This week on the Andrew Yang podcast.
It's so under the radar, but what I love is like I'm jonesing for this article to come out after the election. It's like 'Yang and the Forward Party just blew up Republicans' plan to keep the Senate,' or some version of that. Forward Party flips the Senate. It's going to be cool, and a very non-zero chance, like a very real chance.
Hey guys, it's me and Zach with a special midterms episode of the pod. I don't know if this is the only midterm episode we're going to do because, you know, things could happen, but it's great to be with you. We have some exciting inside stuff to discuss, some of which we're not allowed to share, but some of it we're going to dump right now. Before we get to politics, which is going to be the main topic, I do want to dig into a tweet I put out there, a post that went not quite viral but definitely took notice. So check it out. Those of you who don't care about the stuff, I'm going to explain to you why you should care in a sec, but there was a very, very big venture capital firm called Andreessen Horowitz, A16Z, you might have heard of them. They raise gazillions of dollars, and they just fired the vast majority of their 34-person talent team that was headhunting for their portfolio companies. So their pitch was, 'Hey, if we invest in you, it's not just money, we also recruit your executive teams.' And that's been their pitch for quite some time. It came out in Axios that they just asked the vast majority of that team to leave. And I took this as a very significant bear market signal because what this is is a major firm saying to their portfolio companies, 'Look, we don't think you should be hiring to the point where we're just going to get rid of our entire talent team.' And I'm pretty sure simultaneously they sent out a message to their firms, 'Batten down the hatches, there is a very, very rough time coming.' These venture capital funded companies tend to be the canaries in the coal mine of the risk-on economy. You know what I mean? These guys are investing in edgy tech, and when the tide is going up, everyone looks like a genius. I'm sure the valuations have all gotten marked up over and over again. And by the way, one thing I don't know if I shared with you, so I put this post out, it got a few hundred thousand views. And then someone texted me saying, 'Hey, thanks for putting that out because I was literally talking to those headhunters. They're trying to help me find a job, and then they said, like, I just lost my own job, so I'm sorry I can't help you anymore.' So there is an ill wind blowing, and I'll talk a little bit more about another sign of the top that just came out in a moment. But thoughts on, hey, major firm now just cut its talent team.
My sense was, on one hand, sign of a bear market ahead or choppy waters ahead. But the other one is, how many of these jobs are actually getting, especially in the engineering world, are getting either duplicative or they're getting eliminated from AI, you know? Like these AI companies.
Too is like maybe this is person light. So I want to cut to why I think this is important for just about everyone. So I was talking to my personal trainer, I do have one.
Anyway, so he mentioned something that I was like, 'Yo, that's probably not very smart.' He mentioned that the majority of his portfolio and savings are in one stock, and that stock was Nvidia.
And I said, 'Look, I'm not prone to giving tons of investment advice, but I just think that's a bad idea. And you should definitely, yeah, that's objectively unwise. And you should lighten up.' And then he was talking about it. He's like, 'Isn't Nvidia just going to benefit from the AI boom, blah blah blah blah blah?' And I was like, 'Let's just say there's some stuff going on under the covers that might make you glad you sold some.' They're like, 'If if.'
At the top. So, you know, everyone's going to get affected if the AI boom goes into reverse because some major figure just came out and said, 'Look, if you get rid of the data center spend, we go into recession.' Which is objectively true. By the way, that is true. The majority of the economic growth has been.
Data center spend. But I don't think that's sustainable. I think the bloom is coming off the rose. The other major announcement that came out was Anthropic's going to go public in November. It's going to go public at some whopping valuation, but they released their Q3 results because it's like October. So they released their Q3 results, and they did, I think the number was $16.8 billion in Q3, which was a 45% increase from Q2. Which you could say, 'Wow, that's amazing. That sounds great.'
But the problem was that that growth rate's a little bit behind what people were hoping for. And I will tell you for a fact that Anthropic has been nudging its customers and discounting tokens trying to get people to spend.
More because they're trying to IPO. I mean, that's obvious. Like you try to IPO to get.
As a customer of Anthropic, they have discounted plenty tokens.
Yeah, so so then their valuation on the private market and what they were trying to IPO at was $2 trillion. And their valuation went down by 10% on the basis of the fact that now people saw these earnings in the private market. So that might not sound like a lot. I mean, obviously 1.8 trillion still a bonanza. But this entire AI story is a hyper growth story. And so when the hyper growth just becomes normal growth, some of these valuations don't make any sense.
And you're going to see, and if I think Anthropic will still go public and it'll be fine. I have very, very deep skepticism about OpenAI's ability to go public. I've heard also that OpenAI is discounting tokens and trying to juice demand and it's also, you know, showing, let's say, non-hyper growth.
And this, so the rubber's going to hit the road, and I think the rubber is going to hit the road a little bit sooner than people might think or hope. So if you're listening to this and being like, 'Hey, how does this affect me?' It's like just like Yang thinks that we're in for a very, very rough period, that this cycle is now reaching its top or the momentum is eroding.
Very quickly. And if you're an investor, then you'll obviously take from this, so like maybe I should do something, maybe I shouldn't. If you're a non-investor, then you should still think, 'Okay, there might be some moves to make or precautions I can take just in terms of maybe you put off that home improvement project. Maybe you.
You know, maybe you just hunker down.' And I felt, look, it's not like I'm some Nostradamus figure where I don't have a crystal ball, but I just feel some obligation to share some of these data points with people that keep up with us because, you know, appreciate everyone who does keep up with us. Love you all. And if I believe something is in the works that could affect people, I just want to be able to discuss it and share.
What is the bomb that goes off? What is the pop? What is the fall? Is it Anthropic's IPO being discounted 50% from what they initially thought? Is it OpenAI not being able to go public? Like what, if this bubble bursts, is there something you're watching that would be the not the canary in the coal mine, but the actual bomb? The actual issue.
I have thought for months that the problem was going to be OpenAI not being able to go public. Because then there's a lot of money locked up in there and that they expect it to be able to get it out.
And if they're not able to get it out, then I think there are very, very significant problems.
I think that you are going to look at a discussion of do you nationalize OpenAI because some of the mega companies that are in there are going to look to the government to make them whole. I know that's screwed up sounding.
But the legitimate case they're going to make, which I frankly am very unsympathetic towards, but the legitimate case they're going to make is, 'Hey, if this spending evaporates, like you are going to see a very, very deep recession and market correction.' And those are just numbers. That's not like a, it's just if you look at how much of.
Our growth is tied up in this stuff. So I thought it was going to be a failure of OpenAI to IPO, but now I'm starting to think it could be some earlier dominoes.
OpenAI even said, 'Oh, it would be unwise for us to go public. So we're not going to go public until next year.'
But I don't think that was a choice. I think that choice kind of got pushed on them, you know? And he's acting like it's prudent.
I was talking with a friend who was an entrepreneur and things like that. He was saying being the CEO of OpenAI or Anthropic would have to be one of the worst jobs in the world right now. And I was thinking about whether I agree with that or not. It's like, okay, you're rich, but you're not liquid. You're not rich rich, right? They're rich on paper. So they're not like living the creature comforts. It's a sprint every day. You seemly I was like related to a presidential campaign where you have to have a win every one to two weeks. You have a new product every day. You're racing with not only your own country's innovators, but also you know Google and Facebook's and the biggest players in the world, but also the whole world. The legal risk is insane in that this thing could happen. You know, this thing goes rogue seemingly every couple days. And what's the end? Is AGI? Like what the end is something terrifying we don't understand. I'm just curious your thoughts on the human side of running these businesses and to me it maybe matters because there's a human being making a decision on how this thing lands, how this thing ends, you know?
Yeah, I think they've got a trillion-dollar wind at their backs. Certainly Anthropic right now, and I do know this for a fact that Anthropic employees are having meetings about personal wealth management. Like they're all looking around being like, 'Hey guys, we're about to all get fantastically rich.'
If they do go public, yeah, there's a lot of that, sure.
So that, you know, and then if you were the CEO of that organization, you also are obviously going to become a billionaire many times over, but you're surrounded by people who are going to become very, very.
Rich and waiting for an IPO.
50% of what you expect, they're still rich, yeah.
Yeah, yeah. So you have a trillion-dollar wind at your back saying, 'Let's go, go, go. Let's hit goals and get out the gates.' You know, to me, in some ways, it's like what happens post-IPO is going to be a more human question, shall we say? Because there'll be a lot of people up and down there. And I think OpenAI is in a similar situation where, and I don't know if I, I'm obviously dubious that there's a trillion-dollar IPO pot of gold waiting for those guys. But they're trying to make it happen.
Like that's, I mean, they've got literally like tens of billions of dollars in investment on the line. So that job, I would say, is extraordinarily stressful. That one would be very difficult.
Yeah, because you're feeding the story and the story is one of the biggest in business history.
And then how the story ends is very much up in the air.
I mean, it makes like the guy who put all his money in Nvidia. So what was it, a California gold rush? Like most people, almost no one made their money in gold. The people who made their money were like the picks and shovels, you know, the suppliers of the people attempting to get rich, which is the Nvidia play, if you will.
Well, so there's another company that's run into problems just now, CoreWeave.
And it turns out that Nvidia owns 10% of CoreWeave.
Nvidia, you know, because Nvidia I believe invested billions and then CoreWeave is going to spend the money on Nvidia chips. There's a lot of circular financing going on.
In the space, and at the center of it all is Nvidia. Because here's the dynamic. It's like, 'Hey, you want to buy 10 million dollars worth of chips from us, CoreWeave? Well, you don't have 10 billion, but I'm going to give you 10 billion, then you're going to pay me.' And that's been going on. Sometimes there are multiple entities involved in this practice. It's called round tripping.
Yeah, it's not a great, guys. It's not great. So musical chairs, dude. So I just wanted to share some of the data points that hit the radar this week. The big ones are A16Z laying off their talent team. Anthropic's valuation going down because their hypergrowth seems to be slowing. I do have some other data points that OpenAI is having worse problems than Anthropic trying to juice their revenue. So that hypergrowth's going to fall. And then this company called CoreWeave is having problems with its financing. So I'm going to share a joke that I actually opened the talk with the other day. I don't know if I've used it on the podcast. I'm going to ask you. Let's see. How far behind the US is China in AI?
Tell me the answer. You said this on the presidential campaign, I think.
Well, 12 hours because they wake up and see whatever we did the previous day. So there was a report by a bank called Jefferies that said that they think that Chinese open-weight AI models are going to end up being a cheap substitute for a lot of the frontier models that we spent gazillions on, and that a lot of the investment in OpenAI and Anthropic in particular is going to end up being written off. And I believe that's directionally accurate because I talked to someone at a very high-performing financial institution who said that even for them, and this is like a very rich company, even they have been swapping in open-source models for.
OpenAI and Anthropic because they're like, 'Look, get me 85% of the quality for 10% of the cost, and this is not necessarily a, like, where am I going to invest a billion dollars thing. This is like for me to just write a report or do this or do that.' You know what I mean? So that, and the token spend was significant enough even for this financial institution where they were like, 'Look, we're just not going to do it.'
If the thought is that these companies are going to rely on the retail aspect of AI, so like humans, families using it to book flights and do the calendars.
One's going to spend that.
Be a super, like the current models work great and they'll get a little better and that's fine.
There is a point, and we're at Noble, we're somewhat there, but if you're a best in bank or you're doing some really crazy modeling or heavy engineering, like yeah, the super models are going to might be worth a little bit of payment, but at the core of it what is this thing? It's a super fast calculator, computer, researcher.
Report writer, research writer, yeah.
Assistant. If that's baked into their growth projections, then I don't think people are going to pay for it if there's a free option.
Yeah, it's hard to double from 80 billion is one of the things that's like, you know what I mean? Like you just got to find another 80 billion. It's just not happening. So you know that this, the bloom is coming off the rose. Hunker down, be a little cautious on that side. Risk on is about to become risk off in my humble opinion.
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You know, it's one reason why I'm really glad to be working on Noble Mobile with you, because it's going to save people money and headaches. And I wanted to do something with you that actually solved a pain point for the average American family. So if you haven't switched to Noble yet or at least checked it out, if you go to noblemobile.com/yang, three free months for anyone listening to this. It's good for you and your family members. Email
[email protected] if you want to talk to a real life human about it. But would love for you to take us up on this because we're genuinely trying to return value to you, and the carriers are not.
I would say the big, certainly Verizon, AT&T, to me there's, they're paying their shareholders $18 billion a year in profits, and that's pretty much the reason anyone holds the stock. And Noble Mobile's doing great.
We're growing all the time, and we're a private company so we can't be putting out the numbers, but things are going really, really well. And we have some exciting announcements on that side as well upcoming.
That's why me and Zach are in a good mood and stuff.
A great mood. Yeah, business is good.
Also, if you, we hear a lot like 'Hey, I'd love to switch but I got to pay off my device,' etc. We will pay off your device relatively cleanly with free data. So if you email
[email protected], m-a-t-t, we can sort of help you do that. There's some exceptions to that because some of you guys have crazy bills, but most of the time we're able to do something pretty substantial. So.
Yeah. And one reason why Noble's doing so well is we bought a discount brand called Helium Mobile, which might be the cheapest plans out there. Now it's no frills. Noble is kind of the full Monty.
We got the full people. We got international. We're comparable to Verizon, AT&T. But if you want just the data.
If you want the best, the Helium Mobile, if you look, I mean you're talking about the cheapest plans around for the data.
Yeah, so cheap that we're not even making money on a lot of those plans. So [laughter].
But yeah, so Noble's the premium, values-based one, international, cashback, 5 and a half percent interest rate.
Brain on tools, all these things, yeah.
Yeah, and then Helium's just budget.
Give me the data, baby, which I get some people like just want the data.
Yeah, no, totally cool. So check out Helium Mobile if that sounds appealing to you. But things are going great on that side. All right. To the midterms.
Talk about politics, baby.
Yeah, yeah, me and Zach came together on politics. I'm still obviously deeply involved. Your phones are probably blowing up. My phone's blowing up. I'm attending events all the time.
I get multiple a day for sure.
As it for the record, I think I've said this on this podcast before, the Yang campaign did not sell your email and phone number. That is a Democrat DNC ActBlue situation.
To ActBlue then you have nothing to do with this, this, yeah.
I make things much worse for myself because I actually continue to donate to various, like I.
I attend events and do things partially because I've been a candidate, and so like I feel for candidates though. Obviously people that keep up with me know that I've focused on a couple of independent Senate candidates that we'll talk about after we talk about the general midterms.
Talk about it, man. What are you thinking?
It's going to be a great night for the Dems and anti-incumbents. The term that came to mind for me was 'blue wave,' but I really detest that because 'blue wave' suggests that the Dems all of a sudden have figured their stuff out and everyone likes them again, which is, yeah, they didn't do anything.
On this one. But you know who did do something? Donald Trump and his 32% approval rating. By the way, 32% is crazy low. Like it used to be traditionally if you were anywhere in the low 40s, people were like, 'Uh-oh.' I mean, low 30s, I've never even seen this before.
I mean, look, this is an own goal. It's his own fault. He got cocky after Venezuela, went to war with Iran. And now we're in a forever war. And he ran on no more wars, which is something that almost every American in the country is like, 'We've got issues here. Stop spending money abroad.' And then he did, and now we're stuck in this thing. And there's no way out. And frankly, the other thing is.
