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20VC: Reid Hoffman on The Trump Administration | Elon Musk and DOGE | The US Defence Budget, NATO and The War in Ukraine | China, Tariffs and TikTok | The Future of Chips, Nuclear Energy, Quantum Computing and Climate
Mon, 16 Dec 2024
Reid Hoffman is one of the most impactful people in technology and startups. As a Founder he founded Paypal and Linkedin before moving to the investing side where he has led deals in Facebook, Airbnb and more. In Today’s Episode with Reid Hoffman We Discuss: 1. China and Tariffs: Should the US ban Tiktok and other Chinese companies, given China banning US companies presence in their country? How does Reid evaluate the rise of the Chinese car industry? What are his concerns? How does Reid hope Trump uses tariffs to advantage the US position? What is Reid concerned about what Trump could do with tariffs? What would be bad? 2. Elon Musk and DOGE: What impact will Elon Musk have on the future of AI in America? Why does Reid believe that it is impossible for DOGE to achieve it’s targets? What should Elon must be given credit for? What does he not deserve credit for? What are Elon’s greatest strengths? What are his greatest weaknesses? 3. The US Defence Budget and Ukraine: Why does Reid believe that the US should reduce their defence budget? Does Reid believe the US should continue to finance the war in Ukraine? Should the US continue to subsidise NATO’s lack of defence spending? 4. NVIDIA and The Future of Chips: Will NVIDIA be able to sustain their monopoly? What is the biggest threat to their position? Should both the US and Europe have their own chip sovereignty? How does Reid evaluate potential conflict between China and Taiwan impacting chip supply? 5. Nuclear, Quantum and Climate: Why does Reid believe nuclear fusion can solve climate change? Does Reid believe that with the rise of global conflict and AI, the importance of climate change is reduced in the attention of the world? Why does Reid believe that AI does more to help than harm climate change? Why is Reid so excited for a future with quantum computing? What are the biggest dangers of quantum that we need to be mindful of?
The trade wars will create a massive drop in prosperity in the US. There is next to zero chance that the missions that they have declared will be successful because the only way to get $2 trillion out of the budget would be to massively reduce the deficit and reduce defense spending. We're not reaching the upper end of LLM.
The next large LLM that's trained with a larger computer will still have new magic in it. The scale game is still playing.
This is 20VC with me, Harry Stebbings, and today Reid Hoffman joins me in the studio for what is the most wide-ranging discussion I think we've ever done on 20VC. We discussed the future of tariffs, cryptocurrency, Elon Musk, the war in Ukraine, defense spending, quantum computing, TikTok, nuclear energy, Chinese cars, climate change.
I don't think there's ever been such a broad discussion with so much value in one show. That I can promise you. Huge thanks to Reid for being such an amazing guest today. But before we dive in today,
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The company is among Forbes' list of top 100 startup employers for 2023 and Business Insider's list of the 34 most promising AI startups for 2023. Learn more today at secureframe.com. It is a must. You have now arrived at your destination. Reid, I am so excited for this. It's so special to have you in person again. Thank you for being here. Always a pleasure. I look forward to this.
Now, listen, I know you have some news, so I'd love to just start with some of the news and let you start with that.
Okay. So, look, obviously there's been a meme because as I was talking about with my friends, I am still extremely hopeful for American prosperity. I will remain living in Seattle, Washington as my residence. But when I was talking to friends, I said, look, I'd love to spend more time in the UK. That became a whole meme with the New York Times saying, he's moving.
And it's like, no, no, no, no, no. I'm still based in Seattle, Washington. But of course, I come to the UK twice a year already anyway.
And here I am. And you thought, you know what? I'd love to see Harry two more times a year. Yes, exactly. I totally get it. My mother thinks the same.
By the way, I will commit here to being on air with you twice a year. Yeah.
This is worth it already. How do you think about your future involvement in US politics? Like just diving right in. You were very active last election cycle.
So look, I think one of the things that it's a responsibility of Americans to do, including myself, of course, is you try to make whatever administration as successful as possible for the people of America, for the country, for the industry. I will be doing that. I will be investing in businesses. I will be getting new American businesses generated. I will be doing those things.
Obviously, in the next administration, they don't want to have me helping them. I won't be involved in any of the activity that the administration is doing. And actually, you know, obviously I anticipate, unfortunately, I'll probably be critical of some of the things the administration's doing.
I hope to help do as many of the things that are like reduce regulation, increase energy for AI, have AI companies be prosperous for America and around the world. I will be doing all that kind of stuff. But on the other hand, I suspect that I will have some things that I'm still an opponent of.
You said that you might be critical of some things. I'm critical of some things of this wonderful Labour government. Well, everything that they do, bluntly. And someone said to me that you should be a bit more careful. Some of your tweets might piss them off. Do you feel like you have the freedom and flexibility to be critical?
I do because of the principles of America, which is we should aspire to continue to be a place where we can speak truth to power, that we can criticize when things are wrong. And I will continue to do that.
Now, that being said, one of the things that I think is part of the reason why I have been critical of some of Trump's supporters and some of what Trump has done is because there is, even in the first administration, there was some abuses of instruments of state for personal gain, for personal power.
That is, I think, anti the spirit of anything in democracy, anti the spirit of anything in American. Those are the things that I would still continue to be opposed to in as much as they play out. Now, my friends argue, no, no, that's just the electoral path that when he talks about the fact that he is going to attack enemies within, or threaten to execute generals, or other kinds of things.
That's just politicking. That's not something that we will actually see. I am hopeful that they are right, and I am hopeful that we'll get back to the business of America, which is business.
You said you were hopeful there. There's multiple different outcomes that can come. If you think what could go very wrong with this administration, and then what could actually go right, if we look on it, what could go wrong first?
If the administration were to engage in a lot of idiosyncratic political persecution, whether it's individuals, politicians, military figures, businesses that were attacked entirely for political reasons and the balance of politics versus legitimate reasons. Because sometimes people do bad things, whoever they are, and that's fine. But that that was the cause of what's happening.
That's, for example, I think one of the reasons why this whole tariffs thing, which could be enormously destructive, is I think, is like, well, how do I apply tariffs idiosyncratically, like against my political opponents, but not for my political allies? Economic corruption. What if foreign actors are
Russia, others were transferring economics to people with political power in order to influence the U.S. and what they're doing. Easy ways to do that are like buy true social stock. Easy ways to do that are buy freedom coin or currency. Invest in businesses that, you know, people who are, you know, have a lot of political power are then essentially payoffs.
All of those things would be in the category of disastrous things.
On the tariff side, what would you do with tariffs? What is the right way to leverage, use them to benefit America?
Look, America benefits enormously from a global trade regime. The whole country gets a lot of economic prosperity. including things that support areas of the country that have more economic challenge. So you don't want to create trade wars. The trade wars will create a massive drop in prosperity in the US and in other places. Now, that being said, there are places that either have
Like, for example, take Iran, who are bad actors within the international context, or Russia, and that actually, in fact, are creating violence and war and chaos in various countries around the world. And you use tariffs and other kinds of sanctions as a way to rein in that behavior. That's one zone.
Another one is if you have countries that are behaving irresponsibly within the global economic system, And so, for example, with China, there's ways in which they slant the field so that they say, well, we can do economics in your country, but we can do business in your country, but you can't do business in our country. I think responding- Social media. Yes.
So it's like, okay, if you're going to disallow our businesses to operate in your country, we can disallow your businesses in parallel to operate in our country. Just as an economic thing, as kind of nothing else for how to operate. And those kinds of things I think are useful.
If, for example, people are using labor camps to produce products, adding tariffs as a way of saying, we're not going to allow that to happen, that's another good use. But those are like specific things, not general mercantile warfare.
I love sitting down with you because I just learned a huge amount. But how do you think about the Chinese car industry? You mentioned that kind of global tariffs. They subsidize the Chinese car industry phenomenally so they can do incredibly cheap production. How do you think about that and the destruction that that brings to European cars?
You're actually, in fact, trying to destroy our industry in the short term so that you can then raise prices later and capture it. That is mercantile warfare. Responding to mercantile warfare is completely fine.
And so we should raise tariffs on it. Totally get that. If that's like concerns and what could go wrong, if we were to put on the optimistic hat, what could go right?
So I think a lot more of things as I actually think the US will be benefited by a substantial reduction in regulation. Okay. For every new regulation you want to add, remove two as a way of kind of modernizing and refactoring versus just accreting. Some of that will be AI, for example, an area that I'm committed to, passionate about, believe will be great for the world over time. We'll need power.
How do you get that power? What do you do with regulatory? A return to nuclear power fission and fusion I think will be really amazing. The question around being deeply committed to growing business across the entire country I think will be really good. One of the things that I actually think is not only a competence but a moral requirement for American presidents is to say business is good.
Now, you should invest in business across the entire industry, not just your own. So, it's not just improve real estate, right, or improve freedom coin, it's do the entire thing. And I think that's really important. So, I think all of those things are things that we could see as very good outcomes.
So many things I want to unpack there. We mentioned kind of AI. What does Elon's political ascendancy mean for the future of AI?
Well, it's a little unclear. It kind of depends on how he chooses to use his time and focus. So if his time and focus was, let's make sure that all of the kind of players in US industry are greatly amplified, like availability of power and the creation of new data centers and power for do that, and that's across the entire industry, that would be an enormous boon.
If the question around, okay, let's make sure that we are being rational about how we are willing to import talent, as we have done in the history of the US, to bring in talent that can work on this across the entire industry, that could be really good. If it was the, I want to make sure that we are inventing the future at the speed we need to be doing it, that's really good.
Now, the challenges would be is what if he goes, no, no, the most important issue facing AI is woke AI. Because we have this calling card, which means a whole bunch of different kind of, you know, these people are evil and terrible.
That's silly and not good, but easy to fix and not the most important issue when you consider what like AI means for American prosperity, well-being, a bunch of other things like that's an easy fix. Do you think Doge will be successful?
Well, in a sense, I would want it to be because I think the refactoring of bureaucracy, the refactoring of efficiency, those are things that I think accurately have gone wrong. There is next to zero chance that the missions that they have declared will be successful because the only way to get $2 trillion out of the budget... would be to massively reduce the deficit and reduce defense spending.
Those are the two areas, or for example, Medicare, Social Security. Those are the areas where the real money is. We want to posture that we just have too many federal employees. And by the way, maybe we do have too many federal employees, but it's not where the trillions of dollars in terms of what you can cut out of the budget, that's not actually where you can get it.
Did you see the news though of like, we don't actually know where your taxes go?
Well, that's generally true for very large financial institutions. And by the way, I think it's an important thing. That's the reason why, like you say, bull bear case on Doge as well. Look, I actually think kind of going through, balancing the books, figuring out the economics, applying kind of fiscal discipline in the way that we do in companies is a very good thing.
What I think is a false promise is to say, well, the really important thing is if we lay off
x percentage of the federal workforce and all of a sudden our federal budget will be so much more trim it's like well no no actually that's not you just have to do the math and that's actually not where the numbers that you're claiming you'll get to is what do you think should happen to defense spending in europe we spend woeful amounts on defense and you know i've got torsten from helsing coming out tomorrow's show he wants bluntly it to be five six percent and it's two percent what should happen to u.s defense spending
So I think US defense spending should reduce, right? I think that would actually be a good thing. It's one of the problems that we have in American politics and that we have neither the political will to do that on either the left or the right side. Like, if I anticipate anything going to be happening in the next administration, it will be increase in defense spending versus decrease.
Despite all that, we're going to have fiscal discipline and we're going to reduce costs and we're going to bring this. A massive amount of that comes from the Department of Defense. And the way that I would do it is I would try to, because basically the business America's business, it's you want to be investing in things that create the future businesses.
The military industrial complex is not the business that you most want to be investing in. And so how do you essentially do that?
Do you think you can reduce defense budgets so when you have the global conflicts that we have today?
Yes. If you said, where should Doge focus? The answer is, there's a lot of massive misspending within the Department of Defense. Now, part of that is not just the Department of Defense's fault. Let's take a specific. We should not be building aircraft carriers. Aircraft carriers themselves cost billions. The planes on them are more billions. They put thousands of American lives on them.
And in the modern world, you have to Sure, an aircraft carrier is great for bullying sedan, which is not a particularly good use of billions of dollars military. In a real conflict, one or two hypersonic missiles, which are like $2 million each, can take out an aircraft carrier. So if you said, what should I be doing to save money in American events?
It's like, let's stop building aircraft carriers. But of course, part of the political reason that doesn't happen is because the states and Congress people, like one of the things that happens frequently is the Department of Defense says, well, we should stop these programs. And Congress says, no, we're continuing them because this is where, you know, you're spending money in our district is.
And that's the kind of thing that if Doge had guts, they would go to.
But, you know, that's a difficult political topic. Do you think the US should continue to subsidize the lack of spending that Europe commits to in defense?
Look, I think it's better for the world and better for Europe if Europe increases its defense spending. Now, I understand it was the right thing after World War II and the right thing with the Marshall Plan and the right thing to create interdependence to do that because you wanted to make sure that in this area that created two world wars. that you created strength of ties and bonds.
It's part of what the European Union's about, trade, mutual prosperity. But now that that's there, it's good for Europe to get to its rightful place, both in, for example, defense against terrible players like Russia and things, but also in the world to be another important force in the world, and that means increasing the defense spending. And that includes Ukraine?
Look, my view is that the Ukrainian people have the right to fight for their own self-defense. It is not for us to say, oh, Ukraine was always just part of Russia. That's for the Ukrainians to say, not for us. That's a repetition of evils that human beings frequently do. You should be clear about this. And people have a right to articulate their own self-determination, I think.
Supporting him in that is, I think, a good thing.
Can I ask, you mentioned Medicare. What would you like to see happen with Medicare and what would be the right next 12 to 24 months?
Well, it's another area that's a political third rail in the US because older people vote at much higher percentages. And so therefore, figuring out how to, like, for example, again, if you said if Doge had guts, they'd go look at this area to say, well, how should we rationalize this on a cost per quarter?
quality month of life and you go, well, look, there's a whole bunch of money that's spent on these last three to six months of life. Let's reduce the spending on that and say that is not a public expense. And let's increase, for example, preventative and other things that are much more dollar focus.
Now, again, unfortunately, I would predict that they're not going to do that because it's a political third rail and it requires courage and other things to go into it.
You mentioned there the propensity for older people to vote. What Trump did well was harnessing actually TikTok and younger people to vote. I'm intrigued. We mentioned, you know, BYD and Chinese car imports. Should TikTok be banned on the back of this?
So the right way, I think, to think about this from an American or any other perspective is to say China bans competition in China from Meta, Twitter, etc., And so the right way to say is like, look, if you're banning our companies, we should ban yours. Entirely a commercial question, not a question around like, well, that's a Chinese social media company.
Because I actually believe that there's a different question when you say, well, what should be the rules of governance for social media companies when you get around the world? And I think there should be some transparency, responsiveness to local laws, et cetera. But I think that's the right thing to do.
Now- Is it a bit childish? I don't mean that rudely, but it's like if a child gets hit at school, it's like the parents saying, well, hit them back harder. Yeah. Not really the right response, is it?
Well, it gets back to the tariffs question, which is you want people to be playing on a fair and balanced playing field. If you're country X is denying licenses to country Y, then country Y should do that to country X, right? As just a general thing to get back to a playing field. And by the way, there's lots of bad actors in the world. Yes.
Sometimes, by the way, when the bully hits you, the only way to stop the bully from hitting you again or hitting someone else is to hit them back pretty hard, right? Because then they learn, oh, there's consequences. Sometimes the rule of the five-year-old playing ground is actually, in fact, the rule that countries live by.
We mentioned the power and nuclear. There's a lot of opinions around it. How will realistic is it to see the transition to nuclear power like is needed or beneficial?
So this is maybe my greatest hope out of an administration that promises to be a wrecking ball to a history of regulation, because the things that we have done in regulating nuclear have been destructive to, for example, climate change, because you're using a lot more coal versus nuclear. I mean, we see great examples in France as how to use nuclear.
Well, the technology has advanced over the decades in nuclear fission. You know, people have invented nuclear fission plants that are powered. It's called TerraPower powered on nuclear waste. So it's a way of consuming the waste and getting rid of it and converting it into power. There's all of these things that are really, really good to do.
And a regulatory agency backed up by fearful public opinion, unknowledgeable, ignorant public opinion, but fearful too, hasn't done anything about this. And then you say, well, what's the best way we worried about running out of electricity We're worried especially about green electricity going and doing this.
And so I myself have been investing in both fission and fusion over the last five to 10 years entirely philanthropically. I have no idea how to invest in this. When I do these investments, I write them to zero in my book. I have no idea. what the economic outcomes are of this, unlike like internet investing or software investing or what's the rational way of doing it.
But creating the technology for the benefit of society and humanity is extremely important. I've been putting lots of money into this out of a desire for putting America in a much better position, helping the world with this new technology, etc.
Do you worry that with AI, with global conflict, with everything that we see today, climate kind of just falls down the pecking order? I think it's guaranteed.
And given that it is an inevitable, it's a physics process. I worry about that. That's one of the, I think, likely outcomes of the next administration that will be a serious impact. Now, that being said, like you said, okay, bull bear on the next administration, they'll go, oh no, climate change is a fiction and it's a liberal conspiracy and you know, dah, dah, dah.
And you're like, why would the liberals bother with a climate change conspiracy? I mean, it's just like the logic of this is not great. But what they might do, which I would hope, again, be hopeful for, is they say, look, what we really need to be doing is doing the Apollo projects on the right kinds of clean energy.
And we're going to now go 10x down onto that, including all versions of nuclear, as well as everything else. And that actually might have a very positive impact over time in what we're doing with climate change.
Does AI do more to help or to hurt climate change?
Well, it's a frequent misconception because there's obviously a growth of a electricity curve that AI has got climate impact. One, it's something like data centers, I think, or something like it's some single digit percentage of all power consumption, like three something. So it's not very big. And then AI within data centers is like a single digit percentage of that.
So currently, AI is not accounting for any of the electricity that makes any of the difference. No, but it's growing. And you go, well, what happens if it continues to grow in a compounding way? And so and so everyone goes, ah, I can be I can be green and climate by posturing in the media, by saying AI is bad for climate. Pay attention to me, please. Lay, pay attention to me, please.
This is a little bit like the people who are being anti-nuclear, which then caused a whole bunch of coal plants to be built, which caused a whole bunch of environmental degradation as a consequence of being anti-nuclear. It's a similar thing because AI has several points of being massively positive on climate. Here's a simple actual data point.
So Google's engineers, some of the best in the world at running data centers, thought we have run our data centers as efficiently as possible. It was, I think, five, seven, eight years ago, DeepMind ran their algorithms on Google's data centers and figured out how to save 15%. of the electricity. So think about you're applying AI and intelligence to go, how do we run our grids more efficiently?
How do we apportion costs? How do we do all this stuff? How do we add intelligence to all this? That's one. Two, maybe even more significant, which by the way, that means AI technology can actually be a net energy saver as we apply it to the inference cost to all the electricity we're doing in the future. Number two is, well, what's happening as a boon for green energy right now
All of the major hyperscalers are doing multi-billion dollar commitments to green energy companies saying, if you can deliver the energy, we will give you the initial customer capital to build that. And by the way, we will subsidize because energy is always expensive when it's small and cheaper as it gets bigger.
We will pay the expense at the beginning to start building your nuclear, to build your geothermal, to build your solar. in order to do that. So they are functioning as the R&D venture capital for creating green energy for the entire society in building their new data centers. So that's another thing where AI is coming out to building green energy.
Look, the most far-fetched and unclear is it's also possible, but I think this is more of a science fiction thing is, well, kid, the patterns of intelligence and AI, and people are doing this work, like applying it to, can we get it to make fusion to work?
Can it solve certain problems that then make sustainable green energy possible because of the intelligence that AI can bring in its massive computation to solving these problems? And people are working on that on fusion containment, right? Because if you can make fusion work, you can solve climate change. Can you just unpack that for me, sorry? How does fusion completely solve climate change?
So fusion is the most scalable green energy. You know, the sun is powered by fusion. And obviously, there's various ways to try to use solar that I don't think we've tapped out on and everything from satellites with solar energy collection to various things on the ground. So I think there's a bunch of stuff there.
That's actually, in a sense, an indirect fusion because you have this massive fusion reactor that's known as the sun. But microfusion is both super safe and can produce enormous amounts of power very cheaply. And once you have enormous amounts of power, you can solve significant world crises. So for example, how do you do decarbonization?
How do you pull carbon out of the atmosphere in order to reduce global temperature back to that great band that humanity prospers in? And the answer is it takes a lot of energy.
Well, if your energy is carbon producing as you're doing it and you're not net doing it, so you have to be carbon neutral to negative on this, then if you can produce it at massive scale, you can pull carbon out of the energy, let alone power all of the things that human beings want, houses and transport and all the rest. So it's more than the silver bullet.
It's like the platinum bullet. I love a platinum bullet. Thank you for explaining that, by the way. I've learned one thing. Never be afraid to ask the really basic questions. You mentioned that actually deep mind and what you did with the efficiency within data centers. How important was Willow, Google's announcement on their new quantum chips yesterday?
Well, I think it's a significant step forward. I don't know exactly where we will be in scale quantum computing. Usually, again, of course, the discourse with new technology always starts with the fears, which is a mistake that I'm always trying to correct. because it doesn't mean you shouldn't have concerns and anxieties and navigate.
But like, for example, you go, oh my God, quantum computing, it's going to break security and our banking system is going to collapse and our public encryption and security safety is going to collapse. And oh my God, there's a disaster. Like, well, look, we'll have to figure that out because that'll be an issue once we get to what is somewhere maybe
minimum 2000 or 5000 logical quantum bits, qubits. So that's at 2000 to 5000 or more is when you get into the encryption issues. I'd call it 150 to 250 logical qubits. So a complete order of magnitude down, quantum computers become great at helping invent new medicines, new drugs, new semiconductors, new physical materials, things at a micro scale.
That's going to be the first thing from quantum computing. So the moment that we can get there, it'll have enormous prosperity benefits well before we have to navigate these things. And so I'm very hopeful about quantum computing. I just don't know the timeframe.
Speaking of kind of immense power, one thing that did just strike me, that kind of worried me, it's like, I don't think we've ever seen someone with as much power as Elon has. He owns the digital town hall. He owns the roads around the town hall with Tesla. He owns the power for it with Starlink. He kind of owns the physical town hall now with ownership of Donald.
Have we ever had someone with so much power? And is that not worrying?
So I think we have had people with that much power in history, but I think part of modern society is to create checks and balances, to create accountability within your government. So like, for example, Traditionally, when you have people who go into government, they put their business stuff in blind trust and do other things in order to avoid conflicts of interest.
So I think the worry is not necessarily the power as much as the conflicts of interest and navigating the conflicts of interest with ethics and integrity, which I think is the thing to watch with the next administration.
The power, look, I think there- I mean, he's able to turn off the internet for large swathes of the population.
Yeah, look, and so I think we want that to be within the hands of democratically elected governments, or at least certain parts of it. And I think that's important. But by the way, you know, I mean, I think while there are things that I have been and probably will be in the future critical of Elon about, the electric vehicle revolution... owes itself to Elon.
The revolution in space ISPs with Starlink owes itself to Elon. And by the way, the initial defense of Ukraine would not have worked without Starlink. So there's enormous positive contributions here. So it's a complicated topic. Now, that being said, I would want the halls of democracy and government and the conflict of interest within personal businesses to be kept very distinct.
I think we may see some challenge in that.
What do you think is his greatest power and his greatest weakness?
Well, they actually kind of go together. Elon has a conviction that what he believes is true is absolutely true, even when all of the evidence is against his belief. That allows him to do, I can see that we can colonize Mars and here we go, right? And that creates SpaceX, that creates Starlink, that creates... And so huge amount of kudos and power.
But then that's similarly when he sees a conspiracy theory on Twitter...
probably being created by russian intelligent assets to destabilize the us it goes oh that looks right to me and then he'll retweet it that's correct and so it's the same impulse which has created these amazing things but also has these destructive things should one not have policing on tweets i had this debate before with many american guests and i'm like that can be very dangerous and damaging to have someone retweet with his power and weight to the audience that he does
And my American fans are like, of course not. It's freedom of speech. You should be entitled to.
Well, so I think there's a really interesting distinction between freedom of speech and freedom of reach. If you're standing at the local corner and standing on a soapbox and saying, the moon is made out of blue cheese and the earth is flat and so forth, it's fine, go ahead. When we have our collective media systems, e.g.
reach, it's important to have some ability to say, well, we should bring in studies and expertise into it. And by the way, this is what we've made progress with science. This is how we've made progress with law, is we use thoughtful groups of people to bring a notion of truth. In science, it's reproducibility of science experience.
It's scientific panels which decide on things being advocated as true. In juries, you have, in the US, 12 people who listen to it and have to agree. That's the way we do things. And so we need to kind of figure out how to apply that also within, call it,
They reach. So should there be policing? Because, I mean, he is not an ambassador for the UK, to say the least. Yes. And some of the stuff that he retweets is true. Yes. And some is completely not true. Yes. And people believe it. So should there be policing on them?
Well, so, look, if I could, through a democratic process, because I believe in democracies, I believe in collective governance, get our society to agree to say, hey, what we should do is identify some topics that panels of experts can yield to a truth determination on. What I would prefer we do with all media, and by the way, it's not just social media. It's also cable news. It's also talk radio.
We say, look, if you're going to speak your opinion, which you may do, you can say the world is flat. I can get on Harry's podcast and go, I believe the world is flat. And then what you say is, oh, by the way, expert opinion says that's completely false.
And just along with my saying, the world is flat, expert opinion comes up and says, hey, by the way, if you're listening to this, you should also consider that expert opinion says this is totally false, right? And so it allows you freedom of speech, but it then allows a collective learning system. And it says, I would prefer that, but we need to get there through a democratic process.
Frankly, one of the things that he said, which is dangerous and the reach is worrying, people said in comments when I asked this about Epstein. Yeah. Why is that wrong?
I was never a client of Jeffrey Epstein's. I never had anything directly to do with Epstein. Everything I did was fundraising for MIT. My mistake, which I publicly apologize for, is I relied on MIT's vetting. to say, hey, we vetted him and it's okay to do this. I obviously regret that. I've issued an apology about burnishing brands because the damage to victims and other kinds of things.
But of course, the modern age is such that these things get reported and so then have a media impulse. So you have to be responsive to that.
Do you not worry though about that cancel culture and that freedom of ability to just destroy someone's, but so wrong and lie when you have a reach like Tucker Carlson and you can just say what you want and now fuck it, someone else said it. That's a really worrying world.
Yes, exactly. And the funny thing is, is the right wing says woke is cancel culture. And yet that's the shit they do. It's, of course, normally so destructive. I'm very careful about the things I say. I only say them when I have some ground for evidence that I can speak publicly to, that I can have other people validate why it is I'm saying it, right? That kind of thing.
That's the standard that we should all hold ourselves to.
Matt Clifford told me about a couple of different areas where you're spending time. He told me one is AI applied to cancer. Talk to me about your work with AI, how that interacts with cancer, and how our interaction with cancer will change moving forward, do you think?
So one of the things, in addition to quantum computing, which we already talked about, one of the things that I've been looking at is what other areas are people not paying nearly enough attention to that AI will make a huge difference for the human condition. And drug discovery is a really important one.
How you use drug discovery as we invent new drugs for really key things like cancer, those will make a huge difference to the quality of human life, to lives saved, and to the economics. So we spend an enormous amount of our economic budget on medicine, and we'll have a huge saving there. I've been working on the intersection of bio and computing for over a decade now.
Now is the time with AI that we will start seeing amazing new products.
I was thinking this last night when I was reading into this. Do you think that if you are a serial entrepreneur building in AI today, doing a SDR tool for sales teams, you are doing yourself an injustice? I know that's a bold statement, but when you look at cancer, climate change, poverty, conflict, defense, and you are choosing to spend your time on SDR work,
think it was the founders fun guys he said it was like an injustice if you do that that's a hyperbolic statement i mean look i think we want to get more people doing the big things doing nuclear fission and fusion doing drug discovery doing education doing other things that have an impact for billions. But by the way, sales process is also part of how the OS of our society is business.
The OS of our society is like, how is government funded? Through the operations of business. How are universities funded? How is medicine funded? How is education funded? Through the operations of business. So improvement of business is a good thing. So improvement of sales and sales efficiency is also a good thing. So is it a less heroic, oh my gosh, I have cured some versions of cancer.
I have made fusion possible. Yes. And I think as a society, we should appropriately treat the people who are doing the heroes and things as heroes. But by the way, it's a contribution to be contributing to sales too.
On the flip side of that, when we think about spending more time in the UK, it's a very negative sentiment towards the UK now, forgetting Elon, but just generally. Why you may be bullish when everyone else is incredibly bearish?
Well, I'm bullish for a couple of reasons.
So one, amazing set of talent, universities, technical talent, entrepreneurs, a willingness to be bold, not just the bold that went and created the United States of America, because you could look at US as a entrepreneurial offshoot from Great Britain, but also kind of a global perspective, a willingness to be like one of the things that I loved in visits here in my days as a student,
was the global learnings and global perspective I get from London and Oxford and Cambridge and other places. And so there is enormous potential.
How do you think about that, though, in the face of, like, you know, bluntly the deterioration of the German ecosystem, the no growth for the UK for three consecutive years, as our wonderful Labour government have pointed out? It doesn't look good. I'm trying to be honest. My business is here. My fund is here.
It doesn't mean there aren't challenges. Brexit was a terrible idea. And I think there are challenges. But the notion of how we rejuvenate economies, we go, look, how do we build the economies of the future? And so you can't try to hold on to the economies of the past. You don't want to say, well, I want to be doing coal mining in Newcastle. You're like, no, no.
We should be good for those communities and people and try to help them transition, but we need to build the economies of the future. The question is, I think the UK is well positioned to make that progress and make that effort, but it has to be collectively investing in it, enabling it, bringing in talent.
Do you think we are? Because when you think about chip sovereignty, energy sovereignty, economic distributions across the country. I cannot point to one positive around any of them.
Well, you may have studied this more closely than I have, and so there may not be yet, but I know that the capabilities, the talent, the will is possible. Now we just have to organize and make it happen. I mean, this is part of the thing of, Occasionally, since it's part of my support for Entrepreneur First, I meet with these entrepreneurs. They're great entrepreneurs.
They can create great businesses. We need to enable that. And by the way, once you create great businesses, that then has economy, jobs, revenue, tax revenue, et cetera, et cetera. That's the thing we need to be doing.
Do we need chip sovereignty and Europe's ability to have our own NVIDIAs of the world? Does the US? How do we think about TSMC?
I think it's important to have chip sovereignty within the Western ecosystem. For example, I would be less concerned. I'm an advocate for, I think, what the Biden administration did with the CHIPS Act as a good idea. restart the chips ecosystem in the US is a very good idea.
I hope that while I expect that the next administration, because they'll say everything the Biden administration did was terrible, we're tearing it all down, that they'll tear it down in words and then keep doing the work, right, would be my hope. But I would be much less concerned about that if Europe had a good chips industry, because it's within the Western ecosystem and diversified.
One of the things we learned from COVID is one of the challenges of globalization tends to be the, oh, we resolve to one point of manufacture, but then you're brittle. So when Italy went down with COVID, all of a sudden, the specific medical manufacturer that was oriented there suddenly broke for the rest of the world. So you want...
several different places of source of origin for resilience and robustness against possible adversity. So ideally, in a good world, you'd have two to four or five places of semiconductor manufacture, and you would have at least one or two of those within the Western nations. And if that was the case, then we'd be good. So a single point of dependency on Taiwan has a bunch of global risk.
Do you think Nvidia continues to accrue power and monopolization or monopolies? Or do you think it continues to be eaten away by Apple's, Google's, Amazon's building more and more of their own chip supply and ability?
So unsurprising to you, because you and I have talked a bunch, both. So both NVIDIA's business will continue to go very strongly because they have an amazing lead in amazing chips and there is massive demand for their chips for doing compute. And many players, Google, Amazon, others, including AMD, are building out chips as well. So you both have them developing.
what is still a very valuable leading resource, and a bunch of other chips developing as well. We have kind of like electricity. We have infinite demand for compute at moderate pricing. So as long as we can deliver that, demand will completely fill.
In terms of like demand, we have multiple different LLM providers. We had Mark Benioff on the show, and he said, I'm not going to do his accent actually. It's going to be terrible. We're reaching kind of the upper end of LLM abilities.
By the way, incorrect, but yes. We're not reaching the upper end of LLM. It's kind of like, look, the press cycles like to go, aha, we haven't seen anything in the last six months. We're at the upper end. It's like, oh, if it were, we haven't seen anything. By the way, we did see GPT-01, right? If we hadn't seen anything in the last couple of months, that doesn't mean it's the end of the cycle.
That means we're still getting to what the next set of stunning things. I think the next larger computer, the next large LLM that's trained with a larger computer will still have new magic in it. And all of the people who argue against it are to some degree arguing their own book. Well, I don't have the compute. So the next level of compute won't make a difference. I don't have the data.
So the next level of data won't make the next difference. Or the current data is all we have. And so we won't be able to do it. It's like, well, actually, in fact, we can create synthetic data. And there's a ton of data that's out there that's not part of the standard internet training corpus. The scale game is still playing.
So he was saying we've reached the upper hand about that. Incorrect. And then now it's the era of agents. Yeah. And that is why agent forces.
Well, by the way, he's right that, look, we're going to have a ton of agents. And I think the agents will be composed of multiple models. But to count out the next level of scale models as being important in creating a number of quality agents is just incorrect.
do you worry when you look at the pricing of some of the investments going down today that it's just a complete bubble well so when everyone understands that a technology transformation is happening a bunch of people make foolish investments it happened in the internet it happened in mobile right it happens
But because there's some foolish investments doesn't mean there aren't also really good investments that change. And so part of the work for being a good investor is to on a probability basis, because you will make some foolish investments too, to make sure that you have some of the really good ones.
And by the way, sometimes the decision of foolish or wise is doing something that may seem like it's a crazy price.
What deal did you do that seemed like a crazy price was a phenomenal investment?
When I did the series A of Airbnb, there were 60 million posts. At that time, the founders probably could have gotten on the phone all week and called every single person who had used an Airbnb that week if they were working through the call list. So it was a very small transactional volume. And the question is, would it grow? What would happen with cities?
What would happen with market acceptance? There's a bunch of other things. But part of the way that I invest is I go, look, if I'm right, if the theory of this investment is correct, then it will transform an industry. And that's what I tend to do as an investor. It's majority of my investments, not all, there's sometimes other things.
But if that plays out to be the case, and so then is my theory of my investment at least a reasonable probability, right? Like it has a reasonable chance of working. And that's why I did the Airbnb one. So that would be one example. But I also tend to be more careful about part of the discipline that I've learned from Silicon Valley is when you look at a seed, a series A, a series B.
It isn't that price is irrelevant. Does the coherent sense of this make sense in terms of what future capital will need, how the entrepreneurs are thinking about their business? And so that's part of where pricing comes in.
Do you think acqui-hires are inevitable for LLM companies? We see the likes of Mistral in France. They just don't have enough cash. It's spade to spade. Are acqui-hires inevitable?
Well, in a well-functioning society, hopefully it's acquisitions rather than acquirers. Part of the thing, there's a thread of antitrust that misunderstands their own game. So, for example, the thread of antitrust roughly looks like this. It says, we should stop the aggregation of power in the large companies, so we should block acquisitions.
And in some cases, limited specific cases, that makes sense. But in general, if you want competition with those large companies from startups, investors, say for example, I'm an investor who's going to put a billion dollars into a company that might compete with one of the large tech companies.
I'm only going to put the billion dollars in if I have a chance of an acquisition exit because I'm going to need the billion dollars back possibly. That's a huge loss. So if I am blocked, if you have a regulatory authority to say we are never going to allow that, then I'm never going to do the investment that allows a company to potentially compete with those large tech companies.
And so their theory, which is we're stopping the aggregation of big power, is they're creating more aggregation of big power because they're stopping the financing of competition.
Does the M&A window open up without Lina Khan?
Well, I hope so. And by the way, I think it's good for society. It's good for competition. It's good for investing in the competition. And so that's part of the reason why I've kind of made public statements around this, because it's not that I'm saying, oh, antitrust is bogus. I'm saying you actually got the exact wrong theory of the game.
Do you think Figma's antitrust was bogus?
Yes, shortly. Look, I'm an investor and all the rest. And I think Figma is an amazing company that's going to – I'm probably going to make substantially more money because the deal was essentially derailed. But there was a bad theory of the case.
I would love to move into a quickfire. I always love my, I always leave thinking, God, I've learned so much. I say short statement, you give me your immediate thoughts. What do you believe that most around you disbelieve?
Great question. So what I think is that the AI revolution will both create enormous value for the large companies and enormous value for the small companies. And it's going to do both. And part of that is because I don't think it's a big tech question. I don't think it's a little tech question. I think it's a scale tech question.
And I think part of what we do as investors and creators and creators in new industries, we invest in scaling technology. It starts small and it gets very large. And we want more large tech companies. The answer is not we want fewer large tech companies. We want more large tech companies.
Is Twitter better post Elon or worse? With deep regret, I would say substantially worse. What would you do if you knew you couldn't fail? Oh, well, fusion energy maybe. What's the highest multiple investment you've ever made?
I actually almost never look at multiples.
Do you?
No. My investments are at seven to 10 years out. And so it's a belief in what seven to 10 years looks like. And almost everything I invest in is unprofitable when I invest in it. Have I invested in a business that's profitable? I can't remember.
What would you most like to change about venture today? You see the landscape.
Well, what I would love to have, and look, I understand the economics. I myself follow the economics of going into software. A broader range of things, and I've tried to do some of that myself, so I don't just preach it, you know, a nuclear fission and fusion, a Joby and flying cars, because the world is not just digital, it's also real and physical. And so a broader range would be a good thing.
What have you changed your mind on in the last 12 months? Interesting. I guess what is the right way for governments to interface productively with cryptocurrency? And there's micro things. I'm a believer in cryptocurrency. I bought Bitcoin back in 2013. I've invested in cryptocurrency companies.
I think it can be very good for society, but the ways that it can integrate well in society, there's evolving beliefs there. What should happen, what should not happen, but they're all micro things, not macro things. Maybe the most macro thing might be It's not a change of my belief as much as it's kind of like an open question.
I watched some congressional testimony from people from the national security establishment that were claims that government labs were studying material from extraterrestrial spacecraft. And this was congressional testimony. And so it was like... huh? Is it an asteroid or is it a robot ship or is there nothing? Is it just craziness?
But before I'd watched that testimony, if you had said, what do I think about UAPs? The answer is conspiracy theory. And maybe that's still the right answer. But I just watched that recently and I'm now got to go scratch at that a little bit and say, okay, what is this UAP thing and try to understand it.
What is the price of Bitcoin end of 25?
By the way, I never do that again, seven to 10 year horizon. So I bought a bunch of Bitcoin. I've just hold, I just hold it like I've never sold it. And I then haven't bought new Bitcoin. I would say end of 25. So I'm, I'd guess approaching 200,000. That's it.
We're going to have another show at the end of 25. You mentioned Bitcoin, you mentioned Airbnb series A. What was the worst financial investment you've made?
Well, actually, the interesting thing about this is people tend to think the worst thing you did was you invested in something and it went to zero. Actually, in fact, the worst thing is saying no to the things that went to the moon. Well, it's not doing the B of Airbnb and the C. Yes, exactly. Like those kinds of things. What one comes to mind with that? Well, Airbnb was one.
I mean, where I have key lessons is where I have key lessons of missing an opportunity I should have said yes to. And I should have said, okay, not, look, I led the A, I don't need to go lead the B or the C. I should have gone, I'll lead the B or the C. I'll double down on the risk coefficient because I had the conviction. I just had the, oh, look, I'm already in it.
I already led the series A. And so, that's clearly one. I think there's I got pitched early in Stripe and Square, and I didn't do the investments because I knew how hard payments was from PayPal. It's one of the things when you know too much and you know the risks too well, and those were terrible mistakes. I mean, there's just the list of things you miss that you regret is substantial.
Oh, for sure. When you're doing it right. Yes. Yeah, I totally agree. Final one for you. You have had the most incredible career. When you think about advice given across it, What's the best advice that you've ever been given that sticks with you most?
Lots. We could have a whole show on advice, but I'll say with one of the things my dad said to me when I was a kid, which is, he said, the difficulty of making decisions is that in the short term, it reduces your opportunity set because you've made a decision, but it's the only way you have long-term opportunity.
I love that. And honestly, I have so enjoyed today. I can't thank you enough for going so broad with me across so many different topics. You've been fantastic. So thank you.
A pleasure as always. I look forward to the next in my next trip to London.
I mean, I always so enjoy my discussions with Reid, and if you want to see that episode recorded live in the studio in London, you can find it on YouTube by searching for 20VC. That's 2-0-V-C. Now, before I leave you, we're excited to ignite your curiosity with a journey into the world of transformative ideas.
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