The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:51:10 · Harry Stebbings, Brendan Foody
[00:51:10] S1: My next assumption was when you talk about orders of magnitude more when you talk about spending more on compute than you will on salaries, why didn't we just put all of our money in NVIDIA? I know it [00:51:20] S0: sounds supercilious and glib. I think it's not a crazy idea. NVIDIA is obviously a phenomenal business that will continue to execute super well. The only caveat is that it feels like we're starting to move towards a multi chip future, where obviously Cerebras is executing well. I'm good friends with the etch guys. Most of the labs are building in house chips. And so I would guess that in five years, it doesn't feel like NVIDIA has quite the same monopoly, but that's okay, because even if they only have 30% or 40% market share in the largest market in the world by far, that is the world's most valuable company. [00:51:57] S1: Speaking of the world's most valuable company, you're seeing this concentration of value towards the top eight names more than ever before. 84% of the year's state rally was driven by the top 10 names. Do you worry about the concentration of value to such a small number of players?
00:51:57 · Harry Stebbings, Brendan Foody
[00:51:57] S1: Speaking of the world's most valuable company, you're seeing this concentration of value towards the top eight names more than ever before. 84% of the year's state rally was driven by the top 10 names. Do you worry about the concentration of value to such a small number of players? [00:52:12] S0: Maybe to some extent, I definitely worry about how do we smooth out the benefits to society? Like how do we ensure that every enterprise and every individual is able to reap the full benefits of AI rather than just like a handful of people in San Francisco? But ultimately, I also think that there is some natural dynamic associated with capital allocation where it is going to be more valuable to give the compute to an anthropic where they have the marginal demand and can use that right away versus a less successful company that might not be able to create the most value with that. So I think that it's probably good from a capital allocation and efficiency standpoint, so long as we are able to manage the societal implications of increasing inequality. Speaking of increasing inequality, you wrote an essay about, and this is taken from your Twitter, how we should eliminate income tax for the bottom half of Americans. [00:53:11] S1: Talk to me about that.
00:53:11 · Harry Stebbings, Brendan Foody
[00:53:11] S1: Talk to me about that. [00:53:12] S0: Well, believe this very strongly. I actually wrote this essay as a research paper when I was a freshman in college. It was one of the few productive things I did in college. And essentially, the thesis of this was that the largest positive externality in the economy is jobs, right? People talk about all of these economic theory of how we have negative externalities like carbon, or like smoking, or whatever it is, we should tax those. But on one hand, the largest positive externality is jobs. Yet on the other hand, the way that most economies structurally collect income is by disincentivizing jobs, both on the income tax side by taxing the individuals, as well as on the payroll tax side of taxing the companies. And as we move towards a world where there's increased job displacement, increased uncertainty around how many jobs are there gonna be, especially for the bottom half of Americans, I think that this is going to become extremely problematic. And so I would suggest that we move towards a paradigm where we instead focus on taxes of things that aren't necessarily going to have a negative impact on incentives in the economy. Like one great example is capital gains, where I'm going to invest money in assets regardless. And so if there's higher capital gains tax, it's not like I'm just gonna not invest, right? And so I think that taxing capital gains, especially short term capital gains, which I
00:54:37 · Harry Stebbings, Brendan Foody
[00:54:37] S1: think is probably not as beneficial for the economy as long term capital gains, would probably be structurally much better off than taxing income. With the greatest of respects, if you increase the tax on capital gains, you will disincentivize those investors to take risk. Why the fuck should I pay more? I'm already taking a risk. I'm already investing in innovation when other people won't, when banks won't, when all the data tells me not. Now you wanna tax me more for doing that, for taking [00:55:09] S0: The thing is when investors are taking very high risks, it's generally in an aggregated way in a portfolio, and so you would tax the gains on the portfolio overall, and so even if you have a portfolio of like, and I know that you don't like to hear the capital gains tax, Harry, but... [00:55:25] S1: No, no, no, I think, and I say this with the nicest respect, it's just wrong, because you just move. [00:55:33] S0: I agree that the main thing you need to be careful about is if people would move to other geographies, because obviously that creates problems. But I think capital gains is one option. Think But I'm so sorry to [00:55:45] S1: be addicted, and you can say withdraw. That creates problems. Yeah, that's kind of the whole point. You fuck off to somewhere that doesn't have capital gains, and then you lose all the tax revenue completely. Sorry, forgive me, we live in The UK where there's the Green Party, there's this idealist movement, Well, then we leave, and then you have nothing.
00:56:07 · Brendan Foody, Harry Stebbings
[00:56:07] S0: I agree. I think that there needs to be sensitivity analyses associated with how does the increased amount of taxation cause people to just leave and reduce overall government revenue. But I think that another way of going about it is also taxing consumption of items that probably aren't the best. Like, it's crazy to me that instead of taxing carbon, we tax the bottom half of Americans. But why don't we tax carbon, right? That's like a very clear negative externality in the economy, at least in The US, that's not taxed. And so I feel like there is a lot of low hanging fruit with respect to things that we could tax without damaging incentives in a perverse way or causing people to flee the country that would be far better than taxing the bottom half of Americans. And the other thing is that it's only 3% of government revenue. The fact that it's only 3% feels like it's a very easy decision for policymakers to make in the grand scheme of the impact that it would have on people. Would you tax prediction marketplaces? It's gambling. I probably would. There's probably some value of having good prediction marketplaces for allowing people to have effective predictions of the future and hedge things within their lives and investment portfolios, but it's likely okay to tax. The thing on that point around taxing the bottom 50% is Jeff Bezos retweeted me, which I was ecstatic about. It's pretty cool. [00:57:34] S1: It was pretty great, yeah. Who's the coolest person you've met? I really
00:57:34 · Harry Stebbings, Brendan Foody
[00:57:34] S1: It was pretty great, yeah. Who's the coolest person you've met? I really [00:57:39] S0: like Jensen, and I really like Satya. I mean, so many incredible people. Obviously, Dario and Sam are incredible. But if I had to choose one person... I mean, Jensen's so cool. Right? Like the jacket, his style, he's always on point. So I would say Jensen is probably one of the coolest. [00:57:55] S1: The fascinating one I would love to ask you, and you shouldn't give the answer to this, but I think this and people have asked [00:58:00] S0: it for me before, it's very hard [00:58:02] S1: to answer, is who did you think would be amazing who was surprisingly underwhelming? And don't answer that one, it's a really [00:58:09] S0: good one. It is an interesting question. And I have met a [00:58:12] S1: couple where you're like, Wow, that gives me confidence that I can do that too.