Presidential Debate Reaction, Biden Hot Swap?, Tech unemployment, OpenAI considers for-profit & more

🚨 Last night's debate was a disaster for Biden—Democrats are in panic mode! 🚨

Alright everybody, welcome back to the number one podcast in the world. It's episode 185. You're going to be delighted by today's docket if you're into politics. We moved the taping back a day, gentlemen, because we knew there would be a presidential debate.

With me to discuss all things presidential debate and the news finance markets are David Freeberg, David Sachs, and Jason. Oh, oh, the end game is here. Okay, we're in the end game now. Our friend, the sultan of science, is back to work. He's in his cube. How are you doing there, Freeberg?

The humble headquarters of Ohol Genetics, with a beautiful lab downstairs. I'll take you on a tour one day. Can't wait to hear my friends gloat and bloat themselves on the show today after the debate last night. Looking forward to it. You're building the next 10 billion dollar company. We don't get to invest, but we do get a tour. If you guys want to put money in, I will open up the round again for you. You said this three times! When do we wet our beak?

That’s how you know the winner. Let your winners ride. Instead, we open source it to the fans. They've just gone crazy with it. Enough of the craziness. Last night was the first presidential debate. There's no easy way to put this—it was an unmitigated disaster for the Democrats and President Biden. He looked confused, lots of slips, lots of gaffes. If you are under a rock living in a cave without Starlink and you missed it, here's a couple of clips.

Making sure that we're able to make every single solitary person eligible for what I've been able to do with, uh, with the, uh, excuse me, with um, dealing with everything we have to do with, uh, look if we finally beat Medicare. Thank you, President Biden. President Trump—gosh, that was brutal. The reaction from CNN, even MSNBC's Joy Reed, as far left as you can go, was brutal.

The knives are out from the Democrats for President Biden. There is a deep, wide, and very aggressive panic in the Democratic Party. It started minutes into the debate and it continues right now. It involves party strategists, it involves elected officials, it involves fundraisers. They're having conversations about the president's performance, which they think was dismal. They think it will hurt other people down the party in the ticket. They're having conversations about what they should do about it.

Some of those conversations include whether they should go to the White House and ask the president to step aside. Other conversations are about whether prominent Democrats should go public with that call. They feel this debate was so terrible. I love Joe Biden. I work for Joe Biden. He did not do well at all. There is time for this party to figure out a different way forward—if he will allow us to do that.

I too was on the phone throughout the debate. My phone really never stopped buzzing. The universal reaction was somewhere approaching panic. The people who were texting with me were very concerned about President Biden seeming extremely feeble, seeming extremely weak. Quite frankly, a car accident in slow motion. Joe Biden sought this debate at this remarkably early time because he knew he was losing. He needed to change the narrative. He did change the narrative. He sunk his campaign.

There is absolutely no way any of us could have predicted this. Oh wait, Nick, play the clip. Read the room, Democrats. You have put up a candidate that nobody wants. His policies on the border and some other issues are not in sync with the majority.

People who were texting with me were very concerned about President Biden seeming extremely feeble, seeming extremely weak. Joe Biden sought this debate at this remarkably early time because he knew he was losing and he needed to change the narrative, and he did change the narrative. He sunk his campaign.

I believe that's what's going to happen in the next 30 to 60 days. So I'm predicting, you think this could be a switch—100%. I have no idea. Could be Gavin, could be anybody. Anything's possible. I think Trump's going to demolish him in the debate. I think he'll sink to 30% in the polls and then the Democrats will find a way to give him a graceful out and then they'll field somebody else.

Prediction markets showing Biden has plummeted to—let's check the number—oh yeah, 33%. President Biden is a person that's given up his whole life to work on behalf of America in the best way that he thought was possible. He's overcome a lot of tragedies. I think he's worked very hard. He's diligently tried to do what he thought was right on behalf of the people of Delaware and then the United States.

My honest takeaway is that person, though, is no longer really in charge, and I think that was very troubling for me. It actually makes the last six months make a lot more sense. I thought the fact that we could not get a response from the White House to be—I took it a little bit personally. I was wondering why, for someone that had been such an ardent supporter, I couldn't even get an email back when I was consistently asking them to be on the pod.

And now I see that it wasn't just one single act; it was part of a holistic strategy. It was the same strategy that boxed RFK out of the Democratic primary because could you imagine if this event had happened when he had to debate RFK in the Democratic primaries? It would have been exposed then.

🚨 Biden's debate flop has Dems scrambling! 😬

Alright, everyone, welcome back to the number one podcast in the world. It's episode 185. You're going to be delighted by today's docket if you're into politics. We moved the taping back a day, gentlemen, because we knew there would be a presidential debate.

With me to discuss all things presidential debate and the news finance markets are David Freeberg, David Sachs, and Jason. Oh, oh, the end game is here. Okay, we're in the end game now. Our friend, the sultan of science, is back to work. He's in his cube. How are you doing there, Freeberg?

The humble headquarters of Ohol Genetics, with a beautiful lab downstairs. I'll take you on a tour one day. Can't wait to hear my friends gloat and bloat themselves on the show today after the debate last night. Looking forward to it. You're building the next 10 billion dollar company. We don't get to invest, but we do get a tour. If you guys want to put money in, I will open up the round again for you. You said this three times! When do we wet our beak?

That’s how you know the winner. Let your winners ride. Instead, we open source it to the fans. They've just gone crazy with it. Enough of the craziness. Last night was the first presidential debate. There's no easy way to put this—it was an unmitigated disaster for the Democrats and President Biden. He looked confused, lots of slips, lots of gaffes. If you are under a rock living in a cave without Starlink and you missed it, here's a couple of clips.

Making sure that we're able to make every single solitary person eligible for what I've been able to do with, uh, with the, uh, excuse me, with um, dealing with everything we have to do with, uh, look if we finally beat Medicare. Thank you, President Biden. President Trump—gosh, that was brutal. The reaction from CNN, even MSNBC's Joy Reed, as far left as you can go, was brutal.

The knives are out from the Democrats for President Biden. There is a deep, wide, and very aggressive panic in the Democratic Party. It started minutes into the debate and it continues right now. It involves party strategists, it involves elected officials, it involves fundraisers. They're having conversations about the president's performance, which they think was dismal. They think it will hurt other people down the party in the ticket. They're having conversations about what they should do about it.

Some of those conversations include whether they should go to the White House and ask the president to step aside. Other conversations are about whether prominent Democrats should go public with that call. They feel this debate was so terrible. I love Joe Biden. I work for Joe Biden. He did not do well at all. There is time for this party to figure out a different way forward—if he will allow us to do that.

I too was on the phone throughout the debate. My phone really never stopped buzzing. The universal reaction was somewhere approaching panic. The people who were texting with me were very concerned about President Biden seeming extremely feeble, seeming extremely weak. Quite frankly, a car accident in slow motion. Joe Biden sought this debate at this remarkably early time because he knew he was losing. He needed to change the narrative. He did change the narrative. He sunk his campaign.

There is absolutely no way any of us could have predicted this. Oh wait, Nick, play the clip. Read the room, Democrats. You have put up a candidate that nobody wants. His policies on the border and some other issues are not in sync with the majority.

People who were texting with me were very concerned about President Biden seeming extremely feeble, seeming extremely weak. Joe Biden sought this debate at this remarkably early time because he knew he was losing and he needed to change the narrative, and he did change the narrative. He sunk his campaign.

I believe that's what's going to happen in the next 30 to 60 days. So I'm predicting, you think this could be a switch—100%. I have no idea. Could be Gavin, could be anybody. Anything's possible. I think Trump's going to demolish him in the debate. I think he'll sink to 30% in the polls and then the Democrats will find a way to give him a graceful out and then they'll field somebody else.

Prediction markets showing Biden has plummeted to—let's check the number—oh yeah, 33%. President Biden is a person that's given up his whole life to work on behalf of America in the best way that he thought was possible. He's overcome a lot of tragedies. I think he's worked very hard. He's diligently tried to do what he thought was right on behalf of the people of Delaware and then the United States.

My honest takeaway is that person, though, is no longer really in charge, and I think that was very troubling for me. It actually makes the last six months make a lot more sense. I thought the fact that we could not get a response from the White House to be—I took it a little bit personally. I was wondering why, for someone that had been such an ardent supporter, I couldn't even get an email back when I was consistently asking them to be on the pod.

And now I see that it wasn't just one single act; it was part of a holistic strategy. It was the same strategy that boxed RFK out of the Democratic primary because could you imagine if this event had happened when he had to debate RFK in the Democratic primaries? It would have been exposed then. It's probably partly to explain how the law has been used in New York state... you prevented other people from actually challenging you and directly asking questions of you in the Democratic primaries and then you try to put political pressure on your opponents.

All of that is systematically about a group of people that are unelected who are trying to control democracy and I think that that's the most troubling takeaway from this... there is a person who should be allowed to transition into the sunset and be celebrated for what he's done. Instead, there are people that frankly at the margins are acting pretty unethically and at the limit are actually acting somewhat diabolically to prop this person up so that they can keep power.

His campaign put out the word that he had a cold and maybe he just had a bad night. Joe Scarboro just saying a week ago that not only was Biden cognitively fine but in fact he was the best Joe Biden he had ever seen just a week ago or two weeks ago. Reed Hoffman was saying that he had a two-hour lunch with Joe Biden and Biden was regaling him with details of AI and Gaza and he was good. I'm actually taking them at their word because they seem like very trustworthy sources to me.

I see no reason to swap out this candidate. I think that anyone can have a bad night and there's no reason whatsoever for the media to be panicking like this. Stand by your man, stop being a wimp because your candidate had one bad night. You don't stab him in the back like this, absolutely not. You rigged the primaries for him, you boxed out Bobby Kennedy who you know I thought was a fantastic candidate, you basically boxed out Dean Phillips.

This is the candidate who you want. Sleep in it, you made your bed, sleep in it, stop betraying your candidate like this, it's unseemly. This is a candidate who you've been supporting for years, and just days ago you were saying was completely mentally fit, in fact, the best he had ever been. Stop betraying your candidate like this, it's unseemly.

The big loser of last night's debate was the American public. The big winner of last night's debate was probably Russia, China, Iran, maybe the Saudis, licking their chops watching the utter dysfunction in the leadership of the party and the leadership of the country as it stands today. I absolutely love the fact that there were no interruptions, that the mics went mute, that there was no audience and the moderators didn't kind of challenge back and forth and try and make themselves the show. That was very unique in a presidential debate so I actually like the debate format.

Joe Biden does not appear equipped to be president of the United States. His inability to conduct even a basic interview or give a clear and concise statement in a candid setting highlights a clear and obvious decline in function since he took office. It is important for Democratic Leadership to find an alternative candidate and message this soon. Doing so, I believe, will buoy fundraising efforts across the board. I said I would feel uncomfortable with a Democratic majority Senate and House giving a leader with declining aptitude nearly limitless effect.

Mainstream media and leadership in the Democratic party have tried to tell an alternative story that was so obviously revealed to be not true last night. There are a few people in charge who decide who gets to be the candidate and those few people are keeping democracy from working effectively. Every time a video or an interview comes out, it has been excused away as "oh, well, he tripped" or "oh, you know, it wasn't well edited." The fact that they all flipped so quickly is what's so shocking.

The takeaway is that there's something wrong with the way things are running in this country. The media and the Democratic party leadership are lying to America. The subversion of democracy is really the real threat to democracy. None of us are choosing to elect a shadow cabinet of handlers to run America. We have the risk of having for another four years if this lie isn't exposed. The through line is as you said a coordinated effort to kind of obfuscate his decline.

You see these clips being talked about by millions of people but then media and Democratic Leadership won't acknowledge them. Because the importance, as Freedberg said, is so high you probably do have a lot of people outside the United States really questioning what is going on in the greatest country in the world right now that this can even happen. They're actually not that anti-Trump; they're just Pro Power. They care more about their hatred of Donald Trump than their desire to stay in power.

We have been talking about his cognitive ability for a couple of years here on this podcast. What we saw last night was incredibly troubling. This is 25th amendment territory; this person is not fit to serve as president for the remaining of his term. This is elder abuse.

This person is not fit to serve as president for the remaining of his term. This is elder abuse. You got to take the keys away from Biden; he's not fit to finish the rest of his term, period, full stop. These lunatics are so deranged they thought they won last night.

Let the guy retire. Let him spend time with his grandkids, great-grandkids, whatever he's blessed with. It's incredible that not a single staff member has resigned, isn't that incredible? Joe, you never fired anyone.

They consider Trump such an existential threat and they want to maintain power that they'll do anything to keep it. This was an embarrassment for America. This debate, the fact that these are the two candidates, is a complete embarrassment.

📉 Economic weakness, not AI, is the real job market culprit! 🧐💼

Alright, folks, let's dive into the latest buzz around AI and the economic landscape:

Expectations and Economic Weakness

Well, I agree with Jamaath. It's just too soon for AI to be responsible for this. AI productivity gains are just starting, and we're not really seeing job elimination or job replacement yet. I think this is just a symptom of economic weakness, and the main reason for the economic weakness is the rate hike cycle.

Remember, we went from practically 0% interest rates to 5.5% in one year. A lot of people were expecting that to cause a recession. That's normally what happens when you get a very rapid rate hike cycle; it sucks liquidity out of the economy, contracts economic activity, and you get a recession. I was one of the people who thought that, and it didn't happen.

I think one of the reasons it didn't happen is there was a huge backlog of jobs. It started at 12 million open jobs. The rising interest rates have created some economic weakness. It's caused a reduction in liquidity and investment, and created more pressure on companies to be profitable. All those things have cascaded through, burning off this job backlog. We haven't necessarily seen unemployment yet, but we're seeing a reduction in job postings. I think that's what's going on. The economy may not be in recession yet, but it's just weak. This is just one metric showing that.

Hiring Trends

You're running a company now, doing hiring qualitatively. What are you seeing in terms of hiring?

We've been putting job postings out and seeing hundreds of people apply for jobs that we would get dozens for previously. What's the game on the field in terms of hiring? We hire very specialized people. In the specialty field we're in, we're the best in the world, so everyone wants to work here. Hiring's got easier. It is way easier to hire devs right now, no question about it. There's not three competing offers from Big Tech. Typically, a developer would have those three sets of offers: a startup willing to give 1% of the equity, a mid-market company like Uber or Airbnb offering $300K, and an incredible $500K offer from Amazon or Google. Those offers just aren't there, so it makes it easier for startups to hire great talent. This is the best time possible to be a startup; the talent on the field is incredible.

OpenAI and For-Profit Conversion

EY is considering a for-profit conversion, possibly an IPO soon. It's possible OpenAI will become a for-profit benefit corporation. If you don't know what a for-profit benefit corporation is, it's a corporation with a stated mission that the board is responsible for achieving. This means OpenAI, which was valued at $86 billion, could IPO at some point.

I mean, it makes so much sense for them, so I think they should do it as quickly as possible. We are in the first inning of what should probably be an enormous tectonic shift in technology. Whoever wins in the first inning usually isn't the one that's winning by the ninth inning. I would encourage anybody that's winning right now to monetize, get secondaries, and take money off the table as fast as possible because the future is unknown. The more disruptive the technology is, the more entropy there is.

Monetizing and IPO

Look at social networking as an example. The people who captured all the value were not the ones at the beginning who everybody thought was going to win. They need to clean up that convoluted Byzantine corporate structure with all the line charts everywhere. That structure is what created all the problems with this nonprofit board. You've got a for-profit entity reporting to a nonprofit board, creating a culture clash.

Using a tried and true C Corp is the way to go. They should make it a standard C Corp, make things right with Elon because he provided the first $40 million of seed capital, and make it right with Sam so he gets his compensation. Then, they should IPO. The public actually has the ability to invest in this AI wave. The trend line is it's doubling revenue year over year. It'd be good for OpenAI to clean up its Byzantine cap table and structure, and it would be good for the public to have the opportunity to invest. So, it's a win-win.

📈 OpenAI's rapid growth could make its IPO a golden ticket! 🚀💵

Alright, folks, let's delve into some intriguing developments surrounding OpenAI and its economic and strategic maneuvers.

IPO Potential and Employee Wealth

A company generating $3 billion in revenue eyeing an IPO at a $120 billion market cap might make you think the public already missed the big wave. But no, I don't think so. The trend line shows it's doubling revenue year over year. It'd be good for OpenAI to clean up its Byzantine cap table and structure, and it would be beneficial for the public to have the opportunity to invest. So, it's a win-win.

However, it does take time to get your reporting to the level of maturity necessary to be a public company. You don't want your earnings or revenue to be volatile. I've heard they've had quite a bit of turnover because there's been pretty good secondary market activity, which means a lot of employees have cashed out and made substantial money. I heard 70% of employees at Nvidia are millionaires now. I would recommend taking some chips off the table. Even if you think it's the greatest company in the world, it makes sense to diversify because you don't want all your eggs in one basket.

Strategic Positioning and Government Ties

I think OpenAI is running a very strategic game plan to become part of the tech establishment as quickly as they can. They were able to add the former head of the NSA to their board of directors. There's a group of people who want to ensure that these kinds of technologies and capabilities are firmly within the hands of the United States apparatus and not anybody else. Interestingly, they managed to get Elon to drop his lawsuit, conveniently on the same day that the former head of the NSA was added to the board.

The next logical step is to create capital markets distribution, which is really about syndicating ownership of the company to all the big, deep pools of money. That way, these investors will also be rowing in the same direction in support of OpenAI. This pulls them closer to the kinds of folks who could otherwise give them a hard time. When Senate hearings about this stuff happen, it's more likely to be confidential behind closed doors. All these moves benefit OpenAI.

Capital Markets and Deep State Connections

They were able to get Elon to drop his lawsuit, which was conveniently on the same day the head of the NSA was added to the board. The next logical step is to create capital markets distribution, syndicating ownership to attract big mutual fund apparatuses globally. This is about creating a high-level game theory of how to establish an international apparatus that supports your corporate objectives. The only thing left is to get shares into the hands of major investors like BlackRock and other big mutual funds, who then syndicate to individual investors worldwide.

With government connections and no real legal overhang, the likelihood of an IRS agent suddenly deciding to audit OpenAI is basically zero. I don't think it's cynical; it's smart business strategy. They're integrating themselves into the deep state. They offer to be a vessel for the intelligence community, granting access to whatever is needed in exchange for protection and wealth accumulation.

Implications for Civil Liberties and New Ventures

Every week before the 2020 election, there were meetings between the trust and safety teams, the censorship division of Twitter, and the intelligence community. Big tech companies have essentially given themselves over to this powerful apparatus. In exchange for being left unfettered to make their money, they've conceded some power. I think it's a troubling development for the civil liberties of ordinary Americans, but it's a reality we've seen unfold.

Securing an incredible salary bump by working in big tech has become the norm. Ilia announced his new startup, Safe Superintelligence Inc. (SSI), which is special because its first product will be the safe superintelligence, and it won't do anything else until then. Ilia resigned from OpenAI after a decade with the company. You might recall he was on the board that orchestrated Sam Altman's firing. It's a bit confusing to come into the market with such a specific focus, but that's what some people are discussing.

🚀 OpenAI's strategic moves are tying it closely with the deep state for ultimate protection and growth! 🕵️‍♂️💰

Alright, folks, let's delve into some intriguing developments surrounding OpenAI and its economic and strategic maneuvers.

IPO Potential and Employee Wealth

A company generating $3 billion in revenue eyeing an IPO at a $120 billion market cap might make you think the public already missed the big wave. But no, I don't think so. The trend line shows it's doubling revenue year over year. It'd be good for OpenAI to clean up its Byzantine cap table and structure, and it would be beneficial for the public to have the opportunity to invest. So, it's a win-win.

However, it does take time to get your reporting to the level of maturity necessary to be a public company. You don't want your earnings or revenue to be volatile. I've heard they've had quite a bit of turnover because there's been pretty good secondary market activity, which means a lot of employees have cashed out and made substantial money. I heard 70% of employees at Nvidia are millionaires now. I would recommend taking some chips off the table. Even if you think it's the greatest company in the world, it makes sense to diversify because you don't want all your eggs in one basket.

Strategic Positioning and Government Ties

I think OpenAI is running a very strategic game plan to become part of the tech establishment as quickly as they can. They were able to add the former head of the NSA to their board of directors. There's a group of people who want to ensure that these kinds of technologies and capabilities are firmly within the hands of the United States apparatus and not anybody else. Interestingly, they managed to get Elon to drop his lawsuit, conveniently on the same day that the former head of the NSA was added to the board.

The next logical step is to create capital markets distribution, which is really about syndicating ownership of the company to all the big, deep pools of money. That way, these investors will also be rowing in the same direction in support of OpenAI. This pulls them closer to the kinds of folks who could otherwise give them a hard time. When Senate hearings about this stuff happen, it's more likely to be confidential behind closed doors. All these moves benefit OpenAI.

Capital Markets and Deep State Connections

They were able to get Elon to drop his lawsuit, which was conveniently on the same day the head of the NSA was added to the board. The next logical step is to create capital markets distribution, syndicating ownership to attract big mutual fund apparatuses globally. This is about creating a high-level game theory of how to establish an international apparatus that supports your corporate objectives. The only thing left is to get shares into the hands of major investors like BlackRock and other big mutual funds, who then syndicate to individual investors worldwide.

With government connections and no real legal overhang, the likelihood of an IRS agent suddenly deciding to audit OpenAI is basically zero. I don't think it's cynical; it's smart business strategy. They're integrating themselves into the deep state. They offer to be a vessel for the intelligence community, granting access to whatever is needed in exchange for protection and wealth accumulation.

Implications for Civil Liberties and New Ventures

Every week before the 2020 election, there were meetings between the trust and safety teams, the censorship division of Twitter, and the intelligence community. Big tech companies have essentially given themselves over to this powerful apparatus. In exchange for being left unfettered to make their money, they've conceded some power. I think it's a troubling development for the civil liberties of ordinary Americans, but it's a reality we've seen unfold.

Securing an incredible salary bump by working in big tech has become the norm. Ilia announced his new startup, Safe Superintelligence Inc. (SSI), which is special because its first product will be the safe superintelligence, and it won't do anything else until then. Ilia resigned from OpenAI after a decade with the company. You might recall he was on the board that orchestrated Sam Altman's firing. It's a bit confusing to come into the market with such a specific focus, but that's what some people are discussing.

The Focus on Safe Superintelligence

The company's goal right now is in the title: develop a safe superintelligence. The company is special in that its first product will be the safe superintelligence and it will not do anything else until then. It's a little bit confusing to come into the market and compete with a throttle or a governor, I guess, on your startup. I'm not bullish about that pitch because I think it makes the company a little bit schizophrenic. Safety concerns are a brake pedal; they don't help you move faster, they make you move slower.

I think that Sam wants to win; he wants to develop AI as quickly as possible, specifically AGI, and he had this group inside the company that frankly was a lobby for moving slower. The companies that care about safety more than others are going to lose, and so you have this Darwinian effect going on where there's going to be a race to AGI. I think that is genuinely a little bit scary for where this all leads us.

The Race for Truth and Honesty in AI

Elon says that we're going to make sure that our model at XI, the Grock model, is scrupulously honest; it's not going to lie to you. I think maybe the best you can do is impose a truth governor. The best way to hit truth is to cite your sources. It is unbelievably good if you put "cite your sources." It's really starting to understand what you're asking for.

I was asking it, like, I'm hiring some positions; give me the high, low, average of this position, give me five sources of information, put it in a table, and then average the high, low, and median. It came back to me, with an incredible thread jam off of this position, and then sourced Glassdoor, Indeed, Salary.com, whatever it was. I was like, holy cow, this is an hour or two of research work done instantly.

Foundational Models and Consumer Surplus

Foundational models are quickly becoming a consumer surplus. Every model is roughly the same; they keep getting better and better, but they're also approaching these asymptotic returns. You need to change a key underlying variable that you use to build these models, and it looks like one of those variables that people are looking at is how you basically take the internet, not as raw data, but then you actually kind of refine it and refine it some more and then use that as the basis of learning. It drives up model costs to a degree that are probably untenable for most companies except for a few.

The cost of a good functional model today is in the billions, but by 2027 it could easily approach a hundred billion dollars. There isn't a hundred billion dollars for everyone to have. Google will find it, Microsoft will find it, Facebook will find it, Amazon is coming out, OpenAI will probably find it, Amazon will find it. It's becoming an arms race.

The Arms Race and Its Implications

It's not dissimilar actually to ride-sharing. When people saw Uber's success, they thought, well, this is simple, and it was, but you had to subsidize losses for decades before that company was profitable. One startup can probably win, but there will be a bunch of open-source alternatives. They're all asymptotically similar, and so it's an arms race on cost and compute.

I just don't see VCs having the temperament and the wherewithal to fund hundreds of billions of dollars into multiple companies to do that. I have been having tremendous results there. It seems like there is, I don't know, I don't want to say a step function, but man, it's a lot better right now.

Practical Applications and Edge Computing

We're using a lot more models, and we're seeing them be very practically applied at the edge. You're getting highly functional, application-specific models that can be run in a local environment on the edge, so they're not running in the cloud on big compute clusters. There's incredible applications in things like machine vision and control systems.

Military Applications and Ethical Concerns

China basically ripped off Boston Dynamics, or at least that's what it looks like, and they created this military dog. Then they put machine guns on the back of the dog's back. This thing goes autonomously into a building, and it can then find its target and eliminate its target with the machine gun on the back.

Imagine those are amphibious, and they could travel across water and wind up in another destination.

🚀 Microsoft’s sneaky bundles are crushing competition and dominating markets! 💼📉

Alright, folks, let's delve into some intriguing developments surrounding OpenAI and its economic and strategic maneuvers.

Machine Vision and Military Applications

Machine vision applications are incredibly powerful. When you see this insane video from China, it’s a different topic altogether. Have you guys seen this? I have. This autonomous machine goes into a building, finds its target, and eliminates it with a machine gun on its back. It’s incredible... but also terrifying.

This is the dark side of small, highly performative, application-specific models running in an embedded way. Imagine if these machines were amphibious and could travel across water, winding up in another destination. It’s a chilling thought.

Microsoft’s Antitrust Issues with the EU

On a completely different note, the EU just charged Microsoft with antitrust violations over how it bundles Teams, their so-called Slack killer, into Office. Microsoft Teams was bundled automatically with Office, rocketing to 75 million members in 2022 compared to Slack's 12 million. Microsoft excels with bundling; it’s their not-so-secret weapon for dominating new markets.

We know their playbook: Office plus Teams, Windows plus Explorer, Azure plus Visual Studio, 365 plus OneDrive, and Xbox plus Game Pass. If Microsoft can clone a breakthrough innovative product, even if it’s 10%, 20%, or 50% worse, they include it in their bundle. They effectively give it away for free as part of the bundle, pulling the legs out from under competitors and preventing them from being vibrant.

The EU’s Decision and Its Implications

I think the EU made the right decision by siding with Salesforce, who claimed that Microsoft was engaged in illegal bundling by combining Microsoft Office and Teams. By bundling, it means that enterprises get Teams for free until, of course, the price of the bundle goes up the next year. This makes Teams appear free on the margin, whereas Slack is something you have to pay for. That is illegal bundling.

Every single product needs to have its own à la carte pricing. When you add together the à la carte prices, it should equal the price of the bundle. In other words, you don’t get anything for free on the margin; the customer must have the discretion to choose what they want.

Microsoft's Bundling Strategy and Market Domination

If we don’t enforce this, Microsoft will use the power of the bundle to systematically dominate enterprise software. They won’t take on everybody at once, but every year they’ll add a new product to the bundle. It appears free on the margins because it’s part of the bundle, but then they raise the price of the bundle the next year. They boil the frog, so to speak.

Historical Context and Antitrust Measures

Microsoft has been bundling products to kill competitors for 40 years. They used Internet Explorer, bundled it with Windows, and killed Netscape. The FTC and DOJ need to dust off that old consent decree, read it, and figure out whether this makes sense again. The right approach to antitrust is to stop anti-competitive tactics, and bundling is at the top of the list.

Economic Implications

You deny risk capital reward, and you need that reward to induce the next stage of risk-taking. Investors are looking at corporate credit and PE deals for returns, not venture capital, because there’s no M&A occurring. Dollars are being taken out of innovation in early stages and put into privatizing SaaS companies or real estate deals. This is really dangerous for America.

So, these are some of the pressing issues we're facing right now, from the dark side of machine vision to the ongoing battle against anti-competitive practices in the tech industry.

🔍 LPs are ditching VC for safer bets like corporate credit and PE deals! 💰📉

Alright, folks, let's dive into the latest developments and insights I've gathered from my recent discussions with LPs.

Shifts in Investment Focus

I've been talking to a lot of Limited Partners (LPs), and they're shifting their focus towards corporate credit and private equity (PE) deals because these offer more predictable returns. They're looking at venture capital and wondering, "Why is there no mergers and acquisitions (M&A) occurring? Where's our Distributed Proceeds Indicator (DPI)? Can you guys sell some of these companies?" The reality is, we can't sell them because the current market conditions, especially with the looming threat of increased regulation, are scuttling M&A activities. This shift means dollars are being taken out of early-stage innovation and funneled into privatizing SaaS companies and real estate deals. This trend is really dangerous for America because we need more investments driving innovation.

The Bundling Debate

If bundling benefits the consumer through improved prices, I don't buy the anti-trust arguments in many of these cases. Supermarkets, for example, use loss leaders like peanut butter, milk, and eggs to attract customers. Once people are in the store, they purchase other items, balancing out the loss. Similarly, bundling in tech isn't necessarily a monopoly. When you install Microsoft Office and it comes with Teams, you still have options. There are plenty of alternatives out there. The whole benefit of SaaS (Software as a Service) is that it allows market power to be challenged. You can switch providers if a better option comes along.

The Reality of Competition

Google competes effectively in the office space against Microsoft Office, and Zoom is a strong competitor to Teams. None of these businesses have been completely sidelined. What we're really debating is a sales practice where Microsoft says, "Well, you need Office, you need Windows, and you need Active Directory." Once they dominate a market, like they did with Slack, they can raise the price of the bundle—that's the theory, and if true, it should be prosecuted. Under the old Microsoft Internet Explorer action, the issue was bundling. Microsoft needs to price the bundle transparently, allocating costs across all components, so people can buy each product à la carte.

Ensuring Fair Competition

If the total cost of buying individual products à la carte is cheaper than the bundled price, it's a great deal for the customer. What we're talking about here is proactively maintaining competition, which creates a healthy market dynamic. If large companies like Google hadn't propped up products like Chrome, Microsoft might have monopolized the core interface for the internet. Firefox, for instance, became almost irrelevant, and Netscape went to zero.

The Danger of Market Power

If left unchecked, Microsoft could dominate the market entirely. It's not a big ask to implement à la carte pricing to level the playing field. Better products can still win even with bundling. For example, Figma has succeeded despite Adobe's strong market presence. Adobe operates within a vertical system of record, while Microsoft spans broad, horizontal systems that are harder to replace. Bundling is like offering a wrench and a can of peanut butter together—you don't necessarily need both.

Political Commentary

I want to compliment Joe Biden for continuing to fight these anti-competitive practices. You're doing just fine. On the other hand, the disservice done to the American people with certain political maneuvers is ridiculous. The idea of invoking the 25th Amendment to replace the President shows the level of frustration and urgency some feel about current leadership.

Watch: youtube.com/watch?v=aEYcZtaZRXQ