Why No Truce With the PayPal Mafia is Possible
Foreigners middlemanning between America and foreign countries won't work, and most of them have some sort of record of theft
The whole venture ecosystem on the West Coast is a phenomenal mess. It’s very clear that it’s not going to work going forward. It’s parasitical on the American economy, and parasitical of Americans.
One thing to be super concerned about when you notice all the foreign cash and fraud going on, is how these data plays are used to steal companies and IP from other people. There are a lot of ways our IP system will need to be revisited from a national security standpoint, first-to-file probably needs to change because of some of this, and reassigning patents based on demonstrable foreign theft ought to be done. This is already the Chinese and Israeli MO, and that these VCs do the same is more or less par for the course given their allies.
When you look at the PayPal mafia in particular, and the big data play at the center of it, Palantir, and that’s where things get really concerning. It’s the only company that does any real business with the feds. Its stock price is wildly overinflated because a lot of Jews invested in it after 10/7 due to its staunchly pro-Israel position. Most serious defense contractors would prefer to align with European companies, which by this point expect some compliance with norms around human rights.
For now, Palantir is a way of taking a lot of DC policy people, especially from the hawkish side of things, off the table. Their inflated stock price has given them the ability to do that, and that’s probably fine, since most of these people’s worldview has no place in the world to come, and they get to meet a lot of the sayanim the company is now stuffed with who agree with their views anyway.
But the big problem with Palantir is the risks of IP theft, if you look at the founders. Joe Lonsdale has a ton of Russian problems. This isn’t the sort of company that would have a lot of scruple about stealing companies and ideas from people.
The record of this in the PayPal mafia is vast. For instance:
The Anduril Roadrunner’s design is a copy of the Iranian Shahed-136, sold at marked-up prices to the U.S., and it has been alleged that none of its Sentinel towers are actually deployed on the Southern border.
Some of the plays by the very dirty David Sacks, who has been in business with the literal mob, are obviously ways to spy on other companies. What he’s tried to be is the resident expert in SaaS, and SaaSGrid is obviously a way to spy on the data of other SaaS companies. He has a reputation in Silicon Valley of this kind of shit.
There are real questions, when you look at a thing like SaaSGrid, how much of the other workplace tech these guys invest in is a means to spy on competitors.
Founders Fund portfolio companies almost seem like they’re designed to enable the theft of personal data, like Nucleus Genomics.
Elon Musk and Jack Dorsey are both in favor of eliminating all IP law.
So there’s an ecosystem here in a position to monopolize all early-stage investment, with some of these data plays, which routinely works with dirty or foreign players. The way they’re using a lot of the cash they hoover up is objectively bad and wasteful, and they have a record of both obvious theft and attempts to arrange the policy environment in such a way that makes theft easier. And almost none of them make anything real.
None of this is good for the American economy or innovation in the long run. It’s not fatal when it comes to consumer technology, but the risks when you’re dealing with information of national security relevance are quite significant, which is why most of these guys’ attempts to move into that space fail and will continue to: of their centerpiece companies, Anduril and Palantir, the former looks like a Ponzi scheme, and the latter is wildly out of step with events and very overvalued. We’re probably somewhere near a high water mark for these guys.
You should read the senior tech execs at Meta, OpenAI and Palantir being commissioned by the Army as the feds forcing their compliance, because everybody knows how messed up these companies are. In the medium to long-term, even for consumer technology, this is probably an ecosystem that needs to be both built around and brought under control.