Reid Hoffman, LinkedIn & Paypal Founder: Trump Administration, Elon Musk and DOGE | E1239

Intro (0s)

• The trade wars are expected to cause a significant drop in prosperity in the US, with little chance of success in achieving the declared missions due to the need for massive reductions in the deficit and defense spending to reach the goal of $2 trillion from the budget (7s).
• The next large language model (LLM) trained with larger computers will still have new capabilities, as the scale game is ongoing (20s).
• Reid Hoffman is a special guest, and it's a pleasure to have him in person again (42s).

The Latest Updates from Reid (44s)

• Reid Hoffman is still extremely hopeful for American prosperity and will remain living in Seattle, Washington, as his residence (1m1s).
• A recent meme started after Reid mentioned to friends that he would love to spend more time in the UK, which was misinterpreted by the New York Times as him moving (1m13s).
• Reid already visits the UK twice a year and has no plans to change his residence from Seattle, Washington (1m20s).
• Reid has committed to appearing on air twice a year, which he believes is worth it (1m36s).

Reid’s Future Involvement in US Politics (1m40s)

• Future involvement in US politics will focus on making the administration successful for the people of America, the country, and the industry, by investing in businesses and generating new American businesses (1m40s).
• The next administration may not want help, and there will be no involvement in their activities, but efforts will be made to reduce regulation, increase energy for AI, and make AI companies prosperous for America and around the world (2m17s).
• Criticism of the administration's actions is anticipated, and the freedom to speak truth to power and criticize when things are wrong will be exercised (3m10s).
• Past criticism of Trump's supporters and actions was due to abuses of instruments of state for personal gain and power, which is anti-democratic and anti-American (3m39s).
• Concerns about the administration's potential actions include idiosyncratic political persecution of individuals, politicians, military figures, and businesses for political reasons (4m55s).
• Other potential disastrous outcomes include economic corruption, foreign actors influencing the US through economic means, and the use of payoffs to people with political power (5m53s).
• The possibility of the administration engaging in destructive actions, such as applying tariffs idiosyncratically against political opponents, is also a concern (5m35s).

How Should Tariffs Be Used to Benefit America? (6m34s)

• America benefits greatly from a global trade regime, which brings economic prosperity to the country, including areas with more economic challenges, so creating trade wars should be avoided as they can lead to a massive drop in prosperity in the US and other places (6m41s).
• Tariffs and other sanctions can be used to deter bad actors in the international context, such as Iran and Russia, who create violence, war, and chaos in various countries around the world (7m36s).
• Tariffs can also be used to respond to countries that behave irresponsibly within the global economic system, such as China, which slants the field by allowing its businesses to operate in other countries while restricting foreign businesses from operating in China (7m51s).
• Responding to such behavior by disallowing Chinese businesses to operate in the US in parallel can be a useful economic measure (8m12s).
• Adding tariffs can also be used to discourage countries from using labor camps to produce products (8m30s).
• The Chinese car industry's phenomenal subsidies can be seen as a form of mercantile warfare, which can lead to the destruction of European and American car industries, and responding to this with tariffs can be justified (8m46s).
• A substantial reduction in regulation in the US can benefit the country, and modernizing and refactoring regulations can be achieved by removing old regulations for every new one added (9m30s).
• The development of AI, nuclear power, and fusion can be greatly beneficial for the world, and a return to investing in these areas can be positive (9m42s).
• Growing business across the entire country, not just in specific industries, is a moral requirement for American Presidents, and investing in business across the entire industry can lead to good outcomes (10m19s).

What Does Elon’s Political Role Mean for AI’s Future? (10m41s)

• Elon Musk's political ascendancy may have unclear implications for the future of AI, depending on how he chooses to use his time and focus, with possibilities including amplifying US industry players, ensuring rational talent importation, and inventing the future at the necessary speed (10m41s).
• However, if Musk focuses on issues like "woke AI," it could be a challenge, as this is not considered a crucial issue when considering AI's impact on American prosperity and well-being (11m44s).
• The success of Dogecoin (DOGE) is uncertain, but its goals of refactoring bureaucracy and efficiency are considered valuable, even if the declared missions have a low chance of success due to the difficulty of reducing the deficit and defense spending (12m13s).
• Reducing the federal workforce is not seen as a viable solution to balancing the budget, as the real money is in areas like Medicare, Social Security, and defense spending (13m0s).
• Applying fiscal discipline and balancing the books is considered a positive step, but the idea that laying off a percentage of the federal workforce would significantly trim the federal budget is seen as a false promise (13m36s).
• The actual impact of DOGE's proposed budget cuts would require a more detailed examination of the numbers and the budget, rather than relying on simplistic solutions (14m5s).

What Should Happen to Defense Spending in Europe & the US? (14m6s)

• The current defense spending in Europe is considered inadequate, with some suggesting it should be increased to 5-6% of the budget, up from the current 2% (14m15s).
• Reducing US defense spending would be beneficial, as the current allocation is not ideal for investing in the future, and the military-industrial complex is not the most desirable business to invest in (14m20s).
• Despite global conflicts, it is possible to reduce defense budgets by addressing massive misspending within the Department of Defense, such as the construction of aircraft carriers, which are costly and vulnerable to modern threats like hypersonic missiles (15m10s).
• Stopping the construction of aircraft carriers would be a good starting point for saving money in American defense, but this is a difficult political target due to the influence of Congress and the economic interests of certain states (16m3s).
• The US should not continue to subsidize Europe's lack of defense spending, and instead, Europe should increase its defense spending to take its rightful place as an important force in the world (16m34s).
• Supporting Ukraine's right to self-defense is crucial, and it is not for other countries to decide Ukraine's fate, as the Ukrainian people have the right to fight for their own families and against genocide (17m39s).
• Medicare is another area that requires reform, with a need to rationalize costs and focus on preventative care, but this is a difficult task due to the political influence of older voters (18m17s).
• Reducing spending on the last three to six months of life and increasing investment in preventative care could be a more cost-effective approach, but this would require courage and a willingness to tackle a sensitive political issue (18m49s).

Should TikTok Be Banned Due to Its Political Influence? (19m18s)

• The Trump administration successfully harnessed the power of TikTok and younger people to vote, which is an intriguing aspect of the platform's influence (19m24s).
• The question of whether TikTok should be banned due to its political influence is a complex issue that should be approached from a commercial perspective, considering that China bans competition from companies like Meta and Twitter (19m39s).
• A possible approach to this issue is to implement a reciprocal ban, where if China bans American companies, the US should ban Chinese companies, in order to create a fair and balanced playing field (19m52s).
• The governance of social media companies is a separate issue that requires transparency, responsiveness to local laws, and a set of rules that apply globally (20m12s).
• The idea of banning TikTok as a response to China's ban on American companies may seem childish, but it can also be seen as a way to establish consequences for unfair practices and create a level playing field (20m25s).
• In some cases, responding to a "bully" with equal force may be necessary to establish consequences and prevent further aggression, which is a principle that can apply to both individuals and countries (21m15s).
• The concept of reciprocity and responding to aggression can be seen as a fundamental principle of international relations, where countries may need to take strong actions to protect their interests and establish a fair playing field (21m31s).

How Realistic Is a Transition to Nuclear Power? (21m38s)

• A transition to nuclear power is considered a hopeful solution, especially given the current Administration's stance on regulation, as past regulations have hindered the adoption of nuclear power and contributed to climate change by favoring coal over nuclear energy (21m42s).
• France is cited as an example of a country that has successfully utilized nuclear power, and advancements in technology have led to the development of new types of nuclear power plants, such as those that can consume and convert nuclear waste into power (22m15s).
• TerraPower is mentioned as a company that has developed a nuclear power plant that can be powered by nuclear waste, providing a potential solution for waste disposal and energy production (22m27s).
• Despite the benefits of nuclear power, regulatory agencies and public opinion have hindered its adoption, with many people holding fearful and uninformed views about nuclear energy (22m44s).
• Investing in nuclear fusion and vision is seen as a philanthropic effort to create technology that can benefit society and humanity, rather than a purely economic investment (23m7s).
• The goal of investing in nuclear power is to help the US and the world transition to cleaner energy sources and mitigate climate change, with the potential for new technologies to play a crucial role in this transition (23m45s).

Does Climate Risk Losing Priority Amid AI & Global Conflict? (23m53s)

• Climate change may lose priority due to global conflict and other pressing issues, which is a concerning and potentially inevitable outcome (23m54s).
• A possible approach to addressing climate change is to undertake "Apollo projects" focused on clean energy, including nuclear energy, which could have a positive impact over time (24m39s).
• Artificial intelligence (AI) is often misconceived as a major contributor to climate change due to its electricity consumption, but it currently accounts for only a small percentage of power consumption (25m5s).
• However, AI's growing energy consumption could become a concern if it continues to grow exponentially (25m39s).
• Some individuals use AI's perceived negative impact on climate change as a way to gain attention, similar to those who opposed nuclear energy and inadvertently led to the construction of coal plants (25m58s).
• AI can actually be beneficial for climate change by optimizing data center efficiency, with Google's engineers using AI to save 15% of electricity in their data centers (26m36s).
• AI can also be applied to run grids more efficiently, reduce costs, and add intelligence to various systems, potentially making it a net energy saver (26m41s).
• Major hyperscalers are investing in green energy companies, providing initial customer capital and subsidies to support the development of new energy sources, including nuclear and geothermal energy (27m14s).
• AI may also contribute to the development of sustainable green energy by solving complex problems, such as fusion containment, through its massive computational capabilities (28m28s).
• If fusion energy can be made to work, it could potentially solve climate change, and researchers are actively working on applying AI to achieve this goal (28m35s).

Can Fusion Completely Solve Climate Change? (28m41s)

• Fusion is considered the most scalable green energy, with the sun being powered by fusion, and various methods can be used to harness solar energy, such as satellites with solar energy collection and ground-based systems, which can be seen as indirect forms of fusion (28m48s).
• Micro Fusion is a safe and efficient way to produce enormous amounts of power at a low cost, making it a potential solution to significant global crises (29m16s).
• One of the global crises that fusion energy can help solve is decarbonization, which requires a lot of energy to pull carbon out of the atmosphere and reduce global temperatures (29m34s).
• To achieve decarbonization, the energy used must be carbon-neutral or negative, and fusion energy can provide this at a massive scale, allowing for the removal of carbon from the atmosphere and powering human needs like housing and transportation (29m57s).
• Fusion energy is seen as more than a silver bullet for solving climate change, but rather a "platinum bullet" due to its potential to provide a scalable and efficient solution to the problem (30m18s).

How Significant Is Google’s New Quantum Chip Announcement? (30m27s)

• Google's new Quantum chip announcement is considered a significant step forward in the development of Quantum Computing (30m36s).
• The initial discourse around new technology often starts with fears, such as the potential for Quantum Computing to break security and collapse the banking system, but these concerns will need to be addressed once the technology reaches a certain scale (30m51s).
• The potential security issues with Quantum Computing will arise when the technology reaches around 2,000 to 5,000 logical Quantum bits (cubits), which is a much larger scale than the current 150 to 250 logical cubits (31m22s).
• Quantum computers have the potential to greatly aid in the invention of new medicines, drugs, semiconductors, and physical materials at a micro scale, which will bring enormous prosperity benefits (31m48s).
• The benefits of Quantum Computing will be realized well before the need to navigate the potential security issues, making it a hopeful development (31m59s).
• The exact timeframe for the development of Quantum Computing is still uncertain (32m5s).

Has Anyone Ever Held as Much Power as Elon Musk? (32m7s)

• Elon Musk has immense power due to his ownership of various influential platforms, including digital town halls, roads around town halls with Tesla, power for it with Starlink, and physical town halls, which is a worrying trend (32m11s).
• While individuals with significant power have existed throughout history, modern society aims to create checks and balances, accountability, and avoid conflicts of interest within the government (32m34s).
• The concern is not necessarily the power itself but navigating conflicts of interest with ethics and integrity, which is crucial for the next administration (33m0s).
• Elon Musk's ability to control information and turn off access to large segments of the population is a concern, and such power should ideally be in the hands of democratically elected governments (33m15s).
• Despite criticisms, Elon Musk has made significant positive contributions, such as the electric vehicle revolution, space exploration with Starlink, and aiding Ukraine's defense (33m45s).
• It is essential to keep the halls of democracy and government distinct from personal businesses and avoid conflicts of interest (34m15s).
• Elon Musk's greatest power and weakness are his conviction in his beliefs, even when evidence contradicts them, which allows him to achieve great things but also spread misinformation (34m30s).
• The same impulse that drives Elon Musk's innovative ideas also leads him to retweet conspiracy theories, highlighting the need for responsible social media behavior (35m21s).
• There is a distinction between freedom of speech and freedom of reach, and while individuals should be entitled to express their opinions, collective media systems should have some ability to regulate and verify information (35m52s).
• Progress in science and law is made through thoughtful groups of people who bring a notion of truth, such as reproducibility in science and juries in the US (36m20s)
• In the US, juries consist of 12 people who listen to evidence and agree on a verdict, and there are also blue ribbon commissions that decide on certain matters (36m43s)
• There is a need to figure out how to apply this concept to social media, where people like Elon Musk can spread both true and false information, and some form of policing may be necessary (36m55s)
• However, any form of policing should be implemented through a democratic process, and the goal should be to identify topics where panels of experts can determine the truth (37m15s)
• A proposed solution is to allow people to express their opinions, but also provide expert opinions that contradict false statements, allowing for freedom of speech and collective learning (37m48s)
• This approach would require a democratic process to implement, and would involve identifying topics where expert opinions can provide a truth determination (38m19s)

On Epstein (38m23s)

• Jeffrey Epstein was mentioned in comments when asked about him, and it was stated that being associated with Epstein is wrong. (38m24s)
• There was no direct involvement with Epstein, and all interactions were related to fundraising for MIT, which was a mistake that was publicly apologized for. (38m33s)
• The mistake was relying on MIT's vetting of Epstein, and it was regretted due to the damage caused to victims and others. (38m42s)
• An apology was issued for burnishing brands, and it was acknowledged that such actions can cause harm. (38m54s)
• The modern age of media reporting can create a media impulse, requiring responsiveness to reported issues. (39m2s)
• There is concern about cancel culture and the freedom to destroy someone's reputation with false information, especially when individuals with a large reach, like Tucker Carlson, can spread misinformation. (39m8s)
• It was noted that the right-wing accuses others of cancel culture, but they also engage in destructive behavior. (39m25s)
• A personal approach to public statements involves being careful and only speaking when there is evidence to support the claims, allowing for validation by others. (39m37s)
• This approach is considered a standard that everyone should hold themselves to. (39m50s)

How Will AI Transform Cancer Treatment? (39m54s)

• Reid Hoffman has been looking into areas where AI can make a huge difference for the human condition, including drug discovery and cancer treatment, which can improve the quality of human life, save lives, and have huge economic savings (39m57s).
• Hoffman serves on the Chan Zuckerberg Initiative Biohub and the Institute board, and has been working on the intersection of bio and computing for over a decade, expecting to see amazing new products with AI (40m50s).
• Hoffman thinks that serial entrepreneurs building in AI today should consider working on big problems like cancer, climate change, poverty, conflict, and defense, rather than just sales tools, but also acknowledges that improving sales efficiency is a good thing (41m14s).
• Hoffman believes that the improvement of business, including sales and sales efficiency, is a good thing, as it is part of the operating system of society, and contributes to funding government, universities, medicine, and education (42m1s).
• Despite negative sentiment towards the UK, Hoffman is bullish on the country due to its amazing talent, universities, technical talent, entrepreneurs, and willingness to be bold, with a global perspective (42m54s).
• Hoffman appreciates the global learnings and perspective he gained from his visits to the UK, particularly in London, Oxford, and Cambridge, and believes that this perspective is an asset (43m32s).
• The UK's economic growth has been stagnant for three consecutive years, and the deterioration of the German ecosystem is a concern, but there is still enormous potential for growth and rejuvenation (43m55s).
• Brexit is considered a terrible idea that has presented challenges, but it's essential to focus on building the economies of the future rather than holding on to the past (44m19s).
• The UK needs to collectively invest in and enable the growth of new industries and technologies, such as chip sovereignty and energy sovereignty, to create a more positive economic distribution across the country (44m54s).
• Despite the current lack of progress in these areas, the UK has the capabilities, talent, and will to make it happen, and it's essential to organize and make it a reality (45m14s).
• Supporting entrepreneurs and enabling them to create great businesses is crucial, as this can lead to job creation, revenue, and tax revenue, ultimately driving economic growth (45m24s).
• The focus should be on creating a positive economic future, rather than dwelling on past challenges or trying to revive outdated industries like coal mining (44m35s).

Do We Need Chip Sovereignty in Europe? (45m41s)

• The concept of chip sovereignty is important for Europe to have its own semiconductor industry, similar to the US, to reduce dependence on other countries and mitigate global risks (45m42s).
• The Biden Administration's Chips Act is seen as a good idea to restart the chips ecosystem within the US, and it is hoped that future administrations will continue this work despite potential criticisms (46m8s).
• Having a strong chips industry in Europe would be beneficial as it would provide diversification within the Western ecosystem and reduce the risk of dependence on a single point of manufacturer (46m37s).
• The COVID-19 pandemic highlighted the challenges of globalization, including the risk of dependence on a single point of manufacturer, and the importance of having multiple sources of origin for resilience and robustness (46m46s).
• Ideally, there should be two to four or five places of semiconductor manufacturing, with at least one or two of those within the Western nations, to provide a robust and resilient supply chain (47m24s).
• A single point of dependency on Taiwan poses a significant global risk, and having chip sovereignty in Europe would help mitigate this risk (47m40s).

Will Nvidia Maintain Dominance or Be Challenged by Big Tech? (47m46s)

• Nvidia's business is expected to continue strongly due to its current lead in producing amazing chips and massive demand for its products, particularly for compute purposes, despite other companies like Google, Amazon, and AMD building their own chips (48m4s).
• The demand for compute is infinite, and as long as it can be delivered at a moderate price, demand will completely fill, similar to the concept of electricity (48m41s).
• Large Language Models (LLMs) are not reaching their upper end of abilities, and the next larger computer and LLM trained with it will still have new capabilities (49m8s).
• The argument that LLMs have reached their upper end is incorrect, and the next level of compute and data will still make a difference, with the possibility of creating synthetic data and utilizing data outside the standard internet training corpus (49m40s).
• The era of agents is emerging, and while agents will be composed of multiple models, the next level of scale models will still be important in creating high-quality agents (50m13s).
• The current investments in technology may seem like a bubble, but it's a natural part of a technology transformation, and good investors need to make probability-based decisions to ensure they have some successful investments (50m44s).
• Foolish investments are inevitable, but it's essential to have some good investments that can change the game, and sometimes, what seems like a crazy price can turn out to be a wise decision (51m14s).

A High-Priced Deal Turned Out to Be a Great Investment (51m23s)

• A high-priced deal that seemed like a crazy price at the time turned out to be a phenomenal investment, as seen in the case of Airbnb's series A funding round, which had a post-money valuation of $60 million at the time, despite the company having a very small transactional volume (51m24s).
• The founders of Airbnb could have personally called every single person who had used the service in a week if they were working through the call list, highlighting the small scale of the company at the time (51m34s).
• The investment in Airbnb was based on the theory that it would transform the industry, which is a key factor in the investment approach, focusing on majority investments that have a reasonable probability of working and changing the industry (51m57s).
• The investment approach also involves being careful about prices and ensuring that they make coherent sense in terms of future capital needs and the entrepreneurs' business strategy (52m37s).
• The discipline of evaluating investments in this way has been learned from experiences in Silicon Valley, where prices are not always relevant, and it's essential to consider whether the investment makes sense in terms of future growth and capital requirements (52m38s).

Are Acquisitions Inevitable for Cash-Strapped Companies? (53m0s)

• Acquisitions are inevitable for cash-strapped companies, especially in the case of LLM companies that do not have enough cash, such as MRA in France, and it is better for them to be acquired rather than go out of business (53m2s).
• The threat of antitrust is often misunderstood, as it aims to stop the aggregation of power in large companies by blocking acquisitions, but this can actually limit competition from startups (53m31s).
• Investors are less likely to invest in companies that might compete with large tech companies if there is no chance of an acquisition exit, as they need to recoup their investment, and regulatory authorities blocking acquisitions can create more aggregation of big power (53m51s).
• The theory that stopping acquisitions prevents the aggregation of big power is flawed, as it actually stops the financing of competition, and a more open M&A window would be good for society, competition, and investing in competition (54m22s).
• Public statements have been made to highlight the incorrect theory of the game behind antitrust, not to say that antitrust is bogus, but to point out the flaws in the current approach (54m45s).
• The Figma antitrust case is seen as an example of a bad theory of the case, and the deal being derailed may actually benefit investors, but the approach to antitrust is still flawed (54m54s).

Quick-Fire Round (55m18s)

• The AI Revolution will create enormous value for both large and small companies, as it's a scale Tech question, and the goal is to invest in scaling technology that starts small and gets very large, with the desire to have more large tech companies (55m29s).
• Twitter is substantially worse with deep regret, and the ideal investment would be in something like Fusion Energy if there were no fear of failure (56m2s).
• The highest multiple investment is not a consideration, as investments are made with a 7 to 10-year outlook, and most investments are in unprofitable businesses at the time of investment (56m18s).
• The venture landscape would benefit from a broader range of investments, including non-software and non-digital areas like nuclear fusion, flying cars, and other real and physical world innovations (56m40s).
• Changes in perspective over the last 12 months include micro changes, such as the right way for governments to interface productively with cryptocurrency, and an openness to understanding UAPs (Unidentified Aerial Phenomena) after watching Congressional testimony from the National Security establishment (57m10s).
• Cryptocurrency is still believed to be good for society, with investments in Bitcoin and cryptocurrency companies, but there's an evolving understanding of how it can integrate well into society (57m32s).
• Watching Congressional testimony on the study of material from extraterrestrial spacecraft has raised questions and sparked an interest in understanding UAPs, although it may still be considered a conspiracy theory (58m8s).
• The individual has a long-term investment approach, having bought a significant amount of Bitcoin and holding onto it without selling, with the intention of keeping it for a 10-year horizon (59m13s).
• The individual considers their worst financial investments to be the opportunities they missed, such as not investing in BNB and not leading the B or C series of investments in certain companies (59m47s).
• One key lesson learned is the importance of doubling down on investments with high conviction, rather than being cautious after initial success (1h0m13s).
• The individual regrets not investing in Stripe and Square early on, citing their knowledge of the risks in the payments industry from their experience with PayPal as a reason for not investing (1h0m31s).
• The individual's father once gave them advice that has stuck with them: making decisions in the short term reduces one's opportunity set, but it is necessary for long-term opportunities (1h1m12s).