Let's talk about Chinese Venture Capital Because there was something very Interesting that you and I both saw Which is that the exit Market which is Frozen here in the US not nearly enough IPOs though we will cover the web tune Debut either this week or next week so That's coming up we are seeing a dir of IPOs also over in the Chinese market and Nikki Asia reports that during the first Six months of the year the total value Of Mainland China's IPOs fell 84% on the Year to about 4 and a half million Dollar only 44 IPOs down 75% holy crap that's C well I mean this Is what happens when you kill the Golden Goose if you look at XI jinping's Process here he was very open to people In the west investing in companies in China whether it's Alibaba Tik Tock you Know or a whole swwa of Education Companies absolutely then you had the Giant ant Alibaba Financial going out You had Jack G modest criticism of the Banking system and then he disappeared And then he was painting and he was no Long working on his nonprofit and no Longer in charge of Alibaba or their Spin out IPO that was going to be like One of the biggest IPOs in history one Of the biggest IPOs in history yeah and So this is what I always tell people you Know as messy as capitalism is and we Spent the first third of the show
Talking about the Trump interview and The potential Trump presidency 2.0 and You know Biden and the debt and all the Stuff as messy as our process is you Don't have a god king like XI Jing ping For Life who can just say you know what Education belongs to the people you Can't have an education startup and he Wiped out all those returns now imagine If you took me as an investor and you Said oh uh Uber Tom Robin Hood your top Three Investments are gone what happens To my DPI in a power law industry Distributed yeah boom done done he did That he rug pulled the entire Venture Industry by taking away that IPO for ant By taking away all these education Startups yes and I said this on CNBC a Decade ago I said I would never buy any Chinese companies on the stock market Because they can who knows what they're Doing with their accounting it's a black Box it is completely opaque if you're a Momentum investor you want to place Crazy bets do it but it's like playing In a rigged Casino when I was in LA I Got invited to a lot of poker games that Were occurring with a lot of craziness And I didn't go to them because I was Like you know what there's too much at Stake here high stakes poker game for Two or three of these people to not be Cheating and sure enough there was a a Guy recently who got accused of couple
Of million dollars and stealing because He was wearing contact lenses and a mark Deck where the contact lenses told you What card so you're basically playing Face up versus your opponents if you can Cheat as we've seen in crypto as we see In poker and as we now see you know in a Dictatorship like China if you can cheat You're going to cheat that's it it's Just human nature there's too much at Stake and then you add to it all these Um you know regulations here in the US Where you know SEO and other places that Were investing had to divest and the Government's like yeah we maybe don't Want you investing in our Rivals and Building their economy so you know this Is um the decoupling this is the great Decoupling that's why xinping came to San Francisco remember he came to San Francisco new was like yeah we're gonna Clean this place up for 48 hours for the Chinese dictator you know the citizens Whatever you guys can pounce all but When the dictator comes we're going to Clean it up real nice that whole Situation was him xiin pin coming back And saying invest in our country yeah That was him saying give me a mulligan Here I made a mistake can you please Come here you have to be crazy if you're An LP to want to invest in China well I Think that there's a difference between What he did xingping which was a
Publicity tour and then the facts on the Ground and yes so here's an article if You're looking at the video of this of In San Francisco a big deal Geopolitically didn't end up leading too Much but from the same Nikki Asia Article that we were talking about Earlier uh one VC said this is the Hardest and worst time to raise funds in China last year Chinese venture Capitalist only raised $14 billion down By two3 and there's another 30% decline This year so it's not just that foreign Investors are pulling back it's also That domestic investors are as well now There has been a turnabout here Jason The Chinese government has made a lot of Noise about how it wants to change the Way things worked and provide some Support for vental Capital firms and I Went ahead and made a little bit of a List of things here I think we have an Image we can pull up I did a summary of What the actual Chinese government uh Said in their quote several policy Measures to promote high quality Development of venture capital which is A very Chinese Communist Party way of Saying we're here to help now what are They talking about promoting corporate Venture Capital promoting hard tech use Of more State backing in Venture funds More private Market backing of venture Funds favorable tax policy and tax and
Qu consultation with VCS working out Getting more foreign capital and also Why are there no exits so some of that Stuff works for everybody but I just Don't think that trying to be slightly More easy to talk to is going to do away With the concerns that you mentioned That make it an uncertain business Climate and therefore not one you can Trust that money going in will be good And that you can get money back out it's A competition for capitalism globally Jurisdiction matters as we've seen here In a microcosm Delaware now has a Serious issue versus Texas where people Are incorporating Texas and Nevada after What happened when a person with nine Shares could sue you know to revoke Elon's pay package and then the lawyers Make A5 billion Commission on that like This is crazy so everybody's now saying Well let's take a look at Texas let's Take a look at uh Nevada as Jurisdictions after a 100 Years of doing Delaware companies because it was Predictable now that it's not Predictable people are moving to other Jurisdictions if you look globally if You're an entrepreneur you're an an Investor are you going to put your firm And your money in Dubai and UAE where It's predictable and where the Government has shown over the last 20 30 Years hey you can do business here and
We're not going to rug pull you you come To UAE Abu Dhabi especially and Dubai as Well you're going to feel very safe in Living there investing there Incorporating there they want it to be So stable that you don't think about Maybe I put this in Hong Kong oh yeah You put it in Hong Kong what happened in Hong Kong oh China took it over the only Way for China to stop all of this Isolationism is for them to just come Out and say one China policy taiwan's Part of China and we don't need to Invade it we all know it's part of China And we all keep this facade up that They're not going to invade it which we Did for two decades where we would say You know Taiwan is its own great amazing Culture and Country and we believe in One China we literally talked out of Both sides of our Mouth3 years we're still doing it today Right and and and okay sometimes you Kick the can down the road you know like Let's not pick the Hornets next year and Now I feel like if we're not going to Invest in the country and they're going To invade Taiwan like maybe this Relationship's broken forever I don't See a way for it to come back on its Current trajectory because if I was China and to be clear not but if I was Trying to Jin up uh business for my Export driven economy I would not be
Antagonizing all my local Maritime Neighbors by claiming that I own all of Their ocean um now I like to call Mainland China West Taiwan just to annoy People but I will say that I think the West Taiwanese sea should be shared by International norms and rules and not Just taken over by one local power but That is a way to do business it is just Not a way to do business that I think Makes the most sense for an economy that Right now could use a little help versus An extra weight or an anchor behind it Because as we all know the Chinese Economy and its demographics are a Little bit rough right now and I want Everyone to be rich I want everyone to Be free and i' seen China move both you Know on both areas the wrong direction Is is disappointing for a number of Reasons but also think of the people This is going to am miserate essentially It's just a waste it's unnecessary Everybody knows I spent a little bit of Time in the Middle East I've been to do Twice I've been to UAE three times Riad Twice bahin I haven't been to Omen and Kuwait yet but I'm gonna do that on my Next trip I spent a lot of time there And people are like oh so you don't care About human rights or oh my God you know Monarchies whatever and I'm like let me Explain something to you all right Capitalism is Destiny and there is a
Moment in time right now where that Region wants to invest and be part of The West they want to be part of this Great capitalistic experience and Machine if we say no we don't want you To participate in this then there other Option is to participate with Pakistan North Korea Russia and China and as We've seen with Russia and the sanctions Who are they participating with we just Had um Putin and like driving in some f Car vacation ever like where' you go Honey I didn't go to mayorca I didn't go To Iceland I didn't go to the ti del Fuego I went to pong Like worst literally that's where Putin's welcome like literally Putin's Destin this is why like being a dictator Is dumb like Putin can't go to France he Can't go to Paris Paris is awesome can't Go to Barcelona can't go to Club 33 cl 33 four courses no VIP for Putin and his Kids no and he killed his Chef too it's Terrible I mean come on I mean listen Enough with the penoni I think what you Want to do is yeah and this is one of The reasons I was spending time in the Region and they don't want to me myself You tell me what your thinking is Because I worked at Amnesty International I used to be a hardliner About human rights either you hit the Declaration of Human Rights um you know As uh done by the UN and Elanor
Roosevelt or you don't yeah and now I'm Like are you trending towards that or Not that's the way I look at the world Now are you trending towards are you Trending in the right way yes or human Decency Freedom Autonomy and sovereignty are you Trending them now we just talked about China they're not and then if you look At the Mina region they all are or Almost all of them are trending in the Right direction and they're actually Putting a lot of effort into that and so I engagement essentially is the way to Help lead them towards what we consider To be the better future okay so I what Do you think do you think I'm just a Rapid capitalist or you think I have a Good strategy uh let me explain to you Why I'm slightly skeptical before I Cause any judgment because I don't want To I don't want to just jump here to the Obvious kind of a skeptical opinion China pre-opening up no internet Etc ET Etc yeah things change D shaing opens The economy let some people get rich Let's try many things doesn't care if it As long as it catches FES whatever the Know was or rats I forget the the story There the country opens up Liberalization integration with the WTO Some liberalization and then it reached A peak and then began to pull back now You could say that that is because its
Current leader has a very Marxist History and a particular view of the Soviet Union and its collapse and is Bringing that we've all read the Speeches yeah that's an example of a Movement towards uh economic Liberalization not leading to political And civil rights liberalization right so You've been to the Middle East I have Actually not I don't think I've ever Gotten to go no but I've been to China I've been to Russia but uh do you see That this path they're on has a long Road ahead of it that is an Ascent Towards what I might consider to be Key Human Rights points so if you just take The UAE as a microcosm sure you have Economic freedom you have personal Freedoms you don't have political Freedoms you can't run for office right It's a monarchy still uh and so and you Have to be respectful of the monarchy Not going to say uh derogatory things About the king or the the royal family And then you look at Saudi they've Actually had to catch up to UAE because Now everybody puts their company in Dubai or Abu Dhabi get a golden visa and It's predictable so NBS and his team are Trying to make Riad and Saudi as Predictable as UAE Qatar and DOA were Trying to do the same thing but then the Iran Hamas connection has set them back So now you have this great rivalry
Occurring and Oman has its own royal Family and they want to participate in W So you have this hey where do you want To put your company and now a person Who's starting a new company maybe They're from Singapore maybe they're From Hong Kong maybe they're from Europe They're going to look and say you know What got investors in Abu Dhabi I got uh Investors in do I got investors in Dubai I'm G to pick one of those places ah you Know if I go to China I'm not going to Get investors it's not predictable the Investors don't like it and then you Have to decide and xiin ping made this Decision and think obviously made the Wrong one uh it maybe overplay as end oh You know I want to go with you know I'm The god king and what happens he Squeezes too tight and the Galaxy slip Through his fingers as Princess Leia Eloquently put and now nobody invests in Their country so no it's it's almost Like you know so do you want to be part Of the new world or not and so what I Want to do in the Middle East and I've Been pretty upfront about this is I'm Considering and it's just really a Matter of my personal preference in Terms of time I want to do 20 episodes Of this week in startups there I want to Do like a this week in startups Mina Region right have a local host maybe you And I do a couple of episodes and I've
Been thinking about maybe founder University or accelerator doing it there One time a year just to kind of build The bridge right and that connectivity I Wish that was occurring with China again You know would be better for the world And um yeah so there there's no easy Solutions but I think we're trending in The right direction I'll take you know What I'll I'll take the movement in the Right direction that's very encouraging To me as someone who has very strident Views about gay rights and women's Rights and so forth yeah I wonder what's Going to happen when they have a jack ma Because Jack ma yeah was I mean he would Play guitar on stage Alibaba events he Was literally a business rock star he Was one of the most visible names in Faces he W Steve Jobs but but more fun I Thought ja was always a real kick in the Pants I like the guy uh one mild Criticism and he got 86 like yesterday's News what happens in Saudi when someone Makes lots of money who's not part of The royal family and sesame my critical NBS we all recall the 2017 to 2019 Saudi Arabian Purge yeah so I guess here's the Thing I want to be optimistic here but To me I still see monarchy and I just Don't know how to how to thread that Needle with capitalist threat yeah and So I think it's you got to go with the TR I'm going with the trend line I think
It's the best you can do because the Trend Line's either going to come Towards democracy and engagement or it's Going to go towards North Korea Russia I Think we just got to get more countries Going the right trend line and if yeah With between that that's the real Politic Choice it's not it's not do you Engage or not it's which way do you want To influence the situation because it's Going to go one of the two ways and That's why I think you get some Flack Which is probably not entirely fair but I can also see the other people's Perspective of how dare you you know What about kosi Etc so it's complicated Um I think that's and interestingly I Met with one of kogi's cousins when I Was there and I've told the story before You know they basically look at the Situation in that region broadly Speaking as hey if you're not a strong Leader there you're not going to be the Leader there like and so you have to Understand the Dynamics that their Leaders are going through it's not set In stone who's running each of these Countries there have been coups in many Of these countries that people can get Overturned and so if you're not strong In these countries you will get 86 Yourself oh well I have a solution to That what they could do is is they can Instead of trying to have a hereditary
Monarchy predicated on theocracy they Could have elections and then they could Let people vote and then every I don't Know four years you could have a new Leader and then you could have term Limits like maybe two yeah and then you Wouldn't have that problem of uh of and Then it would be mess like the west and Well yeah it's messy everywhere but I Then we have the messy set of issues Here but I'm hoping it Trends in the Right direction that's my my goal as a Human being on planet Earth with Whatever time I have left is gosh I hope It Trends in the right direction and I Have to say when it comes to women's Rights it's been spectacular how much Things have changed just in the past Three four five years every meeting I go To in the Middle East uh women in senior Positions leading discussions leading Meetings leading initiatives they're Really leaning into to that and so so to Speak and it's becoming like a big push For them and and in talking to men in Private in those Regions they're really Thrilled they're like yeah this is great My wife's out doing business and she's Driving and she's got all the stuff it's Awesome like I don't have like you know Her at home feeling like she has no Choices and our relationship is not as Happy so it's really interesting
