Trump's Cabinet, Google's Quantum Chip, Apple's Flop, TikTok, State of VC

But I think on the general liquidity thing, I don't think that the thing holding up acquisitions and IPOs is markets. I actually think it's investor and board expectations on valuation relative to where they put money in the last couple of years... They don't want to take these things out and take a 60, 70% haircut on the IPO. They'd rather kind of let this thing sit private and see if they can earn their way back into the valuation that they did the market when they put the round together.

But there's also a culture thing, I have to say, like in talking to a number of like the leaders of these public companies that were very inquisitive and M&A, they are taking the position it's easier for us to build a competing function, a competing adjacency than do any tuck ins. They just told the corp dev people pencils down and they are not wanting to spend a year or two on a deal when they have a breakup fee

That said, I don't believe that what she's done has affected exits very much at all.

But as it turns out, it is impossible for any company that is not a Chinese company to be able to manufacture these magnets in an economically viable way... So what do you do, Jason? If you can observe that and realize that we want supply chain diversity, what the tariff does is it starts to push back on those kinds of activities because it doesn't allow it to continue to work.

It's because of environmental regulations. It's the same thing with Starship going up. We got a lot of regulations in this country. I understand people want to do the right thing, but we also have a lot of debt. If we could start mining Rare Earths metals here and maybe loosen the regulations.

And so we're now kind of spitting distance or a couple of years. It's not really clear. Is it three years, five years, seven years? But a couple of years away from having computers that theoretically could crack all encryption standards... And all of computing and all software is going to need to move to post quantum encryption in the next couple of years.

So if you think of Willow as essentially like one stable, logical, qubit equivalent in a chip, we need about 4,000 to break RSA 2048, and we need about 8,000 to break SH8256, which is the underlying encryption framework for Bitcoin.

First of all, I think there's a long time before this becomes a commercial product or application of any sort. So it's great that they're taking money, but think about it as almost like Stanford takes money or the US government funds basic research in some ways. This is at least a decade out kind of thing.

You don't even have to have a conversation. In my view, TikTok is a threat to the national security of the United States.

I said, you have to look at the Pegasus-like equivalent, infiltration of WhatsApp, having been done on TikTok... But there's probably 1,000 to 10,000 to 15,000 people. I do suspect that state actors are smart enough to figure out how to triangulate who.

So if they'll do it to their own people, they would have no problem doing it to an adversary and, ask yourself, if the shareholders care about money, they would be willing to divest, right? No problem. They want to take the company public. So if you won't divest and get off the board as the CCP, it's because you see this as a valuable tool, right?

So I think you're going to see real tariffs, like especially against China. And the Trump administration is completely committed to reducing inflation, the cost of eggs and groceries. And I think those things can be reconciled.

I think Keith said it pretty well, which is that we do have a lot of experience with how tariffs can be implemented and that the practical experience is not what the fear-mongering is about.

You're not the only person. People are freaking out about the interface changes on Photos, crashing is a major thing, and Apple Intelligence just doesn't work. So it does seem, Keith, that Apple has gotten off their game of making polished stuff to race to try and, I guess, catch up to their perception of AI being a disruptive force at the interface level

And then playing on a field that's not favorable to them, which is there are advantages Apple has in AI, but there's some significant organizational structural disadvantages. And that's the field that people are going to be competing on for the next five years from a consumer perspective. And they're playing on a field where they don't have all the advantages in their favor.

And but now, like my photos app is completely unusable. So I totally understand, you know, Chamath, the frustration and they are showing like the decay function, you know, culturally and otherwise, that eventually somebody will figure out an angle to rip them out.

It's literally not just photos. It's like the phone doesn't work. So there are just core structural issues with this operating system now that makes the iPhone maybe 10% to 30% less usable. And that's really frustrating.

So yeah, if a bureaucrat thinks the right thing to do is to divest a random browser to fix Google's monopolistic tendencies, that's not a remedy.

So the most important thing about Apple is to remember it's vertically integrated, and vertically integrated companies, when you construct them properly, have a competitive advantage that really cannot be assaulted for a decade, 20, 30, 40, 50 years. And so chips, classic illustration, go all the way down to the metal, build a chip that's perfect for your desired interface, your desired use cases, your desired UI, and nobody's going to be able to compete with you.

But by the way, this reinforces what you said before, which is it's hard for an outsider like us to comprehend what's really happening inside of Google because the business they've built was able to fund this.

By the way, a different version of this, I wrote this in my weekly newsletter, but I was curious why these Chinese models are so good. And I was like, the training of these models seems to be quite fast. The quality of these models are really good, the Alibaba model, et cetera. And part of what you realize is when they do their training runs, the Chinese models have no guardrails in the sense that there's no copyright checks.

And the wrath of LenaCon is officially over. She's out. Andrew Ferguson is in. This looks like a great appointment, another one by Trump in the column of somebody who wants to allow business to occur and wants a free market. He wants to do basically everything LenaCon didn't do, which is allow some M&A.

So if you actually were to sit down and do the Black Scholes modeling of the value of the synthetic call option that he's selling you with the convertible note, there's a reason people are paying for it. They think that there's value there. So there's certainly something to the structure that makes sense.

I think a lot of people had been hesitant to start new crypto companies, and there's a belief and confidence in the new administration, the SEC, etc.

My anecdotal experience is there's AI companies where the market's pretty hot, maybe cooling a little bit, but hot, and AI companies with the right team are getting funded frequently, quickly, etc.

I think that the United States economy is too complicated to be managed by theoreticians, by folks with random PhDs and absolutely no working experience in the real world. And when you bring those people in to oversee those PhDs, I think you probably get better outcomes.