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00:00:00.000 I think every founder like you know
00:00:01.680 comes out of meta like regrets selling
00:00:03.280 their company to Meta you know like
00:00:06.080 happened with both Instagram and
00:00:07.440 WhatsApp for sure. Yeah. Palmer as well
00:00:09.840 for for like Oculus. Oh yeah do too.
00:00:11.840 Yeah. But at the same time like you know
00:00:13.200 Zuck doesn't make it easy to say no. I
00:00:14.880 mean he he literally will give you like
00:00:17.199 a crazy good price or he'll crush you
00:00:19.439 right like he'll like uh you know he'll
00:00:21.920 clone your exact app which is what
00:00:23.680 Instagram did right with uh with
00:00:25.600 Snapchat. I mean a lot of the
00:00:26.640 innovations we take for granted today
00:00:28.320 like stories and you know private
00:00:30.720 messages and stuff come from Snapchat.
00:00:32.558 Uh even the glasses came from Snapchat
00:00:34.399 right like the one that Meta AI is like
00:00:36.559 kind of perfecting right now. Tariffs
00:00:39.120 are going to be bad for the market and I
00:00:42.640 think I I think Trump is serious about
00:00:44.640 it. I think there isn't a world where we
00:00:46.399 go back to you near 0% tariffs. I think
00:00:48.879 the best we'll get is like 10 to 15%. I
00:00:52.000 think there's another worry that I have
00:00:54.640 around uh kind of flight away from US
00:00:57.760 dollars. Um and we've seen this a little
00:00:59.760 bit the you know do you really want to
00:01:02.000 be in uh the biggest actual driver to US
00:01:06.640 uh equities in the last few years has
00:01:09.360 been kind of more and more people
00:01:10.720 putting money in US dollars and then you
00:01:12.560 got to put it somewhere. uh but I just
00:01:14.960 feel like uh there's this kind of
00:01:16.960 reverse trend here where you know
00:01:18.640 actually uh if you want to improve US
00:01:21.840 manufacturing you kind of want to weaken
00:01:23.360 the US dollar and if you want to weaken
00:01:24.880 the US dollars everyone else should get
00:01:26.320 out of US dollars and actually the only
00:01:28.000 way to weaken the dollars is for money
00:01:29.840 to leave. It takes a while for this
00:01:31.759 stuff to work its way through the
00:01:33.119 system. Um and um so I I would say that
00:01:36.960 like you know the worst impact will
00:01:38.880 probably be be towards the end of this
00:01:40.720 quarter and like next quarter. And then
00:01:43.759 my thesis is that like we're going to
00:01:45.360 see um significant layoffs uh across the
00:01:48.799 board. Um and unemployment rates is
00:01:51.439 going to rise at some point and the Fed
00:01:52.960 will cut rates at some point b based on
00:01:55.280 like higher unemployment.
00:02:00.159 Hi everyone, welcome to Founders in Arms
00:02:02.079 podcast with me Immad Akun, co-founder
00:02:04.079 and CEO of Mercury and I'm Raj Suri,
00:02:06.479 co-founder of Lima and Tribe. Today we
00:02:08.959 have a an episode with just Immad and I
00:02:12.160 um talking about the week's tech news
00:02:14.879 and some of the stuff that you know
00:02:16.400 we're working on or excited about. And
00:02:18.800 uh you know we had a guest fortunately
00:02:20.480 couldn't make it so we'll reschedule him
00:02:21.920 for another day and uh today we'll you
00:02:24.319 know Ahmad and I will be talking about a
00:02:25.840 bunch of things that we're excited
00:02:26.879 about. Um, I guess the the big news for
00:02:29.760 this week is this uh epic lawsuit uh
00:02:33.920 against Apple has finally concluded uh
00:02:36.239 with a judge saying that now app
00:02:38.800 developers can link out um to websites
00:02:41.599 and and you know um allowing the
00:02:44.480 developers to to charge off the Apple
00:02:47.440 platform, meaning they don't have to pay
00:02:48.959 30% tariff rate uh to Apple. This is
00:02:52.879 huge news for developers. I mean, I
00:02:54.959 think there'll be lots of situations
00:02:56.239 where it still makes sense for
00:02:57.519 developers to use inapp purchases,
00:02:59.280 right? The conversion rate can easily be
00:03:00.800 30% higher, but I am excited about being
00:03:03.519 able to buy Audible and Kindle books
00:03:06.959 without this like right now it's such a
00:03:08.800 like complicated dance. You have to go
00:03:10.159 to like Amazon.com, find it. It's it's
00:03:12.640 completely pointless. Uh so that will be
00:03:14.800 definitely be a better user experience.
00:03:16.000 I didn't realize that was because of the
00:03:17.360 Apple issue. Um it's like there's credit
00:03:19.840 system, right? Like that you have to
00:03:21.120 use. Yeah. Yeah. Yeah. And if you don't
00:03:23.040 have credits, you can't actually you can
00:03:24.640 sometimes buy them. It's it's just
00:03:26.000 complicated. Uh and it'll be way better
00:03:27.920 after. You can link out. Um I guess it
00:03:30.560 could actually be a pretty smooth
00:03:31.599 experience if you if you have an app,
00:03:33.440 you link out and then it pops up
00:03:35.360 something where you can use Apple
00:03:37.400 Pay. Ironically, Apple Pay makes it like
00:03:39.760 actually pretty easy. Apple Apple Pay
00:03:42.239 has been a game changer for so many apps
00:03:44.239 now. Um I mean it's so easy to pay so
00:03:46.159 many websites. Yeah. I mean u I mean
00:03:48.319 payments used to be like a really
00:03:49.760 annoying thing like you know 10 years
00:03:51.040 ago and uh Apple Pay has really made it
00:03:53.440 so so much easier in every respect. I
00:03:55.519 mean even like tap to pay at at um
00:03:58.159 stores now. I mean I almost never need
00:04:00.000 to take out my credit card anymore
00:04:01.920 almost every time. And I think Apple
00:04:03.200 makes a little bit of money every time
00:04:04.640 you do that. Yeah. Uh like their whole
00:04:07.120 big thing is services revenue now
00:04:08.799 because like I mean you just don't need
00:04:10.319 to update your iPhone that often. Uh so
00:04:13.519 it all adds up. It was kind of notable
00:04:15.599 that the judge referred Apple for like
00:04:17.279 criminal contempt for not obeying you
00:04:19.600 know the rule uh the rule the earlier
00:04:21.600 ruling and it was kind of I mean they
00:04:24.720 basically called out Tim Cook for not
00:04:26.720 listening to his product team and
00:04:28.880 instead listening to his finance team
00:04:30.960 and and they called out his finance
00:04:32.400 leader like the VP of finance for
00:04:33.680 outright lying uh on the stand. Um
00:04:37.040 apparently the product team um you know
00:04:40.080 basically told them that they should
00:04:42.000 they should just kind of go with this
00:04:43.360 and like it's better for the overall
00:04:45.199 reputation you know for Apple to you
00:04:47.440 know allow this but their finance team
00:04:49.759 and they had like emails of the finance
00:04:51.600 team saying don't do it. Oh yeah I think
00:04:54.160 so. Yeah that's what I was reading and
00:04:56.000 they had like this um and apparently Tim
00:04:58.639 Cook didn't listen to them went for the
00:05:00.160 finance team stand. I think you you
00:05:01.600 probably have been in this position
00:05:02.639 right like where you have different team
00:05:04.320 members you know different uh or
00:05:06.800 advocating for different positions based
00:05:08.080 on the role I mean it's not just role
00:05:09.680 right like any any healthy company has
00:05:11.600 like different perspectives so I think
00:05:13.280 the different perspectives is not bad
00:05:14.639 it's like if if it turns out one
00:05:16.160 perspective is like illegal and contempt
00:05:18.320 of court that's different uh it's kind
00:05:21.120 of interesting right we also had the
00:05:22.880 other news I think it was last week or
00:05:24.240 the week before where Google's being
00:05:25.919 told to actually break up right like I
00:05:28.720 think they're going to uh they're
00:05:30.639 probably going to do another appeal, but
00:05:32.880 I think like there was a kind of funny
00:05:35.680 thing where OpenAI was like, "Hey, if
00:05:37.759 you're breaking up, let us buy Chrome."
00:05:40.320 Uh, which would be which would be kind
00:05:42.720 of bad probably to have like one
00:05:44.479 monopoly take it from another monopoly.
00:05:46.560 Um, but the interesting thing here is,
00:05:49.520 you know, we had all we had four years
00:05:51.520 of kind of, you know, the Democrats
00:05:54.000 going after big tech and this is kind of
00:05:56.240 the conclusion of those things. And I
00:05:58.560 was wondering whether, you know, is the
00:06:00.880 new administration going to try to stop
00:06:02.479 these things? Presumably it can't
00:06:04.080 because this is kind of the judicial
00:06:05.919 system. And in many ways, uh, you know,
00:06:08.240 Trump has also been kind of anti- big
00:06:10.000 tech at times as well. So, or the rep
00:06:12.880 Republicans have. So, uh, yeah, I wonder
00:06:15.520 what else is kind of in the pipeline
00:06:17.360 against kind of I think Trump can
00:06:19.440 absolutely stop these like um, you know,
00:06:22.160 uh, these prosecutions if he chose. He
00:06:23.919 just chose not to, right? like uh like
00:06:26.160 Zucker um Zuckerberg actually personally
00:06:28.319 pitched Trump this is you know to stop
00:06:30.639 his uh antitrust lawsuit against Meta um
00:06:34.400 and it's it's the government prosecutor
00:06:36.560 DOJ is prosecuting these cases um or or
00:06:40.160 it's uh the FTC actually right um and so
00:06:43.520 uh the they can stop anytime they want
00:06:45.600 they can just you know put pens down and
00:06:47.039 it's it's over uh they've decided to
00:06:49.120 keep going with it maybe maybe Trump
00:06:51.600 feels like if they if the ruling is
00:06:53.440 favorable to the
00:06:55.199 then they they can always settle later
00:06:57.280 on and there and there still could be a
00:06:58.639 settlement I think right at the end of
00:07:00.000 these things. Um but maybe he wanted to
00:07:02.560 just keep going see what the courts say
00:07:04.479 and then decide how much leverage he has
00:07:06.560 after that. Yeah. Well, he's also
00:07:09.280 presumably busy with a lot of things. So
00:07:11.199 maybe this isn't the top priority. U
00:07:13.440 actually notice Tik Tok is still on the
00:07:14.960 app store. When is when is the deadline
00:07:16.960 for that happening? No, he keeps
00:07:18.479 extending it. it it deadline was the
00:07:20.960 deadline was up sometime in March or
00:07:23.599 April and he extended another 90 days.
00:07:26.080 Um I I I I don't I mean he's he's going
00:07:28.240 to keep it. It's not Tik Tok is not
00:07:29.759 going anywhere. It's pretty clear
00:07:31.039 without divestment. I mean there's a uh
00:07:33.919 yeah there was a feeling that at least
00:07:36.000 someone was saying that Trump is in the
00:07:37.840 pocket of Chinese. But obviously with
00:07:39.680 these tariffs like it's pretty clear
00:07:41.759 he's still pretty anti-China. So, uh
00:07:44.960 maybe they want to keep Tik Tok for the
00:07:47.680 negotiations uh with China like as one
00:07:50.479 more one more pawn in the
00:07:53.160 negotiation. Yeah. Yeah. Yeah. I'd love
00:07:55.680 to believe there's a ground strategy
00:07:56.879 here versus you know like uh kind of
00:08:00.240 flying by your seat of the pants and
00:08:01.520 seeing what happens. Um but you know
00:08:04.639 we'll see. We'll see what uh what comes
00:08:06.400 out. But it is interesting that I mean
00:08:08.560 what do you think of all this antitrust
00:08:10.319 stuff? Um, you know, do you think these
00:08:11.759 companies should be broken up or do you
00:08:13.520 think they should be more surgical? I
00:08:15.840 think breaking up companies seems a
00:08:18.160 little silly. Like I don't, you know,
00:08:19.840 you take YouTube away from Google, like
00:08:21.599 what are we doing? What like how does
00:08:23.919 that make YouTube less competitive? I
00:08:25.919 mean, it's still basically a monopoly.
00:08:27.960 Um, and actually think mostly if you did
00:08:31.120 break these companies up, they would be
00:08:32.559 more valuable as a sum of the parts. Uh
00:08:34.958 I think it's hard to value Google
00:08:37.440 because you know you think oh wow Google
00:08:39.200 search is going to you know maybe be
00:08:40.880 disrupted but actually Google's like 10
00:08:42.559 different pretty big revenue streams. Uh
00:08:45.880 so but I don't really know what we're
00:08:48.160 achieving. I I feel like we should pick
00:08:50.000 the specific thing that is
00:08:51.279 anti-competitive and come up with a way
00:08:53.440 of making it comp. So if I was to go
00:08:56.000 after Apple I would say hey the thing
00:08:57.600 that Apple does that's anti-competitive
00:08:59.120 is force everything through the app
00:09:00.480 store uh and force everyone to give a
00:09:02.959 30% rake. Obviously, this new ruling
00:09:05.680 helps against the 30% rake. Uh but yeah,
00:09:09.120 why can't there be another Apple app
00:09:10.959 store on Apple iPhones and people can
00:09:13.120 opt out of it? Um I would do things like
00:09:16.080 that. I would try to come up with uh
00:09:18.320 points of or positions in the market
00:09:20.800 where it is uh anti-competitive and and
00:09:23.839 then come up with like answers to that
00:09:25.760 to that position. I mean it is
00:09:28.000 interesting. I mean the other one that
00:09:29.120 always bugs me is Amazon. like the fact
00:09:31.360 that they can like take something that's
00:09:33.200 doing really well on Amazon, make an
00:09:34.720 Amazon basics version of it and put it
00:09:36.480 above it or uh or their own home brand
00:09:39.920 version. I don't think it's always
00:09:41.040 called Amazon Basics, but like that
00:09:42.800 seems like very anti-competitive. And I
00:09:44.640 know grocery stores have done it
00:09:45.920 forever, but Amazon is like much more
00:09:48.399 often monopoly uh than like your local
00:09:50.800 grocery store, even uh Safeways or
00:09:53.920 whatever. Uh that's always bothered me
00:09:55.920 as like something that like it does just
00:09:57.519 doesn't seem fair. Yeah. Yeah. I mean,
00:10:00.160 Costco is famous for doing this pretty
00:10:02.000 well, you know, the Kirkland brand. Um,
00:10:04.959 and I think Kirkland brand is like a
00:10:06.399 huge percentage of the revenue now, you
00:10:07.839 know. Oh, really? Yeah. Yeah. I guess
00:10:10.560 it's hard to get mad at Amazon if
00:10:12.000 everyone else is also doing it. You'd
00:10:13.360 have to have a consistent policy. Yeah,
00:10:15.120 you need a consistent policy. It is um
00:10:18.640 Yeah, it's a tough one. It feels unfair,
00:10:21.120 but it's just everyone is doing it. It's
00:10:22.959 like, well, yeah. Yeah, one thing
00:10:24.959 interesting you were you were saying
00:10:26.240 earlier how you're using all the AI
00:10:29.120 APIs. Uh I remember when OpenAI first
00:10:33.120 came out and chat GPT was being big,
00:10:35.680 everyone kind of felt that they would be
00:10:38.079 the monopoly, right? There would be only
00:10:40.320 there would only be only one good LLM
00:10:42.640 and uh but now there's just so many. So
00:10:47.120 it's like it's hard to actually see
00:10:49.519 where the monopoly power is going to
00:10:50.959 come between you know anthropic open AAI
00:10:54.240 Google uh and then I guess Deep Seek and
00:10:57.600 all the Chinese versions of this uh like
00:10:59.760 do you think that there is kind of
00:11:00.959 monopoly power to be had in these kind
00:11:02.800 of in the LM API space? Not at all. No
00:11:05.279 no they're very much a commodity at this
00:11:06.959 point and and like all developers like
00:11:08.800 myself are just like switching between
00:11:10.240 them you know depending on which one is
00:11:11.920 better. It's quite easy to do that and
00:11:14.720 honestly like it's really exciting
00:11:16.160 because you know you can get a bunch of
00:11:17.760 free functionality that would otherwise
00:11:19.839 take you a long time to like build uh
00:11:22.240 because these guys are just building it
00:11:23.519 and putting it in their APIs you know
00:11:25.040 like image generation you know it's
00:11:27.440 already in their API you know it's
00:11:29.839 really it it went from like you know a
00:11:32.399 groundbreaking thing that OpenAI
00:11:34.560 developed like a month ago you know to
00:11:36.640 like now available to anyone you know to
00:11:38.880 like build on which is really powerful
00:11:40.560 like any app will can can add image
00:11:42.880 generation which is a really cool
00:11:44.399 feature right like you know the Gibbli
00:11:46.079 stuff and like you know I think there's
00:11:48.160 a bunch of action figure stuff that's
00:11:49.519 online right this functionality is now
00:11:52.320 really easily available and like there's
00:11:54.720 so much stuff coming it's like a bounty
00:11:56.399 for developers it's like it's like the
00:11:58.800 best time to be developing cool apps
00:12:01.279 because it you know all these AI guys
00:12:03.040 are coming up with so many cool things
00:12:04.480 and they're competing so heavily um you
00:12:06.959 know OpenAI is shipping at a ridiculous
00:12:08.880 rate right now like they they have new
00:12:11.040 features It's really impressive. Yeah,
00:12:13.600 you know, it's kind of inspiring because
00:12:15.040 they're a big company. We know it's hard
00:12:16.240 to like ship stuff as a big company. Um,
00:12:18.880 but it's all kind of integrated. So,
00:12:20.320 they announced this week a bunch of
00:12:22.079 improvements to their search
00:12:23.240 functionality and I believe they're also
00:12:25.120 going to be enabling shopping on the
00:12:26.880 open I never use OpenAI search. You use
00:12:28.639 OpenAI search. I haven't I've actually
00:12:31.040 used Perplexity more than OpenAI search.
00:12:33.360 You know, it's just like that the one
00:12:34.959 extra button to hit search. I don't
00:12:36.480 press it, you know, like I just never
00:12:38.079 think of it. I end up using deep
00:12:39.519 research quite often if like if I feel
00:12:42.160 like I'm asking a complicated enough
00:12:43.680 question uh or I wanted to think about
00:12:45.760 it longer. But yeah, for some reason it
00:12:47.760 never occurs to me to go to OpenAI for
00:12:50.560 search. Yeah, it doesn't occur to us. Um
00:12:53.120 apparently they get a billion search um
00:12:55.440 queries every week or something like
00:12:56.639 that. It's like really high. Yeah. How
00:12:59.519 does that compare to Google? Actually,
00:13:02.160 that would be a good question. We should
00:13:03.279 we should look that up. Yeah, you look
00:13:05.680 that up on IGBD.
00:13:08.639 I'm asking 20. Well, Google AI says 29.4
00:13:12.240 billion, but either way, that's a
00:13:13.680 billion is catching up. Yeah. Yeah.
00:13:15.519 Yeah. And I'm sure Perplexity has a big
00:13:17.600 number, too. So, um, but but OpenAI
00:13:20.639 probably has. So, I think OpenAI is
00:13:22.160 basically becoming this consumer company
00:13:23.680 that wants to like eat every other
00:13:25.200 consumer company. Apparently, they're
00:13:26.959 building a social network now as well. I
00:13:29.760 think they're serious about it as well.
00:13:31.680 I was trying to imagine what it looks
00:13:33.200 like if it's like a social network built
00:13:34.880 into GPD. Someone came up with like a
00:13:37.680 pretty reasonable
00:13:42.519 ide. It's like oh you did something on
00:13:44.720 on chat GPD and you want to share it. Uh
00:13:47.040 or sharing images uh if it's things like
00:13:49.279 that I think that makes sense. If it's
00:13:50.720 like literally like I add Raj as a
00:13:52.959 friend and I can like see his like
00:13:55.519 tweets or something or whatever the open
00:13:57.839 version of that would be. I don't think
00:13:59.680 that makes sense. Yeah, I'm not sure
00:14:01.839 exactly what it's going to be.
00:14:03.040 Apparently, it's going to be something
00:14:04.000 to compete with uh Twitter and uh and
00:14:07.040 threads. Um someone suggested they
00:14:08.880 should buy Snapchat. It's only worth
00:14:11.120 13.2 billion today. So Oh, really? Yeah.
00:14:14.079 But that doesn't feel like it fits very
00:14:16.000 well. No, no, but but the talent is
00:14:18.560 probably pretty good there.
00:14:20.040 Um you know, Snapchat's really
00:14:22.079 interesting story. I mean, I study all
00:14:23.199 these consumer apps carefully, right?
00:14:25.279 And like you know I mean they got an
00:14:27.760 offer from like I think Mark Zuckerberg
00:14:30.160 for six billion over 10 years ago right
00:14:32.880 um and uh maybe 12 years ago and and you
00:14:36.720 know they it's been really hard for them
00:14:38.240 to grow you know into substantial
00:14:39.839 standalone company
00:14:42.199 um it's been interesting I mean WhatsApp
00:14:44.480 itself was sold for like almost 20
00:14:46.320 billion um you know for some for some of
00:14:49.440 these consumer apps it makes sense to
00:14:50.800 sell you know I wonder if Evan regrets
00:14:52.959 it or maybe he's just had fun. I mean, I
00:14:55.440 guess he's like wealthy either way. So,
00:14:57.839 it's just like is it more fun to, you
00:15:00.959 know, even if your valuation flounders,
00:15:03.199 like is it more fun to just keep
00:15:04.480 building? Uh, or is it kind of, you
00:15:06.880 know, frustrating? I'm sure it's more
00:15:09.120 fun. Um, but, you know, you look at the
00:15:11.040 different paths that like, you know, the
00:15:12.399 Instagram guys took. I think every
00:15:14.639 founder like you know, comes out of Meta
00:15:16.480 like regrets selling their company to
00:15:17.839 Meta. You know, like
00:15:20.560 both Instagram and WhatsApp for sure.
00:15:22.480 Yeah. Palmer as well for for like
00:15:24.399 Oculus. Oh yeah, Palmer do. Yeah. Yeah.
00:15:26.399 Yeah. Yeah. Um but but at the same time
00:15:28.800 like you know Zach doesn't make it easy
00:15:30.320 to say no. I mean he he literally will
00:15:32.959 give you like a crazy good price or
00:15:34.880 he'll crush you, right? Like he'll like
00:15:36.639 uh you know he'll clone your exact app
00:15:39.360 which is what Instagram did right with
00:15:41.120 uh with Snapchat. I mean a lot of the
00:15:42.800 innovations we take for granted today
00:15:44.560 like stories and you know private
00:15:46.880 messages and stuff come from Snapchat.
00:15:48.720 Uh even the glasses came from Snapchat,
00:15:50.560 right? like the one that Meta AI is like
00:15:52.720 kind of perfecting. Yeah. Yeah. And he's
00:15:55.519 willing to spend like a billion dollars
00:15:57.600 a year to to to ruin you as well. So
00:16:01.360 yeah, it's hard to say no to him. I
00:16:02.959 mean, he is really following the Bill
00:16:04.320 Gates strategy, I think, at Microsoft,
00:16:06.000 right? Um it's kind of interesting to
00:16:08.560 see how like it's basically Meta has
00:16:10.079 become this new version of of Microsoft,
00:16:12.079 more consumerf facing, but you know,
00:16:14.079 it's like the same type of CEO. Yeah,
00:16:16.800 I'm surprised Bill Gates is not on
00:16:18.320 Meta's board because it does it does
00:16:20.399 seem like they're close. They're close.
00:16:22.160 They're both Yeah. Harvard dropouts. I
00:16:23.680 just saw an interview with Zuckerberg
00:16:25.199 interviewing Satya. You know, it's
00:16:27.279 interesting to see like the the ally the
00:16:28.959 alliances that some of these companies
00:16:30.160 have and like the beefs like Meta and
00:16:32.959 Apple are like, you know, huge enemies,
00:16:35.199 right? Um but Meta is very close to like
00:16:37.839 uh Microsoft probably because of the
00:16:39.519 Bill Gates connection. Um and it's
00:16:42.880 interest and like you know opening eye
00:16:44.240 is obviously close to Microsoft and is
00:16:47.600 close to Amazon. Yeah. Yeah. Um yeah I
00:16:51.480 mean these big foundation models they
00:16:54.160 all had to ally with someone with like
00:16:56.639 deep deep pockets as a cloud provider
00:16:59.839 with deep pockets was like kind of the
00:17:01.360 requirement. So Google obviously has its
00:17:03.920 own Amazon and Anthropic and then uh
00:17:07.439 Microsoft and OpenAI. Uh actually the
00:17:10.319 recent earnings report were like a big
00:17:12.720 uh big hit for Microsoft right and uh
00:17:15.359 all of these cloud revenues are still
00:17:17.199 growing like crazy because of AI. Yeah.
00:17:19.199 Yeah. Even Meta Meta killed their
00:17:20.720 earnings report as well. Um and like uh
00:17:24.240 you Google killed it last week. So like
00:17:26.319 all the the big tech are still doing
00:17:27.760 pretty well. Um you know they're all
00:17:30.559 beating earnings. But I still think it's
00:17:32.160 very early honestly. Like my prediction
00:17:34.400 is like you know these tariffs are going
00:17:35.840 to have um a major downstream effect on
00:17:39.280 investment and spending and I these tech
00:17:42.160 companies right or or you think they
00:17:43.679 just cause a recession. I think it'll
00:17:45.200 just cause a rec I think people will
00:17:46.400 just like hunker down. Um I mean at
00:17:48.400 least all the people I'm talking to are
00:17:49.679 hunkering down you know unless you're
00:17:52.240 actually working on AI. Yeah. Yeah. So
00:17:55.039 actually I had two ideas here. Uh number
00:17:57.679 one, we had one of our board members uh
00:18:01.120 say this and I kind of I was like,
00:18:02.720 "Okay, that's pretty interesting." Uh
00:18:04.480 yeah, we were talking about whether
00:18:06.799 tariffs, recession is going to slow down
00:18:08.559 VC funding. Uh and he said, "Yeah, AI is
00:18:12.480 such a big tailwind um that yeah,
00:18:17.679 whatever happens with the a recession
00:18:19.840 that that you know, that only hits for
00:18:22.000 like one year or two years. uh whereas
00:18:24.640 AI is like completely changing
00:18:26.080 everything. Uh so his perspective was
00:18:28.240 that even if there is a recession like
00:18:29.679 VC funding doesn't slow down. Um and
00:18:32.400 potentially this has you know that this
00:18:34.320 also means that uh Nvidia still does
00:18:37.520 well and all all of the other kind of AI
00:18:39.840 related uh stock. I mean I guess
00:18:42.400 eventually he could be wrong and VC
00:18:43.919 funding does eventually slow down if
00:18:45.440 there's a deep enough recession but at
00:18:46.960 least uh anything shallow uh the VCs
00:18:50.480 still seem optimistic. I and it sounds
00:18:53.919 like you as well are like mostly out of
00:18:55.919 the market right now. At least I'm
00:18:57.679 mostly out of the market. My view on it
00:18:59.600 is
00:19:00.919 that, you know, tariffs are going to be
00:19:04.799 bad for the market. And I think I I
00:19:07.840 think Trump is serious about it. I think
00:19:09.440 there isn't a world where we go back to,
00:19:11.440 you know, near 0% tariffs. I think the
00:19:13.280 best we'll get is like 10 to 15%. And I
00:19:17.280 think there's another worry that I have
00:19:20.000 around uh kind of flight away from US
00:19:23.039 dollars. Um and we've seen this a little
00:19:25.039 bit the you know do you really want to
00:19:27.360 be in uh the biggest actual driver to US
00:19:32.000 uh equities in the last few years has
00:19:34.720 been kind of more and more people
00:19:36.080 putting money in US dollars and then you
00:19:37.840 got to put it somewhere. Uh but I just
00:19:40.320 feel like uh there's this kind of
00:19:42.240 reverse trend here where you know
00:19:43.919 actually uh if you want to improve US
00:19:47.200 manufacturing you kind of want to weaken
00:19:48.720 the US dollar and if you want to weaken
00:19:50.240 the US dollars everyone else should get
00:19:51.679 out of US dollars and actually the only
00:19:53.280 way to weaken the US dollars is for
00:19:54.880 money to leave the US ecosystem if that
00:19:57.440 makes sense. So u so I think there's
00:19:59.440 plenty of trends that like lead towards
00:20:02.559 people kind of leave leaving US equities
00:20:05.039 if you are a non you if you're a
00:20:07.440 foreigner uh uh which isn't necessarily
00:20:10.720 bad for the US you know as as a market
00:20:14.799 as a whole uh but it's definitely bad
00:20:16.480 for us equities. Mhm. Yeah, I I I agree
00:20:19.440 with that and I think yeah, the
00:20:20.880 timelines are important here, right?
00:20:22.000 Like AI is going to transform the world
00:20:23.360 in 5 to 10 years. I don't know if it's
00:20:25.919 making enough impact right now to like
00:20:28.320 transform um industries in in like the
00:20:32.320 uh to counteract a short-term recession.
00:20:34.320 So, I think in the next, you know, 9
00:20:36.960 months to a year, I I would I would
00:20:39.039 expect we already had um you know, a
00:20:41.440 quarter of negative growth last quarter.
00:20:43.760 We're going to I think we're going to
00:20:44.640 see one or two more um you know, this
00:20:46.720 year.
00:20:47.840 And um I think earnings will also be
00:20:50.080 impacted like I think um I think all
00:20:51.840 earnings will be impacted. Um you know
00:20:54.000 right now it hasn't remember the we're
00:20:55.679 only one month into these like severe
00:20:57.120 tariffs. So you know April 2nd is it
00:21:00.720 takes a while for this stuff to work its
00:21:02.320 way through the system. Um and um so I I
00:21:06.400 would say like you know the worst impact
00:21:08.400 would probably be be towards the end of
00:21:10.240 this quarter and like next quarter. And
00:21:12.880 then my thesis is that like we're going
00:21:15.039 to see um significant layoffs uh across
00:21:18.400 the board. Um and unemployment rate is
00:21:21.280 going to rise at some point and the Fed
00:21:22.720 will cut rates at some point bas based
00:21:24.880 on like higher unemployment. Why would
00:21:26.640 there be layoffs? Uh you're saying in
00:21:28.960 these companies that are affected by
00:21:30.480 kind of imported goods and their demand
00:21:33.120 goes down or like where where's the
00:21:35.039 layoffs happening? Yeah, I think
00:21:36.640 everyone everyone obviously working on
00:21:38.640 trade uh is going to be impacted first.
00:21:40.480 I think everyone else though will also
00:21:42.000 be impacted because uh you know so I
00:21:44.640 mean once you have a slower economy in
00:21:46.400 general like it's going to affect every
00:21:47.840 part of the economy you're going to have
00:21:49.679 advertisers buying less stuff because
00:21:51.360 consumers aren't buying because they're
00:21:52.480 laid off from their job right like
00:21:54.720 there's like a number of downstream
00:21:56.320 effects um from that you know yes you're
00:21:59.760 right that AI companies are still going
00:22:01.360 to have funding and some of some of them
00:22:03.360 have raised several billion dollars
00:22:04.640 already so that there's a lot of funding
00:22:06.559 in that but that's a very small pocket
00:22:07.919 of the market of the economy yeah 100%
00:22:10.159 Um I mean a lot of the big tech
00:22:12.080 companies have had hiring freezes for
00:22:14.720 like even years now, right? Like they
00:22:16.559 hired too much in 2021 and now uh AI is
00:22:19.600 leading to efficiencies. And actually
00:22:22.000 the uh the recent Mark Zuckerberg
00:22:24.559 interview that sounds like neither of us
00:22:26.080 fully listen to had this thing where
00:22:28.960 like uh Zuckerberg was saying they've
00:22:31.280 developed an AI internally uh just to
00:22:34.320 help the their engineering team um you
00:22:37.039 know get more efficient like a kind of
00:22:39.360 internal cursor or windserve. Uh but
00:22:42.720 yeah, there's definitely like
00:22:44.000 efficiencies being had at levels that
00:22:47.280 also leading to layoffs, right? Um I was
00:22:50.320 talking to another VC and he said he
00:22:52.960 fired all of the lawyers they had in
00:22:55.120 house because AI is just good enough to
00:22:57.039 like review docs now. Uh he said 40% of
00:22:59.919 their staff was laid off. So I was like
00:23:02.000 wow. Uh and obviously like that's that's
00:23:04.159 not the whole economy but but yeah
00:23:06.240 there's lots of things that are
00:23:07.919 pressuring kind of I mean on the other
00:23:10.320 side we have a labor shortage still I
00:23:12.480 think um so there is like some some
00:23:15.039 relief valve to be had but yeah maybe
00:23:17.039 this all adds up to like significant
00:23:19.520 enough layoffs. Yeah. Yeah. I kind of
00:23:22.640 feel like that has to happen. I mean
00:23:24.320 look when Walmart starts laying off
00:23:26.000 people then we know like it's real you
00:23:28.000 know. I think um you know I don't think
00:23:29.840 open air is going to be laying off
00:23:31.360 people anytime soon but like um yeah I
00:23:34.080 think you know main street um companies
00:23:37.360 laying off people you know that that
00:23:39.360 will really tell us something um and I
00:23:41.200 you know I think Trump is doing some
00:23:42.559 good things on deregulation and stuff
00:23:44.080 like that but that's going to take a
00:23:45.840 while to to impact so you should see
00:23:49.280 growth later down the line with AI and
00:23:52.000 deregulation but that's going to happen
00:23:53.440 a lot later could even be after the
00:23:55.520 midterms I think also actually like
00:23:57.440 coming back to tech. It it almost makes
00:23:59.360 a you there's a set of companies that
00:24:01.520 are non AI and some of them are doing
00:24:03.919 well. I was talking to a founder that's
00:24:06.159 like you know built like a a serious
00:24:08.480 company like it's like you know four
00:24:10.480 plus million in annual revenue and he
00:24:13.039 just can't get a series A funding done
00:24:16.080 uh because it's not an AI company. Uh so
00:24:18.480 I think like if the market gets worse
00:24:21.200 potentially that story gets even worse
00:24:23.200 where uh you know the only thing that's
00:24:25.440 getting funded is AI. uh which yeah
00:24:28.720 actually is like probably a good
00:24:30.080 opportunity for founders like him
00:24:31.520 because if you can if you can kind of
00:24:33.760 tough it out and keep growing uh you're
00:24:35.840 not going to have much competition but
00:24:37.840 yeah obviously you got to do there is a
00:24:40.159 market for like alternative like
00:24:41.760 investment capital for these fund for
00:24:43.440 these companies like you don't have to
00:24:45.360 follow the herd on VC most VCs have to
00:24:47.679 invest in AI because that's their story
00:24:49.120 they're telling their LPs right but like
00:24:51.360 um you know if you're a smart investor
00:24:53.520 at this point you're probably going the
00:24:55.679 opposite direction and saying, "Well, I
00:24:57.039 I can help these companies." Maybe, you
00:24:59.200 know, maybe it's hard to even tell a
00:25:00.480 story where they're going to get to like
00:25:01.679 a massive valuation that quickly, but
00:25:03.360 there's good companies. It's worth
00:25:05.360 owning, you know, good operators, worth
00:25:07.760 owning a piece of it. And maybe there is
00:25:09.679 a structure that makes sense, you know,
00:25:11.520 for an investor come in. Um, and so I
00:25:13.919 think there's a good opportunity for
00:25:14.960 some like brave investors who don't want
00:25:16.960 to follow the herd and uh, you know, um,
00:25:20.000 back good founders, you know, like who
00:25:21.440 are not working on AI like are you
00:25:22.880 talking about family offices or you're
00:25:24.400 saying you're saying
00:25:26.480 I'm seeing you like sure but I can't you
00:25:30.640 know I I'm only investing like 150k like
00:25:33.360 I'm not leading series A's right like
00:25:35.200 there's uh there's probably a set of uh
00:25:38.720 people out there that do have money that
00:25:40.320 would be willing to do them but there's
00:25:41.840 kind of a matching problem right like
00:25:43.440 everyone everyone in Silicon Valley
00:25:45.440 thinks of like 20 VCs and maybe you know
00:25:47.840 maybe if you go down the list you've got
00:25:49.120 like 30 VCs but uh if you're like the
00:25:52.400 you know some family office that has a
00:25:54.480 billion dollars but doesn't do this that
00:25:56.080 much. Like it's hard to the matching
00:25:57.919 problem is like a big deal. It's going
00:25:59.600 to take a brave person to like put
00:26:01.200 together like a fund who who like
00:26:02.720 focuses on these opportunities. So I
00:26:04.640 just don't know if the existing VCs are
00:26:06.000 going to do that. I don't think they
00:26:07.200 are. I think like u they're going to be
00:26:09.600 like they're very much tied to the same
00:26:11.440 group of LPs. And by the way, those LPs
00:26:13.039 are very challenged because there's a
00:26:15.039 big issue with endowments right now. I'm
00:26:16.640 not sure if you know about that, but
00:26:17.679 like you know it's like um every VC I
00:26:20.080 talked to complains about you know um
00:26:22.720 what's the issue with endowments? Well,
00:26:24.880 Trump is going after a bunch of these,
00:26:26.720 uh, universities, right? Like, um, you
00:26:29.120 know, and, uh, they're all very under
00:26:31.200 stress financially because, you know,
00:26:32.960 like Harvard, for example, is, you know,
00:26:35.120 uh, being cut off from federal funding.
00:26:36.799 So, you know, they, you know, they might
00:26:39.200 need to use endowment dollars to fund
00:26:40.720 their operations. Um, and u, so, and
00:26:44.480 that's true for many, that's true for
00:26:45.760 MIT as well. Um, you know, that's true
00:26:48.080 for a lot of these organizations.
00:26:49.600 Everyone's hunkering down from the
00:26:50.720 university side and university
00:26:52.000 endowments are a big source of LP
00:26:54.000 capital I believe. Yeah. Yeah. I think
00:26:56.000 it's I mean maybe not the majority but
00:26:58.480 yeah if you maybe actually it is the
00:27:00.960 majority for those like billion dollar
00:27:02.400 funds. I mean who who has enough money
00:27:04.480 to fund billion dollar funds endowments
00:27:06.240 and like yeah funds I would say right um
00:27:08.400 endowments endowments pension funds and
00:27:10.159 so sovereign wealth funds. Yeah. Um it
00:27:13.600 is kind of funny to me and maybe this is
00:27:15.200 like me not understanding how the US
00:27:16.880 education system works, but it is funny
00:27:18.480 to me that like somewhere like Harvard
00:27:20.559 has like this huge endowment uh
00:27:22.799 presumably they charge people a lot of
00:27:24.240 money to attend as well. Uh but they're
00:27:27.200 still also accepting federal uh money
00:27:29.600 cuz I mean these are also private
00:27:30.960 institutions, right? Like they're not
00:27:32.559 they're not public. Uh so it is a bit
00:27:35.520 weird. uh a lot of it's for research
00:27:38.559 actually and like you know research in
00:27:40.640 the public interest like health research
00:27:42.159 Harvard operates um you know it's a very
00:27:44.400 big medical facility but that's
00:27:45.919 different right those are grants like
00:27:47.360 we're talking about we're not talking
00:27:49.039 about the grant funding uh which which
00:27:51.360 is also under stress yeah I I I mean I
00:27:53.840 think a good portion of it is I don't
00:27:55.440 know what the exact breakdown I think
00:27:56.480 the majority actually is like so there
00:27:58.240 used to be a thing where for every $100
00:28:00.559 of grants uh you could get uh I think
00:28:04.440 $66 of federal uh funding for the
00:28:07.600 administr for the academic institution
00:28:09.919 or the lab uh which is kind of crazy. So
00:28:12.799 it was it was about 40% would go to the
00:28:15.840 go to the university uh and the 60%
00:28:18.720 would go to the funding and I think they
00:28:21.039 did change the I believe they changed it
00:28:22.720 to 15% or something. I guess it all adds
00:28:25.120 up right money is green and like if
00:28:27.039 you're losing funding from the source
00:28:28.559 then you have to get it from your
00:28:29.760 endowment. One thing I've learned in the
00:28:31.840 last few years kind of working on
00:28:33.039 immigration stuff is that there's a
00:28:35.679 there's too much dependence in general
00:28:37.279 of handouts you know from a lot of
00:28:39.440 organizations uh including working on
00:28:41.120 immigration like like uh in immigration
00:28:43.600 it's like you see oh I want to solve a
00:28:45.279 problem around immigration let me go get
00:28:46.799 find donors or let me find like you know
00:28:49.120 get some money from the government and
00:28:50.960 very few people are like okay let's
00:28:52.320 figure out like a sustainable business
00:28:53.679 model you know to make this work and um
00:28:56.480 and there's a culture of that I I think
00:28:58.720 universities certainly have that culture
00:29:00.000 I It's a healthy thing to not depend on
00:29:01.679 the federal government, you know, for
00:29:03.279 funding. They shouldn't be. They should
00:29:05.200 figure out their own like a like a
00:29:07.279 business model that works. Um I I
00:29:10.000 learned uh this was last year. I was
00:29:12.279 talking anyway, it was someone really
00:29:15.120 high up in I won't say who because I
00:29:17.120 think this is supposed to be like
00:29:18.399 chatting rules, but someone high up in
00:29:20.399 like academic institutions and they said
00:29:22.559 for most of the top colleges, they make
00:29:25.600 a loss on every student that comes to
00:29:27.679 them. So even if the student is paying
00:29:29.440 like 200k for a bachelor's degree, it's
00:29:32.640 costing them like 300k to service the
00:29:34.960 student, which I thought was insane. I
00:29:36.480 was there's been such a uh you know what
00:29:40.480 what is the there's like a name for it.
00:29:43.360 Like there's been such a cost disease at
00:29:46.320 these institutions that they can't like
00:29:48.240 they somehow they can't take like 200k
00:29:50.399 from like one student and turn into a
00:29:52.399 profit. uh which I guess it goes back to
00:29:55.120 your thing like there's there's so much
00:29:56.720 money available that these these things
00:29:58.320 are not running at all like a business
00:30:00.000 they're running like as as like very
00:30:02.080 wasteful institutions. Totally. Yeah. Uh
00:30:04.640 I I don't think they're efficient at
00:30:06.159 all. And um you know but but places like
00:30:09.120 MIT like uh they uh one thing they are
00:30:11.840 doing is I think they're providing like
00:30:13.279 a real social service. I mean like u
00:30:15.919 anyone who's qualified can get into MIT
00:30:17.840 like you don't have to have money to get
00:30:19.039 into MIT. they basically fund every
00:30:21.679 every like 70% of people I think are
00:30:23.679 fully funded because they don't meet the
00:30:25.440 income threshold to have to pay. So like
00:30:28.080 it's it's a very um from my perspective
00:30:30.399 I I feel you know like they're doing a
00:30:32.720 real service to like people who are like
00:30:34.559 ambitious and smart and wanted to do
00:30:36.080 great things a little bit like YC you
00:30:37.919 know they're they're trying to help you
00:30:39.919 know young talent and uh um so I I would
00:30:43.120 definitely support that type of u you
00:30:45.520 know according to a quick search it's
00:30:48.080 39% that's tuition free. Okay. Okay good
00:30:51.679 thanks for factchecking. Yeah. No, it
00:30:53.919 seemed quite high, but 58% is needs
00:30:56.720 based financial aid. Uh, and that is a
00:30:59.039 that is a powerful service. I mean,
00:31:00.399 there's also there's also like a
00:31:02.559 positive externality where, you know, if
00:31:04.720 you train a student, they're going to
00:31:06.720 create tax revenue and like, you know,
00:31:09.520 there's a reason that a lot of places do
00:31:11.279 have this stuff uh completely for free.
00:31:13.720 Uh, but I guess like the counterargument
00:31:17.279 might be that a lot of this is going to
00:31:19.679 foreign students. Is that true for MIT?
00:31:21.679 I actually don't know. I don't think
00:31:22.799 foreign students get uh funding. Um not
00:31:25.840 really. Okay. No. Yeah, I don't think
00:31:27.559 so. Um I think it's only um domestic
00:31:31.360 students who who get the free ride. I
00:31:33.120 mean, at least for undergrad, I think
00:31:34.480 for grad foreign students can still get
00:31:36.880 it. But uh but um yeah, you might have
00:31:39.919 to fact check me on that too, but uh cuz
00:31:42.000 I I came in as a grad student and my
00:31:44.080 thing was fully funded um through like
00:31:46.640 fellowships and things like that. So um
00:31:49.200 definitely for grad students it it was
00:31:50.559 funded. I think the difficult thing with
00:31:53.039 a lot of the Trump stuff is like this
00:31:55.360 stuff is happening very suddenly. Uh
00:31:57.600 like same with tariffs. Uh it's like
00:31:59.679 yeah the to if you actually wanted to
00:32:01.840 say hey we need to fix academia and we
00:32:04.399 need to come up with like better funding
00:32:05.600 models and these things need to be more
00:32:06.880 efficient. Like ideally you'd do that
00:32:08.640 over a few years and come up with actual
00:32:10.399 plan rather than like okay let's let's
00:32:12.640 cut the spigot figure it out and like
00:32:14.559 cause like all of these like second
00:32:16.720 order effects like VC fund VC
00:32:18.960 investments not getting enough money
00:32:20.559 from endowments. Yeah. And look I think
00:32:22.960 I think tariffs are going to create a
00:32:25.039 major drag on growth. Um like you know
00:32:27.919 open economies grow the fastest closed
00:32:30.960 economies uh don't grow or you know
00:32:33.919 either like have negative growth or or
00:32:35.760 no growth. Um, I think we'll we'll we'll
00:32:38.080 learn that lesson again soon as we as
00:32:40.799 like at 10% it's not a closed economy.
00:32:43.600 Like, yeah, I guess it depends where we
00:32:45.679 end up. Yeah. Yeah. Yeah. Fair enough.
00:32:47.360 But, um, you know, at uh 145% it's
00:32:50.480 certainly closed or whatever. So, yeah.
00:32:52.159 I mean, that's just a there's basically
00:32:53.919 an embargo in China. I mean, it's a
00:32:56.000 two-way embargo. They also did 100% on
00:32:58.320 the US, right? you saw the news that
00:32:59.919 Amazon was like um Trump called Bezos
00:33:02.960 because there was a rumor that Amazon
00:33:04.799 was going to display the tariff cost on
00:33:07.120 all of their uh products. So basically
00:33:09.760 you would see how much more you're
00:33:10.880 paying in tariffs um on Amazon and they
00:33:14.559 call you know Trump called it a hostile
00:33:16.320 political act and just by displaying the
00:33:18.720 tax you're just displaying the tax that
00:33:20.799 are paying. I mean, Bezos is not even
00:33:22.720 there anymore, but it doesn't seem
00:33:24.559 unreasonable to display the cost of It
00:33:26.720 doesn't seem I mean, you get taxes on
00:33:28.240 your line items all the time, right?
00:33:29.679 Like you see it every time. So, uh, I
00:33:32.000 mean, I think in the US it's like a
00:33:33.760 legal requirement to show taxes as a
00:33:36.240 separate line item. So, it is funny. Uh,
00:33:39.840 but it's probably also just hard to
00:33:41.120 calculate, right? I guess sometimes
00:33:42.799 maybe it's simple. U,
00:33:45.519 but I assume it would be like self uh
00:33:47.600 defined. Apparently there's a bunch of
00:33:49.360 negotiations going on between like you
00:33:51.200 know suppliers and
00:33:53.080 um purchasers right now like Amazon's
00:33:55.919 having a bunch of like you know
00:33:57.440 apparently according to contracts that
00:33:59.120 like the vendors are supposed to take on
00:34:00.480 the burden of this right and if they
00:34:02.240 don't take on the burden they just
00:34:03.279 cancel the order so like they're not
00:34:05.360 going to buy it anymore but there's some
00:34:07.600 negotiation for like critical items
00:34:09.520 where like how do you how do you split
00:34:11.359 the cost of the additional tariff? I
00:34:14.320 mean what is the current China tariff? I
00:34:15.839 think it's more than uh more than even
00:34:19.040 145, isn't it? Isn't like 200 or
00:34:20.800 something? Uh but yeah, it seemed like
00:34:22.960 it would be too much to even split the
00:34:24.480 cost, but maybe it's doable for certain
00:34:26.639 goods. Thank you everyone for listening
00:34:28.879 uh to our open thoughts uh on various uh
00:34:32.480 current topics. Let us know what you
00:34:33.839 think in the comments and uh we'll see
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00:34:38.159 review uh subscribe and we appreciate
00:34:40.639 all you listening.
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