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Venture Blues
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Speaker 3
Hello, everybody. It's Friday, April the 25th, 2025. It's that time of the week of Friday, time for our That Was The Week Tech Roundup. And this time, maybe we have some... Glints of sunlight. Keith is talking about venture blues, but there may be a silver lining, and there's a lot of silver linings in the tech news this week. My interview of the week is with Peter Layden, who believes that Trump is unintentionally making America great again by essentially destroying the Republican brand. Peter Layden is the author of The Great Progression, an excellent sub-stack newsletter and believes that he's a former Wired editor. He's based in the East Bay, and he believes that we're on the brink of a reinvention. He talks about America's 80-year cycle. Happy Friday. Is this reason to rejoice? Is Peter Leighton's instincts right? Is Trump destroying the brand and is America about to go through one of its remarkable 80-year cycles?
Well, I like his optimism, but I've got to say that the chances of America looking anything like the American he thinks it might look like are very low. His basic point is that America has reinvented itself multiple times, going way back in history. And he's not really right. The America that we know is very specific to the post-Second World War era, and its lifespan compared to, say, the British Empire has been quite short.
The reinvestment required to do what Peter says is not on the cards. He's really arguing for a complete remaking of the American fabric in terms of what it produces and where value comes from. And you just don't see it happening at all. So I think... I think he's right about Trump. I mean, clearly, you know, Trump's long-term historical status is in decline almost daily. But I don't think that necessarily leads to the rejuvenation that he's talking about. But I'm interested why, you know, what you think. You talked to him, I didn't.
Well, I'm relying on you, Keith, to be cheerful. There's supposed to be a glint of sunlight in your newsletter, Silver Lining. We'll come to Venture Blues in a minute. I mean, you're always the cheerful one. Now you're writing it off. My thought on Layden is, like you, I hope he's right, and I'm encouraged by his cheerfulness. I think... One of the problems, to be a little bit more specific, is he sees California and Silicon Valley, Northern California in particular, as leading the charge. He sees some of the new politicians or perhaps old new politicians like Gavin Newsom and others leading this. But there's just not much evidence when you think, for example, of Northern California or California's failure to establish high-speed trains in comparison to China. For all his wishful thinking about American reinvention, the evidence just isn't there.
Yeah, I mean, I don't think it's any fault of America, to be honest. I think it's systemic in that an aging economy, in order to give rebirth to itself, has to do the innovators dilemma. You have to basically throw away the old and rebuild from the beginning. And that's super hard to do. There isn't a country in history that's ever done that. So the likelihood that America will break that trend is very low. You know, the Roman Empire is not coming back. Ancient Greece isn't coming back. The British Empire isn't coming back. And America at its peak isn't coming back.
And not even Manchester United is coming back, Keith.
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AndnotevenManchesterUnitediscomingback,Keith.
Speaker 1
Oh, that could be one that will change the records.
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Oh,thatcouldbeonethatwillchangetherecords.
Speaker 3
And yeah, I tend to think you're right, although I would strongly encourage, of course, everyone to watch my interview with Leiden. He's a lovely guy and he's full of enthusiasm. He's a bubbly character. Another bubbly character, although he's not bubbling quite as much as Peter Layden, is Thomas Friedman, longtime New York Times columnist. One of the pieces that you link to in this week's newsletter, Keith, is how Friedman's description of himself politically, he describes himself as a Waymo Democrat. And I guess, in that sense, Peter Layden is also a Waymo Democrat. So... Maybe if you add Friedman to Leyden, there's something there. Is there an opportunity for Waymo Democrats now in the America of reactionary Trumpism?
I like the phrase he's coined. I mean, it basically implies a Democrat that focuses on economic progress, not culture wars, if you will. So I like the framing.
And I also think if America does have a hope, It is in leading the world on innovation and transforming human experience due to, I use the word technology, but when I use that word, I'm not really describing things as much as what we collectively people can invent to make our lives better. I do think America, that's its primary chance, but not in a competitive sense. I think there's almost no chance that China won't also do the same. And China will possibly do it at a greater scale and faster. So America is, it's not a one-dimensional world anymore. It's a multi-dimensional world. America can definitely progress and be a big part of that. It just can't be number one.
Well, it can be co-number one. You're in Palo Alto. Are there local politicians, Keith, who you think are beginning to pioneer a way more democratic ideology? I mean, if they're not coming out of Silicon Valley, then they won't come out at all.
I don't see them. I mean, you look at Gavin Newsom.
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Idon'tseethem.Imean,youlookatGavinNewsom.
Speaker 3
The current governor.
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Thecurrentgovernor.
Speaker 1
Look at Newsom. His primary work in the last few months since the election has been to agree on the trans issue. I mean, it's opportunistic politicians looking for favor as opposed to doing real things. So I don't see this Waymo Democrat yet as a trend, but I do know that Friedman isn't the only one in that camp.
And then Ezra Klein and Derek Thompson, their book, which has been pretty influential. Klein and Thompson and others, and I've had a number of their people on the show, they're all writing books about the problem with changing America. dysfunctional nature of the country. The fact that it's so hard, for example, to build a high-speed rail connection between San Francisco and Los Angeles. I think they built about 50 miles and in the same period spent billions of dollars. The Chinese have built thousands of miles of high-speed rail. So the challenge for Waymo Democrats, to borrow Friedman's term, is to reform regulation or government to enable these re-architecting of American economics and society, rebuilding homes, high-speed rail, all these other essential things. And I guess the problem, if you like, with a Waymo Democrat is that Waymo is owned by Google. It's a private enterprise business.
But isn't it ironic that those very same people are strongly in the anti-Elon Musk camp, but if Doge represents anything, It's the attempt to clear away bureaucracy and regulations. They're not, though.
I mean, I don't know how much you listen. I listen to the Klein show quite a lot. I think he's pretty good. They're not in the ante. I mean, they're not crazy about masks, but in principle, they agree with a lot of the Doge goals. They're not big fans of some of the things that have happened, sort of the cruelty of it. But on the other hand, they recognize there is a need, a profound need, to reform government.
Yeah. I mean, that whole narrative around China's a centralized authority with the ability to just decide to do something and then do it without any friction, and America's a democracy, therefore people have a say, and that slows things down. It's interesting how irrelevant that is to the problems of the age. The problems of the age are really transforming economic realities. That's the primary number one goal anyone should have right now to allow of wealth production so that people can live better lives. And those of us with kids in late teens or early twenties know that they are massively challenged to imagine a life that's even as good as their parents due to those economic challenges. So I think Friedman is fishing in the right water
Well, I'm sure I'd be pleased to hear that from Keith Teer. And meanwhile, there's lots of good news. I'm looking around for good news from your newsletter. You've got a lot of pieces. Hamish McKenzie from Substack believes that a new media order is emerging. Of course, it goes without saying it's coming from Substack, where he is the founder. But I think there's something in that we put this out on Substack. We both have Substack platforms, accounts. I think it's an excellent platform. And I think there's all sorts of interesting things happening on the media front. It's easy to gain to be dismal and pessimistic. I know you're a big fan of Hamish McKenzie. You've known him for many years. What do you make of Substack's progress in this latest piece?
The latest piece is trying to associate Substack with the new media order and it's pretty unitary, as in there is only one new media order and it is Substack. Surprise, surprise. And he frames it in the context of the annual White House correspondence dinner that both Trump and the comedian who was due to play are not going to be there. And Substack are putting on their own party in D.C. to clash with it on the same timeline. You know, I think it's...
In other words, Hamish, if you're watching, Keith Teer is writing you off. Maybe he should throw you off your platform. You're going to get thrown off the platform, Keith.
that's why you've always, as a startup entrepreneur, that's always been your shtick about grandeur. You've got to think billion-dollar companies, even if it's really only worth $100,000.
Yeah, well, exactly. You have to think backwards from the end. As we will come to at the end. But there has to be a path. You know, I've done a lot of startups. I always start at the end. And unless there's a path, that is to say a series of things you can execute against to get you there, then the end isn't available to you. And with Substack, because it's based on subscriptions and you can only pay for so many subscriptions, there is a theoretical scaling issue with that model that may mean it's a perfectly great business, even quite a big business. but not a game changer in the way he wants it to be.
Well, speaking of ends, things never end, although, of course, Francis Fukuyama peddled the idea of the end of history and has been forever mocked by it. Fukuyama is cheerful this week. He, on persuasion, had an interesting piece about my chat GPT teacher. Fukuyama teaches at Stanford. He's an example of the old intellectual elite. And yet he acknowledges his use of chat GPT, helping him think, helping him write. Is this again, Keith, reason to be slightly cheerful that... The old guard is coming around to recognizing the value of this new technology and not just writing it on.
Everyone's younger than you, Keith. No, I'm joking.
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Everyone'syoungerthanyou,Keith.No,I'mjoking.
Speaker 1
You're allowed to make fun of my age. It's fine.
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You'reallowedtomakefunofmyage.It'sfine.
Speaker 1
Exactly. So he actually used code to move a database from an old computer to a Linux computer, and ChatGPT basically did it for him. And so he's a bit like I was when I first started using AIs for coding. He's thrilled at the fact that he could achieve that goal. He's just thrilled by it. So hats off to him for being so excited about having achieved something that he probably couldn't have done without ChatGPT. Thought it was good.
Yeah, and of course, he published on Persuasion, which is another interesting platform, does pretty well. I think it operates off Substack. So lots of things to be cheerful of. Of course, there's always miserable people on your links this week. Paul Krugman, who seems to always be miserable, has something about Trump's cultural revolution. I know you're a big fan of Krugman, who, of course, now is distributing his work post-New York Times on Substack. What is Krugman saying about Trump's cultural revolution?
You know, he was in Portugal when he wrote this, and I think Portugal has the ability to make you start to ponder abstractions. So this is basically depicting Trump as the equivalent of Mao during the Cultural Revolution, as in he wants to kill the past. just like Mao did and like they did in Cambodia.
Yeah. And so he, and by the way, I'm not that much of a, I'm not actually anything like a fan of Krugman's. I like Friedman much better than Krugman. Krugman, it seems to me, has jumped on the, you know, low blow anti-Trump democratic bandwagon, which is, is pointing fingers and being superior. It reminds me of Hillary Clinton's The Deplorables. It's not Lena Kahn.
We're not going to blame Lena Kahn, are we, Keith?
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We'renotgoingtoblameLenaKahn,arewe,Keith?
Speaker 1
No, I think we can blame Hillary Clinton, though, for The Deplorables comment. And he really does look down on normal people and sees himself living in a superior universe. And, you know, so I'm not a big fan. He's not a Waymo Democrat, then? He's definitely not a Waymo Democrat. He's more of an old-fashioned Keynesian Democrat, I would say. And I like Keynesianism. I think there's a lot to be said for Keynesianism.
Well, speaking of Waymo Democrats, as I mentioned, Waymo is owned by Google. It's one of their more successful initiatives. Lots of news about Google. You wrote them off last week, but their numbers were excellent. They were, yeah. The stock went up about 20%, which is good from my household's point of view. Is it a bit early then, Keith, to write Google off? You have a piece from Casey Newton suggesting they're on the brink of a breakup. Lots of news about OpenAI and even Yahoo buying Chrome if the government forces Google to sell Chrome. Are you beginning to think it may have been a bit early, given Google's numbers this week?
Well, their numbers were, you're quite right, exceptionally good. They had a 43% profit increase. you know, based on last year's same quarter. And it was all driven by search, amazingly. So it looks as if their AI integration to search, people are noticing that they now give answers at the top of the search result that come from Gemini. It isn't anywhere near as good as perplexity, but it's better than it used to be. And that seems to be driving some numbers.
So maybe I was... Well, really, Matt, you always say that about Google. You always say they're no good and then their numbers come out. Does that even matter? Most people don't even notice these things. It's good. No one's going to use perplexity. I've tried to use it. It's complicated.
Actually, Perplexity is off the charts doing well. Its numbers are very high. Not only that, it's about to release its browser as well to compete with Chrome.
I think even Trump would bring Lena Kahn back on that front. Yeah, so there's going to be some interesting M&A stuff. I mean, do you think that this Chrome thing will actually happen?
To me, the whole thing is bizarre. I mean, the case was about advertising platform, you know, the exchanges. And the remedy is to do with Chrome. That's so weird. I don't think Google should have lost the case in the first place. I don't think it should have been. put on trial, actually, never mind, lost the case. So I don't think this breakup makes any sense. By the way, Chrome is open source. It's not even Google. Google doesn't, you know, proprietorily own it. There's a whole project called Chromium, and almost every browser, including Microsoft's Edge browser, is built on top of Google's open source version of Chrome. So this is an area where Google is a good actor. So the whole thing makes no sense.
I mean, speaking of Waymo Democrats, Friedman's term, could Waymo begin to become an increasingly valuable, I mean, its revenue is still relatively small, but as it grows meteorically, I mean, now we all use it in San Francisco. Do you have it in Palo Alto?
And as it, emerges as we can drive to the airport no one's going to drive themselves certainly no one's going to use uber if you can use a waymo instead you have to talk to the
driver yeah look all through all three of them and by three i mean tesla uber and waymo they're all going to be offering this this service waymo's limitation is they have to build jaguar cars that cost well over $100,000 per car. And so they have huge capex. Tesla, every single Tesla on the road will be able to be one of these. Uber this week announced to deal with Volkswagen to do self-driving buses. You know, the Volkswagen kind of the old style camping van.
Yeah. So there's going to be a lot. And Waymo's certainly going to be a player. But I fear that Waymo's business model might be requiring too much capital expenditure.
So there's lots of reasons, Keith, to be cheerful, aren't there? I mean, lots of good things happening. You know, we can't read New York Times headlines and be miserable all the time.
Yeah, no, my editorial actually is about the challenges faced by venture capital structurally, which is obviously... not of interest to a lot of people, but it is the case that this week there are lots and lots of articles by venture capitalists explaining why everything they thought was true isn't and they're going to have to change their thinking. And so you could consider that negative. The reason I put cloud silver lining is I think venture capital has always been structurally challenged. And the only new news is that they're beginning to recognize it themselves. And that usually is the beginning where a rebirth can happen on a completely new basis. So I think that is good news, but it's good news that comes out of a kind of a sour feeling.
And if it gets dissing, if the links get cut with Google, then it doesn't have any value. Although it's a nice browser. I mean, I like with the Google search engine, I just use it because I'm familiar with its aesthetics and architecture. Yeah, it's convenient. Well, speaking of reasons to be cheerful, your startup of the week is YouTube. It turned 20 this week. Got a lot of press. I mean, it's a remarkable story. I remember in my book, Cult of the Amateur, which I wrote almost 20 years ago now, I mocked the Google podcast. acquisition of YouTube, which explains why no venture capitalist would ever hire me and I remain very poor. It seemed at the time an absurd acquisition. And now it's I don't know how you break down Google value, but it's a multi trillion dollar company. YouTube is worth hundreds of billions of dollars.
Well, you know, it has an audience entertainer kind of core, which isn't the same as Facebook or LinkedIn. So it's different. but the number of people that use it and the size of the audiences of some of the people producing the content means at a human level, it dominates the Earth's entertainment time. That's a big statement, the Earth's entertainment time.
Keith, I know Mike Arrington doesn't like to hear this, but you were one of the co-founders of TechCrunch. I know that you used to know the YouTube founders. before anyone even knew what YouTube was, perhaps before even they knew what YouTube was. Tell us about your memories of the foundation.
Yeah, well, so Mike used to, in the early days of TechCrunch, for the first couple of months, Mike used to run barbecues at his house. Yeah, I came down for a couple of those. And yeah, I think the first one had about 20 or 30 people. After the fourth or fifth one, it was like 1,000 people. And at the very first one, Chad Hurley, who was raising money at the time, or trying to, with difficulty, it should be said, stood up on a sofa and pointed his laptop to the room and demoed YouTube to about 20 people, along with the founder of one of the radio stations, the aggregators. I forgot what it's called now, beginning with P. Anyway, Chad was there, and he was just a regular guy launching a Web2 company where he could upload videos to the internet. Literally within two months, he was acquired by Google for a billion dollars, I think it was at the time.
Which I mocked, or I certainly mocked, which was perhaps the smartest thing. I mean, the couple of things that Google, certainly amongst the smartest thing Google has ever done.
Exactly. And it was not clear, I will say this. There was Web2, which was being defined at that time. Mike and I helped define it through our community's labs that we ran together. Web2, at the core of it, was the separation of content from the point at which it was originally published. And Yahoo was, in our view, the loser, because Yahoo was a portal where the content and the place were always going to stay together. So we saw this world where content would not be fixed, but could travel through embedding and other forms, RSS feeds, the like. And YouTube really grew because of embedding, because you could upload a video and you could publish it anywhere.
Right. It's amazing that we mentioned earlier Yahoo is still around, eyeing a Chrome acquisition 20 years after or 25 years after its glory years. Although, Keith, you perhaps are looking at the past with rose-tinted glasses. You and I were involved in a video startup, Santa Cruz Networks. We could have been YouTube, couldn't we? We existed before then. We saw the value of video. I guess we weren't alone. How did Hurley figure out video where everyone else knew it was for real? I mean, we were the sister investment of Skype, the audio platform.
Look, you have to remember in 2005, the iPhone hadn't yet come out. So there were not handheld cameras. There was like Sony cameras and Canon cameras. And you could make videos using those old-fashioned cameras. And uploading it involved transcoding it and then uploading it. It was quite a big effort to upload a video. And so 2005 was not a time when you would have thought video was at yet You know, it wasn't yet time for it, really. But he got ahead of the curve, and it was nice enough. People chose to try and do it on a great scale.
Yeah, it's interesting that, I mean, the Justice Department's talking about splitting Facebook out and taking Instagram away, talking about taking Chrome away from Google, which doesn't seem to me to be that big a punishment. No one's talking about taking YouTube away from Google, which would be a very significant punishment.
Yeah, I mean, Google is really three core businesses. It's YouTube, Search, and then Google Workplace with docs and... Well, and AI, of course. AI is more not a business. They don't make money from it yet. They make money from the other three.
No, not a skeptic. I just think they're challenged to maintain cost per click advertising in a world where the web is used less and less. Search is used less and less. We already have apps. Soon we're getting AI. So they're going to have to reinvent themselves. I'm not down on them at all. They could completely achieve that. but they can't just keep on keeping on doing the old stuff.
Well, we shall see. I'm cheering you up, Keith. You're usually the one who's cheering me up, but you seem a little miserable today. Has something happened in your life? Have you been having Lena Khan nightmares? No, everything's good. All is good. Well, finally, we'll get to your post of the week, which I have to admit, which is not rare for me, that I didn't understand this at all. The dark night about working backwards from the outcome you want. What does this mean and how does it fit in, Keith, to the theme in the newsletter about Venture Blues?
Well, silver lining is a word that is attempting to capture an end result that you would think would improve things. And what Gary Tan, and remember, Gary Tan is the CEO of Y Combinator, so he's advising startups how to think about a startup. And working backwards from the outcome you want, is what entrepreneurs do. Very different to business managers. Business managers work forwards from today and figure out what to do tomorrow. And the very best business managers execute day to day, week to week. They may have strategies that last more than that, a year maybe. But entrepreneurs is completely different. You start by imagining the end, both in terms of physically, what it is you're building and who will use it, And what will they pay for it? You also think about the end financially. What could it be worth? And then you create a business plan or a roadmap starting from today with the goal of making that end come to life. If you don't do that, you don't have what in startup land is called a true north. You don't really have a place you're headed. And you can't articulate to an investor why they should back you because you can't tell them what it is you're building. except for maybe tomorrow. So working back from the end, I've always done it my whole life, just intuitively I do that because I can't spend five or 10 years on an idea unless I've thought it all through.
in all seriousness, though, isn't this one of these business school truisms that are fine in theory, but in practice, let's go back to Chad Hurley. YouTube is 20 years old today. You mentioned that 25 years ago, Chad Hurley used to come to the TechCrunch barbecues in Mike Arrington's yard. He had no idea of what YouTube could be, had no idea of even selling it to Google, let alone it becoming the dominant entertainment platform in the world in its remarkable 20-year history. So isn't this stuff always obvious in retrospect?
Well, firstly, it isn't true what you said. He really did have an idea. Oh, he did? By the way, I met Jeff Bezos at Rester Dyson's conference in the early 90s, mid-90s. His vision for Amazon was already way beyond books. He thought through the whole thing. And when Kleiner Perkins invested in him, it wasn't in books. It was in the end game. So, and it isn't a business school truism. I mean, to be honest, very few people are able to conceptualize an end and then execute towards it because they think it's BS, the end. Most people have taught themselves out of it because it's too grandiose to think about it. But in fact, if you're going to change the world, you have to think about it. You know, when de Gaulle thought about Europe after World War II, he had to have an idea of something beyond France already in his head. And so I do think this is not received wisdom and it isn't normal. It's quite unusual to do it.
Well, let's end Keith with an assignment. to do what you're saying, to work backwards from the outcome you want when it comes to Waymo Democrats. You and I are both Waymo Democrats. We both believe in a degree of social justice, but using technology. How should Other people who want to make the world a better place, who don't like Trump, how can they work backwards from the outcome we all want, which is an efficient society, a high-tech society, but one that recognizes some degree of humanity and decency?
Well, I think once you start describing it, it sounds a little bit utopian, and most people will mock it, but given what's happening with AI and with agents especially, the end in a, let's say, a five-decade framing, the end is where human beings live without working, live well without working. And so the puzzle is how do you... We're saying you're not driving with Waymo. Waymo's just a small bullet point in this narrative, but it's how do you channel the massive abundance of wealth that automation will produce to benefit everyone? How do you do that? And if you can do that and everyone is happy because they have everything they need, governance, small government becomes inevitable. So even Republicans will celebrate way more Democrats if they can boost wealth to the point where government diminishes down to nothing or close to nothing. And I think that is the vision. And that means the Democratic Party has to abandon the class struggle, which it barely has anyway, but let's assume it does have a little bit of class struggle, unions versus rich people at its core. That Elizabeth Warren Democratic Party has to be...
It needs to be destroyed and replaced by this way more Democrat, for want of a better term, where the future makes all human beings better and wealthier and the benefits of innovation lift up the whole of society.
Well, it can't happen just in America because the scale required to deliver that is global. It will happen everywhere. America may well be the catalyst. Open AI today is used everywhere in the world to greater or lesser effect. And in a growth context will produce a lot of value. It's possible open AI will produce more value in China than it will in America. Not for itself, but for human beings. And so that's the second part of it, which is you really have to think globally if you want to imagine the end game. It doesn't mean you can't also think about America, but you have to think about America in the context of the world. And not as a combatant, but as a member, if you like, of a global community.
Well, there you have it from our show's resident true northerner, Keith Teer. How to transform America into a Waymo democracy. I think it's an interesting conversation. Keith, we will certainly return to many of these themes. I'm going to be in London for... the Europa Cup semifinal on Thursday. So we're not going to be able to do a show next weekend, but we'll do it the following week. So keep well, Keith, keep thinking backwards and thinking big thoughts. And we'll talk in a couple of weeks.