E118: AI FOMO frenzy, macro update, Fox vs Dominion, US vs China & more with Brad Gerstner

The roughly 500 generative‑AI startups existing at the time of this discussion will grow to around 5,000 startups (10x) in the near term (over the subsequent few years), but the majority will be culled relatively quickly via milestone‑based funding, leaving a much smaller surviving set.

“that 500 is going to go ten x, there'll be 5000 of these start ups, but it will quickly whittle down as people go through this milestone based funding system in Silicon Valley.” View on YouTube

Over the venture fund vintages immediately following this discussion (roughly 2023–2024), institutional LPs will concentrate commitments into a small set of top‑tier Silicon Valley firms, while many sub‑scale, first‑ and second‑time venture funds will struggle significantly to raise new capital.

“the consequence is they're narrowing their aperture as to the venture funds they want to allocate capital to... I think what we saw over the last two years, Jason, was an explosion of new funds, an explosion of new first time, second time funds, I think subscale small funds, with no doubt they're going to find a really, really tough time to chamath's point about raising capital” View on YouTube

In 2023 H2 and throughout 2024, there will be widespread recapitalizations in venture‑backed startups: many companies that raised at peak 2021 valuations will be forced into down rounds or structured financings, while AI companies will continue to attract significant new investment, creating a bifurcated funding environment.

“I think what we're going to see in the second half of 23 and all of 24 is a lot of medicine being taken, a lot of down rounds, a lot of structure. It's going to be a tale of two cities, the hot area. You know, AI is going to continue to receive new investment. And all these companies that you know, that receive peak valuations in 2021 are going to have a day of reckoning.” View on YouTube

Over the inflation data releases in the weeks immediately following this March 3, 2023 recording (i.e., the next few CPI/PCE prints), U.S. inflation will continue trending down toward roughly 4%, and it will do so faster than prevailing market sentiment at that moment implies.

“we now are going to have a couple inflation prints coming up over the course of the next couple of weeks that are going to be important. My hunch is, you know, everybody has tilted again on what we saw in the last couple prints. My suspicion, if you look at Morgan Stanley and Goldman Sachs, the consensus view is that we're still heading in the direction of 4% faster than I think people emotionally Think so.” View on YouTube

The U.S. Federal Reserve will raise the federal funds rate to approximately 5.5% in this tightening cycle, leading to short‑term bank products such as Credit Suisse 3‑month T‑bill offerings reaching around 7.5% annualized yield in the near term (i.e., during the same rate‑hike cycle, 2023).

“I still kind of maintain that we're probably going to have a 5.5% fed funds rate, which means that, I don't know, maybe Credit Suisse will offer me 7.5% soon on three month T-bills, but we're going to have higher rates.” View on YouTube

Salesforce will continue to deploy significant capital to share repurchases, expanding its buyback activity toward a total authorized program of about $20 billion over the ensuing few years after this March 2023 earnings call.

“But the company bought back $2.3 billion worth of its stock. We're going to see more of that for sure. And they're going to be increasing its share buyback program to $20 billion going forward.” View on YouTube

The Dominion Voting Systems defamation lawsuit against Fox News will not ultimately result in Fox being found legally liable under the current U.S. defamation standard (New York Times v. Sullivan), i.e., Fox will avoid an adverse final judgment on liability.

“Let me answer you directly, Jason. I think this would be a better world if Fox reliable, but I don't think they're going to be because that's not the legal standard.” View on YouTube

In the months following early March 2023, rhetoric in the U.S. Congress from both Republicans and Democrats will feature an unusually high and sustained level of anti‑China sentiment, more intense than in recent years.

“We're going to see a level of Chinese hate leveled out of out of Congress, both sides.” View on YouTube

Within a few years after March 2023, TikTok will be banned from operating in the United States in its then‑current, China‑controlled corporate structure; it will become the primary high‑profile corporate casualty of rising U.S.–China tensions.

“Should it be banned? No, because I believe in a free market. Will it be banned? Yes. Because it's. The most obvious cultural way to pick a fight with China without actually picking a fight with China. So, yeah, I think it's going to be the most obvious victim of all of this.” View on YouTube

As U.S.–China great power competition intensifies over the few years following March 2023, TikTok will be severely harmed in the U.S. (through a ban, forced divestiture, or equivalent measures), effectively becoming a major casualty of that competition.

“I tend to think Chamath is right that TikTok is going to be gpk roadkill, and Gpk stands for Great Power Competition.” View on YouTube

Over the subsequent several years after March 2023, the concept of “Great Power Competition” with China will become the dominant organizing principle of U.S. foreign policy, widely used in official rhetoric and strategic planning.

“You're going to start hearing that term more and more. It's going to become the organizing principle of American foreign policy.” View on YouTube