E156: Ivy League antisemitism, macro, SaaS recovery, Gemini, Figma deal delay + big Friedberg update

Beginning in late 2023 and over the subsequent election cycles, the political alignment of American Jews will measurably shift, with a higher share identifying with or voting for the Republican Party (or right‑leaning positions) compared with prior decades, reversing part of the historical tendency of American Jews to align with the left/Democratic Party.

“I would expect that, again, a lot of Jewish people are waking up to the ways in which the left has changed, and they're realizing that that is not a hospitable place in the political spectrum for them to be. And I would expect there to be kind of a pilgrimage now of more Jews in America towards the right, as opposed to remaining on the left where they've always been.” View on YouTube

Following the December 5, 2023 congressional hearing on campus antisemitism, at least one of the university presidents who testified (e.g., from Harvard, MIT, or Penn) will be removed from their position or forced to resign in the ensuing donor backlash, within the subsequent months.

“I think they're getting fired. I think the money, as you pointed out in your tweetstorm, is going to cause that. They're going to lose a lot of donations.” View on YouTube

Of the university leaders involved in the campus antisemitism controversy discussed in the December 2023 hearings (e.g., presidents of Harvard, MIT, Penn, etc.), at least one will be fired or will resign under pressure within the near term (on the order of months following the hearing).

“I think of the four. If I were to just have to make a bet, I'd say probably at least one of them's getting fired.” View on YouTube

The Federal Reserve will implement at least one interest rate cut during Q1 2024, which will begin an easing cycle that materially benefits financial markets and, indirectly, President Biden’s 2024 re‑election prospects.

“I think, I think, I think there will be a rate cut in Q1, and I think this is the Biden bailout.” View on YouTube

Conditional on the Federal Reserve executing a 25 basis point rate cut in Q1 2024, roughly $1 trillion of the approximately $5.7 trillion then parked in U.S. money market funds will flow into risk assets (e.g., equities) over the following months, producing a significant market rally.

“If you see a quarter point rate cut in Q1, a trillion of the 5.7 trillion in money market accounts will rip into the market.” View on YouTube

Within roughly two years from December 2023 (by late 2025), U.S. benchmark interest rates (e.g., Fed funds or the 10‑year Treasury yield) will decline to around 2.5%, approximately 160 basis points lower than prevailing levels at the time of the discussion.

“Without debating whether it happens in first quarter or second quarter. The more fundamental thing is if you look two years out, you probably see rates around 2.5%, and that's 160 basis points from here.” View on YouTube

From Q3 2023 forward, the period of contraction or stagnation in software/SaaS (the "software recession" characterized by shrinking or negative net‑new ARR and widespread cuts) is over, and the sector will, on average, return to sustained positive net‑new ARR growth in subsequent quarters.

“I think again, the software session I'm calling an end to the software recession officially.” View on YouTube

After the mid‑2022 to mid‑2023 "software recession," aggregate revenues for software/SaaS companies will resume positive growth from late 2023 onward, with industry‑wide top‑line growth rates improving compared with the prior four quarters of negative or flat net‑new ARR.

“I think software revenues are going to rebound.” View on YouTube

The early‑stage startup funding vintage of roughly 2023 (the year in which he invested in ~100 companies) will, in hindsight, produce better venture returns than any other venture vintage during the lifetimes of the hosts (i.e., will be the best-performing VC vintage of their investing careers).

“So I think this is going to be the best vintage adventure in our lifetimes. That's my personal belief. I invested in 100 companies this year, but I could be wrong.” View on YouTube

Google will remain a major competitive player in AI going forward, with its Gemini launch marking the start of it being one of the leading forces in the AI market for the foreseeable future (at least several years).

“So you know big, big, big announcement for Google I think it's definitely worth saying that they're in the game and it's going to be pretty powerful to watch I think pretty important to watch.” View on YouTube

As AI answer experiences increasingly replace traditional search results over the coming years, Google’s market share in search will decline from its historical dominance; Google’s AI franchise will not reach the same relative market share that Google Search historically held.

“So I think as more and more searches get replaced with AI, it's just impossible that they're going to maintain that same dominant share.” View on YouTube

Over the next several years as AI assistants become integrated into products like Google Gemini/Bard, the volume of user queries to AI systems (AI "questions asked") will increase by at least an order of magnitude (10x) and potentially up to 100x compared to the current volume of traditional web searches.

“I think the number of searches or the number of interactions, the number of queries, let's call them questions asked is going to go like ten, 20, 50, 100 x. I think people are going to be talking to their AIs all day long.” View on YouTube

AI-driven answer experiences (such as Gemini integrated into search, flights, shopping, etc.) will become a highly lucrative advertising business for Google, with ad clicks and targeting integrating effectively into AI responses, leading to substantial new ad revenue growth over the coming years.

“I think it could be a goldmine. And I think the click stream and the ad network is going to fit perfectly into it.” View on YouTube

Over time (within roughly the next several years), the number of large foundational AI models available will proliferate, and the marginal cost of using such models will trend toward zero, making foundational model access effectively commoditized.

“There's going to be a proliferation of foundational models. The cost of those models will go to zero.” View on YouTube

As foundational AI models and specialized hardware become commoditized over the next several years, the primary economic value in AI will accrue to (1) large and next‑generation AI cloud/infrastructure providers (e.g., AWS, Azure, GCP and similar) and (2) application-layer companies built on top of these models, rather than to the model providers themselves.

“So the folks that are the AWS, the Azures and the GCP of the world, or these next generation entrants who are building AI clouds, those folks, I think will make money and then the apps will make money.” View on YouTube

Following the UK CMA’s aggressive stance on the Adobe–Figma and Microsoft–Activision deals, the EU and possibly the US FTC/DOJ will adopt similar positions or reasoning, leading to coordinated regulatory resistance to such large tech acquisitions in the near term (subsequent few years).

“But I think that's what's going to happen.” View on YouTube

If the UK CMA continues to impose slow, burdensome, and unpredictable merger review processes, over the long run (the coming decade) UK economic productivity and startup activity will be negatively impacted, as fewer tech companies will choose to establish or expand operations there.

“I think it fundamentally hurts UK productivity over the long run because I don't see how companies, if they can't a get a reasonable SLA for a response and then b get a reasonable document that's not going to require $50 million of of lawyers and consultants to read. To do business in a country just goes down the incentives to do a business.” View on YouTube

Given the CMA’s current approach, an increasing number of tech companies over the next several years will choose to avoid creating a regulatory nexus with the UK (e.g., by not opening offices or materially operating there) in order to prevent their future M&A deals from being subjected to UK review.

“So what I'm saying is, if you're a company, why would you subject yourself to that when it's so easy to avoid their market?” View on YouTube

If regulators like the UK CMA continue to apply slow and subjective standards (such as future-competition theories) to tech mergers, there will be a noticeable chilling effect on tech M&A activity over the following years, resulting in fewer high‑quality startup exits and a reduction in risk capital flowing into the startup ecosystem.

“That's going to have a dampening or chilling effect on M&A activity, which means fewer good exits for the ecosystem, which means that less risk capital will want to go into the ecosystem to begin with.” View on YouTube