58 – US Election and What it Means for Tech

Another election year and it’s already a dramatic one. Biden vs Trump turned into Harris vs Trump. An attempt on Trump’s life. What’s next? This episode will focus on the implication of the elections for Tech and its ecosystem in the US and globally.

Navigation:

1. Intro (01:34)
2. Harris vs. Trump
3. Silicon Valley / Tech business at large views
4. Implications for Rest of the World
5. Our take
6. Conclusion

Our co-hosts:

• Bertrand Schmitt, Entrepreneur in Residence at Red River West, co-founder of App Annie / Data.ai, business angel, advisor to startups and VC funds, @bschmitt
• Nuno Goncalves Pedro, Investor, Managing Partner, Founder at Chamaeleon, @ngpedro

Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

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Nuno Goncalves Pedro

Welcome to Episode 58 of Tech DECIPHERED. Today, we will discuss the US election and what it means for tech. How will the upcoming US election affect tech and the entire ecosystem in the US and globally? To be clear, and just to put a disclaimer, this episode will not focus on policies by the candidates that do not relate to what we perceive to be implications to tech. For example, we will not be discussing topics like pro-choice versus pro-life, and other things that are obviously very central to the decisions that many of you will make in how you will vote for the next presidential elections in the US.

Nuno Goncalves Pedro

At the same time, we will also share with you what we know to the best of our knowledge. Obviously, policies change with time, and proposed policies definitely change a lot with time, as you know, with politicians. There might be things that we will share with you today that might be different when you listen to our episode. We are not responsible for that. People and candidates change their minds all the time, even after they’ve been elected. That’s not our fault. Just with those disclaimers, that’s what we’re going to share today.

Nuno Goncalves Pedro

The third and final disclaimer, obviously, there will be tonality on how we discuss and evaluate some of the policies, and if they’re good or bad or whatever. But from this, you cannot also take a conclusion on, “Oh, I should vote for Trump,” or, “I should vote for Harris,” because no, this is just a view around tech and tech ecosystem. We will share how we perceive the policies and the proposed policies, and that’s literally it. We’re not giving you advice on who to vote for.

Bertrand Schmitt

First, this is a recording made August 28. We’ll try to be as precise and as relevant as of this date. This is before the first debate between Donald Trump and Kamala Harris. As a reminder, a French politician once said that promises by candidates only engage those who listen to them. With that as a reminder, let’s start the topic. Maybe first, we can talk about the official platform. As of today, there is an official platform if we go to the page of the candidate, Donald J. Trump, there is a 20-point page, and there is a more detailed PDF as well on the Trump Republican platform. Some of our points will try to leverage what is on this official platform page, and we will also, of course, try to leverage what was done when Donald Trump was president, because sometimes actions speak louder than words. We also pick what we have heard from the candidates on the trail, if it diverts or if it adds to that platform.

Bertrand Schmitt

On the other side, VP Harris’ platform is not there. As of August 28, there is no official platform on her website, which, to be frank, it’s scary because if you cannot hold a candidate to their promise after they are elected, that’s a tough place to be. Obviously, she’s part of the Biden-Harris administration, so we will leverage for discussion what was done by her administration, what was also planned by her administration, and we will highlight whatever has been shared by her, since she’s running as a candidate.

Nuno Goncalves Pedro

Well, okay. That’s a great start. But based on speeches—obviously, Vice President Harris is in office right now, so she’s been part of a platform—based on what analysts’ say, we’ve looked at a bunch of comparisons across the board for where they stand on a variety of issues. Maybe we start with economic policy overall, and talk a little bit about how we see the Biden-Harris administration, and obviously what things have happened around there. We will later discuss other topics like taxes, labour, perspectives, for example, on gig working, immigration, antitrust, and a variety of other topics. The economic policy overall piece that we will share at the beginning is very high-level, as you will see, then we will go in details into a couple of other areas. Maybe starting on that, Bertrand.

Bertrand Schmitt

Actually, we have two, and when I say candidates, of course, we should think about the ticket, per se. If we take on Trump’s side, what’s interesting with both Trump and JD Vance is that they have both extensive experience in the private sector. Trump, obviously, as a businessman, who built a business empire. JD Vance, as an ex-VC, venture capitalist. Both have been in the trench of what it means to run a business, to be on the board of businesses, to be on the private side of things.

Bertrand Schmitt

On the other end, we have a stark contrast, because both Harris and Walz have actually never been on the private side of things. Harris has been on the legal side as a prosecutor, as attorney general. We have Walz, who had a long experience in the military, followed by running for different position at state level before becoming governor.

Nuno Goncalves Pedro

I would say one parenthesis on JD Vance. He was in venture capital for a short period of time, three years and a half or four years, which is not very long, for venture capital funds are normally 10 years, et cetera. But he does obviously have private sector business experience before that as well. He did write the book, and the book was made into a movie. There’s definitely a lot of private sector stuff in there.

Bertrand Schmitt

That’s true. Actually, I forgot to say that JD Vance also has a military experience.

Nuno Goncalves Pedro

Yeah, he was also in the military.

Bertrand Schmitt

The economic policy, if we look at what has happened under the Biden-Harris administration, I mean, obviously it has been hugely inflationary. The numbers have been terrible. I mean, if you have a basket of stuff to buy at the groceries, you have seen big price increase. Go to McDonald’s or any other restaurant, you will have seen a huge difference in the past four years. Whatever the Inflation Reduction Act was supposed to do, I guess it did the opposite of the name of the act. It was a more inflationary act instead of a reduction one.

Bertrand Schmitt

The latest has been Kamala Harris has shared, or some of her spokesperson have shared that she wants to put in place some level of price controls, which is pretty scary, to be frank. In some ways, it’s typical to first create inflation, and then to claim it’s the fault of the capitalists. If prices are increasing, therefore we need to put in place price controls. I think the last time that there were some level of price controls in the US was a long time ago, in the ’70s. It was not a good outcome, just to be very clear. It has rarely, if ever, be a good outcome if you go to price controls.

Nuno Goncalves Pedro

Yeah, I mean, price controls, I don’t think would be a great idea anywhere in the world. On economic policy, I would bring another element to the table, which is maybe stepping one step above. As you guys probably know, both Bertrand and myself are not American originally. I have since become an American citizen, so this will actually be the first presidential elections that I will have the pleasure and honor of voting in.

Nuno Goncalves Pedro

Bertrand is not an American citizen, but he does live in the US and has lived in the US for a very long time. Coming from different countries, Bertrand’s from France, I come from Portugal, with national health systems. We both lived in China, which is a bit funky in terms of health system. Again, different education systems, et cetera. I’d say the only point I would make is, at least from my perspective, coming out of Europe and having lived in Asia, there’s very little structural support on things that I do think are critical. For me, the three things that are critical, I always mentioned these three things, are health, education, justice. The health, education, justice system in the US is, let’s just say, very private sector-owned. It’s very private sector-led, and it’s uncommon for that in many countries in the world.

Nuno Goncalves Pedro

It has its pluses and minuses. But if I were to look at the minuses, the fact is, if I’m an American citizen, the level of protection I have in terms of, for example, having a health scare or whatever is not really comparable to, for example, I’m a Portuguese citizen, I live in Portugal. I do think there are a lot of factors that are put into economic policy to make some of these elements work in the economy, which, to be honest, the Democrats have had probably a better track record than the Republicans have had.

Nuno Goncalves Pedro

The whole notion of you take care of yourself, and if you have health issues, take care of yourself, and if you have diabetes, you take care of yourself, is very much a Republican speech motto thing. On the Democrats side, there’s more of this level of protection for at least certain elements. Now, we can have, as Bertrand was saying, also an argument that there’s been too much spend. The government is overspending dramatically. We have money that we don’t have the right to spend. We’re borrowing.

Nuno Goncalves Pedro

What happens at some point? Does the country default? What happens? There has to be somehow more of a moderate view on what is important and what is essential to citizens or not in the country. I do agree with the point that you were making that there has been extreme spend in US under this administration, too much spend under this administration. But at the same time, there are things that need to be taken care of in the US by the states, by the government, and particularly by the federal government in this case, because we’re discussing a federal election, that honestly do require spend. Sometimes I think the Republican piece of discussion is a little bit like, “Oh, no, we’re a capitalist country. Everyone takes care of themselves.” That’s not how a country should work. Why do we pay taxes? I think there should be something a little bit more in the middle.

Bertrand Schmitt

My take at this stage is that a lot of people talk about where is the money coming from, do we increase taxes? There is very little discussion on how well the money is spent, when at the end of the day, that’s all that matters. How well is it spent? My worry, and we’ll talk a bit on more specific points, but there are very clear specific points on, for instance, high-speed broadband or electrification of the US, where billions have been invested by this administration, Biden-Harris administration, and there is absolutely nothing to show for.

Bertrand Schmitt

That’s for me what’s totally scary, because when stuff is clearly identified, four years after, you see zero in terms of returns after spending billions. That, for me, is for sure the scary part, and a big question. I think there is some level of, from my perspective, a clear dysfunction overall, not just this administration, by the way, but there is, overall, a clear dysfunction. I think there should be way more discussion about how well is the money spent, and how well invested it is. I think, unfortunately, it’s not discussed. It’s more how much money do we tax, where should it go, and not, has it been well spent? My personal worry is that the majority of the money is actually not well spent.

Nuno Goncalves Pedro

I think that’s a good segue to the tax discussion. Let’s start exactly with the point you’re making, which is, I think of the countries that I’ve lived in, probably this is the country where I’ve seen the most delta between taxation and what’s deployed into stuff that you can actually see as impact. There’s a lot of leakage in deployment. Just to be clear, I lived in China, for example, like you did. There are other types of leakage in China, but the leakage here on tax credits, I mean, I live in California, you used to live here, Bertrand. It is absolutely incomprehensible where some of the taxes are going, because infrastructure needs a tonne of maintenance. Everything that gets done takes a tonne of time to be done. It’s super costly.

Nuno Goncalves Pedro

I mean, there’s all these incredible cases of the million dollar… Was it the million-dollar toilet in San Francisco or something? The way it gets deployed or something, it’s mind-boggling, and it is significant. I know people that left this country because of that, that left this country because they’re like, “I’m paying taxes. I don’t mind going somewhere else and pay even more taxes, but I know it’s being deployed. I know I have a national health service that takes care of me and takes care of other people. That mostly works. I know there’s education, guaranteed K-12, which is pretty decent. The variability is not huge across the board. I know where my taxes are going.” I think the accountability of taxation than in deployment is something that’s very interesting and very important to me. This country is definitely messing it up.

Bertrand Schmitt

It’s very surprising. I cannot say I’m a big fan of the French’s quasi-socialist economy, for instance. But if you pay more taxes in France, I personally feel you also get way more in return. You have functioning roads, you have high-speed rails, you have a great aerospace industry. Look at if you compare Airbus to Boeing, obviously, SpaceX is in the US. Yeah, that’s really a big question. Especially, I would say that one thing that personally surprised me was Kamala Harris’ support for the equality of outcome, not equality of chance, but equality of outcome. Because if you start with that mindset, and that started with a presidential election in 2020, that’s pretty scary. Because if that’s your mindset, if you want an equality of outcome, you are going to tax even more. Obviously, I don’t believe equality of outcome will work. That’s a scary part.

Bertrand Schmitt

If we go more precisely, it seemed to have been endorsed by Kamala Harris, it’s the last Biden-Harris administration proposal to increase corporate tax, to increase income tax. The worst of the worst is to dare to do a tax on unrealised capital gain. That one is like, from my perspective, I mean, batshit crazy. I will not use any other word.

Bertrand Schmitt

I’m coming from France, where we used to have a wealth tax, which had so many negative effects. The first negative effect was a tax that costs more to the state than it gained. Because people left France because of this tax. Wealthy people left France, and ultimately, France got less tax as a result of imposing a wealth tax. This is not only very bad in principle, but realistically it never works, but it certainly serves to damage the country. For me, that’s the most scary proposal of all. This is, as of today, seem to be endorsed.

Nuno Goncalves Pedro

This is to the best of our knowledge, right? I wouldn’t be shocked if she steps back a bit on that, but we will see, particularly in realised capital gains. A lot of people is like, “How does that work?” I have this stuff in stock—like Elon Musk has all this stock—and it’s worth something. Probably he’s getting loans from banks to do things, et cetera. Correct, he is. But think about, for example, the startup world, the world that we occupy for the most because we’re in venture capital. If I’m a founder of a company, I start the company, and sometimes I get paid literally zero when I start a company. At some point, I might get a meagre salary, and then that salary gets a little bit better and better, but it’s never a great salary. My compensation is I started the company, therefore, I have a big portion of the company in equity.

Nuno Goncalves Pedro

As I go through time, that portion of the company decreases because I’m raising money from third parties, and therefore, I have less and less ownership of that company. But let’s say I have, I don’t know, 20% of the company at a certain point in time. The company, as it goes through rounds of financing, is valued at different amounts. There are two types of valuation. There’s the valuation that’s done by investors that come in to get preferred chairs, and there’s the so-called 409A valuation, which is a valuation that’s applied because you have to give options to employees and other things to stimulate and give them as benefits.

Nuno Goncalves Pedro

If that valuation at some point, the valuation is always going higher. If the valuation at some point is higher, you’re being taxed on that increase in valuation on equity that you have done nothing with. You have equity in the company, but you have not done anything with that equity. That destroys that market. What’s my incentive? I’m a founder, and I’m getting taxed on stuff with cash I don’t have, because I haven’t sold the equity. In some case, I’m going to keep that equity for the next seven, eight, nine, 10 years. That part is what Bertrand is saying is idiotic. I think a similar thing is being done in the UK right now, which is creating a huge amount of noise and complaints and whatever. I looked at something recently, because people are, “Why does this matter?” Well, it matters for a variety of reasons. It matters because it has huge implications on the ecosystem and startup VC. I mean, it’s huge. I mean, Silicon Valley, this would be huge in Silicon Valley.

Nuno Goncalves Pedro

It has huge implications because the US has a tonne of millionaires. To this day, I just saw a chart from, I think, 2023. It’s net positive, the US. There’s more millionaires coming to the US than leaving the US. Last year, according to that chart I saw, the US was second in the world, only beaten by the UAE. I think UAE had a net positive of 7,000 millionaires. US had a net positive of 4,000 millionaires. For example, China’s last. China’s net negative, the most net negative. It’s in the top 10 of net negative. Portugal is in the top nine of net positive. It’s in ninth place. Of the top 10 of net positive, it’s in ninth place. What do you think would happen as well to millionaires? Because a lot of these people have participation equities in companies, the thing, whatever, your tax on unrealised gains.

Nuno Goncalves Pedro

I think that would be a massive destruction of value, and it would have a huge impact in tech ecosystem for sure. Extremely negative. I don’t know how we would go around that. How would we figure this out? I’m sure there are lawyers already thinking through that, but how would you work around these kinds of things? Going forward, it’ll have implications on VC funds, and how we hold the stock at because we would have to pay taxes ourselves, but we haven’t exited the company. We have the equity in our books, but we can’t do anything with that equity, either. We only do when there’s an exit, but then we have to pay taxes on it? This is dramatic. This is absolutely dramatic, and it’s absolutely idiotic in my perspective.

Bertrand Schmitt

Of course. The other piece, as you said, one of the biggest issue in private equity in venture capital as an entrepreneur is that the stock is not liquid. If you have to pay taxes, you cannot sell your stock because there is still not yet a market for it. Because by definition, it’s a private stock. It’s absolutely huge trouble. Are you forced to borrow to pay your taxes because you cannot sell your stock? Is everyone selling their stock at the same time every year to pay taxes? It’s destroying the valuation. It’s very shocking for me that there is even a discussion about this.

Bertrand Schmitt

As you say, for sure, there would be fewer millionaires or billionaires coming to the US. I mean, they will not come any more. I’m sure they were bringing not only cash, but their smartness and knowledge to the US. That would be a big issue. I certainly hope there will be a dramatic change ASAP on Kamala Harris on this part of our platform. But right now, that’s there, and that’s a big issue for anyone involved in entrepreneurship, from any side of the puzzle.

Bertrand Schmitt

On the other end, we have Trump proposing personal tax cuts at federal level. There were also some deductions that were set to automatically expire that would be probably extended. That actually is on Trump platform. These tax cuts would not be extended under Kamala Harris’ administration. I was surprised to hear that experts estimated this to be a 20% tailwind for the market, this personal tax cut. This simple one, once it’s expired, would have a very dramatic, immediate impact on the market. Trump is also planning to cut even more corporate taxes. I think the agenda could not be more stark in terms of their opposition on taxes.

Nuno Goncalves Pedro

It’s opposite in many ways, yes. It’s historically been one of the big things between Republicans and Democrats ever, always.

Bertrand Schmitt

True.

Nuno Goncalves Pedro

But in this case, to your point, it’s even starker, right?

Bertrand Schmitt

I would say, one piece I have not heard any candidate talking about that for me has some importance is the IRS Section 174 part of the code that has started to impact small businesses since 2023, if I’m not mistaken. This one is creating huge trouble for entrepreneurs because they have to, instead of deducting, amortise research R&D expenditures. That has a huge impact for a lot of business that are not yet profitable from a cash perspective, but are considered profitable from a tax perspective, and therefore end up having to pay taxes when they are not generating cash.

Bertrand Schmitt

I know a lot of businesses have been very significantly impacted. That’s also causing a lot of issues in terms of competitivity of smaller tech businesses in the US versus basically anywhere else in the world. I certainly hope candidates are going to work on it and change that. But so far, I’m not sure I’ve heard anything about it.

Nuno Goncalves Pedro

Maybe moving to labour, and that includes gig working. Vice President Harris does seem to be, obviously, more on the side that gig workers need to be treated more and more as actual workers.

Bertrand Schmitt

Employees.

Nuno Goncalves Pedro

As employees, effectively, with broader protections, and around what worker classification means, and how all of this works. Obviously, as always, the Democratic Party is much more on the side of unions, in principle. This has significant implications. I mean, both of us are VCs, just to be very clear. Hopefully, we don’t have too many biases, but I’m certainly investing in companies that have a significant part of their deployment is based on the fact that they can do 1099s, people that are seen as contractors, and sometimes they can do W-2s.

Nuno Goncalves Pedro

In this case, this company does both. The company has just got into someone’s pressuring them, in San Francisco County, whatever. It’s all sorts of things going on around this gig economy piece. Now, are there elements of the gig economy that need to be a little bit more thought-through? Yes. I do believe a lot of the elements of gig economy that need to be more thought-through should be thought-through for any person that is a citizen. In some ways, we’re trying to go after the gig piece because employers are easier to go after. Going after a corporation is probably easier to go after.

Nuno Goncalves Pedro

Obviously, former President Trump had adopted rules that made it easier for businesses to classify workers as independent contractors. He’s not a big fan of unions, as you can imagine.

Bertrand Schmitt

Actually, on this point, Trump was for the first time, there was a very visible union, Teamster Union, speaking at the Republican National Convention.

Nuno Goncalves Pedro

Interesting.

Bertrand Schmitt

I would say, for a Republican candidate, Trump is probably the most friendly to union workers of any Republican candidate ever. I think there is actually quite a significant change that is not widely acknowledged that union workers in industries, not in government—in government, I’m pretty sure they favour Kamala Harris—but in industries, I think there has been a very significant change where union workers are actually more massively voting for Trump than Kamala Harris, and there is more and more official support.

Nuno Goncalves Pedro

Are you saying overall, they would vote more for Trump than for Kamala more than before the delta would have increased towards Republicans?

Bertrand Schmitt

I think union representing industries—not government—employees are probably going to vote way more for Trump than Kamala Harris.

Nuno Goncalves Pedro

Okay, I’m not sure. It’s interesting to see where we end up once election day comes. But I do feel that part of this is, again, historical. The US historically has had very low unemployment based on a lot of sub-employments or under employment. People that have three, four jobs at the same time, they’re getting shifts here, shifts there. They’re not really employees of any company. They don’t get benefits through anyone.

Nuno Goncalves Pedro

I understand that, obviously, the Democratic Party and NDPRs believe that the situation should change, and that people should have employment and should have a protective net in terms of how that employment is done. Obviously, on the broader side, things have always been a little bit more around.

Nuno Goncalves Pedro

It’s the country. It’s a capitalistic system. This is how the country has had such low unemployment. This is how the country has had such low unemployment rates. Unemployment is part of the equation. If we had all these things in place, employers can’t employ people, and therefore, unemployment has to go up. It’s a fundamental religious fight almost on this. There’s a very different view on what’s at stake here.

Nuno Goncalves Pedro

I think in Europe, if we look at Europe, the right side and the right-wing parties versus the left-wing parties, certainly in the middle are the Social Democrats and the Socialists. They’re okay-ish in the middle. They do believe in protections for employees and all that stuff, et cetera.

Nuno Goncalves Pedro

The battle is quite a little bit in the middle. Here, we have a little bit more of an extreme battle. I think it does come from the notion that the US is in a very different place in terms of worker compensation, how people are treated as contractors, what rights are they entitled to, et cetera. There is a philosophical issue here.

Bertrand Schmitt

Totally. To be clear, I think flexibility in the US is flexibility of work is a feature, not a bug of the system. Ultimately, my guess is that the Biden-Harris administration or Kamala Harris-Walz and possible future administration wants more to follow the European path. Coming from Europe, I’m certainly not excited by this direction, because I personally think some of these choices and decision have a real cost to the economy.

Bertrand Schmitt

If you look at how Europe has grown, actually experienced lack, of course, compared to the US for the past 10 to 20 years. It’s very stark. It’s absolutely very stark. You can see that the efficiency in Europe has gone lower and lower. Productivity of workers has gone lower and lower. I would be really scared, personally, to go in the direction because I think it has been tried, and it has been shown it’s not working. You can say that, “Yeah, it’s harder here in the US.” Sure, but at least there is more wealth to go around. But at some point, it will come to each personal opinion.

Nuno Goncalves Pedro

It’s sad that we can’t get to a more moderate view, I think, would be my comment. It’s actually around most of the points we’re going to discuss today. Because honestly, I do think workers should have more protections in many cases. But at the same time, I agree with you, Bertrand, there are situations in Europe, in many countries in Europe, where you can’t fire people. You just can’t.

Bertrand Schmitt

Yeah. I can tell you very clearly from an entrepreneurial perspective, as a result of that, a lot of companies are making the decision not to grow as fast because they cannot take the risk to try to go too fast, and if stuff don’t work, you have to scale down, but then scaling down costs you so much money. You cannot afford it any more. You actually go bankrupt scaling down the business, where in the US, you can scale down the business in a matter of two weeks, save the business and turn it around, and basically manage the up and downs results of the global economy, which you cannot control on your own business and readjust.

Bertrand Schmitt

I have seen again and again that, at least in Europe for the growth economy, it’s simply not working. You cannot grow as fast in Europe because of these regulations than in the US. Another side effect is that it’s very slow to hire people because everyone has to wait for two, three months to give their resignation, leave the business. When you hire people, it takes a lot of time to hire people. This is again connected to the protection afforded, and you cannot fire too fast. But as a result, even if you wanted to hire, and you would take the disproportionate higher risk to hire fast, like in the US, you cannot because people cannot join you so fast. You will be limited practically on how fast you grow.

Bertrand Schmitt

Ultimately, if you have a business A in the US, and B in Europe, that is targeting the same market, has the same access to capital and stuff, you might deliver a much better result in the US simply because of the environment. I’m not even talking about also places like China, where you could also grow very fast. It’s a very tough place to be. At some point, you have to think about being globally competitive, and I think that that would be a mistake not to think about it.

Nuno Goncalves Pedro

Correct. I mean, it’s anecdotal. I do ask some gig workers, obviously Uber drivers, Lyft drivers, people that do any type of Taskrabbit, whatever. The feedback I systematically get is if the trade-off is there are fewer jobs available or whatever, honestly, I’m fine. Now, is there minimum benefits and minimum things that you need to put in place for these workers, even though they are independent contractors? Absolutely. You should. But I don’t think it’s going to be, honestly… Between you and me, Bertrand, I don’t think it’s going to be government regulation that’s going to make that much better or not. It’s going to be just natural competition if there are players in the market.

Bertrand Schmitt

I see so much flexibility in gig working, if we go on this specific topic. I mean, you have the ability to work whenever you want. If you’re an Uber driver, you can buy your own car. Not so long ago, you wanted to drive a taxi, you had to pay a medallion. You had to spend enormous amount of money. You have to get a loan, to be a shark loan, typically. You will be forced first to work for a taxi companies that will pay you very little. Basically, I don’t think all of this protection and so much were so great if you are really on the worker side.

Bertrand Schmitt

I think now, everyone has an opportunity to start quickly. It’s not a few taxi company bosses who are going to basically take advantage of you. I think the current system with Uber or Lyft is much more competitive, and give an opportunity to anyone. Personally, I’m very much in favour of this system. One thing I want to say, I think the overall functioning of the system in the US is not very efficient because a lot of it is dependent on the company paying for health insurance for different things.

Bertrand Schmitt

Instead, where I come from, Europe and other places, you have a system that is much more independent of the companies. If you’re a freelancer, and you want to work on your own, it’s very easy to get access to all the protection you want. You just pay a bit more on top of it, and you will get access to any protection. It’s very different. It has to go from the company that hires a worker.

Bertrand Schmitt

This is actually a weird distortion of the market coming from World War II, when employers were mandated in the US to not increase salaries to limit inflation. As a result, employers came up with some ideas to compete against each other by providing stuff on the side, from health insurance to other things. This is a very weird distortion of the market that happened, guess what, again, by government intervention. Where now, we have this system in the US where many things depend on the employer, making things more difficult in some ways for independent contractors.

Nuno Goncalves Pedro

A lot of the discussions we have today, it’s a country that has, at moments, at some point, historically, a very top-down industrial policy thinking, but then very large time periods of a couple of decades of bottom-up thinking. Because of the system in the US, with states, federal government, cities, counties, all of that. There’s all these flaws in it. It’s a very bottom-up thought. It has unintended effects that nobody ever thought about. People obviously take advantage of it, because the things are there to be taken advantage of. In some ways, I think part of how the country has evolved over time.

Bertrand Schmitt

On this point, it’s something we have not talked before, but the incredible complexity of the tax system in the US, for instance, is insane compared to most other countries. We are talking about a complexity of the system that is 2 or 3x more than most other countries, just to be clear. Most Americans don’t realise how complex is a system versus other countries.

Nuno Goncalves Pedro

Moving to immigration. Here, maybe we should focus around immigration that has an impact in tech. We’re talking about more specialised immigration.

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

I’ll throw the first stone. I mean, Trump was not cool when he was in power. Now he’s showing more openness around the H-1B visas, which are the specialised visas that are capped, for those who don’t know, which has been a huge engine of growth in Silicon Valley. There were some stats posted, I think it was probably around 2014, ’15, that for each H-1B person, there were 10 jobs created. I mean, that’s silly.

Nuno Goncalves Pedro

I think the cap back then was 60,000 H-1Bs. It’s silly. He wasn’t very kind, and he was tough on all immigration. In that sense, everything was slowed down. Green cards were slowed down, specialised visas were slowed down. Obviously, green cards are very important as well for specialised workers, because people want to be permanent residents.

Nuno Goncalves Pedro

Citizenships, I’m not sure if they were slowed down or not when Trump was in power, but I’d be shocked if they weren’t. He wasn’t very friendly to us here in Silicon Valley for sure, and had obviously a huge impact in that sense. Now, he’s speaking to a different tune, with JD Vance as the VP. Maybe they’re speaking to a different tune, but I’m not sure he has an amazing track record to show for on that side of the fence.

Bertrand Schmitt

That’s clear that it was not good in terms of legal immigration. It was also very strong in terms of illegal immigration, but this one has less direct impact on tech. It’s very sad for me that usually, those two go together. Either you’re open for legal immigration, and you’re also open for illegal immigration, or you are close to illegal immigration, and you are close for legal immigration.

Bertrand Schmitt

It’s very frustrating the two, illegal and illegal immigration, have to be linked somewhat by candidates. It’s either everything is open or everything is closed. I think it’s a dumb burst of [inaudible 00:32:53]. I’m personally quite happy to see and hear that Trump seemed to have a change of mind in terms of illegal immigration. He was extremely clear in an interview on the All-In podcast that he was open to legal H-1B immigration. I think it was before he picked JD Vance as his VP, so I’m definitely hopeful.

Nuno Goncalves Pedro

They need to believe him, but yes.

Bertrand Schmitt

Yes, of course.

Nuno Goncalves Pedro

We need the politicians, both sides. This is not a slap on Trump. I mean, to be honest, we need to then believe them. Everything we’re discussing today is we have to believe that they’re saying what they’re going to do, as I at the beginning of the episode.

Bertrand Schmitt

I would say, so far, my impression is that he tried to do what he said he would do in his first administration. I have some hope that if he claims to have a change in mind on this specific topic, it’s real. I think there must be some admission that if you want some support in Silicon Valley, you have to be more flexible on this. I think he’s trying to get that support, and he has more people around him coming from Silicon Valley. It might have helped change his mind, not just political calculations.

Nuno Goncalves Pedro

Yeah, this is definitely a big deal that matters. I’d say, probably, Vice President Harris would be a clearer view on this, as in what it affects tech, which is legal immigration, specialised workers, et cetera. Probably, she would have a stronger stance. We’re not going to discuss safety and security at the border, illegal immigration, and all that stuff, because as we talked about before, it doesn’t have a direct impact in technology for sure.

Nuno Goncalves Pedro

Shall we move to antitrust? Maybe just to frame my antitrust, this is obviously the ability for companies to be split because they’re too big, and they have monopolistic control of a specific market. But it also affects, for example, approvals on mergers and acquisitions. It has huge impact in tech in that sense as well. The ability for big tech companies to buy small companies, or other big companies, or do big acquisitions, and all of that.

Nuno Goncalves Pedro

I think on this, it’s pretty clear that with former President Trump being elected, it would be easier to get a more lenient antitrust rulings on a lot of things, and a lot more M&A would be approved. I had a conversation with a founder that I will not name, and he was telling me… Back then, President Biden was still a candidate, and he said, “I will vote for Biden, I won’t vote for Trump. But honestly, if Trump is elected, it will be much better for my company because I’m in the eye line of a top tech company to be acquired. The probability that it will get approved under President Biden is very low, and the probability it will get approved under President Trump, and that DOJ and stuff, it’s probably very high.” He’s like, “I’m going to vote for one, but I hope the other one win.” I was like, “That’s tough.”

Bertrand Schmitt

It has been a virtual ban on big tech acquisitions. If you are an entrepreneur or a VC in tech, that’s practically the end of the world. Because it’s either IPO, in a minority of case, or selling the business typically to someone with a lot of money if you want a big exit, so it will be to big tech companies. If suddenly, big tech companies cannot make acquisition, you cannot exit companies. If you cannot exit companies, you cannot provide a return, nobody can get rich, and nobody can reinvest. It’s a total nightmare right now. Again, as you said, it’s managed by the FTC, the DOJ. If we take the FTC, the chair, Lina Khan, named by President Biden, this administr