The Case for AI Optimism — ft. Reid Hoffman

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29:54We're back with Prof G Markets. I agree, and Scott knows this, that eventually new opportunities will come as a result of AI transforming our economy. But the question is what happens in the interim. And the Industrial Revolution, I think, is a great point. We're in a comfortable position now looking back 100 years ago saying, oh, it worked out. Look how wonderful the world is today. but I'm sure there are thousands, potentially millions of people who lived through that revolution who did lose their jobs, who were not very happy about the situation. And we've talked to people who have talked about that too.

30:30Daron Esamoglu is someone who says, actually, we didn't do a very good job of handling that transition. And it seems that this is going to be a similar thing, except even faster, because instead of putting vehicles on the ground or building factory equipment. You're literally just shipping software to companies. And we're already seeing it where employees are being laid off like thousands at a time in one go. I mean, this is what happened with Block. This is what happened with Amazon. They just literally send an email. They say, you're all fired. Sorry. Like that's a new kind of system. And from a just purely like capitalist perspective here, one, I mean, from a human perspective, that's got to be kind of shitty for a lot of people.

31:15I've already seen that. But also from a capitalist perspective, it seems as though one of the biggest obstacles for the AI build-out, if you are an AI optimist technologist, one of the biggest obstacles is how unpopular it is now, largely because of this work-being-replaced dynamic, where AI is now less popular in the US than ICE. So that seems to be a big issue, and we're now seeing it in the political sphere. And so I guess my question is, like, how much of a problem is that? Is the popularity problem for AI a genuine concern among the technologists who you are close with in Silicon Valley who are actually building this technology?

31:56You know, you'd have to be pretty blind not to be concerned about the popularity problem. And, you know, it's manifest in such, you know, things also is, you know, weird, like, we should have, we should ban data centers. And you're like, okay, you want the data centers built in Canada or somewhere else, you know, as opposed to here, you know, and most of the arguments against data centers are pretty spurious. I think the key question around the local economy is say, hey, make it a good enough trade for us to bring it here. Like bring in some economic prosperity. Sure, the construction jobs and the running jobs aren't a lot of jobs.

32:34Maybe there's some other things you can bring in. Like, you know, maybe you could bring in a plus 10 % of your energy of your usage. You add 10 % that helps us in a structural way. I mean, there's all kinds of different ways you can do that. Now, that being said, you know, for example, you know, the UK didn't invent the Industrial Revolution but embraced it strongly and had, you know, centuries of global prosperity from it. And so I do think the transition is challenging, but I think the embrace is valuable. And I think that the question around, you know, what should we do is like it's important from a economic, it's like it is the driving force of what the future economies are.

33:23and it'll only work for future generations if we embrace the right economic things. But I think the key thing is to try to figure out what's the way we navigate better. Like, I think it's like, you know, anyone who says, oh, we navigated the industrial revolution perfectly is out of their mind or ahistorical or anything else. It's like, look, what's the learnings? What are the things we can do? Now, the most often thing that people who are not building within the, you know, kind of just call it competitive business world or competitive technology world, It's like, we'll just slow everything down.

33:51Right. And you're like, OK, the problem is competition doesn't slow down. That's actually not not the way that that kind of competition works. Like if you just said, hey, everyone, wait for me to get my economy in order and then you can start shipping your export things. I mean, you know, take a look what what's going to be happening within Europe with the spread of BYD cars from Hungary, for example. It's like, oh, no, no, wait for a decade for us to get our auto industry in place. That's not going to happen in terms of how this operates. So you have to be like figuring it out how to make the adjustments and transformation at the speed that, you know, here we are in a markets podcast that the markets are bringing about.

34:32And that's the thing to do. So the idea is they give good ideas on the transformation that we can embrace to help make the transformation better. And that's part of the reason why, like, I gesture at the speed and depth of AI also gives us tools to help with the transformation. How much genuine thought is being given to those kinds of ideas? Like, I think the trouble that a lot of people have is, on the one hand, there's the possibility that AI could be good for society and it could be a great thing and bring prosperity to many people, potentially. But also, on the other hand, it could also make a small handful of individuals incredibly, incredibly wealthy.

35:14It could make wealth inequality even worse. It could concentrate power and wealth into the hands of a small few, which makes it—I think it makes people feel fairly and justifiably suspicious. And, you know, Dario Amadei could go on a show and say, AI's going to be, you know, wreck everything. And people might say that that's not a lie, but exaggeration. He could also say, AI is going to be a great thing for everyone. Everything's going to be fine. Everyone would say, that's an exaggeration. That's a lie. He's just trying to get rich. So I guess the question is, when you interact with these people as someone who's kind of in the eye of the storm, to what extent are people actually concerned and working on solutions to make this work for everyone versus just trying to keep the message intact as they pursue the ultimate goal of wealth?

36:16I don't think that's wrong to produce a goal of wealth. I think every networked system, cities, trade, everything else creates, you know, economic inequality and an economic inequality is part of the engine by which we, you know, fuel capitalism and competition and all the rest. So it's like, you know, just to be clear, I think that's a fine thing. I do think the question is, is how do you bring, you know, kind of the bulk of society along, e.g. how do you have benefit that spreads, you know, throughout all society? And I'd say, like, for example, is one instance, you know, Sam Altman's gotten a bunch of bad press over the last, you know, X months.

36:55And yet in the very early days, he was funding, you know, universal basic income experiments, trying to figure out what kinds of things would work there and, you know, spending money directly himself in order to do that. So I'd say that there are people who actually, in fact, pay attention to the issue, care about the issue. It's one of the things I don't think Sam gets enough credit for is just one instance. Now, that being said, the question is to say, all right, are we putting in time and energy in order to help society? I think that a number of the different players, you know, definitely Microsoft, Google, Anthropic, OpenAI, and some others, are interested and willing to do that.

37:42they're not willing to do it if it's fruitless relative to its engagement and everything else, given that they also have an intense competition clock going. So if you wanted to say, like, one of the things that I've been telling, you know, governments for years is, like, the kind of thing you should be asking for is, I'd like to have a medical assistant that runs on every smartphone that can help people. I'd like to have a legal assistant that runs on every smartphone that can help people. I'd like to have a tutor that runs on every smartphone and essentially make those the equivalent of free as part of the benefit for helping in transition.

38:16Like, I think you could do that. And I think you could very easily cut the deals in which they would build it and so where than the government could make sure it's there for everybody. And to be getting some benefits in, you know, as we sort out the kind of melee of what's going. But like, say, for example, they just say, OK, we'll go build the tutor that helps with like all things economic and jobs. Well, OK, we build it. are we going to use it? How's it going to get there? Do we have to spend energy and time on that too? So given that there's this focused competition about where the primary economics are and the establishment of platform and so forth.

38:50So this is kind of an area where I think they are legitimately concerned. Part of the reason why they in their own minds will say, you know, pretty, this is, you know, Scott was gesturing at, you know, kind of like the, Oh, are you just fundraising by saying white color bloodbath in X years? You know, buy my Series D. And I don't think that's a great way to try to sell the Series D. I think it's actually like, hey, shit's coming. Somebody should be helping do something here. And we're happy to help. We got our shit that we're working on, but we're happy to put some energy into it. And I think that's what we need to be doing.

39:33You know, now, unfortunately, at the moment, saying well-run government seems to be, you know, something on kind of on the order of dinosaurs or dodo birds or anything else. And it's difficult to figure out what to do. You know, I'm always happy whenever a, you know, any government of any Western democracy, style democracy calls me and says, hey, I'm trying to figure this out. What can I do to help? I'm like, OK, here's some ideas. Here's things. like the medical assistance one that I've been talking about since 2018, right? Because you want to say, hey, this AI transformation is challenging. Most people do not have immediate access to medical advice, right?

40:15The vast majority of the world does not have that. And so it's like, oh, could I get some that's good? And that would be easy for governments to set up because it's changing the legal liability and then the mandate for how it's reached and then having a deal with whatever number of companies you want in order to go into that in terms of what you do. And then all of a sudden you're providing something. Part of me wonders if, I mean, you mentioned how like Sam Altman has been working on and talking about universal basic income ideas for a long time. And in fact, OpenAI recently just published a proposal.

40:53They called it like this New Deal style proposal where they gave a bunch of ideas on how we might lessen the potentially harmful impacts of AI on our economy and things like wealth inequality. They suggested higher capital gains taxes. They suggested something akin to a UBI. Like, to their credit, they are thinking about this and proposing solutions and putting it out there. Part of me wonders, however, that this issue of comms and AI's PR is almost an impossible problem because of the reality, the fundamental reality of wealth inequality on the ground today. And this is something Scott and I have talked about, where we look at the wealth inequality Gini coefficient, for example, which is 0.83 in the US right now.

41:47And during the French Revolution, it was the same number. Things like that, where Americans hear this and they get very upset about it. And so anything that suggests that this could worsen that trend AI being one of them, and it could, like there's nothing, there's no amount of communications, there's no amount of PR or IR that you can do to make them feel better about that. That's what I've started to wonder about this AI revolution. I wonder if you have any thoughts on that and if you agree or disagree. I tend to not focus as much on the inequality question as much on, like if you say, the kind of the bulk of 80 % of society, is their circumstances improving in some substantive way?

42:35And I tend to think that if they think, hey, I've got some reasonable opportunity playing the game, my circumstances can improve, they might be improving, then I think you get more social stability. And I think it's when I, like, I don't know how to feed my children. I think, you know, my prospects over the next decade are just categorically worse, you know, et cetera, I think when you hit it, and it's not, you know, like the usual kind of thing that I tend to say is inequality tends to be more of a political topic because it's like, well, the CEO should only be paid 20 times as much as the bottom person.

43:09You're like, well, how do you get to that magic number? Why isn't it two? Why isn't it 5 ,000? You know, like you let markets sort those things out. And by the way, inequality comes with the economic system that we have built prosperity and capitalism and in competition. And, you know, cities generate higher wealth because of network density. Trade generates higher wealth, you know, kind of these kind of things. And it always has some disparate curve. It's not like it's evenly spread out like peanut butter across the whole system. Now, that being said, it is absolutely mandatory for healthy societies to be saying, hey, I, as a middle class family, am like viewing myself as having better prospects as I'm going into it.

43:51I might have a rough year or two. I might have some way that I have to work hard or anything else. But like that kind of thing is an option. And I think that that needs a strong solution. And I think that part of the thing is right now, I think people are like, look, times are hard. It's part of the reason why, you know, I think democracies around the world tend to be, tend, not 100%, but tend to be, you know, kind of saying, hey, we want to elect someone who's going to take a wrecking ball to everything because we think maybe that's the only way that things can get better. that's almost always leads to things being worse, you know, cultural revolution, you know, French terror, et cetera, et cetera.

44:35Renovation is the important thing, but I get the frustration, the anger, the uncertainty that gets there. And I think it's beholden on all of us to try to say, hey, let's try to renovate these institutions together and let's try to make it work for the bulk of 80 percent and whatever it takes to get there. Because like, for example, If you said the simple problems in equality, it's like, well, then let's just simply, you know, institute a, you know, kind of like a 90 percent upper bound tax on stuff. And that should just simply solve everything. And I don't think that would actually, in fact, solve everything.

45:09I think, you know, like I think someone did an estimate that if you took one of the super billionaires, you know, Elon or Bezos or whoever, and then simply redistributed their economics across the entire U.S. country, it makes a difference. Everyone's like, you know, small savings account gets a little bit bigger, but it doesn't fundamentally change anything there. So you want to be changing the actually economic system of what's happening. I would push back a little bit, Reid. I find that just because taxing billionaires or super wealthy people wouldn't solve the problem. It does feel like once you get to kind of the 0.1%, your tax rate plummets.

45:48And just from an equity standpoint and being responsible, we do need to restore a progressive tax structure, including it should go up for the wealthiest, not down. And yeah, the defense that it's not going to solve our problem, I don't think is a solid defense. Oh, just to be clear, I'm for progressive taxation. This was an inequality point as being like that's the problem of society and what we need to solve. You think there should be a floor? How do we raise as much of the kind of call it 80 plus percent of people as we can and whatever that took in progressive taxation? That's awesome from my point of view.

46:25I just that progressive taxation itself, I don't think is sufficient to the solution. Right. Like it's it's by the way, I completely agree. The differential like there's a reason why I think in in most of the places where we've had strong growth in societies, we've had progressive taxation. The fact that the wealthy can hack it in ways that they're paying less tax than a middle class person as a percentage is essentially a misfunction of society and that that should be fixed. Right. But that's fixed for a different reason other than pure inequality questions. What would be that fix? Because right now, a lot of people are just like, well, wealth tax.

47:05I mean, it might be a crude and un-nuanced perspective, but that's what is being proposed in California because they're like, well, we haven't seen anything else. Like, what is the alternative in your view? Well, so take the California one, which is they go, OK, we have a budget shortfall because of things that Trump's, quote unquote, big, beautiful bill did. So we're going to pose a one off wealth tax for a particular kind of benefit of segment of California. I think all the optics in this are wrong. It's not fixing the systematic thing. It kind of you start with California, which other than Manhattan has the highest income tax rate in the country.

47:47from the way of doing this and no real understanding of this and no sense of what we're really trying to do is fix the overall system. Now, like, for example, I was supportive of the increase of the state income tax provision and the fact that you say, hey, we now charge this income tax now at we added a new level at higher levels, like a million dollars of income and so forth. I think those are good things to do. And by the way, some people against wealth taxes go, well, wealth taxes, we never do wealth taxes. They're terrible. They're unproven. You're like, well, actually, property taxes are former wealth taxes.

48:24There's ways to do it. Now, there's a bunch of questions around what happens with private stock and so forth. I mean, there's a bunch of unknowns and challenges, and you want to compound in the growth. I'd say that the reason why the wealth tax comes out in California is because it's more politically expedient. The easiest one is repeal Prop 13, but that's a third rail, which is a fixed on property taxes, which is a wealth tax. But that's a third rail in California because the commercial real estate associations, which benefit massively economically, slaughter any candidate who does that. So it's like, oh, let's go after billionaires versus real estate across the entire country.

49:06I'd love to get your take on the case that kicked off yesterday, and that is Elon Musk's actions against or action against OpenAI. I was around, and basically Elon, I think, is doing everything possible to throw anything he could possibly invent at OpenAI. and you know among them was you know kind of claiming that they misled him like he wanted to identify himself as a co-founder of creating it but then it's oh you misled me into into a philanthropic donation with a later plan to turn this into commercial and having been around it i know it's factually incorrect we'll see what happens it seems that it's like it's the kind of the definition of legal harassment and kind of trying anything possible to kind of say, no, I didn't make a huge mistake when I basically told OpenAI that it should become a company that I own, I, Elon, should own 80 % north of.

50:04And if you're not going to do it, I'm leaving. And oh, look, the organization did well. So I'm hoping that truth and justice will prevail, which is basically there'll be a speedy trial, which all of this stuff will get kicked out. And maybe even an open AI countersuit for massive defamation and false suits might even work, but we'll see. What do you think of the idea of creating sort of this space media AI conglomerate?

50:40And I mean, they're talking about a SpaceX IPO. You're a markets guy. You're an investor at 95 times revenue. And Ed pulled some data. When Google in public, it was growing 240 % a year and trading at 10 times revenues. SpaceX is growing 20 % or 24 % a year and going out at 100 times revenues. And I'll say this about all the kind of upcoming IPOs. Doesn't it feel like the valuations have gotten way out over their skis here? I certainly wouldn't buy in the SpaceX IPO. I think most of the people who are buying there are kind of in the, hey, everyone thought Tesla was crazy for a long time and I made a bunch of money on Tesla.

51:24And they did. I agree, but they did. Yes, exactly. And so, well, what the hell? Give it a shot. As I think roughly what the investment thesis is there, which, you know, it's kind of like, that strikes me as like a Bitcoin charter. It's like, well, it went up, so I should buy because it will go up again, which is, again, not smart investing behavior. I also, a friend of mine kind of said, hey, I think what he thinks is going to happen is that the, and he's heard from other people, he thinks that SpaceX will go out and then they're going to merge it with Tesla because, you know, Elon's comp package is apparently on market cap.

52:07So, you know, gets a whole bunch of money if it goes out and they merge. Oh, wow. You know, I haven't cross-checked this, but, you know, it strikes me as a possible, you know, set of considerations. But anyway, so I think it's – IPOs should be made on a prospect of real growth. And so if you're not having that, I think, you know, the market should be more sane. Whether or not they will be sane is a different question. We'll be right back. And if you're enjoying the show, come join us on tour and hang out with us live. You can get your tickets at ProfGMarketstour.com. The link is in the description.

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55:01We're back with ProfG Markets. We were talking earlier about that there is a lot of competition in AI, at least for the moment, and that might be a good thing, bringing prices down. One thing that I would also add is that it's also being subsidized right now by essentially the VC community, which is helping with prices. I feel like eventually prices are going to go up. So either way, one thing that we have been a little cautious of in the AI ecosystem is what we have described as corporate incest, which is where there is a lot of sharing of revenue that we're seeing. We saw this between NVIDIA and OpenAI.

55:36And then also we saw this trend of these kind of like pseudo acquihires or pseudo investments that turned out to be acquisitions. and one of the most prominent ones was a company that you founded, which is Inflection. And something that really struck me, I mean, I remember reading the headline like, Microsoft is partnering with Inflection. And Inflection was this company that everyone was talking about. It was one of the hot AI startups. Microsoft is partnering with Inflection. They're going to pay them several hundred million dollars to partner with them. And then suddenly we also learned that half of the employee base has moved over to Microsoft.

56:15And then we also learned that the co-founder, who you started the company with, Mustafa Suleiman, also moves over to Microsoft and is now the CEO of Microsoft AI. At which point I started to think, well, this wasn't a partnership. This was an acquisition. And then we started to see it with other companies, too. Meta goes and grabs Alexander Wang, who started Scale AI, another big AI startup. We saw it with Google and Character AI. they kind of create this deal and then suddenly all the employees end up working for Google. It made me think that big tech is sort of taking over the AI ecosystem. You are sort of at the heart of this.

56:53What happened there with inflection and what do you make of that concept in my head? Whether it's an acquisition or not, my actual point of view is, does the business continue? Inflection continues. It has 70 employees. It has been doing a B2B business and so forth and pivoted. So I think the question is, you know, is the business continuing relative to the, is it really an acquisition or not? Like, so it's a partnership is a very generic world and it's a huge deal, which a bunch of employees and a non-exclusive IP, right. And, you know, co-founder went, and that's happened in even more cases than you've mentioned.

57:27I think inflection, we set the stage on. And I think that the question is, I think part of what you've seen in the large tech companies is they would prefer to be buying companies versus doing these kind of strange deals, but feels that the regulatory environment is too hostile for them to do that, especially earlier and so are looking for other ways to make it work and so you say well what's a deal that you could make work that isn't an acquisition it's like well you know uh get a like a like kind of something that's not quite a bd deal but not quite a corp dev deal corp dev like it's kind of like halfway in between and the measurement is does the business continue you know with with vigor and effectiveness afterwards um and i think that the you know I think regulators, you know, from having seen a bunch of commerce questions about this, you know, aren't fond of it because they're like, well, we want to be, we're trying to regulate the corp dev side of things.

58:39um i think part of the challenge is is i think that the theory just speaking in the u.s although i i know that the uh the uk competitions market can be a little nutty you know like view like we should not allow something if there's going to be future competition which is like kind of strange um i think that the question around uh acquisition should be uh not like are we increasing the amount of capability of competition. Like, so let's take, for example, one of the big companies that has no play in AI right now, which is Apple. Like, you shouldn't go get in the way of Apple buying an AI company because that will actually increase their competitiveness with the other hyperscalers in terms of what they're doing, even if it makes a big company bigger.

59:34So you want to be increasing the competitive landscape of this and looking at where they currently are. And I think that's what you'd want to do on the corp dev side. Now, this kind of thing, I think, is a deal innovation that's like BD plus in order to kind of navigate the universe. And, you know, inflection got a bunch of capital and could pivot its business from doing frontier models to B2B and a bunch of other things in order to execute on this. I mean, it sounds like you acknowledge, like it is a way of getting around regulation, essentially. And I guess, you know, people can make, can do what they will with that fact, whether it's a good thing or a bad thing, whether it's innovation or like, you know, kind of skirting around the law.

1:00:25Well, I don't think it's skirting around the law because I think what happens is the corp dev law doesn't cover it, right? So it's like, here's a way to make a deal transaction of a certain sort, a new sort of work, because this doesn't cover it. So, like, skirting implies, like, well, I'm going 80 miles an hour versus the 60 miles an hour that's posted on the highway. It's like, well, I'm going down a different road. Right. It's almost like tax avoidance versus tax evasion. Like, it's technically legal, but it's, like, in essence, accomplishing kind of, like, the same thing. It's still following the law, but effectively, like, it is an acquisition, like in a lot of ways.

1:01:07So I guess the question would be like, is that of concern? Should startup founders, I mean, just as an observer, I looked at Inflection, I looked at Mustafa Suleiman, I'm kind of thinking, you know, and you, and you co-founded this company. And I'm thinking, this company could be the next Google, this company could be the next Microsoft. And that didn't happen because there was this moment where big tech had so much cash, essentially, that it could just kind of be like, hey, like, let's just partner. We'll pay you hundreds of millions of dollars, and then that'll be the end of it. Well, actually, I think you've got it exactly reversed.

1:01:48Okay. No, I think you've got it exactly reversed, because the question is, I think these deals are generally terrible for investors. They're not, like, what you really want to be able to do is command a really high price and say, the only way you get anything here is that you buy the whole company, right? And if that's not available and you believe that your prospects on your current path aren't working, you will accept a suboptimal deal. So I think these deals are broadly much less good for investors. Fair enough. Right. And so investors don't want them. And by the way, then there's also the function of, you know, are they usually in these deals, it's on smaller numbers, deals are better for investors.

1:02:32On larger numbers, investors and employees are the same. But that also means that it's then suboptimal for employees as well. By the way, the reason why people will do this is because they go, oh, I see that the path we're on currently with this business is not going to work. So for example, in the inflection case is we're not going to be able to establish our agent with building frontier models in the way that we hoped. We need to pivot. So we're going to pivot to P2B. How do we get the capital? How do we make that happen? Well, we do a deal where that enables that to happen. But that's a pivot deal, not a, like it wasn't Microsoft came along and kind of said, hey, a little bit of cash, you know, you completely upend your business was like, no, no, we've actually already decided that we need to change.

1:03:21And we're trying to figure out how to fund that change and make that change go through. But then the question becomes, why is inflection in a position where they feel that they can't compete in this space? Like inflection, from my understanding, you had some of the greatest minds assembled in all of technology, yourself included, to make this thing a success. and the fact that you guys decided that the better option would be to sort of slightly fold and pivot into Microsoft tells me that the landscape was too dominated by big tech, which is something that people have been concerned about, about this generation of technology versus, say, like the dot-com boom.

1:03:59So we figured on a chatbot side, which is the thing we were focused on, that going into scale building frontier models would be too expensive. And a year or two down the road, we'd be like in this really, really difficult position because in a strategy, you're trying to pivot before you've driven the bus off the cliff. You try to go down a different road before you're like off the cliff. Now, if we had had the idea, which Anthropic got into, which is let's go totally coding and APIs and just done that, maybe we would have been Anthropic, right? We didn't have that idea. So we had a bunch of talent, but it's always about the engagement with the market, what you're showing to investors, even in crazy times, et cetera.

1:04:42And we looked at the thing we had and said, we need to pivot to B2B. If instead we said, hey, we could do coding, maybe things would have been different. But we didn't, you know, more fool us. We didn't have that idea. And, you know, hooray for an anthropics, you know, iteration. Do you believe that the monopolization or market power of big tech isn't a problem? Do you think that it isn't stifling innovation or having a negative impact on startups? Well, the short answer is no, for a couple of reasons. One is, it's a question of, do you have growing number of competition? So like, for example, if we were five hyperscalers heading to three, right, then I'd say we have a problem.

1:05:26But I think we're five to seven hyperscalers heading to 10 to 15, you know, OpenAI, Anthropic, you know, NVIDIA being some of the new ones with all competing with each other. And as a startup founder and as an investor, that surface gives me a lot of opportunity to maneuver. And by the way, the reason why you don't want to block out CorpDev is you say, I want to create a company to complete with hyperscaler X. Well, what happens when the company is not doing that well? I cannot raise substantial amounts of capital if I don't have an acquisition opportunity to get out, right? And so if you say, well, we're going to block all acquisition opportunities for that, then I will never create the capital.

1:06:08And then, by the way, me as a series ABC means that I'm not going to invest in a company that's trying to create a new kind of search experience because I can't get an acquisition out as one possibility if the IPO doesn't work. And by the way, my incentive is to create, you know, in modern parlance, a trillion-dollar company. That's what I want. And I want to go long for that. So that's the reason why the regulatory structure is somewhat foobar in terms of the way it's currently conceptualized. And right now, you can say, well, you get pure capital determination about, like, what the markets are.

1:06:42And every VC is trying to spend as much money on AI companies as they possibly can in investing. What do you think of some of these tech companies going vertical and acquiring media companies? Complicated question, actually. And actually, I'd be very curious to hear your answer to this, too. Roughly speaking, I think that people have not quite generated the right interesting generalizations from Netflix originals and Prime and Apple movies and so forth. like all these things which i actually think that part of what you should be doing in the modern age of the internet is everyone has an ability to have a certain amount of expressiveness to the world at large society customers industry and so everyone should be running kind of like almost like some version of content marketing and i don't mean that as pure like buy my product but i mean it's kind of like this is who we are in the world this is the kind of thing we're doing.

1:07:44Now, some of it could be more pure, like, hey, we're just going to have a cool set of TV series, you know, whether or not we're, you know, Netflix, you know, Amazon or Apple. But it also could be other things. I actually think that's a good way for the companies to process. Now, that's separate from we desperately need kind of objective civic news for democracy. and how do we solve that problem, which has been crushed from multiple sides. And obviously I don't think the commercial is, the tech companies, other people buying these things isn't helpful, but I don't think it's the source of the harm.

1:08:24By the way, I'm a huge fan of big tech, vastly overpaying for independent podcast networks. I think it's a great, I think it's a great idea. Yeah, can you put a good word for us at Microsoft? Yeah, I think it's a great idea. Well, I mean, it's funny. I mean, there's definitely a tension, right? There's a tension between deep-pocketed companies using what feels like or cosplaying independent journalism to do anything but independent journalism. That's the fear. And they crowd out true independent journalism, which doesn't have the backing of deep pockets. But at the same time, going vertical and having content or thought leadership, that's how I built my last company, analytics company.

1:09:03I started putting out media on YouTube. So they should absolutely be allowed to do it. I'm a big fan. If you were asked by the administration, let's be real, you won't be asked by this administration. If you were asked by the next administration to help, loosely speaking, with a crude AI framework for regulation, as far as I can tell, the only regulation that's come down so far is meant to stop regulation at the state level. If you wanted some sort of safe and sane guardrails for AI right out of the gates, what are the two or three things you'd want to see happen? Well, by the way, I thought what the Biden administration started doing was pretty smart, which is bring all the tech companies in, push them very hard on a set of things, get them to make some voluntary commitments, then to up it and kind of start enshrining it.

1:09:57And it's kind of like having red team on safeties, safety plans and so forth. I think the first and most important issue is what happens in like bioterrorism, what happens in cybersecurity, et cetera. How does that get provisioned? So and I think there because you want to start stop anything that could have a systematic damaging of the entire system. And you want to make sure that's kind of, you know, kind of well guardrailed. And that that would be one set of things you would do. I think another one you would do is say, I want to generate, like, whatever your list of concerns are. Like, say, if your concern is job replacement or your concern is, you know, I don't think the environmental impacts are actually, I think they're all more politicking than anything else.

1:10:42But it would say you had those. Then say, I want to have you generate these kinds of reports. Could be for, you know, in a, you know, only for, you know, government consumption. but validated by your auditors, whatever the particular set of concerns are. And I want to have a trigger that if some of these numbers are getting worse, you know, in a timeframe that is quick, I want to have a trigger by which your auditors tell us quickly. So we can say, is something really happening and, you know, jobs or something really happening and, you know, et cetera. misinformation on networks. And we could get some sense of it so that we can start intervening on it.

1:11:29And then, as part of that, we also want to get previews about what's actually happening in the engagements with your products so we know how to steer. And I think that's a really good place to start versus all of the political melee, which is more about what I care about versus what I perceive the world to be versus actual data and information. Reid Hoffman is the co-founder of LinkedIn, Inflection AI, and Manus AI. He's also a partner at Greylock and sits on the board of many companies, including Microsoft. He authored six bestsellers, including his latest super agency, What Could Possibly Go Right with Our AI Future.

1:12:09Reid also co-hosts two podcasts, Possible and Masters of Scale. And for more, you can check out his new substack, Theory of the Game. Reid, thank you for your time. Pleasure.

1:12:29Ed, what do you think? I agree with him on something, but I disagree with him on other things. I think what he kind of honestly acknowledged is that big tech is really dominating the AI landscape, and I don't think he convinced me otherwise, to be honest. So I think that's one thing I disagree with him on. I also kind of disagree with him on his views on the wealth inequality problem. Like, it sounds like he is pretty aggressively against a wealth tax, and that's fine. By the way, I don't think it would work either. but I think that there could have been more, I think there should be more attention paid to, okay, what is the alternative?

1:13:12Like it is getting to that point where we need to be very seriously advocating for different redistribution methods if you are going to also say that the one that other people have proposed is not the right path forward. So I guess that's where I would be in sort of disagreement with him on. You know, he's also an incredible entrepreneur, incredible power player in the tech community. I mean, you can't deny his accomplishments. So I appreciate him for sharing his thoughts on all of these subjects with us. If you talk to anybody with the fingers and the pies he has, they're like, oh, no regulation.

1:13:48Income inequality isn't a problem. Let our horses run. What if China gets out ahead of us? You know, it's constant excuse, excuse. There shouldn't be any regulation of AI. There's no problem here. Move along, nothing to see. Reid is going to be as focused on preventing a tragedy of the commons as anyone in his position. You know, it's just he can and it's hard for him. He's on the board of Microsoft. He has to be very measured about what he says about open AI. He has to be very measured about what he says about Elon Musk. And he sort of calls it as he sees it. He says, look, this is, calls it as what it was, that Elon's having the biggest case of seller's regret in the history of business.

1:14:31Yeah, a lot of people just wouldn't give their opinion or give an answer to many of the questions that we asked him just then, and he did. Find me a VC or someone hugely invested in AI that has anything resembling the kind of moderate reasoned views of Reed. There just aren't very many of them. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carty. Our research team is Dan Chalon, Isabella Kinstel, Chris Nodonoghue, and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director. And Catherine Dillon is our executive producer.

1:15:07Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.

1:15:19Lifetimes

1:15:25You help me In kind reunion As the world turns And the dark flies In love, love, love, love