The Cult of Venture Capital Wants Your Future
“The rational fear of those who dislike economic inequality is that the rich will convert their economic power into political power: that they’ll tilt elections, or pay bribes for pardons, or buy up the news media to promote their views. I used to be able to claim that tech billionaires didn’t actually do this—that they just wanted to refine their gadgets. But unfortunately in the current administration we’ve seen all three.”
Paul Graham, a famed tech investor who co-founded the Y Combinator startup accelerator, posted these words today on X. It’s a stunning admission. But not even Silicon Valley can ignore the political corruption and radicalization rising in its midst.
In today’s episode of the Nerd Reich podcast, Dr. Olivier Jutel and I discuss this very subject: how the cult of Silicon venture capital has become an existential threat to both democracy and humanity.
We explore how VCs became the “de facto state planners” of American capitalism, why they’re now desperately betting on government bailouts to save their failed investments, and how their Network State ideology aims to extract maximum value from our country before exiting to their own private sovereignties.
Spoiler: they don’t plan for the rest of us to come along for the ride.
Available wherever you get your podcasts. Full transcript below.
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The Nerd Reich Podcast: Inside The Tech Cult: How Venture Capitalists Plan to Exit Democracy
Transcripts are auto-generated and may contain errors.
GIL DURAN: Donald Trump is assaulting American democracy, but venture capital is bankrolling and supporting it. And they're not just writing checks. They have a plan—a plan to exit democracy entirely, to create their own governance systems and to remake the world according to their vision of network states, charter cities, and crypto-enabled sovereign zones. Venture capital has a new pitch: absolute political radicalism. These aren't just investors. They're ideologues with billions of dollars and increasingly desperate schemes. They want to cash out their failing bets by destroying the systems that made their wealth possible in the first place.
My guest today is Olivier Jutel of the University of Otago in New Zealand. He studies venture capital with a critical eye. His recent lecture, "A Critical Theory of Venture Capital," explains how this small group of men became the de facto state planners of American capitalism. In this episode, we discuss our current crisis, one that is driving them toward increasingly extreme, even apocalyptic, political visions. From Peter Thiel to Marc Andreessen to the entire network funding Donald Trump and JD Vance, we trace how the cult of venture capital went from funding apps to funding fascism. Here we go.
Olivier, welcome to the Nerd Reich Podcast.
OLIVIER JUTEL: Thanks so much, Gil. It's great to be on with you.
GIL: Let's talk today about venture capital. You did a recent lecture called "A Critical Theory of Venture Capital," where you looked at what's happening in the world today and how venture capital plays a big role in it. But even people who may have heard of venture capital may not understand why it's important or the role it plays in our society in general. Venture capital actually makes up a small percentage of our total economy, but it has a massive influence over our lives and increasingly today over our politics. And you've described venture capitalists in some pretty stark terms. You've said they are the de facto state planners of American capitalism. What do you mean by that? And why does this small group of men have such outsized power today?
OLIVIER: I traced some of this history going back to the first Silicon Valley venture capital firm, Draper, Gaither and Anderson. These were sort of military-financial grandees of the establishment, looking at California as this place where you could pluck young scientists from Stanford or wherever else and really sort of align all of these capabilities and capacities into imagining, quote, "the future." That's the real sort of power that venture capital has as its hegemonic rollover. The rest of this sort of enterprise is: yes, we think in 10-year terms and we think about the future in this grandiose way.
GIL: You say in your lecture that venture capital has become a synonym for innovation. And that seems to be a key to understanding this. So they're not investing in pork belly futures or other things that might yield returns over the course of time in the continuation of the American economy. They're betting on important disruptive technologies in sectors that are going to radically transform the economy—at least theoretically. In some cases, they're making big bets in disruptive technologies and that's sort of what gives them their power. And as you were saying, there's this history with them being enmeshed in the past with the military industrial complex. You know, when Joe Biden left office, his last speech, he said there was now a tech industrial complex that was rising up and posing a threat to democracy. Very nice of him to say that at the last minute as he was exiting the White House.
So they invest in these disruptive technologies. And another interesting part of venture capital is how they make their money. And we talked about this in a recent episode with Catherine Bracy, who wrote a book on venture capital called World Eaters. You point out that the way they make their money is not the way people generally think they are—with making these amazing investments constantly—but rather through a more pedestrian fee structure. So explain to us how they make their money, how this shapes their incentives. And are they really taking risks or are they just extracting fees regardless of outcomes?
OLIVIER: Yeah, so there you go. There's been this trajectory, this historical trajectory that VC has been on. And one of these is the sort of hyper-financialization of our economy, which has made it easier for pools of private equity to come together to reap sort of windfall capital gains. And I mentioned Draper, Gaither, Anderson. And what they did was essentially—it's in the name. It's the general partners. It's the named partners. They literally said, "We met forming NATO"—the first American ambassador to NATO, two-star Air Force general, the head of the RAND Corporation. So you're trading in this grand status and you're bringing in other limited partners. So the general partners, they're on the name. Limited partners are giving up their capital for the GPs, the general partners, to manage.
And essentially what happens is: a big pool of capital, something like Andreessen Horowitz—I think it's at 48 billion or whatever it's at right now—that pool of capital is managed by those partners who get 20% of the overall profits once various products and startups and assets are either acquired or come to market, and the rest of the general partners get 80%. But there's also this fee structure, right? Somewhere between 2 to 3% overall per year for managing this fund.
There are eras in VC investment that are sort of like high water marks. I mean, like the dot-com era was this sort of "deregulating telecommunications"—as they put it, there is blue ocean territory here to seize. There's sort of trading in that Halcyon days, because the returns since dot-com have not been great. So they talk about themselves as like navigating the "trough of despair." And there's some quote from a guy from Craft Ventures who talks about how "a startup is just chewing glass and looking at the abyss of death, harnessing the lightning of technology." You know, they talk about risk, but we are at this sort of parasitic phase where the hundreds of billions of dollars injected into the economy is not really birthing the kind of great innovations.
And as Peter Thiel said, "We were supposed to have flying cars" or whatever it was. And we're not really getting that. We're getting sort of like software-as-a-service or other sort of like monopolistic forms of tech. You mentioned the "World Eaters" moniker, which comes from Andreessen's very famous essay, "How Software is Eating the World." And he's talking about this great revolution in tech. And he's mentioning Zynga, which was the company that launched Farmville, which got people into Facebook in this really sort of parasitic way. That's the sort of product and the outcome of this sort of alchemy and mystique that masks itself as risk in staring into the abyss of death.
GIL: They are very much into mythology and telling these grandiose stories about themselves, and we're going to get to that later in the episode. On this subject of the investments they make, it is interesting how they are going into such ridiculous areas. Remember a couple of years ago when it was non-fungible tokens? Basically you could buy a JPEG of an image and you supposedly owned it and it was worth a lot of money. You had all of these venture capitalists buying these Bored Ape Yacht Club NFTs, paying $50,000, $100,000. I think some went for much higher than that. And the idea was that you could own these pixels and they would be of increasing value over time. And of course that all kind of collapsed because it made no sense—the idea of owning a digital image that was worth money. Again, like a lot of their stuff, only worth more money if you convince everybody that it's worth even more money, right? This is the scheme of crypto, et cetera. So NFTs are kind of like a perfect example of the weird stuff they're getting into that doesn't make sense. It's not an actual product.
The value is only in the perception. If people think about venture capital at all, they probably think of companies like Airbnb, DoorDash, Instacart, Uber—companies that actually they can interact with that have a certain impact on their life in terms of how they rent a space when they stay in another town or getting their food delivered or the apps that litter the streets of our cities with all these crappy electric scooters that are quite dangerous actually.
The nature of venture capital is changing. And instead of investing in burrito deliveries and room rentals, they're going all in on AI and crypto schemes and chasing after contracts for surveillance and war technologies and AI-powered killer drones. And you say they've also made some shaky investments that will require them to exit through the state. How is VC shifting now? And what does it mean to exit through the state?
OLIVIER: Let me draw a sort of long picture here, but I think it sort of reinforces that, again, this is within the sort of confines of the American state project, such that it exists through the national defense budget and a certain sort of financial elite. And again, I mentioned the dot-com era. We're deregulating finance and telecoms and we're creating this new wealth. And then what are we doing with some of this wealth? Well, the next sort of cycle is, as you've mentioned, it's Airbnb, it's Uber. Fundamentally, these are companies about cannibalizing the public trust.
We are in this next phase in which we've had a couple cycles of crypto and Web3 and NFTs and AI. And again, we're thinking in sort of 10-year cycles of sort of the maturation of funds. And the NFT vision didn't quite... well, it didn't work at all. It was a spectacular failure and the whales ate the krill, as the saying goes, right? The big crypto whales were able to use everyday people as exit liquidity. But it did also help engender and model this idea that like, you are on your own and we are all running pump-and-dump scams in every aspect of our life and social and sort of everyday kind of finance—that we should be like little VCs in miniature, that we should be thinking about pumping our reality through things like prediction markets.
There is a sort of remaking of us by this cannibalizing of the public trust and the hollowing out of the state. And of course, this is where national defense strategies as a backstop for AI infrastructure is really important, or essentially allowing a kind of U.S. Treasury stablecoin rail for the global market. Yevgeny Morozov has recently written about this. If we had to define US imperialism under Trump 47, it's this kind of like combination of Nvidia chips and dark crypto-enabled finance and a kind of like tithing to Silicon Valley and Trump.
Just to sort of step back here, these are guys that present themselves as, you know, the upstart iconoclasts, champion of the free market and all the sort of libertarian values. Behind every sort of libertarian is a big fat government contract. They love to squeal about how the SEC or the state is victimizing them or putting them up on the cross. Sorry, this is a little bit boring, but—
GIL: I like to hear a little bit boring. Make it interesting.
OLIVIER: All right, all right. Well, basically, check this out. So massive VC performs spectacularly against your sort of regular standard public market equivalent fund. The 2011 era is about level, and currently in the last 10 years of VC investing, they are underwater. So they need to get that bag somewhere. And the state under Trump—that's the exit through the state. That's where they're going to get the proper sort of funding for these ridiculous bets on what the future is.
GIL: It seems to me that one of the things that radicalized a lot of these venture capital guys was the Great Recession—near failure of the market in 2008—along with the election of Barack Obama as president. And what you're saying when you say "exit through the state," they expect the government under Trump, especially now, to somehow save them from their bad investments, much as people were saved from their bad investments during the lead-up to the Great Recession. Right. And almost like they're trying to find a way to monetize the mechanism by which if you become too big to fail, the government will have to save you. And seeing that as like the next big parasitic opportunity.
You've described them as parasites. And I think in a way that's what they're trying to do with all of their different schemes is: how can they find a way to get a percentage of everything we do? Every food we eat, every car ride we take, every hotel stay, every opinion we have, right? These prediction markets are now trying to monetize you having an opinion. You can't just have an opinion and share it with your friends and family or online. You have to go and put it on the prediction market and take bets and make money off of it. It's just an utterly ridiculous effort to just financialize everything. And they say that, right? It's "the financialization of everything," which means everything has to be about somehow making money here or there.
I don't think people grasp the degree to which these guys are counting on the government to save them. I think that's completely hidden from view with this idea, the mythology of venture capital, that these guys are just great at inventing the future and finding billions of dollars somehow.
OLIVIER: Obama was a guy who really helped launch this mythology, right? Like this was the answer to the Great Recession—was something like the Jumpstart Our Business Startups Act, which legalized crowdfunding, gave government matching funds for startups, and in the words of Obama, "allowed everyday retail investors to now invest in the entrepreneurs that they believe in." So Obama was a big deal in helping create the sort of like tech founder CEO king.
It's really hard to know how sincere or hysterical they are. Like, does Peter Thiel sincerely feel like he is so utterly besieged and that the mission of venture capitalism is a kind of civilizational telos, like a kind of saving of Western civilization? Or is everything like a pump and a deep form of cynicism in which there's very few sort of sincere beliefs here? And this is an interesting example. I don't know if you remember Chris Dixon. He wrote this book about the Web3 NFT future that maybe you and I haven't seen yet. It's gonna be this wonderful world and we're immersively sort of freely exchanging on the internet. And he says, "Don't worry about the shitcoins and the meme coins. That's casino. That's the bad stuff. Web3, NFTs—that's computer. And computer is mother. Computer is beautiful."
But I mean, who do I see last week writing lyrically about Kalshi? Chris Dixon, betting on Kalshi, betting in prediction markets, which like, they give casino a bad name. I mean, like this is like casinos on casinos all the way down. So for someone like Chris Dixon, who's out here trying to sort of, as they say, "tell the story" of what investment is and what entrepreneurialism is, again, it's just so instrumental about getting that bag that I don't know if sincerity has anything to do with this space.
GIL: Well, we'll have to bet on it and then we'll have to bet on the bet, and then bet about it, right? Bets on bets. I think there's the answer to our sincerity question today. There was a story in Politico actually—Chris Larsen, this crypto billionaire who co-founded Ripple, is betting on both Katie Porter, a staunch Democrat for California governor, and on Steve Hilton, a right-wing zealot who used to have a show on Fox News for California governor. So he's just betting on both because this is the crypto mentality. Let's just bet everywhere and maybe we'll win something.
One of my favorite hobbies these days is to read descriptions or definitions of what Web3 is. Tell us for people who don't know and who may have heard "Web3," because this is one of these concepts that you hear, but I don't think everyone knows what it is. What is Web3 supposed to be?
OLIVIER: I mean, I guess it's like Second Life or Club Penguin, but like with better VR headsets.
GIL: Let's go 101 here for the Web3 part. Let's go 101.
OLIVIER: If some of y'all remember text-heavy internet—you know, 90s message boards, needing some ability to have some sort of programming language capacity in order to sort of like use the internet—you know, that's sort of like your basic text-driven Web1. Once we have MySpace and Blogger and later Facebook come into the mix, we have this proliferation of tools that allow people to publish and participate in sort of new modes of social media as we know it.
Now the Web3 people and the crypto people and some of the Ethereum blockchain people—I have to try to be as generous as possible—they are able to identify the way in which we have this platform oligarchy in our internet that makes it suck. Honestly, Google, Facebook, they don't really care if they're ruining the product that used to have some level of social or public good. I mean, there was that ProPublica report a couple weeks ago about Facebook knows 10% of its revenue is fraud and they don't really care, right? They're destroying that infrastructure.
And the promise of Web3 was like, "Okay, take your identity, put some kind of Fortnite skin over top of it, some sort of CryptoPunk or ape or whatever it is, and you're gonna leave this space of mediation where you're dependent upon the big players and you're gonna go into this other space in which you enter voluntary contracts with all the different sort of like services that you want. It's not just gonna be just gambling. It's not just gonna be trading in Web3 skins. It's gonna somehow be everything." This is somehow also gonna bleed into like off-world and like restructure our economy.
For the people that wanna live in Second Life, a kind of virtual Burning Man in which you do gift economy stuff—like, okay, fine, I'm not gonna give you a hard time about that. But the reality of course in Web3 is we're just trading in a set of other concentrations for people who hold certain tokens, certain coins. You're trusting somebody else. You're always trusting a larger kind of conglomeration of crypto power rather than Google or Facebook. So it's sort of still like a metaphor. It's still sort of like an ethereal dream space.
GIL: Yeah, getting people into virtual spaces that they mistake for their real lives and where they can spend money. Well, the way I think of it is Roblox. You know, when I give my nine-year-old nephew 30 bucks for his birthday, the first thing he does is blow it all on Roblox cash to buy fake flowers and other implements that I have zero understanding of, but are very, very important to him. The Roblox drama often leads to real-world fights with other kids at school. People have to be kicked off of Roblox for a couple of weeks to learn their lesson. And it's just amazing the degree to which this has been monetized—that my nephew could go buy ice cream, he could go buy something cool that's real, but would rather have fake flowers and fake drama on Roblox.
OLIVIER: I have to divulge, Gil, that I was responsible for having basketball cards banned at my high school. We had a fight over who traded this Cedric Ceballos Michael Jordan Flight Club insert card, 1993-94 Upper Deck. I mean, damn, I could have been a Roblox kid.
GIL: Totally. Well, what I think of—when I was a kid, I used to read a lot of comic books and in the back of the comic books, there were these mysterious ads for a figure called Captain O. You could work with Captain O by selling crappy stuff in this catalog they would send you and you had to go door to door selling Captain O products. And I walked all around Oildale in Bakersfield, California, knocking on doors, trying to get people to buy Captain O products so that I could get enough Captain O points to then trade it in for some crappy chintzy stuff. But the amount of Captain O products I would have had to sell in order to qualify for even a nice toy or game was just astronomical. And so after like, you know, a week of this job of walking around at like nine or 10 years old trying to sell Captain O door to door, I gave up. But it seems like they're finding ways now to create these new digital schemes that are a lot more exciting and that actually require you to give your money. At least Captain O sent me his scam kit for free, but these guys, you got to have a buy-in.
OLIVIER: So that's tokenomics skill. You really do have some talents there. But here's where I think we can actually connect this to what's overall happening in the economy and the kind of progressive layers of financialization, which has led to the prominence of VC, but also popularized that you should be a Web3 token holder. And that token isn't quite a security. It's not quite like a game pass, but it's a stand-in for the future. You're invested in the same sort of grand thinking about the future as VC.
I suppose like we are in this deeply cynical moment, right? And various layers of the sort of gig economy have stripped away the public trust or the notion that the SEC or the FTC should or could do anything good for you. When I try to explain angel investors to my students, I say, "Look, you guys know that guy, Gary Vee, right?" This is the sort of world of hustle and grind that is so ubiquitous. And if you don't really know anything else, you think that this is your chance at getting a generational bag.
So it's Roblox, but then imagining that your Roblox skin is a pass to all this other stuff that you keep hearing about. And people are vulnerable and we want to believe in something—the sort of occult golden goose thing that somehow a switch will flip and we'll get abundance or a climate solution or immortality. We've always been sort of oriented towards belief in that.
GIL: Interesting to me. And "get your bag" or "getting a bag" means getting the big bag of money, the windfall, the jackpot from making some investment. And that's what all scams sell—the idea of a massive windfall for little effort. You just have to be smart enough to see the opportunity, to see the money lying in plain sight if you invest. And it does seem like it's really a society-wide scam. It really makes me think of when you go to a big international city—I think of the Westminster Bridge in London where you see the guys doing the shell game on the ground. Even though everybody knows that's a scam, somehow there's always a crowd of tourists crowded around to play the game. And of course, some of the people playing the game are part of the scam to model the behavior of winning.
But it seems to me that that's largely what venture capital is becoming about these days—this sort of shell game on the sidewalk, because that's what we are, those of us who are not investors. It's like buying a lottery ticket. I mean, I'm sure they're probably tokenizing those too, right? If you're putting all of your hopes that you're going to buy the right lottery ticket, you're going to lose in the end. That money would be better off invested in some other kind of thing.
OLIVIER: I like your thing about the lottery ticket though, because if you do hit the lottery ticket, you need to build a whole sort of mystique and philosophy around how your lottery ticket meant something about your innate ability to understand human nature and technology. The sort of mysticism of buying the lottery ticket that then becomes monopoly for someone like Peter Thiel is to say, "Look, you know, I don't invest in anything that doesn't have the potential to return my whole fund." So therefore, you need to sort of like upsell what that product is and its world-building power. This is the language that Peter Thiel uses—that when a developer creates a new company or program, they are, quote, "building a new world," which they might just be arbitraging the sale of like your bedroom for two nights, right? But no, they think of this in this sort of really grandiose scale, part of the history of California.
I'm actually just reading this great book. It's by Gray Brechin, it's Imperial San Francisco, which is all about as soon as they hit that Pacific Ocean, it's like, "It's not enough. We need a Pacific Empire, we need outer space, we need our new nations."
GIL: The frontier.
OLIVIER: Yeah, yeah. Because the way they imagine and think about returns on investment is 100x, 1000x or whatever. And someone like Naval Ravikant, his whole sort of mystique and aura is that like, "Hey, he put $25,000 in Uber and ended up being," or whatever it was, right? Naval is sort of like an interesting guy that like made a bet and now he's some sort of guru to the whole sort of movement.
GIL: You've said that this investor class is becoming completely blackpilled and nihilistic because they're stuck holding the bag on their failed investments. And so they have to figure out some scam to get out of this, whether it's exiting through government contracts or ripping off all the normies on the tokenization of everything in the world. This desperation is also leading to some ideological extremism, which you hinted at in your last answer. And we talk on this podcast about a lot of the main characters in this ideologically extreme movement—Peter Thiel, Marc Andreessen, Balaji Srinivasan, Joe Lonsdale, Naval Ravikant. These are people you mentioned in your speech as well. They'll be in my book.
And speaking of books, you can pre-order Gil's book now: The Nerd Reich: Silicon Valley Fascism and the War on Democracy. Pre-orders matter, people. Besides, if you love the pod, you'll love the book. Book releases August 4th, 2026. How does this all express itself through the network state?
OLIVIER: This highly ideologically charged guy who's been talking about secession from California and channeling the kind of hysterical sense of being persecuted by regulators, media, Kara Swishers, like some brutal Stalinist or whatever.
GIL: Communists, yeah, communists everywhere.
OLIVIER: Total anti-communist Red Scare stuff, Islamo-leftism, that sort of Lonsdale and Sean Maguire shtick. You've got Jason Calacanis always going on about liberal arts students ruining everything, right? So just complete right-wing froth. But also the other part here is that they're so used to thinking about "my tribe" and "my set of founders and investors" being so aligned that it's like, "You know what, actually, we should just start a country. We should just trade in our own crypto. We are so the source of all value that nothing else is really required. Let's go to a special economic zone, take our Discord and our group chat and turn that into like coins and contracts and the emergence of the state. Let's hyperstitiously pump up the idea that we are the new sort of guiding light of civilization and that we can forge and be that sort of metaphorical city on the horizon," et cetera.
It's a very strange misrecognition of like what makes cities and countries great and how the overall contribution that government and labor make to the creation of value. But they've become so sort of mentally, psychologically detached from the rest of us that they'd also like to be physically and sovereignly separate from the rest of us. Yeah, it's not really worked out, but that's where they're going.
GIL: It makes sense though, because you've described them as autodidacts who don't read—self-taught people who don't read widely, but read a few things and decide, "Well, I'm going to frame my entire life around these things." And "I can now figure out a better way to do America than the founding fathers did and a better way to run society than all of the people in government are doing." And they seem to think that they are philosophers for some reason. And I was actually in a chat with some folks who were very mad about the way the word "philosopher" is being used by the media to describe whatever new tech dweeb has a new crazy idea that'll never work out, right? We're sort of debasing the philosophical field by calling everyone a philosopher.
It does seem that there's a great emptiness. A lot of these guys are billionaires. They have more money than they'll ever need. And most of us could probably envision being quite happy with a lot of money, maybe giving a lot of it away to charities and flitting about on islands and having every kind of convenience and luxury we can afford. And probably that would be a good life for most people. It does seem that the money's not doing them a lot of good. And so they get into these dark visions like living forever or going and living in space or creating their own countries. And Peter Thiel has said that you should run your startup like a cult.
What we're seeing is really a cult of venture capital rising up to impose these pretty extreme visions of the future on everyone else. And I really see the network state as the business plan for that—a way to buy real estate, to tokenize government, to provide society as a service. How serious of a threat do you think the network state is? This is a question I grapple with a lot. People who think, "Well, that's just, that'll never work out" or "Good. Let them do it. Then there won't be a problem anymore." But I don't think people fully understand what the network state vision totally entails because it's not just about a few billionaires having their cult communes. They could already do that today. It's about a much bigger disruption in a way.
Think about it as kind of matching up with your "exit through the state." They want to use the United States as a sort of booster rocket to fuel their exit from our reality. It's not like we'll all get to be here living our same lives when they're done with that. Their vision inherently requires a collapse of our democracy, of our nation-state, just like they've hit the hotel industry or hit the taxi industry. They seek to extract maximum value and exit, but that extraction of value is inherently destructive to our country. So it's not really a case of, "We'll just let them go. Who cares," right? Crystallize for us the deep level of the network state vision.
OLIVIER: The use and abuse of philosophy here—there's a very limited set of texts. Davidson and Rees-Mogg's The Sovereign Individual is probably, and Peter Thiel's Zero to One, that's on the bookshelf of all these guys. There is this sense of, "Yes, the sovereign individual as the source of all value who steels themselves in this very singular way towards a particular vision," which is again, when Balaji says, "Here's how we'll create a network state," he would say to you, Gil, "I need that one idea." Think about Milchick in Severance saying, "Grow, grow, grow"—like just sort of synthesize that quantum idea, that one powerful germ that will explode value and allow your transcendence and freedom as some sort of like tech value-creating god. That's the vision here. Again, totally detached from material reality and from the rest of us.
There's also obviously a looming sense amongst all our sort of capitalist overlords about the destruction that's happening to the planet that they're disinterested in ever thinking about—rather to sort of immaculately conceive of a trillion other AI lifeforms than to care about us. At a more sort of like grounded level, I think Quinn's work obviously is very important here and saying that, "Look, the special economic zone or the charter city is kind of like one of these policy tools that has been in the last 30-plus years." It's one of the sort of few levers that states know how to actually pull in terms of like cleaving off valuable parts of the country and of our sort of like public infrastructure for their own personal fiefdoms. I think that's very real and on the cards.
Part of Canada's response to Trump and tariffs is to like go in this sort of special economic zone route. And as your work has covered, this is kind of a veneration of like the robber baron and the company town and Star City. There's this sort of overbearing sort of ideological dark cloud about an inability to think about a future with us in it. Calacanis was on Twitter the other day about like the AI worker apocalypse. The only solution for everyday people is to be a founder—a world of 8 billion founders. No, I mean, obviously they don't imagine that. It's just basically being a founder and having the right Web3 token pass to the proverbial rocket ship to Mars is kind of what they got in line for us.
I mean, who knows? You've been doing a great job also of sort of charting where some of the fractures are. Are we entering into Trump's lame duck?
GIL: We're entering into Trump's sleepy time, apparently. It's funny that it's almost karmic. He's now Sleepy Don. He accused Biden of being sleepy, but now we just see him falling asleep. I think age is catching up with him. And I think greed is Trump's main motivation, right? He likes to play the dictator, but that would require a lot of work and a high degree of risk that he doesn't really probably feel like taking at age 78 when he's making out like a bandit in so many other ways.
And what I'm noticing is that the tech bros and a lot of the right-wing zealots are starting to freak out. You know, it started with Curtis Yarvin saying, "This is going to fail and we're all going to be in trouble." And now everyone is saying that. Mike Cernovich is saying that. They elected Trump to do the thing and he's not going to do the thing, which is hilarious because you look at Trump's entire history, it's ripping off people who trusted him, right? From his workers to whatever. So he's going to rip them off too, I think, because all of these things he's been doing—sending the troops into cities—he kind of backs off at the end, right? He's mostly doing actual harm to undocumented immigrants and people who can't really fight back within our system. Right? He's not yet shooting Americans down. And there are some people saying that there should be public executions in the country. They want more terrifying drama from Trump and they're just not getting it.
The Trump dictatorship might turn out to be as worthless as an NFT. Although it's still quite scary and destructive and people should be held accountable, but they are starting to freak out a bit, which I take as a good sign. The thing about it is that it's not something that just goes away once Trump is out of the picture, right? It'll keep going because these guys have billions of dollars and they can continue to play the long game here. And I think that they will. So I won't be celebrating when Trump's out and these guys are sneaking around with their tails between their legs because they're going to try again. And as I've said, my fear is that they will over time buy off the Democratic Party, which is very easy to do, and get there on a more slow pace. They saw an opportunity with Trump to really accelerate the process, but hey, who knows? We've got a lot of time between now and the next election.
OLIVIER: Looks like abundance is back on the menu. The Abundance Democrat pivot.
GIL: Totally, they find these ways to sell or create these new frameworks and then Democrats buy it because they want that billionaire money. Let's talk a minute about the herd mentality in venture capital. And you've talked about a clustering effect when all the venture capital firms start to cluster around certain kinds of investments. And right now they seem to be clustering around AI, crypto, surveillance, war technology, network state projects, biotech to some degree—very influential investment sectors. You've got Founders Fund, 8VC, Lux Capital, Andreessen Horowitz. You see the same group of people recurring and a lot of them also overlap with the network state, right? The biggest funders in these powerful technologies that are portrayed as the future of humanity are all deeply involved with this small set of venture capitalists. What is the effect of this clustering and bundling on venture capital and what is it due to our government? What does it do to our economy and what's the effect on our lives?
OLIVIER: I gotta shout out Peter Lee and Professor Hilary Allen for writing about this stuff. But essentially, if everyone is going for the quick and easy returns in crypto, crypto is a thing that mirrors the logic of VC so easily, because it's sort of like you can exit quicker, you can pump a lot quicker. You know, an initial coin offering is like an IPO, right? So there's all these attractive things about crypto. And it also has this ability to arbitrage the state and regulators into making that imaginary sort of Web3 money effectively like something real, something tangible.
In the rush to generative AI, your startup needs to have something about generative AI. You need to become a generative AI startup. I use this example. There's a Balaji and A16Z venture. And the other guy from Replit is an investor in this AI education tool called Synthesis. And it was a startup that was the school for kids that worked at Starlink or something like that. It was like a Star City school, and it was modeled on the great visionary Elon and his sort of approach to education. And it was a sort of very bespoke homeschooling product that involved like real teachers and tutors. And then when Marc Andreessen dropped his AI Optimist Manifesto, "Why AI Will Save the World," he included very particular language about AI tutors. And so Synthesis is like, "Yeah, right, that's what we do. We do AI tutors." Yeah, there are no humans. Boom, gone. You can see the change in their website. You can see how they fundamentally kind of imprint on the vision of like Andreessen as a particular sort of lodestar figure.
So there is this herd mentality about what Marc, Peter, or Michael Moritz or any of these big guys in VC want. There's an impact here on startups thinking about what exactly that Marc or Peter or Michael Moritz is looking for and thinking about replaying back gamification or any of these other sort of key concepts that sort of have defined the history of Silicon Valley. So there's a kind of replaying of the same deals, chasing the easiest returns.
So, you know, one of the things that's so stupid about Ezra Klein and Derek Thompson's book or narrative about abundance is: why would you think that capital in America gives a shit about housing? Stripped out all the guardrails that capital would naturally align to human needs? No, it goes to the easiest return. That's why we haven't seen, you know, so-called hard tech except backstopped by the military. Before dot-com, you know, like biotech and health and ICTs are kind of like level pegging. But from there, ICTs take flight because this is sort of like the thing that is defined as the, quote, "new economy."
GIL: Tell us what ICTs are.
OLIVIER: Information communication technologies—your Ciscos and Sun Micros and the rest. Sorry, a very sort of 2000s term. So that's sort of what's happening with AI. We need to be in the AI space. We can't miss out. And in fact, I wouldn't say a revolt at Sequoia Capital, but that South African guy—
GIL: Botha.
OLIVIER: —is no longer the lead partner because he was a little bit bearish on AI. You know, that's the sort of like investor expectation. Hard tech or things that fulfill some sort of social public need is not where VC money flows.
GIL: It does seem like one of their magical powers—their only magical power—they have a lot of money to dangle out for wannabe founders. And this is sort of a funnel for the cult of venture capital as I view it. When Peter Thiel gave his recent Antichrist speeches, most of the people there weren't really interested in his take on Christianity. They wanted to get into the same room with venture capitalists and pitch their ideas. And one guy had an idea for a cross on the moon and another one's an investor in something called sperm racing? Another financialization—put your sperm under a microscope and race it. This is apparently a thing though. This is how insane they have become.
OLIVIER: I would gamble on that by the way, Gil.
GIL: Probably the most apt symbol or metaphor we have for venture capital at this point—financializing masturbation. One thing about the abundance thing, you know, they have one of the visions they have for when all of our jobs are allegedly erased by AI. Everyone will have more then because prices will go down and everybody will somehow get a share of the wealth created by AI. And we won't just create wealth, we'll create extreme wealth for everybody. This is Sam Altman talked about this. And so we're going to have this utopian Shangri-La where AI is not hurting us, it's helping everybody. And 8 billion people in the world will all have a fair share and they can do whatever they want with it and there'll be no more poverty.
The problem with this fairy tale fantasy lie of Altman's is that we already have abundance. It's just not fairly distributed in the world. Most of it is going to a small percentage of people. And so if the people who are the profiteers of our current abundance aren't sharing it now, why the hell are they going to share it in the future? They're not. That's why they're planning to get off the planet. That's why they're planning to live in digital fortress societies. So it's funny to see them pretend as if the future is going to be a techno-socialist Shangri-La when nothing in their behavior suggests that they have any care, as you said, about any of human beings here on earth today.
And I think the fact that a sort of socialist scheme is the best future that Sam Altman can offer people doesn't get enough attention. In addition to this imaginary idea that everything—we should just do on AI now, watch movies made by AI—they are so desperate to find a use case for so many of these things. It's really telling the degree of desperation. And I'm not saying that all artificial intelligence technologies are bad, but what they're trying to push on us is literally the worst face of these things.
OLIVIER: You know, part of what made Sam accidentally the sort of maven of this future—again, they released ChatGPT and it was unexpectedly a hit and it had 80 million users in a month and then that's ballooned to, what are we, they're saying something like 800 million, whatever it is. That's the sort of like key story of like, "Right, you show that you've got the potential to like dominate market share and monopolize that." And then somehow like the network effect will kick in and you'll just kind of reap these monopoly profits.
Now that can't happen with AI because of the material and energy demands. It's totally crazy. What Sam and those companies can do is really fuck with us in terms of reimagining what it is to be human and what relationships we should have to chatbots essentially. And so create that desire and create that necessity. So much of the offsetting of VC investment in these 10-year cycles is like saying, "No, you're going to need to have a personal sort of servant deliver your treats at your doorstep." That's gonna be a future need, a future necessity that's non-negotiable.
When you heard that little maniac from Kalshi talk about prediction markets, he's like, "And that is a consumer habit that will not be undone." And that's what Sam and the rest of them are doing with Generative AI is, "Well, we don't really have like great business cases, there's not great rates of return for businesses that adopt pilot projects, but we can like, I don't know, like re-engineer humanity." That sounds a bit extreme, but that's fundamentally what this experiment is.
And even when they like release information about like, "Turns out that X amount of users were having psychotic episodes or mental health crises using our product," it's like saying, "We now control that core important data about what this question is." So much the same way that like you put Lime scooters everywhere on the street and see if you can make this a sustainable business once you plow through the cash.
GIL: The strongest through line in your work is the connection between the structural economic crises and the ecological crisis facing our planet and the rise of this fascist tech ideology. And it isn't coincidental, it's cause and effect, right? They are seeing crisis ahead and instead of solving the crisis, as you said earlier, they want to capitalize on the crisis. It's sort of Naomi Klein's disaster capitalism at a meta level. How do we capitalize on the destruction of the planet? How do we capitalize on the destruction of democracy? How do we capitalize on the destruction of humanity itself? So what's at stake? What do people need to understand as a closing word? What venture capital is really about and what it means for our future.
OLIVIER: Well, you said the word. It's the foreclosing of our future. It's breaking free from this idea that we will be in the sort of Total Recall Mars colony, right? Like if we want some sort of humane future, then we need to bring it back under some kind of democratic control. If we're staying in a capitalist system, there's nothing inherently wrong about making 10-year risky bets in sort of frontier tech, as they like to call it. Those questions about where those bets lie and for whom those interests and those bets will pay off is highly concentrated in Silicon Valley, highly because of the sort of sociological and economic reasons concentrated around the kind of frothy feverish vision of apocalypse.
California is just so fascinating. Eric Davis wrote about this. It has always been a kind of like hotbed of religion, new religion and technology, that the frontier was always sort of like a techno frontier. Yeah, that is about questions of US imperialism. And while the EU is not in any way sort of a bulwark or, you know, it's a pittance in terms of what they're trying to do to sort of have some kind of sovereignty over what tech might look like there, that would be pretty useful. But I just think just sort of framing the question overall is reclaiming our future from the tech oligarchy. That's it. That's what's at stake.
GIL: It's an important thing to do. And I think hopefully in the coming years, venture capital will get a lot more attention from people because it's not just a bunch of investors. It's a bunch of political schemers. It's people who want to rewrite the future. Venture capital is not about innovation. Venture capital is about power.
It is funny their obsession with California, which they portray both as heaven—the home of Silicon Valley—and hell because it's liberal governance, et cetera. And if you look at the things that come out of California, a lot of good things have come out of California, a lot of innovations. You know, it's the breadbasket of the nation and the world. But we also are like the ground zero for cults. And in a way, I think of these guys as yet another cult rising up out of California. A lot of them are now doing psychedelics and talking about biblical themes. That's what Charles Manson did. Network State—we had a guy named Jim Jones who started his own thing called Jonestown and a bunch of people died there. It was in Latin America where a lot of the venture capitalists are concentrating their colonial scheme.
So it's amazing how by trying to invent the future, they're simply reinventing things we've already seen before. The Gold Rush, for instance, right? So they're basically a mix of the Gold Rush, Charles Manson, and Jim Jones. So if you want to understand venture capital, there you go.
OLIVIER: But don't forget, and just to put on my weird hat, CIA torturer Dan Mitrione was the guy that helped broker the deal for Jim Jones to Guyana. Gotta throw the spooks in there too.
GIL: Yeah, exit through the state, right? Anyway, Olivier, thanks for joining us today. And I'm sure we'll talk again sometime soon.
OLIVIER: Thanks so much, Gil. Really looking forward to the book. Your book, not mine.
OUTRO (R.R. ROBBINS): And on that excellent segue by Olivier, I'll remind you again to pre-order Gil's book, The Nerd Reich: Silicon Valley Fascism and the War on Democracy, wherever you get your books. Catch Olivier's excellent lecture in its full format at http://www.youtube.com/scholastics.
The Nerd Reich is written and hosted by Gil Duran. It's edited and produced by me, R.R. Robbins. Also, it's a new year and a new chance to sign up for the newsletter. Go to thenerdreich.com and become a paid member today. For those with visual sensitivities—yes we read the comments—we recommend our audio-only version of the pod. Go to Spotify.com or anywhere you get your audio podcasts.
Today's final words from Dorothy Parker: "If you want to know what God thinks of money, just look at the people he gave it to."
See you next time.
