Podcast Summary: BG2Pod with Brad Gerstner and Bill Gurley
Episode: Coatue’s Laffont Brothers. AI, Public & VC Mkts, Macro, US Debt, Crypto, IPO's, & more | BG2
Release Date: June 20, 2025
Hosts: Brad Gerstner (@altcap) & Bill Gurley (@bgurley)
Guests: Philippe and Thomas from Coatue
Introduction
In this episode of BG2Pod, Brad Gerstner and Bill Gurley engage in a comprehensive discussion with Philippe and Thomas from Coatue, celebrating the 10th anniversary of Kotuzzi East Meets West in Los Angeles. The conversation delves into a wide array of topics, including artificial intelligence (AI), cryptocurrency, public and venture markets, macroeconomic trends, and the evolving landscape of IPOs and mergers & acquisitions (M&A).
AI Super Cycle and Market Capitalization
Optimism Around AI's Growth
Philippe and Thomas present a compelling case for AI being the defining tech trend of the decade, potentially reaching 75% of the total US market cap. This ambitious projection is supported by historical parallels to past technological waves, such as mainframes, PCs, and the Internet, which built upon preceding innovations.
Philippe (03:23): "AI is probably the defining and biggest tech trend that we're going to see."
Comparative Growth with Historical Industries
The hosts compare AI's potential impact to that of industrials and transport, emphasizing that like these sectors, AI is built upon previous technological advancements, making its growth sustainable and expansive.
Philippe (05:45): "There've been new trends since the canals and whale oil... AI is built on top of all the previous innovations."
Crypto and Institutional Perspectives
Evolving Views on Bitcoin and Stablecoins
The discussion shifts to cryptocurrency, highlighting the recent passage of stablecoin legislation as a significant regulatory milestone. Philippe expresses nuanced views on Bitcoin, acknowledging its volatility and institutional hesitancy while recognizing its potential as a growing asset class.
Philippe (08:44): "Bitcoin represents 2 out of 500 of the net worth of the world... Could Bitcoin be 5 or 6?"
Institutional vs. Retail Investment in Crypto
The panel explores the differing appetites for risk between public and private market investors, questioning how institutions might approach volatile assets like Bitcoin compared to retail investors.
Thomas (09:09): "We need to become better, be willing to change our mind and stay open to the future."
Impact of ChatGPT on Google and Search
Declining Google Page Views Due to ChatGPT
A significant portion of the conversation centers on the impact of ChatGPT on Google’s search dominance. Philippe presents data indicating a decline in Google page views correlating with increased ChatGPT subscriptions, suggesting a shift in how consumers seek information.
Philippe (16:55): "Absent ChatGPT, Google Page views are growing 4% per year... With ChatGPT, they're down 8% year over year."
Resilience and Adoption of ChatGPT
Despite competition from other AI models like Meta’s Gemini and Anthropic’s offerings, ChatGPT remains highly resilient and continues to see rapid user adoption, comparable to the early dominance of platforms like Uber.
Bill (20:58): "ChatGPT has been radically more resilient and the engagement has increased much faster than I think any of us would have thought."
Cloud Market Share and GPU Allocation
Mapping Cloud Revenues to Nvidia GPU Allocation
Philippe and Thomas discuss a chart illustrating the disparity between cloud revenue market share and Nvidia GPU allocation among major players like Amazon, Microsoft, Google, Oracle, and Core Weave. The analysis suggests strategic differences in how these companies approach AI infrastructure.
Thomas (24:00): "Amazon has half the share of GPUs than their share of AWS. That could mean they're behind in AI or pursuing a different hardware strategy."
Emergence of New Hyperscalers
The conversation highlights the rise of Core Weave as a pure-play AI company, challenging established giants by securing significant GPU allocations despite limited cloud revenue shares.
Philippe (26:11): "There's a battle between those who want to standardize on Nvidia and those pursuing different hardware strategies."
Macroeconomic Backdrop: Debt, GDP, and AI Productivity
Debt-to-GDP Concerns and AI's Role in Economic Growth
Philippe presents an analysis of the US debt-to-GDP ratio, projecting that sustained productivity growth fueled by AI could stabilize or reduce this ratio. This optimistic view contrasts with pessimistic forecasts of unmanageable debt spirals.
Philippe (30:29): "If productivity for the next decade was about 2.5 to 3.5% per year, we could achieve substantial reductions in debt to GDP."
Potential for AI to Lower Inflation and Interest Rates
The panel discusses how AI-driven productivity gains could lead to lower inflation and interest rates, drawing parallels to the productivity boom of the 1990s during the Internet era.
Philippe (34:13): "Way more in like the 5% plus, maybe even 6, which by the way, that was the case for many of the years in the 90s."
Public and Private Markets: IPOs, M&A, and Unicorns
Rebound in IPOs and M&A Activity
Thomas notes a resurgence in IPO activity and M&A deals, attributing this to the renewed vigor from AI advancements. The performance of recent IPO cohorts has improved, indicating a healthier market environment.
Thomas (36:07): "This is the first year we're seeing an unlock, both in terms of M&A and IPOs."
Strategies for Private Companies Considering Public Markets
The discussion emphasizes the importance of transparency and accessibility in public markets, advocating for large private companies to consider going public to democratize wealth creation and ensure regulatory compliance.
Philippe (44:37): "These super, super large private companies, if you're not willing to submit yourself to the sunshine of the public markets, you're going to get it through a regulatory agency."
AI-Driven Productivity and Employment
Employee Productivity Enhancements Through AI
Using examples like Microsoft and Applovin, the panel illustrates how AI is enabling companies to boost productivity without proportional increases in headcount. This trend suggests a shift towards more efficient operations driven by AI technologies.
Thomas (47:14): "Applovin has gone AI first and had massive margin expansion or revenue per employee."
Implications for the Future of Employment
Philippe touches on the potential for AI to not only reduce the need for certain jobs but also to create new, more interesting roles, invoking the Jevons Paradox to argue that technological advancements may ultimately lead to lower unemployment rates.
Philippe (51:22): "It's possible that companies need less employment, but more companies get created because it's much easier to create a company."
Strategies for Companies Based on Growth and Profitability
Quadrant Analysis for Company Strategies
Thomas introduces a strategic matrix categorizing companies based on growth rate (above or below 25%) and profitability (cash flow positive or not). This framework offers tailored advice for entrepreneurs:
- High Growth & Profitable: Consider going public to leverage market opportunities.
- High Growth & Burning Cash: Build a strong balance sheet and prepare for future scaling.
- Low Growth & Profitable: Reinvent and explore new opportunities to reignite growth.
- Low Growth & Burning Cash: Undertake significant reinvention or pivot to new business models.
Thomas (53:53): "If you're growing over 25%, you are profitable. Time to think about whether you should be public."
Encouraging Reinvention in Low-Growth Scenarios
For companies stuck in the low-growth, burning-cash quadrant, the advice centers on reinvention—whether through new products, open-sourcing initiatives, or strategic pivots—to adapt to the changing market landscape driven by AI.
Thomas (57:03): "It's time to reinvest and think about what can AI do for your business."
Conclusion
In this insightful episode, Brad Gerstner and Bill Gurley, alongside Philippe and Thomas from Coatue, navigate the complex interplay between AI advancements, market dynamics, and macroeconomic factors. The discussion underscores AI's transformative potential, the evolving stance on cryptocurrencies, the shifting landscape of public and private markets, and the critical need for companies to adapt strategically in an AI-driven economy. The panel's optimism about AI's role in reshaping economic productivity and stabilizing debt metrics offers a hopeful outlook amidst ongoing market volatility.
Notable Quotes:
- Bill Gurley (03:23): "I think that's the most optimistic I've heard you on this stage in the 10 years that you've been doing this."
- Thomas (57:03): "It's time to reinvest and think about what can AI do for your business."
- Philippe (51:22): "It's possible that companies need less employment, but more companies get created because it's much easier to create a company."
Disclaimer: The views expressed in this podcast are those of the speakers and do not constitute investment advice.