Steven Sinofsky & Balaji Srinivasan on the Future of AI, Tech, & the Global World Order

Balaji Srinivasan (0:00)

For four years, it was just a desert. The state blocked IPOs. They're blocking M&A's. It was just an all-out anti-tech assault.

Steven Sinofsky (0:08)

DC is the zero-sum game. There's something positive out there, so it has to accrue to the DC power base.

Balaji Srinivasan (0:16)

FIGLA managed to make its way through that. Absolutely no thanks to the state attacking it. And then Lena Kahn decided to take a victory lap on this, which was, as I said, it's like the assassin congratulated themselves for helping to elect Trump.

Erik Torenberg (0:30)

There's been a wave of M&A chaos lately, Meta and Scale, Windsurf and Google, and a lot of it points to something bigger, how regulation, capital and innovation are colliding in 2025 In today's episode, I brought on Steven Sinofsky and Balaji Srinivasan to break it all down. We get into how deal making is changing from acqui-hires to what Balaji calls aquifiers, plus the deeper power struggle between the state and the network, and what it all means for AI startups in the future of tech. Let's get into it. As a reminder, the content here is for informational purposes only, should not be taken as legal business tax or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any a16z fund. Please note that a16z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com/disclosures.

There's been a lot going on in the world of M&A, in the last month, et cetera. There's been the Meta, Archdale, there's been the Windsurf Saga, there's been Alina Khan Discourse surrounding Figma. I wanted to bring both Balaji and Steven together to reflect and discuss at a higher level how we make sense of what's happening in M&A land. Balaji, I know you've had some thoughts recently, so I thought I'd let you open.

Balaji Srinivasan (1:55)

Yeah. There's actually three, I think, separate issues that are all interrelated. They're all related to how US capital markets are becoming tougher, but the interest in capital markets is starting up. Those are the Windsurf, Scale, Character and so on. Then this new kind of deal structure, then the Figma IPO, and then finally the new Genius Act.

To briefly summarize, since Starbucks, Sarbanes-Oxley in the early 2000s, which was passed in the wake of Enron, that was the intent was to stop Enrons, but it actually did stop IPOs. So the number of public companies has just declined, number of IPOs has declined, and tech companies started going private for longer. And then now with the FTC antitrust harassment of the last several years, that also started to cut off the M&A window. So for four years, there was just a desert and DOJ went into fear, for example, with JetBlue's acquisition of Spirit, Spirit went bust, Roblox had issues, a bunch of companies suddenly died. Go ahead. Rumba, Rumba, Rumba.

Steven Sinofsky (2:56)

I mean, kill a robot vacuum company.

Balaji Srinivasan (2:58)

Yes, they said, Roblox is fine. Sorry, Rumba, you're right.

So first, the state blocked IPOs. And so we had to go private for longer and build a whole PE kind of model. And then they're blocking M&A's. And so essentially that just caused, I mean, among other things, there's also the assault on AI with limiting number of flops. There's the assault on crypto, with the SEC essentially doing lawfare against the whole space and debanking companies. There's an all out anti-tech assault. And then the amazing thing was, Figma managed to make its way through that and actually get to IPO. Absolutely no thanks to the state attacking it. And then Lena Kahn decided to take a victory lap on this, which was, as I said, it's like the assassin congratulated themselves for helping to elect Trump.

Steven Sinofsky (3:43)

It was quite a remarkable statement, but it really gets to the heart of the way that DC is the zero-sum game. And so there's something positive out there. So, it has to accrue to the DC power base, because otherwise, there's not enough positive left over. And so, it was sort of this absorbing the one glimmer of hope that's out there and ignoring the long, long tail of carnage that they recently caused.

Balaji Srinivasan (4:12)

That's right. And basically, the thing is, they take credit for the good things and the bad things, oh, well, that company must have sucked anyway or something like that, right? And actually, the DC thing, I'm not sure this is apocryphal, but I remember, I think Gates said something in the late 90s or early 2000s, actually before the whole antitrust thing, which you guys actually had to go through, you had to go through the whole thing. Something like, he wanted something to do with Washington and all, just wanted a code. And they said, well, that's fine. But some politician said, but we're just going to hold hearings on you, and then you're going to have to donate to us. Do you remember that? I remember somebody wrote that up. Go ahead.