Logan Bartlett: tariffs will likely cause a recession, but VCs won't stop dancing yet

foremost geopolitical expert, tariff expert, and and you couldn't you couldn't get that person. So I uh you got a VC which is the next best thing I guess. No honestly grow what we've seen is growth stage VCs tend to be you know have the strongest opinions most strongly held.

So I listen I am open to I would love nothing more than to be wrong about all of this stuff and I uh I spent my weekend glued to my phone more than I should both out of shot in Freud and also uh debating Keith Reo back and forth which has he already come on? Is he already poison? No, he's coming out in 30 minutes.

Maybe you just stay on and start arguing if we're actually doing a podcast tomorrow. He and I are I'm going to try to be a neutral moderator in that discussion uh rather than a uh a participant. But uh yeah, it was uh it was interesting.

It was interesting to hear his perspective about the uh what the intended results are of this.

Uh because I guess I I I typically try to stay out of like politics uh for the most part, but this I don't know this feels a little bit adjacent in that it's pretty economically driven and does tend to impact the world that I play in. So I ended up dipping my toe into it far more than I wanted to.

Well, let's start how conversations have gone with portfolio company CEOs. You guys are obviously been a growth stage software investment firm. Y but I'm curious uh in talking with CEOs over the weekend, what's been your sort of high level what's been what's been top of mind?

Uh aside from just kind of battening down the hatches maybe. Yeah, I mean I think it's mostly that uh I I I will say it sort of feels like we've been through three different um existential uh potentially risky circumstances over the last what is it five years.

uh we we had the March COVID stuff and then we had the unwind that sort of happened postzer uh the time to get fit or whatever it is and now we have this and so feels like most of our CEOs are are kind of old hat uh in some ways at how to deal with this stuff and I do think that we measure our time in months and years and not um you know days and hours if you will and so I I think it's kind of a wait and see approach in particular because it's hard to know is this a means to some end that might be orthogonal to the pure economic purpose of it.

And I think you're sort of seeing that with what Navaro comes out and say says versus what Bessent will say versus what Elon's, you know, out out tweeting now. It's a little bit hard to know um what the strategy is behind this.

I do think we probably need to take it literally at this point and assume that this is probably here to stay in some way, shape or form, but I do think that our company shouldn't be totally um uh moving the dials too much in the near term. What do you think's happening?

Uh I mean, you do those fantastic uh public market reports. um it feels like just kind of everything's down, but I would assume that some of the larger SAS companies that in the public market should be less affected.

Um but do you think that there will be any sort of like bifurcation or like uh flight to safety that might happen in the next uh couple months as people kind of figure out who's actually exposed? Like if you're Nike, it's different than if you're Salesforce, I imagine. Yeah, it's it's a great question.

I I I think that it seems because we've gone through this twice before and ultimately the results that were learned out of that in the postcoid uh you know after March of 2020 and then after um 2022 it seemed that everyone kind of learned similarish lessons of it and maybe the wrong ones like uh postcoid the the right answer was to invest into all these tech companies and so I do think with the war chest that a lot of the venture firms have right now, I think it's going to take a while before people actually stop dancing.

I think everyone's going to convince themselves, at least in the near term, that this is a good buying opportunity. And if you look like I was looking at some of the numbers, I think March was the highest uh buying that we've seen on record uh from retail investors.

And so it feels like a lot of people have learned similar lessons of like, oh my gosh, well, when a dip happens, that's actually a better buying opportunity than it is a time to be fearful in this.

And so my guess is it's probably going to take a couple orders before uh anyone starts to capitulate that maybe this is the new normal, particularly given how manic the market has kind of been and the decision seems to have been. Yeah.

Um, I remember during the kind of Zerp Unwind post SBB crisis, you did a show where you were talking to somebody about just this idea of like dry powder and everyone was saying, "Oh, well like the VCs have so much money they have to invest and of course there were a bunch of funds that like returned capital or size down their funds.

" Um, but then most of the funds just kind of ripped pretty quickly and came found excuses to move into AI and stuff. And uh at this point it feels like if you're an LP in a large fund and you see the market down, you've been trained.

So I guess the question is like like do LPs pay more attention to this than GPS or or does this or or is it even a longer cycle for the LPs to actually start making calls and saying like, hey, how are you adapting to this strategy?

Yeah, I think that the uh the GPS in some ways like when you're a hammer everything looks like a nail.

If you're if you're thinking like, hey, I need to do growth stage investing, then I think a lot of people just operate with, okay, I'm going to invest in the relative quality of the names that I see over the next quarter, two quarters, four quarters, and try not to be too uh episodic because at the end of the day, what we're trying to deliver back to our limited partners for the most part isn't um some relative uh uh adjusted return versus all the other sectors in the economy, right?

We're not deciding should we go buy lumber or should we go buy futures contracts or go buy equities in the public markets like we're delivering some sliver of a product and I think within a lot of LPs that's also the case where you've seen kind of this uh as it's been more institutionalized you've seen um different people become responsible with oh I'm not just responsible for the venture book I'm actually or I'm not just responsible for private's book I'm actually just responsible for the ventures book and we're going to allocate 8% or whatever it is to that and and so at a at a micro level I think a lot of the LPS are um incented almost similar to the to the GPS.

Now as you go up further and further up the stack to the CIO or someone that oversees some like broader purview of all this stuff then those people are making relative tradeoffs of like is venture at a 12% level like the right exposure that we want to have going forward and that's where the domin denominator effect can really play through.

Um, I will say back to the everyone kind of learning similar points though, it does seem like a lot of the LPs have decided, hey, um, the best time to be in these managers is is when things are going down and so we're going to commit to it. And then there's also this like kind of principal agent problem, I guess.

I don't know if that's the perfect term for it, but if you leave a uh a firm, then they don't let you back in the next fund. like you don't get to cherry pick, okay, I'm going to be a part of this vintage, but not that vintage for the most part with the blue chip names.

And so the LPs in some ways are sort of faced with a a decision of do I want to get out of this manager almost in perpetuity or do I want to stick with it and trust their ability to navigate those waters? Uh and so I think that there's a bunch of different dynamics that sort of play out in all of that.

Uh and it's going to take a while for it to role through, right? like fund cycles are two to three to four years and it's only on those time periods that the LPs are really making these decisions. So I think we're a long way from knowing. Yeah.

Doesn't this just continue to overheat AI in that you know especially and and other sectors too when I look at the areas that have gotten the most hype and attention in some of the biggest rounds recently. It's defense, robotics, AI.

And like if I'm a GP or I'm an LP, those are three areas that I actually, you know, the world's becoming less stable. It feels, it certainly feels less stable. Uh AI is not getting tariffed and we need to, you know, the sort of onshoring reshoring narrative just means that you want to deploy even more dollars there.

Yeah, it feels actually very on theme. Go ahead. No, no, you know, it just feels very on theme, but yeah, what's your take? I I mean, I think so.

Although I wonder um when we talk about like AI not getting hit or semis not getting hit with tariffs like it's such a complicated global supply chain that um I do worry about the um like I I I think and I've heard anecdotally from some of the big foundation model companies that um the different tariffs and the the issues that you have to deal with not just China or Taiwan or South Korea but also um even Mexico like there are a bunch of inputs even if it doesn't feel like they're direct inputs there's so many complicated pieces of the puzzle from an AI standpoint that um that I think it's going to be hard to disassociate uh the the aggregation that is what's being tariffed into AI uh and in talking to people over the weekend that are exposed to these large model companies Um, I think there's a real real concern about what this is going to do to those businesses, uh, and their ability to access the different things that they ultimately need.

And it could be everything from, I don't know, cooling to, um, to different server types. And all these different pieces are a part of a big chain. And so, I will think there I do think there will be a flight to to those things in some ways. But I I I'm hesitant to say that they're not going to be impacted.

I actually think especially the way at least this has been messaged thus far, it feels like there's going to be a lot of different inputs that ultimately cause a bunch of um uh issues no matter what the end market is. Be it defense or be it robotics or be it AI.

Yeah, we were talking about electrical transformers, not the architecture, but very key ingredient in drawing power into these huge data centers and most of those are made overseas, many of them in China. If there's if there's tariffs on those, it could slow down the roll up roll out of new data centers.

Although I imagine that's not a huge portion of like the per token cost. But even like Poly Market has the chance of a US recession in 2025 at a 62% chance. If there's a recession, like people could say, you know what, $20 a month GPT or chat GPT plan, like maybe I downgrade.

Uh there could just be like some consumer hesitancy to add a new subscription as people tighten their belts. I think I think that's 100% where we're headed uh on all this.

Like I think that um at a minimum some of these things are self-fulfilling in some ways where if we have the perception of a slowdown, then people are going to stop spending which will inherently lead to a slowdown. And so it starts to become a little bit self-fulfilling in that regard.

And so I I've seen stuff I mean I realize poly market saying 62%. And it sounds like I think Goldman moved their estimates to 45% this morning or their economists did. Um, and I've seen some people saying we're already in the in the middle of a recession. I mean, just the amount of uncertainty that this is introduced.

I don't know how you do any planning if you're a if you're a business right now and you're thinking through like should I uh maybe not Apple or someone that has like you know a gobs and gobs of money to go figure this out but like a midsize uh public industrial company or something if you're thinking through like whether or not to start rebuilding in the US which in some ways is a very noble goal particularly with regard to security and so I don't mean to be like entirely anti-tariffs Uh but if you're thinking through that and you're not sure, I mean, we've seen some people start to break ranks on tariffs already, be it Elon or Ted Cruz or um I mean, uh Aman, there's like a bunch of people in the Trump world that's starting to break ranks.

And then Congress does theoretically have the power to revoke some elements of the president's tariff uh power. And so, I mean, there's murmurss of that, not to mention midterms in the next whatever it is, 18 months. And so you have all these different things that could throw a wrench into the the tariff plan.

Not to mention maybe this is just a means to some other end as a negotiating tactic. And so I don't know if if I think people are going to be stuck in the state of paralysis a little bit of like what do we what do we actually do right now?

And inherently I think that becomes self-fulfilling in the way that it's going to lead to a recession for us. I hope again I hope I'm wrong. Like I don't want to be right about any of this stuff.

Uh do you how do you weight uh posts coming from the handle chamoth on X because um you know he's he's clearly one to happily sort of like talk his book but at the same time Yeah. Yeah. That that guy the C h a t uh like the guy the guy talking. Yeah. Yeah.

That guy that guy big podcaster but no so so there's two things happening. one clearly happy to talk his own um book. He's probably super long. Laura Piana uh among other things, but um he also is like, you know, podcasting with the pe some of the biggest sort of like he's an insider. He's an insider, right?

And so it's one of those things he's he's coming out, I think it was last night or this morning talking about the Mara Lago accords. How do you uh how do you kind of evaluate, you know, it's a signal. I don't know if it's a good signal or an accurate one, but um do do you put any weight on on anything?

You know, there's this great feature I've started to use on um on Twitter X. Uh and you can actually do it for any account. I I uh you it's um I I forget exactly where you find in the screen, but it mutes these people talking and then you don't see what they have to say. And I didn't know I didn't know it existed.

Uh, and so I will say I don't know what made me think of that, but I will say that um I I think you have to take some of the insights that these folks have because of their access. Yeah.

Um, you have to take it um with probably a grain of salt, but also as a potential angle of dissemination of information uh or at least trial balloons going out there.

I saw right before I came on, Kimble Musk tweeted something about how terrible tariffs are and uh maybe he just woke up today and thought that or maybe you know his brother who he sits on the board of and I think a lot of his net worth can be attributed to uh maybe encouraged him to go say that.

And so I think it to be dismissive of any of these individuals uh I think is probably not not particularly do but I I'll even if I'm making a joke I'll I'll say it out loud to John first and be like what do you think and if John thinks it's funny I'll post it if he says I don't know which is the exact same thing as uh you know the the Kimble Elon thing.

Yeah, the Elon thing is and so I but but but I I think all of that is to say I'm not sure there's like I I think we sort of seen that that what what Bessent says versus what um Navaro says versus what uh what um Elon says like there's not any consistency that uh at a high level is coming out from those different people there.

all the messages are slightly different. And so I I would I would find all this stuff pretty intriguing if not um if not necessarily uh factually accurate. And so I feel like all these things are kind of informing the little inputs into my decision.

But I do think it's interesting to see people like Dan Loe or Dan Loe uh Bill Aman break rank uh and start to come out and really be negative against these tariffs.

Uh I I mean we can joke and uh I have certainly on Twitter about um him and changing his views and all this stuff, but like at least he's owning some of the decisions that he now finds to be wrong.

I I find the most frustrating thing is a lot of people just morph their view into whatever um fits into the the uh I mean Donald Trump specifically, but I this is true of of people on the left as well. Uh that whatever they say is their talking point, they just follow it in suit.

And so I give Aman credit for breaking rank and uh maybe we'll end up seeing Chimoth or some of those other guys do the same. When's the last time? Yeah, the Elon thing is interesting because you you'd think he'd be a big beneficiary of tariffs because of the cars and the exposure for Tesla.

But my my my question is like I feel like tech VCs like shifted so into the Trump camp like I'm not even seeing like like the the big dissenting opinions on tariffs are coming from like Tyler Cowen and the economists and I'm not seeing that from like big GPS and it's it's like have they just completely overrotated or do you think that they're just not even thinking about it or not exposed to it like what's driving that lack of well one one thing to note uh Tesla sell sold sold almost 34 of a million.

They sold just under 700,000 cars in China last year. Trade global company. Very bad. And I'm sure they source from China very heavily for certain things. Yeah. And I think they have they have factories there as well. Gigafactory in Shenzhen.

You know, there's this interesting thing that's uh that's played out where I think kind of post the election, it was so uncool to have voted for Kla Harris.

Uh to the to the point that I was at parties kind of being accosted like people asking who I voted for and all these things and I was like and I just found it an unusual um swing of the pendulum in that way. And I give the Democrats there's a lot of blame that Democrats should should have on that.

the one that I there's obviously all the DEI and whatever all that stuff. Uh but I do think that if you look Democrats have been very um anti-growth and anti- capitalism in a meaningful way.

And I think it was just kind of embarrassing in some ways to uh be extolling the virtues or pushing back too much over the course of the last couple months because it was such a resounding um election defeat.

And there was such a even the people that I think within the the uh at least the parties I know uh that within technology that voted for Kala Harris like they they all seemingly held not all but a lot of them seemingly held their nose and did it and was like hey this is the lesser of the two things and so now under the tariffs um it's been I feel like people are like warming up their thumbs a little bit like sort of forgetting what it's like to like push back too too much on on this and so I I found myself waiting in the waters of all of this far more than I expected.

What I find most interesting though at like a high level is just how populist uh a lot of the rhetoric within the Republican party or at least Donald Trump has become.

And um I mean you sort of go back and you look at Milton Friedman or Ronald Reagan or like some of these OG conservative icons and what they had to say about tariffs are just so different than than what we're hearing from our president today.

And so I guess the question in this is like does this present ultimately if this is going to be the move that the Republican party makes from a populist standpoint, does this present an opportunity for the Democrats to be a little bit more progrowth and like let's grow the pie?

And I think it was pretty well time that Ezra Klein and Derek Thompson wrote that book abundance, right? Because this there was no such thing really over the last decade as a progrowth Democrat, I think. And that would be an interesting lane for the party to try to rally behind. I just don't know.

Ultimately, these things seem to follow some like charismatic politician uh in some ways. And so I don't know who that person is. Shapiro seems like someone that could be interesting in that regard. Uh you know, maybe if we tweet enough, we can get Weineberg to run for some political office.

He can take the proc Democratic thing. Maybe that's Aaron Levy's next uh next, you know, gambit he's going to go down is politics. Uh, but it feels like that's a mantle that that people should really take. I don't think his hair can get any grayer. I agree, honestly. And it's still full. That's the thing.

I don't know if that's just genetics or hims or or who we credit that fullness of hair. It's definitely gray, but man, it's like a robust set of hair. It almost feels like he's set up to be presidential in that regard. You take a company public at like what, 29? Like you're gonna go gray, which will do it to you.

Could you see it though? I mean, he honestly looks like a West Ring, you know, like a Josh Lyman kind of running into Martin Sheen, President Bartlett's office on the West Wing now with that gray hair. I could see it. Yeah. Fantastic.

What did you What did you think about uh Toby's leaked memo from this morning where he very very eloquently lays out how he wants his employee?

Like to be to be honest like one it's well timed in my point of view and that you can basically say to your team we're freezing hiring without saying we're freezing hiring because now it's like hey if you want to hire if you want to actually make an offer hire an agent. Hire an a Yeah. Yeah.

No, but I'm curious uh you know obviously if it was leaking wouldn't have been that damaging but it's cool that he put it out there. I'm curious what what your immediate thought was.

Yeah, it it's um it's something we've been thinking more and more about and I've seen my my my own uh workflow switch so much more to being AI native in like what I'm doing on a daily basis. I'd be curious your guys perspective on like prepping for this show.

Um, it's just so much easier to get information at your fingertips and and get access to uh I feel like I learned more this weekend or the last week like going really deep into the history of tariffs and all this stuff.

It would have taken me in the past like I don't know three weeks to do what I did over the course of the last four days, five days. And so I get the perspective of like hey we have to make our company AI native in some ways.

Um I do I imagine there's a little bit of marketing behind it like behind every good um leaked internal memo. Uh there does seem to be an element of both signaling to the broader market as well as potential new candidates that are coming on board like this is the new normal. This is the way we're going to do things.

But I haven't heard anyone else do it. I don't know. You guys might Well, the Clara I mean the CLA took another approach. It wasn't a memo. He just came out. we're not hiring. And it was like almost overly aggressive and everyone was like, "We don't really buy it, man. Like, it's too much.

" And then Jeremy uhh Jeremy Diamond Jamie Diamond uh had that leaked like voice call. Yes. Where he was like, "You got to work really hard. " And it was like, "Okay, this is just a billboard advertisement for your company and your culture, which is cool.

" But I think the lesson is like every we all need to be leaking more memos. I think that's right. I your your your redpoint analysis, you shouldn't you shouldn't try and post that. You should be like, "It's leaked. We'll leak it. We'll leak it.

That's what I I don't know if you guys ever uh like New Cocover, Eric Newcomer, it's like a bunch of interesting like oh here's founders fund returns and heck like how did you where on who would have given you these amazing returns, right? Good news. You got to leave that stuff. Yeah.

The other one I thought was really masterful PR was um was ASF and and Whiz last year.

Um what was interesting in that whiz announcement uh when they when they announced that they were going their own and not going to be bought by Google was like everything that they said was then reported on the media be in the media because of the leaked memo and so they got to really control the narrative of how things went down with Google.

So, I actually the dark arts of PR I think is is a pretty clever thing um for companies to try to master both as for morale and hiring and just public perception.

Um, the other one I thought was funny, not to give credit to Whiz, but I don't know if you guys remember this, they like Sentinel One had some company that was agitating to buy them or something, and Sentinel 1's like a $6 billion public company.

And uh, I think Whiz announced that they were interested in exploring the acquisition of Sentinel One. The Sentinel One CEO is like, "Fuck off. " Like, what? You're not buying us. What are you talking about? But like, you know, it gets reported in that way. I think Toby's really smart in that regard.

Uh, and I do think we'll see this divergence of fluency of of people's ability to use AI. I still get asked questions from people internally or externally from buddies that are like so quickly answered by a prompt into a model. And so I wonder when that behavior shift is going to happen uh for people in mass.

But I think signaling that that's an requisite thing is smart from an employee standpoint. Uh, speaking of models, uh, did you read AI 2027 and do you think we're just sort of picking up pennies in front of a steamroller right now with all the tariff stuff?

Because if if AI 2027, either path we go on, uh, the forecast basically means the economy will change by like a 100,000% or something like that. I it certainly seems I mean man I really hope uh I I really hope we get the ubiquitous sort of uh growth in all of this. Remind me I just saw it tweeted about.

What was the what was the net of AI 2027? What was the takeaway? Super intelligence by 2027. So uh extreme compounding growth driven by AI models that can do their own AI research starting at the end of this year.

uh no no hiccup in any of the scaling laws uh a quick path to you know 10 terowatt it involves it evolves basically by you know 2027 2028 open AI buying every automotive manufacturer and turning them into self-replicating robot production facilities I like that will we still be able to um will we still have our jobs like screwing doing the screws into the iPhones like that will be in America.

That's the main Okay, so we can do that. Our jobs might be gone, but yeah, that's uh that sounds good. I will say this website's super slick. Uh it is it's a really cool website. You scroll down and it like it updates the probabilities and takes you through all the time. I mean, it's a beautiful feature.

People are calling it like science fiction fanfiction, but I like it. It's entertaining. No, it's a it's a very cool exercise to go through.

It it to me sort of the great irony of this whole situation is like right now nobody can talk about anything other than the tariffs and fixating on like what's the next post on truth social bull market for true social usage. Uh but uh but then you know you know the big winner in tariffs right now is Pete Hegsth.

Man, I uh we were all we were talking about last week. Signal this, signal that. Is he in? Is he out? And now that is a long since forgotten thing. So I uh if there's anyone that I think deserves credit or is celebrating this, I think it's him. Last one uh for me, underrated voice right now online.

Anybody breaking through that you think is uh good signal? you know who I I mean I I've sort of appreciated this mix of uh of politics, economy, and all of uh all of that stuff. So I really Modest Proposal I think's always done a good job. I don't know if you guys follow Buco Buco Capital.

Uh I always find him super entertaining and some of the stuff he's he's tweeting out. Um so those are probably the two biggest ones that I've been uh enjoying of late. Uh but I I' I've definitely added a lot of uh econ people to my LA of my rotation over the course of the last 10 days or something.

So yeah, good time to be an economist. Bull market and economist posted. I I've always I've always honestly thought that you would be the kind of guy to have like a really big alt account that we all like followed and nobody knew.

You know what's funny is I uh I feel like I tweaked too much of my unhinged stuff, at least I did for a while for my normal account. So, well, he does have an alt. He does have an alt, but it's just about basketball. Yeah, that's right. College football, too. I'll sneak in there.

I I will say I was accused of at different points in time being um uh I don't know VCs congratulating themselves like all these different things and I'm like I I just I don't know. It feels it that was pretty unhinged things for my own account. So, yeah, for sure. For sure.

Uh well, looking forward to your uh you sort of moderating this debate tomorrow. If I hang on, will Keith show Is Keith the next guest? He's the next guest. Hang on. You can hop on. Uh should we give Should we give a preview?

Listen, I uh I mean, I teased out from him all his stated goals of what he was thinking was going to come from all of this stuff. So, I hope you guys uh you know, pin him down on all that stuff. I need to make sure I have all my prep work done.

He's sort of open sourcing the manual to debate him by uh by tweeting all his takes. So, I mean I mean the the the debate that was going on in the timeline was just that he's he's somehow found a way to make no matter what happens proof that it's working, which is kind of genius. I like that a lot.

I don't know if I I probably can I share on this screen? Yeah, you can share here. Hang on. Just whatever you share is live, so don't share a password. I know. I know. I know. I need to I need to make sure I get Oh, wow. It's the returns from Logan's portfolio. They're fantastic leads.

Oh, what a what a quick 60% IRRa for a decade. It's all these models reaching out to me. I was like, "No, I'm married, guys. Take it easy. " Uh, let's see. I can't find it. Uh, but it was it was Oh gosh, where is this? Uh, give me one second here. I'll wait while uh while Keith comes on.

But it was essentially a meme of like the Oh, here it is. Uh, let's see. How do I share this? Hey, Keith. How you doing? Great. How are you guys? You're you're on with Logan Bartlett, too. Prepare this. Can you see it? Cool. prepping for the next uh for the next for the next debate tomorrow, right?

Is my uh is my thing coming up or no? Is this prime time and that's the backup? Yeah. Yeah. Yeah, this is prime time. All right, I'll let you go, Keith. Keep open sourcing all the points of your debate. I uh I want to hear all the talking points. Uh just get them out there in the wild for us. Good.

One day I'll get you into turn you into a DJT voter. Yeah, maybe tomorrow you're gonna convert him from a member of the Panakin party, which Trump says is a new party based on weak and stupid people. That's me. I uh I actually am getting my my card and badge tomorrow. It's coming through. So, yeah. Yeah. Yeah.

All right. You might win the economic department, but you'll lose the dunks for sure. There's no chance. Yeah. We'll FedEx won a Paul Graham in the UK, too. Okay. Yeah. You you you can probably buy in bulk at this point, Keith. You just send them around. So, all right. to see you guys. Great to see