Are Markets Rational on AI Valuations?

“I don’t know if any rational person ever became a billionaire running a disruptive company.” — Keith Teare

Is capitalism by permission of democracy, or is democracy by permission of capitalism? That’s the question Keith Teare and I have been circling for a while on our weekly tech roundup, and this week it triggered a full-blown discussion of our 21st century economic and political fate.

Earlier this week, Vinod Khosla — one of Silicon Valley’s most successful venture capitalists — posted on X that “capitalism is by permission of democracy.” Keith agrees. I’m not so sure. My sense is that as AI start-ups approach valuations that rival the GDP of nation states, the old equation inverts. Governments no longer permit capitalism. Capitalism permits government. The Sam Altmans and Elon Musks of the future, running 10 or $15 trillion dollar startups, won’t lobby politicians. They’ll replace them. Dario Amodei’s confrontation with the US government, then, is a sneak preview of the future. Indeed, as what Om Malik calls a “symbolic capitalist”, Amodei is a good example of the type of engaged capitalist who will usurp traditional politicians. That’s the good news. The bad news is that other examples of symbolic capitalists include Elon Musk and Peter Thiel.

Five Takeaways

•       Keith Says OpenAI Will Be Worth $10 Trillion in Five Years: I told him I’d take him to dinner if he’s right. He said I’d have to do more than that. His logic: NVIDIA promises $1 trillion in new revenue by the end of next year, Anthropic did $5 billion in new revenue in a single month, and the three expected IPOs — Anthropic, OpenAI, SpaceX — would together raise more money than the entire IPO market of the last decade. The Netscape moment, if it comes, won’t be a moment. It’ll be an earthquake.

•       Fundrise Is the Canary in the Coal Mine: A fund holding private shares in Anthropic, OpenAI, SpaceX, Databricks, and Anduril went public this week at $34 and closed above $100. Retail investors paying three times net asset value for companies that aren’t even public yet. Keith says that’s not irrational — it’s the market pricing the future. I’m less sure. History is littered with futures the market got catastrophically wrong.

•       Om Malik Reframes the Entire Debate: His essay on “neo-symbolic capitalism” argues that value in the 21st century derives from symbols, narratives, and reputation rather than products. In that framing, Amodei’s fight with the government isn’t a miscalculation — it’s brand-building. Musk is the master of it. Altman tries to wear every hat simultaneously. Peter Thiel is in Rome talking about the Antichrist. And the billionaires who signed the Giving Pledge now want out.

•       Keith and I Disagree on What $10 Trillion Means: Keith says the government retains power regardless of corporate size. Being big doesn’t give you political power unless governments are corrupt. I think that’s naïve. If AI companies approach valuations that rival the GDP of nation states, the old equation inverts. Government doesn’t permit capitalism. Capitalism permits government. The Amodeis and Musks of the future won’t lobby politicians. They’ll replace them.

•       Contrarianism Is at the Very Core of Innovation: The one thing Keith and I agree on this week. Every billionaire is irrational. Musk is on the spectrum. Thiel believes in the Antichrist. Amodei thinks he can fight the US government and win. Keith concedes: no rational person ever became a billionaire running a disruptive company. The question is whether that irrationality is a feature of capitalism or a threat to democracy. We disagree on the answer.

About the Guest

Keith Teare is a serial entrepreneur, investor, and publisher of That Was The Week, a weekly newsletter on the tech economy. He is co-founder of SignalRank and a regular Saturday guest on Keen On America.

References:

•       That Was The Week — Keith’s editorial on public markets and price outcomes.

•       Om Malik on neo-symbolic capitalism — the essay that reframes the Amodei debate.

•       Episode 2835: Why Dario Amodei Might Be the 21st Century’s First Real Leader — last week’s TWTW, where the Amodei debate began.

•       Episode 2836: Is Elon Human? — Charles Steel on the curious mind of Elon Musk, referenced in the conversation.

•       Fundrise (VCX) — the IPO that triggered this week’s discussion, trading at 300% above NAV.

About Keen On America

Nobody asks more awkward questions than the Anglo-American writer and filmmaker Andrew Keen. In Keen On America, Andrew brings his pointed Transatlantic wit to making sense of the United States — hosting daily interviews about the history and future of this now venerable Republic. With nearly 2,800 episodes since the show launched on TechCrunch in 2010, Keen On America is the most prolific intellectual interview show in the history of podcasting.

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Chapters:

• (00:00) - Introduction: AI and unreason define the world
• (01:49) - Markets as prediction machines: NVIDIA’s $1 trillion promise
• (04:42) - The three IPOs that would dwarf a decade of IPOs
• (05:50) - Fundrise (VCX): retail investors paying 300% premium
• (09:23) - Keith’s prediction: OpenAI at $10 trillion in five years
• (11:44) - The Anthropic debate continues: tactics vs. morals
• (14:22) - Silicon Valley’s behind-the-scenes support for Amodei
• (16:42) - What happens when an AI company rivals a nation’s GDP?
• (23:05) - Om Malik on neo-symbolic capitalism
• (28:10) - Musk as the master of symbolic capitalism
• (30:08) - Bezos, Project Prometheus, and the Prometheuses of AI
• (32:07) - Peter Thiel, the Antichrist, and the Giving Pledge collapse
• (35:27) - Vinod Khosla: capitalism by permission of democracy?
• (38:23) - Or democracy by permission of capitalism?