Another election year and it’s already a dramatic one. Biden vs Trump turned into Harris vs Trump. An attempt on Trump’s life. What’s next? This episode will focus on the implication of the elections for Tech and its ecosystem in the US and globally.
Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news
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Welcome to Episode 58 of Tech DECIPHERED. Today, we will discuss the US election and what it means for tech. How will the upcoming US election affect tech and the entire ecosystem in the US and globally? To be clear, and just to put a disclaimer, this episode will not focus on policies by the candidates that do not relate to what we perceive to be implications to tech. For example, we will not be discussing topics like pro-choice versus pro-life, and other things that are obviously very central to the decisions that many of you will make in how you will vote for the next presidential elections in the US.
At the same time, we will also share with you what we know to the best of our knowledge. Obviously, policies change with time, and proposed policies definitely change a lot with time, as you know, with politicians. There might be things that we will share with you today that might be different when you listen to our episode. We are not responsible for that. People and candidates change their minds all the time, even after they’ve been elected. That’s not our fault. Just with those disclaimers, that’s what we’re going to share today.
The third and final disclaimer, obviously, there will be tonality on how we discuss and evaluate some of the policies, and if they’re good or bad or whatever. But from this, you cannot also take a conclusion on, “Oh, I should vote for Trump,” or, “I should vote for Harris,” because no, this is just a view around tech and tech ecosystem. We will share how we perceive the policies and the proposed policies, and that’s literally it. We’re not giving you advice on who to vote for.
First, this is a recording made August 28. We’ll try to be as precise and as relevant as of this date. This is before the first debate between Donald Trump and Kamala Harris. As a reminder, a French politician once said that promises by candidates only engage those who listen to them. With that as a reminder, let’s start the topic. Maybe first, we can talk about the official platform. As of today, there is an official platform if we go to the page of the candidate, Donald J. Trump, there is a 20-point page, and there is a more detailed PDF as well on the Trump Republican platform. Some of our points will try to leverage what is on this official platform page, and we will also, of course, try to leverage what was done when Donald Trump was president, because sometimes actions speak louder than words. We also pick what we have heard from the candidates on the trail, if it diverts or if it adds to that platform.
On the other side, VP Harris’ platform is not there. As of August 28, there is no official platform on her website, which, to be frank, it’s scary because if you cannot hold a candidate to their promise after they are elected, that’s a tough place to be. Obviously, she’s part of the Biden-Harris administration, so we will leverage for discussion what was done by her administration, what was also planned by her administration, and we will highlight whatever has been shared by her, since she’s running as a candidate.
Well, okay. That’s a great start. But based on speeches—obviously, Vice President Harris is in office right now, so she’s been part of a platform—based on what analysts’ say, we’ve looked at a bunch of comparisons across the board for where they stand on a variety of issues. Maybe we start with economic policy overall, and talk a little bit about how we see the Biden-Harris administration, and obviously what things have happened around there. We will later discuss other topics like taxes, labour, perspectives, for example, on gig working, immigration, antitrust, and a variety of other topics. The economic policy overall piece that we will share at the beginning is very high-level, as you will see, then we will go in details into a couple of other areas. Maybe starting on that, Bertrand.
Actually, we have two, and when I say candidates, of course, we should think about the ticket, per se. If we take on Trump’s side, what’s interesting with both Trump and JD Vance is that they have both extensive experience in the private sector. Trump, obviously, as a businessman, who built a business empire. JD Vance, as an ex-VC, venture capitalist. Both have been in the trench of what it means to run a business, to be on the board of businesses, to be on the private side of things.
On the other end, we have a stark contrast, because both Harris and Walz have actually never been on the private side of things. Harris has been on the legal side as a prosecutor, as attorney general. We have Walz, who had a long experience in the military, followed by running for different position at state level before becoming governor.
I would say one parenthesis on JD Vance. He was in venture capital for a short period of time, three years and a half or four years, which is not very long, for venture capital funds are normally 10 years, et cetera. But he does obviously have private sector business experience before that as well. He did write the book, and the book was made into a movie. There’s definitely a lot of private sector stuff in there.
That’s true. Actually, I forgot to say that JD Vance also has a military experience.
Yeah, he was also in the military.
The economic policy, if we look at what has happened under the Biden-Harris administration, I mean, obviously it has been hugely inflationary. The numbers have been terrible. I mean, if you have a basket of stuff to buy at the groceries, you have seen big price increase. Go to McDonald’s or any other restaurant, you will have seen a huge difference in the past four years. Whatever the Inflation Reduction Act was supposed to do, I guess it did the opposite of the name of the act. It was a more inflationary act instead of a reduction one.
The latest has been Kamala Harris has shared, or some of her spokesperson have shared that she wants to put in place some level of price controls, which is pretty scary, to be frank. In some ways, it’s typical to first create inflation, and then to claim it’s the fault of the capitalists. If prices are increasing, therefore we need to put in place price controls. I think the last time that there were some level of price controls in the US was a long time ago, in the ’70s. It was not a good outcome, just to be very clear. It has rarely, if ever, be a good outcome if you go to price controls.
Yeah, I mean, price controls, I don’t think would be a great idea anywhere in the world. On economic policy, I would bring another element to the table, which is maybe stepping one step above. As you guys probably know, both Bertrand and myself are not American originally. I have since become an American citizen, so this will actually be the first presidential elections that I will have the pleasure and honor of voting in.
Bertrand is not an American citizen, but he does live in the US and has lived in the US for a very long time. Coming from different countries, Bertrand’s from France, I come from Portugal, with national health systems. We both lived in China, which is a bit funky in terms of health system. Again, different education systems, et cetera. I’d say the only point I would make is, at least from my perspective, coming out of Europe and having lived in Asia, there’s very little structural support on things that I do think are critical. For me, the three things that are critical, I always mentioned these three things, are health, education, justice. The health, education, justice system in the US is, let’s just say, very private sector-owned. It’s very private sector-led, and it’s uncommon for that in many countries in the world.
It has its pluses and minuses. But if I were to look at the minuses, the fact is, if I’m an American citizen, the level of protection I have in terms of, for example, having a health scare or whatever is not really comparable to, for example, I’m a Portuguese citizen, I live in Portugal. I do think there are a lot of factors that are put into economic policy to make some of these elements work in the economy, which, to be honest, the Democrats have had probably a better track record than the Republicans have had.
The whole notion of you take care of yourself, and if you have health issues, take care of yourself, and if you have diabetes, you take care of yourself, is very much a Republican speech motto thing. On the Democrats side, there’s more of this level of protection for at least certain elements. Now, we can have, as Bertrand was saying, also an argument that there’s been too much spend. The government is overspending dramatically. We have money that we don’t have the right to spend. We’re borrowing.
What happens at some point? Does the country default? What happens? There has to be somehow more of a moderate view on what is important and what is essential to citizens or not in the country. I do agree with the point that you were making that there has been extreme spend in US under this administration, too much spend under this administration. But at the same time, there are things that need to be taken care of in the US by the states, by the government, and particularly by the federal government in this case, because we’re discussing a federal election, that honestly do require spend. Sometimes I think the Republican piece of discussion is a little bit like, “Oh, no, we’re a capitalist country. Everyone takes care of themselves.” That’s not how a country should work. Why do we pay taxes? I think there should be something a little bit more in the middle.
My take at this stage is that a lot of people talk about where is the money coming from, do we increase taxes? There is very little discussion on how well the money is spent, when at the end of the day, that’s all that matters. How well is it spent? My worry, and we’ll talk a bit on more specific points, but there are very clear specific points on, for instance, high-speed broadband or electrification of the US, where billions have been invested by this administration, Biden-Harris administration, and there is absolutely nothing to show for.
That’s for me what’s totally scary, because when stuff is clearly identified, four years after, you see zero in terms of returns after spending billions. That, for me, is for sure the scary part, and a big question. I think there is some level of, from my perspective, a clear dysfunction overall, not just this administration, by the way, but there is, overall, a clear dysfunction. I think there should be way more discussion about how well is the money spent, and how well invested it is. I think, unfortunately, it’s not discussed. It’s more how much money do we tax, where should it go, and not, has it been well spent? My personal worry is that the majority of the money is actually not well spent.
I think that’s a good segue to the tax discussion. Let’s start exactly with the point you’re making, which is, I think of the countries that I’ve lived in, probably this is the country where I’ve seen the most delta between taxation and what’s deployed into stuff that you can actually see as impact. There’s a lot of leakage in deployment. Just to be clear, I lived in China, for example, like you did. There are other types of leakage in China, but the leakage here on tax credits, I mean, I live in California, you used to live here, Bertrand. It is absolutely incomprehensible where some of the taxes are going, because infrastructure needs a tonne of maintenance. Everything that gets done takes a tonne of time to be done. It’s super costly.
I mean, there’s all these incredible cases of the million dollar… Was it the million-dollar toilet in San Francisco or something? The way it gets deployed or something, it’s mind-boggling, and it is significant. I know people that left this country because of that, that left this country because they’re like, “I’m paying taxes. I don’t mind going somewhere else and pay even more taxes, but I know it’s being deployed. I know I have a national health service that takes care of me and takes care of other people. That mostly works. I know there’s education, guaranteed K-12, which is pretty decent. The variability is not huge across the board. I know where my taxes are going.” I think the accountability of taxation than in deployment is something that’s very interesting and very important to me. This country is definitely messing it up.
It’s very surprising. I cannot say I’m a big fan of the French’s quasi-socialist economy, for instance. But if you pay more taxes in France, I personally feel you also get way more in return. You have functioning roads, you have high-speed rails, you have a great aerospace industry. Look at if you compare Airbus to Boeing, obviously, SpaceX is in the US. Yeah, that’s really a big question. Especially, I would say that one thing that personally surprised me was Kamala Harris’ support for the equality of outcome, not equality of chance, but equality of outcome. Because if you start with that mindset, and that started with a presidential election in 2020, that’s pretty scary. Because if that’s your mindset, if you want an equality of outcome, you are going to tax even more. Obviously, I don’t believe equality of outcome will work. That’s a scary part.
If we go more precisely, it seemed to have been endorsed by Kamala Harris, it’s the last Biden-Harris administration proposal to increase corporate tax, to increase income tax. The worst of the worst is to dare to do a tax on unrealised capital gain. That one is like, from my perspective, I mean, batshit crazy. I will not use any other word.
I’m coming from France, where we used to have a wealth tax, which had so many negative effects. The first negative effect was a tax that costs more to the state than it gained. Because people left France because of this tax. Wealthy people left France, and ultimately, France got less tax as a result of imposing a wealth tax. This is not only very bad in principle, but realistically it never works, but it certainly serves to damage the country. For me, that’s the most scary proposal of all. This is, as of today, seem to be endorsed.
This is to the best of our knowledge, right? I wouldn’t be shocked if she steps back a bit on that, but we will see, particularly in realised capital gains. A lot of people is like, “How does that work?” I have this stuff in stock—like Elon Musk has all this stock—and it’s worth something. Probably he’s getting loans from banks to do things, et cetera. Correct, he is. But think about, for example, the startup world, the world that we occupy for the most because we’re in venture capital. If I’m a founder of a company, I start the company, and sometimes I get paid literally zero when I start a company. At some point, I might get a meagre salary, and then that salary gets a little bit better and better, but it’s never a great salary. My compensation is I started the company, therefore, I have a big portion of the company in equity.
As I go through time, that portion of the company decreases because I’m raising money from third parties, and therefore, I have less and less ownership of that company. But let’s say I have, I don’t know, 20% of the company at a certain point in time. The company, as it goes through rounds of financing, is valued at different amounts. There are two types of valuation. There’s the valuation that’s done by investors that come in to get preferred chairs, and there’s the so-called 409A valuation, which is a valuation that’s applied because you have to give options to employees and other things to stimulate and give them as benefits.
If that valuation at some point, the valuation is always going higher. If the valuation at some point is higher, you’re being taxed on that increase in valuation on equity that you have done nothing with. You have equity in the company, but you have not done anything with that equity. That destroys that market. What’s my incentive? I’m a founder, and I’m getting taxed on stuff with cash I don’t have, because I haven’t sold the equity. In some case, I’m going to keep that equity for the next seven, eight, nine, 10 years. That part is what Bertrand is saying is idiotic. I think a similar thing is being done in the UK right now, which is creating a huge amount of noise and complaints and whatever. I looked at something recently, because people are, “Why does this matter?” Well, it matters for a variety of reasons. It matters because it has huge implications on the ecosystem and startup VC. I mean, it’s huge. I mean, Silicon Valley, this would be huge in Silicon Valley.
It has huge implications because the US has a tonne of millionaires. To this day, I just saw a chart from, I think, 2023. It’s net positive, the US. There’s more millionaires coming to the US than leaving the US. Last year, according to that chart I saw, the US was second in the world, only beaten by the UAE. I think UAE had a net positive of 7,000 millionaires. US had a net positive of 4,000 millionaires. For example, China’s last. China’s net negative, the most net negative. It’s in the top 10 of net negative. Portugal is in the top nine of net positive. It’s in ninth place. Of the top 10 of net positive, it’s in ninth place. What do you think would happen as well to millionaires? Because a lot of these people have participation equities in companies, the thing, whatever, your tax on unrealised gains.
I think that would be a massive destruction of value, and it would have a huge impact in tech ecosystem for sure. Extremely negative. I don’t know how we would go around that. How would we figure this out? I’m sure there are lawyers already thinking through that, but how would you work around these kinds of things? Going forward, it’ll have implications on VC funds, and how we hold the stock at because we would have to pay taxes ourselves, but we haven’t exited the company. We have the equity in our books, but we can’t do anything with that equity, either. We only do when there’s an exit, but then we have to pay taxes on it? This is dramatic. This is absolutely dramatic, and it’s absolutely idiotic in my perspective.
Of course. The other piece, as you said, one of the biggest issue in private equity in venture capital as an entrepreneur is that the stock is not liquid. If you have to pay taxes, you cannot sell your stock because there is still not yet a market for it. Because by definition, it’s a private stock. It’s absolutely huge trouble. Are you forced to borrow to pay your taxes because you cannot sell your stock? Is everyone selling their stock at the same time every year to pay taxes? It’s destroying the valuation. It’s very shocking for me that there is even a discussion about this.
As you say, for sure, there would be fewer millionaires or billionaires coming to the US. I mean, they will not come any more. I’m sure they were bringing not only cash, but their smartness and knowledge to the US. That would be a big issue. I certainly hope there will be a dramatic change ASAP on Kamala Harris on this part of our platform. But right now, that’s there, and that’s a big issue for anyone involved in entrepreneurship, from any side of the puzzle.
On the other end, we have Trump proposing personal tax cuts at federal level. There were also some deductions that were set to automatically expire that would be probably extended. That actually is on Trump platform. These tax cuts would not be extended under Kamala Harris’ administration. I was surprised to hear that experts estimated this to be a 20% tailwind for the market, this personal tax cut. This simple one, once it’s expired, would have a very dramatic, immediate impact on the market. Trump is also planning to cut even more corporate taxes. I think the agenda could not be more stark in terms of their opposition on taxes.
It’s opposite in many ways, yes. It’s historically been one of the big things between Republicans and Democrats ever, always.
But in this case, to your point, it’s even starker, right?
I would say, one piece I have not heard any candidate talking about that for me has some importance is the IRS Section 174 part of the code that has started to impact small businesses since 2023, if I’m not mistaken. This one is creating huge trouble for entrepreneurs because they have to, instead of deducting, amortise research R&D expenditures. That has a huge impact for a lot of business that are not yet profitable from a cash perspective, but are considered profitable from a tax perspective, and therefore end up having to pay taxes when they are not generating cash.
I know a lot of businesses have been very significantly impacted. That’s also causing a lot of issues in terms of competitivity of smaller tech businesses in the US versus basically anywhere else in the world. I certainly hope candidates are going to work on it and change that. But so far, I’m not sure I’ve heard anything about it.
Maybe moving to labour, and that includes gig working. Vice President Harris does seem to be, obviously, more on the side that gig workers need to be treated more and more as actual workers.
As employees, effectively, with broader protections, and around what worker classification means, and how all of this works. Obviously, as always, the Democratic Party is much more on the side of unions, in principle. This has significant implications. I mean, both of us are VCs, just to be very clear. Hopefully, we don’t have too many biases, but I’m certainly investing in companies that have a significant part of their deployment is based on the fact that they can do 1099s, people that are seen as contractors, and sometimes they can do W-2s.
In this case, this company does both. The company has just got into someone’s pressuring them, in San Francisco County, whatever. It’s all sorts of things going on around this gig economy piece. Now, are there elements of the gig economy that need to be a little bit more thought-through? Yes. I do believe a lot of the elements of gig economy that need to be more thought-through should be thought-through for any person that is a citizen. In some ways, we’re trying to go after the gig piece because employers are easier to go after. Going after a corporation is probably easier to go after.
Obviously, former President Trump had adopted rules that made it easier for businesses to classify workers as independent contractors. He’s not a big fan of unions, as you can imagine.
Actually, on this point, Trump was for the first time, there was a very visible union, Teamster Union, speaking at the Republican National Convention.
I would say, for a Republican candidate, Trump is probably the most friendly to union workers of any Republican candidate ever. I think there is actually quite a significant change that is not widely acknowledged that union workers in industries, not in government—in government, I’m pretty sure they favour Kamala Harris—but in industries, I think there has been a very significant change where union workers are actually more massively voting for Trump than Kamala Harris, and there is more and more official support.
Are you saying overall, they would vote more for Trump than for Kamala more than before the delta would have increased towards Republicans?
I think union representing industries—not government—employees are probably going to vote way more for Trump than Kamala Harris.
Okay, I’m not sure. It’s interesting to see where we end up once election day comes. But I do feel that part of this is, again, historical. The US historically has had very low unemployment based on a lot of sub-employments or under employment. People that have three, four jobs at the same time, they’re getting shifts here, shifts there. They’re not really employees of any company. They don’t get benefits through anyone.
I understand that, obviously, the Democratic Party and NDPRs believe that the situation should change, and that people should have employment and should have a protective net in terms of how that employment is done. Obviously, on the broader side, things have always been a little bit more around.
It’s the country. It’s a capitalistic system. This is how the country has had such low unemployment. This is how the country has had such low unemployment rates. Unemployment is part of the equation. If we had all these things in place, employers can’t employ people, and therefore, unemployment has to go up. It’s a fundamental religious fight almost on this. There’s a very different view on what’s at stake here.
I think in Europe, if we look at Europe, the right side and the right-wing parties versus the left-wing parties, certainly in the middle are the Social Democrats and the Socialists. They’re okay-ish in the middle. They do believe in protections for employees and all that stuff, et cetera.
The battle is quite a little bit in the middle. Here, we have a little bit more of an extreme battle. I think it does come from the notion that the US is in a very different place in terms of worker compensation, how people are treated as contractors, what rights are they entitled to, et cetera. There is a philosophical issue here.
Totally. To be clear, I think flexibility in the US is flexibility of work is a feature, not a bug of the system. Ultimately, my guess is that the Biden-Harris administration or Kamala Harris-Walz and possible future administration wants more to follow the European path. Coming from Europe, I’m certainly not excited by this direction, because I personally think some of these choices and decision have a real cost to the economy.
If you look at how Europe has grown, actually experienced lack, of course, compared to the US for the past 10 to 20 years. It’s very stark. It’s absolutely very stark. You can see that the efficiency in Europe has gone lower and lower. Productivity of workers has gone lower and lower. I would be really scared, personally, to go in the direction because I think it has been tried, and it has been shown it’s not working. You can say that, “Yeah, it’s harder here in the US.” Sure, but at least there is more wealth to go around. But at some point, it will come to each personal opinion.
It’s sad that we can’t get to a more moderate view, I think, would be my comment. It’s actually around most of the points we’re going to discuss today. Because honestly, I do think workers should have more protections in many cases. But at the same time, I agree with you, Bertrand, there are situations in Europe, in many countries in Europe, where you can’t fire people. You just can’t.
Yeah. I can tell you very clearly from an entrepreneurial perspective, as a result of that, a lot of companies are making the decision not to grow as fast because they cannot take the risk to try to go too fast, and if stuff don’t work, you have to scale down, but then scaling down costs you so much money. You cannot afford it any more. You actually go bankrupt scaling down the business, where in the US, you can scale down the business in a matter of two weeks, save the business and turn it around, and basically manage the up and downs results of the global economy, which you cannot control on your own business and readjust.
I have seen again and again that, at least in Europe for the growth economy, it’s simply not working. You cannot grow as fast in Europe because of these regulations than in the US. Another side effect is that it’s very slow to hire people because everyone has to wait for two, three months to give their resignation, leave the business. When you hire people, it takes a lot of time to hire people. This is again connected to the protection afforded, and you cannot fire too fast. But as a result, even if you wanted to hire, and you would take the disproportionate higher risk to hire fast, like in the US, you cannot because people cannot join you so fast. You will be limited practically on how fast you grow.
Ultimately, if you have a business A in the US, and B in Europe, that is targeting the same market, has the same access to capital and stuff, you might deliver a much better result in the US simply because of the environment. I’m not even talking about also places like China, where you could also grow very fast. It’s a very tough place to be. At some point, you have to think about being globally competitive, and I think that that would be a mistake not to think about it.
Correct. I mean, it’s anecdotal. I do ask some gig workers, obviously Uber drivers, Lyft drivers, people that do any type of Taskrabbit, whatever. The feedback I systematically get is if the trade-off is there are fewer jobs available or whatever, honestly, I’m fine. Now, is there minimum benefits and minimum things that you need to put in place for these workers, even though they are independent contractors? Absolutely. You should. But I don’t think it’s going to be, honestly… Between you and me, Bertrand, I don’t think it’s going to be government regulation that’s going to make that much better or not. It’s going to be just natural competition if there are players in the market.
I see so much flexibility in gig working, if we go on this specific topic. I mean, you have the ability to work whenever you want. If you’re an Uber driver, you can buy your own car. Not so long ago, you wanted to drive a taxi, you had to pay a medallion. You had to spend enormous amount of money. You have to get a loan, to be a shark loan, typically. You will be forced first to work for a taxi companies that will pay you very little. Basically, I don’t think all of this protection and so much were so great if you are really on the worker side.
I think now, everyone has an opportunity to start quickly. It’s not a few taxi company bosses who are going to basically take advantage of you. I think the current system with Uber or Lyft is much more competitive, and give an opportunity to anyone. Personally, I’m very much in favour of this system. One thing I want to say, I think the overall functioning of the system in the US is not very efficient because a lot of it is dependent on the company paying for health insurance for different things.
Instead, where I come from, Europe and other places, you have a system that is much more independent of the companies. If you’re a freelancer, and you want to work on your own, it’s very easy to get access to all the protection you want. You just pay a bit more on top of it, and you will get access to any protection. It’s very different. It has to go from the company that hires a worker.
This is actually a weird distortion of the market coming from World War II, when employers were mandated in the US to not increase salaries to limit inflation. As a result, employers came up with some ideas to compete against each other by providing stuff on the side, from health insurance to other things. This is a very weird distortion of the market that happened, guess what, again, by government intervention. Where now, we have this system in the US where many things depend on the employer, making things more difficult in some ways for independent contractors.
A lot of the discussions we have today, it’s a country that has, at moments, at some point, historically, a very top-down industrial policy thinking, but then very large time periods of a couple of decades of bottom-up thinking. Because of the system in the US, with states, federal government, cities, counties, all of that. There’s all these flaws in it. It’s a very bottom-up thought. It has unintended effects that nobody ever thought about. People obviously take advantage of it, because the things are there to be taken advantage of. In some ways, I think part of how the country has evolved over time.
On this point, it’s something we have not talked before, but the incredible complexity of the tax system in the US, for instance, is insane compared to most other countries. We are talking about a complexity of the system that is 2 or 3x more than most other countries, just to be clear. Most Americans don’t realise how complex is a system versus other countries.
Moving to immigration. Here, maybe we should focus around immigration that has an impact in tech. We’re talking about more specialised immigration.
I’ll throw the first stone. I mean, Trump was not cool when he was in power. Now he’s showing more openness around the H-1B visas, which are the specialised visas that are capped, for those who don’t know, which has been a huge engine of growth in Silicon Valley. There were some stats posted, I think it was probably around 2014, ’15, that for each H-1B person, there were 10 jobs created. I mean, that’s silly.
I think the cap back then was 60,000 H-1Bs. It’s silly. He wasn’t very kind, and he was tough on all immigration. In that sense, everything was slowed down. Green cards were slowed down, specialised visas were slowed down. Obviously, green cards are very important as well for specialised workers, because people want to be permanent residents.
Citizenships, I’m not sure if they were slowed down or not when Trump was in power, but I’d be shocked if they weren’t. He wasn’t very friendly to us here in Silicon Valley for sure, and had obviously a huge impact in that sense. Now, he’s speaking to a different tune, with JD Vance as the VP. Maybe they’re speaking to a different tune, but I’m not sure he has an amazing track record to show for on that side of the fence.
That’s clear that it was not good in terms of legal immigration. It was also very strong in terms of illegal immigration, but this one has less direct impact on tech. It’s very sad for me that usually, those two go together. Either you’re open for legal immigration, and you’re also open for illegal immigration, or you are close to illegal immigration, and you are close for legal immigration.
It’s very frustrating the two, illegal and illegal immigration, have to be linked somewhat by candidates. It’s either everything is open or everything is closed. I think it’s a dumb burst of [inaudible 00:32:53]. I’m personally quite happy to see and hear that Trump seemed to have a change of mind in terms of illegal immigration. He was extremely clear in an interview on the All-In podcast that he was open to legal H-1B immigration. I think it was before he picked JD Vance as his VP, so I’m definitely hopeful.
They need to believe him, but yes.
We need the politicians, both sides. This is not a slap on Trump. I mean, to be honest, we need to then believe them. Everything we’re discussing today is we have to believe that they’re saying what they’re going to do, as I at the beginning of the episode.
I would say, so far, my impression is that he tried to do what he said he would do in his first administration. I have some hope that if he claims to have a change in mind on this specific topic, it’s real. I think there must be some admission that if you want some support in Silicon Valley, you have to be more flexible on this. I think he’s trying to get that support, and he has more people around him coming from Silicon Valley. It might have helped change his mind, not just political calculations.
Yeah, this is definitely a big deal that matters. I’d say, probably, Vice President Harris would be a clearer view on this, as in what it affects tech, which is legal immigration, specialised workers, et cetera. Probably, she would have a stronger stance. We’re not going to discuss safety and security at the border, illegal immigration, and all that stuff, because as we talked about before, it doesn’t have a direct impact in technology for sure.
Shall we move to antitrust? Maybe just to frame my antitrust, this is obviously the ability for companies to be split because they’re too big, and they have monopolistic control of a specific market. But it also affects, for example, approvals on mergers and acquisitions. It has huge impact in tech in that sense as well. The ability for big tech companies to buy small companies, or other big companies, or do big acquisitions, and all of that.
I think on this, it’s pretty clear that with former President Trump being elected, it would be easier to get a more lenient antitrust rulings on a lot of things, and a lot more M&A would be approved. I had a conversation with a founder that I will not name, and he was telling me… Back then, President Biden was still a candidate, and he said, “I will vote for Biden, I won’t vote for Trump. But honestly, if Trump is elected, it will be much better for my company because I’m in the eye line of a top tech company to be acquired. The probability that it will get approved under President Biden is very low, and the probability it will get approved under President Trump, and that DOJ and stuff, it’s probably very high.” He’s like, “I’m going to vote for one, but I hope the other one win.” I was like, “That’s tough.”
It has been a virtual ban on big tech acquisitions. If you are an entrepreneur or a VC in tech, that’s practically the end of the world. Because it’s either IPO, in a minority of case, or selling the business typically to someone with a lot of money if you want a big exit, so it will be to big tech companies. If suddenly, big tech companies cannot make acquisition, you cannot exit companies. If you cannot exit companies, you cannot provide a return, nobody can get rich, and nobody can reinvest. It’s a total nightmare right now. Again, as you said, it’s managed by the FTC, the DOJ. If we take the FTC, the chair, Lina Khan, named by President Biden, this administration has been totally following this policy. Interestingly enough, JD Vance was one of the rare Republican to support her. This is adding a level of intrigue to what will happen in a Trump-JD Vance administration.
My guess is that JD Vance will fall in line with Trump policy, but we will have to see. We could also imagine that a more favourable acquisition policy could be connected, as it come out to other behaviour expected from big tech companies. I’m not sure it will be a free pass, but I would expect definitely a much easier situation and better outcome for entrepreneurs and VCs if the policies were changed.
Here, just to be thoughtful around the discussion, antitrust is obviously related a lot to the regulatory environment and regulation as we discussed in the past. It’s pretty structural part of regulatory environment. It’s who is controlling a specific market or who are the players that are controlling a specific market. Just to be a little bit more nuanced on the point, regulation is needed and things need to be regulated. There are things that are absolutely unacceptable. But I think what we’ve seen in this country in terms of antitrust policy is aggressive antitrust policy tends to not do much on actual regulatory constraints to the big guys. What it ends up actually doing is creating regulatory capture, which we’ve talked to in a previous episode. It creates the ability for the guys who are dominating a specific space to win in that space. It’s almost like a barrier than to entry. You’re like, “How does that work?”
If Google or Facebook cannot buy a smaller company, they cannot. It’s fine. They’ll live on. They won’t die. The small company might die as well. That space might implode in of itself. There are a lot of implications here that are pretty systemic in thinking through the system in a more complex way. These are very complex systems that are interrelated.
Startups with bigger tech companies, with investors, both private equity, venture capital, hedge funds, the public equity markets, all these things are related to each other. There are very systemic ripple effects once, for example, stuff like this is happening where antitrust is being more aggressively applied to the market. Again, I don’t want to be a sceptic, but I think in this country, you’ve seen it. If antitrust is very aggressively applied, the big guys win and there’s more regulatory capture in those industries. That’s it.
I think that you’re totally right. That’s my big worry, when they care to wake up in terms of looking at what’s happening in an industry, usually it’s too late. It’s like you attack Google on a monopoly on search in 2024.
Well done. Just 15 years after the fact, maybe, and I’m generous. It’s like what’s going on? It’s like 15 years too late. Is it even relevant as of today? There is, of course, the question of what will you do about it? Do you want to split the company? How are you going to split the company? Even if you split it, is it better or worse? If we look at in the past when there has been the split of some monopolies, if you take some or all, or even the predecessor to AT&T and most telecom companies in the US, the resulting split entities became bigger than the original parent company in terms of revenues, in terms of market cap, and their founders and owners became actually wealthier. It’s not clear that competition was so much improved. It’s definitely raising question about what is ultimate outcome, but what is clear in our industry, keeping as it is today, we’ll start to have a very significant impact.
Because if you don’t get exits, if you don’t get cashback from the investment, you cannot reinvest it in new investment. You cannot take risk, thinking that there could not be an outcome in terms of selling the business. 90% of the outcome is selling the business versus IPO. And by the way, IPO have been more rare, because it’s too taxing to go public. It’s too risky and not enough of rewards because of the regulatory environment of the past 15 years. What do you do? Do you stop the whole innovation pipeline that has been the core of the success of the US this past 30, 40 years? When you think about it, this is actually very dramatic. I think we have not seen a dramatic impact yet, because this is quite recent, what happened. But if we got one more administration playing this game, I’m actually extremely worried about where the tech economy is going. As you say, the big ones, the Apple and Google of the world, they would be good. But the rest of the ecosystem changing them? Good luck.
I think that’s the key issue that we have, and that has happened when antitrust has been very forcibly enforced. Moving to privacy and the digital divide, I don’t know if there’s a very strong view on what happens on that, but you want to share the SpaceX story?
I think here, especially on the digital divide, there was a special program from the Biden-Harris administration to provide high-speed broadband to rural areas. I think there is real value to provide last-minute connectivity, high-speed to places that cannot get it easily. However, what’s very scary is actually this program has disqualified SpaceX to provide a high-speed broadband access and be part of that program.
This was the Internet for All, the 65 billion thing?
It was a very big program spend, that’s for sure. And to be clear, this program has delivered, I believe, near zero in terms of connectivity after three years plus in activity. We talk about government waste. I mean, that’s one of the best example you can get in terms of government waste. But to think that not only such a total waste, but it actively excluded the best place private companies to deliver on this program is really insane. On top of it, when you think about it, it’s a program that was not needed because actually, private forces were at work to solve this problem, and the way to solve it was not to lay down miles and miles of fibre to nowhere, but to use space as a communication backbone if you want to go into more rural or areas with more limited access. Because fibre is workable in dense urban areas, but it’s not workable in extremely rural areas. You had to add another approach.
For me, what’s interesting is that private market forces through SpaceX, I mean, saw that and saw that opportunity and worked on it. Instead of saying, “You know what? We are going to use the best provider for this, if we want to add an additional layer of subsidies.” No, they didn’t use the best provider, and as a result, they have nothing to show for, except paying some companies to lay fibre to nowhere. It’s very shocking because when you have a microscope to go into some programs, you see how bad it can be.
Yeah, I think on the digital divide, obviously, President Trump, when he was in power, did a few things, but not significant. I think he was trying to definitely reduce the regulatory oversight capabilities of the FCC. He didn’t invest much, from what I know. The only number I know for sure is 86 million to expand rural broadband through the Department of Agriculture. To your point, I think he was like, “Let’s let the market figure it out and just go after each other and get it.” I have to confess that the telecom market in US baffles me. That I pay the bill that I do, living so close to San Francisco, is mind-boggling to me. It has to do exactly with the fact of what you were saying. There’s no incentive to competition, and effectively, there are de facto oligopolies in certain areas, suburban and rural areas in particular. There’s de facto oligopolies. Maybe there’s a little bit of fight in urban areas, certainly on fixed internet access. But then I can only get high speed from Comcast Xfinity where I live. I can’t get it from anyone else. I could try DSL, some variant of DSL from AT&T.
I could try SpaceX as well as a back play, but it’s still not ideal. I love to have options, but I don’t have amazing options. I’m not part of the digital divide issue. We can afford internet and pay for it, and it is what it is. It’s just too pricey, it’s stupid, and it’s not competitive. We’re not here complaining. It is a first-world problem in that sense, but the market is messed up. It’s messed up. It’s too expensive in general, et cetera.
I think you’re right. Coming from Asia or Europe, when you see the prices for fixed internet broadband or for mobile wireless, the prices in the US are insane. I’m not even going to compare it to India prices, where it’s probably the lowest.
Telecom is a classic example of a regulatory capture. You were mentioning they split into all of this, and then it all came together, and it’s bigger. It’s like the Terminator, right?
Yeah, that’s an interesting comparison.
Just quickly on data privacy, just a couple of notes. Vice President Harris has supported the President’s call to action to pass federal data privacy laws, and it was linked to an executive order on artificial intelligence that their administration also put forward. We’ll talk about AI later on. On privacy, former President Trump repealed, when he was in power in 2017, an FCC rule that instilled online privacy protections for consumers from Internet service providers. That said, his administration was working on a consumer protection privacy policy in 2018 that never came to fruition. I think on privacy, it’s very unclear if any of the candidates has very aggressive thinking. Obviously, a lot more needs to be done around data privacy, but we don’t probably believe that there is a huge difference between the candidates. Maybe vice president Harris will be more protective and former President Trump will be less, but it doesn’t seem to be a huge area of a fight in terms of policy between both candidates.
Yeah. To be clear, I’m absolutely not a fan of what happened in Europe with GDPR. As expected, it went way too far, and it benefited the bigger guys, the Apple of the world, the Meta of the world. I mean, it helped them to reinforce their market position compared to the smaller guys who had fewer data and therefore could not leverage as much in order to deliver advertising. They couldn’t even work together to try to compete against the bigger guys. The end result is a total opposite of what was claimed by Europe at the time. It didn’t create more competition. It didn’t push back the bigger guys. It actually helped entrench the bigger guys who, as usual, could afford thousands of lawyers on the payroll and could go around whatever regulation is put in place and could leverage the fact that there are bigger guys in the space. They have, by definition, more data to play with. They have access. Personally, I’m not a big fan. I don’t think it has helped. I don’t think it has helped in many ways. I know Europeans are more sensitive to that, especially the Germans, for some obvious reasons in their past.
But I don’t think it’s a good reason to not be realistic about the true impact of such regulation. For me, I’m glad that both Biden-Harris administration, and Trump, potential Trump administration, will not try to go the European way.
California has done some stuff, we’ll see, but it’s a place where we shouldn’t do dramatic things. GDPR is one step too far, very, very clearly. Free speech. I know this is a pet one for you, so I’ll let you go first.
No, I think we already did actually an episode on news. Which episode was it? And the lack of truth in our news. Was it episode 54? I forgot.
It was 54. Can you handle the truth? The future of news. 54. Yeah.
Yes. You can go back to our episode if you want more perspective on what we think about truth and free speech. Yeah, personally, I feel very strongly about free speech. I think what’s key is to be able to seek the truth, to discover the truth. For that, you need free speech, free experimentation. For me, it’s very critical. Obviously, the Republicans have been way more pro-free speech. If we take a big backer, and we’ll talk later more about the backers of each side, but Elon Musk has been now officially on the Trump side, he is one of the biggest person to push for free speech, and as a result, was a target for the Biden-Harris administration of a lot of lawfare. For me, it’s very sad to see that the Biden-Harris hasn’t signed. Harris-Walz ticket are definitely way more on the censorship side, and we have seen how much the White House have pushed for control, censorship from most major news networks, social network platforms. I think quite recently, Walz have been a very public in his support of a limiting free speech. I think it was before he was a VP candidate, but that was a very scary speech he did on this topic.
Actually, I think the case has been heard by the Supreme Court, and I think they ruled in their favour, around the fact that the federal government had actively participated in influencing social media platforms in how they showed certain content above others or certain content wasn’t shown much at all, et cetera, around feedback and commentary, in particular during COVID, that was not favourable to them. It was not favourable to the position that they were manifesting to the market in terms of how the market should behave. We’re talking like this is one of these situations where I feel we need to put a little bit more of a moderate perspective.
I think free speech should be given. It is part of this country’s view, and it is part of the First Amendment, and it’s there to be enforced. At the same time, what happens if free speech promotes violence and it promotes bad attitudes? It’s whatever… What then do you do? Obviously, if it promotes falsities and untruths, there are other systems as well. People can take each other to court and all that stuff, but what’s the boundary conditions around it? I think it is a valuable discussion to have. All free speech, and we can say whatever we want is cool as an ideology, but then who has checks and balances?
If someone’s saying that’s something that’s fundamentally false, and it affects people’s lives, or it creates an incentive to violence, et cetera. I think somewhere in the middle, as you guys can imagine, I’m a moderate, I’ve said that before, would be how you need to go. You still have to accept that there are people that are going to have views that you’re not going to support. That’s life. But they do have the right to manifest it. Why wouldn’t they not have the right to manifest it?
I think that’s important to be able to have frank, open, and honest discussion. Each time a government has tried to limit that, I think we have seen the consequences pretty quickly. On this topic, you could argue that a recent example has been the UK. It feels like since a few weeks, we are closer to 1984. Happening in the UK, if you remember this book, now you get put to jail for two or three years for a comment on social media, while at the same time, bring real dangerous perpetrators of some pretty bad things in order to make space for the grandmother who express a comment on social media who has to go to jail for that for two or three years. For me, this is exactly the logical conclusion of what you describe. Once you start to put a limit on free speech, it becomes pretty bad and pretty hard, and it hits you. That’s why I’m much more on the side of being absolutely for free speech, because the other side is just too scary.
Just to be clear, for those of us who haven’t read the First Amendment recently, two threats of violence are outside the bounds of the First Amendment protection. There’s some complexity then around that. What is a true threat of violence? But it is outside the First Amendment, and there have been cases on this, and it’s gone to Supreme Court, et cetera.
It has been described very clearly. The Supreme Court has a lot of position on this topic for a long time, so it’s pretty established about what’s okay or not okay. But my take is that what’s okay or not okay as described in the US, in the US system, is where it should be, at least from my perspective. Any change to that is scary. Again, the example of even a country as close to us as the UK, it’s a scary reminder of what happens if you decide to change that. I’m not even going far. It’s very obvious what happens in some truly totalitarian countries. But the things at a place like the UK, this can happen to this level where, to be clear, people were not talking about violence. That’s where it’s scary. You realise very quickly if the law is not clear, if the law is new, it could be taken advantage by some courts.
Moving to maybe less complex issues or more impactful, maybe, but less complex, I’m not sure. Who knows? AI. There have been executive orders, actually, former President Trump, when he was in power, did have an executive order on, I think it was called maintaining American leadership in artificial intelligence.
It was a very positive order when you read it. It’s not trying to push it back, but it’s more to push it up and push for American leadership and investment in that direction.
Yeah. Then there’s the executive order for the safe, secure, and trustworthy development and use of artificial intelligence, which is done under the current administration, Biden and Vice President Harris. I think there’s a lot of discussion around protection of AI, protection of American dominance or American competitive advantage around artificial intelligence. I don’t think this is an area of extreme disagreement between both parties.
Yeah. From my perspective, there is quite a stark difference. It feels like the White House has limited capacity, luckily, to push too much legislation. I mean, its legislation is still up to Congress. But I feel that the White House executive order from the Biden-Harris administration has been actually trying to move more in the direction of what Europe has been doing, which is pretty bad around AI. I’m more worried that the mindset of Kamala Harris and our administration would be to keep going further in controlling AI, and I think for all the wrong reasons, just to be clear, I think AI is absolutely not where some doomsayers are saying it is, and it’s not close to be there. The last thing you want at this stage is to push regulation. You want the field to develop, to expand, to grow, to be successful. For that, I believe you need as little regulation as possible. On top of it, I believe there are a lot of existing regulations that if you do AI, you will have to abide with already. Let’s not add regulation until it’s proven it’s really needed, versus just listening to the doomsayers who usually have no clue about what’s happening.
On that, probably a former President Trump would be more on the side of not too much regulation, and probably Vice President Harris would be more on the other side.
Yeah, but on the trade side, to my point earlier, they’re probably relatively aligned, trade controls, export controls.
I think we might talk a bit more in the China section, but yes. Maybe one other point is that JD Vance has been very pro-open-source AI, which also I believe is a good thing. I think it’s great to have an alternative open-source AI versus only proprietary model, because proprietary models, from my perspective, will only benefit the bigger corporations that can afford billions of dollars of investment. I’m glad he’s on the ticket, at least from this perspective. Maybe on AI to finish, there is a very scary California AI bill that’s also insane. This one is really bad. It’s very dangerous. It’s artificially limiting what AI can do. They want to create crazy commissions and programs as if we are dealing with nuclear weapons. This makes no sense. This is packed by doomsayers. I’m worried, because obviously Kamala is from California, is from the California Democrat establishment. Hopefully she won’t be influenced by this mindset, and hopeful California AI bill will be vetoed by giving you some, potentially it might land on the governor’s desk, and hopefully will listen to reasons. There will be enough influential voters who will push against it, so we’ll see.
But that’s a scary development because this one might be even more crazy than the European AI bill, and that’s to say something. To be clear, this could have dramatic negative impact on California competitiveness in the US if this California AI bill is put in place. I mean, many companies might decide to California if they are involved in the act because the risk will be too high for them to stay and be regulated by this bill.
Yes. Maybe you can go a little bit faster through some of these, but crypto, it seems like Trump now is pro-crypto. The Biden administration wasn’t very pro-crypto, anti, if anything. But just to be clear, we’re investors. I have investments in blockchain companies, and we hold crypto assets and stuff as well. Just a disclaimer, so people know where this is coming from. But yeah, I think crypto is going to happen no matter what, so you might as well figure out how to create boundary conditions around it, et cetera. Obviously, the use of crypto for avoidance of KYC and all of these other things is negative. There’s a lot of money being laundered and moved around using some facilities for sure as well. There is need for regulation, there’s need for rules to be put in place, there’s need for a variety of things to be done. But on this one, I’m sitting a little bit more on the pro side that maybe things should be a little bit more positive towards crypto. At some point, have very clear boundary conditions as well. I think part of the issue with crypto over the last five, six years, also including former President’s Trump tenure, is there was very little clarity on many areas.
Is this taxable? Is this not taxable initially? Is this okay? Is this not okay?
Now we’re getting all this slew of cases being judged back and saying, Well, that this is wrong. You shouldn’t have done that. I think clarity as well probably matters most, even beyond being pro or anti. Let’s be clear, I think, on boundary conditions. The whole crypto situation, it feels to me like, obviously, we have the more positive side on one side and then the less positive side on the other. I think what we’re missing is clarity. It’s an area where being more pro-crypto, anti-crypto, question mark, maybe more pro-crypto is better for investors and the crypto people, those who are involved in blockchain. But I feel for many years, what we’ve lacked is clarity. The lack of clarity goes back to former President’s Trump own tenure in the White House and continue through the last administration or through this current administration, rather. Clarity, I think, would be a good way forward on the crypto side.
It’s clear that the current administration has been doing everything they can to destroy crypto. I guess lack of clarity is better than trying to actively destroy crypto. But I agree with you, we need both. We need to stop trying to destroy crypto without any good reason. We need more clarity so that people need to know what are the rules. I think that has been the complaints by a lot of players like Coinbase’s Brian Armstrong, saying, “Hey, just give me the rules and I will play by the rules. But if I don’t know the rules, and you try to hit me left and right without sharing any of the rules, then it’s impossible to do my business.” It wasn’t that, it’s extremely risky to do this business. That’s why many companies left the US because of that risk of being an actor in the crypto space.
There’s been a lot of post hoc decisions and rulings, and things that have happened where some of them were blatantly fraud and stuff like that, but others were like, rules were not specified. Now, I’m going after you because I think you broke rules that didn’t exist back then, which is interesting. Maybe we switch topics to the energy, electric vehicle space? Maybe starting with energy, maybe the higher level topic in terms of where they’re headed? Obviously, from a President Trump, not a renewable energy kind of guy.
Drill, baby, drill. Good. So clear on that. On the other side, we’ve had anything from the Green New Deal, and how do we scale renewable energies. Obviously, from my end, I come from a country that… Portugal, originally, that is, they surpassed 51% in the use of renewable energies within the country by consumers, so what was actually by consumers. In 2017, we had six straight days last year where all the consumption was coming from renewable energies in Portugal, 100%.
I feel in Portugal, to be honest, there wasn’t a tremendous amount of government involvement. The original company that runs energy in the country still has a gold share from the state, but it was really motivated by market dynamics, the situation in Portugal, and the use of several other types of renewable energy. Question mark on whether the polls on renewable energies is enough. It’s very clear. For example, in Portugal, we had a very large coal plant that got shut down finally in 2021, 10 years late. We sometimes get things a bit late as well. But that accounted for Portugal for 12% of all the carbon emissions of the country, that plant.
Obviously, there are big gains here. There are big wins to be had. But it’s clear that we still have dependency on petroleum and oil-based products. That’s not going to go away. From a cost perspective, it’s still pretty essential. But there needs to be a move, at least in my opinion, towards more renewable energies in this country, even more. I’m not saying that necessarily means I’m siding on current Vice President Harris’s side, but probably, again, in the middle lies the right way to go on the energy side.
It’s clear that there is a big gap on the other side. You have the Trump administration that was friendly on oil and gas, that was definitely not supportive of electric vehicle mandate and subsidies on that plan to actually keep it that way. But surprisingly enough, Elon is fine with that. From his perspective, actually, it will provide a more clean competition without any disruption in the real price of gas. I think it’s pretty stark. On one side, you have pro-green, anti-oil and gas, pro-electric cars, as long as they are made by unions. On the other end, you have a more pro-oil and gas position on the Trump side, even support for nuclear energy, actually, and fewer incentives for electric vehicles.
Yeah, and nuclear, I know you’re a huge fan of it.
France, a huge fan of it as well. Certainly from a startup and venture capital perspective, it seems to have a renaissance of sorts in the last six years in the US. If I go back five to six years. Basically, Y Combinator, all the cohorts had several companies doing nuclear reactors, et cetera. The MARVEL Project, which I think was initially sponsored by the Department of Energy, has rippled a lot of startups out of it. There has been a spawning of startups out of it. There’s funding in it. I’m now starting to see companies that are coming up for Series Seed or Series A rounds at scale. We have a lot to go, but definitely, it seems to be a bit of renaissance of nuclear in the US, which I’m sure you will welcome.
I’m French, and I think that one of the best example of a good governmental policy was a French investment going all in on nuclear in the ’70s, ’80s, which resulted in independence from an energy perspective. Mostly independent, with nuclear providing up to 70% of all electricity in France. France has been, from that point on, the most green country on Earth, probably, at least of a reasonable size country. I don’t think we have found any other source of energy as of today that is as a safe, as cheap in terms of resource, and as cheap in terms of overall cost of electricity, as long as we don’t have a long list of unnecessary regulations on top of it. These so-called regulations were just added and pushed by the green movement in order to make nuclear less competitive. What’s interesting, in terms of safety, is that with the latest generation of nuclear reactors—like the ones that are being deployed right now in China at scale, we’re talking about hundreds plus reactors—we can have reactors that are now extremely safe. Meaning, that if there is a breakdown in the reactor itself, now you have reactors that are going to safely shut down by themselves.
In the past, they used to necessitate some external source of energy to provide a safe shutdown of the reactor. It’s not the case any more. It’s actually changing dramatically the nuclear energy business model, because you have completely decreased the risk level to zero. That changes everything, because let’s not forget, nuclear is a source of energy that is non-stop. It doesn’t stop when there is no wind, it doesn’t stop when there is no light. It’s always on. It takes very, very little space. You need very little resources. Ultimately, you can even use what’s left from a nuclear reactor to be used in some other types of nuclear reactor. It can be a very, very efficient process.
Maybe switching gears to China. Now, this is actually one area where probably Vice President Harris, and former President Trump will have fewer disagreements. We have to give credit where credit is due. I think it was under former President Trump’s administration that he went after China with tariffs, and a bunch of sanctions and things that were really put in place. I think the Democratic Party, President Biden, and Vice President Harris have followed suit on it. I don’t see dramatic differences between both sides in that sense. It feels both of them are going to be basically a relatively tight point of view on how China plays in the global economy. There will be pretty aggressive trade controls on China, not only on exports from the US to China, but also from importing stuff from China into the US. It doesn’t seem super mega dramatic, in terms of policies on both sides. This is probably one of the few areas where there’s relative agreement. As we know, Donald Trump is a pragmatist, so we don’t know where this will end up. Things might change, but it seems like this is an area where they’re definitely in agreement.
Yeah, there seems to be an agreement. I would say, what’s more extreme is actually the stance of the two VPs. If you look at Walz, he apparently has a history of deep China ties, spending quite a lot of time organizing “exchange programs” in the late ’80s, early ’90s. We are talking post-China, Tiananmen Square incident. It’s surprising how long, how much time he has spent. On the other end, JD Vance has been pretty much very against China as a dominant power, so we will see. As you said, Trump started changing the view of the establishment against China in the US, and at the same time, he’s seen as a pragmatist. But it seems that he’s planning to put more tariff on goods from China that we currently have.
This is what we all want to know. TikTok. Can we keep TikTok, please? We want TikTok.
I’m lost at this stage. Who wants to stop it, keep it going? It looks like they’re both happy to keep it running for the elections?
Both elections, I have no clue. I think it’s definitely a clear question for both candidates, but I don’t think anyone is committing at this stage.
We will keep our TikTok. That’s great. Let’s move maybe to DEI and ESG. DEI, for those who don’t know what it stands for, it’s Diversity, Equity, and Inclusion. ESG is Environmental, Social, and Governance. These are measures that have been adopted throughout the world, not just in the US, both around DEI and ESG, to enforce more equity or diversity on the one hand, on the other hand, more around either socioeconomic benefits or environmental benefits, et cetera.
Some examples of this might mean some enforcement, like we see in companies that are in a couple of stock exchanges. You have to have a minimum number of board members that are female. But there are countries that have obviously put in place a variety of rules around this. Very opposed views on DEI and ESG by former President Trump. I think Vice President Harris and President Biden have been all-in on this DEI, ESG trend, and former President Trump has been all-out on it. It’s a good way of saying it.
Yeah, this is quite representative of the woke movement at large, DEI and ESG. Some of these policies have been proven in the US to be illegal. To be clear, you cannot discriminate when you hire people, when you promote people, when you fire people in the US. You cannot discriminate based on multiple categories: from sex to race to different things. That’s why some universities lost their appeal at the Supreme Court and had to change their hiring policies for new students.
For our listeners, because they may get confused, you can’t discriminate both ways. You can’t discriminate because the person is African-American negatively, but you can also not discriminate positively. Positive discrimination being also illegal is basically what was [inaudible 01:09:44] on. You can’t give a benefit because someone is African-American, Latinx, or whatever.
Yeah, because by definition, positive discrimination is going to discriminate negatively on everybody else. Let’s not forget that piece of the puzzle, and that’s what Supreme Court in the US judged upon. So yeah, very clear opposite. Of course, this has an impact on businesses. At the same time, let’s not forget, especially in the US, most of the DEI, ESG regulations were not really low, per se. It was more what some investors have been pushing, what some NGOs have been pushing, some shareholders. But there is no legislation coming from Congress on this topic.
This is an area where I think both candidates are wrong, and let me explain why. I feel the piece of the puzzle that need to fit in is in the middle. There are some guardrails you need to put in place, both on the DEI and ESG, and behaviours that absolutely are unacceptable on both ends. But at the same time, I think having too much positive leaning in or too much negative leaning out is not advantageous. In some ways, the notion that by having some of these metrics, and big corporations are saying, “Oh, I’m doing this on DEI, I’m doing this on the ESG,” I apologise in advance for the terminology, but this is like putting lipstick on a pig. Not many structural things are being done, really, by some of these corporations. They’re filling checklists, they’re BS-ing some of their numbers, they’re massaging something else. They’re using it for marketing purposes. A lot of this has come out when people are using this specifically for marketing purposes. It’s very hypocritical, because maybe they were the guys who created the problem in the first place. In certain areas, that’s certainly the case, for example, in environmental stuff.
The core remains undone. Certainly at our firm, we’re very thoughtful, for example, around diversity. That’s a topic that matters a lot to us. But it doesn’t matter to us just because we want more gender diversity, or we want more racial diversity or background diversity. It matters a lot to us because the points of view that come from very diverse team members are very valuable for us in our job. We get angles that we might otherwise lose in the analysis of a company, the analysis of a market, et cetera. In all honesty, it’s a bit of a mixed thing. We don’t have any mandates. Our investors have not forced any mandates on us in terms of DEI and ESG, in terms not only of our own firm, but also in who we invest in. On the positive side, out of the gate, our fund, currently, first three investments, founder CEO is a woman. Our first three portfolio companies that we invested in, the founder CEOs are all women. On the other hand, we’ve tried to hire—for example, for our deal team—female associates, female analysts, even female principals were looked into, and it’s extremely difficult.
It has to do with the industry. It has to do with how many people are in the market. It has to do with maybe venture capital, still needs to go through its own moment of increased diversity in talent, which we all know it’s probably true. But how can one do more than that? If we had a mandate on number of people we had that are, for example, female in our team, how would that work? There isn’t enough talent out there for us to have the pool that we need to hire from, to have full equality in terms of 50/50 between women and men, for example, on that specific field. Again, it’s difficult. It’s a difficult conversation. It has a lot of nuances to it. I think creating the awareness of it and having very aggressive guardrails whenever there are issues of discrimination, for me, is pretty fundamental.
I think we want to preclude the team to discriminate against special categories of people. However, I think you certainly want to hire, promote, and fire based on merit, and that should be the key criteria. Personally, at companies, the business I built over 10 years, it was key for me to, on one side, hire a very diverse set of people in terms of where they come from, their mindset, their approach, their nationality; at the same time, make sure everyone is properly motivated, and everyone sees we are hiring the best, we are promoting the best, and it’s a natural competition for talent. If we talk about some other topic like pay gap analysis, I still remember our new head of HR, when running an analysis, comparing male versus female, she was surprised to see a non-existent gap. I think it was less than 1%. I think that’s what ultimately happens if you are really focused on the merit. If you focus on merit, you end up, again, hiring, promoting, and paying people the same way as long as they deliver the goods. I think that’s what ultimately you will probably end up, but personally, I’m against some of these mandates.
They are not natural. You don’t want to force them.
Maybe we move to how Silicon Valley and some of the larger tech business leaders are coming in and inputting onto this election. I think very different from previous elections, certainly in Silicon Valley, a lot of polarisation. I think Silicon Valley is historically extremely pro-democratic. Whenever there were manifestations, people were, “I’m for that Democratic candidate.” On this one, not true. I mean, we definitely have, obviously, JD Vance, who’s putting money where his mouth is, I guess, because he is the vice president candidate. Elon Musk, Marc Andreessen, and Ben Horowitz are very publicly saying why they are supporting former President Donald Trump. Peter Thiel, obviously a huge backer of Trump in this first election, and has continued in this one. David Sacks and Chamath at all-in, and a variety of other people.
Yeah, Peter Thiel, and many other partners at Founder Funds. The whole team is pretty clear on this at that fund. I think we have Sequoia, Delian, and Shaun McGuire, who have been pretty pro-Trump.
I’m not sure, for example, that Marc Andreessen and Ben Horowitz represent Andreessen-Horowitz. I’ve seen Andreessen-Horowitz, general partners, signing up for VCs for Kamala website. I suspect it’s not a firm-wide view, but it’s certainly the two-names-on-the-door view, so that should matter, I guess.
To be clear, I don’t think you can do a firm-wide view.
This is the Andreessen and the Horowitz.
As big as it gets, I guess.
But I don’t think it would be fair to force anyone to vote in your team.
Of course not. Everyone should have their own individual perspective.
Exactly, to vote or to contribute. We have to be careful as well.
But this is very uncommon. I don’t think I ever remember, certainly, since the time I’ve been here. Just in a nutshell, having become American a couple of years ago, first election I’m voting on, et cetera, I have followed previous elections, and I’ve never noticed so much on, “What camp are you?” kind of thing. People are like, “If you don’t talk about it, it’s because you don’t want to talk about it.” It doesn’t mean necessarily that you’re voting Republican, but right now, there are people very specifically saying, “I’m going Trump,” right? That’s the way I’m going. That’s sort of unheard of, certainly since I’ve lived here for more than 12 years, and since I’ve been following politics in Silicon Valley for some time and tech. Very unique. But there’s also people that are pro-Vice President Kamala Harris, some notable ones as well.
Yeah, we have Rudolf Mann of LinkedIn Fame. We have Mark Cuban, now technically in Silicon Valley, Vinod Khosla of Khosla Ventures, Aaron Levie, from Box, Chris Sacca, Mark Suster, Ron Conway, even Steve Wozniak, co-founder of Apple, who have signed up a VCs for Kamala List. But honestly, it’s not so much clearly pro-Kamala in terms of big name VCs. It feels relatively balanced on the Trump side. We have also quite a few people from the crypto space like Winklevoss Brothers, Ryan Selkis. It feels pretty even. As you say, in the past, I think if you were a Republican, you would hide it, more or less, given how pro-Democrat was California and Silicon Valley at large. But yeah, I think it’s a very different trend. If we remember, in 2016, probably only Peter Thiel from Silicon Valley was pro-Trump, and I think he had to leave. He decided to move to LA first. I’m not sure if he had to leave, but he was definitely an outcast at that point. But it’s a very different game now. I mean, at the end of the day, you have the most talented entrepreneur of our time, Elon Musk, who very clearly show his weight behind Trump.
Again, to your point, which is, I don’t want to force it too much, but it is quite important. It’s not this love fest for Vice President Harris as a candidate in Silicon Valley as everyone probably would have expected it to be. If I had to hypothesise on the factors, one is the whole tax situation, in particular, the unrealised capital gains situation. I think that’s a super big deal for VCs and for startups here. It matters, right? It matters tremendously.
All the other taxation effect: How are you charging the things and capital gains? How are you taking them into account? Et cetera. Then, maybe second order, maybe the whole antitrust situation, and where the current administration has been, how aggressive they’ve been, et cetera. I do think that those are probably two of the largest levers at the table right now that are tilting things more towards former President Trump than one would assume in Silicon Valley. In Silicon Valley, you assume most people are going to go the other way, and… There are some shocking things. As I said, the Marc Andreessen and Ben Horowitz thing, we knew some of their leanings, but publicly? This is a huge deal. It’s very big deal.
To be frank, I feel it’s time that people are not afraid to share their perspective on backing one candidate, one side or the other. I mean, 50% of the country, more or less, is for Trump, 50% is pro-Kamala, at least from the voters. I don’t think it’s okay that you have to hide yourself, that you are a pro one side or the other. Of course, it’s better if you have arguments to defend your position as usual, or to explain it. But at the same time, why one side should have to hide itself, especially at a time when, to be clear, as you just said, this tax unrealised capital gain has the ability to destroy this tech industry. I guess every side has some issues to deal with in the sense that I don’t think anyone is perfect.
The implications for the rest of the world, we discussed China already a little bit. Obviously, there will be more of an antagonistic perspective on China going forward. Yeah, maybe not a huge escalation, but maybe the same line that we’ve been in before. Obviously, it depends on who gets elected. If former President Trump is elected on certain aspects of, for example, taxation, it might be more beneficial for people that are quite wealthy, millionaires and above. Although the US has a lot of millionaires, someone was telling me this the other day, some pretty ridiculous numbers. Someone was telling me, I don’t know if this number is true or not, so I would fact-check, but that there’s one million Americans that have an asset and net worth above 10 million, and that’s mind-boggling to me. Anyway, if, for example, in that case, on the taxes side, there might be a little bit of an exodus of millionaires or very wealthy people outside of the US if there’s aggressive taxation. If there’s taxation on unrealised capital gains, I do think over the medium to long term, it will affect Silicon Valley, and it will affect how Silicon Valley can become and be still the centre of gravity of tech of the world.
There are some implications around that as well. We talked about immigration policies. And on that, obviously, Vice President Harris, if she’s elected, probably will be a bit linear or more pro-immigration than former President Trump. That’s probably a little bit more advantageous to Silicon Valley. But the rest of the world will have the effects of that. Everything that affects negatively Silicon Valley or the US in tech affects the rest of the world positively and vice versa. In some ways, the discussion you can have right now, you can take your own conclusion conclusions on who do you prefer to be elected. If you live in France, or if you live in Portugal, or if you live in Japan, or in Korea, or whatever. It’s a little bit of an à la carte decision in some ways.
In terms of our take, I think we just wanted to make this episode to try to clarify the points of difference between the two candidates in terms of what impact they might have for the tech ecosystem. As you started the episode with, I certainly agree that all the points, when you vote for a candidate, are not just about the economics and your industry you work with. But we felt it was important to try to highlight these points, given the importance of the presidential election for the US, and by extension, the rest of the world. This is it for today. Thank you so much. Thank you, Nuno.
