E153: In conversation with Jared Kushner: Israel-Hamas War, paths forward, macro picture, AI

From roughly the mid‑2020s onward, Iran’s strategy of supporting destabilizing Islamist jihadist proxies in the region is entering its ‘last gasp’: over the coming years, its influence and ability to destabilize the Middle East will decline, while a more collaborative, economically integrated ‘new Middle East’ will continue to emerge and strengthen.

“So the way I kind of view this period right now is that the Middle East today is way stronger than it's been in the past. And this is what I would say, the last gasp of Iran and those who have pushed for destabilization and kind of this whole, um, you know, Islamist jihadist project at the expense of kind of a collaborative, uh, Middle East, which which would then will create a lot of opportunity for the next generation to, to really thrive.”

Israeli security services (including Mossad) will eventually locate and kill or capture the top leadership of Hamas responsible for the October 7, 2023 attacks; the question is timing and method, not whether it will happen.

“there obviously are some bad leaders at the top who are culpable who, um, who, who are military targets. And I imagine that it's really, you know, knowing the capabilities of Israel and the Mossad. It's just a matter of, you know, when and how, as opposed to anything else.”

Israel’s GDP will experience a significant decline in Q4 2023 as a result of the Gaza war, although historically the Israeli economy rebounds quickly afterward unless the conflict turns into a prolonged war, in which case economic damage will be larger and more sustained.

“I think GDP will take a big hit there in Q4. But obviously, you know, in Israel they do have a history of coming back right away. But if this is a prolonged war effort, there could be big hits.”

Israel’s GDP will experience a substantial decline in Q4 2023 as a result of the war in Gaza, large enough to be characterized as a "big hit" relative to prior quarters/trend.

“What could happen if they go to war and it's a prolonged war, is that economy can go off track. I think GDP will take a big hit there in Q4.”

By the time of the November 2024 U.S. presidential election, the U.S. economy will not be in a recession and will instead be in a "reasonable" (i.e., non-recessionary, soft-landing-type) condition.

“Now, if we were going to go into a November election where we were going to be in a recession, that's very bad for Biden. But sort of the tea leaves, for whatever it's worth, all the predictions, all the predictive markets show that we're going to be in a reasonable place.”

U.S. inflation will continue to decline over the subsequent 6–12 months after November 2023, moving the economy into a materially better ("pretty decent") inflation environment than at the time of this recording.

“We know that inflation is falling. It's going to fall even more. The second thing, Nick, the third chart here is you can see that now validated in these ten year breakevens... what it shows is the ten year break evens are also telling us, okay guys, we're going to be in a pretty decent place.”

As interest rates start to be cut in 2024, U.S. equity markets will perform well, with a broad positive move in equities driven by rate cuts and large cash balances moving out of money market funds.

“So that's a really positive sign, which is that money will need to find a home once rates drop... And then, as you said Friedberg, the last part of this is now you introduce rate cuts, and that's a real accelerant. Now, more than likely, I think what that means is that markets are set up to to do pretty well equity markets specifically.”

By mid-2024, the Federal Reserve will have begun cutting interest rates, U.S. inflation will largely be past its peak and no longer a major problem, and the U.S. economy will achieve a soft landing (i.e., avoid a recession while growth slows).

“I think what it's kind of saying is inflation is very much in the rear view mirror. Rates are going to get cut by the middle part of the year. The economy looks like it's going to be a soft landing.”

From late 2023 onward, the Russia–Ukraine war will remain broadly militarily static, with no major changes to front lines or decisive battlefield breakthroughs by either side in the near term.

“it does seem like it's kind of reached a point where it's not much is going to change militarily.”

Over the coming years, advances in AI tooling will enable a very large number (on the order of millions or more) of one- to two-person teams to create and operate companies, leading to a startup landscape dominated by many very small firms rather than a smaller number of large, labor‑intensive startups.

“If you think about a world where there's a million little companies or 50 million companies or 500 million companies that exist because they're one and two person teams that can build stuff that seems pretty reasonable and logical as the outcome.”

Over the medium to long term, the traditional venture capital role and firm structure will be largely replaced by more automated, algorithmic systems that allocate many small investments (e.g., $100k–$500k) against specified objectives, with only later‑stage large checks remaining as a more conventional process.

“I think there's a reasonable case to make that it doesn't exist. It's more of an automated system of capital against objectives.”

The AI application ecosystem will ultimately resemble the open web rather than a tightly controlled app‑store model, with open and widely accessible models and tools prevailing over a single proprietary platform.

“I think the reality is it's going to end up as the open web.”

Elon Musk will open‑source the Grok AI model, making it freely accessible for broad developer use.

“whether it's Llama or Mistral or even grok, when Elon open sources it, it's going to allow people to have access to these tools, basically for free.”

As AI models and tooling become pervasive, the tech and startup economy will shift toward many more small companies and materially fewer extremely large, dominant companies (“ginormous outcomes”) than in the previous tech cycle.

“So I think what that means economically is there's just going to be a lot more small companies and a lot fewer of these ginormous outcomes.”

Within the next hardware generation or so (on the order of a few years from 2023), training new foundation or near‑foundation AI models will commonly take on the order of weeks rather than many months.

“So to your point, this thing is going to be like people will be training models in weeks.”

OpenAI (or comparable leading AI providers) will add video as a supported modality for their models after text, images, and audio, enabling multimodal input/output that includes video in the foreseeable future.

“The other thing is multimodal. I mean, so they're really stressing the idea of combining text with photos. I guess videos will eventually come later.”