Fed Hesitates on Tariffs, The New Mag 7, Death of VC, Google's Value in a Post-Search World

Name: Fed Hesitates on Tariffs, The New Mag 7, Death of VC, Google's Value in a Post-Search World
Uploaded: 2025-05-09T21:29:34.000Z
Duration: 3 h 12 min 9 s

An Evening at Shiso Restaurant

Dining Experience and Generosity

The hosts visited a restaurant named Shiso, known for its Asian fusion cuisine, particularly sushi.

The owner, Shimoth, is a fan of the All-In podcast and refused to let them pay their hefty bill, stating "Your money is no good here."

Jason advised Freeberg to leave a generous tip after the meal was comped; they ended up tipping $3,000 for a dinner that cost around $19,000.

The hosts expressed satisfaction with the food quality and service at Shiso, recommending it to anyone visiting Miami.

Highlights from Miami F1 Event

Memorable Moments and Guests

The episode reflects on their enjoyable time in Miami during the Formula 1 event filled with laughter and great stories.

Notable guests included Tony Robbins, F1 champion Nico Rosberg, Antonio Gracias from Valor Capital, and Mayor Francis Suarez.

Sergey Brin made a surprise appearance; he shared insights about his demanding work schedule at Alphabet.

Impressions of Speakers

David Freeberg highlighted Sergey Brin's casual demeanor during discussions as impressive.

Antonio Gracias received praise for his transparency in uncovering government issues without personal gain; his efforts were noted as challenging yet important.

Reflections on Speaker Engagement

Audience Reactions and Insights

Shimoth Polyhapatia appreciated all speakers but specifically mentioned enjoying Nico Rosberg's contributions.

Tony Robbins' unique energy left an impression on attendees; interactions revealed his vibrant personality despite initial reservations from the hosts.

A meditation exercise led by Robbins was well-received by the audience.

Introduction of Philippe Leafant

Guest Background

Philippe Leafant joined the program for the first time; he has been catching up on previous episodes of the All-In podcast at high speed.

F1 Experience and Celebrity Encounters

Trophy House Event Overview

The event took place at the Trophy House, a beautiful three-floor structure with various activations offering free items to attendees.

A poker game was held during the F1 race, providing a unique way to experience the event despite the fast-paced nature of Formula 1 racing.

Social Dynamics and Celebrity Interactions

Due to rain, the poker table was moved inside for an excellent view of the finish line; notable guests included Freedberg and Travis.

Timothy Chalamet made an appearance, leading to humorous interactions as Phil Hellmuth awkwardly engaged with him.

Larry Summers was humorously noted as moonlighting as a dealer after losing sponsorship deals.

Inappropriate Behavior and Event Highlights

Phil Hellmuth's behavior drew criticism; he was accused of tackling celebrities inappropriately at events.

Despite his antics, Hellmuth claimed credit for creating "Allin," showcasing his tendency for exaggeration.

Sponsorship and Future Events

OKX, a major sponsor of McLaren F1 team, was highlighted; they recently launched their crypto exchange in the US.

Plans were discussed for future events including F1 Austin and possibly Vegas or Super Bowl gatherings.

Reflections on Event Enjoyment

Attendees shared their favorite moments from the weekend; Saturday stood out due to poker games and socializing until early morning hours.

Economic Outlook and Fed's Stance

Federal Reserve's Current Position

The Fed has maintained interest rates between 4.25% to 4.5% in 2025, adopting a "wait and see" approach due to uncertainties surrounding tariffs imposed by Trump.

Despite solid economic expansion, the Fed warns of potential stagflation, highlighting concerns over rising unemployment and inflation.

Market Reactions and Sentiment

Markets have largely recovered from the impact of Trump's tariff announcements; however, there is a prevailing sense of instability with many mergers and acquisitions (M&A) on hold.

Some analysts argue that the Fed's decision not to cut rates could signal economic strength rather than weakness, challenging common perceptions about rate cuts.

Discrepancy Between Data and Sentiment

There is a notable contrast where hard economic data appears strong while consumer sentiment remains low; this discrepancy raises questions about market psychology.

Analysts observe that government intervention occurred when markets declined significantly, indicating responsiveness to liquidity issues rather than simply bailing out equity markets.

Consumer Behavior Insights

Despite weak consumer sentiment, spending remains resilient; indicators such as Visa and Mastercard earnings reflect strong consumer activity even amidst tariff-related anxieties.

The relationship between market performance and consumer sentiment suggests that negative feelings may lag behind actual economic conditions.

Future Projections for the Fed

Predictions indicate varying probabilities for no changes or cuts in interest rates over the coming months, reflecting uncertainty in monetary policy direction amid political pressures.

Economic Indicators and Political Influences on Federal Reserve Decisions

The Role of Liquidity in Economic Forecasting

Discussion highlights the importance of liquidity as a leading indicator, suggesting that current metrics are signaling caution.

The speaker expresses skepticism about the "Fed put," indicating that political considerations may be influencing monetary policy decisions.

It is suggested that the Fed's reluctance to cut rates could be politically motivated, particularly in relation to President Trump's actions.

Political Dynamics Affecting Monetary Policy

The conversation implies a complex interplay between financial metrics and political motivations, with the Fed potentially ignoring critical indicators due to political pressures.

Concerns are raised about subprime lending as an early warning sign for potential economic downturns, including missed payments on mortgages and loans.

Key Economic Data Points

Upcoming CPI data is noted as crucial for assessing inflation trends; March's CPI was reported at 2.4%, above the Fed's target of 2%.

A recent trade deal with the UK includes a 10% tariff rate on imports from the UK into the US, raising questions about future trade negotiations.

Implications of Trade Deals on Economic Growth

The ongoing tariff discussions suggest potential long-term revenue streams for the federal government, which could influence tax cuts and overall economic strategy.

There is speculation that these tariffs might drive inflation and GDP growth while affecting employment levels.

Market Reactions and Future Expectations

The discussion indicates that Powell may be waiting for more data before making significant policy changes, reflecting uncertainty in market conditions.

Insights from retailers suggest that not all tariffs will fully translate into consumer prices, hinting at possible resilience in retail sectors despite tariffs.

Conclusion: Navigating Uncertainty in Economic Policy

Despite concerns over tariffs impacting friendly nations like the UK, market reactions remain strong, indicating investor optimism amid ongoing negotiations.

Economic Implications of Sustained High Rates and Market Reactions

The Challenge of Sustained High Rates

Discussion on the difficulty of operating in an environment with sustained interest rates around 4-5%, highlighting potential economic implications.

Perspectives on Tariffs and Negotiations

Inquiry into differing opinions regarding tariffs: strategic "4D chess" versus chaotic reactions, illustrating the complexity of current negotiations.

Impact on the Tech Market

Examination of how uncertainty affects tech companies considering IPOs or mergers and acquisitions (M&A), noting recent activity from DoorDash.

Disconnect Between Economic Sentiment and Behavior

Analysis of a disconnect between public sentiment about the economy and actual behavior, suggesting improved communication could build confidence.

Sector-Specific Tariffs and Their Disruption

Identification of key sectors affected by tariffs, particularly semiconductors and assembly processes, emphasizing ongoing disruptions in these areas.

Government Response to Market Feedback

Observations on government responsiveness to market conditions, including executive feedback loops that may lead to adjustments in policy.

AI's Role Over Traditional Concerns

Introduction of the concept that advancements in AI ("tokens") may outweigh concerns over tariffs, indicating a shift in market focus towards technology growth.

Shortage of Chips as a Market Driver

Recognition of chip shortages impacting capital expenditures (capex), contributing to market fluctuations alongside tariff discussions.

Future Outlook for Tokens vs. Tariffs

Management Decisions and AI Opportunities

Insights from Sergey on Management Tools

Sergey shared anecdotes about using management tools, highlighting that managers are often the first to be impacted by changes in technology.

He emphasized a generational opportunity for selecting companies that will accelerate growth through the adoption of AI tools across various sectors, not just traditional tech firms.

The Reinvention of Traditional Businesses

The discussion revolves around how traditional businesses are being transformed by AI, leading to significant market value creation opportunities.

Unlike previous trends where market differentiation diminished as markets matured, every mature market now has potential for disruption due to innovative technologies.

Google's Market Challenges

Antitrust Lawsuit and Search Engine Dynamics

Google experienced an 8% drop in stock value following negative search data linked to an antitrust lawsuit regarding its payment to Apple for default search engine status.

Eddie Q from Apple noted a decline in search volume for the first time in 20 years, attributing this shift to the rise of AI-driven search alternatives like ChatGPT.

Implications for Google's Future

Following Q's comments, Google lost $100 billion in market cap within an hour. This raises concerns about whether shareholders should panic over these developments.

The conversation highlights a paradigm shift in human-computer interaction; users may prefer chat interfaces over traditional search boxes.

Transitioning Search Interfaces

Google's Response Strategy

Google possesses competitive models and is aware of the need to adapt its services amidst changing consumer preferences towards chat-based interactions.

Transitioning from traditional search interfaces to chat interfaces will likely be gradual rather than abrupt, allowing users time to adjust.

Revenue Considerations and User Engagement

Current revenue from search ads is substantial ($200 billion), but serving AI queries incurs higher costs compared to standard searches.

Google's Market Position and Future Strategies

Current Market Dynamics

The discussion revolves around Google's current market position, questioning whether it's time to panic or view the situation as an opportunity for growth, particularly in expanding product lines.

Google previously held a 99% market share, but there are concerns about this declining share due to competition from other models like ChatGPT and Anthropic's codegen models.

Economic Implications of Share Shift

With the decline in market share, it becomes easier to calculate the economic impact of each percentage point lost. This week marked the beginning of that analysis.

The shift is framed as a consumer choice issue; users are gravitating towards alternatives like ChatGPT, which is rapidly gaining traction.

Strategic Recommendations for Google

A proactive approach is suggested: anticipate a drop from 99% to potentially 75% market share within two years and prepare accordingly by integrating Gemini as a primary interface for Google.

Waiting for data before taking action could lead to missed opportunities and decreased morale among Google's talented workforce.

Investment Perspectives on Google

Discussion shifts to investment potential; while not providing direct advice, there's speculation on whether Google has the capability to navigate its challenges effectively.

Comparisons are made between Google's market cap (approximately $1.8 trillion) and that of ChatGPT (around $300 billion), raising questions about future valuations.

Historical Context and Future Outlook

Reference is made to past industry shifts (e.g., yellow pages vs. search engines), suggesting that while Google has significant cash reserves, it must adapt or risk stagnation similar to companies like IBM.

The conversation highlights Google's diverse revenue streams (YouTube, cloud services), emphasizing their importance amidst potential declines in search revenue.

Navigating Change in Technology Landscape

The "innovator's dilemma" is discussed regarding how new products like Gemini might disrupt existing business models within Google itself.

There's acknowledgment of complexity in stock evaluations during times of rapid change; AI advancements may signal a shift away from traditional investment strategies such as the "Mac 7."

Conclusion on Future Indices

Speculation arises about emerging indices reflecting new tech leaders beyond traditional metrics like Fang or Mac 7, indicating that companies will need to adapt quickly amid evolving landscapes.

Investment Strategies and Corporate Decisions

Balancing Investment and Risk

The speaker discusses the importance of optionality in investment strategies, suggesting that spending excessively on capital expenditures (capex) without a clear return can be detrimental.

Emphasizes the need for companies to take risks rather than merely harvesting profits from existing products, arguing that innovation is crucial for long-term success.

Google's Future Direction

Highlights the necessity for Google to invest in future technologies, asserting that taking calculated risks is essential for creating an outstanding company.

Predicts significant layoffs at Google as part of a strategy to refocus efforts on AI and corporate responsibility, reflecting a shift towards more serious operational management.

Integration of AI in Products

Discusses the deep integration of AI tools like Gemini into various Google products, noting their potential to enhance user experience through personalized interactions.

Points out that Google's data advantage stems from its extensive user base across multiple services, which could be leveraged for better product integration.

Enhancing User Experience with YouTube

Suggests that YouTube should evolve beyond simple search results to provide more interactive and informative responses based on user queries.

Proposes using advanced AI capabilities within YouTube to create comprehensive content summaries or analyses based on historical data.

Strategic Decision-Making Challenges

Warns about the dangers of reactive decision-making driven by external pressures rather than proactive strategic planning within Google’s management team.

The Future of Search and Advertising

Talent Concentration and Market Dynamics

The speaker notes a significant concentration of talent reminiscent of their time at Facebook, emphasizing the potential for innovation in search models that differ from Google's.

They argue that if question asking does not cannibalize traditional search, Google will remain unaffected; however, they encourage exploring scenarios where it might.

The Impact of AI on Advertising

There's a discussion about how integrating user queries with AI tools like Gemini could enhance targeted advertising effectiveness.

An example is given where Gemini searches could display relevant ads alongside results, potentially creating a superior advertising product compared to traditional search.

Changing User Behavior

A participant reflects on their reduced use of traditional search engines since the advent of tools like ChatGPT and Gemini, indicating a shift in how users seek information.

Another speaker highlights an increase in personal research efforts as users leverage AI instead of relying on human assistance for tasks.

Reevaluating Search Metrics

The conversation shifts to questioning the relevance of measuring market share based solely on search queries, suggesting that overall engagement may be more important.

Concerns are raised about losing significant portions of traditional search traffic while only capturing small shares in emerging markets.

Strategic Considerations for Google

The need for Google to adapt its strategies is emphasized, particularly regarding new products and user engagement amidst competition from AI-driven platforms.

Suggestions include focusing on inbound actions into Google's ecosystem rather than just traditional search metrics to assess value effectively.

Founders' Influence and Company Direction

A query arises about whether the return of founders would positively impact Google's direction during this critical juncture.

Google's Strategic Changes and Market Dynamics

The Role of Founders in Major Changes

Discussion on the importance of founders, like Larry Page and Sergey Brin, in implementing significant changes within Google, especially during critical junctions.

Acknowledgment of Larry and Sergey’s past successes with Alphabet and the expectation for them to lead another transformation.

Emphasis on the moral credibility required for leaders to make impactful decisions that could affect a $1.8 trillion company.

Investment Perspectives

The speaker reflects on their investment strategy, suggesting a focus on around 25 key companies rather than just five to mitigate risk.

Personal anecdote about starting in the stock market as a French investor and learning from early losses.

Challenges Facing Public Companies

Exploration of why there are fewer IPOs today, citing high costs and regulatory challenges as major deterrents for private companies going public.

Notable examples of successful private companies like SpaceX and OpenAI that remain private due to these challenges.

Regulatory Environment Impacting Investments

Commentary on how public companies face more scrutiny from government agencies compared to private firms, which may have fewer issues reported.

Observations about the sophistication of private markets mimicking public markets through selective trading rounds.

Competition and M&A Considerations

Concerns regarding perceptions that large companies are detrimental to competition, leading to restrictions on mergers and acquisitions (M&A).

Argument for allowing larger firms to engage in M&A as a means to foster competition among them rather than stifling growth opportunities for smaller firms.

Proposals for Market Regulation Adjustments

Suggestion that non-MAG7 companies (under $750 billion market cap) should be allowed more freedom in M&A activities.

Discussion on Antitrust and Market Size

The Role of Company Size in Antitrust Decisions

Philipe argues that size should not dictate antitrust decisions, using Apple as an example to illustrate that a company with minority market share can still pursue acquisitions without harming consumers.

He emphasizes that the primary goal of antitrust authorities is to prevent monopolistic practices that negatively impact consumer choice and market freedom.

Concerns Over Monopolistic Practices

The discussion highlights the potential dangers of large companies making orthogonal acquisitions, which could lead to reduced competition if they engage in price dumping.

Jason raises concerns about how large companies could eliminate competitors by offering services for free, thus undermining long-term competition.

Thresholds and Market Cap Considerations

Philipe counters that imposing thresholds based on market cap for mergers and acquisitions (M&A) is flawed since smaller companies can also have significant competitive impacts.

He acknowledges the importance of being cautious about M&A activities but insists that size alone should not be a disqualifying factor.

Navigating the Debate on Big Companies

The conversation shifts towards finding solutions to the ongoing debate about big companies being inherently bad, questioning whether political intervention could help resolve these issues.

An investor perspective is introduced, suggesting that successful ventures often overshadow past mistakes, akin to winning a lottery.

Bundling and Market Dynamics

The discussion touches upon bundling strategies used by major corporations like Amazon and Apple, where membership fees drive profitability despite low margins on bundled products.

There’s concern over how excessive bundling might stifle competition while emphasizing the need for maintaining high financial incentives for innovation.

Implications for Venture Capital and Innovation

Chimath discusses challenges in venture capital due to societal perceptions around profit-making; he warns against marginalizing high-risk investments necessary for progress.

Investment Trends in China and Canada

Decline in Investment Capital

The last five years have seen a significant drop in investment capital in both China and Canada, despite their differing political regimes.

Historical patterns indicate that countries experience stagnation without sufficient investment and risk capital, leading to marginalization.

Regulatory Impact on Innovation

Excessive regulation can hinder the ability of companies to utilize risk capital effectively, resulting in fewer opportunities for substantial outcomes.

A chart on exits reveals a spike in IPO activity in 2021 followed by a flatline, indicating companies' preference to remain private amidst tightening venture capital.

Venture Capital Landscape

The current constriction of venture capital is occurring at a critical time when an entirely new economy is emerging, risking innovation acceleration.

Retail investors and sovereign wealth funds outside the U.S. may become essential sources of incremental capital as traditional funding avenues tighten.

Market Normalization and Returns

Defining Capital Investment Strategies

Exit volumes should guide limited partners (LPs) on how much capital to invest for adequate returns relative to public markets.

The economy's growth rate appears fixed; thus, LP expectations must align with realistic return rates based on market conditions.

Risk Assessment for Investments

LP strategies involve targeting a base return of around 10% annually after taxes; achieving this often requires venturing into higher-risk investments.

Illiquidity issues within venture investments necessitate high expected returns (mid to high 20% net), but current data suggests lower performance akin to hedge funds.

Impact of Regulations on Market Dynamics

Effects of Administration Policies

Current regulations are perceived as strangling potential returns; removing or reducing them could significantly enhance upside potential by hundreds of basis points.

IPO Activity Overview

The lack of IPO activity has led some investors to view venture investments almost philanthropically unless market conditions improve significantly.

Historical Context and Future Outlook

Notable IPO Performances

Highlighted successful IPO examples from 2021 include Rivian ($66 billion), Affirm ($24 billion), Robinhood ($30 billion), showcasing the peak performance during that period.

M&A Market Sentiment

The Impact of Risk-Taking on Investment and Innovation

The Perception of Wealth and Risk in Investment

The speaker expresses a desire for people to stop playing the lottery, emphasizing that the current system thrives on risk-taking, which is misunderstood by many.

There is a concern that some investors may judge successful entrepreneurs negatively, not realizing the broader consequences of their decisions on capital return to various risk-takers.

The discussion highlights the "waterfall effect" where negative judgments can lead to collateral damage affecting multiple stakeholders in investment ecosystems.

Global Perspectives on Entrepreneurship

Various regions like the Middle East, Japan, Australia, and Singapore are interested in replicating Silicon Valley's entrepreneurial success.

The speaker notes how successful companies create a cycle of innovation where former employees become angel investors or venture capitalists, fueling further growth.

Philanthropy vs. Wealth Retention

A key difference between American and European wealth dynamics is discussed; in America, wealthy individuals often donate their fortunes to foundations rather than passing it down through generations.

This philanthropic approach allows for continued support of innovative projects and initiatives that might otherwise be neglected by government entities.

Case Studies: Successful Companies as Catalysts

Founders from companies like Atlassian have invested back into new ventures such as Canva, demonstrating how successful exits can lead to more entrepreneurship.

Australia has adopted similar strategies seen in Silicon Valley, indicating a global trend towards fostering innovation through shared knowledge and resources.

New Fund Structure: Bridging Private and Public Investments

The speaker introduces a new fund designed for both public stocks and private investments while allowing flexibility with cash reserves.

Unlike traditional private funds available only to ultra-rich investors, this fund aims to democratize access while providing long-term investment horizons without immediate returns.

Concerns about public market trends are raised; many managers resort to indexing due to fear of underperformance when deviating from market norms.

Rethinking Investment Strategies

The speaker questions why investors feel compelled to remain fully invested at all times despite unfavorable market conditions.

Emphasizing the importance of strategic cash management during downturns could allow for better decision-making regarding future investments.

Vision for Future Investments

Investment Strategies and Democratization of Tech Investing

Overview of Interval Funds

The speaker discusses a willingness to work at lower fees in exchange for longer-term capital commitments, emphasizing the appeal of interval funds with a minimum investment requirement around $50,000.

These funds are seen as a means to democratize tech investing, allowing more investors access compared to traditional institutional investments.

Fund Management and Fee Structure

The speaker mentions managing approximately $53 billion and reflects on how they set their fund's fees based on competitor analysis, noting typical fees for interval funds around 1.25% management fee and 12% incentive fee.

They express that accepting lower fees is strategic; it allows them to compound capital over a longer period rather than maximizing short-term gains.

Investment Philosophy

The speaker compares their investment strategy to Berkshire Hathaway’s model, aiming for permanent capital that supports diverse investments across public and private sectors.

They highlight the importance of long-term compounding over higher short-term returns, suggesting this approach benefits both the investor and fund manager.

Building Initial Momentum

Acknowledging their relative obscurity in the market, the speaker shares efforts to gain traction by engaging tech entrepreneurs who support democratizing tech investing.

They successfully pitched family offices from notable figures like Jeff Bezos and received significant initial funding (a combined billion dollars).

Fund Accessibility and Investor Engagement

The process for potential investors involves due diligence followed by signing an LPA (Limited Partnership Agreement), with marketing handled by firms like UBS.

The goal is to reach a broader audience through wealth management firms while allowing smaller investments from many individuals compared to traditional venture funds.

Regulatory Considerations in Venture Capital

Discussion includes regulatory caps on accredited investors in venture funds versus interval funds, which allow greater participation from non-accredited investors.

Investment Strategies and Market Dynamics

Evaluating Companies Post-IPO

The speaker discusses the dilemma of whether to retain or sell shares in a company post-IPO, comparing it to established giants like Google that may see significant growth.

Questions arise about how competition influences fundraising cycles and the evaluation process for both investors and entrepreneurs.

Focus on Strengths Amidst Competition

The speaker emphasizes the importance of focusing on internal strengths rather than competitors, acknowledging the challenges within the investment landscape.

A hybrid approach combining public and private market strategies is highlighted as a potential advantage in risk management.

Strategy for Private Investments

Discussion shifts to specific strategies regarding private companies, including leading Series A rounds or acquiring secondary shares from existing investors.

The concept of identifying future market leaders (the "new mag seven") is introduced, with an emphasis on understanding which companies will dominate in ten years.

Insights on Market Correlation

The speaker reflects on historical correlations among top companies and how this has changed, prompting a reevaluation of what constitutes valuable investments today.

It’s suggested that both public and private companies should be considered when constructing an optimal investment portfolio.

Challenges in Valuing Private Companies

Concerns are raised about inflated valuations in overheated private markets, particularly for pre-revenue companies seeking high valuations.

Understanding the Dynamics of Public and Private Investment

The Importance of Being a Public Investor

The speaker emphasizes that being a public investor is crucial as it allows one to assess what a private company would be worth if it were public.

They highlight that while public companies provide discipline, private businesses offer a "telescope into the future," enabling investors to envision potential growth.

Balancing Imagination and Discipline in Investing

A successful investor must balance creativity and imagination with practical discipline, recognizing when valuations are excessive (e.g., "80 times earnings").

The speaker notes the volatility in public markets, where investments can significantly drop in value, contrasting this with the gradual rise often seen in private markets before sudden losses occur.

Lighthearted Commentary on Current Events

A humorous interlude occurs with breaking news about the Pope's selection, showcasing a playful tone amidst serious discussions.

The conversation shifts to light banter regarding performance comparisons among participants, adding an element of camaraderie and competition.

Conclusion and Farewell Remarks

As the episode wraps up, there’s acknowledgment of competition among participants and a call for audience engagement in deciding outcomes.