Michael Eisenberg: How China Could Overtake the US in the AI Race | E1167

Foundation models are the fastest appreciating asset in history. Why invest in a business where the assets walk out at night? If I'm in Europe and I'm starting a company, I would get out. Lina Khanos, I think, openly is, I think, a threat to American capitalism. Whether Biden or Trump gets elected, she needs to go. I don't buy that the IPO window is closed. The IPO window is wide open. The question is, what's the price you're willing to take?

Ready to go? Michael, I'm so excited. Dude, we've been friends for years, and this is the first time that we get to do this in person. So, thank you for joining me.

Thank you for having me. The first time we get to do the podcast in person, but not the first time we meet in person.

Uh, no, no, no, no, no. The first time podcast in person. But, you know, it's so funny. I'm sure you find this actually, but I was saying the other day on Twitter that actually it makes such a difference doing, um, in-person shows.

I totally agree with you.

Really, for me, it's a game-changer. N-

Thank you for having me.

Not at all. But I want to dive straight in, because it seems like we're in this kind of bizarre AI bubble now, and we have one side of the table that says, "No, this is the most transformational technology that we've seen in 20 years," and we have another side of the table that says, "This is completely nuts. The valuations are crazy. The amount of cash that's being burnt is crazy. This is peak." How do you just think about that from a starting point, before we do a comparison?

One of the hardest things to do in the venture business is hold ... And in life, by the way, is to hold two truths in your head at the same time. I think both of those things are true. This is the most transformational technology I think I will ever see in my lifetime. Um, and at the same time, uh, there is, like happens with many transformational technologies, just an incredible gold rush that brings in a lot of people. Both these things are true. You know, when the internet came on, uh, and I was starting my venture career, this is in 1995, it was, it was incredible. I mentioned to you before we came on air, the first deal I did was called Picture Vision, and it was an online photo sharing, when there were still cameras with film and negatives. You had to actually scan the negatives, uh, in order to send the pictures. You'd upload them. It looked like paint drying, uh, to put- upload, uh, upload the pictures. And then there was pets.com and pets.com.com and pets.com.com.com, because it was an incredible gold rush. But the internet, eBay, Amazon, et cetera, turned out to be incredible companies. And I think the same will be true about AI, which is, by the way, a giant bucket that we need to kind of break apart. And then, you know, right after the dot-com thing, people have forgotten, but there was like a fiber optic craze. Everyone's forgotten it, 'cause it's called the dot-com crash. But there was a fiber ac- uh, optic equipment and infrastructure craze. And we laid a ton of fiber optic cables, and it was a bubble, and the stocks went crazy. But we live off that infrastructure today. And that's what's made the current moment possible. Same thing happened, you know, uh, Cisco bought, um, blank on the name of the company for $6 billion in the fiber optic routing space in, I think, 2001. Then that bob- bubble burst, and, you know, it took a bunch of years to kind of find our footing again. So yes, AI is the most transformational technology I think I'll ever see in my lifetime. True. It's also true that there's a massive financial gold rush going on in what turns into a bubble. True. What's also true is those bubbles create the infrastructure that we need going forward, and that's also true. So, a lot of people are gonna lose a lot of money during this, like a lot of money. Um, and some foundational companies and technologies will be built.