitution which are the distinction between a
00:19:18
surveillance state and individual freedoms.
00:19:21
And, you know, as many have said, democracy is, you know,
00:19:25
the worst of all systems, but, you know, it's the least worst
00:19:28
or the best of a whole bunch of bad systems, but our system is
00:19:31
the best in the world. I don't want to live in a
00:19:33
theocracy. I don't want to live in
00:19:34
authoritarian or authoritarian state.
00:19:36
Technology can be used by leaders of those States and has
00:19:40
been from Hitler and Mussolini who commandeered radio.
00:19:45
You know, we thought that would be a great liberating thing.
00:19:47
But I but I think that the big message here was like why the US
00:19:50
is different? Is it isn't like this BS rah
00:19:53
rah, you know, freedom jingoistic.
00:19:55
It really is not trying to suppress individuals.
00:19:59
It is not trying to create a social score based on whether
00:20:03
you pledge fealty to the great leader and whether you will be
00:20:06
allowed onto the train or whether your kids will get
00:20:09
admission into a school where you will get shows to show
00:20:13
tickets to the concert. This mechanism, which is
00:20:15
straight out of Black Mirror, it makes Black Mirror writers look
00:20:18
totally uncreative because it's real.
00:20:20
It might have been presaged half a decade ago, but it's very
00:20:23
real. Did we just see, you know, Chris
00:20:26
Krebs, who had sort of spoken out against Trump, is now
00:20:29
alleging literally today he lost Global Entry status because of,
00:20:34
he presumes, sort of anger from the Trump administration?
00:20:39
I have, I have no. Idea that you don't know that
00:20:41
example, but I'm just saying what you're describing it sort
00:20:43
of fit. I don't think it's so.
00:20:45
We're so insulated from that potential in the United States,
00:20:49
are you? Feeling I think look that is a
00:20:51
right and just fear that anybody should have about people
00:20:54
pledging loyalty or authoritarian instincts and and
00:20:57
how technology can be used in those ways and you know all
00:21:00
those things are are very complicated.
00:21:01
But we do have freedom of speech here, and we do have freedom of
00:21:04
expression and freedom of religion, freedom of sexual
00:21:07
married. Yeah, Ryan Peterson just posted.
00:21:10
Like, I've been shitting on the Trump administration over
00:21:12
tariffs, and nobody's coming for me.
00:21:14
It's been great to have freedom of speech, right?
00:21:18
Look, I I I did not vote for Trump.
00:21:20
I didn't vote for Kamala, you know, I voted, actually.
00:21:23
Hold. Hold on.
00:21:24
Ready. I think there were seven people
00:21:25
in my party. I know Romney well.
00:21:30
I'll be. Honest, Hold on, hold on.
00:21:31
I made these hats before I consulted with my boss, which is
00:21:34
my wife, OK. And, and one of the top issues
00:21:38
in our household is women's rights broadly and reproductive
00:21:41
rights. So she reminded me that I needed
00:21:44
to flip the ticket, which I did when I voted.
00:21:46
It was Bloomberg, Romney, but. So I got asked at Human X, my
00:21:51
favorite billionaire and I, you know, I worked for Bloomberg.
00:21:53
I said Bloomberg I think was my favorite billionaire.
00:21:55
So I, I not, not, not wrong. Never going to get elected
00:21:59
unfortunately. No, he, I mean, look, he, he, I
00:22:02
truly felt, and this is a weird thing to say, that I think that
00:22:05
billionaires should run for office and hold office.
00:22:09
And whether Mitt was a billionaire or close to 100,
00:22:12
Trump was not really a billionaire when he was running.
00:22:14
You know, maybe he became profiting off his name later.
00:22:16
But, and the reason is I don't think that they could be bought.
00:22:18
I don't really think that there was anything when Mike Bloomberg
00:22:20
was running the city of New York where he could be bought.
00:22:22
And frankly, when there were cuts to the arts here in the
00:22:26
city, he reached into Bloomberg Philanthropies and it was like
00:22:29
100 million plus to keep up the arts.
00:22:32
That's the kind of benevolent mayor I want.
00:22:34
And is he driven by pure virtue? Probably not.
00:22:36
It's probably his legacy and, and his reputation and his
00:22:40
family and all that kind of stuff.
00:22:41
But man, you know, I I wish he was a better debater and you
00:22:45
know. Yeah, you got to win the stage
00:22:48
presence. I do want to circle back a
00:22:50
little bit to what we talked about at what was what was
00:22:53
discussed at Hiland Valley this year.
00:22:55
One big conversation of course was, you know, around reshoring
00:22:57
manufacturing. And part of that is made
00:23:00
complicated by the fact that China has so many of the
00:23:03
critical minerals. So with this aggressive tariff
00:23:06
policy, there's they have things that we don't have yet and maybe
00:23:10
we do under reserves, but we need to get them and that's
00:23:12
going to take time. Where do you land on that
00:23:15
liberating stance between A1 size fits all tariff policy and
00:23:18
not? Like how does that score with
00:23:20
the reindustrialization mission? Let me break it down from the
00:23:24
top layer, which is the tariffs and I will say either this was
00:23:27
the greatest policy blunder and worst roll out in the history of
00:23:31
presidential decrees and economic sphere or and and I'm
00:23:35
giving a lot of credence here. This is not what I believe, but
00:23:37
I'm giving credence. It is part of a grander bargain
00:23:40
and particularly China and and the game theory that I can see
00:23:44
playing out. And again, I don't know that
00:23:45
this was a priority planned. I'm not giving them the credit
00:23:49
to say that this was, you know, some grand scheme of 40 chess,
00:23:53
OK. I think it was most likely that
00:23:55
this was haphazard and chaotic, maybe ideological driven.
00:24:00
I personally think that what happened is post election, you
00:24:03
had this boom of rah, rah golden age of America.
00:24:09
It was like a just a echo Chamber of homogeneous only up
00:24:14
from here. And then you started to see big
00:24:16
tech with the recomposition of Zucks board and meta.
00:24:20
And you started to see one by one people taking the literal or
00:24:25
figurative knee and the $1 for the inauguration,
00:24:29
1 by 1. And they're all lined up and and
00:24:31
I think that they're starting to be a confidence from the
00:24:34
administration of we are running the table and everybody is
00:24:38
bending down to us. And I think that that then got
00:24:41
exacerbated onto the global stage.
00:24:42
And it was sort of like when the tariff thing happened.
00:24:45
We control the cards and China's like, yeah, we make the cards.
00:24:48
So so that you're. Saying tech capitulated so well,
00:24:54
the Trump's like, oh, we're so powerful.
00:24:56
We're going to, we're going to keep running the table, right,
00:24:58
Right. I think that that is probably
00:25:00
the psychological confidence slash overconfidence that led to
00:25:05
that, that first part of why this rollout happened.
00:25:07
Now from here, I am more sanguine than everybody and I'll
00:25:10
tell you why. Beginning the tariff rollout 3-4
00:25:13
weeks ago, whatever it was 4 weeks ago, I had friends that
00:25:16
were reading hundreds of papers, hundreds of research reports,
00:25:18
sell side by side everything they could get.
00:25:20
And I had other people that were reading nothing.
00:25:21
I said, you know, come Monday morning, both of you will know
00:25:23
the exact same thing, which is nobody knows nothing.
00:25:25
You have no idea what's going to happen.
00:25:27
I was shocked by only one thing, which was that people were
00:25:30
shocked by the tariffs. I mean, Trump has been talking
00:25:33
about for 25 years. He campaigned on them.
00:25:35
Democrats hit him on the fact that he was going to do tariffs
00:25:38
repeatedly. And then they do it and it's
00:25:40
like, okay, wait, there's a shock.
00:25:41
So if you were long volatility, if you bought deep out of the
00:25:43
money puts like you did great. We happen to do that as a
00:25:46
family. Because I was like, all I hear
00:25:47
is positive, positive, positive, nowhere but down to go from
00:25:51
here. So I don't know what the
00:25:52
catalyst is going to be, but it just feels like something is
00:25:54
going to crack. OK, so that's the first part.
00:25:56
What happens from here? If you were long volatility, you
00:25:59
were right. Because Trump 1.0 it was all
00:26:02
about chaos and crazy and volatility.
00:26:04
Well, now you have volatility. If you are a country or a
00:26:07
company, the number one thing that you hear from CEOs and
00:26:09
executives and boards, they all have the same uniform consensus,
00:26:12
which to me is always like, where's the variant perception?
00:26:14
Everybody's like, we're paralyzed.
00:26:16
We don't want to make CapEx decisions.
00:26:18
We're not going to hire. Our demand signals are really
00:26:22
noisy because a lot of people pulled forward demand.
00:26:24
Consumers bought a lot of stuff because they're not sure of
00:26:26
themselves. And so you have this aberrant
00:26:28
spike in sales for a lot of companies, but you have CapEx
00:26:31
that's super low. You have GDP that came out
00:26:33
negative for the first time in, you know, a very long time.
00:26:36
So what's scarce today is predictability and stability.
00:26:41
OK, Now go to the global stage. If you're Japan or Korea or
00:26:45
India or Germany and you are feeling the same thing because
00:26:49
of this chaos, would you pay a premium to get stability and
00:26:53
certainty and predictability for the next five years or 10 years?
00:26:56
I think you might. Now, I don't think that was
00:26:59
calculated, but my prediction, which is why I'm more sanguine.
00:27:01
A week ago, JD Vance, Indian wife goes to India, not a deal,
00:27:06
but a deal to do a deal in India.
00:27:08
OK, But that's an important thing.
00:27:10
It's a billion 5 people of the world.
00:27:12
OK. Next, you know, most populous
00:27:14
country, China billion 4. We're 375 million people.
00:27:17
So if India looks and says we can do a deal here, maybe boost
00:27:22
our aerospace and defence, maybe boost partial but.
00:27:24
This so you think the outcome is that we have lower tariffs in
00:27:29
some of these allied countries at the end of this or that's
00:27:31
what the wins certain situation is like he wins if it get but he
00:27:35
likes tariffs. You just said that he he like he
00:27:38
believes it. What he likes is winning.
00:27:40
He likes deals. He likes leverage.
00:27:42
It isn't the sake of tariffs, it's the sake of feeling that
00:27:45
there's inequity, that somebody's getting a better
00:27:46
deal. So twist the table so that we
00:27:49
get a better deal, right? That kind of thing.
00:27:50
Now, if Japan comes to the table, and they are, and I got
00:27:55
to tell you, Scott Besson, close friend, I think he's one of, if
00:27:58
not maybe the adult in the room. He is erudite, sophisticated,
00:28:02
knows markets and currencies and bonds and history, but he also
00:28:05
knows human nature. And people are like, why isn't
00:28:07
he speaking out? Because he knows human nature.
00:28:09
He's not going up against his boss so that he can get fired.
00:28:11
And none of us want him fired, right?
00:28:14
So increase the most hysterical television interviews where he
00:28:17
can't really. Yeah, anyway.
00:28:19
Scott's. Scott's recipe for the US and
00:28:23
when he was interviewing for the job and got it as Treasury
00:28:25
Secretary was predicated on the Japan model of the sort of three
00:28:28
arrows. And so I think that he will get
00:28:31
a deal with Japan, a deal with India, a deal with South Korea.
00:28:33
And by the way, if you're a South Korean motor manufacturer
00:28:36
and you have like, I don't know, 4% market share in the US or
00:28:38
something like that, because China's got 50 or 60%.
00:28:40
Would you do a deal that says, Hey, we'll do a 10 year deal
00:28:43
with you, The government and defense and a bunch of our other
00:28:45
industries are going to buy from you.
00:28:47
We're going to keep tariffs high on China.
00:28:48
Your market shares can go to from 4:00 to 12:00 or 16.
00:28:51
You're going to triple or quadruple your, your, your
00:28:54
ownership. I think that we might see a, a
00:28:56
grand bargain with a bunch of those countries.
00:28:58
And then the big thing, which is probably going to take two years
00:29:00
is China. And the optimistic view here is
00:29:04
you get not just trade, but remember it's a whole bunch of
00:29:08
stuff that's on the table. TikTok.
00:29:10
Is the delay on TikTok really about the delay so they can
00:29:13
figure it out and find a buyer? Or is it that and part of a
00:29:16
grand bargain with China, fentanyl IP?
00:29:20
You know, there's a whole bunch of other things to figure out in
00:29:22
this grand bargain and all these things are shits on the table.
00:29:25
So I'm a little bit more sank. I am much more skeptical than
00:29:28
you. I mean, first of all, Japan, it
00:29:30
could very well drive them closer to China and there have
00:29:32
been signs of that. You're omitting Europe, which is
00:29:35
our most important set set of allies, which are are really
00:29:39
turned off by this. And finally, we just had the
00:29:41
Canadian election where Trump rallied the whole country to the
00:29:45
Liberal Party when they probably would have gone conservative
00:29:47
like I just that is a great bellwether that the our global
00:29:52
allies are not reading this tariff strategy as making
00:29:56
friends and bringing them closer.
00:29:57
I'm shaking my head violently because you are 100% correct.
00:30:01
On the media, the newspapers, the popular opinion culture.
00:30:05
OK, but. Canada, but like if you're.
00:30:09
Sweating by Canada relatively irrelevant, like in the big
00:30:13
scheme of things, certainly for our.
00:30:14
Defence, it's one of our closest trading.
00:30:16
Part it's right yeah and then and they need us and we need
00:30:18
them and it'll work out and OK it'll it'll be fine we'll have
00:30:20
like a little bit of schoolyard fight but it'll work out Europe
00:30:24
who are they turning to for the security umbrella literally who
00:30:28
are they turning to they're. Going to go themselves.
00:30:30
They're going to go how? Long is that going to take?
00:30:32
How long is that going to take to build up a defense where who
00:30:35
who's making F30 fives for them? I, I just I am way more I am.
00:30:40
You are 100% correct. The popular opinion tourists,
00:30:43
The media? Entertainment companies like the
00:30:47
Max. That's not the media.
00:30:48
It's the regular, regular people, human beings, the
00:30:50
massive, right tourists, right? 99% of people could be like,
00:30:55
Americans suck under Trump, I'm not going there, whatever.
00:30:57
But the people that matter are the generals and the war
00:31:02
fighters. And they're not saying, yeah, we
00:31:04
don't like Trump, he's a Dick. We're not.
00:31:07
We're not going to buy weapon systems.
00:31:09
The entire world depends on cheap manufacturing from China,
00:31:15
oil and that gas mostly from the Mideast and weapon systems from
00:31:19
the United States. And unfortunately, those weapon
00:31:23
systems really matter. They do matter, but I guess I'm
00:31:26
curious to see if if they're the only thing that matters, you
00:31:29
know, there's lots else going on.
00:31:30
No, they don't. No, but but I just think that
00:31:33
the average person on the street is not like I hate America.
00:31:38
So I'm not. So like you have no say in
00:31:40
whether weapons systems are sold.
00:31:42
You have a say whether you're subscribing to Netflix or you're
00:31:45
buying American fashion brands or you're tweeting and yelling
00:31:49
about America. But I'm telling you that the
00:31:51
trillion dollar defense budget and the enormity of our
00:31:57
industrial defense base globally, which needs to be
00:32:00
refreshed domestically, is just a major source of leverage that
00:32:05
the average person takes for granted because they never think
00:32:07
about it. I mean, what do, what do you see
00:32:09
as like the goal here? I I mean, like, to me the goals
00:32:14
would be, yeah, like get to a free trade environment, avoid
00:32:19
war with China, which would include avoiding an actual like
00:32:22
invasion of Taiwan. Like I guess to me the Trump
00:32:25
stuff I'm seeing where eroding free trade we're making it with
00:32:31
with Ukraine and other things. The signals are that we're less
00:32:33
likely to defend Taiwan. So I I don't know what are we
00:32:37
building up all this military might for if at the same time we
00:32:41
seem totally disinclined to mount the the 2 greatest fronts
00:32:47
we're likely to face, one being Ukraine and the other one
00:32:50
defending Taiwan. Like what?
00:32:51
What is all this militarization? For pretend that the two biggest
00:32:55
fronts were ones that people are not talking about and I'll give
00:32:56
you what what they are in a moment.
00:32:58
But Ukraine minerals deal either imminent signed but like going
00:33:06
to get done. The US cares a lot more about
00:33:10
Ukraine when we do that deal. OK, so now Trump.
00:33:16
Specifically feels like OK, yeah, but OK, yes.
00:33:19
But just in general, like it could be about defending Western
00:33:22
democracy or the buffer of Putin's encroachment into NATO
00:33:25
and our allies. But now America cares whether it
00:33:28
was about. Oil America cared most of.
00:33:31
I just am taking issue with this idea that America didn't care.
00:33:33
Trump didn't care. America cared about Ukraine
00:33:36
because it was a buffer. All the other things were true
00:33:39
besides the mineral deal. The mineral deal exists to make.
00:33:42
Trump care, yeah, but but what I'm saying now is if you're just
00:33:45
again seeing like a state, if you are Ukraine as a state and
00:33:49
you're America now I've given you America a interest, would
00:33:56
you persuade interest, not reason.
00:33:58
We are all aligned like American values, Western values, right?
00:34:03
Now we have a Whiting. Reason to care about dictators.
00:34:06
One that might be compelling to Trump, Yes.
00:34:07
OK. And and, and Trump, and because
00:34:10
as a country, it's sort of like, well, even Americans who vote
00:34:13
for Trump, I'm just not one of them.
00:34:14
That's like, why do we care about Ukraine?
00:34:17
OK, well now there's a reason to care about Ukraine in your own
00:34:19
self-interest. There are minerals there that
00:34:20
affect the jobs and the robots and the autonomous cars and the
00:34:23
future machinery that we have because we need that stuff.
00:34:26
So we're going to protect it and not let Putin get that.
00:34:28
OK, so that's Ukraine. Taiwan.
00:34:30
There won't, in my personal opinion, be an invasion.
00:34:34
Interesting. China will take Taiwan I.
00:34:38
Don't know, it just won't need an invasion.
00:34:41
OK, Yeah. We'll, it'll be, it'll be Hong
00:34:43
Kong. Now, what they will do because
00:34:47
they can is continue to build up.
00:34:49
They've got 200 X the shipbuilding capability that we
00:34:51
do. They've got roughly 400 war
00:34:55
fighters today on maritime. We've got 300 and something the
00:34:59
shape of the battle that they have in their ability to spend
00:35:02
to build that up is sort of not entirely, but sort of like what
00:35:06
we did during the Cold War where we effectively bankrupted Russia
00:35:10
with this arms race, OK. So it is in their strategic
00:35:13
economic interest to get us to try to match parity with what
00:35:15
they're building. But they're what they're
00:35:17
building is useful for other conflicts that may arise in the
00:35:19
future. OK.
00:35:21
But all they have to do, there are 100 flights a day or
00:35:24
whatever it is, you know, between Taipei and Shanghai.
00:35:27
You just send the equivalent of like the little orange men and
00:35:30
all of a sudden one weekend there's some mainlander that
00:35:35
gets beaten up by a bunch of thugs or something like that.
00:35:38
And they're a peacekeeping force that comes in and it's Hong
00:35:41
Konged over a weekend. So I don't know why they would
00:35:43
go to kinetic battle. You know, I am friends with Sam
00:35:46
Paparo Indo Paycom. He wants to create a hellscape.
00:35:48
I applaud it. I think we should do it.
00:35:49
We we stand to benefit as all the treatable systems and drones
00:35:53
from Androl and sale drone and others help to blockade and
00:35:57
prevent freedom of navigation maneuver for the Chinese around
00:36:02
important strategic areas. But if I'm China, that's like
00:36:06
checkers, right? Like so?
00:36:08
You're saying Taiwan's lost? America shouldn't invest in
00:36:11
trying to stop it. No, China's smartest thing that
00:36:14
they can do is continue to build up their arms.
00:36:17
Let the America do it. Do their little exercises,
00:36:19
provoke people, provoke the Philippines, you know, just try
00:36:22
to do all that stuff and then let America build TSMC in the
00:36:27
United States. Let Intel finally convert into a
00:36:32
manufacturing for other people's semis, which is what they should
00:36:34
have been doing and I called for over the past 10 years because
00:36:36
they no longer make competitive chips.
00:36:38
And then Americans are looking at like, why do we care about
00:36:41
Taiwan now? We 3 and the rest of you know,
00:36:44
democracy might care about it because it's a values based
00:36:47
thing. But in pure economic interest,
00:36:49
why would we care about Iran other than the fact that our
00:36:52
chips are made there and if chips are now made in the US?
00:36:54
And what what I'm very interested in your OK, I don't I
00:36:56
don't we equivalent. To by the way, I'm, I hope you
00:36:59
see, I'm not being like ideological about this.
00:37:00
It's real politic. It's like really understanding
00:37:03
what are the interests, what are the means, what motivates
00:37:05
people. But what you where do you think
00:37:09
the real conflicts are you sort of alluded to not Ukraine into?
00:37:12
OK, you make me SEC deaf or SEC state for the day or you let me
00:37:15
advise, and I've said this publicly.
00:37:16
There are two areas, 2 regions, one broad, one narrow, that I
00:37:21
think are going to be the next chaotic areas.
00:37:23
And the problem with so much conflict and war is that we
00:37:26
react to things instead of proactively preempt.
00:37:30
The first is the Sahel and Maghrib.
00:37:34
I pause. Yeah, you know, we're, I have no
00:37:37
idea what you're talking. About and that's why and most
00:37:39
people are listening. Most people, Sahel and Maghrib
00:37:42
are the latitudinal areas of Africa and they have had coup
00:37:46
state after coup state. Most people couldn't even name
00:37:48
some of the countries, Chad, Niger, Mali, Sudan, etcetera.
00:37:53
OK, three forces are am I allowed to curse here are
00:37:59
fucking this place up. OK, big time.
00:38:02
You got Russian mercenaries who are coming in making money,
00:38:06
propping up warlords, propping up coups, extracting resources.
00:38:09
There's a whole economic chain of what they do with those
00:38:11
resources and how they clean them and get money.
00:38:13
OK, and other people that are involved in that.
00:38:15
The second are Chinese Communist Party that are coming in with
00:38:19
infrastructure, telecom, roads, etcetera, and having influence.
00:38:22
And the third are Islamists that are coming from Syria,
00:38:26
Afghanistan, Iraq, that have fought wars for the past 20
00:38:29
years and are radicalizing young men and spreading this violent
00:38:35
extremism. We are, in my opinion, I don't
00:38:38
know if it happens in six months or six years, but I think that's
00:38:41
the Window 1 terror event away from one of those ISIS in Africa
00:38:47
or Al Qaeda in Africa type groups projecting into Paris or
00:38:51
Barcelona or London, away from that entire region becoming our
00:38:55
next Afghanistan at a time when U.S. troops have been pushed
00:38:59
out, French troops have been pushed out.
00:39:01
And I think that is going to be like chaos central.
00:39:06
OK, so and again, my life is spent trying to find a low
00:39:10
probability, high magnitude thing that other people haven't
00:39:12
found. I do.
00:39:13
In technology. If I was in the music world, I'd
00:39:16
be trying to find the next band. If I was in real estate, I'd be
00:39:18
trying to find the next hot neighborhood or fashion or art
00:39:20
or whatever. But in geopolitics, it's what's
00:39:22
the thing that nobody has attention on, where there are
00:39:25
bad actors convening, like out of a movie, and we are not there
00:39:30
proactively. Friendship building, winning
00:39:33
hearts and minds, doing commerce, all the things that
00:39:36
can diffuse these people. I'd say also we've, you know,
00:39:39
seen a lot of cuts to USAID and a lot of what I would call our,
00:39:43
you know, soft power mechanism over the last, you know, three
00:39:47
months. Like how does that play into all
00:39:49
of this? Should we be ramping that more
00:39:51
up as well, in addition to military force?
00:39:53
Strategically, yes, soft power matters.
00:39:55
Soft power matters. But if you know we're funding
00:39:57
stupid shit, it should be cut. And if we're funding smart, why
00:40:00
strategic stuff that is aligned with?
00:40:03
A, a broader strategy. I mean, the problem is you have
00:40:06
different, you know, different government entities that are
00:40:07
focused on different things, but you need a grand strategy to say
00:40:12
Africa is a concern for us all. Right.
00:40:14
So, so number one is terrorism 2 point O out of Africa, which is
00:40:18
interesting and the other. I would create a Monroe Doctrine
00:40:23
#2 which shores up a Pax Pan Americana of north-south and
00:40:29
Central America. And the reason is, if you've
00:40:32
been down there, my bet is you went to Patagonia or Brazil, or
00:40:37
you saw Guazu Falls, or you went to Costa Rica, maybe you went to
00:40:40
Honduras or Jamaica. The infiltration of the Chinese
00:40:46
Communist Party into all of these places that Americans
00:40:49
travel is like what the Russians did with Cuba back in the 40s,
00:40:52
fifties and 60s. Right, which is why we shouldn't
00:40:54
be alienating in Mexico like there's no country I love.
00:40:57
Well, that's what we really loves us too.
00:40:59
But. But I know we're fine but like
00:41:01
it was too dumb. That, but it's the rest of this.
00:41:03
Region right we've. Got a billion people that mostly
00:41:06
speak 80% Spanish and English except for Portuguese.
00:41:10
In Brazil you have abundant natural resources, abundant
00:41:13
agriculture, highly trained, highly literate populations, and
00:41:17
the quiet Chinese infiltration literally into our sphere of
00:41:21
influence on this Western Hemisphere.
00:41:22
We should have a hemispheric hegemony that creates a new
00:41:26
allied longitudinal axis so that we can project power from the
00:41:30
Atlantic and the Pacific and not be vulnerable from all these
00:41:33
states. I was in Nicaragua in December.
00:41:34
I was terrified. You literally have Iranian
00:41:37
Hezbollah forces in Nicaragua. I I have a best friend who's a
00:41:43
journalist, A prominent 1 and and our families were travelling
00:41:47
together and he was stopped at the airport in Miami and denied
00:41:51
boarding the flight because he was a journalist.
00:41:55
We're going out of leaving the US.
00:41:57
From the US to Nicaragua, yes. But by the US or by.
00:42:00
No, by, by, by, by the by the Nicaraguan government, They,
00:42:03
they, they said you can get on the flight, but if you land,
00:42:06
we're detained. Interesting the I would I guess
00:42:10
what I want to understand. I think these are both
00:42:11
interesting and like provocative, but like to me, a
00:42:16
premise of what's going on in Hill Valley and American dynism
00:42:20
and and all the defense tech investing is sort of this global
00:42:24
face off with China. And like a key question is what
00:42:27
types of companies do we invest in?
00:42:29
Because like what does the nature of that conflict look
00:42:32
like? I mean, do you do you think
00:42:34
China is powering this investment movement?
00:42:37
And if you don't see it as a sort of head to head war between
00:42:42
the two countries in Taiwan or, or you know, even the sort of
00:42:46
like proxy Taiwan where like what, what is it?
00:42:49
It's like fighting terrorism again, because there are
00:42:51
influences in these regions you talked about.
00:42:54
Or why? Why is China so important if
00:42:56
you're not bringing that up? I I think the catalyzing force
00:42:59
over the past few years was people complaining about the
00:43:05
defense base we have that is slow and bureaucratic.
00:43:08
Whether people were criticizing the F35 Joint Strike Fighter
00:43:10
being made in 350 plus congressional districts and
00:43:13
being overtime and over budget. And that's the thing for
00:43:15
taxpayers justly. Or that China was developing
00:43:19
hypersonic missiles or when people saw DeepSeek and that's a
00:43:24
whole other complicated thing, but more efficient, maybe less
00:43:27
GPUs stolen, not whatever it is. And people saying, are we losing
00:43:32
on a bunch of different fronts. And I think there are 44 key
00:43:34
technological areas and some studies have shown that on 37 of
00:43:37
them we are losing to China 50% of undergraduates in AI.
00:43:42
Are China's more of a benchmark? It's more like we just need to
00:43:45
do things really well. And you're like China's like a
00:43:47
comparison point. Yes, and and so if we are but
00:43:50
but Sputnik was that moment for us that persage the Cold War and
00:43:53
build up and whatever, but it was like, holy shit, America is
00:43:56
great. That's great.
00:43:57
But if we're not great and they're actually beating us, you
00:44:00
know, you can be the president. You could lie about how big your
00:44:02
buildings are and how big your bank account is and how big your
00:44:04
crowds are. But you can't lie about the
00:44:06
market, right? Market goes up or down.
00:44:08
You can't lie about how much it went up or out.
00:44:10
Everybody feels that. And you can't lie when you see
00:44:12
that China's flying a satellite or launching a satellite or
00:44:16
releasing an AI tool that actually empirically, observably
00:44:21
shocks you. And so I think people have been
00:44:23
shocked now to say, are we behind?
00:44:25
Do we risk being behind you take shipbuilding something, you
00:44:29
know, I mentioned before the stat 200 times the capability in
00:44:31
China that we have. We have one major shipbuilding
00:44:34
area in Hampton Roads. We've run these risk games at
00:44:36
Lux to analyze the vulnerabilities of this kind of
00:44:39
stuff. We used to have 25 and so
00:44:41
reassuring something that you mentioned before.
00:44:44
It's not, you know, Scott Besson said America first does not mean
00:44:48
America alone. Are we going to truly do
00:44:50
shipbuilding here alone? I don't know.
00:44:52
There's going to be probably in this, in this defense budget
00:44:54
with reconciliations, something like 47 billion of the trillion
00:44:58
dollars that gets allocated for shipbuilding.
00:44:59
But South Korea, Norway, a bunch of people are amazing
00:45:03
shipbuilders and we should be partnering with them, whether
00:45:05
there or here or both to do that same thing.
00:45:08
Taiwan coming here, building Intel should probably team with
00:45:11
TSMC. Maybe TSMC buys them.
00:45:12
I don't know. But we should be friend shoring
00:45:16
to do re shoring. It shouldn't be alone.
00:45:17
I think that's foolhardy. Same thing by the way, with
00:45:19
minerals, even more reason to be in Africa and South America.
00:45:23
But the big grand strategy here, the big like why hill and
00:45:26
valley? What's happening here is what
00:45:29
people have been talking about for a very long time of like,
00:45:31
we're falling behind. All of a sudden you had a
00:45:33
culture shift with Project Maven, Google employees walking
00:45:37
out, a bunch of other companies, including one of ours clarify
00:45:40
that came in and won those contracts.
00:45:41
You had the rise of DIU. You had the founding of Andrel 7
00:45:44
1/2 years ago and we were founding investors there and
00:45:46
people thought Palmer was a joke.
00:45:48
Peter Thiel and I are at the Reagan National Forum and
00:45:50
Palmer's in his Hawaiian shirt, cargo pants and flip flops.
00:45:53
My guess is 5% of the people, maybe 10% of the people that
00:45:55
attended there back 6-7 years ago have applied for a job at
00:45:58
Andrel since, right? And so Andrew went from nothing
00:46:02
and nobody to a $30 billion company and people are like,
00:46:07
holy shit, this thing is working.
00:46:08
And it inspired other people to be like, we're going to go do
00:46:10
that, but in a different sector or whatever it is.
00:46:12
And so you have a move of self-interest and motivation
00:46:16
that people don't want to work on ads and video games and
00:46:18
bullshit. They want to work on things that
00:46:20
matter. And right now there is a
00:46:21
zeitgeist that feels that American defense matters.
00:46:25
And you have the Hill and Valley where you have aging politicians
00:46:28
that get lobbied from like the big primes and get donations
00:46:32
from the big primes. But now they see.
00:46:33
Wait a second, there's a lot of money here, venture capital in.
00:46:36
Some ways what's happening is what we're telling ourselves,
00:46:38
the psychological story. There will be more money to
00:46:40
come. Silicon Valley is committed to
00:46:42
this area, telling politicians that they need to like look to
00:46:45
startups and not just rely on the primes.
00:46:48
And and leaders seem more bought into it too.
00:46:50
I would say like the event was very positively received.
00:46:54
I mean, I can tell you from conversations with people that
00:46:56
are doing these budgets and doing these bills, you're going
00:46:59
to see big wins for new manufacturing technologies.
00:47:01
You're going to see big wins away from the major primes who I
00:47:03
think are sitting there fat and lazy and they're going to be
00:47:05
shocked. And so you had this generational
00:47:08
moment from like that Last Supper, you know, when when
00:47:10
defense was told post Cold War budgets getting shrunk, you guys
00:47:13
all have to merge together and they merged into an oligopoly.
00:47:16
And you had Raytheon and L3 and Boeing and Lock, etcetera.
00:47:19
OK. And now you have a emergence of
00:47:22
winning tech companies that are tracking the best talent,
00:47:25
innovating and making technology faster and and winning.
00:47:28
And I think it's a wake up call. So let me be clear.
00:47:33
The big take away I had from Hillen Valley is that the
00:47:35
politicians keep getting older or the attendees keep getting
00:47:38
younger. And the younger people are the
00:47:41
ones that have the mix, which is that beautiful cocktail
00:47:45
combination of ambition, naivete, and they're the ones
00:47:49
that make shit happen. They're the people that we
00:47:51
invest with. And so those people are inspired
00:47:54
and excited and they're not naive in how long it will take.
00:47:57
They're not like suddenly, oh, we're going to get a billion
00:47:59
dollar contract this year. And it is always dangerous to
00:48:01
say this time is different, but there is something palpably
00:48:03
different that I think we're going to see in this budget when
00:48:07
it gets done, next year's budget.
00:48:09
And you're going to start to see like, Wow, market share is
00:48:11
really accruing to these new primes, these new entrants like
00:48:14
Andrel and Sale Drone and Hadrian and Varda and Impulse
00:48:17
Space. We'll let you go, but in a way,
00:48:19
do you think the enthusiasm from the administration and from
00:48:23
funders can overwhelm potential economic headwinds?
00:48:28
Like if, if the economy is in a bad place, do you think this
00:48:31
enthusiasm is misplaced or you think you know some trends can
00:48:35
overwhelm A broader economic situation?
00:48:38
The evidence that it will overwhelm is again, if you look
00:48:41
right now at Andrew as one example, 8 1/2 billion dollars
00:48:45
of demand for a 2 1/2 billion dollar round.
00:48:48
You know, nobody there was like, you know, like we're feeling
00:48:50
really nervous, like interest rates are 4/2 the 10 year
00:48:54
despite unemployment, the GDP print, like nobody cares.
00:48:59
There are going to be isolated pockets that will overcome the
00:49:01
economic thing. But you are naive.
00:49:03
Anybody is naive to think that the macro doesn't matter.
00:49:06
I always say we pick individual companies, we find individual
00:49:09
entrepreneurs, the most micro decision that you can make.
00:49:12
And it's the equivalent of picking the best dish on a menu,
00:49:15
having selected the best menu from restaurant and best
00:49:17
restaurant from a city and a state and OK, and you're about
00:49:19
to eat that delicious morsel and Godzilla comes and just steps on
00:49:22
it. Right.
00:49:23
Yeah, exactly. We need to have an appreciation
00:49:26
of the macro and whether that's the cost, capital and rates,
00:49:29
whether that's the flow of capital and if Japan and China
00:49:31
sell our bonds. It's just complicated.
00:49:34
I do believe that there are these long term trends that you
00:49:37
can be relatively insulated from the volatility and vicissitudes
00:49:41
of the here and now in markets. Josh, thanks so much for coming
00:49:44
on. This is awesome.
00:49:45
Great to see you both. See ya.