Code red: our favorite tech rivalries

0:05This week on Great Chat, we discuss startup beefs, who benefits, who loses, and how you should think about rivalries for your own business. I'm Angela and this week I'm joined by Helen and Ashley. Great chat is brought to you by Mercury, the fintech used by entrepreneurs through every stage of company building. We use Mercury to run this podcast and love recommending it to other founders and fund managers. Try it for yourself. Visit mercury.com to join over 200 ,000 entrepreneurs who use Mercury to make managing their money unbelievably simple. Hi. Hey guys. Happy Tuesday. I hope everyone had a good Thanksgiving.

0:43I returned victorious for my first ever RV trip into the Redwood Forest. I learned what a stinky slinky is. It's the pipe that connects to the RV and deposits all the sewage into the sewage hole.

1:03Yeah. I've never heard that. But there's like, there's black water and gray water, right? Yeah. Yeah. I forgot which is which, which was critical to know but um but I didn't know that the the hose itself had a name was it like a class b camper van like how big was this thing it fits seven people so it was like enormous it's like driving a boat around um but someone was and you guys like actually drove it we drove it yeah yeah like okay you guys did you guys take turns or no no no I refused used to drive. Um, but it honestly, it was much better than I expected. It was very clean inside. It was very functional and Helen, I know you camp a lot.

1:52Actually, I don't know if you're a camper or not, but I feel like I'm kind of converted. Like you're not sleeping on the ground. You have actual like beds and pillows and blankets. There's a restroom that you can easily access. There's a shower. You can turn the heat on at night. Did you use the shower? Okay. It's like four drops. Four drops of water coming out of the spa. Don't judge us. None of us showered for two days. Not because it was dirty. That's the real way. It was just too much mental. But not having to get up and put on your shoes and coat and walk out to use the restroom, amazing.

2:25And you can go camping in the winter because you can turn the heat on. Right. Yeah. So I think we're converted. Angela, I was watching your Instagram stories, and I feel like it's very much like a boat where like every square inch has like a purpose and very intentionally designed um and probably like a boat yes the shower is like less than one would one would wish for from a water pressure standpoint but still a miracle that it exists did you feel hopeful like like that if we had another pandemic that you would like live a camper van life and you know it would be less of a lockdown, but more like a mobile lockdown?

3:07I don't know if there's anything more terrifying than being locked in a camper van with my two children, like driving around the country. That sounds like the end of time. So I don't know. I feel like a lot of city dwellers were saying that the worst thing was being locked at home. Like I had friends in Manhattan who were like stuck in an 800 square foot yeah being in an rv in humboldt county we could not have felt further away from silicon valley and the ai like it like i feel like we're in a world of like you're in the bubble that we live in and then there's like ai hasn't like technology hasn't even amazon hasn't even reached this like this land yet you know but there's no there's no ai in the Redwood Forest.

3:53They don't have Prime. They don't have two-day Prime. Okay, that's funny. Maybe that's the solution of like if robots come for us all in the cities, we just all live in RVs in the forest. I took a Twitter break over Thanksgiving and I was telling the chat like when I came back, you know, I feel like I didn't know anybody I saw in the feed and I missed like important storylines like you only see like the responses to them so catching up was interesting but then like I think the next day it was just all David Sachs stans and I was like I didn't know David Sachs needed stans but okay I clearly I missed something and then I read the New York Times piece um so curious you know what you guys thought of did you hear did you read did you read the full New York Times piece, I guess that's the first question, because we did discuss the reactions to them, which some of them are even longer than the piece itself.

4:55Wait, but for those of us who haven't read the piece, can you guys just give a TLDR of what the original sin was for the New York Times? I can take a stab and then Helen, feel free to fill in any gaps. I think I skimmed it would be like the accurate way to describe my consumption. I mean, TLDR, it was about how David Sachs is very entrenched tech industry insider, has made tons of investments, has lots of tech friends. And now he has this appointment as the AI and cryptos are in the Trump administration. and it was sort of calling into question, like how divested is he from all of his various holdings and like the policies he's putting forward?

5:45Are they enriching his friends? I don't think they had any like real like gotcha. Like I wasn't like scandalized by anything in the article and maybe I'm just too cynical these days, but it kind of struck me as like, yeah, any industry person, who is hyper-connected, who then goes into a government post, is going to have a lot of ties to that industry. And especially if he has been selected specifically to champion the policies that benefit his sector, then yes, we're going to see some of that vast ecosystem of connections and companies and holdings benefit from his work. So that was kind of my, like, it felt like, yeah, you could say this about pretty much any, anyone.

6:40Yeah, I felt like it was a nothing burger, but with like kind of a grabbing headline, right? And so I think that was the part that was, I would say, most frustrating for people. I mean, even if you have absolutely no horse in the race and no context, you're just like the headline didn't match the article. And so it sort of felt like to me that the article wasn't meant for me. And the article was probably not meant for literally anybody on Twitter. I mean, the article was like not meant for anyone in tech, even if you are not a David Sachs stan. the article is not for you because it was just funny how they even described like the tech industry there is this one paragraph that I tweeted about because I just found it so funny because it was like it was like an app framed as an accusation but it was like craft adventures has made hundreds of investments including in companies owned by David Sachs's friends and I'm like yeah welcome to tech where it's like super networked and like his LPs would be furious if he didn't get into the rounds of his like most impressive friends.

7:49It was written in a way to scandalize things that are actually quite normalized within tech. And so like that to me was like, oh, I could go through this article and like rewrite it in a way where it would be much more credible to like a tech audience and a little bit less like pearl clutching and maybe more just like, I don't know. I think there are interesting questions about who has the most influence and power in DC right now. And what does that mean for the tech industry? And is David Sachs the right person to do that? I think they focused on the wrong things. And I had some fun like back channeling, back channeling going with friends.

8:26And one of them was like, he absolutely has like, you know, lost money by taking this post. I mean, I think he sold a bunch of crypto, although Bitcoin's down right now. So maybe he's now, maybe he's now looking good and divested himself from certain investments that are doing well. But again, I feel like this misses a broader point, which is I think there's an assumption that the wealthiest people care about money most of all, when in fact, I think what they care about is power and influence. And that is why it was an easy trade to divest from certain investments to ascend to this like, you know, position of power, a position where he can get like everyone on Twitter to like support him and Sam Altman to tweet.

9:13And I don't know, it just like, it just felt very, it felt like it was written for, you know, my aunt who is not in tech and doesn't know too much and thinks like, oh, these people are bad and this is bad and not for like a super sophisticated audience, which I, sorry, I don't, I hypothetical aunt. This is not about you in any particular. Ash's aunt is a loyal listener. Disclaimer before any Christmas meetings. Yeah, exactly. At Thanksgiving, I did learn that certain family members are listening to the pod. So that was a, that was a funny experience for me, but no, it was not written for like a super savvy, like tech savvy, politics savvy audience.

9:59And I think that was a miss. The only thing I'll add to that is it was a nice reminder that, yes, the New York Times is much broader than the people on Twitter. And like, you know, the thing I always say, which is that like Twitter is not a channel the way that like I think we used to traditionally, you know, as marketers think about Twitter as a channel, Facebook as a channel, LinkedIn as a channel, Instagram as a channel. And it's like, no, Twitter is a very specific audience of people. And so let's give the New York Times the benefit of the doubt that they had like three or five reporters working on this over the course of many months that they anticipated a reaction like this.

10:35Then who was this really for? It was for, you know, there are 11 million subscribers. And that's, I guess, like a nice reminder that like tech is not the real world. But I think the second thing that was sort of like sad about this was they really honed in on, you know, his role as AI czar, right? AI and crypto czar. And at a time where I feel like the narrative on AI is, you know, sort of malleable, right? I think that like we talk about AI every week, but like the average person's thought, you know, thoughts on AI, it's like you actually have to really think about what their day to day looks like.

11:11whether it's going to be like a job threat, whether it's like really appending their processes and the way that they work, like whether it's something that they maybe really love because they downloaded an app that's like amazing to them. Like you really don't know. And so I feel like it's still early innings on like shaping the brand of AI and public perception of what AI is. And I felt like this piece sort of too tightly coupled like David Sachs and big tech and, you know tech and vcs with ai because of his like title and sort of like i don't know like i didn't love that because i think we always talk about why did we start this podcast and one because it's fun and we're talking about this stuff anyways let's just like talk about it live um but it's also like you know you can be pro-tech pro-progress pro-ai you know all of these things pro-capitalism Pro-capitalism.

12:03Also, just not be painted as just a greedy, power-hungry person. I think that there is just nuance missing in the conversation, and we thought we brought a fresh perspective to that. I don't know. It was sad for me on the brand of AI, which I don't know if many people are thinking of. Yeah, it's funny. I think if you asked most tech people who are five or 10 names you most deeply associate with the future of AI, like David Sachs wouldn't even be on that list. Right. And I don't mean that as like offensive. Frankly, or crypto, which is so funny, which is or crypto. I know. But maybe because of the All In podcast, like a really large audience of people like actually would couple him with crypto and AI.

12:50So I don't know. I think like the All In podcast, like its evolution over the past couple of years is like less of a tech audience and more of a beyond tech explaining. I think friends that have gone to like the All In Summit will say that the audience is all non-tech people, even if the tech people are on stage and you really understand the reach and influence that All In has, you know, sort of like grown over the years. Can we talk about like the Twitter battle? Oh my gosh, please. Around this piece, especially with the New York Times reaction, because this was. Oh yeah. Yeah, because we disagreed on...

13:25Attention in our group chat. Yeah, yeah, yeah. Not us. Right. We disagreed with Sally, who's not here to defend her point. But basically, yes, the New York Times, what is it? The New York Times Communication Department, or like basically the New York Times' own PR team. Spokesperson. Spokesperson of the New York Times retweeted, like maybe David Sachs' post. So David Sachs did a Twitter... Like David Sachs very much knew how to play this to his advantage. A hundred percent. He called it a hit piece. Yeah. As far as like tech Twitter is concerned, this was like a massive victory for David Sachs because he got to call the New York Times a hoax.

14:05Everyone and their mother came out of the woodwork to praise him and, and, you know, slam the New York Times. And so he had this like very long tweet that I did not read, but like the beginning was like New York Times is like a hoax factory or something. And then I think he like tries to debunk the piece. Yeah. And the New York Times from its like main corporate account quote tweets David Sachs' rant, which of course is like all caps, very Trumpian, like lots of all caps, whatever. And share a screenshot. They don't even write like native to the app. A screenshot of a statement from a spokesperson, no name, that is like the New York Times stands behind its reporters, whatever.

14:48and it was just like like i think we understand all of the reasons behind them doing what they did right some of the reasons that came up were like maybe they felt internal pressure to do so to stand up for the reporters right um like because we don't know what the internal comms or the sort of internal whether there was backlash or controversy so i thought that was a good point that sally made like maybe they felt like they had to do that or maybe wanted to be on offense right like they're like you're being combative we'll be combative but the problem is they like they didn't do it in a twitter appropriate format right like you can't fight an individual with a huge platform and personality and agenda with like a corporate statement attributed to an anonymous spokesperson and like have that go well and my my perspective is they just should have like ignored yeah i shared that perspective your little yeah you're having your little like fit over here very nice for you we have our 11 million readers paid subscribers yeah exactly exactly and so i felt like it ignored it gave too much it played right into you know um the narrative that he was setting up and that he was the you know victim and like all All of these things that I feel like were perfectly laid and they just walked right into it.

16:10But who knows? I mean, I think Twitter is its own audience, its own game. And if you're going to engage, right, if you're going to engage at all, because oftentimes I think the right thing is to just that's not your primary channel, then, you know, sit this one out. And I think that we'll talk about this in a second as our main topic. But like as the dominant brand or as the bigger brand, you don't have to always participate right in those battles. You don't have to acknowledge the smaller brand. And they did. So it was just so bizarre. So bizarre. Also, one other funny, very Twitter-y thing was like, you know, so many people tweeted in David Sacks' defense.

16:53And so I saw a couple tweets along the lines of like hearkening back to a prior great chat topic. I want to see the group chats that were the call to action for this show of support. Because it was, it was like, it did feel quite coordinated. And who knows, maybe it was organic and a couple people did it and then other people felt inspired. And I, you know, I do think it's in a lot of people's interest, investors, founders, to like have a good relationship with David Sachs. And, you know, having a pro-AI, pro-crypto, pro-tech agenda in the White House is certainly benefiting a lot of people in this industry.

17:31But it was funny to see. I think that's the era we're in. There are group chats happening. I think that is the era we're in. I would describe the Trump era as one where, you know, everything has a price. And so I feel like that is very different. And I think that is like one of the biggest shakeups in terms of just like institution and like norms. And so I'm simplifying this too much, but it's just like, yeah, because I think we're in this era where like people see clear ROI from doing things like that. And so that's why another reason why it feels so like different and funky. But anyways, okay, enough about this.

18:08I'm sure we'll see many, many more like, you know, love story owed to David Sachs as the week unfolds. I think we'll also see more coverage pushing back on tech. Like we've just been in this like unfettered growth phase and, you know, whether it's coming from uh legacy media or some of the industries that maybe are going to start feeling the like people need a villain and i feel like for so long that villain was like finance and you know when you think about the 2008 recession right like the villain was like you know lenders and bad um and bad faith sort of you know sort of activity in the financial industry that like took away average American savings and, you know, exploited them and all this.

18:57And like now I think that it's very much like, eh, maybe that storyline's tired and it's just like, it's AI and tech. So I also think that there's this sort of like natural, like need for a villain thing. Yeah, but tech doesn't see itself that way, right? Like you're always a hero in your own story. And I think there's a very obvious attempt to paint China as the villain to justify everything that like tech is doing. um oh yeah that you need a belt right yeah yeah we're like cold war times again too i mean it's it's effective like i i think that the stuff having a villain or a united enemy is really really important for storylines it's important for elections it's you know and we're coming up on midterms and all of that fun stuff so yeah i don't know speaking of villains sam altman called a code red uh to improve chat gpt uh in the wake of um google's gemini relaunch um so there's there's their villain there's their do you think that was leaked do you think that like somebody leaked that because like what is the strategy of like going public saying today we announced a code red internally like what is like what do you think about that part sam is so savvy i 100 percent assume that he expected that to become a story if you're google do you give a shit like i'm sorry you're like oh that's that's cute like i don't know that's why i just sort of like i can't even think about the internal story what do you think it's for i think it's just to keep open ai and like this in the headlines and relevant yeah okay I think a couple people said this but like this this reminded me of like Zuck's lockdown speech which wasn't reported on at the time I think that people came to learn about it like in Chaos Monkeys the book and then there was like a Vanity Fair article about it but basically in 2011 Zuck did this like impromptu all hands where he told us that you know Google Plus is launching and social has always been this kind of like cutesy experiment that they've been doing.

21:16But this time they are as an entire company completely focused on Google. And that is very scary for us because Google doesn't have to put ads on Google Plus. Their monetization stream does not rely on their social platform. So they could essentially create a clone of Facebook with no ads and create, you know, equal user experiences to one that Facebook had at the time and, you know, take all of users. And the fishbowl, his office with the lockdown sign. So then he unveiled this lockdown like neon logo, right, that flipped on. And it was to be on for the next 30 days. It happened to be right next to my desk.

21:55So like even the like some of the photos of it, like I'm just like awkwardly say that. So I remember this very vividly. But I also remember it is probably one of the most memorable speeches that Zuck gave. What that did was for the next 30 days, like it called every single person and basically made their commitment to their work like the highest priority. And it was pretty cool. Like I've never been a part of anything like that since. I wonder how effective it would be today, like at OpenAI. We've heard stories of OpenAI being 996 and all of these things, but like, I don't know if that sort of, are we tired?

22:34Like, are we too tired? Have we seen this before? Like, does that really, are there people at OpenAI who are so driven by the mission? And I know it's laughable to think that like people at Facebook were so driven by the, I personally was, and I think many people were too, but I'm just kind of curious, like, yeah, who is that announcement for? Like, what is the result internally? I mean, I think we got some details, right? That like, they're going to postpone ads, they're going to try to get out the next model like a faster right and they're to me like as from a narrative standpoint it looks like they're going to try to win on tech right that's what tech does they try to win on better technology and i don't know i feel like there are so many other variables like user experience and how the general public thinks about it like there's all these other variables but they're like we're going to win on better tech everyone likes a good rivalry from like team gen to team angelina like Uber, Lyft, OpenAI, Google, that everyone and every stakeholder benefits from a good rivalry?

23:36I mean, AI is weird because there are like literal leaderboards that regularly shuffle, right, in terms of how the models are performing. And so I think it's a level of competition that we've just like never seen before in that it's more measurable in that so many of these companies, or at least the hyperscalers, OpenAI and Anthropic, are sharing their revenue run rates, and they're funding rounds and new valuations and fast succession. And so I think it is deeply, deeply competitive. But to your point, will this be the level of rallying cry that Zuck was able to inspire? I think when every week feels like a sprint and a race, it's probably going to be more incremental.

24:28And I think, I don't know, this is why I think it was more about the headlines than the internal, you know, internal morale and focus. Because I feel like this whole part of the industry has been locked in an arms race, you know, for the past couple of years, but especially this year. With the new variable being that Google really – people have been calling Google a dark horse for a while, but with Gemini 3, I think they're emerging as the real – the biggest threat to open AI. And so it might actually be a real code red, but it's like boy who cries wolf. Everyone's been competing. You think that he's called code red before?

25:13no i just mean like it's it's already a highly competitive i see i see this is not being like oh a competitor is launching something that's coming into our space all hands on deck it's like the battle we've been fighting every day yeah yeah you know for the past two years continues that's like a that's a less effective battle cry than like an invader yeah i mean also just the the analogy of like a marathon, right? Like if you're fighting so many battles, right? With so many competitors 24 seven, it's like, where are you even getting the reserves to fight this new code red battle? Yeah. So that's interesting too.

25:53I mean, that's been my sort of argument in the group chat about open AI, which is like, they're doing an excellent job playing offense, right? Like to me, their, their developer day was very much like, okay, everyone, like we're good. So we're going to build everywhere here so nobody should bother and then like every now and like sort too like everything has been like nope we're also going to compete here so don't bother and like they've been they've been doing an excellent job but it's just just from a sheer number standpoint just so many fights to win or turf to defend that I I know that open AI is growing very quickly you know lots of people are joining but I still don't think it's a big enough organization um to fight the number of battles that they have so that's my call for open AI to hire many, many, many more people, be a gigantic employer of people in the Bay Area and beyond.

26:42They don't need people, Helen. They have AI. I mean, that feels like a perfect transition, or really we're already there to our main topic for today, which is tech rivalries. And maybe we can break down some of the biggest ones we've seen directly, the ones that we are watching from the sidelines now. Helen, you already took us through the Facebook rivalry with Google, but I think Facebook probably, Facebook was probably more often on the other side of these rivalries where it was like the big company. And then there were the upstarts that were, that saw Facebook as their main competition. Oh yeah.

27:22I mean, I think that one of the, you know, genius things about Zuck is he, he, no matter, no matter how dominant Facebook was, he did such an excellent job internally framing Facebook as like the tiny underdog, right? That's such a more exciting rallying cry and inspiring rallying cry than like, we are dominant and we need to defend our turf, right? So, and it's so funny, I just shared that Google Plus story, but like looking back, it's really funny because there's no way Google Plus had a chance, right? But like, I swear at the time, it was truly like, oh crap, like this is existential. But I think the thing that got us talking about this was we saw that maybe the Kalshi fundraising announcement and somebody pointed out that the Kalshi and Polymarket founders like truly, you know, dislike each other.

28:09And that makes the Kalshi Polymarket sort of, you know, competition's kind of more interesting. And that got us chatting about like, well, what other sort of, you know, are there, Are there have there been founder beefs, CEO beefs? And then to what extent do those like permeate throughout the rest of the organization and sort of become a company wide? This is a random question, but what happened to the Zuck and Elon beef? Like, didn't people have them like in a fighting ring ready to box each other? Oh, yeah. And then it just disappeared. No, like it was like such a thing for. Wasn't that during COVID?

28:41That was post-COVID, Helen. I think what happened is Elon became politically powerful with Doge. And then it was in no one's best interest, including Zach, in opposition to him. So that's 100 % happened. And it's why everyone's being so nice to David. That's just the biggest like founder rivalry that like, you know, stand out to me in fact. But well, OK, we mentioned a couple of other founder rivalries or like somebody mentioned like Steve Jobs, Bill Gates. Or maybe that was. Yeah, yeah, yeah. No, I mentioned that. I mean, that was a longstanding rivalry, although I think it was, it sounds like, I want to know the details between the like Polymarket and Calci beef, because it sounds like it's like very personal.

29:27And I think that like Steve Jobs and Bill Gates took jabs at each other over the years, but I think there was also like a deep respect. like a deep respect. And, um, I remember when they came together on stage at, it was, it was pre-code conference. It was like D eight or whatever, like the all things D conference or D five. Like it was a really big moment to have them like both, both on stage together. So I think that was like, like a really great, it's like almost like a sports rivalry where like, you know, having a great competitor, like makes you better. When I read the Andre Agassi book, he talked about how Pete Sampras like made, heard his scores in the long run, but made him a much better tennis player.

30:09And so I think like the dream state is that having a great competitor in the tech ecosystem makes you like push harder, dream bigger, execute more aggressively than you ever would without them. So although with Calci and Polymarket, the battleground seems to be how much capital can you raise and at what valuation? Because the Calci announcement, whether it was today or yesterday, I forget, was like like a billion dollars at$11 billion valuation, which is just insane. Do we have a modern day? I mean, I guess the best one is like rippling deal, which not to keep bringing that up. That is so not Steve Jobs and Bill Gates level.

30:48That's like rolling in the mud a little bit, right? You know, and it's very entertaining, although as we talked about it, it seems to have like diminishing entertainment returns now that we're on like the 10th cycle of beef. um but yes I mean in terms of uh I wonder if that one is also quite personal like polymarket and kalshi uh in addition to being like you know company versus company I mean the one that I I think of a lot because it was I don't know it was like the big rivalry when I was like growing up and my startup career was um Lyft and Uber that was like the classic head-to-head battle and they had very different brands that made it fun, right?