DeepSeek, Open Source, Tariffs, DOGE, Market Impact | BG2 w/ Bill Gurley & Brad Gerstner
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And I think you make a good point and a good defense for globalism. But I think the exact response would be if you're the president of the United States, you know, you're not looking out for, you know, the standard of living for all humans or for all people around the globe. You're looking out for the standard of living of people in the United States, you know, who you have a constitutional oath to. No doubt. But my point is that even with that lens,

you have to think about the dynamics around the globe and pulling up the wall and trying to get people to make a $40 microwave in America is going to fail. ♪

Hey, Bill, it's great to see you. Good to see you, sir. Are you going to apply to run the Sovereign Wealth Fund? Or actually, better yet, will you give me permission to nominate you to run the Sovereign Wealth Fund? I would think there are people that I've met through my days that are LPs at rather large funds that have way better experience for something like that. I think you would be a hell of a choice. Certainly, maybe on the board of the Sovereign Wealth Fund, but it's going to be a fascinating experiment.

One observation I had as we're getting ready for the pod today is last night, I was helping Lincoln study for his AP history exam. And he's studying the Gilded Age and more importantly, kind of the McKinley presidency. And it's all about the McKinley tariffs. And I said to him, it's pretty amazing that you and I are working on the same thing. I'm reading on chat GPT about the McKinley tariffs. And he said, yeah, but dad, don't worry about it. You don't have to take the test.

And I said, no, worse yet. I have to figure out how much money to be exposed to the market. What are risks going to be in the hedge fund? I said, don't worry. I get a scorecard on that too. Yeah. A little weightier than the test.

Yeah, no doubt. I mean, you and I could go full Lex Friedman today. By the way, his five-hour show pod recently with Dylan, those guys was great. But we're going to try to keep this pretty tight and jam quickly on deep seek, on tariffs, on Doge, on maybe what the market reaction might be to all of these things. And as I was thinking about this setup, Bill, I thought it would be helpful to

You and I got into this and we said we wanted the pod to be about this intersection of tech and markets, investing and capitalism. And we specifically kind of wanted to stay away from Washington and politics.

but it's really impossible at the moment to talk about capitalism and markets and what's happening without talking about the big things occurring in Washington. So we're going to do that, but we're really going to try to stick to the economic and market lens of the events that are happening rather than the political lens. There are incredible pods you can listen to that give you kind of the political analysis of all of this. So maybe we just dive in.

Yeah, that'd be great. And listen, I mean, when you expand the lens to include that and you look at the ridiculous pace of innovation in the AI space, I don't ever recall a single time in my career where it feels like you could just have your ear to the ground 24-7 and you're picking up something new constantly.

No doubt about it. No doubt about it. Speaking of, you know, we covered DeepSeek last week, Bill. It seems like it was just yesterday, but a lot's happened since then.

For one, these usage charts for DeepSeq are really quite amazing. Andreessen tweeted this, which shows the percentage of DAUs relative to chat GPT. They're top geos. I think they have something like 15% in India and like 10% in China, 8% in Indonesia. It's really a global phenomenon.

You know, one of the things that struck me after all of this is you tweeted, it's a better world if the most disruptive LLM model is foreign and open source versus domestic and proprietary, right? You said it's better for safety, for security, for free speech, etc. So talk us through where you think we stand today based on a little space now reflecting on R1 and

And we know that you and Benchmark have been like the staunchest proponents of open source over the course of the last few decades. Help us understand how you think open source versus closed source is going to evolve. Yeah. And so let me give you some reflections now, having this been a week in the rearview mirror and reading and watching as much as I can of other people talking. Sure.

here's some things I think we know about DeepSeq and R1. It was quite innovative, you know, point one. And if you have five hours to listen to Dylan and Nathan Lambert on Lex Friedman, they get into some of this. DeepSeq had put more experts simultaneously against a problem. They were able to do that because they figured out a way to

separate the parameters and work on things with smaller parameter counts faster, which no one else had done before. And so you end up with something that's cheaper and faster.

And it's just important to recognize that they did innovate, right? Versus just copy. Because I think there's a lot of noise around this whole thing. Three, they did choose to be the most open model we know of today. And there's a lot of people that like to get into nuanced conversations about whether it's truly open source. I guess people are hoping for one day when someone shows all the data and all the training processes. And so they may have been short of that.

But with the MIT license, which has no restriction whatsoever on how you do this and open weights, it gives a lot of freedom to a lot of people to take this thing and run in opposite directions, which I'll come back to.

The thing you mentioned is also, I think, worth noting. The success was a breakthrough and maybe not compared to OpenAI, you know, but certainly I think Mistral or Anthropic or any of these players would have loved to have had the launch moment, if you will, the deep sea cat and weren't able to achieve it for whatever.

reasons. I don't know if we can fully explain why, you know, this app is still number one in the app store today. I, I, I,

The thing you mentioned that I think is super interesting is rest of world, you know, and we're going to go into, you know, how this might play into China, U.S., you know, sanctions and restrictions and rest of the world could be up for grabs. A couple of other points I think worth mentioning. One, it's validated now that they went around CUDA. And I just think that's interesting. Yeah.

like it's interesting to think about why it's interesting to think about performance optimization and how you might get down to the bare metal you know when we went from on-prem software to sas

places like AWS, they started pulling out as many layers as they could to get to optimization. And so you ended up with very special versions of Linux and whatnot where things are just ripped out and ripped out and ripped out. So I think that's worth noting. And I know of at least another example where someone that's working on inference optimization went underneath as well. And then the last point I would make that I think is just worth noting

understanding. You and I stumbled upon, I think with the help of Sonny, this interview in Chinese with the founder and we translated and read it. And I think it's impossible to read that and say this isn't an exceptional founder. Like he's just...

intelligent, independently minded. I think it'd be very hard to make an argument that he's not a remarkable founder. - And of course you're referring to Ling Wen-Phen, the founder of DeepSeek. - And we'll put the link to that interview and you can copy it and put it into chat GPT or whatever and get a quick translation. - Well, and Bill, as you know, our team knows him quite well and knows a lot of members of the DeepSeek team.

team, but he's become really a national hero in China. And I think there's a little bit more of a telescope on him today. But we did learn some things when we talked to the DeepSeek team. And a few of those I think are pretty salient. And I would share, again, just setting the table for kind of the facts that I think a lot of them are very confirmatory of what you just had to say. Number one, he's an incredible founder. There is no doubt about it.

that. He's been working on this problem for upwards of a decade, been thinking about it. He's very successful and has made a lot of money in the hedge fund business. And so it reminds me a little bit of the Jim Simon story at Renaissance. These are brilliant folks who happened to apply this early AI and deep learning edge to the hedge fund business and quant trading.

But a couple of the key things that were debated last week, one was the total compute capex. And when you take power into account, it really does get you closer to this billion dollars of TCO, which was out there discussed, which is similar, I think, to the TCO of the comparative models. Now, of course, they talked about the $6 million final training run. And this, it's important to understand, this is also correct.

And as I said on CNBC, this compares to about 10 or 15 million for 01 out of OpenAI. So apples to apples, they were 30 to 50% more efficient, to your earlier point, about real algorithmic breakthroughs.

And now, of course, they were doing this a few months later, maybe six to eight months later than what was going on at OpenAI. So you'd expect some of those savings, but take nothing away from them. A lot of them came from algorithmic improvements, many of which I think are going to be copied, but breakthroughs nonetheless.

I would add one thing to that, which is just worth paying attention to. And Dylan and Nathan went into this on the LexPod. But they believe, so I can't really defend it. They believe if you look at the models that are apples to apples on the API right now, that DeepSeek's pricing about 1 20th of OpenAI. And they argue about whether OpenAI might just have higher margins or whether DeepSeek might be subsidizing. But that...

differentials bigger than the ones you, than the one you described for training. Yeah, no, you're, you're referencing what it, what they're charging the customer for inference. And remember, you know, like, and it gets to a couple other points I'm about ready to make, they can run it well below cost, or they could choose to be running at well below cost in order to, to have these outcomes. I don't think that's going to last.

And OpenAI might be charging well above cost for that. But let's keep going. I think Lyft endured rides well below cost for a decade. Yeah. No, you can do it for a very long time. So in that regard, but let's get back to the compute stack because this was something we learned from their team that I think is really important to understand.

Their compute stack was smaller than the compute stack that OpenAI used to train O1, but it wasn't that much smaller, okay? And so the problem they now face is that this changes dramatically. Remember, these are log linear scaling functions. So in order to get to kind of the O3 level now, they got to 10x the amount of compute, right? Assuming that they don't come...

you know, through with some massive architectural improvements that caused them to be able to do log linear scaling without more compute, right? But to get to that next step function, they acknowledge it's going to be a lot harder. So said another way, this was the moment in time where their compute comparison to OpenAI was the closest it's ever going to be for a few reasons. Number one, with the export controls, they acknowledge that

they're going to have a very hard time keeping up with O3 and Stargate's going to be even much more challenging. They're not going to have access to Blackwell that is, you know, two to three X improvement on top of the Hopper series, which already exists. This differential in GPUs as they begin to train O3 is far greater than it was for O1. On top of that, we learned, you know, they are massively compute constrained right now.

So you've seen some tweets about this, people that are, you know, getting server delay and all this stuff with these guys because of their massive success. So they have a limited cluster to begin with, and they're currently taking most of that compute and deploying it against inference, right, just to support the demand that they have coming in the door, which further constrains their ability to do training. And we know they got to 10x the training to get to that next step.

you know, to that next function. So this is a really tough situation. I think, you know, we'll get into this. The export controls, remember on 01, they already had somewhere in the order of 30 to 50,000 GPUs that they had previously purchased. And there's a lot of debate is exactly how many they had, but the differential wasn't that great. But now when you have to step up to 10 X that it becomes very challenging. So, uh,

That we learned, those are things that we think we've confirmed, you know, directly from the company. And so I would expect one of the things that would impress me even more, Bill, you know, I asked the team at OpenAI, like, what did this surprise them? Did DeepSeek surprise them? And they said the only thing that surprised them is that it was a Chinese company that was able to get there before Meta and others, right? And I think it's a really important question. The thing that would impress me even more

If somehow they figure out an architectural or algorithmic way to catch up with O3 and deep research and the stuff that's now, you know, really, truly frontier,

without having access to GPUs, that will, to me, be the definitive statement that they have somehow broken the paradigm on cost and scaling. Yeah. And we wouldn't be the first person to say it because even Fareed Zakaria said it on his show on national television. But

you know, everyone's talking about the fact that constraints can lead to innovation. And the reason Lama probably didn't do it is they had access to scaling. And so only if you're limited on that function might you making algorithmic change. My guess is, and we could have one or something that Nathan Lambert might disagree with you about the 10x requirement. But I will say this,

Because it's open, because they published the paper, I'm 100% certain that people at Anthropic and at OpenAI are studying what DeepSeat did. So if there was some innovative breakthrough, the borrowing is going to be bidirectional.

And it's going to go right back. And then that gets you into Jevons Paradox, which everyone else is also talking about, which is if we make this stuff cheaper, people are just going to buy more and more. But let me go back to your original question real quick on open source, because I do think there that I never really got around to answering it. And there are some things that I think are worth mentioning. So, as you said, I tweeted, you know.

I think a lot of people are worried about these models and whether they control people, what people say and disinformation and what's embedded in them and what do they do. You know, I'm a big believer and many, many people in academia are as well, that more transparency leads to more transparency.

understanding, more safety, more security, more free speech, this kind of thing. And I'm not the only one that said this. If you had a singular model proprietary from a singular company, it would, on all those fronts, would give you more risk, more ability for someone to control that kind of thing. And let's be very clear, the very reason OpenAI exists-

I remember when Elon first talked about it on stage at launch was to defend against singular control by Google of a closed tyrannical AI. So I put those all in one group. And then I said, look, it's also better for innovation, startups, cost performance, and global prosperity. And

I'll give you a data point. I was talking with Clem over at Hugging Face. And so like 48 hours after R1 was posted, they had 500 variants on Hugging Face. And today I pinged them this morning before we started. They're up to 1300.

And so these are just forks in different directions, right? And it allows people to do massive optimization. It allows people to solve problems. Any concern you may have about R1, someone can go work on. Linus's law from the original Buc-Bazaar and Cathedral paper was given enough eyes, all bugs are shallow. And this thing, like the R&D force becomes the world.

not just an individual player. And so it allows for so much optimization. It also makes enterprise companies happy. So Aaron Levy and Mark Benioff were out there very boldly supporting this R1 breakthrough. And it just makes sense, right? If there's a piece of technology that's a commodity that they need to be successful, they're better off than if there's some proprietary piece they have to license from someone.

And it was quickly deployed in all the clouds, you know, in AWS, in Azure, etc. That was shocking to me, especially the Microsoft deployment. So obviously that feels like a piece of the strategic back and forth between OpenAI and Microsoft around this contract.

But yet everybody went up fast and it just shows you what's possible. And I think the amount of innovation that you can have and not just up the stack, I think, you know, people say, oh, that's going to allow people to build special models and all this stuff. But down the stack as well, if you, you know, are trying to compete with NVIDIA, you

You know, with a TPU or a non-GPU, we've talked about all these companies before. Or, you know, we're an investor in a company called Fireworks that's trying to be this optimization middle layer, like high performance inference. And they have a lot of really amazing customers doing runtime inference right now, production. Knowing more about the model allows them to optimize even more.

And so I think the rest of everybody else, other than the big proprietary models, are probably thrilled to have this type of product out there. And once again, the variance will just go and everyone will borrow from it. Hey, Bill, can I just hit pause for a second? Sure. You know.

A year ago, there was a lot of excitement about Llama, okay? And Zuck really took the leadership on kind of open source in the US.

And, you know, here we are evangelizing, you're evangelizing about open source, but it's not about Lama, right? It's about DeepSeek and R1. What do you think happened there? Do you just think it's scarcity and the leapfrog? You know, obviously there are lots of reports that there was a lot of trauma within the Metaplex last week, right?

people very upset about, you know, the fact that they were leapfrogged here and the amount of money they're spending and they didn't get there first. Um, but any speculation by you as to, to why, why not them? I watched, um, different open source battles in a whole bunch of different verticals since my, my firm was an original investor in red hat. Um,

I think 99, so 25 years ago. And there's always a continuum of openness, right?

And there's a whole bunch of licenses. I tweeted this list of like a hierarchy or continuum of licenses. And they're from most open to least open. And almost every company that tries to play in the open source area is playing this weird game where they want the proliferation of openness, but they want some kind of hook to be able to kind of claw back and have proprietary advantage.

And so, you know, we know that Meta had not gone fully open. The weights, they had never published the weights. And there was this clause that says, if you use too much, you got to come see us again. And that...

claws got got spread around last year yeah so so so folks like amazon actually have to pay meta for the use of of llamas right and so they were playing that game that same game that all these companies have played mongo and elastid like they've all they've all had to play this game and so yeah so it looks like these guys just decided to be more open and the mit license is pretty against the rail

And as I said, there are people that say they could be even more open, but this is the most open for sure today. So keep going on. Actually, let me make two last statements and then we can shift. So one,

China, I think it's really interesting to know that China is not a newcomer to open source. If you look at all of the major projects like Linux or MySQL and most of these open source projects have a website and you can see who the leading donors are.

And just go to the Linux one. I'll put a link in here from the Linux member group. And you'll see a ton of Chinese companies. And someone may say, why is China pro-open source? Well, for the past 30 years, the West has done nothing but accuse them of being IP thieves. And so if you believe...

You have the fastest, cheapest, most capable entrepreneurs or engineers that can run faster and work harder than everyone else.

You'd rather live in a world where there's no IP protection than one where you're just being held back. And so I think they jumped into open source full throttle. And, you know, it's not just Linux. It's not just this. If you look at RISC-V, they're one of the biggest supporters of RISC-V.

And every time we put more constraints on what they can get to, they invest more in risk five. And so and I think this is particularly important relative to the rest of the world, as we brought up earlier, because and we'll get into this, we'll get into sanctions and whatnot. But if you pull the wall up.

and we don't support open source, and they do, and everybody else kind of likes them leading that way, ooh, that could be a dangerous situation. And then the last point I just want to make, I want to go back to Fareed Zakaria. I'm a big fan of his. He had two takeaways on DeepSeek, and I was impressed that he landed on both of these. But one was,

that there was a lot of discussion, especially in Washington, that the U.S. was two years ahead of China. And he said, look, it looks like after the fact that that's hubris, right? If that's now six months, three months, whatever, it's closing. And we need to think, I think, with our eyes wide open as we make policy decisions.

And I think that's important. And then the second one, I was just really impressed with his understanding of open versus closed and how you can reach a tipping point where things just move in that direction because so many different entities get behind it. I like to say water runs downhill. Okay, so Sam Altman did this AMA last week and he was asked about DeepSeq and about open source.

And I thought his response was really interesting, Bill. He said,

And on the issue of open source, they said, would you consider releasing model weights and publishing your open source research? And Sam said, yes, we are discussing. I personally think we have been on the wrong side of history here, and we need to figure out a different open source strategy.

So I tweeted in response to, you know, something Mark Andreessen has said that I thought all current closed source model companies, right? So let's just say OpenAI and Anthropic would open source their models. And that in the case of OpenAI, I could see them open sourcing O1, which competes head to head with DeepSeek. At the same time,

I could see all companies that are currently open source and closed, right? Which includes DeepSeek. I could see them in the future. And Mark Zuckerberg has said he reserves the right not to release all the models in the future, right? So I think we may end up with a world where the true frontier, the actual underlying model is not released at all. And the only thing that gets released is the agent, right? But then one or two generations behind, you're going to see them all

open sourcing these models. But let's start with Sam's comments. Are you encouraged that Sam has said, yes, we need to come up, you know, we're on the wrong side of history here? Well, I mean, to a certain extent, it validates what R1 did, right? That he would feel the need to say that. I have found

And you talk to him more than me, but I found that whenever a threat or a challenge is made to OpenAI, Sam tends to go towards it. Like that's his kind of go-to move. And I think it works for him. And so I'm not surprised that he said that. I was...

I'm surprised, on a side note, that a couple of our friends who are co-investors with you in OpenAI, when the R1 thing hit, kind of very quickly took to X to say that, you know, that R1 cheated or that the government needed to come in and

To me, that was a validation point as well. Like you wouldn't take the trouble if this thing wasn't real. But yeah, it could tip us more towards open. I mean, as someone who really enjoyed my business school classes on finance and economics, one of the reasons I like open source so much is it's the closest thing to pure competition. If you look up an economics book, pure competition is like

commodity-like, hard to have prices leads to innovation, low price points, Jevons Paradox blowing up. And so I'm thrilled that it's tilting that direction. Now, this may be a perfect time to transition into the other thing that happened as a result of R1, which is there are a number of increased efforts to, I think,

raise the wall of regulation and sanctions. And it's funny, I watched a number of people go, oh, my God, look at R1. You know, Washington must act quickly. But the thing that each person intended are radically different from one another.

Some people think this means, oh, we need to embrace open source and encourage more open innovation in America. And the other people think, oh, my God. And Dario put out a long piece, I guess, consistent with his entire tenure here, just begging for more lockdown and regulation.

So let's go into that because I do think it's interesting, right? Sam and the industry response seems to be tipping more in the direction where we're going to go open to. And my suspicion is you will see that this year out of folks like OpenAI. But the discussion about DeepSeek clearly touched a national nerve, right? Jensen-

You know, got called to the White House last Friday, or we all see. I think they said it was pre-scheduled. Well, I'm not sure whether or not that was the case, but let's assume it was. But it's opened up this broader conversation about whether the U.S. can or isn't

even whether it's wise for the U.S. to try to stop China from advancing along the AI frontier, right? And some of the arguments are human talent in China will always find a way to innovate. You know, keeping China six months behind is not worth the cost. Scarcity fuels innovation. It turns AI into a global arms race. Or the one that I've been advocating is

I think we've focused so much on slowing China down. We haven't focused enough on speeding America up, right? Removing the regulations around power generation, all the things we need to get America running full speed. But I would say this is probably the biggest divide in Silicon Valley among technologists regarding, you know, kind of this president's policies, right? So there's a camp, as you know, of China hawk.

led by, you know, folks like, you know, Alex Karp was on the Palantir call last night, who view this as an existential holy war and that we must battle on every front and, you know, in order to slow China down. And then I would say there are people who are more what I would consider China constructivists. And I put you in that camp. I would put myself in that camp. I would put, frankly, you know, Elon in that camp and others who seem to think that

It's a losing battle just to focus on slowing China down. And what we really need to focus on is more engagement and speeding the U.S. up. So can you lay out a little bit, you know, your views on those two computing sides and where we may end up coming down on this? Brad, I think you framed it perfectly. The problem is that the –

By the way, I think on the anti-China side in Silicon Valley, you have like three groups. You have the people like Dario who are maybe worried about competition, maybe worried about more, but certainly question that. You have the new kind of VC-backed defense companies that

who all, and maybe I kind of put Palantir in that group, but they all, I think, have an incentive to kind of have tension with China, if you will. It actually increases revenue. I call them the new neocons. And then I think you just have a large group of people who were raised

to be anti-China. It's what they were taught growing up. It's the anti-communist thing. It's what got us into the Vietnam War. It's been around forever, but your parents might've taught you that. It's just in the ethos. One thing I would add to you on the risk side, you listed a lot of great points. One thing I would add is that protection of US companies causes harm. Detroit is not globally competitive anymore.

And putting tariffs on BYD's cars is not going to make Detroit more competitive. It's going to make them less competitive and they're going to fall further behind. And I think this idea of raising the wall and increased decoupling is a super dangerous idea. We may find that the rest of the world is perfectly fine buying $10,000 BYD cars and using deep-seek.

And we may just be shutting ourselves off. I found this interesting data point I wanted to share with you. To highlight my fascination with China, I've kind of studied it over a very long timeframe. It turns out, most people have no reason to know this, but in 1820, China's economy was wide open and they actually had 33% of the global economy. 33% of global GDP was China. Most people probably wouldn't know that.

And the reason they might not know it is because 150 years later at the end of Mao's reign, and Mao had raised the wall and kind of turned China inwards, they had fallen to 5% of global GDP.

And they've been working their way back from that. So we know this emergent China from that place. But, you know, that's the real risk. You know, if you're not a globalist, if you don't believe in, you know, all the great economic work that shows how, you know, specialization can work to the benefit of everyone and you close that wall, you may be surprised at what happens.

To wrap this section, and that's the perfect segue to talk about tariffs, but I would say this. I think there is a middle ground, right? When I first read your tweet, you would rather, it's better for an open source Chinese model to win versus a- I said foreign. Oh, foreign. Okay. I knew what the hell you meant. Yeah.

Then a closed U.S. model, I want Team America to win on this. I would love to see the U.S. frontier labs open source more stuff. I agree with you fundamentally on the principles of open source. I believe they will. And unquestionably, I want to see –

the US win when it comes to the race in AI. And I know you do too. Secondly, I would say on this is that I think a lot of the things that we've done in the name of being tough on China, right, are actually counterproductive.

I agree with that. It takes the eye off the prize. It slows us down, right? And it doesn't focus on speeding us up. And frankly, it's not very effective or it backfires entirely in terms of slowing China down. And one of the places where I think that this bill takes us to is really Trump's tariffs that brought us to the fore this week. But you have something to say. Yeah, I just...

I want to say two things to what you said, and then we'll go to the tariffs. So one, you know, I was being provocative when I said foreign and you could read China. But if you think about it, like Linux doesn't have a geography, right? And so one possible reality that I don't think meets your goal of America wins is you get to a place that's Linux-like where the model doesn't have a sovereignty. And

And because of the 1300 variants of R1 that are on Hugging Face already, and because of that MIT license, it could be that model that wins. It doesn't have to be the one that they're doing. It could be a fork of it. So anyway, I wanted to make that point. And then the other thing I wanted to say, just on a risk side,

And by the way, there are proposals in Congress right now that would kill open source, that would say we couldn't use variants of R1. There's a huge breadth of perspectives, as you already said. But I think I can imagine that if you just poke China enough,

If you keep poking and you keep poking and you keep raising the constraints, you increase the odds that they make a run at Taiwan. And I just think it's important to always think from their perspective, you know, and and I just think we need to be careful about how how how hard we push. We may end up with the exact worst outcome.

Unintended consequences, right? So this week we woke up, you know, really ended Friday at a late press conference the president had, and then it went into effect over the weekend, right? 25% tariffs on Mexico and Canada, 15% tariff.

or a 10 to 15% tariff on China. Before we dive into the economic debates for and against tariffs, let's just kind of lay this out. You know, so Monday morning, the markets overnight Sunday, the markets are falling a lot. Monday morning, Kevin Hassett, chairman of the National Economic Council, comes out on the White House lawn. He said, oh, these are all being misinterpreted. This is not about a trade war. This is a drug war. This is about fentanyl.

You know, he did happen to say we may revisit in the future as part of a tax reform strategy. So he left the opening to to, you know, tariffs for other reasons. Then the president on Monday talks to both sides. They both commit 10,000 troops to the border to fight fentanyl. And you delay the tariffs for 30 days. And I think the market reaction now is that they're not going to hit at all.

So let's first start on what we think happens here. So help me predict what you think happens. And then I would love to get into kind of the merits and demerits from an economic and from maybe the tech industry perspective on this tariff strategy.

So, Brad, I'm going to be brief because, look, this is more your world than mine. You're looking at a lot of large public companies and all the things that impact them. You know, I guess even in the medium-sized public companies I work with, especially if you have physical goods, you've got supply chains all around the globe, right? And I imagine one thing you've had to do in your shop, you know, is when a new tariff pops up, is just immediately –

ask, well, who's impacted? Who's sources there? Who, like, who, and, you know, it probably just creates a lot of chaos, right, in the short term as we try and figure those things out. You know, there's different Foxconn plants all around the globe, right, and different people's source

different, you know, whether it's fashion products or anything, you know, from Vietnam or from Indonesia or from China. During COVID, I think one of the things we realized is there is some flexibility that can move, move a lot faster than people thought. But it's still chaotic. And

Based on, as I said, my default is a globalist. Now, I don't know enough to know if we have unfair deals that need to be honed and that this is just a means to an end. And if so, maybe it's not that big a deal. I don't believe that creating a lot of bringing the wall up, as I said earlier around AI, I don't believe that that'll be in the US's long-term best interest.

You make a good point about, you know, clearly Trump extracted a concession that was a pretty damn good concession from Canada and Mexico when it comes to defending the border, right? So as a tactical negotiating tool, you know, his batting average is exceptionally high. You know, whether it was getting Colombia to take

the detained deportees where he threatened a tariff. And so I think that that's the market's reflexive belief. In fact, Scott Besant, the Treasury Secretary, in a letter he wrote about a year ago to his investors, he used this concept that Trump's tariffs, you shouldn't be afraid of them, because he said his strategy was to have a fully loaded gun, but rarely discharge. Yeah. Right? Fully loaded gun, but rarely discharge. And so

The interpretation is he's just using this as a big stick to achieve very tactical goals. Now, I call this bill the Besant consensus. I believe this is the market consensus view, the Besant consensus. But I want to throw out an alternative view, right? I think that Trump may, in fact, have a much, much deeper and more principled belief in tariffs. If you listen to his speeches, if you read them, and this goes back over a decade, okay?

He believes that McKinley was one of the best presidents. He thinks that the country, he believes that the country, and there are arguments for this, was at its peak or at its best during peak tariffs in 1880, and that you could in fact replace, when we move to replace tariffs. So prior to 1910, which is when we got the income tax, right? The vast majority, we'll put this chart in the pod, the vast majority of revenue to the U.S. government came from tariffs.

And then you see, starting in 1910, basically revenue from tariffs plummeted and the amount of revenue that came from income tax and Social Security tax thereafter skyrocketed. And so I think there's a belief that replacing tariffs with high income taxes and corporate taxes has gutted the middle class.

Not only did it destroy jobs in America, but in fact caused these people to be burdened with taxes to pay for social services that could have otherwise been paid for by tariffs. So that to me is a variant view. Right?

If you believe that to be true, that there is a much more principled architecture that he wants to move to, that this is not the best consensus, which is have a fully loaded gun that's rarely discharged, but it's a fully loaded gun that you fully intend to discharge. So let's assume for the moment that he does have that view, maybe more of a fortress America view.

right? I think you've outlined where you stand on this. You believe that that hurts us technologically and it would hurt us in terms of our global economic standing. Is that right? Well, look, I'm not a tariff expert, but when you told me you wanted to talk about this, I did some research and maybe we could have your son or your son's professor on to talk more about this. But

All of the, even the success stories around tariff, if you ask your favorite AI to tell you, they seem very short windowed. Even the McKinley ones were like four years.

So I don't know of a long term successful high tariff program. And I think it gets back to what I was saying about China, like pulling up the wall is I don't think I don't think there's any economic argument that that works to help a country in the long run. And going back to the to the I do want to take a brief break.

A second to talk about what you just said about the like the American middle class may have been been affected by this. You know, there's a time and place when a country is in a great place to be competitive globally in scaling out production. And it relates to having a.

educated workforce that has a very low standard of living that's willing to work for a wage that's highly competitive globally and maybe willing to work 996, you know, right? Like way more hours than- Nine in the morning to nine at night, six days a week. Right. And so if you look at

When America, you know, was mostly successful scaling out, it's post-World War II where Europe's been decimated. Japan's been decimated. Yeah. And we had a lot of people moving up the social ladder and prosperity ladder as a result of being willing to do that. You know.

If you fast forward to where we are today, I don't think there's any way to say this other than to be blunt. There are people in China, Vietnam, Indonesia, Mexico that are willing to work harder and longer for a wage that is radically lower than what people in the U.S. are willing to work.

And they're going to move from a place on the prosperity and social ladder that's low to a place that's still beneath the average American. And I don't know how, as a humanist, you can say they don't deserve that right. And I think we misinterpret that this is somehow a result of tariffs or trade. It's just

global fairness, right? It's just from my point of view. No, totally. And I think you make a good point and a good defense for globalism, but I think the exact response would be if you're the president of the United States, you know, you're not looking out for, you know, the standard of living for all humans or for all people around the globe. You're looking out for the standard of living of people in the United States, you know, who you have a constitutional oath to. No doubt, but my point is that even with that lens,

You have to think about the dynamics around the globe and pulling up the wall and trying to get people to make a $40 microwave in America is going to fail. You're just going to end up with more expensive products. We watched this happen in Europe. We watched it play out in Europe. You're just going to make yourself Europe.

I do think there are some great economic arguments on this. Like I said, Kevin Hassett is chairman of the National Economic Council is at the Hoover Institute. You know, he's going to be on the front lines of carrying the tariff policy, defending the tariff policy. But if you look at the McKinley tariffs, they certainly caused a lot of strife.

But they're very good arguments that they helped us industrialize in a way we never would have. And more importantly, they helped us build critical strength heading into World War I. So had we not done the industrialization in 1880, 1890, would we have been even prepared? But the world does look very different today, Bill. Global supply chains, the cost of shipping is radically lower, et cetera. But I thought what was interesting is, you know, the Fed actually did a study on, on

the tariffs in 2018, they did it, I think it was on washing machines, you know, and they basically said it led to a lot higher pricing for washing machines, right? Where there were, you know, tariffs put on them. And even for dryers that had no tariff put on them, but because they're usually sold together, the prices went on those as well. And interestingly enough, even the domestic producers raised prices,

because now the competitive market had raised prices. So they now had a pricing umbrella that they could raise prices into. And I think they concluded that very few jobs were actually created. Now, they were looking at this only two years in arrears bill. So again, they weren't looking at the long run effects of did this play out? So I think one area I'm really focused on for Silicon Valley. So imagine a tariff on GPUs or on chips.

Right. Which has been threatened this week. Like they're talking about just a tariff on Taiwan, which is a tariff on chips. Right. And today we we actually can't make those chips in America. Right. We don't have two nanometer, three nanometer fabs where we could build them even if we wanted to.

So when I look at that, that's really just a tax on chip manufacturers and on the end buyers, right? So that would be a tax on the NVIDIAs and AMDs and others. And it would be a tax on Meta and Amazon and all the folks that would have to pay that tax.

which likely means that you get less chips purchased and less AI research, right? So if our number one goal is to win the race in AI, this is a classic case where in the short run, I think it's self-defeating. But I do think there are ways to do this where you can bring more fabs to the U.S.,

But if you wanted to have a permanent 50% tariff on all chips in the U.S. starting now, I think that's just going to have negative repercussions. But if you said of a 50% tax on chips, but I'm going to delay it for two and a half years, and you have to meet these hurdles for building fabs in the U.S., et cetera. So more of a negotiating tactic than it is kind of a permanent and higher tax, I

I think there are some, you know, some really good outcomes of that. We're less dependent upon Taiwan, which is, you know, always threatened by a, you know, what most people believe is a foreign adversary, you know, less dependency in the case of some situation evolving there. So I think it's going to have to be something that we watch. But the main thing I wanted to point I wanted to make today on this is don't be lazy in believing the Besset consensus.

Don't think that this is just about, you know, a negotiating tactic. Go back and read the speeches. I think Trump and Trump's administration has a much more principled view here that may be a value-added tax equivalent, a tariff that is somehow, you know, a proxy for these value-added taxes.

is a more efficient and better mechanism for helping the middle class in the United States than an income tax. And we saw that that backdoor was kind of left open. We said, we may come back to tariffs as part of tax reform. So keep your eyes out for that. Well, and look, any analysis of this situation is made more difficult by the

blatant reality that even if Trump is just using tariffs as a negotiating chip, he can never say that out loud or it would take away their ability to be used in that way. So he has to be obscure about it either direction. And so it makes it harder to know exactly which way is up.

So let's move on to Doge. So you were in Washington. What took you to Washington? And what did you see? What's your perspective of Doge? And like, I love the update on your specific visit. But then could you reflect on why or why not Doge matters to a tech investor? Yeah, no, I think this is so I think it's so important because I think, again, like with tariffs, we're in this fog of war, Bill.

Right. Where, you know, like their change brings a lot of contentiousness. And I think sometimes we lose, you know, the basic facts of what we're trying to achieve here. It's super important to understand that there is nobody like Elon. I mean, he's truly an N of one in working on issues like this, you know. So he's working 20 hours a day. He's working through the weekend. His team is, in fact, sleeping across from the White House and, you know, in the executive office building.

But most importantly, right, Elon is a systems thinker. I mean, he literally showed up in Washington and he didn't do what normal people do when they show up in Washington, which is, you know, fed all the politicians and understand, you know, what he needs to do in order to play by all the rules that everybody else sets. He just starts asking questions. And not surprisingly, the first question he asks is, who sends out the wires? Right.

Like, who controls the wires? Can I just get a list of all the wires that are scheduled to go out? Like, what are we spending the money on, you know, over the next month? Have they been audited? You know, and as I think he started doing that, of course, the Leviathan of Washington just convulses, right? Because they're like, whoa, nobody questions, nobody looks at the wires. He's like, well, that's kind of what, you know, the president has asked me to do, so I need to do that.

Um, and so the antibodies, you know, uh, really started attacking when the only thing he really asked to do in the first instance is, you know, his first principles led him to thinking that, you know, like where, where to look. So, you know, I want to bring it back to this idea that change is hard, but change is necessary, right? We're simply talking about his whole purpose here.

is to balance the budget that both parties have proven the inability to do in the normal process. And most people agree it's bankrupting the country. And so it's not that hard. You know, we showed this on the pod where we went through. If you just return to the baseline of 2019, Bill, if we just go back to the baseline, grow up by 2.5% from 2019, you balance the budget in this president's term.

right? But that requires us getting a trillion dollars cut off the COVID high. We lost our minds. Remember the letter to Meta, time to get fit. It was like we lost our mind. Well, Silicon Valley's gotten fit. We've made some reductions, but government hasn't gotten fit at all, hasn't done anything except stay at that COVID high. And all Elon's saying is, listen, let's just go back. Let's start with just getting a trillion of this out, which is the excess that we put in. And so

The other thing that he's doing is he's literally live blogging this on Twitter. You know, he hosted this Doge Spaces on Sunday night. Anybody, you know, can join this thing. It's not like they're hiding anything. Even Sunday night's a euphemism. It was at midnight Eastern. Which, you know, to me, I mean –

It's not that – I mean I think most people thought that was like him being mischievous. What I took away – I mean the guy works around the clock. Right. That was when he had a free moment. Right. And they're like two congressmen. Yeah. And so –

One of the things I tweeted on Sunday night after that was if we do this and if we tell if we if we tell the American people, you know, that we're going to do this and we put together a believable plan where you're going to cut a trillion dollars and balance the budget in the next few years, I'll tell you what's going to happen. Right. Interest rates are going to come down.

Because the whole reason bond vigilantes moved into the bond market and started shorting it is they thought, okay, here we go. Trump's going to stimulate the hell out of the economy with a continuation of taxes, et cetera, and nothing's going to really change on costs. And I think the big thing that I came back thinking is people are wrong.

Right. Like there are there is a fundamental difference in how these folks are attacking, removing inefficient spending from the federal government and getting us back to what is a very sensible 2019 baseline. Remember, nobody thought in 2019, Bill.

that we were like starving babies in the streets because our spending was so low. Nobody thought that, okay? Like everybody thought we were spending plenty of money in 2019 and that's all they're talking about. And yet, if you watch the convulsion coming out of Washington, you would think that, you know, something very draconian was going on. Well, I mean, but you would expect that, right? Like we don't have term limits. We have lifelong limits.

politicians in Washington, they, we, because of Citizens United, you basically can raise money, unlimited amounts of money from corporate interests. I, you know, I gave the speech a year and a half ago on, on regulatory capture. I, I'm, I'm not surprised

that the entity that is Washington pushes back on someone that wants to take away the tools that give them power. I'm just not surprised. - I think what people expected, frankly, is immediately after people started seeing the relationship with Trump, what's the first thing people did? They all started speculating how long until the relationship blows up and Trump always fires everybody and just the opposite is happening.

And then I think they all expected Elon just to come to Washington and not do anything, like just to maybe make some recommendations to Congress on things that could be cut. But you and I know, Eli, like there's no chance he's going to Washington to just like, you know, run some research and make some recommendations. So I think that was misplaced. So let me tell you how I think Doge fits in with the normal budget process, because I also think this is very misunderstood. Right. So.

Remember, I think the way to think about this in your head is we have two tracks going on here.

Track one is the normal budget process. And in this case, they're using a parliamentary tool called reconciliation. OK, and basically what that means, I'll spare you the details, but this is out of the White House led by Kevin Hassett in the House, obviously led by the speaker in the House Budget Committee. But basically, reconciliation is a special budget process that allows you to get an omnibus budget bill past Congress without having to get to the 60 percent.

votes in the Senate that is filibuster proof. Okay. And they're working hard on this. I expect some meaningful improvements that will come out of this in spending. I suspect that Doge will be offering their ideas how to save some money in this, but this is kind of the normal process that occurs in Washington. And the president, I think has said he wants something to sign out of the reconciliation process in April or May.

And so it has to go through this normal. All the committees are going to have their hearings. They're going to put together the budget that they think complies with reconciliation. There's going to be a grand negotiation that occurs with 10 people around the table and all the horse trading that usually occurs in Washington. So that's track one, Bill.

Track two is doge and cuts in spending by executive authority. And this is the part that I think has Washington up in arms. So that's what you see that's causing the fury. Elon is advising the president, and then the president is deciding in real time whether certain people need to be cut and whether certain spending should be stopped.

And when the answer is no, this amount of money and these people are not required to faithfully execute the laws that I've been given, they say they're just going to downsize the executive agency tasked with executing the law, and they're going to stop spending the money that they believe is wasteful and not needed to fulfill the law. So they're saying, especially in the face of a national fiscal crisis,

where we're falling further and further into a debt spiral, we need to do this. So in the town hall on Sunday night,

For example, Elon called USAID. This is an organization that's quite controversial, you can research it, that spends $50 billion a year on foreign aid. It has thousands of people in the agency. Between, I think among employees, it's probably closer to 1,000 or two and then a lot of contractors.

And basically what Elon said on Sunday night is I called the president. I told him, unfortunately, there's no apple to be saved. It's a total ball of worms. If there was just one worm in the apple, we'd pull the worm out. But the whole thing is a ball of worms. So the whole thing needs to be shut down. And we're going to let thousands of people go and we're going to save $50,000 on the budget or $50 billion on the budget.

It subsequently looks like on Monday that, you know, they made a deal where Marco Rubio, right, who's the secretary of state, is going to become the acting director of the agency. And now it looks like they're going to eliminate whatever they think is wasteful, and then they'll consolidate perhaps other parts of that spending into the State Department. But basically, this is what, Bill, caused Schumer and folks to come out on Monday morning, declare all of this activity unconstitutional.

To say that, you know, nobody elected Elon. He can't do this. It's unconstitutional. And this is where I think the whole challenge is now going to move. But remember, this has nothing to do with track one, right? Except you're angering a lot of people on the Democratic side. But this is really about track two. Does the president have executive authority not to spend money that they deem is wasteful?

So you asked me a question, and maybe we'll touch on it for a second earlier, which is, is it constitutional?

Right. And so I think that's a pretty fascinating constitutional question. I've consulted with a lot of people I think are experts in the area area. And I do expect that Schumer or a group of members as early as this week is going to file, you know, a claim, a lawsuit in federal court where they say that there's a violation of the Constitution under Article one, Section nine, Clause seven, where Congress has the power of the purse strings and the Supreme Court, you know, has long upheld this.

You know, basically, the Supreme Court has said separation of powers generally support the idea that it's Congress who appropriates funds and anybody else who doesn't spend those monies, that would be unconstitutional. So that's likely the argument they're going to make, Bill. And they're going to say immediately they got to cease and desist from, you know, Elon shutting off wires or not spending money or shutting down USAID. Now, I happen to think that's on pretty weak footing.

OK, but it is. I think it's going to happen, but it's on weak footing. Why? So just think about this for a second. Right. The president has the authority to execute the laws. And there's this doctrine that's known as impoundment, which the courts largely recognize. And it's basically the president saying, OK, I see the law that we're supposed to uphold and I don't need all this money.

And in fact, I have a further and maybe supreme duty, an overriding duty to the Constitution that supersedes the constitutional control of the purse to execute faithfully the laws to protect the general welfare of the American people, which he might argue includes protecting the country from bankruptcy.

Right. So he's just saying, listen, I'm doing my duty. Yes, I'm executing all the laws they told me to execute. However, I'm doing it for less money. And given that we're in a national debt crisis, I need to do that in order to protect the American people. So I think that this is going to eventually come to head. Imagine it goes to the to the Supreme Court to decide. And I think there's a decent chance along the way.

That at a minimum, think about what Chuck Schumer is going to have to defend. He's going to have to defend some of this really crazy spending that we all know exists. I mean, I don't think there's anybody in either side of this argument who doesn't think there's a bunch of inefficient and silly spending by the government.

So effectively, that's what you're going to have to defend if you want to defend this lawsuit. So I think the political pressure is going to be massive that's brought to bear, particularly because Doge is being so transparent on this. You do not want to be defending every single line item to the American people, which is exactly what Doge is going to put you on the spot to do. And so

I think two potential outcomes. Number one, the political pressure causes, you know, them to cut a lot more as part of track one, right? This reconciliation process.

Or number two, that the Supreme Court actually does, in fact, recognize some more expansive executive power around impoundment. But I think either way, I imagine before this is all said and done, Bill, that we're going to see headlines that say Elon causing a constitutional crisis.

Right. That, you know, we have the we have the courts involved and you have the solicitor general that would be defending the executive branch in the White House on on this matter.

Now, bring it home. And as I said in the question, bring it back. Why does this matter for tech investors? Let's presume it goes either way. What's it going to mean to how a tech investor should be thinking about the markets and tech stocks? I mean, just think about the three topics we talked about today.

The first one was like just massive technological uncertainty, right? Like you said it, it's a pace of change you've never seen in your career. Highly disruptive, multi, you know, companies that are valued at $150 billion that are being challenged by, you know, a Chinese startup on a shoestring. So you and I would both say our ability to forecast the future as to where this is going, right, is challenged because it's moving so fast. Then

Then we talk about tariffs. Well, massive economic uncertainty, Bill. I mean, you know, free trade has been generally established as a principle in the economy for the better part of, certainly for you and my entire investment career. The markets could count on that.

And now I'm suggesting that at least there's some probability that this president is going to move in a very different direction, right? That maybe it's not the Besset consensus, that maybe it's something else. We might call it the Trump new normal, right, where tariffs become standard practice and maybe as a replacement to income tax. So, okay, there's a lot of uncertainty around that. And now this third one is political.

Right. Like it's been a while since we had a looming political constitutional crisis where, you know, where an issue between the congressional branch and the executive branch went to the Supreme Court. That also yields a lot of uncertainty. When you add these uncertainties up, what does it do for the value of assets that you and I look at? Right. You and I are valuing those future cash flows. We have to apply a discount rate discount.

discount rate measures the risk associated with those future cash flows. So you and I have to take the discount rate up. Why? Because we're a lot less certain about technology, politics, and economics. So to me, that means multiples come down and asset prices have to come down while the world sifts through all this. The surprising thing to me really, Bill, is how well

The public markets have held up in the face of all of this, right? And I think part of that has to do with they believe Trump is going to be a super pro-growth president. You're going to have lower taxes, et cetera. But I think that's the risk on the table. As a risk manager, what I have to say to my team is, okay, we've got to downsize risk.

Right. We, you know, you don't do the 10th best idea, right. Or the 11th best idea. You really got to make sure that you have, that you better understand this stuff. And so I think for the long-term investor, you know, perhaps they can just ignore the noise and they could say, you know, I'm fully involved. I'm fully invested. I believe in this super cycle. AI is going to be great for everything. But what I would say to our friends at Silicon Valley is expect way more volatility.

I think the next six months, all of this uncertainty means that you're going to have a lot of volatility. It's exactly what we felt all weekend long. It's exactly why the markets were gapping down overnight on Sunday. And then they did this U-turn because we got a change in policy or what appeared to be a change in policy out of the White House. And so, you know, welcome back to 2017, Bill.

All of this change may be absolutely necessary and totally good for Team America, but it's going to mean that we have more sleepless nights. Yeah, and look, I think...

because of so much chaos and because of such massive uncertainty in regulatory action and the fact that it can often backfire. I mean, I'll give you an example. Like when deep seek popped up, first of all, I think this whole economic thing kind of got blown out of proportion. The paper originally said 6 million was just for the post-training and somebody interpreted that as the whole thing. And then it led to, but yeah,

But a lot of people then, I would say a lot of NVIDIA bulls ran out and said, no, no, no, they had way more NVIDIA. They had way more GPUs than they thought. Well, guess what? Pounding the table on that may cause some in Washington to say, oh, shit.

We should have had higher restrictions. So you're an NVIDIA bull think you're protecting NVIDIA by exposing deep seek and you may end up with sanctions that end up hurting NVIDIA's revenues. So it's a dangerous place to play. - Well, I mean, you just showed, I mean, you have all of these forces at play. Listen, what do I do as an investor?

You know, what did I do in the fall of '22 that led me into NVIDIA in the first place? I just studied what was happening in technology in the company. I didn't have to think about free trade or tariffs. I didn't have to think about export restrictions. I didn't have to think about, you know, constitutional crisis. All I had to figure out is, is the forecast for NVIDIA too low because of the explosion we're about ready to have in AI? And that's the bet we made and we won big on. But now as I sit here today, the valuation for NVIDIA is much higher.

And now I have to take into consideration all these other risks. And all I'm saying is all else being created equal. I think that the super cycle is, is, you know, if, if I'm just doing my fundamental analysis, I think it's on fire. I think we're going to need way more compute than we have. I think deep seek unleashes the amount of inference we're going to need. I think deep research out of open AI unleashes that. So I think the fundamental is bigger than ever. Um,

But at the same time, I also am humble in the face of what's known and knowable about the next 12 months around tariffs, around export controls, around all these other risks in the economy. And I just think we have to-- you have to look in the mirror and acknowledge that a lot of this is unpredictable. And that impacts what folks are willing to pay, what multiple folks are willing to pay. And for our friends in the VC markets,

Right. Particularly some of these high valued companies, you know, a mid and late stage VC, it's going to impact. Right. There's always that lag effect. But the public markets and the risk appetite and the multiples they pay that rolls downhill. And so I would just say, I think that we may get to the back half of this year into next year. And it may, in fact, be the golden age and off to the races. But I think at the moment it's the golden age of uncertainty.

Hey, Brad, let's let's I think that's that's well said. Let's close with where we started with this sovereign wealth fund thing. So pick either the pro or the con. Make the argument and then I'll take the other side. Well, I mean, I think you saw me post in our thread as a general matter.

Right. I'm you know, I love the fact that we have people with business sensibilities and and incentives looking out for America who want to negotiate on behalf of America. Right. And who, you know, we sell we sell wireless spectrum and licenses. Right. I would love to see that go to the benefit of all the citizens in the country. You know, we we, you know, have a.

you know, drilling licenses on national lands. That money belongs to the citizens. So I love that idea, you know, in the fund. Here's my challenge with it, Bill. We have $40 trillion in debt, and we probably have another $50 trillion of unfunded liabilities. So we're a debtor nation, and we're paying 5% on all that debt.

So the hurdle rate to our return that is needed on the sovereign wealth fund, right, is 5%. Otherwise, you would just take all those monies and you would pay down the debt, right, if this was our personal balance sheet. So what you and I would describe this as is we're levering up the balance sheet of the United States to earn the spread between the sovereign wealth fund returns and the 5% that we're paying to borrow all the money. So I think net-net.

I probably have it in place because I think it's a good tactical lever. You know, I do worry about what administration, administration, it could lead to some crony capitalism and deal making that benefits certain people, et cetera. So I don't know. It's a close call for me, but I think it's going to happen either way.

I would. You took both sides. So I'll do a quick both sides. Yeah. I mean, in addition to the scenarios you talked about and you and I have debated this in the past. But if I look at Goldman Sachs, GM, even United, like if the government's going to be the lender of last resort.

I would argue they should take all of the equity and this could be a vehicle for that. Although there's nothing that's kept the government from doing that. I think in the GM case, they did take equity. So it's like it has done it in the past without the vehicle. I'm way more skeptical than you on the crony capitalism. It would be a 99% certainty that this asset would be raided.

from transition to transition in the government. And I would highlight that probably the most successful sovereign wealth funds in the world are all in autocracies. They're not in democracies. I don't agree. I don't agree with that.

I don't agree with that. I mean, from Norway with Norges to Korea to Canada, we have a lot of great sovereign wealth funds. But I do think, you know, one of the things I would say in all those countries, what you do have, Bill, is consistency and independence.

in the management of the sovereign wealth fund independent from like some unilateral control by the executive branch. And then if you want to see how it can go really wrong, please go read Billion Dollar Whale. It's one of the most exciting books you could possibly read about what happened to the Malaysian sovereign wealth fund. As always, it's fun to get together. Thanks for making the time. We'll talk soon. All right.

As a reminder to everybody, just our opinions, not investment advice.