Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner

Bill expresses enthusiasm about recent events in San Francisco, particularly a thrilling sports comeback. The conversation shifts to the market's reaction to President Trump's announcement of tariffs, referred to as "Liberation Day." The hosts discuss the implications of Trump's economic agenda, highlighting mixed feelings among CEOs regarding the pro-growth administration and the potential impact of tariffs. Speculation arises about the magnitude of the tariffs, with references to differing estimates from figures like Peter Navarro. Insights from a recent JP Morgan Tech Conference reveal that tariffs on China could rise significantly. Following the announcement, the market initially reacted positively but later experienced a sharp decline, reflecting uncertainty about the actual effects of the tariffs amidst ongoing negotiations.

The discussion highlights a minimum tariff of 10% applicable to all countries, with an estimated $600 billion in exemptions under evaluation. Bill questions the support for tariffs among CEOs and Congressional Republicans, noting a lack of enthusiasm for the policy. He emphasizes the complexities of free trade and the challenges companies face in adapting to tariff changes, including the lengthy process of relocating production back to the U.S. He expresses skepticism about the global competitiveness of U.S. labor, suggesting that higher production costs may arise from bringing manufacturing home. Overall, there remains significant uncertainty about the true impact of the tariff announcement and the motivations behind it.

The conversation also touches on the administration's efforts to negotiate fairer trade deals, with anticipated tariffs settling around $300-400 billion. European leaders are seeking closer trade negotiations with China, which could have significant implications for U.S. businesses. The NASDAQ's decline reflects market fears, and there is a focus on upcoming negotiations regarding exemptions for semiconductors and pharmaceuticals, emphasizing the need for a trade deal with China.

In the realm of open source, the conversation explores China's strategic embrace of open source models to mitigate intellectual property concerns. U.S. companies are also adopting open source defensively to remain competitive. The discussion includes examples of how Google has disrupted competitors through open source initiatives, such as Kubernetes. DeepSeek's success in the open source space raises concerns about potential U.S. legislative action against Chinese technology, reflecting fears of foreign influence in American enterprises. OpenAI's recent announcement about a new open-weight language model suggests a shift towards a more open approach, contrasting with Meta's restrictive policies.

The podcast discusses the anticipated release of a new AI model ahead of LlamaCon, expected to feature 400 billion parameters. OpenAI's commitment to this model is highlighted, with an emphasis on fostering competition in the U.S. for open-source models while addressing concerns about global competition, particularly from DeepSeq and Huawei. The U.S. administration's goal to reduce reliance on foreign technology in AI is noted, alongside the importance of open-source leadership in the West.

OpenAI's strategy focuses on product development rather than just model development, aiming to attract developers to build applications on their platform. This approach is compared to Google's support for Kubernetes. Sam Altman’s views on model commoditization suggest that while OpenAI may have the best models, general intelligence will be widely distributed, shifting the battleground towards products and services. ChatGPT is recognized as a significant consumer application, with its integration into enterprises likened to the transition from Blackberry to iPhone.

The podcast also covers OpenAI's recent investment round led by SoftBank, totaling $40 billion, with a pre-money valuation of $260 billion. This valuation is considered reasonable compared to competitors like Anthropic and X.ai. OpenAI's expected revenue for the year is around $13 billion, with a run rate of $15 to $18 billion, leading to a valuation of approximately 20 times revenue. The significant growth in ChatGPT's user base, with 1 million new users in an hour and 20 million paying subscribers, is noted. The high demand for AI services has resulted in throttling of usage and the need for substantial infrastructure investment to meet current demand.

The conversation shifts to TikTok, with rumors of an acquisition deal set to expire or be extended by April 5th. The President aims to finalize a deal, influenced by ongoing tariffs on China. A proposal for a new entity, TikTok US, suggests partial ownership by ByteDance, capped at 19.5%, with significant stakes for new investors. Financial implications indicate that TikTok US would raise new capital without benefiting ByteDance directly. Concerns about TikTok US's valuation arise, particularly regarding negotiations with the U.S. sovereign wealth fund and ByteDance's previous reluctance to separate TikTok US from its global operations.

Investor interests highlight that 60% of ByteDance's investors are U.S. entities, with the fair value of ByteDance estimated near a trillion dollars. The successful completion of the TikTok deal is deemed crucial for ByteDance's public offering, as 90% of its business lies outside TikTok US. Concerns about a recent imposition of 54% tariffs on China raise potential obstacles to a deal, alongside uncertainty about Chinese government approval. Optimism remains regarding U.S.-China negotiations, with the belief that the U.S. president will successfully negotiate with Xi, underscoring the importance of U.S.-China bilateral trade relations for global economic growth.