E117: Did Stripe miss its window? Plus: VC market update, AI comes for SaaS, Trump's savvy move

The roughly $1 trillion of venture capital raised in the recent boom (around 2021–2022), currently marked at about $5.5 trillion in paper value, will ultimately realize only about $1.6 trillion in distributions to LPs as returns revert to the historical industry average of roughly 1.6x paid-in capital, implying that approximately $3.9 trillion of current paper valuation will be lost over the full realization cycle (about 10+ years).

“over many cycles where we've had high rates and low rates and medium rates, our industry typically returns $1.60 for every dollar it raises. And that's over many cycles. And so if you believe that we're going to revert to the mean out of the trillion dollars we've raised, maybe we'll return 1.6 trillion. Now that sounds good. Except the problem is that 1.6 trillion is marked at 5.5 trillion. So you're going to have to give back... you're going to have to give back a lot of paper profits in order to get back to that 1.6 and be okay with it.” View on YouTube

Venture capital funds whose main investing vintages are 2023–2025 will, in aggregate, produce unusually strong, power-law-type returns relative to surrounding years, because short-term interest rates will remain around 5.5% for an extended period starting in 2023.

“Those vintage years 2023 is the is the first vintage year where we're actually starting to see high enough rates that have historically generated that kind of return. And so I do agree with you, David. I just think it's shifted out by a couple of years. 23 2425 those can be some real power law years, I, I think because we're going to have just based on what the fed is saying. 5.5% interest rates for the foreseeable future, which is it's a huge it's a huge number.” View on YouTube

For the current and upcoming early‑stage venture cohorts associated with this high-rate environment (roughly the early‑ to mid‑2020s), if the industry-wide average net return ends up around 6% annually, then approximately 80% of VC funds will have net negative real (inflation-adjusted) returns, about 20% will have positive returns, and only a small minority of those will generate very strong (top-decile-type) returns.

“If the market average return in venture in early stage investing is going to be 6%, remember it's it's not evenly distributed. So you know, 80% of funds could end up having net negative real returns and 20% make money. And then there'll be a very few that will make real money.” View on YouTube

As AI assistants are embedded directly into software products, a large share of customer support inquiries that today require human agents or separate support channels will effectively disappear, being handled in-product by AI instead.

“I think that a lot of that customer support inquiries just go away because the help The assistant gets built into the tool directly, so you never get to the point of you.” View on YouTube

Advances in AI and robotic surgery will eventually reduce the error rate in breast cancer surgeries from around 30% to effectively zero (or near-zero) by enabling precise tumor characterization and complete removal.

“So, for example, breast cancer surgeries, the dirty secret of our healthcare industry is that has a 30% error rate. You know, that can and should go to zero.” View on YouTube

Full‑body diagnostic scans like the one described will decline in price to roughly $500–$1,000 per scan and become widely adopted by the general population, with AI systems using the accumulated imaging data for early disease detection.

“If this thing gets down to like 500 bucks, which it obviously will, or a thousand bucks and everybody's doing it, and then all that data is in there, and then the AI is looking at it like you're saying. I mean, the AI early detection.” View on YouTube

In the Gonzales v. Google case argued in February 2023, the U.S. Supreme Court will ultimately rule in favor of Google, preserving broad Section 230 immunity for recommendation algorithms, and thereby delivering a legal win for Google and other large tech platforms.

“So even the justice, who I think was most likely to rein in 230 seem to be more comfortable with what the defendant, which was Google was saying. So it looks to me like Google and Big Tech are going to win this one.” View on YouTube

The Russia‑Ukraine war, as managed by the Biden administration, will ultimately have a worse overall outcome for the United States than the 1991 Gulf War against Iraq, in terms of cost, duration, clarity of objectives, and strategic consequences.

“I think the truth of the matter is that this war is going to turn out much worse than the Iraq war did in 1991, because in 91, we showed restraint and we knew what our vital interest was, and we kept our objectives is limited, and we kept the timetable very short.” View on YouTube

Western economic sanctions imposed on Russia over the Ukraine war will not cause a major collapse of the Russian economy; instead, Russia will experience only a modest GDP hit on the order of a low single‑digit percentage because non‑Western countries continue to trade with it.

“So the rest of the world is not happy with us. And this is why the Russian sanctions have not been effective. I think the Russian economy has had like a 3 to 4% hit. It is not the collapse that was predicted because there are enough other countries willing to do business with them.” View on YouTube

If the Ukraine war contributes to a significant U.S. recession before the 2024 election, Donald Trump’s main viable path to winning the presidency will be to blame that economic downturn on the war and the foreign‑policy establishment, using an anti–military‑industrial‑complex message as his central campaign argument.

“If we get a recession that Trump can, I think, lay at the feet of this war. He's positioning himself to take advantage of this could be a silver bullet for him. I don't think he has any other way of winning.” View on YouTube

Because the Ukraine war is existential for Russia, its leadership will be willing to escalate up to and including potential nuclear use rather than accept clear defeat, giving Russia enduring ‘escalatory dominance’ over NATO in this conflict.

“And the sooner we recognize that fact, the better off we're going to be.” View on YouTube

U.S. policy and rhetoric around the Ukraine war and China’s potential support for Russia will drive China and Russia into an increasingly close, quasi‑allied bloc opposed to U.S. interests, reversing the Cold War strategy of keeping them apart.

“And what we're doing right now, we're doing right now, is pushing China and Russia together into a new axis block. This is very foolish.” View on YouTube

Quora, by leveraging its Q&A corpus and products like the Poe chatbot, will emerge as the leading AI application company going forward, surpassing current incumbents like ChatGPT in practical consumer relevance; Reddit likewise has significant potential to become a major AI answer platform if it launches its own chatbot.

“It's going to be I think Quora is the number one player in AI going forward. I know that sounds crazy, but the fact that and I think Reddit also has this insane potential if Reddit had a chatbot...” View on YouTube