Podcast Summary: The Compound and Friends – "The World According to Joe Lonsdale"

Episode Details:

• Title: The World According to Joe Lonsdale
• Host/Author: The Compound
• Guests: Joe Lonsdale & Jacob Miller
• Release Date: March 31, 2025

I. Introduction

The episode kicks off with hosts Downtown Josh Brown and Michael Batnick welcoming their special guests, Joe Lonsdale and Jacob Miller.

• Michael Batnick [00:38]: Introduces Joe Lonsdale, an entrepreneur and investor known for founding several companies, including Palantir and AddaPar, and Jacob Miller, the co-founder and Chief Solutions Officer for Opto.

II. Private vs Public Markets

Discussion on IPO Market Dynamics:

The hosts delve into the current state of IPOs, expressing skepticism about the anticipated resurgence of initial public offerings (IPOs) this year. With the NASDAQ showing significant declines, the conversation pivots to the factors influencing the IPO landscape.

• Michael Batnick [04:04]: Raises the question of whether the IPO window will open and remain open enough to mirror pre-2021 levels of exits and new issues.

• Joe Lonsdale [05:28]: Describes the tech markets as "constipated," highlighting uncertainties stemming from policy and the wave of AI investments. He expresses hope for increased market certainty and the potential resurgence driven by AI advancements.

• Jacob Miller [06:04]: Points out the substantial "dry powder" in private markets—approximately a trillion dollars—which allows companies to remain private longer, reducing the immediate need for IPOs.

Quotes:

• Joe Lonsdale [05:34]: "I'll be honest if it's going to work this year or not. It might take a little while."
• Jacob Miller [06:13]: "The dry powder side, let alone new funds being raised each year."

III. AI Investments and Economic Impact

AI's Role in Future Productivity and Investments:

The conversation shifts to artificial intelligence (AI), its investment layers, and its projected impact on productivity across various industries.

• Joe Lonsdale [14:27]: Breaks down AI investments into five layers, from chips (Layer 1) to AI services in the economy (Layer 5). He emphasizes that the most significant returns are likely to come from innovative companies in Layers 4 and 5.

• Michael Batnick [17:59]: Raises concerns about the macroeconomic implications of AI, especially in the event of a recession, questioning whether AI investments will justify their capital expenditures (CapEx) through tangible ROI.

• Joe Lonsdale [18:20]: Optimistically asserts that AI will enhance productivity across Fortune 500 companies, potentially leading to a "massively disinflationary" effect that benefits especially lower-income populations by reducing costs.

Quotes:

• Joe Lonsdale [14:15]: "Every Fortune 500 company should benefit."
• Joe Lonsdale [22:58]: "It's going to be massively disinflationary. This is going to be... it's so good for poor people."

IV. US vs Europe vs China in Tech and Investment

Comparing Market Dynamics and Policy Impacts:

The episode explores the competitive landscape between the US, Europe, and China, particularly in technology and venture capital.

• Jacob Miller [28:30]: Argues that nothing has materially changed in how Europe or China treats business, advocating for the exceptional nature of the US in attracting top talent.

• Joe Lonsdale [29:13]: Highlights America's dominant position in the AI wave and its ability to embrace "creative destruction," contrasting it with Europe and China, which he perceives as more restrictive.

Quotes:

• Joe Lonsdale [30:08]: "America is so far ahead in the AI wave, it's so far ahead in allowing creative destruction."
• Jacob Miller [37:08]: "If you're ABC and you've backed a lot of the best defense tech startups... it's how these things work."

V. Private Markets in Advisor Strategy

Navigating Private Investments for Advisors:

The discussion transitions to the growth of private markets and how financial advisors can effectively incorporate them into client portfolios.

• Joe Lonsdale [35:47]: Affirms that private markets are expanding and will likely continue to grow, particularly in private credit. He emphasizes the importance of accessing top-tier funds to achieve superior returns.

• Jacob Miller [36:22]: Shares a framework for outperforming markets in private investments, stressing the significance of unique information and access.

• Michael Batnick [43:17]: Raises concerns about the liquidity of private market investments, questioning the feasibility of daily-traded private assets.

Quotes:

• Jacob Miller [36:53]: "If you're working in a market where inside information is legal and you don't have that information, you're going to get crushed."
• Joe Lonsdale [43:42]: "Private markets have much higher disparity, much higher differences in returns than the public markets."

VI. Government Funding in Crypto and AI

Evaluating Public Sector Involvement:

The guests critique the government's approach to funding and regulation in the cryptocurrency space, highlighting instances of inefficiency and corruption.

• Joe Lonsdale [49:05]: Criticizes the U.S. government's involvement in cryptocurrency, specifically the strategic reserve initiatives, calling them "nonsense" and "grift."

• Michael Batnick [51:43]: Supports government actions to curb fraud in entitlement programs but remains skeptical about their effectiveness.

Quotes:

• Joe Lonsdale [49:22]: "There's a lot of fraud and so much bad stuff and we're cutting so much nonsense."
• Joe Lonsdale [52:44]: "There are hundreds of billions of dollars in fraud going on in Medicare, Medicaid."

VII. Elon Musk and Policy Influences

Balancing Innovation with Public Perception:

The conversation touches on Elon Musk's influence in technology and policy, acknowledging his controversial nature but praising his accomplishments.

• Joe Lonsdale [56:11]: Praises Musk's dedication, describing him as a "classic warrior" fighting for civilization despite facing significant public backlash.

• Michael Batnick [55:24]: Discusses the dichotomy between Musk’s technological achievements and his contentious public behavior.

Quotes:

• Joe Lonsdale [56:11]: "He's trying to fight for our civilization. Whether or not you just agree or disagree with everything he's doing, that is the energy he's going with."

VIII. Future Outlook

Optimism Despite Challenges:

In wrapping up, Joe Lonsdale offers a forward-looking perspective, emphasizing the enduring strength and innovation within the US, particularly through private markets and AI advancements.

• Joe Lonsdale [58:53]: Expresses confidence in America's resilience and ability to harness AI for long-term productivity gains despite short-term economic challenges.

• Jacob Miller [60:12]: Supports justified tariffs against China for unfair practices but acknowledges the pain they may cause in the short term.

Quotes:

• Joe Lonsdale [59:39]: "This is what's great about private markets... it's going to be 100x regardless of how big those waves move up and down."
• Jacob Miller [60:12]: "If you're on an anti-competitive sense, steal manufacturing from America, we should fire."

IX. Key Takeaways

1. Private Markets Expansion: Private markets, especially in private credit and technology-driven ventures, continue to grow and present significant investment opportunities. Advisors should focus on accessing top-tier funds to maximize returns.

2. AI as a Productivity Driver: AI investments across multiple layers are expected to substantially enhance productivity and disinflationary pressures, benefiting both corporations and consumers over the next decade.

3. US Leadership in Tech: The US maintains a dominant position in technology innovation and venture capital, outpacing Europe and China due to its ability to attract top talent and embrace creative destruction.

4. Government Oversight Concerns: Public sector involvement in sectors like cryptocurrency has been criticized for inefficiency and potential corruption, underscoring the need for more transparent and effective regulation.

5. Elon Musk’s Dual Impact: Elon Musk remains a polarizing figure whose technological contributions are significant, despite his controversial public persona.

6. Optimistic Future despite Economic Uncertainties: Despite potential short-term economic challenges, the narrative remains optimistic about the US’s ability to drive long-term growth through innovation and strategic investments in private markets and AI.

X. Additional Resources

• Opto Platform: optoinvest.com – For more information on private market investment strategies.
• Jacob Miller’s Blog: Available on LinkedIn for insights and commentary.
• Joe Lonsdale’s Substack & Podcast: Search for "American Optimist" to follow his latest discussions and analyses.

This episode of "The Compound and Friends" provides a comprehensive exploration of the evolving landscape of private markets, the transformative potential of AI, and the strategic positions of the US in the global technology arena. Joe Lonsdale and Jacob Miller offer valuable perspectives for investors and advisors navigating these complex and dynamic sectors.