Brad Gerstner
Appearances
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
A riddle for you before we move on. Yes. What do Salesforce, Netflix, Square, Amazon, Palo Alto Networks, Facebook, Snap, Proofpoint, NetSuite, and CoreWeave have in common? No idea. They all broke issue. Oh, wow.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
What will you be looking for in the next 30 to 60 days as this plays out?
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Makes sense.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And by the way, I mean, all this culminated in the past week with OpenAI moving, you know, are talking again about open weighted models, which is a, I think, a really important data point. So how did how do we get from where we were to where we are? So. Yeah, I read that same tweet, and I think it was remarkably misplaced. China has been supportive of open source for well over a decade now.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
If you look on most of the major open source products and look at the management page and who the sponsors are for these, like Linux, you'll see many of the major Chinese companies have been there and been supporting it for a while. Why? They've been accused of stealing tech IP for years. And so when something like open source comes along, this looks like the best thing possible, right?
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
There's no one that can accuse us of IP theft because there is no IP ownership in an open source world. And so having dealt with those accusations for probably 40 or 50 years, I think everyone in China, the government and the entrepreneurs writ large, view open source as a very positive movement for their country relative to the West. And so they've been in on it for a long time.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
They're very adept at it. They're very... they're very big believers in it. You know, when we talked about the interview with the deep seek founder, I would say he had as much kind of, uh,
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
I guess as long as we're repping and rolling, I have two degrees, one from Florida and one from Texas. The Texas ladies are playing in the Final Four in Tampa, so a lot of good stuff happening.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
emotional like his his entire emotional mindset was tied to open source like he believes in it and wants to support it so that's i think that's an important backdrop so i don't think china got there um in some calculated way or do i think it was some recent move i think
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
they embraced open source over a decade ago because it made a ton of sense for them in a world that had pointed a finger at them from an IP standpoint.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Right, but I think that discussion happened a long time ago. Like, it wasn't recent.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Another thing that I think people have to remember is that also within the past decade— And maybe 15 years, many U.S. companies have learned to use open source as a defensive tool rather than just an offensive tool. And this is a more. Yeah. So this is the biggest companies out there.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
If they get in a position where they feel like they're behind the eight balls, so they're not in a leadership position, they will embrace open source as an attempt to level the playing field. And a great example is Kubernetes. So Amazon took this huge lead with AWS in the hosted server business. Everyone was afraid of that.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Google had a piece of technology called Kubernetes that was orchestration that would allow you to move a workload if that became a standard from one large server vendor to another, right? It basically created ease of distribution so you could run on multiple clouds.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
They went to the Linux Foundation, they recruited IBM, a whole bunch of other people, got everyone behind it, and it gained so much momentum that Amazon had to embrace Kubernetes. So it worked, and we don't have a monopolist in that cloud business right now. Perhaps because of that deft move made by Google. But they did it with Android against Apple, being notable.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And Meta did it with Llama here, right? They came to the table. They weren't first to the table in the iSpace, but they were disruptive with open source. One other thing I would point out about that type of move and attention, in addition to saying it's defensive, I think it's great for consumers. Like if you study economics and economics,
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
business school, you know, there's this notion of pure competition, like where, where do you have the most fluid competition, which leads to the lowest prices for a consumer. And certainly open source does that versus proprietary code. Like it's just hyper competitive and that's why it's disruptive. And that's why people use it in this way. So that's a huge backdrop to where we are today.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
I believe DeepSeek has been remarkably successful in the enterprise. And it's hosted by AWS. It's hosted by Google. It's being used around the world. I've heard from Hugging Face that it's been forked over 1,500 times on their site. And so it's prolific. I'm beginning to hear concerns that DC may take action to limit the use of deep seek.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
I think it's safe to say both of those things are happening. There's people that are Really concerned about China technology getting underneath our products. Whether or not this particular code could be bad or not, they just might have that default. And then I think there are people that are lobbying because it would benefit their company.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Yeah, so we're recording this right after Trump's presentation. I think you and I both watched it and then we jumped on the pod. You've been talking about this. It's obviously been choreographed that this was coming. And you've been saying for a very long time,
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Either way, if that gets traction, you have a window in the U.S. right now where someone might move to go left of deep seek in terms of openness on one of their models, either an offensive or defensive move. And I think it's a short window. And so it'll be very interesting from my point of view to see whether Google does that or Meta.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
I think they have an announcement coming up in a few weeks of their next model. I don't think Anthropica would do it. They've been so anti-open source, it would be very out of character for them. But it will be interesting to see what happens on this front. And that leads us up to OpenAI making an announcement, which I'll let you describe.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
He says no.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And by the way, just hold your thought. So in case people don't know, openness is a continuum. It's not black or white. And that's true of all the open source technologies. In the open source model world, some of the players, most notably Meta with Lama, have a usage restriction issue. against the free use of the model at $700 million. And that's what you were referring to.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And so at least in a tweet, Sam suggested they won't have that in theirs. So back to you.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
that Trump and his team are very serious about this rather than the argument that, oh, it's just a means to an end and a way to get a negotiation started. You have made the point that you believe that they believe this is actually where we need to take the economy. And as such, you've been conservative and worried about where this would go.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And you bring up an important point, which is, you know, you don't... You don't have to be... Let's say something does happen to limit deep seek usage. Whoever's going to jump in to try and lead the open source movement in the West, if they want to be a global player, they don't just have to get left of everyone else in the West. They still have to compete with deep seek on a global basis.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And I don't think... You know, it'll be interesting to watch. I'm very, very curious how this plays out. I've already asked Clement, hugging face, if maybe he will create a continuum so we can rank all these different models from an openness perspective, because there's so many different facets by which you could be open or not. Actually, I had one more thing.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Since you're involved at OpenAI, you can correct me if I'm wrong, but you have been saying for, I would say, a couple quarters now that the real opportunity for OpenAI is on the product side versus the model side, which hints at being more of a consumer product than, say, the enterprise APIs business that they've also been in.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
If they think that also, and I'm not involved, so this is a conjecture on my part, being more open with your model is a really deft move because it will put more pressure on other players to try and keep up. It will allow your model to have more pervasive usage globally. And you talked about running out of compute.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
The minute you put that model out where other people can download it, they're doing that on their servers, not on yours. And so I just think it's a very clever move for the same reason Google would have supported Kubernetes. You're kind of... wiping out the business opportunity for other models to play on the API side if you make yours open, which helps protect the competitive flank.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And once again, great for consumers.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
You gave a presentation last week on how to think about this. What did you talk about there? I think it was at the J.P. Morgan Tech Conference.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
There's probably two different types of enterprise. There's probably a product that people buy user licenses for for doing business. you know, white collar research type work where they may, where I think what you said will be very relevant, like having the UI they're used to. And then there's the separate side, which is models that underlie the types of business processes that you're building.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
What was announced?
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Yeah, and I also read that there are still contingencies on whether the full conversion from a nonprofit to a for-profit happens. So I think there's some stuff. If that's true, there's still some stuff to play out. But one thing I would say when I witnessed this from afar, and once again, you're involved, I'm not. So correct me if I'm wrong.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
But having lived through the Uber Lyft situation, which oddly had Masa coming to the table also, You know, our world has just evolved into one where so many people believe in power loss. So many people believe in network effects and that these markets are winner take all that you end up with these massive capital raising rounds.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And, you know, it's not lost on me that both with Stargate and with this one, the headline number is bigger now. Then, you know, the piecemeal when you start to unpack it, which, you know, for better or for worse, from my position, smells of being promotional. And, you know, and so why would you do that? Why are you trying to have a bigger headline number? And that number does get repeated.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
in the press so it does work in that way and and i come back to you know i suspect the company's sending a message to anthropic and anyone else in the game that that we're here for the long haul and you know they probably didn't anticipate all the moves that elon's made with x and twitter and and obviously that is is a another deep pocketed player but but boy you know if you're
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
if you're on the anthropic, you know, investment, you know, side, I, you know, I'd be scared, like, like, you know, and I've lived through this before. It is a, it is a sport of kings, if you will. And then lastly, one thing that naturally falls out of that is unit economics get postponed. You have to believe in the power law and the network effect. They've,
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
In addition to that headline number, I think they've said publicly they expect to lose $5 billion to $7 billion this year. And with an employee count of, I think, $6,000 to $7,000, that's not going to run you more than a billion or two.
BG2Pod with Brad Gerstner and Bill Gurley
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So there's some number between the revenue number you talked about and subtracting $2 billion for expenses and the rest is your operating cost of keeping this AI machine going. And I ran some loose numbers and I come up around $15 or $20 a year for a non-paid user just to run the servers on their behalf. Eventually, you might get to advertising. Eventually, you may convert more of them to paid.
BG2Pod with Brad Gerstner and Bill Gurley
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These are things we've seen play out over time. They played out with ad models. But once again, if you're going to try and lay chase to them, you got to be prepared to underwrite that cost yourself.
BG2Pod with Brad Gerstner and Bill Gurley
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He's not doing that to me. It could be both.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Let me, let me ask you a question. Um, since, since we, you, you went down that Avenue, um, I think they've announced, um, Is it 20 million paid users and 500 million total users? So you have a 4% conversion rate. How do you think about paid versus advertising that conversion rate? How do you think about the business model with those facts on the table?
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And so I think there are a lot of ways... By the way, we've talked about this in the past, but I've often felt that one of the reasons that Google is so susceptible to disruption is how they've maximized the revenue per visitor. And I personally don't think there's any way...
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
when that world you're talking about, that agent world evolves, that that partner in a hotel is going to pay a fee anywhere close to the fee that's paid to Google by someone that's marketing a service. I always say using LTV math versus transactional math. I just don't think there's any way you can get there.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And so that's a huge disruptive advantage for – I think it's a huge disruptive advantage for open AI.
BG2Pod with Brad Gerstner and Bill Gurley
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Well, actually, to be fair, in many circumstances... they'll be using what I call LTV math and they'll pay- They'll pay more than 100%. Oh, they'll pay 50 bucks instead of 20 because, and then they'll say, well, if the customer comes back twice in a year, we get to break even in the first year and we're going to hold them forever.
BG2Pod with Brad Gerstner and Bill Gurley
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And this is why that won't work in the agent world, which is no one's going to think that way because if you're a white label service that's underneath the agent model, the most you can share is 10 of the 20.
BG2Pod with Brad Gerstner and Bill Gurley
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Good to be seen.
BG2Pod with Brad Gerstner and Bill Gurley
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Right, but it's replacing $50 for Google. That's my only point. By the way, another thing played out in this space, a little out of order of our competition, but there's this acronym people are starting to use, MCP, that is a way for you to represent...
BG2Pod with Brad Gerstner and Bill Gurley
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your service, like if you were booking.com to a model so that it's not simply scraping your website, which is certainly not the ideal way to do this thing. That standard, I believe, got started in Anthropic, but OpenAI has agreed to support it.
BG2Pod with Brad Gerstner and Bill Gurley
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And so another factor that plays out with whoever's most aggressive with the open standards is they might be able to take a lead in defining these things, which could be advantageous to them. And I got to tell you, you know, I meant to say this earlier when we were talking about the open source stuff, but I got to believe the anxiety is high at Google. I got to believe the anxiety is high at Meta.
BG2Pod with Brad Gerstner and Bill Gurley
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We've seen some high executive shifts and departures also at Apple in terms of who's in charge of these things. And so I see those moves and I think that must represent anxiety. You know, these are, there's a lot at stake. And so it's, it'll be really interesting to see how open people are, how willing they are to be open with their models, how aggressive they are.
BG2Pod with Brad Gerstner and Bill Gurley
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Because I think it's a really critical window. I'm talking about like next three to six months could dictate who's standing on top of the hill five, 10 years from now.
BG2Pod with Brad Gerstner and Bill Gurley
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Before we run out of time, we had an IPO, which we haven't had very many of. Let's talk IPOs, both CoreWeave, but after that, let's just talk about IPOs in general.
BG2Pod with Brad Gerstner and Bill Gurley
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Yeah, and look, you're absolutely right. It's so funny. We sit around and complain about the IPO market not being open. And for the entirety of 2024, the markets were up 30%. The sunshine was out and no one was going. So here, someone finally gets the guts to go. And the markets, of course, have turned the other way. And that's why, man, I...
BG2Pod with Brad Gerstner and Bill Gurley
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anyone that tells you when you're ready to go public that you have to wait on the markets to be in a particular place, I would tell them to shut the fuck up and take your company out. You can't control that thing. That's an external factor. And And I also believe a lot of people, because of my stance on direct listing, said, was this a good IPO, a bad IPO?
BG2Pod with Brad Gerstner and Bill Gurley
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I mean, as you said, there's stuff moving all over the place. Like you have a leader in their field, unquestionably, huge revenue growth. Their business model isn't fully unpacked because the CapEx is invested so far ahead of the product. So you can't look at the income statement and say, oh, the unit economics are perfect.
BG2Pod with Brad Gerstner and Bill Gurley
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And there's questions about what is the appropriate depreciation schedule and all these things. But I am glad that they got out and I'm glad that it's done fine. They've had basically two customer announcements since they went out, which shows how fast this AI world moves. And I think that's why the stock went from 40 to 36 and way back up above that now.
BG2Pod with Brad Gerstner and Bill Gurley
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Let's hope that it brings more IPOs to the table. This company needed capital because it's a capital intensive business. And those are the ones that tend to come to the markets eventually no matter what. We have this offsetting reality The stripes of the world and Databricks and others are choosing to delay being public and have massive access to private capital.
BG2Pod with Brad Gerstner and Bill Gurley
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And maybe that's a discussion for another day. But there are a few others, Klarna's in the pipeline. We've talked about Cerebrus being in the pipeline. And so I'm always hopeful. I'm always kind of... Just wanting for there to be more companies that are willing to move into the public markets. But the offset of what we talked about at the beginning is going to be there.
BG2Pod with Brad Gerstner and Bill Gurley
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And so we'll see how those things interact with a choppy market.
BG2Pod with Brad Gerstner and Bill Gurley
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He was a little more aggressive than that. Okay, so say it. He called himself the chief revenue destroyer and basically made statements that I think if you interpreted accurately would imply that maybe you should have a two-year depreciation, not a six. He made it sound that way. It's very abrupt. And he took a lot of heat and he probably wishes he hadn't said it, but he said it.
BG2Pod with Brad Gerstner and Bill Gurley
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But look, the pushback on that is obviously that it's not a zero or one. Like you make it sound like it's binary, you either throw it away or it's super valuable. And what inevitably happens is the earning power of that product drops over time. And so there is, I think, a reasonable question, you know, should it be more of like an accelerated depreciation schedule?
BG2Pod with Brad Gerstner and Bill Gurley
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The idea with depreciation is to kind of um you know they say the useful life so you'd kind of want it to mirror the earnability of the asset over time and so six years straight probably isn't the best fit for that but we'll see we'll see what happens over time you you know their peers the the incumbents in this world were at four years ago and pushed it to six which yeah wasn't uh
BG2Pod with Brad Gerstner and Bill Gurley
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A riddle for you before we move. Yes. What do Salesforce, Netflix, Square, Amazon, Palo Alto Networks, Facebook, Snap, Proofpoint, NetSuite, and CoreWeave have in common? No idea. They all broke issue. Oh, wow. And so when the talking heads on CNBC and others are critical of a company because they trade below their IPO price, it's just such a wrong way to look at things. And, you know...
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Right. And one of the pieces that I... witnessed, and I think everybody else did as well, maybe you have more data on it, is when they said reciprocal tariff, they kind of redefined what a tariff is for the reciprocal calculation. And they are including other, whatever, I don't know what else goes in there. Maybe you know exactly what fills this in.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
I think one of the reasons those high-quality companies get priced to perfection is the founders are stronger-minded and have more leverage and negotiate more on this agreed-upon price, which would also go away with a direct listing. But boy, what a silly way to think about quality, whether or not you give away more and pop. That's what a lot of people think. You know, I don't like that.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Yeah, I'm repping the Gator hat still. I'd say we kind of eked by, for those that did watch.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Which was probably engineered. Let's be realistic. There's some peculiar terms in this company that you may have played a part in. The Series C has a put right at like $38.75. No doubt in my mind, people wanted to make sure it priced above that, which may have played a factor here. Who knows? Yeah. But let's move on. Let's talk about one more thing before we go. So much news in one week.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
The TikTok thing, there's new information as we speak. Tell me what you know.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
But basically, the Trump administration is calculating an effective tariff, if you will, for each and every other country, which may not be the explicit tariff.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
So it'd be new fresh capital for new co. It wouldn't go to ByteDance.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
You didn't mention what percentage was for that. But is that part of the cap table too?
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Yeah, one particular question. If you go back six months, maybe three or six months, there was a lot of discussion that would suggest that the parent company, ByteDance, had no interest in this deal. They'd rather shut it down than do this. Have they changed their mind for some reason? Is there a new perspective from their side?
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
This company being TikTok or ByteDance?
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And the Chinese government could probably block the deal.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Important to watch. All right, man. Take care. Great seeing you. Have fun at the games.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Well, I mean, to be honest, like I was afraid. Like I didn't think there was a chance at this point because they were behind by so much as you were heading into the end of the game. And they basically, you know, scored four three-pointers, you know, against zero from the other side. They intentionally fouled and had missed free throws. So I think someone said the Yahoo –
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
Well, yeah. I mean, at a high level, I'm a believer in open markets, free trade, and comparative advantage. Yeah. That's been studied for a very long time. There are very solid mathematical arguments why if you pull up the trade walls between multiple countries that you're going to hurt the efficiency of both of them.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
In the long run, and I, you know, at least from a theoretical perspective, I'm a believer in that. I think there's another issue for the markets and for the CEOs, which has to do with both the slow pace at which they could realistically respond to this, and then the amount of ambiguity that's been out there.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And so let's say what the administration wants to encourage is for you to relocate a factory that you have or let's call it production that you have in Thailand and put it on the American shores. That's not a quick process. And if you start that process today, it might take three years before you'd have the type of volume to be capable of bringing that back and probably at a higher cost.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
I mean, one of the things that I've said over and over again, I don't think our labor is globally competitive, nor do I think it wants to be. And so even bringing it back, you're going to have a higher cost of production because we're going to have a higher cost of labor.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
That being said, you know, this ambiguity, you know, there's a lot of people even going right into this announcement that didn't know what percentage of it was real versus bluster. And there's, I think at this point, just reading the papers, not making my own assessment, the administration has a reputation of Maybe some of this is for negotiation. Maybe some of it's not real.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
game predictor had it at like 98% Texas tech with like very little time left on the clock. And they somehow eked it out. Now the, the bullish people will say, Oh, you lived through something like that. Now you have confidence to deal with anything, but you know, the odds makers have put Duke in front of Florida at this point. And that started, uh,
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
And so you're left not knowing what's going to be the policy three months from now, six months from now, 12 months from now, which makes it very hard to allocate CapEx in any meaningful way whatsoever.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
If you're unsure about things like this, you're not going to hire a bunch of people, for example. You're probably going to pause hiring because you don't know how much earnings you're going to have. So those kind of things can proliferate downward and affect unemployment and eventually affect consumer spending just by freezing nearly everything in the economy.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
I think you said the meeting was in Vietnam. And obviously I got that from the president of the economists who had predicted that that would happen. But yes, you know, there's no reason that that wouldn't happen. And there's a lot of ramifications of this. I don't think... that anything came out of it that's going to be good for the markets and good for stocks.
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
in the opposite place so anyway one game at a time super exciting i was out in san francisco at the chase center got to hang out with the coach a bit and some of the players parents and and it was a good good trip and now since i'm in austin it's right down the street here to san antonio so a lot of friends coming in and we'll we'll see what happens
BG2Pod with Brad Gerstner and Bill Gurley
Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner
But that's more your world than mine. I've always shunned macro analysis.