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Tech investor Ron Conway says California’s proposed wealth tax must be kept ‘off the ballot’

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Famed Silicon Valley investor Ron Conway says he wants to kill California’s proposed wealth tax now.

“Our job is to get Gavin to negotiate this so that it doesn’t get to the ballot. So, maybe they don’t get the signatures,” Conway told Jack Altman during an episode of Altman’s “Untapped” podcast that was posted on Wednesday.

Conway, the founder of SV Angel and known as “The Godfather of Silicon Valley,” said that if the proposed wealth tax reaches the ballot, it “could” pass.

A recent UC Berkeley Citrin Center for Public Opinion Research-Politico poll found that support was hovering around 50%, within the margin of error of potential failure, though it is still very early in the process.

Major names like Google cofounders Sergey Brin and Larry Page have already rushed to move assets out of California, the state home to the most billionaires. If passed, California residents with a net worth of over $1.1 billion would face a one-time tax totalling 5% of their assets. Supporters of the initiative are still gathering signatures ahead of a June deadline.

Conway said Gov. Gavin Newsom, who is publicly opposed to the wealth tax initiative, is aligned with the efforts. Conway said one way to give Newsom bargaining power is by supporting the three competing ballot initiatives, which would effectively neuter the proposed wealth tax.

Brin, Stripe cofounder Patrick Collison, former Google CEO Eric Schmidt, and others have poured over $44 million into “Building a Better California,” a political action committee that is pushing the three competing anti-wealth tax ballot measures. In November, Conway donated $100,000 to “Stop the Squeeze,” another group that is opposed to the proposed tax.

Venture capitalist Marc Andreessen once called Conway “the human router,” a nickname he told Altman that he considers a compliment. Conway has been a fixture in tech for decades, making early bets on Google, Facebook, and other companies. OpenAI CEO Sam Altman, Jack’s brother, credited Conway with helping him hold OpenAI together during his brief ouster in 2023.

Conway also told Jack Altman that their interview could not run late, because that night he had courtside seats at the Golden State Warriors game next to House Speaker Emerita Nancy Pelosi and her husband Paul.

“We must keep this off the ballot,” Conway said. “So a whole bunch of work has to happen for that.”




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‘Big Short’ investor Michael Burry says AI is turning Big Tech into a worse business

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Michael Burry, the investor made famous by “The Big Short,” says the era of Big Tech turning relatively small investments into huge profits is ending.

And he says AI is to blame.

In a recent Substack exchange with tech podcaster Dwarkesh Patel, Burry said the most important metric AI industry investors should be watching isn’t revenue growth, hiring, or even market size, but return on invested capital, or ROIC.

ROIC is a measure of how efficiently a company turns the money it puts into its business into profit.

“The measure to beat all measures is return on invested capital (ROIC), and ROIC was very high at these software companies. Now that they are becoming capital-intensive hardware companies, ROIC is sure to fall, and this will pressure shares in the long run,” Burry wrote.

AI, Burry said, is pushing companies like Microsoft, Google, and Meta away from their historically asset-light software models and toward a far more capital-intensive future defined by data centers, chips, and energy.

Even if AI expands Big Tech’s addressable market, he said, falling ROIC could pressure stock prices for years to come.

Burry rose to fame after his bet against the mid-2000s housing boom was chronicled in “The Big Short.” Outside the occasional cryptic social media post, Burry, for a long time, spoke publicly only rarely.

That changed late last year when he closed his hedge fund to outside cash and began writing financial analysis on Substack.

Perhaps most notably, he has recently compared the AI boom to the late-1990s dot-com bubble, calling OpenAI the “Netscape of our time.” Netscape’s IPO marked the beginning of dot-com hype in 1995. Five years later, the bubble burst.

Burry’s hedge fund, Scion Asset Management, has made large bets against Nvidia and Palantir Technologies, two darlings of the AI era, according to a regulatory filing released in September last year.

Leading AI companies, like OpenAI, Anthropic, Google, and Meta, are spending big to build out the infrastructure they need to support their energy- and data-intensive chatbots and other AI applications. Debt and equity investors have lined up to back these projects.

So far, however, those companies have not shown significant profit returns on their AI products, leading investors like Burry to sound the alarm that AI is a bubble on the verge of bursting.

“At some point, this spending on the AI buildout has to have a return on investment higher than the cost of that investment, or there is just no economic value added,” Burry wrote in the Substack post.




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A $25B credit investor says betting only on AI chips misses the bigger cycle

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The artificial intelligence boom is real — but there’s more to the AI trade than chips alone, according to a credit investor.

“This is a super-duper micro cycle that will outlast many investing careers,” said Scott Goodwin, the cofounder and managing partner of Diameter Capital Partners, a quote he attributed to his partner Jonathan Lewinsohn.

AI represents what Diameter Capital sees as a long-running, disruptive cycle — but buying the most obvious winners isn’t the only way to play it, he said on the “Goldman Sachs Exchanges” podcast published on Friday.

Diameter Capital, which manages approximately $25 billion in assets, has focused on where AI demand could create less obvious bottlenecks — and where those bottlenecks show up in credit markets.

The AI opportunity beyond chips

That view led Diameter to buy the unsecured debt of a midsize telecommunications company in 2023.

Goodwin said the bet was rooted in the idea that as companies move from training AI models to actually using them, demand shifts away from chips alone and toward the networks that carry data.

“It had to leave the data center. How would it leave? It would leave on the commercial fiber, the pipes,” he said.

The telco went on to sign more than $10 billion in contracts with hyperscale cloud providers, and the debt has rebounded to face value, Goodwin said.

Diameter Capital also made “a big bet” on a satellite company tied to the wireless spectrum — a wager that later paid off after the company sold spectrum assets and the debt returned to face value.

Goodwin’s comments come amid growing debate over whether sky-high AI valuations are sustainable and whether investors are overlooking other opportunities tied to the technology.

Risks and rewards

Goodwin warned that parts of the AI-credit boom may be taking on risk that’s hard to price, especially in chip finance.

Some investors, he said, are taking on “residual risk,” or the riskiest slice of chip-financing deals — betting on what the hardware might be worth years from now. Cutting-edge firms refresh their technology often, so chips can quickly become outdated for some customers.

“We call up really smart people in Silicon Valley, we call up really smart people at Big Tech companies and ask them what the residual value is on these chips three, four, five, six, seven years forward,” he said. “None of them have a clue.”

Goodwin said the next phase isn’t just about spending on infrastructure — it’s about competitive disruption rather than capital expenditure.

“Who are the companies, who are the entities that are going to adopt AI and take a step forward versus their peers? And who are going to be the losers?” he asked.

“That is actually a longer cycle than the capex cycle, so that’s really interesting,” he said.




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