The World According to Joe Lonsdale

21:43And Klarna is interesting too, because the other thing, I don't know if they're saying it in public, but I'll say it because I've heard through friends, they're trying to rebuild Salesforce. They have to freaking pay Salesforce, I don't know, like a hundred million something a year. And they're like, you know what? We know the screens, we know the data, we have AI. Let's just like rebuild it internally and maybe we can turn it off. So in some cases, this is good for tech. In some cases, there might be some older companies it's not as good for. Okay. Here's another thing that you'll hear from not bears on AI, but bears on the economy.

22:10If even half of the promise of this AI technology turns out to be real, that's actually horrific for the American consumer. because even if they get new jobs or we invent new jobs down the line, there's going to be a huge gap between when a lot of these people are employable and when actually there are these new jobs created to replace whatever the AI is now doing more efficiently. I'm a student of history. This has been... They say it in every era. In every era. I agree. Destroying jobs is a good thing, which is the opposite of what politicians have to say because also building jobs is a good thing.

22:44But destroying jobs through efficiency has always been a good thing for everyone overall. Yes, but not right away and not for each person. That's true. There are some people that are going to have a tougher time, but it's vastly better overall for everyone around them. And if this AI even works - Well, that's been the history. So that sounds reliable. If this AI even works even a tiny bit, it's going to be massively disinflationary. This is going to be so good for poor people. So that comment obviously pisses people off, right? It feels insensitive, but it is the history of like progress. But the thing is, it's not just like, oh, I'm saying it's good for rich people or good for me.

23:14It's actually especially good for all the poor people because all of a sudden, everything in their life is way cheaper. People have no idea like how cheap everything should get and how convenient everything should get for these people. Like a whole other order of magnitude if this stuff works. So it's really good. Like rewind 200 years, a pair of shoes was like two months pay. Yeah. That's not a good world to live in. Well, my shoes still are, so. We got to talk after. But, you know, yes, there are dislocations and actually, you have some interesting adult education companies that could help with some of that transition.

23:49But everything gets cheaper for everyone. And this is part of the measurement problem you're talking about. You went from, I need to either have a Blockbuster subscription or buy the DVD, to I pay$9.99 a month and I have access to every movie that's ever made. GDP actually shrinks. But everyone has as much movie as they want. Everyone's, what they call a hedonic adjustment. Everyone's quality of life is better, but they might not even perceive it. The consumer productivity stuff is hard to measure. You're right what you say with that. But it's better for everyone. But the thing I think people don't realize, so what's actually problematic in our society is the stuff that's gotten more expensive, right?

24:19Let's be honest. We're talking about like well-being of people. College education, auto insurance, health care. Exactly. These are – and education in general too and probably home prices. These are all the areas that actually AI is really, really good for, right? And this is partially a policy problem as well as a tech problem. But if the tech makes it so obvious how to do these cheaper and better, I think we're going to be able to break through and fix the policy. All right, so just as an example, how does AI make housing cheaper? So multiple things there. One is that any permits should be able to be approved instantly right away.

24:51There's just no reason you need like Betty in the permitting department who's an angry 60-year-old who hasn't retired, like sitting on your thing for four months and like no can build. I'm going through this right now. Don't get me started on title insurance. Well, that's for housing too. But housing, so it's the permitting. It's the actual building. We have a bunch of guys who are some of the best guys from Waymo, for example. now doing construction and actually it's actually working it's you know way way more efficient way better so so that that part's there and then i'll tell you the other one that's crazy it's kind of ai it's kind of just elon stuff in general but if you could actually make infrastructure really cheaply like tunnels and other things far out of cities but then you can live somewhere cheap and then get to the city right away and be part of the economy that massively reduces is that ever going to happen yeah we're doing it we're building right now where who's building boring company has all over vegas we're doing stuff in texas doing stuff in florida i'm getting going on it so it's I mean, it's accelerating.

25:42It's going to take a couple years. I mean, I feel like, so obviously we're on the East Coast. Like Josh and I were talking, we don't see Waymo. So we don't see the driverless cars. Like there is magic happening. Just not just Waymo. People are going around. If you walk around Austin or any city on the West Coast. And it's coming to DC. Yeah, you will see many cars with no driver. It's amazing. It's magic. And think about the productivity from that too. If you have a lot of commuters in this country, even if the productivity is just you're resting and listening to some music instead of focused on the road, but let alone like you can take calls.

26:11Yeah, no, I love that idea. And as a parent of teenagers, I wish this had come like five years earlier. Yeah. Because I'm teaching them how to drive or I've taught one of them how to drive. I want to shift gears and talk about something that I also think is one of the biggest debates on Wall Street and get you guys to weigh in on it. So to start off the year, the US stock market stumbled out of the gates. That happens, but it was a really big surprise this time because in December, all of the strategist notes were about American exceptionalism. And, you know, in the post-Trump election period, stocks were just ripping.

26:46People were pumped. They were excited for lower tax rates. They sort of disbelieved worst case scenarios about tariffs and earnings had been growing and the Fed was cutting. And it just it felt like, yeah, this this long U.S. ignore the rest of the world thing. It'll keep going. That reversed really hard. European stocks are up big this year, German stock market. There's a lot of talk about the revitalization of those economies being the thing that Trump actually made great, which is an interesting and ironic twist. But I want to share something with you from Roushir Sharma of Rockefeller International who wrote in the FT this week and just see what you guys think of it as investors.

27:27Many of the people who hyped the election of Donald Trump to the White House as a huge boost for American exceptionalism now see the recent decline in U.S. stocks and the dollar as a sign that this era of U.S. dominance is under threat. They tie it to Trump and tariffs, et cetera, et cetera. But then he notes, even after the declines of the past month, the real value of the dollar remains at highs, rarely seen since the end of fixed exchange rates in the 70s. The S &P 500 is down less than 10 percent from the February peak, still trades 25 percent above its rising trend line. Despite the sharp rally in Europe and China, it's still a 50 percent premium to international markets.

28:07That's the S &P. Close to the widest leads on record. America's share of the main global market benchmark remains well over 60 percent, even though we're only 30 percent of global GDP. And I guess the question now is like, do you chase this rally in international stocks because something has materially changed about American exceptionalism? Or is this a blip? Nothing has materially changed about the way that, you know, Europe or China treats business. Like we talk, the best founders in Europe moved to America for a good reason. This is, we are an exceptional country. No, America is so dominant right now.

28:47It's actually ridiculous how dominant it is. Doesn't mean we should have hubris about it. Like we should watch, we should get better. We shouldn't f*** it up with bad trade policy. But listen, I have hundreds of friends who are very successful, a lot of them going into the election were terrified and were saying, I'm going to have to like protect my gangs. I'm going to like, you know, move somewhere else. I'm going to like, you know, go live somewhere else out there. I'm going to be a target. It's just really scary. And then so many of them instead now are saying, wow, this is great. It's time to build.

29:11I'm going to start new companies. I'm going to invest. They were worried about Trump, you're saying? They were worried about, before the election, they were worried about the radical populist left, like targeting them and taking after them. And they were very cynical and very negative. And I had friends flee the country to go to Switzerland, go to Singapore. These are successful people who are like, America is going to demonize me and attack me for being too successful. And by the way, that is what happens in China. I literally have friends who were killed in China for being too successful and being multi-billionaires who were speaking up and who weren't all kowtowing.

29:39Like friends don't let friends become Chinese multi-billionaires. The 72 of them disappeared, right? So, and a lot of American billionaires saw what was happening with the same energy and said, wow, this is terrifying. And all of a sudden, instead, they're all investing in building. And I'll tell you what, like America is just so far ahead in this AI wave. it's so far ahead in allowing creative destruction what ai is about is about changing the fundamental way all these services economy businesses work and this stuff's working and we're going to let it happen here europe and china are mostly not going to let that happen right they're too hampered by how they would do things so i mean this is sort of less a market point but china has artificially suppressed the value of their currency in a non-competitive way which did contribute to the shelling out of american manufacturing uh other tariffs i i'm not sure i totally understand the thrust behind, but we should tariff China until that feels fair.

30:27And we should rebuild here what they've taken from us. And we shouldn't rely on them for key industries. It's a fair point of view. Foreign investors, like Australian pension funds, Japanese insurance companies, they're still buying U.S. stocks. Yep. So like there's been like - 16 trillion. That's how much they own. Right. So they own - Foreign investors have tripled their equity holdings in the United States to like 20 trillion over the last decade. Foreigners now own 30 % of the US stock market, which is still a record high. So all the talk about everyone's pulling their money out. Maybe people are looking at ETF flows and they're getting carried away.

31:06It feels like New York is dead. Remember like during COVID? Like as stupid as that. I mean, I think NVIDIA is worth more than the German stock market. We produce exceptional companies and many exceptional companies also choose to move here. When I was a kid, like Europe and US were kind of like the same civilization. We basically had about the same standard of living. They might be a little more regulated, whatever. It's a different civilization nowadays. We're literally our poorest state. When you think, when you make fun of poor people, not you make fun of, but you think like make fun of how poor certain places are in America, they are richer than UK and Germany, our poorest states.

31:36West Virginia, Louisiana, the back country of these places, they are richer than the rich European countries. Like this place, Europe is just like, it's like a bombed out mess of itself. It's cynical. It's arresting people for crazy things. It's like, the best people there, they are fleeing to be part of building here. Like they make fun of us for working too hard. That's about as much as they can say. It's like, come on. So when Macron says the French government is going to put up$100 billion worth of funding for AI startups. It's great. It's great to try. Companies like Mistral. You don't believe that this is like a new mentality.

32:06But also, why would I believe that the French government is good at investing? Oh, I don't think any government is good at investing. I think it's great that certain leaders there see how far behind they are and they want to fix it somehow. I think it's misguided for government to fund these things. Like they're desperate to support their own stuff. And there are some stuff there that's going to be okay. There's some good companies there, but it's just, it's just, if you look at the ratio of the number of unicorns here to there, it's not even close. So you're a backer of Anderle, which has been an outstanding success so far.

32:30Invested every round. Yeah. Good for you. By the way, congratulations. Thank you. It's obviously not only doing amazing things, but it's like inspiring so many other companies. Some of the big things that we've heard overseas are like, you know, Germany saying like, why don't we have a defense industry? The United Kingdom, all those stocks started to rally. after J.D. Vance's visit, where he basically said like, hey, this is not going to continue where we just pay to support NATO and you guys do nothing. It's important that they try. The real context here is that after the Cold War ended, a bunch of our defense primes were forced to merge.

33:06They became very bureaucratic, very much an arm of the government. And there was really two companies that broke through as new companies, new primes. One was SpaceX, one was Palantir. And the DNA out of those companies has now formed a bunch of others. Andrel's the most important new one. Three of the guys who started it work from Palantir and then my friend Palmer Lucky. And so there's people like Cerotic now is building hundreds of ships, also multi-billion dollar new company I helped create with a bunch of Palantir, SpaceX, other DNA. And so you have these new winners here. They're growing really fast.

33:33It's interesting. Eight, nine years ago, when I first started building in defense again, people would attack me. They say, I don't want to work with you anymore. So it's immoral, unethical to build in defense. And now everyone realizes. I remember Josh Wolfe from Lux having that same, like people would go at him on Twitter that he was funding defense investments. And it's almost like, you understand I'm American, right? Yeah, we want America to be the strongest in winning. Oh, so I actually wanted to ask you about that. So, of course, the success of Palantir in the stock market over the last year, I think woke a lot of investors up to the idea that like not everything being built in Silicon Valley is for like a fucking social media app.

34:08Like there are people building serious things that are gonna maybe save our lives. Oh, yeah. I kind of like that. I feel like it's made venture capital investing more tangible to the average person. And I feel like there should be a bigger awareness of like, hey, we're not just funding like Instagram clones. We're funding like metal. We're curing diseases. We're delivering healthcare. We're running the global logistics industry. We're building defense. We're doing advanced manufacturing here. I mean, this is one of the biggest differences between the USA and the rest of the world is our venture capital, the vibrancy and the dynamism of willing to take chances and risks and fund things that might be zeros.

34:46Yep. And attracting the best talent to do that. But this is the difference between, you know, in my mind, between great and just okay venture capital of, you know, if you can get some quick wins in a social media company that attracts a bunch of users quickly, it takes time to build a Palantir. It takes time to cure diseases. And I think the best VCs think big and think long-term enough to see those bets. So let's talk about the rise of private markets. From the advisor's point of view, you should see my inbox. Like it feels like, I'm not saying it is a bubble. It feels like a bubble just based on the volume of emails I'm getting from private real estate, private credit, XYZ.

35:20John, throw up chart four. We have, this is from Torsten Slott, comparing public and private markets. So the global private capital, AUM, is a staggering$13 trillion, but it pales in comparison still to the global fixed income, which is$103 trillion, global equity markets,$101 trillion, and the global size of banking sector balance sheets,$98 trillion. Are private markets going to continue to eat into banks and public markets? They're definitely growing on a second. Where does it come from? Like, if that goes from$13 to$26, where does it come from fixed income? Well, I mean, the bulk of it is going to be, I think, credit because that's the nature is the credit market numbers are bigger.

36:01That's just the way it works. But I mean, there will be a few trillion dollars, I think, in new private companies created with the AI wave and the growing venture wave. And that's going to be a big part of it. There's going to be a lot of derivatives, mostly credit off of those companies as well. And the thing about this is private markets have much higher disparity, much higher differences in returns than the public markets. And so what that - Oh, that's interesting. Why? Because people are less benchmark aware and they're more focused on the returns and not looking like others? They're not as standardized and regularized.

36:32It's much easier for a person who doesn't know what they're doing to come in and lose all of their money on it. It's also a place that the very, very best of exists. And so it's one of those areas where it's really important you're accessing the top talent, the top things, because if you're not, you're going to get crushed. Yeah, I have a really simple framework for this. Like, if you want to outperform markets, it's a really hard thing to do. I think there's really only four ways. Maybe for you. Yeah. Again, you have really nice shoes. That's true. Four ways. You can have unique information, unique access, unique insight.

37:04You can get lucky. Okay. First two are illegal in public markets. Okay. That's a great point. Do not pass code. Do not collect$200. But that's the lifeblood of private markets. And not in some nefarious backroom dealing way. It's, you know, if you're ABC and you backed a lot of the best defense tech startups, if someone, you know, if the best scientist and someone coming out of procurement team up and they're building a company, who's their first call? Yeah, the top guys out of the under will want to do something else. Then I'm going to know about it. This is a Peter Thiel point, which is a very good point.

37:29That's what Jake just said. If you're working in a market where inside information is legal and you don't have that information, you're going to get crushed. So it's not unethical. It's just, it's just the nature of private markets. You do have more information. You're going to win. I think there's a fifth way, but maybe you could kind of fold it into your second point. I feel as though in private markets, more so than in public markets, you have more of an ability to actually affect the outcome because you're an influential investor. That's a great point. You can't. So is that part of choice too?

37:59I would put it into access because part of what a great LP brings is access and impact. And influence. Yeah, and you can bring new clients. You can grow revenue by, you know, if you are connected with a great logistics family and you invest in a shipping company, you can connect those groups. Now, you could do that in the public markets if you're Bill Ackman or you're Carl Icahn. Like Carl Icahn famously got Tim Cook to pay his first dividend and do his first buyback at Apple. But it's harder for – you can't have 50 of those people. Whereas in private markets, you can have a commercial real estate expert who just by giving his imprimatur to a deal in real estate, other people are going to want to fund that deal.

38:41And therefore, he or she is actually impacting the outcome of the investment. It's the size of the basis thing too. Like if I find a company that right now is doing 25 million ARR and I know I'm connected with a group who would be a great client for them and would be a$50 million ARR client. That's a huge impact. I can 3X that business. just by being an investor. So the area of my inbox that is most crowded and not unique to me, all advisors, is private credit. And Jake, you and I were talking earlier that the idea that a loan should trade on a daily basis probably doesn't make that much sense.

39:10Like I loan you money, you pay me back. You pay me interest and you pay me back. But the size of the private credit market is getting so big that there is now more money chasing fewer deals and therefore the terms are getting a little bit looser. And so is there going to be like a blow up a day of reckoning or is this going to be a slow bleed or low returns? What do we think about private credit? There's just lots of areas of private credit, right? I think there are probably more popular areas that are dangerous. I think there's still a lot of esoteric areas, certain parts of assets in venture, for example, that I'm not seeing very many bids to loan against.

39:39And so I think if you have someone with unique access who's really good at this game, I think you're still, just like everything else in private markets, there's going to be some really good stuff to go into. So what should advices be aware of? Like if we don't have expertise, what should be like the stay the hell away from this? Yeah. So, I mean, in the private credit space in particular, where we get most concerned is the mega loan space. So you have a small handful of these super large BDCs that raise billions of dollars a quarter and basically have to put that to work really quickly. And they're paying huge dividends on a quarterly basis.

40:10They're trying to pass through. Something like a 10 % yield. The issue with that is there's only so many companies that, let's say I can write 10 loans and I've got to deploy$4 billion. Those are big loans. There's only so many companies in the world that can take that size of loan. And me and the five other big people are trying to lend to the same companies. And that's where you get that bidding down. Okay. So you're willing to accept less in exchange for the same amount of risk? You've got to put the money to work, and so you accept lower returns. Now, to your question, I don't see this right now as a blow-up.

40:39Where you get bubbles and blow-ups is really high levels of leverage, insiders selling to outsiders, and unrealistic expectations. Expectations are a little unrealistic. Leverage levels are totally in control, and these firms are large sponsors and can basically roll their own loans if they need to. And so it more looks to me like if you've averaged 10, I'd probably haircut that by three to five for the super big stuff. But to Joe's point, if you go below 200, certainly below 150 in loan size, it's like the world you'd expect. Rates have risen. Banks have stepped back. Spreads are wide. Covenants are really strong.

41:15And collateral is good. So I think there's an illiquidity risk that's, I wouldn't say underappreciated, but I don't know what you do about it. We had this blow up with B-REIT a couple of years back. It kind of smoothed itself out. But effectively, you had a market disruption where a lot of people wanted their cash out of that at once. And of course, the outdoor is only so big because the underlying holdings are like buildings. Quick, sell the hotel. So obviously, written into those documents for the people that invest it is like, you might not be able to get your money the exact second you summon it.

41:50It's not an ETF that's trading treasury bonds. Like you might have to relax for a minute. People didn't like that. Everybody investigates it. More recently, we had an ETF come public, PRIV, which is a private market ETF. A little bit of an evolution. Now, effectively, you can buy private assets via an ETF. And when you redeem or sell the ETF, there's a company standing behind it saying, we'll buy those assets automatically no matter what, and we'll provide liquidity. I guess when they say democratization, that's what they mean. Not every asset class should be democratized, I think would be my comment.

42:31Maybe that's a neat gimmick, but do we really need that sort of daily liquidity in private markets? It's very dangerous also when something's not working there. There's not going to be the money there if something goes wrong. Or the company that's on the hook for it maybe is on the hook for more than they thought they would be. I mean, these assets are fundamentally not liquid. They're not all 10-year things. There are three-year things and five-year things. But anytime you might need liquidity before that, that introduces risk. Now, I might argue that that's also true in public markets. It can take seven years for a bet to pan out in terms of your capex, but you're subject to the daily fluctuations.

43:05Philosophically, are these really still private markets if there are 100 million individual participants? Are they actually private anymore, or are they just illiquid but highly public markets? This is a really good question. We talk a lot about the betification of the space. Right now, there is no index. That's part of the other reason why you see a lot of dispersion. There's no benchmark to even track against. I think this is almost the start of the development of that. There will be essentially private market beta, definitely in credit, maybe in other spaces. It'll be probably impossible to do in venture, harder to do in private equity.

43:40But you shouldn't pay a lot for beta. And these still have fees as if they're alpha-like funds. That's a big watch out for. Democratization, to me, is a scary word in this space. I think you want to be working with a fiduciary, and that fiduciary should be picking a partner. And there's a lot of layers of diligence that need to go into making sure you're investing with the best. So give a plug for Opto. What are you guys doing with advisors? Yeah, so Joe and I looked out at the space in 2020, and we're, you know, you said it earlier, pretty disgusted by how things generally run, which is people build platforms.

44:11Those platforms charge GPs 2%, 5%, 10 % to raise capital. The best funds don't have to pay to raise capital. And so it's generally the biggest stuff, not the best stuff. and someone shows up, the wholesaler, you know, drops a book on the table, gets you to buy some stuff and then you never hear from them again when it's down 5 % and they just want to know why. It also was crazy laborious and difficult. Like if you have, you know, even a few hundred families and 15 funds you might choose from, the factorial of all those families to all those funds and all the sub-docs and all the K-1s, no one wants to or should hire the staff out to do that.

44:47RIAs are not set up to manage that many pieces of paperwork. And so combining those two things, how do we build a technology platform that's aligned with clients and makes us as turnkey as possible while maintaining quality and maintaining what's unique to that firm? And so it's not one off-the-shelf fund-to-fund with 50 things in it, and they're different vintages. We sit down, have a goals-based approach, say, what do we need? Do we need the Josh Growth Fund and the Josh Income Fund? Do you want a co-invest vehicle? Should it be by asset class? What will work for your clients? What's the right risk level?

45:20Create that as a custom object. It's your fund. It's a separate entity. It's single sub-doc, single K1. We're even building some of the registered space as well. And then have a timeline to go out and find the best. We don't have to deploy all day one. We can go do thorough due diligence across sectors, across asset classes, and bring the best to the portfolio. In the wake of the financial crisis, the last people standing were hedge funds. Not all hedge funds, of course. the ones that got, quote unquote, got the crisis right. And they had positive returns while everyone else got destroyed. So of course, there was this huge outcry from retail investors.

45:57How come I can't access those hedge funds? And Wall Street did what Wall Street does best. They spun up all these fund-to-funds businesses, all these platforms. Anthony Scaramucci came along and democratized it. But like the idea was like, the idea made sense. It's like, yeah, people should have access to strategies that don't do what the S &P does or can bet against the housing crisis or whatever. The outcomes, though, ended up obviously not being great. And when you talk to a lot of the financial advisors at Morgan and Merrill, you ask them, like, why are you allocating to these particular funds or hedge funds, period?

46:34It was like it's a differentiator. Like, what can I do that Vanguard can't? I can do this shit. And if you look, so we started out of par 15 years ago, and I'm allowed to see the aggregate data, right? I can't look into the specific families and stuff. That's not appropriate. But I see a lot of aggregate data, and I study it, and I talk to a lot of people because RIAs come and talk to me all the time. And it is interesting. Like the very top-performing people tend to be family offices with access. There's some RIAs that are top-performing too, but they tend to be the very top families. They're still run by the usually patriarch who built the business, knows a bunch of friends in the space, and they get access to the best funds.

47:08So they have the best returns. They have the best returns. Those are people that tend to have the best returns. And it's usually there because more of their money is in the space. They know well where they know who the top people are, whether they're an energy family or a tech family or whatever else. And that's how these things work. They have a domain expertise. They know people. And that's how I've been lucky to be able to do that too. I have a pretty good network now for having built all these companies, having mentors and friends who've done this. And so the question is how can you offer that to an RAA really easily in a format that's really positive?

47:35And so the idea is let's build all the technology. Let's build all the frameworks. to help them build a custom fund using that access of what, you know, we're going to help them with things the best. Usually it might be five things, 10 things in the custom fund, two or three of them might be stuff that they really like as an RRA. They already know about. And some of them might come from my network. Some of them might come from another network now of other, you know, billionaire friends. They can do that all through the opto platform. They put it all into one custom fund and they offer it to their clients.

48:00And it's aligned and we, and we only really make money if we get that 5 % on top, which by the way is much less than fund to fund charge. So it's like a much cheaper, or more customized version using tech than the other solutions. So the client household of the advisor effectively is building their own fund of funds. And for cheaper and better and customized for the client and making it easy. And then there's a power of being part of this network. And so we're working across many, many RAs and family offices. And not every deal is going to have excess capacity. But sometimes if you can go from a$5 to$20 million check, you can get a significant discount.

48:31And so if we can find multiple people who want to participate, everyone can benefit from that. We don't pocket the difference. It flows through to the end client. So, Joe, a lot of Silicon Valley-like infiltrated politics and won in a big way, obviously, between Elon and Doge and Sachs the CryptoZara. Well, we red-pilled Silicon Valley first, and then they infiltrated it. So, Chamath and Freeberg interviewing Lutnick and Besant. But a couple of weeks ago, you—I don't know if it was a quote here or whatever—but you called out some of the nonsense or perceived nonsense with the Bitcoin strategic reserve.

49:02And you're friends with Sachs, right? I'm good friends with David Sachs. But you disagreed? He gave me a hug a couple of days later, so we're good. You're not anti-Bitcoin. No, not at all. I think you're anti-taxpayers funding a Bitcoin strategic reserve. Even beyond that, I'll tell you what happened. But listen, this is very funny, first of all, because there's like 30 things I agree with going on with Elon and the administration that I'm helping with. And then I think I've called out two. And whenever I call it out, of course, it gets a thousand times more attention, which is fair, which is fair.

49:29And the thing I called out in that case, and listen, again, I'm a very pro of a lot of stuff going on there. I didn't think it was very presidential or appropriate for the people to influence the president to put out the names of coins in a tweet that might go into a reserve. And you go to those markets and you see ahead of time that there's someone who's making 50, 100 to one bets. I'm not saying it was necessarily something the president himself did. There are probably people around him playing games. And that's just, you know, we're fighting so much fraud and so much bad stuff. And we're cutting so much nonsense.

49:56I'm so proud of this administration. Why do that with the left hand? Why have this other thing going on? Let's be perfectly clean. Let's be really careful. So I actually agreed with what David Sachs said, which if you're going to have seized Bitcoin anyway, if you want to keep that in some government account versus selling it, that's very reasonable. But let's just not play any games with what currencies are going to be in a tweet and someone's going to trade it or whatever. You got to be really clean. You got to be careful. Okay, so on the scale of one to 10, 10, no problem. One, like this made me want to throw up.

50:26When you saw Melania coin come out on the day of the inauguration, like what was your reaction to that? I was a negative 30. on your scale. I didn't love it. I don't know if it's like, it's not more important to me than all the good things happening. But I just think that these, all these things going on with crypto in that way, that's not to me the highest end and purpose of crypto. And so it wasn't my favorite use of it. I think like$5 billion went into the coin, which is now worth zero. So effectively, people lost a lot of money. And my best guess is there are people who either thought they would be smart enough to outsmart other people.

51:00They're gambling. You know what? If people want to gamble, Buyer beware. But I think it's a lot of poor people that don't know better. This is what happens with all gambling, which is why gambling itself is a very questionable thing in general. We use gambling to fund a lot of things with the lottery. Maybe it's a good way to fund things. You're taking money from... So what's your favorite thing that they're doing? I guess, I don't know, pick on Doge. Whatever you want. I mean, there's so many favorite things you're doing. I think there's going to be... I'll just give you two on Doge. Like one is that this USAID stuff actually was extremely corrupt.

51:29It was tied to grift. There was a federal mediation conciliation service, which was like a nine-story office with 60 people in it that was buying art, including from the wife of the boss, and was spending money flying people all around the world. And they were all commenting how they're not really working. And they're just like using the money for sketchy things to pay their friends. Like clearly just nonsense going on. And even beyond just nonsense, there's activists. They're funding for hundreds of millions of dollars to push like a very ideological agenda. So, I mean, that kind of stuff's really terrible.

51:55I'll tell you the craziest one. Most Americans like that. Most Americans like that they got rid of that stuff. 100%. I'll tell you how crazy when yesterday they did the executive order on it to turn them all off. I think they found 17 magic money computers. Did you hear about this? So usually when you issue a check from somewhere, it has to come from an account. That's like a normal thing. In this case, government accounts never quite balance and no one really knows why. But one of the reasons why is there's these computers in HHS, in DOD, in Treasury, just issuing money to people. Money doesn't come out of anywhere.

52:23It's just being paid. How? How do they get on that list? the recipient list I know everyone exactly everyone like I'm sure some of it was legit some of it wasn't that sounds awesome but it's like it's like the genie it's like finding like the genie's lamp or something and then instead of using it for themselves which a lot of people have clearly been doing and it's been around for a while like I'm clear some of them are used well some are not they turn them all off you know which is great is there so much fat to cut or like what if we get too close to the bone there is so much fat to cut I'm involved in hundreds of companies and some of them don't work and some of them get broken some of them get really broken and you have to you know if they fail imagine the most broken companies that you've ever seen and a lot of them get pretty bad and imagine instead of failing they just kept being given money for 50 years like that is some of these departments I liked what they did this week they took this list of people that were listed as over 120 years old receiving social security so let's just we don't have to say it's definitely fraud maybe it's benign neglect maybe I'm trying to be charitable who cashes those checks or is it automatically they're kids that are still around the illegal immigrants using the numbers I mean it's all sorts of people so I love that they did that I don't know a single person I don't care if you're a Democrat or a Republican or a Libertarian if you're a centrist you have to like that finally somebody looked at that and I don't even know the amount of money it doesn't matter it's also it's just the point that nobody's looked at this in 50 years 100 years and there's hundreds of billions of dollars in fraud going on in Medicare and Medicaid I talked to President Obama about this he criticized me for not wearing a tie at the time I learned the lesson you can always wear a tie with the president but you know but he agreed with me He's like, yeah, Joe, let's go after this.

53:55And in his office, Valerie Jarrett, those people, they stopped it because politically it's not useful for them to find fraud on these entitlement things. Plus, my hypothesis is the law of the fraud is probably some of the friends of the friends of the people in the party. Because, of course, that's a great way to find things. So you're like part of the PayPal mafia. Let's just tell people for like people that are not aware. This is in a good way. It's not in a negative way. But you're one of the early people that built what is arguably now one of the most important technology. Well, I started Palantir.

54:23I was a kid at PayPal. I'm not going to take credit for the work there, but I was a kid there. And listen, the way I think about PayPal is you had Peter Thiel and Max Lepchen and a bunch of their smartest friends. Legendary people. And then you had Elon Musk and his smartest friends. And they were competing. And by the way, the Silicon Valley was a place that a lot of the smartest people in the world came at the time to compete. These were two of the very best teams there competing. And then they merged. And that was PayPal. So of course, when you have all that talent, you're going to have dozens of top, multiple-dollar companies coming out of this place.

54:49And so yeah, as lucky as a kid to learn from these people, No credit for PayPal, but I did start Palantir afterwards. So here's where I wanted to go with that question. I think you are a huge fan of a lot of the things that Elon is doing, but you probably are thoughtful enough to realize the manner in which he's doing some of them or maybe the stuff that he's putting out on social media while he does them. He's probably making his job harder, not easier. Do you get a chance to be like, dude, you're crazy for those last four tweets, but I love the things that you're actually accomplishing. What if you did one without the other?

55:24I'm close enough to know where he's coming from and how frustrated he is with some of the things and also his sense of humor. Where he's coming from, it's totally coherent and it makes sense and I know why he's doing it. I think the thing that we're going to try to do is we're going to try to keep communicating this in new different ways. I have a bunch of friends who, guys like Tim Urban at Wait But Why, who Elon likes, who's great communicators, better communicators than me. We need to try to convince some of them to help us communicate some of this stuff better. Because I think Elon's communicating some pretty well, but the press is just so noisy and so negative that we need to get our story out better.

55:56There's a story today. Elon is back in the building. Of course, by which they mean Uber headquarters. That's probably a healthy thing. He means Tesla. Oh, excuse me. Tesla headquarters. I was like, holy shit. Because Travis is done with that. Did he bring a sink too? No, but there's an article today. It's almost celebrating. Tesla's in a 50 % drawdown. A lot of his political activities are driving negative attention on Tesla, which, of course, it has nothing to do with it. I'm sure the consumer thing makes it tougher. I mean, you have to be a really bold, courageous person to be willing to be controversial in public when you're a CEO of a consumer company.

56:32That's tough. My friend Omid runs Tesla with him. Amazing guy. They have such great talent there. These are just good people. And you saw they built the factory in 18 months where you live in Austin. Biggest factory in the world. I mean, extraordinary stuff they're doing. I think a lot of the new technology at Tesla is going to be – you've seen the self-driving stuff. It's going to be, it's going to make the cars worth a huge amount more. I mean, there's this great stuff coming there. If you were giving him advice though, you would have probably told him, go back to Tesla. Like, keep doing what you're doing, but like also go back to Tesla.

56:59Or you wouldn't have said that. I think Omid's really good at what he does. I'm sure Elon and him are in close touch. Like the thing, the thing I would say is it takes so much courage and so much of a warrior spirit to keep doing what he's doing at the government. Like he has lost a lot of money from what he has done here in terms of, in terms of he gets him attacked. It's not, it's not fun. His life's under threat constantly. He's had to cancel a lot of things because people try to kill him where he shows up. I mean, this is not something where like, of course he has a sense of humor and has to joke about it.

57:26Cause what else are you going to do? But it's not something where he's just like doing this on a whim or something. He truly believes. And I believe he is too fighting to save our civilization. And so I really honored him for that. Whether or not you just agree or disagree with everything he's doing, like that is, that is the energy he's going with this. Elon's kind of like a classic he's a warrior in the tradition he's not about luxury he's not about living well he's about memes the memes are a sense of humor he's sleeping on the floor, he's sleeping on the couches he has the smallest office I see where he lives and stuff he doesn't care about having yachts he's literally like a classic warrior from the ancient tradition and he's trying to fight for a civilization so whatever else you think of him I think he's an extraordinary man I want to end by just asking you guys not whether or not you agree with the ideas of Besant and Musk and like some of these things that like feel like they have to get done fast.

58:20And right now, even if we ruffle feathers and the tariffs cause a slowdown, how do you generally feel about how this year ends up? Because we're, you know, we're going to do this April 2nd tariff announcement and it's a big thing. they're handcuffing a briefcase to Howie Mandel, who's going to open the briefcase and announce what the tariffs are. It's very exciting. It's very exciting. Listen, Trump's a good negotiator. I hope he gets it right. I hope he gets it right. I guess what I'm asking is like, is this, not to agree with it, but like, are we going to come out the other side, like not as damaged as some people feel we're about to be?

58:53America is a free society. It's a great society. It's attracting the top talent in the world. This AI stuff is working. This is a civilizational level shift right now that we're going to make these things multiple times more productive. Like as an investor in private markets, my focus is like, is this real? Do we have the best people on it? Is it going to be worth billions of dollars as it scales the next five or 10 years? And that's the focus. This is what's great about private markets is that it's like there's this ocean and the waves are moving up and down. And if you look every day, the waves moving up and down.

59:21We're like building steadily and strongly from the bottom of the ocean up to the top. And it's going to be 100x, regardless of how big those waves move up and down because it's real. And it's worth risking a trade war that potentially causes a recession because the benefit of living through that, everyone would be better off. Listen, it's super complicated, right? I understand. If you get the deal right, and I do have more companies building more things in the US now because of what they're doing, I get where JD and him are coming from. They really do care about the working class and bringing back our manufacturing base.

59:51There's legit parts of it. I tend to not be as excited about tariffs as President Trump, but he's a rational actor in this case, and I see where he's coming from. And I'd separate, in my head again, I separate the China tariffs from everything else. I think those are more than justified, and I personally can go further. And again, if you, in an anti-competitive sense, steel manufacturing for America, we should fire back. Well, there's two things there. One is China's an adversary, and they steal stuff from us, and they devalue things artificially. Two, let's be real. Whether or not you're on the left or the right, I don't think any of us want our oceans-polluted, plastics dumped everywhere, like nasty environmental stuff.

1:00:24That is what happens in these other countries. If they're not going to have the same environmental regulations as us, we should probably tariff them for the damage they're doing. I mean, that's very reasonable, right? So there's things like that we can all agree on. In terms of this year, though, I'd separate tariffs will definitely be quite painful for the large cap equity indices. You have a really high— That'll continue to royal— I mean, you'll be offsetting that with expectations. I'm not necessarily calling a sell-off, but it's most painful for those companies. They have the highest overseas sales growth.

1:00:54They have the highest overseas dependence from the manufacturing and staff. That's who's going to get hit. There's a difference between that and the real American economy. And, you know, will that show up in the small caps? I'm not sure. The small caps are basically, like, they're less relevant because of private markets where we're seeing the building and the innovation, people building new factories, logistic centers, applying AI to traditional industries in interesting ways. It's happening in the private markets. And so if I think about where at the end of the year is the average person going to feel they are.

1:01:21Well, a lot of people, when you survey them, look at the stock market and say, I feel good or bad based on that. But if you look through that, I think there's a lot of green shoots to think about how a normal person will be living over the next five years. That's a great place to leave it. And we appreciate hearing you guys say that. And thank you so much for doing this. I want to tell people where they can go to learn more about Opto and to read more of your commentary and just generally subscribe or whatever. You start, tell us where people can learn more from the investing side. Yeah, go to optoinvest.com.

1:01:56Optoinvest.com, okay. And then I have a more off the cuff blog on LinkedIn. If you want to follow that, that's where I'm a little less filtered. Now, can that site be accessed without a VPN? I wouldn't recommend it. Okay. And I'm JT Lonsdale on X. You, I get your stuff. And you got my stuff. And I have a sub stack. I publish things. I have a podcast called American Optimist. It's an honor to be on, guys. Thank you. Okay, awesome. Thank you guys so much for joining us. Ladies and gentlemen, this has been Jacob Miller, Joe Lonsdale. And please go check out Opto Online. And by all means, subscribe to these gentlemen's podcasts and blogs.

1:02:36We appreciate you guys for being here. Thanks, everybody, for listening. Subscribe, do all the things. And we'll see you soon.

1:02:46So that was kind of like the warm up. I just wanted you guys to get a sense of the show.