20VC: Reid Hoffman on The Trump Administration | Elon Musk and DOGE | The US Defence Budget, NATO and The War in Ukraine | China, Tariffs and TikTok | The Future of Chips, Nuclear Energy, Quantum Computing and Climate

27:45So I think there's a bunch of stuff there. That's actually an indirect fusion because you have this mass of fusion reactor that's known as the Sun. But my Crofusion is both super safe and can produce enormous amounts of power very cheaply. And once you have enormous amounts of power, you can solve significant world crisis. So for example, how do you do decarbonization? How do you pull carbon out of the atmosphere in order to reduce global temperature back to that great band that Yeah, humanity prospers them. And the answer is it takes a lot of energy. Well, if your energy is carbon producing as you're doing it and you're not net doing it.

28:26So you have to be carbon neutral to negative on this. Then if you can produce it at massive scale, you can pull carbon out of the out of the energy, let alone power all of the things that human beings want, houses and and transport and all the rest. So it's more than a silver bullet, it's like the platinum bullet. I love a platinum bullet. Thank you for explaining that by the way. Ever learned one thing? Never be afraid to ask the Rudy Basis questions. You mentioned that actually deep mind and what you did with the efficiency within data centers. How important was Willow Google's announcement on their new quantum chips yesterday?

29:02Well, I think it's a significant step forward. I don't know exactly where we will be in scale quantum computing. Usually again, of course, the discourse with new technology always starts with the fears, which is a mistake that I'm always trying to correct because it doesn't mean you shouldn't have concerns and anxieties and navigate. But like, for example, go, oh my God, quantum computing, it's going to break security and our banking system is going to collapse and our public encryption and safety is going to collapse. Oh my God, there's a disaster. Well, look, we'll have to figure that out because that'll be an issue once we get to what is, you know, somewhere maybe minimum 2000 or 5 ,000 logical quantum bits qubits.

29:45So that's at 2 ,000 or 5 ,000 or more is when you get into the encryption issues at call it 150 to 250 logical qubits. So a complete order of magnitude down, quantum computers become great at helping invent new medicines, new drugs, new semiconductors, new physical materials, things at a micro scale. That's going to be the first thing from quantum computing. So the moment that we can get there, it'll have enormous prosperity benefits. Well, before we have to navigate these things. And so I'm very hopeful about quantum computing. I just don't know the timeframe. Speaking of immense power, one thing that did just strike me.

30:24They've kind of worried me. It's like, I don't think we've ever seen someone with as much power as Elon has here. He owns the digital town hall. He owns the roads around the town hall with Tesla. He owns the power for it with Starlink. He kind of owns the physical town hall now with ownership of Donald. Have we ever had someone with so much power? And is that not worrying? So I think we have had people with that much power in history, but I think part of modern society is to create checks and balances to create accountability within your government. So like for example, traditionally when you have people who go into government, they put their business stuff in blind trust and do other things in order to avoid conflicts of interest.

31:04So I think the worry is not necessarily the power as much as the conflicts of interest and navigating the conflicts of interest with ethics and integrity, which I think is the thing to watch with the next administration, the power, look, I think the, I mean, is able to turn off the insta for large suites as a population. Yeah, look, and so I think we want that to be within the hands of democratically elected governments, or at least certain parts of it. And I think that's, that's important. But, but by the way, you know, I mean, I think while there are things that I have been and probably will be in the future, critical of Elon about the electric vehicle revolution owes itself to Elon.

31:43The revolution in space ISPs was Starlink owes itself to Elon. And by the way, the initial defensive Ukraine would not have worked without Starlink. So there's enormous positive contributions here. So it's a complicated topic. Now that being said, I would want the halls of democracy and government and the conflict of interest within personal businesses to be kept very distinct. I think we may see some challenge in that. What do you think? He's the greatest power and he's the greatest weakness. Well, they actually kind of go together. Elon has a conviction that what he believes is true, is absolutely true even when all of the evidence is against his belief.

32:29That allows him to do, I can see that we can colonize Mars and here we go. Right. And that creates SpaceX, that creates Starlink, that creates, and so huge amount of kudos in power. But then that's similarly, when he sees a conspiracy theory on Twitter, probably being created by Russian intelligent assets to destabilize the US, he goes, oh, that looks right to me. And then he'll retweet it. That's correct. And so it's the same impulse which has created these amazing things but also has these destructive things. Should one not have policing on tweez? I had this debate before with many American guests and I'm like that can be very dangerous and damaging to have someone retweet with his power and weight to the audience that he does and my American fans like of course not it's freedom of speech you should be entitled to.

33:22Well so I think there's a really interesting distinction between freedom speech and freedom of reach. If you're standing at the local corner and standing on a soapbox and saying the moon is made out of blue cheese and the earth is flat and so forth, fine, good, go ahead. When we have our collective media systems, e .g. reach, it's important to have some ability to say, well, we should bring in studies and expertise into it. And by the way, this is what we've made progress with science. This is how we've made progress with law. Is we use thoughtful groups of people to bring a notion of truth in science.

34:00It's reproducibility science experience. It's scientific panels which decide on things being advocated as true. In juries, it's you have in the US 12 people who listen to it and have to to agree. That's the way we do things. And so we need to kind of figure out How to apply that also within, call it the reach. So should that be policing? Because I mean, he is not an ambassador for the UK to say least. Yes. And some of the stuff that he retweets is true. Yes. And some is completely not true. Yes. And people believe it. Yes. So should that be policing? Well, so look, if I could through a democratic process because I believe in democracies, I believe in collective governance, get our society to agree to say, hey, what we should do is identify some topics that panels of experts can yield to a truth determination on.

34:54What I would prefer we do with all media. And by the way, it's not just social media, it's also cable news, it's also talk radio, and say, look, if you're going to speak your opinion, which you may do, you can say the world is flat. I can get on Harry's podcast and go, I believe the world is flat. And then which is says, Oh, by the way, expert opinion says that's completely false. And just along with my saying, the world is flat, expert opinion comes up and says, Hey, by the way, if you're listening to this, you should also consider that expert opinion says this is totally false. Right. And so it allows you freedom of speech, but it then allows a collective learning system.

35:34And it says, I would prefer that, but we need to get there through a democratic process. Frankly, one of the things that he said, which is dangerous and the reach is worrying, people said in comments when I asked, is about Epstein. Yeah. Why is that wrong? So I was never a client of Jeffrey Epstein's. I never had anything directly to do with Epstein. Everything I did was fundraising for MIT, right? Which my mistake, which I publicly apologized for is I relied on MIT's vetting to say, hey, we've vetted him, and it's okay to do this. I obviously regret that. I've issued a polygy about burnishing brands because the damage to victims and other kinds of things.

36:12But of course, the modern age is such that these things get reported and so then have immediate impulse. So you have to be responsive to that. Do you know why they're about that cancel culture and that freedom of ability to just destroy someone's, but I'd be You've been so wrong and lie when you have a reach that talking to Carlson and you can just say what you want and now fuck it, someone else said it. That's a really worrying world. Yes, exactly. The funny thing is, is the right wing says, woke is cancel culture. And yet that's the shit they do. It's of course normalist destructive. I'm very careful about the things I say.

36:47I only say them when I have some ground for evidence that I can speak publicly to, that but I can have other people validate why it is I'm saying it. That kind of thing, that's the standard that we should all hold ourselves to. MacLev had told me about a couple of different areas we were spending time. He told me one is AI applied to cancer. He told me about your work with AI, how that interacts with cancer, and how our interaction with cancer will change moving forwards, you think. So one of the things, in addition to quantum computing, which I talked about, one of the things that I've been looking at is, is what other areas are people not paying nearly enough attention to that AI will make a huge difference for the human condition.

37:26And drug discovery is a really important one. How you use drug discovery as we invent new drugs for really key things like cancer, those will make a huge difference to the quality of human life, to life saved, and to the economic. So we spend an enormous amount of our economic budget on medicine and we'll have a huge saving there. I've been working on the intersection of bio and computing for over a decade now. Now is the time with AI that we will start seeing amazing new products. I was thinking this last night when I was reading into this. Do you think that if you are a serial entrepreneur building in AI today doing a SDR tool for sales teams, you are doing yourself an injustice?

38:12When you look, and I know that's a bold statement, but when you look at cancer, climate change, poverty, conflict, defense, And you are choosing to spend your time on SDR work. I think it was the founders fun guys. He said it was like an injustice if you need that. That's a hyperbolic statement. I mean, look, I think we want to get more people doing the big things, doing nuclear fission infusion, doing drug discovery, doing education, doing other things that have an impact for billions. But by the way, sales process is also part of how the OS of our society is business. The OS of our society is like how is government funded through the operations of business?

38:53How are universities funded? How is medicine funded? How is education funded through the operations of business? So improvement of business is a good thing. So improvement of sales and sales efficiency is also a good thing. So is it a less heroic, oh my gosh, we, you know, I have cured some versions of cancer. I have made fusion muscle. Yes. And I think as a society, we should appropriately treat the people who are doing the heroes and things as heroes But by the way, it's a contribution to be contributing to sales too on the flip side of that when we think about spending more time in the UK It's a very negative sentiment towards the UK now forgetting Elon, but just generally why you may be bullish when everyone else is incredibly bearish Well, I'm bullish for a couple reasons.

39:39So one amazing set of talent University's technical talent, entrepreneurs, a willingness to be bold, not just the bold that went and created the United States of America because you could look at US as a entrepreneurial offshoot from Great Britain, but also a global perspective, a willingness to be like one of the things that I loved in visits here in my days as a student was the global learnings and global perspective I get from London and Oxford and Cambridge and other places. And so there is enormous potential. But how do you think about that there in the face of like, you know, bluntly the deterioration of the German ecosystem, the no growth for the UK for three consecutive years as all wonderful labour government have pointed out?

40:27It doesn't look good. I'm trying to go to my businesses here, my fund is here. It doesn't mean there aren't challenges. Brexit was a terrible idea. Yeah. Yeah. And I think there are challenges. But the notion of how we rejuvenate economies, we go, look, how do we build the economies of the future? And so you can't try to hold on to the economies of the past. You don't want to say, wow, I want to be doing coal mining and new castle. You're like, no, no, right. We should be good for those communities and people and try to help them in the rest of them. But we can need to build the economies of the future.

40:57The question is, is, I think the UK is well positioned to make that progress and make that effort, but it has to be collectively investing in it, enabling it, bringing talent. We all, because when you think about ships, sovereignty, energy, sovereignty, economic distributions across the country, I cannot point to one positive round anything. Well, you may have studied this more closely than I have, and so there may not be yet, but I know that the capability is the talent, the will is possible. Now we just have to organize and make it happen. I mean, this is part of the thing of occasionally, since, you know, it's part of my support for entrepreneur first, I meet with these entrepreneurs, they're great entrepreneurs.

41:36They can create great businesses. We need to enable that. And by the way, once you create great businesses, that then has economy, jobs, revenue, tax revenue, etc., that's the thing we need to be doing. Do we need chip sovereignty? And like, you know, your observity to have our own invidias of the world. Does the US do we? How do we think about TSMC? I think it's important to have chip sovereignty within the Western ecosystem. Like for example, I would be less concerned, like I'm an advocate for, I think, what the Biden administration did with the chips act as a good idea, restart the chips ecosystem when the US is a very good idea.

42:15I hope that while I expect that the next administration, because I'll say everything the Biden administration did was terrible, we're cheering it all down, that they'll tear it down in words and then keep doing the work, right, would be my hope. But I would be much less concerned about that if Europe had a good chips industry because it's within the Western ecosystem and in diversified, like one of the things we learned from COVID is one of the challenges of globalization tends to be the, oh, we resolved to one point of manufacture, but then you're brittle. So when Italy went down with COVID, all of a sudden the specific medical manufacturer that was oriented there suddenly broke for the rest of the world.

42:58So you want several different places of source of origin for resilience and robustness against possible adversity. So ideally in a good world, you'd have two to four or five places of semiconductor manufacturer and you would have at least one or two of those within the Western nations. And if that was the case, then we'd be good. So a single point of dependency on Taiwan has a bunch of global risk. Do you think Nvidia continues to accrue power and monopolization or monopolies? Would you think it continues to be eaten away by apples, Googles, Amazon's building more and more of their own chip supply and ability?

43:39So unsurprising to you because you and I have talked a bunch, both. So both in Videos business will continue to go very strongly because they have an amazing lead in amazing chips and there is massive demand for their chips for doing compute and many players Google Amazon others including AMD are building out chips as well. So you both have them developing what is still a very valuable leading resource and a bunch of other chips developing as well. We have kind of like electricity. We have infinite demand for compute at moderate price pricing. So as long as we can deliver that, we will demand will completely fill.

44:23In terms of like demand, we have multiple different LLM providers. We had many off on the show and he's a, I'm not going to do his accent, that's going to be terrible. We're reaching kind of the up -rand of LLM abilities. But now we're moving. In fact, incorrect, but yes, we're not reaching the upper -rand of LLM. It's kind of like, look, the press cycles like to go, ah, we haven't seen anything in the last six months, we're at the up -rand. It's like, oh, if it were we haven't seen anything, by the way, we did say GPT 01. Right. We hadn't seen anything in the last couple of months. That doesn't mean it's the end of the cycle.

44:55That means we're still getting to what the next next set of is starting things. I think the next larger computer, the next large LLM that's trained with large computer will still have new magic in it. And all of the people who argue and sit are to some degree arguing their own book. Well, I don't have the compute. So the next level of compute won't make a difference. I don't have the data. So the next level of data won't make a difference. Or the current data is all we have. And so we won't be able to do. It's like, well, actually, in fact, we can create synthetic data. And there's a ton of data that's out there that's not part of the standard internet training corpus.

45:28The scale game is still playing. So he was saying we've reached the upper hand of Ella. Incorrect. And then now it's the era of agents. And that is why agent forces. Well, by the way, he's right that, like, we're going to have a ton of agents. And I think the agents will be composed of multiple models, but to count out the next level of scale models as being important in creating a number of quality agents is just incorrect. Do you worry when you look at the pricing of some of the investments going down today that it's just a complete bubble? Well, so when everyone understands that a technology transformation is happening, a bunch of people make foolish investments.

46:11It happened in the internet, it happened in mobile, it happens. But because there are some foolish investments, doesn't mean there aren't also really good investments that change. And so part of the work for being a good investor is to on a probability basis, because you will make some foolish investments too, to make sure that you have some of the really good ones. And by the way, sometimes the decision of foolish or wise is doing something that makes seem like it's a crazy price. What deal did you do that seemed like a crazy price was a phenomenal investment? When I did the series A of Airbnb?

46:45That was a price. 60 million post. At that time, the founders probably could have gotten on the phone all week and called every single person who had used an Airbnb that week if they were working through the call list. So it was a very small transactional volume. And the question is, would it grow? What would happen with cities? What would happen with market acceptance? So there's a bunch of other things. But part of the way that I invest is I go, well, if I'm right, if the theory of this investment is correct, then it will transform an industry. And that's what I tend to do as an investor. It's majority of my investments, not all there.

47:22So sometimes I think, but if that plays out to be the case. And so then is my theory of my investment, at least a reasonable probability, right? it has a reasonable chance of working. And that's why I did the Airbnb one. So that would be one example. But I also tend to be more careful about part of the discipline that I've learned from Silicon Valley is when you look at a C, to Series A, a Series B, it isn't that price is irrelevant. Does the coherent sense of this make sense in terms of what future capital we need, how the entrepreneurs are thinking about their business? And so that's part of where pricing comes in.

47:59Do you think aquaheis are inevitable for other than companies? We see the likes of Mr. All in France. They just don't have enough cash. It's spade to spade. All right, cool, how's the never school? Well, in a well functioning society, hopefully it's acquisitions rather than aquahears. Part of the thing, there's a thread of antitrust that misunderstands their own game. So for example, the thread of antitrust roughly looks like this. It says, we should stop the aggregation of power in the large companies, so we should block acquisitions. And in some cases, limited specific cases, that makes sense.

48:35But in general, if you want competition with those large companies from startups, investors, say for example, I'm an investor who's going to put a billion dollars into a company that might compete with one of the large tech companies. I'm only going to put the billion dollars in if I have a chance of an aqua hire, or not an aqua, an acquisition exit, because I'm going to need the billion dollars back possibly. That's a huge loss. So if I am blocked, if you go, if you have a regulatory authority to say we are never going to allow that, then I'm never going to do the investment that allows a company to potentially compete with those large tech companies.

49:10And so their theory, which is worth stopping the aggregation of big power, is they're creating more aggregation of big power because they're stopping the financing of competition. Does the M &A window open up without leaning on? Well, I hope so. And by the way, I think it's good for society. It's good for competition. It's good for investing in the competition. And so that's part of the reason why I've kind of made public statements around this because it's not that I'm saying, although antitrust is bogus, I'm saying you actually got the exact wrong theory of the game. Do you think Figma's antitrust was bogus?

49:44Yes, shortly. Look, I'm an investor in all the rest. and I think Figma is an amazing company that's going to, I'm probably going to make substantially more money because the deal was essentially derailed. But there was a bad theory of the case. I would love to move into a quick part. I always love it. I always leave things on. I've learned so much. I say short statement, you give me your immediate thoughts. What do you believe that most around you disbelieve? Great question. So what I think is that the AI revolution will both create enormous value for the large companies and enormous value for the small companies.

50:20And it's going to do both. And part of that is because I don't think it's a big tech question. I don't think it's a little tech question. I think it's a scale tech question. And I think part of what we do is investors and creators and creators and industries, we invest in scaling technology. It starts small and it gets very large and we want more large tech companies. The answer is not we want fewer large tech companies. We want more large tech companies. is Twitter better post -earn or worth? With deep regret, I would say substantially worse. What would you do if you knew you couldn't fail? Oh, well fusion energy maybe.

50:55What's the highest multiple investment you've ever made? Actually, almost never look at multiple. Well, so I have no. My investments are at seven to ten years out, and so it's a belief in what seven to ten years looks like. And almost everything I invest in is unprofitable when I invest in it. Have I invested in a business that's profitable? I'm like, I can't remember. What would you best like to change about Ventures Day? You see the landscape. Well, what I would love to have, and look, I understand the economics, I myself follow the economics of going into software, a broader range of things, and I've tried to do some of that myself, so I don't just preach it, you know, a nuclear fission infusion, a joby, and flying cars, because the world is not just digital, it's also real and physical, and so a broader range would be a good thing.

51:39What if you changed your mind on it in the last 12 months? Interesting. I guess what is the right way for governments to interface productively with cryptocurrency? And there's micro things. I still believe in cryptocurrency. I bought Bitcoin back in 2013. I've invested in in cryptocurrency companies. I think it can be very good for society, but the way that it, you know, the kind of the ways that it can integrate all the society, like there's evolving beliefs there. Like what should happen? What should not happen, but they're all like micro things, not macro things. Maybe the most macro thing might be, it's not a change in my belief as much as it's kind of like an open question.

52:22I watched some congressional testimony from people from the national security establishment that were claims that government labs were studying material from extraterrestrial spacecraft. And this was congressional testimony. And so I was like, huh? Is it an asteroid or is it a robot ship or what? Like, or is there nothing? Is it just craziness? But if you before I'd watched that testimony, if you had said, what do I think about UAPs? The answer is conspiracy theory. And maybe that's still the right answer. But like, I just watched that recently and I'm now gotta go scratch that out a little bit and say, okay, what is this UAP thing and try to understand it?

53:04What is the price of Bitcoin end of 25? By the way, I never do, like that again, seven or ten year horizon. So I bought a bunch of Bitcoin. I've just hold it, like I've never sold it. And I haven't bought new Bitcoin. I would say end of 25. So I'm, I guess approaching 200 ,000. That's it. We're gonna have another show at the end of 25. Great. You mentioned Bitcoin. You mentioned Airbnb series A. What was the worst financial investment you've made? Well, actually, the interesting thing about this is people tend to think the worst thing you did was you invested in something and went to zero. Actually, in fact, the worst thing is saying no to the things that went to the moon.

53:42It's not doing the B of adb and the C. Yes, exactly. Like those kinds of things. It's like it's the it's the what one comes to mind with that. Well, Airbnb was one. I mean, where I have key lessons is where I have key lessons of missing an opportunity I should have said yes to. And I should have said, okay, not look, I led the A. I don't need to go lead the B or the C. I should have gone, I'll lead the B or C. I'll double down on the on the risk coefficient because I had the conviction. I just had the look. I've already I'm already in it already I already I already led the series a and so so that's clearly one.

54:16You know, I think there's I got pitched early in stripe and square and I didn't do the investments because I knew how hard payments was from PayPal. It's one of things when you know too much and you know the risks too well and those were terrible mistakes. I mean, just there's just the list of things you miss that you regret is substantial. I'm for sure. When you're doing it right. Yes. Yeah. To make a big worry. Final one for you, you have had the most incredible career when you think about advice given across it. What's the best advice that you've ever been given that sticks with you most? Lots.

54:49We could have a whole show on advice. But I'll say with one of my dad said to me when I was a kid, which is he said the difficulty of making decisions is that in the short term, it reduces your opportunity set because you've made a decision. But it's the only way you have long term opportunity. I love that. Honestly, I have so enjoyed today. I can't thank you enough for going so broad with me across so many different topics. You've been fantastic. So thank you. A pleasure as always. I look forward to the next in my next trip to London. I mean, I always so enjoy my discussions with Reid. And if you want to see that episode recorded live in the studio in London, you can find it on YouTube by searching for 20VC, that's 20VC.

55:29Now, before I leave you, we're excited to ignite your curiosity with a journey into the world of transformative ideas. If you're driven by the pursuit of knowledge and personal growth, you'll love exploring the vast collection of insightful book summaries on the Blinkist app. So with Blinkist, you can access expertly crafted summaries that distill the essence of thousands of influential books, allowing you to read or listen to each in just 15 minutes. I know they beat 20VC. Being recommended by The New York Times and Apple CEO Tim Cook, it's no surprise that 82 % of Blinkist users see themselves as self -optimizes, and 65 % say it's essential for business and career growth.

56:10And speaking of business, Blinkist is also a trusted Ellen D. Partner for industry leaders like Amazon, Hyundai and KPMG UK, empowering over 32 million users since 2012. As a 20 VC listener, even better, you get 25 % exclusive discount on Blinkist. That's B -L -I -N -K -I -S -T. Just visit Blinkist .com, 4th slash 20 VC, to claim your discount and transform the way you learn. And while you're optimizing your learning, let's also optimize your finances with Brexit. The financial stack founders can bank on. Brackse knows that nearly 40 % of startups fail because they run out of cash, so they built a banking experience that takes every dollar further.

56:51It's such a difference from traditional banking options that leave your cash, sitting idle while chipping away at it with fees. To help you protect your cash and extend your runway, Brackse can buy the best things about checking, treasury and FDIC insurance in one powerhouse account. You can send and receive money worldwide at lightning speed. You can get 20X -the -standard FDIC protection through program banks and you can earn industry leading yield from your first dollar while still being able to access your funds anytime. Bracks is a top choice for startups. In fact, hey, it's used by one in every three startups in the US.

57:30Just check them out now, bracks .com -ford -slash -dot -ups. And talking about building trust, secure frame provides incredible levels of trust to your customers through automation. Secureframe empowers businesses to build trust with customers by simplifying information security and compliance through AI and automation. Thousands of fast growing businesses, including NASDAQ, Angel List, Doodle and Coda, trust secureframe to expedite their compliance journey for global security and privacy standards, such as SOC2, ISO27001, HIPER, GDPR and more, but by top tier investors and corporations, such as Google and Client Perkins.

58:10The company is among Forbes' list of top 100 startup employers for 2023, and Business Insiders list of the 34 most promising AI startups for 2023. Learn more today at Secureframe .com, it is a must.