Hi, I'm Eric Newcomer. And I am Madeline Rinbarger.
And this is the newcomer podcast.
Each week, Eric and I discuss the VC deals and the drama that
went down. Let's do it.
Here we go. Welcome back to the show.
Our Co host Eric over here has a little bit of a cold, but I'm
your. Parents, I will.
I will not be held accountable for any of my takes.
It's sort of the ideal, you know, It's like I was, I, I was
loopy, you know, who knew? I can't, can't be held
accountable for what I say on this episode.
Lots happened this week in the world of DOGE that we definitely
want to get into. I feel like this week it was
just Doge 24/7 365. They kicked off the week with
the Wired story about the the young engineers that are working
behind the scenes in the different departments.
I do think the the hostility to them being young, I I.
Yes. I do agree with some of the like
our founders father, we're, we're young.
I don't, I don't know, youth isn't the biggest critique, but
I, I don't know, that wired story to me was great
journalism. Like, I sure there was a little
spin on the ball in terms of being somewhat negative about
them, but I feel like all these conservatives will be like, Oh
my God, that Wired piece ends up being great for the 'cause you
know our cause and they never see it the other way, which is
like, I guess the piece was fairly neutral if you're able to
read it and make it around. The piece, there really wasn't
much. I mean, obviously people online
took to the the youth debate, but the piece itself was really
just outlining who these people are and.
There was a little like, you know, there are some terms of
phrase that were clearly like you knew what their point of
view was, but I. OK, fair, fair.
Within the cast of characters, you know, in the story,
obviously Luke Ferretor, famous in our world for, you know,
helping to decipher Vesuvius scrolls.
Very, very impressive. But does that qualify you to run
the federal government? What do you think, Eric?
Yeah. That's a big question.
No, I mean, what, what's the, the real question is what my, is
my view on Doge overall. I mean, certainly ingenious that
the way you're going to cut government spending is to go
straight to the payments rails, which I think is Elon's
observation in a very tech person way of going about it.
My take is one that I believe in the balance of powers and that
they're literally ignoring Congress is the first branch of
government is supposed to decide where money is going, and that
this is sort of against the constitutional system in any
normal way. So I think it's bad for that
reason. I also think the government and
all of us should be good for our word and that a lot of the money
they're cancelling is like, oh, we told you you were going to be
involved in a clinical trial and now we're going to like, is this
around? No.
Plan the USAID cancellation, yeah.
There's lots of them where it's like their clinical trials,
there's like you're depending on us for HIV medication.
And just like there's an implicit, some of these, there's
probably like an explicit contract, but some of it,
there's an implicit contract, which is we're in the middle of
something, you know, you see it through to the end.
Like, it'd be one thing if they're like, we're going to
wind these things down. But yeah, I mean, I, I've
thought in Elon's private dealings, he's too willing to
not pay rent and to be sort of a bad dealer with people.
And the government should be even more ethical.
So I I don't agree with their way of doing business, but the
larger issue is just the idea that the president should be a
CEO when we have a constitutional democracy, right?
I mean, I feel like it's, it's really an ideological clash
happening right now, right? Like this, this sort of mindset
of, you know, running the government like a business and
looking for efficiencies and flashbacks of the the Twitter X
purchase, you know, are coming back in the massive scale with
the federal government. But does that make sense for the
federal government that within the rule of law, like contracts,
how we honor them, we honor the balance of powers.
It's interesting. To I just, I just don't even, I
don't think this is that thoughtful.
Like if they were really worried about balancing the budget, you
know, Social Security and Medicare and Medicaid and
defence spending. I was gonna say defence.
Spending. Is the is the biggest one right
there and obviously that and also involves SpaceX contracts.
So those are those are staying safe I assume?
They're they're clearly, I mean, I think they've said in some
places, you know, they're they're going after, you know,
the deep state and the liberal elites or whatever, where they
are, whatever they think they are.
And this is sort of culture war as much as cutting spending
because, you know, Trump just proposed huge tax cuts that
would definitely swamp any cuts that they've done.
The debate around also who's doing the cuts was we touched on
before the Wall Street Journal had a really big piece come out
that now is just earning the ire of the entire doge sector,
including Elon Musk himself. About Marco Alez, the 25 year
old who was, you know, hired by Department of Government
efficiency, but his, you know, alt accounts got found and he'd
been posting a lot of racist memes and conspiracy theories
allegedly. And of course, that led to his
resignation, which now is doxing and a witch.
Hunt a lot of a lot of times you have to put racist in quotes,
but here's one of his lines just for the record.
I was racist before it was cool. Another one you could not pay me
to marry outside my ethnicity normalize Indian hate.
You know, it's just like. That's pretty explicit.
I don't really know what else you would call that.
I mean, you could call it ironic, but it's pretty
straightforward. Well, that's always their game
that it's like, oh, it's a troll, sort of, you know, of.
Course you fell for the bait. Why?
You take me seriously? Yeah.
And and Elon is running a poll now bring back Doge staffer who
made inappropriate, inappropriate statements via a
now deleted pseudonym. And Elon, of course, is calling
the Wall Street Journal reporter.
I think he called her disgusting at one point.
To be in the ire of Elon, Twitter is something I would
never wish upon anyone at this point.
But the story is solid. The reporting is solid.
I think again, when it comes back to this debate around, is
this doc saying when you sign up to work for the government,
you're a public figure, like that's that's the trade off you
make right there. Your information is accessible
and your history will probably be combed through because it's
in the public interest now. I, I, I think this might be Mark
Andreessenism. You know, it's just like doxing
has become such a like, it's like when I, when you're doing
it against my ends, it's doxing And, and when it's the other
side, it's, you know, something else.
I I feel like doxing has become a useless word.
It's become totally meaningless. Yeah, it's what?
What does doxing really entail? Lots of times people accuse
doing the work of journalism is doxing at this point.
And I mean the left certainly I mean deserves a lot of blame for
elevating the word doxing. Oh, no question.
Absolutely. I mean, again, this, this goes
both ways. It's just in this case right
now, it's going this way. I find Elon Musk and his network
of supporters on X and his platforms kind of sticking all
of the attention on Catherine Long's reporting at this point
and her personally with all these attacks, beyond just my
personal connection to her, we work together.
Business Insider, she's a fantastic reporter.
This is a really, really good story.
I think the implication that is maybe getting lost in this
conversation is that it's one thing when he did this as a
private citizen, but now he's working for the government.
And when you have an army of trolls that are now in some way
sanctioned by the like the leader of the free world and the
entire apparatus of the state behind you, the implications of
this are a lot more serious than maybe it was just a few months
ago. Elon is constantly saying he
believes in like transparency and we're going to have great
disclosure. And then they're upset when
there's reporting about what's going on and they're angry about
naming the people who are doing the work of government and that
they're not very transparent and they're bullying.
So yeah, I, I think he's pretty reprehensible.
The, my only minor thing is that I do think reporters are just,
we're in the arena. People want to scream at us like
we're part of. Figures too, yeah.
Certainly, I don't think, you know, Elon and Trump run a
government that's, you know, sufficiently appreciative of
journalism and that they're often trying to make journalism
less pleasant to do when I believe in journalism.
So I think good institutionalists would be
making journalism more pleasant to do.
But but yeah, they are trying to make it as unpleasant to do
journalism as possible. I think that's bad and
reprehensible. But the reality is, as
journalists, if we want to succeed, we sort of have to
tough it out and people are going to Boo at us on Twitter.
And most of the time that's basically it.
But obviously, you know, if it starts getting into the real
world that that becomes more serious.
Moving on to our next topic. Feels like a a lateral move
rather than a full recircling this whole issue Daniel Penny,
newest employee and investor at A16Z.
He's notable within the New York circles at least, of news for
being involved in an engine on the subway, yes, for restraining
in in a chokehold. Unhoused man Jordan Neely on the
subway who ended up dying from the incident.
He was acquitted from all charges regarding that incident.
Now he's investing at A16Z. An investing partner.
On the American Dynamism team, which focuses, yes, on defense,
but also government, tech, education, anything that really
touches the national interest, if you will.
DI for vigilantes isn't isn't the best subway vigilante now
maybe this is the Lib speaking isn't the best one somebody who
doesn't kill the person they're intervening on like I I feel
like the most successful subway intervener is like deescalate or
at least like stop restraining person to the point of death.
So I don't know if they're looking for a subway vigilante.
I'm sure there are many unsung heroes.
I don't really know if that necessarily makes people feel
safer if we're, you know, thinking about investing in
concepts of public safety, although obviously many people
disagree. He's been lauded by many people
online as a hero of sort, depending on where your
political affiliations lie. And my main thing about all of
this is I'm a little unsure of his investing qualifications to
be on this team. I think he certainly has
military experience and that is useful for the American Dynamism
Fund and focus, but that doesn't necessarily make one a great VC.
I could be. Wrong.
Lots of VCs don't know what they're doing.
I don't know. I feel like that's the sort of
like savvy way to I don't know why I get the strategy is this
guy is, you know, meeting with Donald Trump and like American
dynamism certainly could do with boosting its right wing
credentials in the world where the Defense Secretary is
hardcore MAGA. So I get the tactical position.
It also feels like, you know what, during the Democratic, you
know, Obama, Biden period, it's like, OK, we're going to hire
diverse people like they want and show that we're proactive.
We're going to have a diverse fund.
Now in the Trump era where, you know, white men think, oh, we
should get our due. We're going to hire the most
disaffected of disaffected white guys and give them a job.
So in some ways it is exactly the same sort of diversity style
that we saw in the last term, which is like, all right, we'll
give a handout to these guys now.
You know, I what troubles me the most is like the the violence,
the violence in this like the, you know, the right wing trolley
culture, you know, with the guy we were just talking about in
doge, you know, the real danger is if it gets sort of violent
and it shows an interest in violence.
I just think, you know, hiring somebody who, even if they're
acquitted, was clearly involved in violence.
It's hard not to think of the sort of celebrity that a lot of
right wing media made Kyle Rittenhouse to be.
It's obviously that is a completely different scale.
That is a much more that multiple people were killed,
that he was armed. It was a completely different
situation. However, there are flashes of
this where when a high profile trial comes around and gets very
politicized in this way, there's a tendency among those in right
wing media circles to make, you know, cause celeb out of people
who are charged in this case. And I think that that is maybe
overshadowing whatever his potential investing prowess
could be right now. It's one thing to make some sort
of, you know, he shouldn't be found guilty, you know, as a
muddy situation, but to celebrate somebody like is
insane. Moving on to the next Twitter X
Controversy of the week. Eric, you got a little involved
in the heat map discourse. Yeah, I've been very involved,
so. A little involved is a little,
you know, OK, I was, I was playing it down.
But I've emailed the authors of the paper underpinning this
whole controversy. Level involved.
OK, you know, on right wing Twitter, there has been this
heat map that shows the moral sentiments of liberals and right
wingers, which seems to show that right wingers care a lot
about their family and less about animals and less about
rocks. It's like, how far does your
moral lane extend out? And liberals, from the heat map,
it seems like wow, they care a lot about like rocks and animals
and not very much about their family.
OK. And so?
I've never beating the allegations of before I became a
journalist. I don't know if you know this,
Eric, I at one point wanted to be a geologist and almost
considered that as a focus before switching gears to media.
So, and I feel like based on, you know, I don't know, as part
of the we have our opinion note on this show.
So maybe that's true. I don't know, Maybe I care about
rocks. My, my sister is a marine
biologist who studies coral reefs and she loves those coral
reefs. Coral reef, you know, intertitle
benthic zones. I think she studies even less
romantic things than corals with that type of creature.
So in some ways she loves rocks. But anyway, the study was really
about how far does your moral lens extend out?
You know, you're saying you care about anything this and below.
Well, the heat map really makes it look like you're insane and
you don't care about your own wife, you know, And so, you
know, it's one of these things where the right you hope is
intentionally just is committing propaganda, though they want to
other us to such an extent that they're like, see, these people
don't even love their own kids, you know, which it just doesn't
doesn't make any sense. And obviously as a liberal, I'm
like getting criticized for caring about more people.
And you know, as someone who studied philosophy, you know, to
me, you know, protecting my wife is in myself interest is
basically protecting myself. Like doing something moral for
someone disconnected from me is the only is much more moral.
It's like what I'm protecting my wife for my own interests, you
know, so their view of morality is like insane.
But but anyway, just as an empirical thing, liberals should
be getting credit. We care about more people not
like and anyway, Marc Andreessen is tweeting this out and the
conservatives have been using as a reason to get angry.
And I think finally Scott Alexander, you know, a slate
star codex or whatever is new astral codex who hysterically
right was the foe of the New York Times for a while is now
like I think sort of not on the Andreessen side of the the
universe. I think articulated an
explanation of this and it says a lot of things.
But one is just the ongoing efforts of Republicans to other
liberals to be dumb and not worry about the facts, to get
angry so that they can be like, oh, liberals are barely people.
I mean, you know, Richard Haney is constantly saying that
there's no elite human capital among conservatives and sort of
agree. But it's really sad that Marc
Andreessen is doing this because obviously Marc Andreessen is
extremely smart. And so it's either he cares so
little about the facts. And the final irony is this is a
set of people who doesn't believe in social science
holding up a social science report that they haven't even
scrutinized. So it's just like, clear, it's
just like the most obvious propaganda thing in the world.
And yeah, it's just like infuriating.
Like to me, a good social network, like what I want social
networks to get is I want to be able to be like anybody uses
this image is like so disqualifying to me that I want
to write them out of my intellectual debate and sort of
move forward in a world without them.
And I'd love somebody to create the social network that says, I
don't know you've you've 3 strikes.
You're out too many, like egregious intellectual sins and
not a centralized thing. But I want to be able to spend
the time and be like, no, you're in.
This post was obviously fake and dumb.
Like cut these people out of my life if they're do this three
times or whatever. So someone please build out for
me. I'd start up idea right here on
the pod. You're welcome.
Free start up ideas if we're going to live in this world of
anonymity. I mean, it's not just an
anonymity problem if Marc Andreessen is tweeting it out,
but it anonymity is part of the problem, which is we have to be
able to assess people's reputations by what they're
posting versus who they are. Okay, enough politics.
We restrained ourselves in print.
So we said on air we can opine, but we did.
We have talked about the business of Silicon Valley this
week. You looked at the metaverse
world, which is sort of out of favor at the moment.
What's going on? I did, yes.
So jumping into the metaverse was fun.
I hadn't been there in a couple years, so great to be back.
Love to see who's still hanging out there.
No, but the big story really came from the Financial Times.
Had a good piece about Metas annual report and that they've
spent I think in the last year close to $20 billion on their AR
glasses and that those have really honestly been a growth
area for them. They've been losing money
overall. It's looking promising and it's
picking up. And so they're willing to invest
even more money into this space. What's going on with Apples ARVR
efforts? Right.
So at the end of the year, the information reported news that
they were winding down some of their scaled production of the
vision pro headset. They're not fully shutting it
down, but it's not looking like it's going to be a huge
investment space for them going forward.
Sales weren't really great. It does seem like, you know, in
my reporting around the metaverse, the the issue
sometimes just comes down to the headset itself.
People buy a headset, it's fun, they enjoy it, but there's a
there's an issue of people picking it back up, you know,
and it's it's a fun novelty for a bit, but it is bulky and heavy
on your head. And there's something to be said
for wearable tech like Meta's ray ban glasses to where you can
get them to your prescription and they only fit, you know this
they're the size of normal glasses.
But while Meta is still doubling down on tech with these glasses
and spending in Reality Labs, nobody else is basically.
And even the VCs who are I've talked to who are definitely see
use cases, they're seeing them more in gaming where this kind
of already was, right? Like this is what this tech was
sort of optimized for in the beginning.
And they're also seeing it in education and training, which
are really important use cases. But I don't see that scaling to
be the next, you know, trillion dollar company.
Right. What what I had this, this, you
know, the AI thesis that it, you know, AI is generative like
we'll create. Generative VR worlds?
Did you see any hints at that? I mean, that's certainly.
Is that Minecraft company? Yeah, Descartes, they're
partnering with Etched, the edge case chip maker to build a
playable AI model that is kind of based off of Minecraft, but
it's generative. So as you play it, the model is
generating new worlds that you can explore, which is really
cool. I mean Minecraft, especially in
these social games, you want more worlds to build and explore
in mine and that's. Certainly without the game
engine, right, Like it just sort of general, it's the same sort
of predictive model that you'd use for text, right?
So it's there is an underlying logic I think is what's part of
what's interesting about it. Yeah, not necessarily.
That's right. So there's companies doing this.
This company Saga is building the infrastructure on blockchain
for game developers to build agents off of using generative
AI. So we combined, you know, agents
and blockchain in one pitch. Seems like what they're doing is
taking off. Well, they've got a new investor
interest from M13. So certainly there are places in
this space that are still attracting interest from
investors who know the space and they've kind of pinned it as a
category they want to invest in. It's just not the wave that it
was, you know, before. And in some ways the the
hardware part of the tech is something that is better suited
to a meta or someone with, you know, gobs of cash than maybe a
venture model right now. And perhaps the apps and the
software will come further down the line if they nail the
hardware. But it's always five years out.
That's what everyone tells me. In five years, we'll all adapt
this, you know? And every year it's five years
later, right? I don't.
Eric, you've been covering this space longer than I have.
But it seems like it just keeps getting pushed farther and
farther back. Yeah.
And yet I believe, you know, I don't know, I do think device
quality or you know, iPhone really took off at the App Store
or some, you know, it's hard to know sometimes what, what really
triggers something. So AR worlds and VR worlds,
we're rooting for you. Moving on to our final story of
the week, Eric, you got the scoop on General Catalysts
fundraising docs. What did you find?
Yeah. I mean, we're super interested
in these mega funds, you know, General Catalysts, which had
raised, you know, an $8 billion suite of funds.
There's Lightspeed, there's Andreessen, obviously Sequoia I
think fits the bill, but I don't know that they want to use that
word megaphone anyway. So I mean, General Catalyst I
think is the most expressed in that.
Hey, Montanasia, the CEO is calling himself the CEO these
days. He's referring to it as a
company. They announced a wealth man.
We call them a firm still, but they they announced that they're
becoming a wealth manager. They have a debt fund.
They bought a hospital. So echoing a lot of the stuff
you see in the private equity industry.
And so yeah, I got somewhat dated, but still telling fund
return information. I mean, it's, it's very wonky in
particular. So you should subscribe and
become a paid subscriber to read it.
We have a bunch of slides. I mean, basically the first one
is only .7% IRR. So I guess good news for new
venture funds that you can survive a pretty middling first
fund then. Then it's 11.9 percent, 9.9%.
They really have their first like great fund in their 2011
vintage fund. I think it was mostly driven by
Stripe, but I'm sure there were other companies.
This presentation doesn't get into the particular portfolio
and you know that the numbers I'm citing are dated December
31st, 2020. So that fund had a 7.16 X NVPI,
which is like net T VPI. So presumably there was a lot of
money potentially still to come. You know, I thought the other
thing is like while investors were considering whethering to
invest in this latest 8 billion group of funds, you know, they
didn't have a lot of evidence that general catalysts like
billion plus funds have done well.
You know, it's just like they're not that old.
They've barely returned any money as of the fundraising
documents. And so I think that's going to
be a big question with all these mega funds.
You know, you're investing in the funds on the basis of their
performance as more traditional venture capital firms, but now
they're asking you to bet on these sort of multi strategy
private equity styled funds. And will their old performance
match their future performance? And that's what we don't know
yet. Yeah, we'll have to wait and see
on that one, but it's it's a big gamble.
Yeah, I mean, the GCS ambitious, Andreessen's ambitious, and like
a lot of these things rise and fall with the tech industry
overall. You know, if they're huge funds
and they get in a lot of the key stuff in Silicon Valley, and
Silicon Valley has some big hitters, then they can do well.
But you have to get in them, you know, you have to be in Strike
Andreessen's and data bricks. You know, it does end up being
these the big companies really matter.
That's our show. Everyone say feel better, Eric.
We'll be back next week with more news in startups and
venture capital. Healthier team, newcomer team
Health Restful weekend. Yeah, exactly.
All right. Thanks.