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Jacob Shapiro: Hello listeners.

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Welcome to another episode
of the Jacob Shapiro podcast.

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Rob and I are back at it
for our biweekly chats.

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Uh, we talk about things happening in
the US market and honestly, we, uh,

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we were pretty, pretty glum today.

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We talked about Chinese biotech
and bear cases for the United

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States and some disturbing cultural
changes, uh, in the United States.

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Anyway, so we promise we'll be more upbeat
next time, but, uh, this is definitely

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indulging in some more dystopian
thoughts, so we hope you enjoy it.

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Email me, uh, jacob@jacobspi.com.

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If you have any questions, comments,
concerns, you know the drill.

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Cheers and see you out there.

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All right.

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It is Wednesday, May 21st.

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Rob, it's been a minute
since we got together.

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Uh, we're on our every other week cadence.

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Um, I don't know if you feel
this way, and by saying this,

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maybe I'm gonna jinx ourselves.

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I feel like the last couple of weeks,
the world has been a little bit quieter.

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Do, do you have that sense or am I
just, uh, have I just gotten numb

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to the, the pace of volatility and
events that we're experiencing?

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Rob Larity: Well, compared to what
came before, I certainly hope so.

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Otherwise, we'd all have a heart attack.

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Jacob Shapiro: No, it, it, it feel,
I mean, it, it sort of feels like

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there was liberation day and then
there was like a swell of volatility.

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And then the Trump administration met
constraints head on in the form of

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treasury yields and a declining dollar.

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And, uh, you know, Scott Besson getting
the president's ear and I, I won't

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say that things have been stable since
then, but, you know, walked back from

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the biggest tariff threats like sort
of normal level market discourse rather

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than, you know, what we were talking about
even six weeks ago, like six weeks ago.

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I was having people like Chase on the
podcast, you know, talking about is,

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are there great depression scenarios
that we need to be worrying about?

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And now it's like we're talking about,
oh, like we've got a big beautiful

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budget bill, which, uh, is gonna, I had
the numbers in front of me here, uh,

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how much it might increase the deficit.

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Um.

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White House Council of Economic Advisors
projects that the bill would boost GDP by

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4.2 to 5.2%, but, um, sort of independent
budget analysis, if you're talking

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about the Joint Committee on taxation
projects, they think it increases the

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deficit by 3.8 trillion through 2034.

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Penn Wharton budget model calls
for a $3.3 trillion increase.

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Uh, Moody's is expecting a $4 trillion
increase over the next decade and

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downgraded US credit ratings last Friday.

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Um.

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Markets.

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Markets are not particularly, uh, I
don't know what the word is, sanguine,

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optimistic treasury yields are going
up again, dollar index going down

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again relative to where we were.

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Um, so why, why don't we start with
the US itself and with the bill?

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Because we've gone from, you know,
Elon Musk at Center Stage and

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fiscal conservatism and Liberation
Day two actually, like we're

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negotiating on all the tariffs and
there's no fiscal conservatism.

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And Elon Musk has been put out to
pasture and is talking about not donating

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money to political causes anymore.

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Um, so it, sure, it sure feels like
constraints got here and now it's gonna

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be more normal trade policy and profligate
deficit spending, which is pretty

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much on brand for every US government.

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Going back to Eisenhower, um, do you think
that's the right way to assess the lay

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of the land or am I being too reductive?

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Rob Larity: Um, I think it is.

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Uh, I mean, it's funny how these
things work because like we often

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talk about things being overbought or
oversold when we talk about markets.

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You can really feel that in the
narrative, like what you said about

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things quieting down, like that is
expressed in charts too, where like

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now we're clearing the hyperventilating
levels of a few weeks ago.

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Constraints are kicking in, they're
dialing down the temperature.

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Um, so yeah, I think there's, there's
definitely an element of this, but

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also sticking with that sort of
charts, uh, comparison, the uptrend

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remains intact, as we would say.

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So a lot of these fundamental
things that you talk about, um,

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fiscal deficits blowing out,
uh, all of that is continuing.

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'cause that's the path
of least resistance.

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Um, so there may be constraints around
doing things quickly or doing things in

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an extreme way, but the path of least
resistance is still holding for now.

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Um, and you can see that
in the price of the dollar.

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You can see it in yields like, we've
had a, a rebound in risk assets.

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Basically clearing the oversold levels.

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Like now we're back to a
level where I would expect to

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start seeing declines again.

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Um, honestly.

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So we will see if that happens.

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But um, yeah, it's definitely sort of
a, a, a calm within the storm moment.

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And it's, it's funny that you mentioned
scent, 'cause I've been reading this

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biography of Zoe Unla, who's the,
uh, was the right hand man of, of Mao

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and this is sort of the unauthorized
biography that was written by, uh, a

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member of the inner circle of the CCP.

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It was banned in China when
it came out in like 2000.

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But I was thinking about Bessant because
much like Zoe and Lai, he bessant

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has to be sort of a, a, a calming and
moderating force within an egomaniac,

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uh, you know, sort of dictating
policies, not necessarily based on, uh.

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Rational thought.

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So it's a, it's a tough position to be in.

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Jacob Shapiro: It is, uh, I mean, Joe
and LA is like maybe one of the most

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remarkable statesmen of the 20th century.

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Um, I, I wouldn't put him in
the same category as Scott Best.

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I think like, like Joe and LA
is like orders of magnitude or

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like standards of deviation.

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Uh, standards of deviation is
more impressive to me as, as

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a statesman than Scott Besant.

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But May, but maybe I'm
selling Scott Besant.

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Um, too short.

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I don't know.

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Um, we'll see

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Rob Larity: if he rises to the occasion.

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Jacob Shapiro: Yeah.

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And if, and if Maoism is, is what is on,
uh, on tap for, uh, for the US government.

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Um, h how are, how are
you digesting this budget?

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Bill and I, I know like it's,
it's still not completely through.

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Um, it looks like it's probably gonna
get through, but I mean, you know,

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you, you look at budget specialists
and people who analyze the budget,

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literally that's all they do for a living.

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You know, here's one from the
conservative Manhattan in institute.

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So the Manhattan Institute actually
knew some people who used to work there.

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I don't think there are anymore.

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But, you know, generally
fiscal conservatives or sort of

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typical small c conservatives.

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Um, and one of their budget specialists
said, you know, this tax bill will

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cost more than the 27 tax cuts
more than the pandemic cares act,

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more than Biden stimulus and the
inflation reduction Act combined.

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Um, so like when you start to put
that together, like, does that just

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mean we're gonna juice the economy
and things are gonna be like.

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Pedal to the metal for the United
States in terms of growth, but you

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know, we're just creating that much
bigger of a bug that's gonna splash

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into the windshield down the road.

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I'm also really struck at the
sort of inverse, not inverse,

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like the opposite way that China
seems to be approaching this.

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Because for, you know, if you, the thing
with China, if, if you read the tea

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leaves, there's always some interest
rate that's being cut or some way that

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they're trying to stimulate the economy.

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But I was looking at, um, Shanghai macro
strategist, he's one of my favorite

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follows on X and he was talking about how
it seems like Beijing is actually doubling

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down on its commitment to austerity.

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Like talking about, you know, different
initiatives to take the lead in

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living frugal lives for normal people
on banning trips and re revising

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regulations for party officials.

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Um, you know, all these different things
that might actually increase deflationary

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trends and which in the long run might
make China look more responsible than

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other countries like China's the.

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Uh, bond yields, 30 year government bond
yields are going down, whereas Japan's

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are surging to like record highs or not
record highs, like 30, 40 year highs.

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Um, I don't know, like, how, how
are you in, like, I'm not surprised

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that the Trump administration has
discarded fiscal, uh, conservatism.

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Like I, one of the points I made for the
last 12 months has been, I don't buy it.

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Like they're gonna blow out
the deficit and they'll blow it

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out, probably even bigger than
they did the first time around.

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Um, but man, the, the scale at which
people are talking about this bill

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blowing out the deficit, I mean the,
the scale of it even surprises me

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and I was expecting this, so I, I
don't know how you feel about that.

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Rob Larity: Um, yeah, I think really one
of the main misunderstandings, sort of

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in the financial community or, or people
who are following this stuff is this

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notion of having the pedal to the metal.

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Um, I think, you know, that is
sort of reflective of a macro

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environment of 10 years ago.

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And, and we've talked about this in the
last few conversations, but if you go

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to the Trump first term, he was coming
into office against a backdrop where

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we needed some sexiness, we needed
some irresponsibility, we needed,

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um, a shot in the arm, so to speak.

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And that's because we were kind of
operating against a deflationary backdrop.

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We needed, um, some kind of
stimulus to, to drive that

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pedal to the metal a little bit.

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And it, it had some effect.

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Um, like that, you know, it was a, it
was a mixed data bag, you, you could say,

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but it wasn't disastrous by any means.

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What, um, you know, the first 2017
tax cuts and that did, you know,

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and, and again, it reminds me of
the late sixties, early seventies

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and the Nixon administration coming
in and sort of recognizing, oh,

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you know, there are problems.

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And then at the first sign of trouble
turning back to sort of the fiscal

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spigot and thinking, okay, well.

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It's too early to deal with the issues.

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So we're gonna go back to
what has worked in the past.

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And the problem is things work in the
past until they create the circumstances

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in which they no longer work.

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And that's the situation where
we are now, which is, if you look

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at this bill, um, primarily we're
talking about tax cuts, um, as the

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source of these gaping deficits.

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And that's a supply side stimulus.

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So if you want, you know, always there's
this fiction that tax cuts will pay for

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themselves, which is never true, but
sometimes they do stimulate the economy.

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And the problem in this case is you
can't use supply side stimulus, um,

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in a situation where uncertainty
and worry and um, sort of forward

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projections are the problem.

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Like you need demand side
stimulus typically to give

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people the confidence to invest.

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And there's no new major
demand side programs here.

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They've walked back some of the more,
um, you know, drastic cuts that they

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had proposed to some things like
the solar tax credit, utility scale,

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solar, you know, things like that, that
have been very popular in, in a lot

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of states and, and real job drivers.

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Um, but there's nothing particularly new.

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We're mostly talking about,
uh, supply side stimulus here.

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And I just think there's, there's
almost no circumstance in which

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that has a huge positive impact and
certainly not enough to offset what

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we're seeing in markets today, which is
30 year US treasury yield approaching

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a new high mortgage rates over 7%.

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Um, those are huge factors that in
all likelihood are gonna outweigh.

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And then some, any of the potential
kind of pedal to the metal effects.

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Mm-hmm.

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Like you, you're pedal to the metal,
but you're driving into a brick wall.

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Jacob Shapiro: How far
away is the brick wall?

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Is it two years away?

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Is it five years away?

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Is it 10 years away?

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Like, if, if you're trying to think
about how to like position yourself

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accordingly, or if, if you're
thinking about sort of the very, I'm

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thinking about the short term here.

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Like, okay, like yield's above 5%, that's
a big psychological number and something

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that the media can really hang a hat
on because, oh, now they're above 5%.

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But you know, if you look at
historical relative terms,

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five percent's not that much.

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7% mortgage not that much,
especially when you're going back

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like 30, 40 year time horizon.

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And I, I agree with you and I, and
we'll get into this a little bit later.

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I wanna talk about, I. Private equity
and biotech and, and some other things

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that are on the tops of our minds.

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But I, I feel like you could get a
scenario where maybe pedal to the metal

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is the wrong thing, but you're, you're
sort of juicing the economy like with like

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a, with a steroid shot, like the economy
is sick, but give it a steroid shot and

220
00:12:21,295 --> 00:12:24,985
for the next two years, it could be, it
be, it could be growing like gangbusters

221
00:12:24,985 --> 00:12:29,335
and this notion that you're gonna outgrow
all the problems might seem clear until

222
00:12:29,365 --> 00:12:34,375
all of a sudden everything like to, to
reference, um, uh, that reference we

223
00:12:34,375 --> 00:12:37,585
had a couple weeks ago, like, the music
will stop and the music will stop very

224
00:12:37,585 --> 00:12:41,665
quickly and some big player will realize
at first, and then everybody will pile in.

225
00:12:41,665 --> 00:12:43,465
So I'm, I'm just trying to
get a sense from your brain.

226
00:12:43,465 --> 00:12:47,125
I know I'm asking you an impossible
question, like, how long can we do this?

227
00:12:47,125 --> 00:12:48,325
Can we do this for five years?

228
00:12:48,355 --> 00:12:50,095
Can we do this for 15 years?

229
00:12:50,275 --> 00:12:51,745
Because you don't wanna miss like.

230
00:12:52,500 --> 00:12:54,005
The, the, the juice era.

231
00:12:54,035 --> 00:12:56,825
Like if, if you're going long home
runs, like you don't wanna, you

232
00:12:56,825 --> 00:13:00,095
don't wanna like get out of the home
run market right before Sammy Sosa

233
00:13:00,095 --> 00:13:01,955
and Mark McGuire are squaring off.

234
00:13:01,955 --> 00:13:02,195
Right.

235
00:13:02,195 --> 00:13:04,805
And right after You wanna do it
after when they have the new rules.

236
00:13:06,095 --> 00:13:06,335
Rob Larity: Yeah.

237
00:13:06,335 --> 00:13:07,865
The juice era is already over.

238
00:13:07,985 --> 00:13:12,845
And I can say that with some confidence
because gold prices are hitting new highs.

239
00:13:13,505 --> 00:13:14,795
Bitcoin is hitting new highs.

240
00:13:15,455 --> 00:13:19,895
Yields are like, Mr. Market is telling
us, hey, the juice is already killing us.

241
00:13:20,645 --> 00:13:24,995
Um, and that's really important because
it would be one thing if this was,

242
00:13:24,995 --> 00:13:26,735
oh, just kick the can down the road.

243
00:13:26,795 --> 00:13:30,665
Like there's no more road
according to these markets.

244
00:13:30,665 --> 00:13:33,035
And that's why intermarket
analysis is so important.

245
00:13:33,575 --> 00:13:34,775
Like you have to be very precise.

246
00:13:34,775 --> 00:13:36,095
Like, what is the question here?

247
00:13:36,125 --> 00:13:40,235
Is it, at what point does the US
reach sort of an unsustainable escape

248
00:13:40,235 --> 00:13:42,155
velocity on the debt accumulation?

249
00:13:42,365 --> 00:13:42,455
Mm-hmm.

250
00:13:42,695 --> 00:13:44,225
Like, that's a complicated question.

251
00:13:44,225 --> 00:13:45,905
'cause at some point they could just.

252
00:13:46,275 --> 00:13:50,175
Paying interest rates or intervene like
this, it's not a linear sort of thing.

253
00:13:50,535 --> 00:13:54,675
So there's the macro question,
which arguably like on the current

254
00:13:54,675 --> 00:13:58,995
trajectory, you know, interest rates
or I'm sorry, interest payments

255
00:13:58,995 --> 00:14:02,295
are already approaching or have
exceeded a trillion dollars a year.

256
00:14:02,775 --> 00:14:02,955
Yeah.

257
00:14:02,985 --> 00:14:07,545
So we're in, like, we
are in the danger zone.

258
00:14:07,995 --> 00:14:12,375
Um, and that's having a real
income statement effect.

259
00:14:12,375 --> 00:14:17,985
Like, like this is one of the, one
of the problems here in, in the

260
00:14:17,985 --> 00:14:21,315
analogy of sort of the juice, is
there's balance sheet effects and

261
00:14:21,315 --> 00:14:22,545
there's income statement effects.

262
00:14:23,025 --> 00:14:30,585
So yes, historically speaking rates
where they are today are not particularly

263
00:14:30,585 --> 00:14:34,725
high relative to, you know, heights
they've reached like in the mid nineties,

264
00:14:34,725 --> 00:14:40,005
1994, like, you know, it's sort of more
normal on that very long-term horizon.

265
00:14:40,545 --> 00:14:43,155
But the difference that is that the
balance sheet is completely different,

266
00:14:43,545 --> 00:14:45,705
the balance sheet is super leveraged.

267
00:14:46,050 --> 00:14:49,980
When you're looking at the public sector,
and you know, in many cases the, the

268
00:14:49,980 --> 00:14:51,689
corporate sector too, not households.

269
00:14:51,689 --> 00:14:52,589
Households are okay.

270
00:14:53,100 --> 00:14:55,709
Corporate sector and
especially government are not.

271
00:14:55,709 --> 00:14:56,130
Okay.

272
00:14:56,550 --> 00:15:01,980
And this is where you have the, the juice
analogy, like immediately hits the, the

273
00:15:01,980 --> 00:15:07,860
wall because, you know, that has an income
statement effect that's very rapid because

274
00:15:07,860 --> 00:15:09,780
you're refinancing into those rates.

275
00:15:10,050 --> 00:15:14,939
You're, you're servicing that
debt on that bloated liability

276
00:15:14,939 --> 00:15:16,050
side of your balance sheet.

277
00:15:16,709 --> 00:15:20,130
And, and that has effects in just
like how the money's flowing around.

278
00:15:20,790 --> 00:15:23,520
So I think there's, there's
already a macro issue there.

279
00:15:24,300 --> 00:15:29,280
And, um, you know, the markets are
telling us what, how the markets are

280
00:15:29,280 --> 00:15:32,310
interpreting it, at least the bond markets
and the currency markets, which are,

281
00:15:32,670 --> 00:15:36,060
you know, dwarf the, the equity markets.

282
00:15:36,959 --> 00:15:37,530
Um.

283
00:15:37,935 --> 00:15:40,395
And, and the other thing is
like, what are companies saying?

284
00:15:40,395 --> 00:15:45,135
So are companies looking at this bill and
saying, oh yeah, like let's go, let's go

285
00:15:45,135 --> 00:15:50,415
ramp up CapEx, let's go, you know, raise
our, like, no, no, it's the opposite.

286
00:15:51,045 --> 00:15:54,855
You know, we just had Q1 earning
season, which ended, you know,

287
00:15:55,185 --> 00:16:00,135
10 days ago, two weeks ago,
depending, and that was a disaster.

288
00:16:00,915 --> 00:16:06,165
Um, lots and lots of companies withdrawing
their guidance, pulling in the horns,

289
00:16:06,165 --> 00:16:08,505
talking about sort of macro uncertainty.

290
00:16:09,195 --> 00:16:16,425
Um, you know, uh, that is, that is
not a sign that normalcy is here or

291
00:16:16,425 --> 00:16:21,825
that that level of confidence that
you need for investment to, to drive

292
00:16:21,825 --> 00:16:24,015
again is, is necessarily coming.

293
00:16:24,555 --> 00:16:24,705
Jacob Shapiro: Mm-hmm.

294
00:16:26,085 --> 00:16:29,085
Anything else you wanna say
about, uh, like US markets before

295
00:16:29,085 --> 00:16:30,435
we turn to a different topic?

296
00:16:30,810 --> 00:16:31,030
No,

297
00:16:32,385 --> 00:16:32,850
Rob Larity: I don't think so.

298
00:16:32,850 --> 00:16:32,860
Okay.

299
00:16:34,320 --> 00:16:34,540
Jacob Shapiro: Um.

300
00:16:36,120 --> 00:16:39,690
Not that they're, you know, a
nice rosy, uh, optimistic point

301
00:16:39,690 --> 00:16:40,920
of view from us on that score.

302
00:16:40,920 --> 00:16:41,250
Cool.

303
00:16:41,850 --> 00:16:46,890
Um, l let's turn to, um, um, l
let, let's turn to biotech and

304
00:16:46,890 --> 00:16:48,660
in particular Chinese biotech.

305
00:16:48,720 --> 00:16:51,600
This is gonna be one of those
conversations listeners where Rob and

306
00:16:51,600 --> 00:16:54,510
I are at the very beginning stages of
talking about something and he and I

307
00:16:54,510 --> 00:16:58,290
have not had a chance to actually talk
about this, and our schedules are crazy.

308
00:16:58,290 --> 00:17:01,080
So, Rob, I just wanna talk to you as if
like, I wasn't actually talking to you

309
00:17:01,080 --> 00:17:02,700
on a podcast and we'll put it out anyway.

310
00:17:02,730 --> 00:17:04,680
'cause I know this is something
you've been thinking about and it's

311
00:17:04,680 --> 00:17:05,790
something I've been thinking about.

312
00:17:05,850 --> 00:17:08,970
And I think it actually does
connect with exactly what you

313
00:17:08,970 --> 00:17:13,110
just said, which is, you know, are
American companies investing more?

314
00:17:13,110 --> 00:17:16,500
Are the circumstances that led to American
growth and American outperformance,

315
00:17:16,500 --> 00:17:19,560
whether it's in semiconductors or
biotech, in some of these, in some of

316
00:17:19,560 --> 00:17:23,130
these areas, are those fundamentals
gone and have they actually shifted to

317
00:17:23,130 --> 00:17:25,530
other places in the world, namely China?

318
00:17:25,920 --> 00:17:26,370
Um.

319
00:17:26,910 --> 00:17:30,600
When you start sort of looking, you know,
last 40, 50 years, the United States

320
00:17:30,600 --> 00:17:33,090
has really been the king of biotech.

321
00:17:33,210 --> 00:17:36,030
I don't think that that's a, a
crazy sort of assertion to make.

322
00:17:36,450 --> 00:17:40,320
Um, but if you start looking
sort of closer the last 10 to 15

323
00:17:40,320 --> 00:17:43,560
years, like China's flashing all
the right signals, and some of

324
00:17:43,560 --> 00:17:44,850
that is for popular consumption.

325
00:17:44,850 --> 00:17:48,510
Like so many people like to, you
know, flaunt this idea that, uh, you

326
00:17:48,510 --> 00:17:51,600
know, China has more, has doubled
its clinical trial activity and it's

327
00:17:51,600 --> 00:17:54,870
doubled the number of articles that
it's published in various journals.

328
00:17:54,870 --> 00:17:58,170
Like I know I, I, I'm not trying to
throw shade at journals, but like I for

329
00:17:58,170 --> 00:18:02,400
instance, knew people at a Russian think
tank who decided they wanted to get more

330
00:18:02,400 --> 00:18:05,670
articles into foreign affairs journals
to make their university look better.

331
00:18:05,670 --> 00:18:08,460
So they were just doing things to try
and get as many articles as they could

332
00:18:08,460 --> 00:18:10,350
possibly get published in these journals.

333
00:18:10,350 --> 00:18:15,120
So like there, there is some level,
um, of sort of, um, emptiness to those

334
00:18:15,120 --> 00:18:20,160
things, but at the same time, like,
um, there's sort of a couple different.

335
00:18:21,044 --> 00:18:23,895
Things that supported the US
biotech industry, or at least

336
00:18:23,895 --> 00:18:25,155
the way that I understand it.

337
00:18:25,605 --> 00:18:30,345
Um, there was funding for research
and for universities in particular

338
00:18:30,405 --> 00:18:32,835
and that public-private partnership
and the US government really

339
00:18:32,835 --> 00:18:34,065
putting its foot forward there.

340
00:18:34,065 --> 00:18:37,395
I mean, you had, you had US presidents,
I believe it was Lyndon Johnson, I think

341
00:18:37,395 --> 00:18:40,095
it was Lyndon Johnson, I forget which
president said we're gonna cure cancer.

342
00:18:40,365 --> 00:18:41,655
I mean, you, you had that sort of.

343
00:18:42,030 --> 00:18:45,000
Shoot for the moon type of thinking in
the United States and you had dollars

344
00:18:45,000 --> 00:18:46,920
that went to those sorts of things.

345
00:18:47,250 --> 00:18:50,130
Um, you've had a low interest
rate environment and lots of

346
00:18:50,130 --> 00:18:54,240
venture capital and startup
funding really since post 2008.

347
00:18:54,570 --> 00:18:56,190
And biotech is the perfect place for that.

348
00:18:56,220 --> 00:18:58,920
'cause you gotta do a lot of expensive
research and hire a lot, hire a lot

349
00:18:58,920 --> 00:19:01,890
of expensive people, and you don't
know if the technology's gonna work.

350
00:19:02,160 --> 00:19:06,030
Um, so in a low or zero interest rate
environment or in an environment where

351
00:19:06,030 --> 00:19:08,940
a pandemic coming and you're doing
operation warp speed, yeah, there's

352
00:19:08,940 --> 00:19:12,480
probably a lot of money out there
for r and d for us biotech companies.

353
00:19:12,480 --> 00:19:13,740
But that's starting to go away.

354
00:19:13,740 --> 00:19:15,990
And we can talk, you can go
down that rabbit hole too.

355
00:19:15,990 --> 00:19:18,660
I mean, this is something we
talk about a lot at Bespoke.

356
00:19:18,870 --> 00:19:22,650
There was an FT article this week about,
you know, US universities like Harvard

357
00:19:22,650 --> 00:19:27,570
and Yale exploring discounted secondary
market sales of private equity stakes.

358
00:19:27,570 --> 00:19:31,050
I'd love to know how many of those
are like shiny biotech startups that

359
00:19:31,050 --> 00:19:33,630
didn't actually pan out, I don't
think we'll ever actually know.

360
00:19:34,410 --> 00:19:35,310
Um, so there's that.

361
00:19:35,370 --> 00:19:36,060
And then.

362
00:19:36,545 --> 00:19:39,005
Attracting top tier talent from abroad.

363
00:19:39,005 --> 00:19:43,085
This really like started around COVID and
the things that the Trump administration

364
00:19:43,085 --> 00:19:46,655
has done in the first five months
of this year have exacerbated it.

365
00:19:46,955 --> 00:19:50,135
Um, the United States, like US
universities are still at the top.

366
00:19:50,835 --> 00:19:53,475
But there's fewer and fewer positions.

367
00:19:53,685 --> 00:19:57,375
Um, there's less and less optimism that
the United States is a place where you

368
00:19:57,375 --> 00:20:01,785
can make a career in this sense, not
just for very, very smart foreigners,

369
00:20:02,264 --> 00:20:04,065
but for us scientists themselves.

370
00:20:04,065 --> 00:20:08,355
Like anecdotally, I have friends who were
in this space who suddenly the money is

371
00:20:08,355 --> 00:20:11,895
drying up and they're looking towards,
well, could I tolerate living in China?

372
00:20:12,235 --> 00:20:13,375
Could I move to Europe?

373
00:20:13,584 --> 00:20:17,034
Like what are some of the, uh, changes
I'm willing to make in my life in order

374
00:20:17,034 --> 00:20:19,014
to participate in top tier research?

375
00:20:19,014 --> 00:20:21,115
Because it doesn't look like
it's gonna be happening in the

376
00:20:21,115 --> 00:20:22,195
United States going forward.

377
00:20:22,254 --> 00:20:25,615
And here, like China is
singing a very different tune.

378
00:20:25,645 --> 00:20:28,645
'cause yes, they're talking about
austerity at a top level, but the

379
00:20:28,645 --> 00:20:32,304
government has said very clearly, no,
biotech is one of the commanding heights

380
00:20:32,334 --> 00:20:35,185
of the sort of tech economy going forward.

381
00:20:35,395 --> 00:20:39,264
They have multiple five-year plans and
spending plans and, you know, different

382
00:20:39,264 --> 00:20:43,014
hubs that they want to create within China
that are gonna be hubs that expand this.

383
00:20:43,284 --> 00:20:46,794
Um, people talk about China's
demographics as being a negative, but

384
00:20:46,794 --> 00:20:49,615
when you have a bunch of old people
and not a great healthcare system and

385
00:20:49,615 --> 00:20:52,915
you need social stability, probably
a good idea to throw as much money as

386
00:20:52,915 --> 00:20:54,534
possible as you could at this industry.

387
00:20:54,534 --> 00:20:57,655
And you're gonna have way more data
and way more old, old people to

388
00:20:57,655 --> 00:21:00,895
treat, uh, than you necessarily will
in some other parts of the world.

389
00:21:01,225 --> 00:21:05,004
Um, and in, and China has also become
just like it has in every single

390
00:21:05,004 --> 00:21:06,955
manufacturing supply chain in the world.

391
00:21:07,635 --> 00:21:11,475
Like they produce a lot of the
precursors, like they have gotten

392
00:21:11,475 --> 00:21:14,534
involved in biotech in an incredible way.

393
00:21:14,534 --> 00:21:18,105
Just in terms of like the things that
are, you know, like the ibuprofen that

394
00:21:18,105 --> 00:21:21,014
I'm gonna g that I give my daughter
when she has an ear infection, that's

395
00:21:21,135 --> 00:21:24,524
probably some of the ingredients
are sourced from China or India.

396
00:21:24,885 --> 00:21:27,524
Um, and you start going down the
list of medications and things

397
00:21:27,524 --> 00:21:28,695
like that, that's all there.

398
00:21:28,695 --> 00:21:31,365
And there's been this huge growth
in, in Chinese biotech in general.

399
00:21:31,365 --> 00:21:34,784
So I'm rambling a little bit, but I'm
trying to, to connect what we were,

400
00:21:34,784 --> 00:21:36,344
what we were talking about before.

401
00:21:36,375 --> 00:21:40,245
And here's China, which everybody
says demographics sucked, uh, sucks.

402
00:21:40,245 --> 00:21:41,355
Structural problems.

403
00:21:41,355 --> 00:21:43,274
Real estate bubble that's
never gonna be fixed.

404
00:21:43,274 --> 00:21:43,844
Everything else.

405
00:21:43,905 --> 00:21:48,314
And yet, like burgeoning biotech
industry, it doesn't take long to go

406
00:21:48,314 --> 00:21:53,685
find McKinsey 50 page decks about what
the opportunity set is, or US government

407
00:21:53,925 --> 00:21:58,754
reports about how China is stealing the,
uh, the cutting edge here and that the

408
00:21:58,754 --> 00:22:01,544
United States government needs to get
back on track immediately, which the

409
00:22:01,544 --> 00:22:03,074
United States government is not doing.

410
00:22:03,074 --> 00:22:03,524
So.

411
00:22:03,899 --> 00:22:06,629
Um, I, I rambled a little bit,
but that, that's the setup.

412
00:22:06,629 --> 00:22:07,290
Let's talk about it.

413
00:22:08,310 --> 00:22:09,179
Rob Larity: No, no, not a ramble.

414
00:22:09,179 --> 00:22:11,310
I mean, there's so many
different interlocking issues.

415
00:22:11,310 --> 00:22:13,290
I think you covered a
lot of them really well.

416
00:22:14,100 --> 00:22:20,939
Um, where to begin, I think just
to, to start with first principles,

417
00:22:22,080 --> 00:22:26,220
like, let's not get outta, you
know, get out of proportion here.

418
00:22:26,879 --> 00:22:32,429
Um, the US is a biotech juggernaut
and that's not gonna change overnight.

419
00:22:33,120 --> 00:22:37,470
Um, like yes, obviously the
NIH is a major factor in that.

420
00:22:37,500 --> 00:22:42,929
There's tons of stuff going on with
the FDA, with the NIH itself, but the

421
00:22:42,929 --> 00:22:48,840
sheer amount of wealth that is in the
US that is financing, um, innovation

422
00:22:48,840 --> 00:22:51,330
and research is just beyond compare.

423
00:22:51,840 --> 00:22:55,050
Even China can't touch it can't
even come close right now.

424
00:22:56,040 --> 00:22:58,350
Um, so the US has enormous strengths.

425
00:22:58,350 --> 00:23:01,470
Like if you look at something like the
Ark Institute, which is financed by.

426
00:23:02,475 --> 00:23:08,145
Um, Patrick Collison, tech entrepreneur,
like that sort of thing is where the

427
00:23:08,145 --> 00:23:10,305
US is going to continue to shine.

428
00:23:10,875 --> 00:23:15,405
And when you look at sort of where
still the most interesting cutting

429
00:23:15,405 --> 00:23:20,235
edge stuff is happening, predominantly
it's still in the US so let's not,

430
00:23:20,445 --> 00:23:24,585
you know, just make sure we're not
being doom and gloom about the US.

431
00:23:24,615 --> 00:23:28,605
'cause relatively things are still
good, but it's similar to the

432
00:23:28,605 --> 00:23:35,235
Multipolarity thesis where the US
is going to be a very powerful force

433
00:23:35,235 --> 00:23:38,055
in this area as well, but they're
not gonna be the only force anymore.

434
00:23:39,015 --> 00:23:45,165
And, um, you know, you mentioned sort of
China's property bubble, the treadmill

435
00:23:45,165 --> 00:23:48,885
to hill all of these things and yet at
the same time, look at what they're doing

436
00:23:48,885 --> 00:23:54,825
in batteries and EVs and grid technology
and biotech and, and all of this stuff.

437
00:23:55,365 --> 00:23:58,485
But those are two parts of
the same coin, or two sides of

438
00:23:58,485 --> 00:23:59,745
the same coin, I should say.

439
00:24:00,345 --> 00:24:00,885
Um.

440
00:24:01,590 --> 00:24:08,250
Sort of this kind of, uh, the Chinese
model, which is really based on to

441
00:24:08,250 --> 00:24:12,390
some extent guiding and commandeering
state priorities around capital

442
00:24:12,390 --> 00:24:17,970
allocation results in stuff like, you
know, cattle and BYD and you know,

443
00:24:17,970 --> 00:24:22,350
the, the supply chains getting built
to support companies like that and

444
00:24:22,350 --> 00:24:24,150
biotech and, and all this sort of stuff.

445
00:24:24,180 --> 00:24:29,310
But it also means you have treadmill
to hill, you know, ghost, uh, cities in

446
00:24:29,310 --> 00:24:34,170
the middle of nowhere and, and capital
misallocation just on huge scale.

447
00:24:35,010 --> 00:24:38,820
So it's always a race, like how much
value can they create with the good

448
00:24:38,820 --> 00:24:42,540
stuff versus how much do they throw
down a hole with the bad stuff.

449
00:24:43,410 --> 00:24:45,450
Um, and it's just the
nature of the system.

450
00:24:45,450 --> 00:24:48,690
So that's kind of working as intended.

451
00:24:48,810 --> 00:24:52,860
And I think just like China has
caught up and, and in many ways

452
00:24:52,860 --> 00:24:55,920
surpassed, depending on which
specific area you're talking about.

453
00:24:57,120 --> 00:25:00,990
Surpass the US in, in a lot of these
areas, like biotech, they're a player.

454
00:25:01,200 --> 00:25:02,670
Like that's, that's clear.

455
00:25:03,090 --> 00:25:06,000
And that is the most interesting
thing because it wasn't very long

456
00:25:06,000 --> 00:25:09,990
ago that they were just nothing
like Chinese biotech was a joke.

457
00:25:10,800 --> 00:25:11,910
Nothing was happening.

458
00:25:12,390 --> 00:25:14,490
Like I think it was
only like two years ago.

459
00:25:15,210 --> 00:25:22,170
Um, you know, uh, which was the
leading C-C-C-D-M-O provider

460
00:25:22,170 --> 00:25:24,480
to us and European biotechs.

461
00:25:25,500 --> 00:25:31,620
They got cut out, uh, from the bios
secure act from providing this to, to

462
00:25:31,620 --> 00:25:33,540
us customers providing their services.

463
00:25:34,020 --> 00:25:36,240
And it was viewed as like, oh
my God, these guys are gonna

464
00:25:36,240 --> 00:25:38,460
be just completely destroyed.

465
00:25:39,450 --> 00:25:39,540
Mm-hmm.

466
00:25:39,780 --> 00:25:44,790
Since then, you know, it's sort of, I
mean, it's too early to say 'cause uh,

467
00:25:44,850 --> 00:25:49,230
they're not as far along in the recovery
period as Huawei, but it has been sort

468
00:25:49,230 --> 00:25:53,774
of a Huawei kind of scenario where I.
They're, they're probably gonna be fine.

469
00:25:54,254 --> 00:25:55,544
And, and guess what?

470
00:25:55,544 --> 00:25:58,995
Now they really dominate the
burgeoning Chinese scene.

471
00:26:00,225 --> 00:26:05,475
So this has happened very fast, and we do
have to keep it in proportion, but we also

472
00:26:05,475 --> 00:26:07,544
have to recognize that this is for real.

473
00:26:07,574 --> 00:26:13,094
It's not just marketing and, and it's
not, um, it's not a flash in the pan.

474
00:26:13,125 --> 00:26:16,334
Like very clearly they've put in
place some of the fundamentals

475
00:26:16,334 --> 00:26:19,635
to do this at scale, as you say.

476
00:26:19,635 --> 00:26:25,004
Like if you have, if you're gonna have
this industry because it's so tied to

477
00:26:25,004 --> 00:26:31,665
sort of local regulatory, uh, apparatus,
you need to have scale to sell into.

478
00:26:31,725 --> 00:26:35,834
Like you can't, it's very difficult
to export these kind of innovations

479
00:26:35,834 --> 00:26:37,185
unless you have some sort of deal.

480
00:26:37,185 --> 00:26:41,175
So like Australia does a lot of early
stage biotech research because they

481
00:26:41,175 --> 00:26:46,995
have a favorable sort of, um, pathway
to get FDA approval and stuff like that.

482
00:26:47,264 --> 00:26:48,854
But that's more the
exception than the rules.

483
00:26:48,854 --> 00:26:51,044
So usually you need a big market.

484
00:26:51,765 --> 00:26:58,335
Um, to do this, Europe, China, United
States for the most part, and China,

485
00:26:58,635 --> 00:27:00,435
you know, they've planted their marker.

486
00:27:00,465 --> 00:27:04,905
So, you know, I think they're here
to say, how do you, how do you

487
00:27:04,905 --> 00:27:07,155
get positive exposure to that?

488
00:27:07,155 --> 00:27:12,285
Like, we have a lot of different things
around this, you know, that we're doing,

489
00:27:12,285 --> 00:27:14,505
but that's more of a bottom up question.

490
00:27:14,505 --> 00:27:18,945
But certainly as a theme, I, I think
it's, I think it's pretty legit.

491
00:27:19,965 --> 00:27:20,265
Jacob Shapiro: Yeah.

492
00:27:20,295 --> 00:27:22,995
I want to give you some stats because
I, I think you're right in terms

493
00:27:22,995 --> 00:27:25,755
of a snapshot of today, the United
States is still the juggernaut.

494
00:27:25,755 --> 00:27:28,425
This is sort of the, in the same
vein as, as the conversation

495
00:27:28,425 --> 00:27:30,255
with Multipolarity, but.

496
00:27:30,540 --> 00:27:33,060
When I look at the data, and this
is like, you know, I've started

497
00:27:33,060 --> 00:27:34,530
my deep dive into this this week.

498
00:27:34,530 --> 00:27:37,715
So maybe three weeks from now I'll be
here saying, eh, like, uh, this data, I,

499
00:27:37,720 --> 00:27:39,210
I found some other data that's better.

500
00:27:39,210 --> 00:27:42,629
But, but here's just a couple of data
points that like, really I sort of sat

501
00:27:42,629 --> 00:27:44,220
up in my chair when I read some of these.

502
00:27:44,700 --> 00:27:48,720
Um, if you look at share of clinical
trials based on a company's headquarters

503
00:27:48,840 --> 00:27:55,590
in 2013, China accounted for less than
5% globally as of 2023, almost 30%.

504
00:27:55,980 --> 00:28:00,750
And the United States has declined
from sort of between 37, 38 down to 34.

505
00:28:00,990 --> 00:28:04,170
If you look at global, um,
shares of biotechnology, venture

506
00:28:04,170 --> 00:28:05,880
capital raised the United States.

507
00:28:05,880 --> 00:28:09,810
That's declined from about 70% of
global share to 60% from China.

508
00:28:09,810 --> 00:28:13,110
It went to basically five to almost 20%.

509
00:28:13,740 --> 00:28:20,070
Um, when you look at, um, STEM PhD
graduates in 2000, US universities

510
00:28:20,070 --> 00:28:24,480
awarded more than twice as many STEM
doctoral degrees as Chinese universities.

511
00:28:24,810 --> 00:28:30,150
Uh, in 2019, uh, China awarded
almost 50,000 STEM PhD degrees.

512
00:28:30,450 --> 00:28:32,010
United States 33,000.

513
00:28:32,670 --> 00:28:34,620
So getting lapped there in general.

514
00:28:34,890 --> 00:28:40,080
Um, up to this, uh, these next stats are
from CSIS up to 90% of the most widely

515
00:28:40,080 --> 00:28:43,590
used medications in the United States,
including ibuprofen and acetaminophen.

516
00:28:43,590 --> 00:28:48,420
So your Tylenol are imported from China
as Chinese investments have surged in

517
00:28:48,420 --> 00:28:51,840
the biotech space in the last 10, 20
years, federal funding for biotech is

518
00:28:51,840 --> 00:28:54,450
actually flat in the US since the 1960s.

519
00:28:54,450 --> 00:28:58,350
And the regulatory environment has
gotten even more sort of complicated.

520
00:28:58,710 --> 00:29:04,350
There was a bio survey, um, that surveyed
124 different biopharma companies

521
00:29:04,380 --> 00:29:11,100
inside of the United States, and they
found that 79% of them, so 79% of 124

522
00:29:11,100 --> 00:29:16,770
US biopharma companies had contracts
with China contract manufacturing

523
00:29:16,770 --> 00:29:20,220
organizations or contract development
and manufacturing organizations.

524
00:29:20,280 --> 00:29:23,220
And that's so important because
it's not like you can just

525
00:29:23,220 --> 00:29:24,630
switch that to the United States.

526
00:29:24,630 --> 00:29:27,270
I recall the conversation
we had with, uh, Tomas.

527
00:29:27,330 --> 00:29:27,630
Uh.

528
00:29:28,470 --> 00:29:31,110
Uh, on the podcast that, uh, well,
I guess that was the beginning of

529
00:29:31,110 --> 00:29:32,520
the year, so many episodes ago.

530
00:29:32,790 --> 00:29:37,620
But one of the questions, uh, we asked
Tomas was, Hey, if, if we could wave a

531
00:29:37,620 --> 00:29:41,190
magic wand and there were no regulatory
problems and there was operation warp

532
00:29:41,190 --> 00:29:45,150
speed from the US government, how fast
would it take you to spin up US refining

533
00:29:45,150 --> 00:29:48,030
capacity for some of the rare earths and
other minerals that you're looking at?

534
00:29:48,180 --> 00:29:51,660
And he said, without hesitation, eh, like
seven years is probably a good estimate.

535
00:29:51,690 --> 00:29:54,180
Maybe that's a little conservative,
but seven years, a good estimate.

536
00:29:54,630 --> 00:29:57,390
Um, bio found that it would
take a lot of these biopharma

537
00:29:57,390 --> 00:30:00,480
companies that they surveyed up
to eight years to change partners.

538
00:30:00,870 --> 00:30:05,130
So even if you want to pass something like
the Bio Secure Act, or if you want, if

539
00:30:05,130 --> 00:30:09,510
the Trump administration considers other
things to try and move, um, dependents

540
00:30:09,510 --> 00:30:13,500
away from some of these, you know, Chinese
contract manufacturing organizations,

541
00:30:13,860 --> 00:30:18,030
uh, okay, you're gonna need seven to
eight years to build either the domestic

542
00:30:18,030 --> 00:30:21,270
capacity or the nearshoring capacity
to do some of these sorts of things.

543
00:30:21,570 --> 00:30:23,880
So I totally grant that the like.

544
00:30:24,165 --> 00:30:26,565
Snapshot today, the United
States is still the juggernaut,

545
00:30:26,895 --> 00:30:28,455
but Arrow is pointing down.

546
00:30:28,545 --> 00:30:30,555
And for China, the arrow is pointing up.

547
00:30:30,825 --> 00:30:34,215
And even though they don't have the
same level of experience of turning

548
00:30:34,395 --> 00:30:38,385
cool science into products, and even
though they don't have a history of

549
00:30:38,385 --> 00:30:42,465
venture capital and all these different
things like creating products that make

550
00:30:42,465 --> 00:30:46,514
profitable companies in general, as with
so many of the things that we talking

551
00:30:46,514 --> 00:30:48,555
about, they are the one making things.

552
00:30:48,795 --> 00:30:51,405
They are the ones that make
the things that go into the

553
00:30:51,405 --> 00:30:52,695
things that make the products.

554
00:30:52,695 --> 00:30:56,895
And if you get into a real decoupling sort
of scenario, like, okay, like they can't

555
00:30:56,895 --> 00:31:00,315
do the high-end stuff, but we can't do any
of the high-end stuff without them either.

556
00:31:00,615 --> 00:31:03,855
And they are pushing really, really hard
on the science and trying to get smart.

557
00:31:03,855 --> 00:31:06,680
So maybe it'll take a long time,
but I don't know, like the, the

558
00:31:06,685 --> 00:31:08,565
arrow seems to be pointing up to me.

559
00:31:08,685 --> 00:31:11,325
Um, am I, is is that too doom and gloom?

560
00:31:11,325 --> 00:31:13,425
Because you said not to go doom
and gloom and I'm looking at the

561
00:31:13,425 --> 00:31:14,565
data and I'm like, I don't know.

562
00:31:14,565 --> 00:31:16,245
First look looks pretty gloomy to me.

563
00:31:18,825 --> 00:31:20,415
Rob Larity: China has a lot of advantages.

564
00:31:20,745 --> 00:31:21,225
Um.

565
00:31:21,870 --> 00:31:26,370
One of the best books to read on this
subject of venture capital and biotech

566
00:31:26,909 --> 00:31:33,570
is Bill Jane Way's, um, doing capitalism
in the, in the financial economy, or

567
00:31:33,570 --> 00:31:35,790
I forget what it's called, something
like that Bill Jane Way's book.

568
00:31:36,450 --> 00:31:41,669
And in it he points out, you know, he was
traditionally a software VC and he pointed

569
00:31:41,669 --> 00:31:48,419
out the difficulty of VC in biotech is
you know exactly what your market is like.

570
00:31:48,419 --> 00:31:52,470
You can literally say, okay,
there's 482,000 people with

571
00:31:52,470 --> 00:31:54,270
this disease every year.

572
00:31:54,750 --> 00:31:57,810
That's we can sell to immediately
if we can get this right,

573
00:31:57,975 --> 00:32:00,120
which is very different.

574
00:32:00,210 --> 00:32:05,520
But at the same time, getting the
science to work, getting a product that

575
00:32:05,520 --> 00:32:11,250
actually can get through, you know,
the gauntlet of, of clinical trials and

576
00:32:11,250 --> 00:32:18,810
all of that is so long and so expensive
that even though you kind of de-risk

577
00:32:18,810 --> 00:32:21,149
the market size like the TAM issue.

578
00:32:21,855 --> 00:32:28,064
Um, like with very few exceptions,
there's, there's very few like really

579
00:32:28,064 --> 00:32:30,855
successful recurring biotech VCs.

580
00:32:31,365 --> 00:32:33,764
Like who's the Andreessen
Horowitz of biotech?

581
00:32:34,544 --> 00:32:40,395
Like, you know, I'm sure there's some
firms that have had success, but it's

582
00:32:40,395 --> 00:32:45,135
very difficult to do and I bring that
up because when you think about discount

583
00:32:45,135 --> 00:32:48,584
rates, when you think about time horizon,
and this is one of the issues when we talk

584
00:32:48,584 --> 00:32:54,044
about uncertainty and why what Trump is
doing, getting this back to the macro is

585
00:32:54,044 --> 00:32:55,814
not gonna fix a lot of these problems.

586
00:32:55,875 --> 00:32:58,814
The problem in many ways is
discount rate and uncertainty.

587
00:32:59,264 --> 00:33:01,605
You're not gonna go build a factory
if you don't know what the hell the

588
00:33:01,605 --> 00:33:03,344
policy is gonna be five years from now.

589
00:33:03,855 --> 00:33:05,804
You're not gonna invest in a biotech firm.

590
00:33:05,804 --> 00:33:10,125
And we see this on the ground up 'cause
we get a lot of visibility into early

591
00:33:10,125 --> 00:33:12,254
stage biotech and med tech companies.

592
00:33:12,554 --> 00:33:16,230
And they're suffering because people
are looking at what's happening at the

593
00:33:16,230 --> 00:33:20,415
FDA and they're saying, what the hell is
the, is the length of the pipeline here?

594
00:33:20,760 --> 00:33:23,610
Is this gonna take four years
or is it gonna take seven years?

595
00:33:24,120 --> 00:33:28,170
Is it gonna cost $30 million to get
to phase two, or is it gonna cost

596
00:33:28,170 --> 00:33:30,180
$70 million to get to phase two?

597
00:33:30,720 --> 00:33:32,520
And there's so much
uncertainty around that.

598
00:33:32,580 --> 00:33:38,220
At the same time that the 30 year treasury
yields is making new highs, it just

599
00:33:38,220 --> 00:33:40,620
strangles private capital allocation.

600
00:33:40,620 --> 00:33:45,330
I mean this is going back to Cain's, like
this is classic, you know, stuff here.

601
00:33:46,290 --> 00:33:51,630
And I say that because, you know, China
does have, the Chinese capital allocation

602
00:33:51,630 --> 00:33:56,910
model does have a, a real advantage
there because it's not market driven.

603
00:33:56,970 --> 00:34:00,540
In many cases it can be driven
by political dick to, it can

604
00:34:00,540 --> 00:34:02,250
be driven by other factors.

605
00:34:02,820 --> 00:34:06,630
And this is getting to one of the, like,
I don't want to be all doom and gloom.

606
00:34:06,660 --> 00:34:09,960
I, I think that's a reason to be very
bullish on China and what they can do.

607
00:34:10,380 --> 00:34:13,020
And let's be clear like
this is not a competition.

608
00:34:13,050 --> 00:34:15,300
The more good stuff that comes
out of this industry, the

609
00:34:15,300 --> 00:34:16,830
more humanity just does well.

610
00:34:17,159 --> 00:34:21,600
So it's not, you know, bombs or
semiconductors or missiles or something.

611
00:34:21,989 --> 00:34:24,120
Like, let's just keep that in perspective.

612
00:34:24,120 --> 00:34:25,830
So we want everyone to win here.

613
00:34:26,489 --> 00:34:31,139
Um, it's not gonna make the US suffer
If, you know Chinese, uh, elderly

614
00:34:31,139 --> 00:34:34,469
people get cured of Alzheimer's, like
that's just a win-win for everybody.

615
00:34:35,429 --> 00:34:39,330
But, you know, I think there's
reasons to be very bullish on,

616
00:34:39,359 --> 00:34:41,429
on the Chinese opportunity.

617
00:34:43,020 --> 00:34:46,080
I wouldn't say doom and gloom for the
US 'cause I, I, I do wanna speak to

618
00:34:46,080 --> 00:34:50,489
that, but one of the sort of hidden
advantages of the US is I think, sort

619
00:34:50,489 --> 00:34:54,509
of the growing influence of impact
capital and sort of social investing.

620
00:34:54,509 --> 00:34:58,170
And, and this is something I've really
come to appreciate more since we've been

621
00:34:58,170 --> 00:35:02,100
doing the, you know, work with bespoke
and, and seeing how people are doing this

622
00:35:02,430 --> 00:35:10,319
at large scale is, that's sort of another
way of, of the Chinese model in some ways.

623
00:35:10,319 --> 00:35:15,210
Like it's not financially
driven only it can have.

624
00:35:15,734 --> 00:35:19,365
You know, quote unquote political motives
and, you know, social motives, o other

625
00:35:19,365 --> 00:35:21,315
reasons to invest in these ventures.

626
00:35:21,615 --> 00:35:26,145
Like I just was speaking with someone,
um, this morning I had coffee, uh, with

627
00:35:26,145 --> 00:35:30,585
a guy who's involved in a, in a biotech
startup, and they're doing a gene editing

628
00:35:30,585 --> 00:35:32,535
thing for congenital heart failure.

629
00:35:33,345 --> 00:35:38,234
And, um, they're in the process of
raising, you know, 30 or $40 million

630
00:35:38,234 --> 00:35:43,185
from a daf, a donor-advised fund and,
and doing it through a grant process.

631
00:35:44,085 --> 00:35:48,765
Um, that's a huge, when I, we talk about
the pools of wealth and what people

632
00:35:48,765 --> 00:35:53,444
invest in and why that's a huge sort
of un under-recognized and strength

633
00:35:53,444 --> 00:35:58,274
of the US that is probably gonna get
bigger, uh, in the next few years.

634
00:35:59,325 --> 00:36:03,975
That said, it's not that big
relative to the existing mechanisms

635
00:36:03,975 --> 00:36:07,245
and all those other problems about
uncertainty and VC throttling

636
00:36:07,245 --> 00:36:09,015
back that is gonna outweigh that.

637
00:36:09,555 --> 00:36:13,154
It's just a way of saying like, the
US isn't totally screwed in any way.

638
00:36:13,845 --> 00:36:17,295
It's just relative, you know,
getting to the Multipolarity thesis,

639
00:36:17,295 --> 00:36:19,275
China is going to continue rising.

640
00:36:19,275 --> 00:36:22,785
They have these unique advantages
and the US does have major problems

641
00:36:22,785 --> 00:36:25,305
even though, you know, a lot of
those strengths still are there.

642
00:36:26,085 --> 00:36:26,535
Um,

643
00:36:27,465 --> 00:36:31,425
Jacob Shapiro: yeah, I'm, I'm struck when
you say that about, and I don't know if

644
00:36:31,425 --> 00:36:35,295
I'm just making everything comport to
my thesis here 'cause I'm in danger of

645
00:36:35,295 --> 00:36:37,065
doing that, but when you think about.

646
00:36:37,845 --> 00:36:41,385
Even the notion of tariffs and
of protectionist US policy and

647
00:36:41,385 --> 00:36:45,825
of the overtones and current US
policy to the early 19 hundreds.

648
00:36:45,825 --> 00:36:49,605
I mean, even in what you just said, in
the early 19 hundreds, there was a real

649
00:36:49,605 --> 00:36:53,085
movement in the United States towards
social welfare that was privately funded.

650
00:36:53,415 --> 00:36:55,845
The government was not the
one that was actually funding

651
00:36:55,845 --> 00:36:56,655
all these sorts of things.

652
00:36:56,655 --> 00:36:59,535
It really isn't until World
War I that the size of the US

653
00:36:59,535 --> 00:37:00,915
government increases markedly.

654
00:37:00,915 --> 00:37:05,835
And so you had, um, you know, this
real movement in the United States,

655
00:37:05,835 --> 00:37:10,935
whether it was making factories safer
or in educating children or like, or in

656
00:37:11,175 --> 00:37:14,745
basic hygiene, things like that, where
you had, and you know, there was also

657
00:37:14,865 --> 00:37:18,015
the, the temperance side of this too,
making people drink less, which, uh,

658
00:37:18,045 --> 00:37:19,815
maybe went, went a little bit too far.

659
00:37:20,235 --> 00:37:24,105
Um, or not, but may, maybe we
have some temperance radicals

660
00:37:24,105 --> 00:37:25,065
listening to the podcast.

661
00:37:25,065 --> 00:37:26,565
I don't wanna, I don't
wanna assume anything.

662
00:37:26,985 --> 00:37:27,465
Um.

663
00:37:28,065 --> 00:37:32,565
But you know, you're talking like that,
that sort of notion is very antiquated.

664
00:37:32,955 --> 00:37:35,984
Like we live in a world where
like, like you said, it's too

665
00:37:35,984 --> 00:37:38,025
small to make a huge difference.

666
00:37:38,025 --> 00:37:41,115
And many of the amazing changes
that have happened inside of the

667
00:37:41,115 --> 00:37:43,815
United States happened because
the United States government, for

668
00:37:43,815 --> 00:37:46,904
better or for worse, we can agree or
disagree from a policy perspective on

669
00:37:46,904 --> 00:37:48,075
whether it's the right thing or not.

670
00:37:48,404 --> 00:37:50,685
But since World War I, the US
government has basically just gotten

671
00:37:50,685 --> 00:37:54,105
bigger and bigger and bigger and
has taken on more and more and more.

672
00:37:54,105 --> 00:37:57,194
And that has come with certain problems,
but it's also come on, unleashing

673
00:37:57,585 --> 00:37:59,805
capital and focus on a national scale.

674
00:37:59,805 --> 00:38:03,285
Not according to dicta, like you
said, as as in a dictatorship.

675
00:38:03,285 --> 00:38:05,145
But you know, in certain moments, yes.

676
00:38:05,145 --> 00:38:06,975
Like semiconductors is a story there too.

677
00:38:07,065 --> 00:38:09,705
And I hate being the cynical one in
our conversation, but you say that

678
00:38:09,705 --> 00:38:11,174
this is gonna be better for the world.

679
00:38:11,625 --> 00:38:12,134
Uh.

680
00:38:12,839 --> 00:38:16,200
Yeah, maybe overall, but not
necessarily for the United States.

681
00:38:16,410 --> 00:38:19,770
If China cures Alzheimer's and China
and the United States are in a great

682
00:38:19,770 --> 00:38:24,330
grand geopolitical battle, um, and,
uh, we can't, and the United States

683
00:38:24,330 --> 00:38:25,890
cannot replicate what China does.

684
00:38:25,890 --> 00:38:29,790
I mean, China's gonna use that against
the United States like we already saw,

685
00:38:29,790 --> 00:38:35,580
like in COVID vaccine diplomacy and
the hoarding of PPE and how really

686
00:38:35,580 --> 00:38:40,020
geopolitically nasty things got about
a relatively minor, uh, pandemic.

687
00:38:40,020 --> 00:38:42,899
In the grand scheme of things, when you
look at other pandemics and the mortality

688
00:38:42,899 --> 00:38:47,399
rate and things like that, like cynically,
like I, I think we're imagining a world

689
00:38:47,399 --> 00:38:49,950
in which if the United States is not
at the center here and there are other

690
00:38:49,950 --> 00:38:55,020
centers that are doing so much better,
um, yeah, I mean, I, I guess maybe you'll

691
00:38:55,020 --> 00:38:58,049
tell me that the technology will diffuse
and it'll, it'll go around everywhere.

692
00:38:58,049 --> 00:39:01,350
But the cynic in me sort of sees,
well, no, like if China's at the

693
00:39:01,350 --> 00:39:05,879
center of these things, um, today,
then like life relatively in

694
00:39:05,879 --> 00:39:07,169
the United States will be worse.

695
00:39:07,169 --> 00:39:10,649
It's, it's not a foregone conclusion
that, that that technology will diffuse.

696
00:39:12,510 --> 00:39:16,290
Rob Larity: Well, from my perspective, if
you said to me that the world is gonna get

697
00:39:16,290 --> 00:39:20,100
a cure for Alzheimer's, but the Chinese
are gonna be the only ones to develop

698
00:39:20,100 --> 00:39:21,840
it, I would want to live in that world.

699
00:39:22,560 --> 00:39:28,860
Um, but let me, let me give like a bear
case on the US 'cause I can, I can argue

700
00:39:28,950 --> 00:39:31,440
a bear case and this is how I see it.

701
00:39:31,470 --> 00:39:36,270
I don't necessarily believe this, but
this is how I would lay it out, which is

702
00:39:37,020 --> 00:39:41,100
that you take sort of an exceptionalist
view of the US biotech industry over

703
00:39:41,100 --> 00:39:46,470
the last, you know, 40, 50 years and
say, okay, this is like, you know,

704
00:39:46,470 --> 00:39:48,690
the New York jazz scene in the 1950s.

705
00:39:48,690 --> 00:39:52,770
Like the right places, the right
people just happen to be together.

706
00:39:53,190 --> 00:39:55,530
You know, this, this is
Renaissance Florence.

707
00:39:55,890 --> 00:39:59,520
Like something happens, some like,
'cause if you look at the rest of the

708
00:39:59,520 --> 00:40:04,890
world, biotech is something that doesn't
really happen almost on anywhere else.

709
00:40:06,030 --> 00:40:09,810
Even Europe, which is extraordinarily rich
and successful in so many levels like.

710
00:40:10,110 --> 00:40:14,280
The level of biotech research that
they're doing, really like at the edge of

711
00:40:14,280 --> 00:40:20,640
what's happening is, is not remotely in
proportion to their level of development.

712
00:40:21,270 --> 00:40:24,960
So there's something kind of weird about
biotech, and I suspect maybe there's

713
00:40:24,960 --> 00:40:29,400
something about sort of these, like
the equilibrium for private capital

714
00:40:29,400 --> 00:40:30,750
to do this, it's just not there.

715
00:40:30,780 --> 00:40:35,160
So you need some weird mixture of like
the right people in the right place and

716
00:40:35,160 --> 00:40:37,650
the right sort of financing structures.

717
00:40:38,940 --> 00:40:43,590
And I guess my bear case would be
like, you know, is that the case?

718
00:40:43,590 --> 00:40:45,030
Is this renaissance Florence?

719
00:40:45,060 --> 00:40:48,690
Because if Florence goes down,
you can't just replicate that.

720
00:40:49,380 --> 00:40:55,980
Like if the magic sauce is lost, like
that could just be a, a net loss.

721
00:40:55,980 --> 00:40:59,070
It's not just like, oh, these people
will go do this somewhere else, or this

722
00:40:59,070 --> 00:41:03,720
activity will happen in India, or you
know, whatever, Turkey or something like,

723
00:41:04,140 --> 00:41:06,030
maybe it just doesn't happen anymore.

724
00:41:06,645 --> 00:41:09,134
And, and to support that,
like, just an anecdote.

725
00:41:09,134 --> 00:41:14,294
So, you know, I'm originally was
in Cambridge for all so many years,

726
00:41:14,355 --> 00:41:18,464
and most of my friends are somehow
related to scientific research.

727
00:41:18,495 --> 00:41:23,685
And Juliet is obviously, as you know, um,
so I see a lot of people in, in that area.

728
00:41:24,495 --> 00:41:30,555
And, um, the, the thing that strikes
me is a how dependent, truly cutting

729
00:41:30,555 --> 00:41:32,924
edge research is on immigrants.

730
00:41:34,004 --> 00:41:37,335
Um, that is a huge factor.

731
00:41:37,395 --> 00:41:42,615
Like if you look at the top labs
at Harvard for instance, they are

732
00:41:43,214 --> 00:41:48,165
60, 70% non-US born researchers.

733
00:41:48,855 --> 00:41:53,924
Um, so the US has been this
enormous magnet for talent and

734
00:41:53,984 --> 00:41:56,115
that is really under threat.

735
00:41:57,015 --> 00:42:00,255
Um, you know, some of my, my closest
friends, just to give one anecdote,

736
00:42:00,255 --> 00:42:03,495
so I'm really good friends with a
Brazilian couple, young Brazilian couple.

737
00:42:03,495 --> 00:42:04,575
They're both scientists.

738
00:42:05,025 --> 00:42:06,285
They come from Sao Paulo.

739
00:42:06,795 --> 00:42:11,355
They've been here for like seven
or eight years, uh, on a green

740
00:42:11,355 --> 00:42:13,185
card, which they got recently.

741
00:42:13,875 --> 00:42:17,595
One is the head of a lab, one
works at a private biotech company.

742
00:42:18,465 --> 00:42:21,315
Both of them are, they just
had to go back to Brazil.

743
00:42:21,315 --> 00:42:24,315
They were terrified they wouldn't
be allowed back into the country.

744
00:42:25,065 --> 00:42:29,535
Um, they're both like reporting
that everyone they know is just,

745
00:42:29,565 --> 00:42:30,645
they don't know what to do.

746
00:42:31,185 --> 00:42:36,045
Um, they're, they're feeling whether it's
justified or not, there's an impression

747
00:42:36,555 --> 00:42:40,215
that they're gonna be kicked outta the
country, that they're gonna be hunted.

748
00:42:40,215 --> 00:42:43,125
Like there's some issue
that's gonna emerge because

749
00:42:43,125 --> 00:42:44,595
there's so much stress around.

750
00:42:44,625 --> 00:42:45,975
We, we take this for granted.

751
00:42:45,975 --> 00:42:47,985
As you know, American citizens.

752
00:42:48,465 --> 00:42:52,695
There's so much stress around the process
of getting your green card, doing the

753
00:42:52,695 --> 00:42:54,465
application, going through the process.

754
00:42:55,274 --> 00:42:56,265
Trying to get it through.

755
00:42:56,294 --> 00:43:01,605
Don't, don't screw something up, like the
stressful levels are through the roof.

756
00:43:02,085 --> 00:43:07,274
Uh, one of their friends from Brazil
went back to Brazil last year to go work,

757
00:43:07,904 --> 00:43:11,565
uh, in a lab in, in, in Port Alegre.

758
00:43:12,375 --> 00:43:14,294
And that was weird.

759
00:43:14,475 --> 00:43:17,714
Like he just, he just went back
to Brazil and I don't know, like

760
00:43:19,125 --> 00:43:20,835
maybe they'll stay long term.

761
00:43:20,924 --> 00:43:25,694
They've, they've kind of put down roots,
but at the margin it's gonna be more

762
00:43:25,694 --> 00:43:31,455
difficult to attract that talent if that's
the zeitgeist around what's going on.

763
00:43:31,515 --> 00:43:36,645
And people see that we're gutting the
public institutions that stand behind

764
00:43:36,645 --> 00:43:38,444
a lot of the kind of basic research.

765
00:43:38,865 --> 00:43:41,685
'cause you know, we have to remember
too, it, it's sort of like government

766
00:43:41,685 --> 00:43:45,855
and, and the bureaucracies, or I'm
sorry, government and private industry

767
00:43:45,855 --> 00:43:47,265
where people go back and forth.

768
00:43:47,265 --> 00:43:51,075
Like people will come here to do
research and then they'll hop to.

769
00:43:51,735 --> 00:43:57,315
A biotech private sector job like that
happens a lot because most people,

770
00:43:57,885 --> 00:44:03,105
especially if they don't, if they're
coming from abroad, they're not usually

771
00:44:03,105 --> 00:44:04,935
coming from a private sector background.

772
00:44:04,965 --> 00:44:06,465
'cause there are no biotechs abroad.

773
00:44:06,585 --> 00:44:10,545
It's, you know, they're, they're,
they've just been educated and

774
00:44:10,545 --> 00:44:14,025
now they're looking for, you know,
they're gonna continue in the ac in

775
00:44:14,025 --> 00:44:16,605
the academic, you know, uh, role.

776
00:44:16,965 --> 00:44:21,045
But that is really, like, that's a
bottleneck that's dependent on grants and

777
00:44:21,045 --> 00:44:24,765
labs and universities and, you know, all
of this stuff that we're talking about.

778
00:44:25,305 --> 00:44:30,945
So, you know, it's easy to underestimate
how much, if that bottleneck gets

779
00:44:31,005 --> 00:44:36,945
squeezed, that you're ultimately squeezing
the flow of people also to the private

780
00:44:36,945 --> 00:44:41,625
sector and to, you know, the big biotechs
in Kendall Square and, and all of that.

781
00:44:41,625 --> 00:44:43,935
Like, it's just very fragile.

782
00:44:43,995 --> 00:44:47,145
I think that that would be my,
my bear case is that it's much

783
00:44:47,145 --> 00:44:48,345
more fragile than we think.

784
00:44:48,345 --> 00:44:50,415
It's much more of a like.

785
00:44:50,805 --> 00:44:56,325
Unique combination of ingredients and
we've like spoiled the, the souffle and

786
00:44:56,325 --> 00:45:01,365
now it's just gonna collapse and you
can't get it back in remotely the same,

787
00:45:02,205 --> 00:45:04,035
you know, fashion that it once was.

788
00:45:04,725 --> 00:45:06,795
Jacob Shapiro: Well, and, and I
don't know how much this actually

789
00:45:06,795 --> 00:45:10,880
matters, but you know, there used to
be a belief in scientific progress.

790
00:45:11,025 --> 00:45:14,444
Like these things were seen by
society as fundamentally apolitical

791
00:45:14,444 --> 00:45:18,735
and as fundamentally virtuous, and
they're not seen that way anymore.

792
00:45:18,735 --> 00:45:23,235
I mean, we're having real conversations
in 2025, the year of our Lord, about

793
00:45:23,235 --> 00:45:25,245
measles outbreaks in the United States.

794
00:45:26,295 --> 00:45:28,995
You know, I'm, I'm sorry if there
are listeners who, who are on the

795
00:45:28,995 --> 00:45:31,845
anti-vax thing, but I like, it's
one of the few things I, I don't

796
00:45:31,845 --> 00:45:33,105
have a whole lot of patience for.

797
00:45:33,105 --> 00:45:35,265
Like, we have a fix to this problem.

798
00:45:35,445 --> 00:45:36,195
It was fixed.

799
00:45:36,195 --> 00:45:38,025
It's a vaccine like I have children.

800
00:45:38,025 --> 00:45:40,545
You wanna risk that your
kids are gonna get measles.

801
00:45:40,815 --> 00:45:43,155
Like this is not some experimental thing.

802
00:45:43,155 --> 00:45:43,905
Like we had it.

803
00:45:43,905 --> 00:45:46,515
And like even stuff like
that is getting demonized.

804
00:45:46,515 --> 00:45:49,605
And that's before you get to, okay,
we've got all these new types of

805
00:45:49,605 --> 00:45:53,475
technologies that we need a whole new
regulatory apparatus to even comprehend

806
00:45:53,745 --> 00:45:55,155
the things that we're capable of.

807
00:45:55,155 --> 00:45:55,305
And.

808
00:45:55,725 --> 00:45:58,275
Things that could be very dangerous
if they're not handled correctly.

809
00:45:58,275 --> 00:46:01,245
Like the speed at which we can do things
doesn't mean we should necessarily do them

810
00:46:01,245 --> 00:46:04,365
like we should totally have very serious
conversations about what this looks like.

811
00:46:04,755 --> 00:46:08,595
Uh, but the point just being like in that
fragile renaissance Florence metaphor that

812
00:46:08,595 --> 00:46:13,424
you're talking about, like there was a
time when US society believed in progress

813
00:46:13,424 --> 00:46:17,654
and believed in science, and the majority
felt good about that and felt good about

814
00:46:17,654 --> 00:46:19,125
the United States being the cutting edge.

815
00:46:19,755 --> 00:46:22,065
I don't get the sense
that that's true anymore.

816
00:46:22,275 --> 00:46:25,515
I saw a map about for, for measles
vaccination rates in the country,

817
00:46:25,515 --> 00:46:30,105
and I was absolutely gobsmacked,
um, at the, at the high levels

818
00:46:30,105 --> 00:46:31,875
of like unvaccinated rates.

819
00:46:32,205 --> 00:46:34,395
Um, for something, for
something like measles.

820
00:46:34,395 --> 00:46:37,965
So like maybe the, the system
doesn't care about what.

821
00:46:38,535 --> 00:46:41,685
The rank and file think, but I gotta
think that if you have a society that is

822
00:46:41,685 --> 00:46:45,735
beginning to show signs of fundamentally
doubting the very thing that underpins the

823
00:46:45,735 --> 00:46:49,695
advances in the first place, um, I mean
maybe that will express itself in a lack

824
00:46:49,695 --> 00:46:51,825
of political will to protect this funding.

825
00:46:52,065 --> 00:46:55,065
Maybe it does just make it so
that foreign researchers are like,

826
00:46:55,065 --> 00:46:56,385
well, why would I want to go there?

827
00:46:56,445 --> 00:46:59,625
Like, China's the one that has a five
point plan that says, we wanna do

828
00:46:59,625 --> 00:47:02,745
the absolute cutting edge stuff and
we will stop at nothing to make sure

829
00:47:02,745 --> 00:47:03,945
that the cutting edge happens here.

830
00:47:03,945 --> 00:47:08,025
We'll give you all the tools and all the,
the hubs and all of the, everything else

831
00:47:08,025 --> 00:47:11,115
just like solve these problems because
this is what the future of the planet and

832
00:47:11,115 --> 00:47:12,915
of the nation like completely requires.

833
00:47:12,915 --> 00:47:16,155
And you couldn't be farther from that in
the current US regulatory environment.

834
00:47:16,845 --> 00:47:20,385
Rob Larity: Well, to tie this into
something else that we've talked about in

835
00:47:20,385 --> 00:47:25,185
recent months, um, scientists are experts.

836
00:47:25,395 --> 00:47:27,765
They're authority figures by definition.

837
00:47:27,795 --> 00:47:29,355
'cause they have a secret knowledge.

838
00:47:30,165 --> 00:47:34,965
And you know, I kind of
made my thesis earlier that.

839
00:47:36,270 --> 00:47:39,030
I think a lot of what's happening in
the US is really a cultural thing.

840
00:47:39,030 --> 00:47:42,390
And we've talked about this many
times in the sense of like, it is an

841
00:47:42,390 --> 00:47:48,180
anti-authoritarian and anti expert,
anyone who, who is perceived to be

842
00:47:48,180 --> 00:47:54,780
sort of part of the hierarchy of, uh,
authorities and people, you know, elites,

843
00:47:55,110 --> 00:47:58,680
they're being torn down 'cause it's
a, it's a populous kind of movement.

844
00:47:59,460 --> 00:48:05,790
And you can see that like Renaissance
Florence only worked and those superstar

845
00:48:05,790 --> 00:48:10,650
artists, you know, fancy pants elites,
they only got to do what they did because

846
00:48:10,650 --> 00:48:14,700
the public was financing the churches
that were paying them to paint stuff.

847
00:48:15,030 --> 00:48:15,420
Jacob Shapiro: Mm-hmm.

848
00:48:15,630 --> 00:48:20,100
Rob Larity: And you know, same thing
for like, you know, mid 16 hundreds

849
00:48:20,790 --> 00:48:25,200
Dutch culture, like people really
valued what those guys were doing

850
00:48:25,200 --> 00:48:28,530
and they were buying what they were
doing and that's why it could exist.

851
00:48:29,490 --> 00:48:32,160
And, you know, to transport that to today.

852
00:48:33,645 --> 00:48:39,795
The public doesn't support, you
know, these, these structures doesn't

853
00:48:39,795 --> 00:48:42,465
support these, these forms of elites.

854
00:48:42,465 --> 00:48:44,625
And you can see that in the
gutting of public funding.

855
00:48:45,195 --> 00:48:47,445
It's gonna be very difficult
to, to maintain that.

856
00:48:47,505 --> 00:48:51,735
And that's why, like China is one
thing, but I think Europe has an

857
00:48:51,735 --> 00:48:56,505
extraordinary opportunity here
just because it's more, it's more

858
00:48:56,505 --> 00:48:57,975
accessible to most of these people.

859
00:48:58,305 --> 00:49:04,665
Like realistically speaking, my Brazilian
friends, if they didn't go to Cambridge,

860
00:49:05,085 --> 00:49:06,555
they would not be going to China.

861
00:49:06,645 --> 00:49:07,755
'cause it's just too weird.

862
00:49:07,755 --> 00:49:09,855
It's too like, out of their experience.

863
00:49:10,425 --> 00:49:14,985
Um, it's not like China is its
own civilization, whereas like

864
00:49:14,985 --> 00:49:19,305
coming here to Paris, you know,
that's a much easier leap.

865
00:49:19,995 --> 00:49:22,755
And I haven't had a chance to really dig
into this, but one of the things that's

866
00:49:22,755 --> 00:49:27,555
like top on my list is I know the EU has
announced some, some significant funding

867
00:49:27,585 --> 00:49:29,445
behind, like trying to attract scientists.

868
00:49:30,150 --> 00:49:33,330
From abroad and, and, um,
like really lean into this.

869
00:49:33,330 --> 00:49:36,660
And I don't know if it's, if
it's of any size or whatever,

870
00:49:37,500 --> 00:49:38,910
but they'd be stupid not to.

871
00:49:39,750 --> 00:49:43,710
Um, and, and you know, just thinking,
putting this back into the framework

872
00:49:43,710 --> 00:49:48,390
of like populism and anti, anti
elites, like as I said before,

873
00:49:48,390 --> 00:49:52,770
Europe is still pretty in favor of
people who know what they're doing.

874
00:49:54,120 --> 00:49:57,660
Uh, you know, uh, right
wing movements left aside.

875
00:49:57,660 --> 00:49:59,610
Like those people aren't
running these nations yet.

876
00:50:00,120 --> 00:50:04,320
Whereas the US is really struggling with
that for reasons we've talked about.

877
00:50:04,440 --> 00:50:09,654
And I think that's gonna be a core problem
for the US in supporting the sciences.

878
00:50:10,560 --> 00:50:15,210
Um, and, and these, these sorts of
like research oriented technology

879
00:50:15,210 --> 00:50:19,860
development ventures, because to
get the people you need to have the

880
00:50:19,860 --> 00:50:23,279
structures in place and you need to
have the, the general acknowledgement

881
00:50:23,279 --> 00:50:24,509
that like, this is a good thing.

882
00:50:24,870 --> 00:50:26,009
We like these people.

883
00:50:26,070 --> 00:50:28,680
This is good for society to have this.

884
00:50:29,625 --> 00:50:32,805
And that's just really lacking,
uh, as you point out in, in a

885
00:50:32,805 --> 00:50:34,305
way that it wasn't 20 years ago.

886
00:50:34,845 --> 00:50:35,385
Jacob Shapiro: Yeah.

887
00:50:35,445 --> 00:50:37,575
Well, maybe two things
to, to close out on.

888
00:50:37,605 --> 00:50:40,185
There was a, I dunno if you saw
this op-ed by Kyle Chan in the New

889
00:50:40,185 --> 00:50:41,715
York Times, which was really good.

890
00:50:42,135 --> 00:50:45,585
Um, and it was about China sort
of dominating things like high-end

891
00:50:45,585 --> 00:50:48,765
manufacturing cars, chips,
MRI machines, commercial jets.

892
00:50:48,765 --> 00:50:52,605
He makes the very spicy take that the
battle for AI supremacy, if we continue

893
00:50:52,605 --> 00:50:55,635
on the current trajectory, will not be
fought between the United States and

894
00:50:55,635 --> 00:50:59,295
China, but between high tech, Chinese
cities like Shenzhen and Hong Jo.

895
00:50:59,325 --> 00:51:01,665
Like it's not, it's not
about us versus China.

896
00:51:01,665 --> 00:51:04,455
It's actually probably about like
Chinese provinces and cities and

897
00:51:04,455 --> 00:51:05,895
like development hubs themselves.

898
00:51:06,465 --> 00:51:11,205
Um, and Kaiser quo, who's somebody that I
really respect, um, Seneca podcast, if tho

899
00:51:11,295 --> 00:51:15,195
for those of you who haven't sort of, uh,
discovered him, wrote, not a rejoinder,

900
00:51:15,195 --> 00:51:18,105
but actually sort of a meaningful
engagement with Kyle Chan's piece.

901
00:51:18,105 --> 00:51:19,695
And I, he had a really great corrective.

902
00:51:19,695 --> 00:51:24,585
He, um, I. I'll actually read something
that he, he said here, he doesn't, he, he

903
00:51:24,585 --> 00:51:27,855
says he doesn't, uh, dispute that China's
poised to dominate in many of these areas,

904
00:51:27,855 --> 00:51:31,725
but he cautions against overstating the
coherence or inevitability of China's rise

905
00:51:31,725 --> 00:51:33,945
or the permanence of America's decline.

906
00:51:34,545 --> 00:51:37,605
Um, he doesn't say this out of patriotic
sentiment or triumph as nostalgia.

907
00:51:37,605 --> 00:51:39,735
Rather, he believes that his
historical outcomes are rarely

908
00:51:39,735 --> 00:51:42,705
as clean as the Chinese century
versus the American century.

909
00:51:42,705 --> 00:51:46,395
And much will hinge on whether either
country can summon the political will

910
00:51:46,395 --> 00:51:50,505
and institutional capacity, um, to
adapt to the scale of the China, uh, to

911
00:51:50,505 --> 00:51:52,275
the, uh, to the scale of the challenge.

912
00:51:52,365 --> 00:51:54,555
China is formidable, but not infallible.

913
00:51:54,585 --> 00:51:56,925
The United States is
reeling but not terminal.

914
00:51:56,985 --> 00:52:00,225
I thought that was like a really good way
of encapsulating some of these things.

915
00:52:00,495 --> 00:52:04,455
On the flip side of this, there was an
article in the Wall Street Journal this

916
00:52:04,455 --> 00:52:08,655
week about, um, a bunch of data centers
that were gonna go up in West Virginia

917
00:52:08,745 --> 00:52:12,675
actually about a, a law that the West
Virginia legislation was trying to pass.

918
00:52:13,410 --> 00:52:16,200
Uh, to allow the use of
natural gas and coal to power

919
00:52:16,200 --> 00:52:17,820
AI projects in West Virginia.

920
00:52:18,120 --> 00:52:22,200
And we are talking Podunk, West
Virginia, some of the most impoverished

921
00:52:22,200 --> 00:52:23,580
places in the entire country.

922
00:52:23,580 --> 00:52:24,600
This is coal country.

923
00:52:24,600 --> 00:52:25,680
It got left behind.

924
00:52:25,860 --> 00:52:27,120
Nobody took care of them.

925
00:52:27,420 --> 00:52:29,970
Uh, it's absolutely, it's a
beautiful part of the country.

926
00:52:29,970 --> 00:52:32,970
I've spent a lot of time actually
like hiking and traveling

927
00:52:32,970 --> 00:52:33,810
in this part of the country.

928
00:52:33,840 --> 00:52:37,680
'cause um, I had some family like in this,
in this neck of the woods, no longer.

929
00:52:37,680 --> 00:52:40,440
But, you know, I've spent time in this
part of the country, even though it's

930
00:52:40,440 --> 00:52:42,540
beautiful, it's poor, it's impoverished.

931
00:52:42,540 --> 00:52:45,210
And the Wall Street Journal article was
all about how the locals are saying,

932
00:52:45,510 --> 00:52:47,880
actually, we don't want any of that.

933
00:52:48,210 --> 00:52:51,630
We don't want any data centers
built anywhere near here.

934
00:52:51,720 --> 00:52:53,100
And on the one hand I'm
like, okay, I get it.

935
00:52:53,100 --> 00:52:56,040
You don't wanna ruin the pristine,
you know, rivers and the hiking and

936
00:52:56,040 --> 00:52:56,940
the mountains and things like that.

937
00:52:56,940 --> 00:52:58,920
But on the other hand, you guys are poor.

938
00:52:59,730 --> 00:53:02,280
Your GDP per capita relative to
the national average, terrible,

939
00:53:02,280 --> 00:53:06,420
your life expense, life expectancy
relative to the national average.

940
00:53:06,420 --> 00:53:07,050
Terrible.

941
00:53:07,320 --> 00:53:11,730
And you don't want the shiny tech money
that's coming in and has discovered

942
00:53:11,730 --> 00:53:13,080
this beautiful part of the country.

943
00:53:13,080 --> 00:53:15,990
It is like, ah, we finally
have something we can use all

944
00:53:15,990 --> 00:53:17,520
this coal and natural gas for.

945
00:53:17,640 --> 00:53:21,990
Why don't you guys become the center of
an AI renaissance inside the United States

946
00:53:21,990 --> 00:53:25,200
And the the poor impoverished residents
are telling the Wall Street Journal.

947
00:53:25,585 --> 00:53:26,125
No way.

948
00:53:26,125 --> 00:53:27,205
Get off my lawn.

949
00:53:27,235 --> 00:53:28,435
I don't want this money.

950
00:53:28,525 --> 00:53:29,695
I want my poverty.

951
00:53:30,025 --> 00:53:33,535
Uh, along with, you know, being able
to hear the crickets, which I get it.

952
00:53:33,535 --> 00:53:34,765
I want to hear the crickets too.

953
00:53:34,825 --> 00:53:37,705
I talked on the last podcast about
how depressing it is that we killed

954
00:53:37,705 --> 00:53:40,555
all the fireflies in New Orleans as
we were trying to wipe out malaria.

955
00:53:40,555 --> 00:53:41,305
Like, I get it.

956
00:53:41,665 --> 00:53:42,924
But you can sort of have both.

957
00:53:43,134 --> 00:53:47,185
And I, I'm, I'm like a little bit tongue
in cheek, but my point is just, you

958
00:53:47,185 --> 00:53:51,205
know, it's not the biotech example, but
this is an impoverished area that has

959
00:53:51,295 --> 00:53:56,095
a resource that could be critical to a
boom in an industry that is going from

960
00:53:56,095 --> 00:54:00,355
strength to strength, AI and data centers
and information economy and everything.

961
00:54:00,565 --> 00:54:02,035
And it's like, nah, actually we're good.

962
00:54:02,904 --> 00:54:03,850
We're good with where we're at.

963
00:54:04,080 --> 00:54:07,165
Like, I, I, I feel like
I see that mentality.

964
00:54:07,575 --> 00:54:11,235
Everywhere in the United States economy,
in the United States culture, in the,

965
00:54:11,475 --> 00:54:14,895
you know, the, the gravity that the
past has make America great again.

966
00:54:14,895 --> 00:54:17,055
Let's go back to the way
that things were before.

967
00:54:17,055 --> 00:54:20,355
Like, I don't know, like there, there
is just something in that, that I

968
00:54:20,355 --> 00:54:23,025
have a hard time engaging with and
which makes, when, which is starting

969
00:54:23,025 --> 00:54:27,915
to color some of these deeper dives
into things like AI and biotech.

970
00:54:28,335 --> 00:54:31,395
Um, in the current context, which it's not
the fault of the current administration.

971
00:54:31,395 --> 00:54:33,945
The current administration is
just, I think, a reflection

972
00:54:33,945 --> 00:54:35,355
of this cultural change.

973
00:54:35,355 --> 00:54:39,075
And with its disjointed policy is
accelerating some of these trends.

974
00:54:39,675 --> 00:54:43,245
Um, but it's, it's hard to be optimistic
in some areas about the United States

975
00:54:43,245 --> 00:54:45,105
when this is the cultural push.

976
00:54:45,165 --> 00:54:46,545
Am am I being, I don't know.

977
00:54:46,545 --> 00:54:47,295
Is that too much?

978
00:54:47,325 --> 00:54:49,215
I, I'm, I guess I'm feeling glum today.

979
00:54:51,105 --> 00:54:54,105
Rob Larity: No, I think it, it
hits, hits it on the head, frankly.

980
00:54:54,135 --> 00:55:00,345
'cause and tying this into China, um,
I think it's a matter of coherence.

981
00:55:00,375 --> 00:55:02,520
Like when I think about
what we're really doing.

982
00:55:04,380 --> 00:55:06,780
For clients or from an
investment standpoint.

983
00:55:06,780 --> 00:55:12,540
So much of it is trying to find where
in the world is there the coherence

984
00:55:12,540 --> 00:55:18,360
of action and the uni unity of action
to, to do big things and to build

985
00:55:18,360 --> 00:55:21,240
things and, and to develop and to grow.

986
00:55:22,200 --> 00:55:24,390
And that's, that's rare.

987
00:55:24,420 --> 00:55:28,500
And, and in the United States,
I think in many ways that's now

988
00:55:28,560 --> 00:55:30,330
breaking down in many places.

989
00:55:30,750 --> 00:55:33,600
Like NIMBY is a form of lack of coherence.

990
00:55:34,020 --> 00:55:38,370
It's atomization of interests
that will not work together, even

991
00:55:38,370 --> 00:55:41,190
though it's probably in the greater
good to build that data center.

992
00:55:41,610 --> 00:55:42,480
You have friction.

993
00:55:43,590 --> 00:55:47,280
And, and this is not to look at China
with rose tinted glasses because

994
00:55:47,880 --> 00:55:52,500
you know, the normal state of China
is one of high friction and lack

995
00:55:52,500 --> 00:55:54,360
of coherence and warring states.

996
00:55:54,810 --> 00:55:58,740
And one of the things I worry about is
like, if Xi Jinping dies tomorrow of a

997
00:55:58,740 --> 00:56:00,870
heart attack, I. What the hell happens?

998
00:56:00,870 --> 00:56:05,100
Do you enter something like, just look,
one of the things that terrifies me, and I

999
00:56:05,100 --> 00:56:08,970
don't think anyone's really talking about
this, I haven't seen it, are these stories

1000
00:56:08,970 --> 00:56:13,860
of, um, I dunno if you've seen this,
but uh, Chinese local governments are

1001
00:56:14,010 --> 00:56:18,900
kidnapping executives who come from other
states and, and like basically holding,

1002
00:56:18,930 --> 00:56:22,200
like blackmailing them, holding them
ransom 'cause they're so cash strapped.

1003
00:56:23,040 --> 00:56:25,380
That is a major red flag to me.

1004
00:56:25,800 --> 00:56:27,690
And maybe it's just, it's anecdotal.

1005
00:56:27,690 --> 00:56:31,260
Maybe it's not big, but that's the sort
of thing you should be looking at if

1006
00:56:31,260 --> 00:56:37,140
you want to make the bear case on China
is that without the sort of coherence

1007
00:56:37,200 --> 00:56:42,060
of 10% growth, which was driven by the
factor, you know, the treadmill, the hill

1008
00:56:42,060 --> 00:56:46,860
factors that we've talked about, does
that coherence break down into atomization

1009
00:56:47,190 --> 00:56:48,900
and they just can't get anything done.

1010
00:56:49,650 --> 00:56:54,270
Um, there's no real sign of that yet,
but that's the risk on the Chinese side.

1011
00:56:54,270 --> 00:56:56,385
And it's not a. Tail risk.

1012
00:56:56,415 --> 00:57:00,465
It's a real, like significant,
like that's the bear case and

1013
00:57:00,465 --> 00:57:02,355
it's worth taking very seriously.

1014
00:57:03,075 --> 00:57:05,805
Um, and in the US you have the bear
case that you pointed out, which I

1015
00:57:05,805 --> 00:57:09,615
think paralysis, inability to build.

1016
00:57:09,675 --> 00:57:12,555
Like that's why software has been so
successful and everything else has

1017
00:57:12,555 --> 00:57:18,465
not because software you can just
spin up a server and you know, AWS

1018
00:57:18,465 --> 00:57:20,355
la la land and no one can stop you.

1019
00:57:21,015 --> 00:57:26,265
Um, it's a lot harder to do that with
physical things out in, out in space.

1020
00:57:26,985 --> 00:57:31,725
Um, so he, God that's like
pretty negative on both places.

1021
00:57:33,675 --> 00:57:36,500
Jacob Shapiro: It is, it is negative on
both places, which actually underscores.

1022
00:57:36,500 --> 00:57:39,525
I, I had a question at an event I did
a couple weeks ago where somebody asked

1023
00:57:39,525 --> 00:57:41,535
me, who wins in the US China trade war?

1024
00:57:41,535 --> 00:57:44,445
And we've said this on the podcast a
couple different times and had guests

1025
00:57:44,445 --> 00:57:45,825
who brought data to back this up.

1026
00:57:46,185 --> 00:57:47,055
Nobody wins.

1027
00:57:47,549 --> 00:57:49,650
There are no winners in
what's happening right now.

1028
00:57:49,650 --> 00:57:53,339
So instead of focusing on the things
that could actually make life better,

1029
00:57:53,339 --> 00:57:57,690
we are now focusing on recreating
things so that we can have national,

1030
00:57:58,170 --> 00:58:02,040
um, you know, self-sufficiency in some
areas, and we're using these different

1031
00:58:02,040 --> 00:58:05,220
things as leverage against each other
and thinking about what this means

1032
00:58:05,220 --> 00:58:06,509
from a national power perspective.

1033
00:58:06,509 --> 00:58:09,435
You can see this in how, I mean, look
at how the tech community in the United

1034
00:58:09,435 --> 00:58:14,279
States has basically just morphed into
a defense tech play and has allied

1035
00:58:14,279 --> 00:58:19,980
itself with, um, you know, uh, with a
really defense oriented, like, protect

1036
00:58:19,980 --> 00:58:23,520
oriented environment, rather than
pushing the boundaries of what's new.

1037
00:58:24,089 --> 00:58:26,400
Um, I think you can sort of
see that all over the place.

1038
00:58:26,400 --> 00:58:29,520
And the, and the depressing thing of
what you're saying is, well, what if in

1039
00:58:29,520 --> 00:58:33,720
fighting each other and in the great power
competition, there can be no florences.

1040
00:58:34,270 --> 00:58:38,020
There can't be a Florence anywhere
if everybody is thinking is watching

1041
00:58:38,020 --> 00:58:41,380
their back and thinking about how some
other country is, is gonna attack them.

1042
00:58:41,440 --> 00:58:44,290
Um, and I think that was one of the
nice things about Kaiser's rejoinder

1043
00:58:44,290 --> 00:58:47,710
to that Kyle, that Kyle Chan article
reminding us that, okay, like we're

1044
00:58:47,710 --> 00:58:48,880
sitting here in the United States.

1045
00:58:49,090 --> 00:58:51,310
I know West Virginia, I've
been to West Virginia.

1046
00:58:51,310 --> 00:58:53,200
I can read that Wall Street
Journal article and make

1047
00:58:53,200 --> 00:58:54,130
the jokes that I just made.

1048
00:58:54,460 --> 00:58:58,600
I bet there's a Chinese version of me who
can do the same thing in China and can,

1049
00:58:58,600 --> 00:59:01,660
you know, think about, oh, well we got
these grand plans, but I can't, I mean,

1050
00:59:02,140 --> 00:59:06,190
China had a real problem in getting people
to take vaccines around COVID-19, right?

1051
00:59:06,190 --> 00:59:08,080
Like, so I'm talking about
vaccine hesitancy here.

1052
00:59:08,080 --> 00:59:11,020
Just because, uh, there's a dictatorship
in China doesn't mean that the

1053
00:59:11,020 --> 00:59:14,500
average Chinese person wants to take
a vaccine any more than a American

1054
00:59:14,500 --> 00:59:15,790
citizen wants to take a vaccine.

1055
00:59:15,790 --> 00:59:18,730
So, um, yeah, I don't know.

1056
00:59:18,730 --> 00:59:20,800
Maybe you should tell your Brazilian
friends to go back to Brazil.

1057
00:59:20,830 --> 00:59:22,960
That comes with its own, uh, problems.

1058
00:59:23,170 --> 00:59:23,410
So,

1059
00:59:23,590 --> 00:59:26,530
Rob Larity: well, I guess that that's the
bear case to everything that we're doing.

1060
00:59:26,530 --> 00:59:30,370
I, I've been reading
some books about, so, uh.

1061
00:59:31,170 --> 00:59:37,320
This book by Eric Klein, I just read 1177
bc. Did you ever, did you hear about him?

1062
00:59:37,350 --> 00:59:37,985
No, no.

1063
00:59:38,250 --> 00:59:44,100
He wrote one called 1177 BC and then one
called after 1177 bc But this is about

1064
00:59:44,160 --> 00:59:49,080
the collapse of the Bronze Age, uh,
civilizations and sort of what happened.

1065
00:59:49,080 --> 00:59:52,890
And, you know, they used to call
it the, the original Dark Age.

1066
00:59:53,430 --> 00:59:59,580
Basically there was climate problems, mass
migration that destabilized societies,

1067
00:59:59,790 --> 01:00:04,620
which led to warfare and agricultural,
you know, problems, which led to costs.

1068
01:00:05,610 --> 01:00:11,850
And the takeaway in his book after
1177 BC is just like, nobody won.

1069
01:00:12,450 --> 01:00:16,170
Like, yeah, there were like, the
Venetians did relatively better and

1070
01:00:16,170 --> 01:00:20,100
the Creon did relatively better, in
part because they were more mobile

1071
01:00:20,100 --> 01:00:24,630
and sort of how they could do things,
which is a separate discussion, but

1072
01:00:24,660 --> 01:00:27,600
like, it just sucked for everybody.

1073
01:00:28,109 --> 01:00:31,799
Everyone did absolutely worse
off than they would've otherwise.

1074
01:00:32,490 --> 01:00:37,770
And that's like the negative scenario of
what could potentially be in our future.

1075
01:00:37,799 --> 01:00:38,609
Like, I hope not.

1076
01:00:38,609 --> 01:00:41,700
I hope we're in a situation where
we're arguing over who gets all

1077
01:00:41,700 --> 01:00:44,670
the new Alzheimer's treatments and
they won't share with each other.

1078
01:00:45,660 --> 01:00:49,230
But it's not unthinkable to think
like, yeah, maybe just no one wins.

1079
01:00:49,830 --> 01:00:55,080
And it's just, you know, God
going into a dark place with this.

1080
01:00:55,080 --> 01:00:55,230
Yep.

1081
01:00:55,230 --> 01:00:55,680
With this one.

1082
01:00:55,680 --> 01:00:55,920
But

1083
01:00:56,100 --> 01:00:58,319
Jacob Shapiro: our podcast
title, it sucks for everybody.

1084
01:00:58,350 --> 01:00:59,700
Nice chatting with all of you.

1085
01:00:59,700 --> 01:01:02,850
We will see you in two weeks
with our latest and greatest.

1086
01:01:02,940 --> 01:01:03,149
Yeah.

1087
01:01:03,149 --> 01:01:03,509
Anyway.

1088
01:01:03,569 --> 01:01:06,960
Um, well, no, it's, it's important
to think about the, it's important

1089
01:01:06,960 --> 01:01:07,890
to think about the downside.

1090
01:01:09,555 --> 01:01:11,985
Okay, well Rob, I, let's
commit to each other that we'll

1091
01:01:11,985 --> 01:01:13,305
come back here in two weeks.

1092
01:01:13,755 --> 01:01:17,355
Uh, and let's try and argue the opposite,
or let's see if there's any optimism

1093
01:01:17,355 --> 01:01:18,675
that we can find at some of these things.

1094
01:01:18,705 --> 01:01:21,465
'cause I think that that's the other
thing about the volatility spiral

1095
01:01:21,885 --> 01:01:24,885
it, uh, I said this actually on
another podcast yesterday that I did.

1096
01:01:25,185 --> 01:01:27,525
Somebody asked me what, uh, what
I've been focusing on right now in

1097
01:01:27,525 --> 01:01:30,705
my honest answer was I haven't felt
like I could focus for three months.

1098
01:01:31,185 --> 01:01:33,435
Um, it used to be that, okay, I
spent the first couple hours of

1099
01:01:33,435 --> 01:01:36,135
my day getting on top of, okay,
here's what's going on in the world.

1100
01:01:36,135 --> 01:01:39,105
And, you know, I'd pour myself a cup of
coffee, maybe two, and by 10 o'clock I'd

1101
01:01:39,105 --> 01:01:42,075
be like, okay, like I have a pretty good,
my finger's on the pulse of the world.

1102
01:01:42,075 --> 01:01:43,425
I can go do some deep research.

1103
01:01:43,425 --> 01:01:46,970
I haven't been able to do that for three
months because just keeping your finger

1104
01:01:47,175 --> 01:01:51,705
on the pulse of what's going on, like is a
five to seven hour job now, where it used

1105
01:01:51,705 --> 01:01:54,525
to be a two to three hour job for somebody
who does this for a living and has been

1106
01:01:54,525 --> 01:01:56,325
doing it for a living for like 10 years.

1107
01:01:56,805 --> 01:01:57,195
Um.

1108
01:01:57,930 --> 01:02:01,229
Which makes it harder to like stay
focused on the things that are optimistic.

1109
01:02:01,259 --> 01:02:02,939
'cause you're not thinking
about the bigger trends.

1110
01:02:02,939 --> 01:02:04,589
You're just having to
deal with all of this.

1111
01:02:04,950 --> 01:02:06,899
Um, and, and it's not
just, it's not new things.

1112
01:02:06,899 --> 01:02:12,000
It's like, okay, one day it's this, then
it's 180 degree turn, then oh, another

1113
01:02:12,000 --> 01:02:14,250
360 turn then oh, 90 degree angle.

1114
01:02:14,250 --> 01:02:15,209
Let's go this direction.

1115
01:02:15,209 --> 01:02:16,979
And it's sort of the same
thing over and over again.

1116
01:02:16,979 --> 01:02:20,520
And the trend lines just kind of
stays, uh, stays in the same place.

1117
01:02:20,520 --> 01:02:21,540
So anyway,

1118
01:02:21,720 --> 01:02:24,000
Rob Larity: well, the last time we
were in a volatility cycle, I think

1119
01:02:24,000 --> 01:02:27,899
people said some of the same things
about these new motor cars zipping

1120
01:02:27,899 --> 01:02:29,609
around at these unheard speeds.

1121
01:02:29,609 --> 01:02:33,689
And, you know, my God, I can't
even keep up with the news and war

1122
01:02:33,689 --> 01:02:36,000
here and terrorist bombings there.

1123
01:02:36,089 --> 01:02:42,450
And, you know, there's some element
of of that that always happens

1124
01:02:42,479 --> 01:02:46,770
in these things like volatility
spirals are also very good.

1125
01:02:46,830 --> 01:02:49,589
I think that's the hardest thing
is like, it's, it is so easy to

1126
01:02:49,589 --> 01:02:54,359
say the doom and gloom and, oh,
1177 BC and everyone's screwed.

1127
01:02:54,915 --> 01:02:59,985
Like there's an equally and probably
more valid in terms of probability

1128
01:02:59,985 --> 01:03:03,525
scenario, which is the future's
so bright, I gotta wear shades.

1129
01:03:03,855 --> 01:03:08,625
And like the volatility spiral swings both
ways and it'll be both at the same time.

1130
01:03:08,625 --> 01:03:12,795
There's gonna be countries that are
gonna be absolutely demolished by

1131
01:03:12,884 --> 01:03:16,035
all this stuff going on, and we're
already seeing so much of this.

1132
01:03:16,095 --> 01:03:20,895
And at the same time, there's gonna be
such incredible things coming out of this.

1133
01:03:21,285 --> 01:03:25,485
I, I think, and you can see some
of that too, like it's, it's hard

1134
01:03:25,485 --> 01:03:29,895
to have a nuanced and complex view
of the world, but, and that doesn't

1135
01:03:29,895 --> 01:03:32,895
make for good podcast listening
'cause people just want kind of a

1136
01:03:33,435 --> 01:03:35,174
relatively straightforward narrative.

1137
01:03:35,265 --> 01:03:39,134
But both those things can happen
simultaneously and you know,

1138
01:03:39,134 --> 01:03:40,515
that's, that's the reality of it.

1139
01:03:42,495 --> 01:03:43,910
So yeah, we can talk about the future.

1140
01:03:44,085 --> 01:03:45,495
So bright, I gotta wear shades.

1141
01:03:46,245 --> 01:03:49,154
Side of things next time,
just to even it out, but

1142
01:03:51,404 --> 01:03:53,355
Jacob Shapiro: alright,
well, I'll hold you to it.

1143
01:03:53,415 --> 01:03:54,044
We'll go from there.

1144
01:04:00,165 --> 01:04:02,984
Thank you so much for listening
to the Jacob Shapiro podcast.

1145
01:04:02,984 --> 01:04:06,705
Uh, this show is produced and
edited by Jacob Mian, and it's

1146
01:04:06,705 --> 01:04:08,205
in, in many ways, the Jacob Show.

1147
01:04:08,475 --> 01:04:11,595
Um, if you enjoyed today's episode,
please don't forget to subscribe.

1148
01:04:11,925 --> 01:04:15,105
Rate or leave a review takes just a
couple seconds of your time, but it

1149
01:04:15,105 --> 01:04:16,755
really helps us also share with a friend.

1150
01:04:17,025 --> 01:04:20,595
If you're interested in learning
more about hiring me to speak at your

1151
01:04:20,595 --> 01:04:24,015
event, or if you wanna learn more
about the wealth management services

1152
01:04:24,015 --> 01:04:27,735
that, uh, I offer through bespoke or
at cognitive investments, you can find

1153
01:04:27,735 --> 01:04:30,015
more information@jacobshapiro.com.

1154
01:04:30,015 --> 01:04:34,155
You can also write to me directly
at jacob@jacobshapiro.com.

1155
01:04:34,485 --> 01:04:36,735
I'm also on, on X for now with the handle.

1156
01:04:36,735 --> 01:04:37,515
Jacob Shap.

1157
01:04:37,515 --> 01:04:39,255
That's Jacob, SHAP.

1158
01:04:39,255 --> 01:04:42,405
No DATs dashes or anything
else, but I'm not hard to find.

1159
01:04:42,885 --> 01:04:44,595
Um, see you out there.