Silicon Valley's Great Reversal: From Firing Palmer Luckey to Needing Him Back 🔄
Good Morning from San Francisco, Palmer Luckey got kicked out of Facebook for backing Trump. Now Meta wants him back.
Good Morning from San Francisco, ☀️
Elon Musk fled Washington this week. 🏃♂️ The world's richest man discovered something shocking: politics is harder than rocket science.
After 130 days trying to slash government spending, Musk packed his bags. 🎒 His verdict? The federal bureaucracy is "much worse than I realized." He entered promising $2 trillion in cuts. 💰 He left claiming $175 billion—a figure nobody believes.
Tesla paid the price. 🔥 Protesters burned his cars. The brand tanked. Musk whined: "Why would you do that? That's really uncool."
Now he's back at SpaceX, wearing his "Occupy Mars" shirt. 🚀 Tuesday's rocket launched successfully, then exploded. 💥 Musk called it progress.
Meanwhile, Nvidia just proved that trade wars backfire spectacularly. 📈 The chip giant beat earnings but lost $8 billion to China restrictions. Here's the kicker: those restrictions aren't stopping China's AI development. They're accelerating it. ⚡
Chinese competitors evolved. 🇨🇳 Huawei built chips that rival Nvidia's best. CEO Jensen Huang admitted China's $50 billion AI market is now "effectively closed" to U.S. companies. 🚪
America wanted to slow China down. Instead, it handed them rocket fuel. 🎯
Stay curious, 🧠
Marcus Schuler
Elon Musk packed his bags and left Washington this week after 130 days trying to slash government spending. His verdict? The federal bureaucracy is "much worse than I realized."
The world's richest man entered the Trump administration with grand plans to cut $2 trillion from the budget. He left claiming $175 billion in savings—a figure widely seen as inflated. His Department of Government Efficiency became what he called "the whipping boy for everything."
Musk's exit followed a public break with President Trump over a spending bill. He told CBS News he was "disappointed" by the legislation, saying it "undermines the work that the DOGE team is doing." Trump declined to respond when asked about Musk's criticism.
Behind the scenes, Musk tried to sabotage a rival's business deal. When he learned OpenAI was negotiating a data center project in the UAE, he demanded his own AI company be included. He warned UAE officials the deal had "no chance" of Trump's approval without his involvement. The deal went through anyway—without Musk.
The billionaire's feud with OpenAI's Sam Altman dates to 2018, when Musk left the company after a power struggle. He's since called Altman "Swindly Sam" and "Scam Altman." His own AI startup, xAI, hasn't matched ChatGPT's success.
Tesla paid the price for Musk's political involvement. Protesters burned Tesla cars. The company's brand reputation cratered. Musk lamented: "People were burning Teslas. Why would you do that? That's really uncool."
Now he's back at SpaceX headquarters in Texas, wearing an "Occupy Mars" shirt and promising a "maniacal sense of urgency" about reaching the red planet. Tuesday's Starship test launched successfully but exploded in space. Musk called it a "big improvement."
DOGE may outlast its founder's interest. The program could continue through 2028, well beyond its original July 2026 end date. Some of Musk's deputies remain embedded in government agencies.
Why this matters:
Read on, my dear:
Prompt:
A detailed pencil sketch presents a reimagined portrait of the Mona Lisa, now adorned in a modern oversized pink hoodie and distressed blue jeans. Her famously enigmatic smile persists, while her calm, knowing eyes meet the viewer’s gaze directly, conveying a sense of contemporary confidence and quiet amusement. The background is a softly rendered studio with subtle grey gradients, highlighting the delicate linework and the inscription "La Gioconda" in the upper left corner. Soft, diffused lighting gently illuminates the portrait, enhancing the texture of the pencil strokes and creating a harmonious blend of classic artistry and modern style.
Nvidia beat earnings expectations and delivered strong revenue growth, but CEO Jensen Huang spent most of the quarterly call arguing that U.S. export controls are failing.
The chip company reported $44.06 billion in revenue, up 69% from last year. Data center sales jumped 73% to $39.1 billion. Gaming hit a record $3.8 billion. The stock rose 6% after hours.
But Huang focused on what's not working: trade restrictions. China export controls cost Nvidia $4.5 billion in charges this quarter and $2.5 billion in lost sales. The company expects to lose $8 billion more next quarter from the H20 chip ban.
Here's the twist. Instead of keeping AI technology away from China, the restrictions are pushing Chinese companies to build their own chips. Huawei has become "quite formidable," Huang said. Their latest AI chip performs close to Nvidia's H200.
"The Chinese competitors have evolved," Huang told Bloomberg. "Like everybody else, they are doubling, quadrupling capabilities every year."
Huang argued that major Chinese buyers like Tencent can't be blamed for switching to local suppliers. They need reliable chip sources. U.S. companies can't provide that anymore.
The Nvidia CEO called China's $50 billion AI chip market "effectively closed to U.S. industry." He wants policymakers to reconsider the restrictions, saying they're not achieving their intended goal.
"You cannot underestimate the importance of the China market," Huang said. "This is the home of the world's largest population of AI researchers."
Despite the China headwinds, Nvidia's business continues growing. Global AI demand remains strong. Microsoft deployed tens of thousands of Blackwell GPUs and plans to ramp to hundreds of thousands. The new Nintendo Switch 2 runs on Nvidia chips.
Gaming thrived with the launch of RTX 5070 and RTX 5060 graphics cards. Nvidia's DLSS technology now works in over 125 games.
The company expects $45 billion in revenue next quarter. That would be $8 billion higher without the China restrictions.
Why this matters:
Read on, my dear:
I struggle with [specific relationship type] because of [your main challenge]. I tend to [your typical pattern/reaction]. I want to [one clear goal]. Give me practical steps that actually work.
Examples:
The phrase "practical steps that actually work" cuts through fluff. No theory. No feel-good nonsense. Just actionable advice.
The examples show the tone you want. Honest. Direct. Human.
One more tweak: Add "Be specific about red flags to watch for" at the end. Relationships fail when we ignore warning signs. Better to spot trouble early than fix damage later.
Apple will drop confusing version numbers and name all operating systems by year, calling the next releases iOS 26, macOS 26, and watchOS 26. The company wants consistent branding across devices and will announce the change at its June developer conference alongside a new interface called Solarium.
Anthropic CEO Dario Amodei warns AI could eliminate half of entry-level white-collar jobs and spike unemployment to 20% within five years. He says companies are racing to replace human workers with AI agents that can code, analyze data, and handle customer service at a fraction of the cost, but lawmakers and workers remain largely unaware of the coming disruption.
Google overhauled Photos with AI tools that were once exclusive to Pixel phones, including auto-framing and text-to-image features. The redesigned editor simplifies editing with three main options and suggests which tools work best for specific edits, rolling out to Android next month.
Microsoft will let any app use Windows Update instead of separate updaters that run constantly in the background. The new system lets developers schedule updates based on battery life and user activity while hooking into native Windows notifications and update history.
Foxconn told shareholders its revenue will top $234 billion this year, beating 2024's record despite headwinds from tariffs and currency swings. Chairman Young Liu said on an earnings call that U.S. tariffs will bring more challenges and his outlook for the full year was more cautious than previously, but AI server demand keeps driving growth. The company expects another Japanese automaker partnership soon, following its Mitsubishi deal announced this month.
Donald Trump's sons told a packed Las Vegas bitcoin conference they want to see major banks "go extinct" while promising their father will make America a "bitcoin superpower." The Trump family has launched multiple crypto ventures this year, with Eric and Donald Jr. predicting bitcoin will hit $170,000 within 12 months.
A federal trade court blocked Trump's sweeping tariffs on Wednesday, ruling the president exceeded his emergency powers and can't impose import taxes based on trade deficits alone. The decision throws Trump's signature economic policy into doubt, though he can still appeal to the Supreme Court and may retain limited tariff authority under other trade laws.
Trump ordered US companies to stop selling chip design software to China, targeting tools that help develop advanced semiconductors. The move hits major suppliers like Synopsys and Cadence, whose stocks dropped over 9% as the administration escalates its tech war despite ongoing trade talks.
The US will ban foreign officials from visiting if they censor Americans or pressure US tech companies to moderate content beyond their authority. Secretary of State Marco Rubio called Europe "a hotbed of digital censorship" and said officials issuing arrest warrants for social media posts made on US soil is unacceptable.
EU Tech Commissioner Henna Virkkunen says 99% of content removals happen under US platform rules, not European law. She told critics like Elon Musk that American companies remove more posts through their own terms of service than EU authorities take down under the Digital Services Act.
Czech officials accused Chinese state hackers of targeting their foreign ministry since 2022, calling it part of Beijing's interference campaign. The attack by APT31, linked to China's spy agency, hit unclassified networks and prompted NATO to condemn what it called a growing pattern of Chinese cyber aggression.
Kuaishou turbocharged its Kling AI video generator with a new update that creates high-quality clips in under a minute. Kuaishou said Kling 2.1 can generate high-quality 1080p videos in less than a minute, speeding up production while slashing costs for users. The company also delivers better motion physics and more realistic animations across all quality modes.
WSJ's Joanna Stern and producer Jarrard Cole spent days generating over 1,000 AI clips to create a three-minute film using Google's Veo and Runway AI. The project cost thousands of dollars and revealed that while AI can create impressive visuals, it still needs human creativity, careful prompting, and extensive trial-and-error to tell a coherent story.
Intercom builds chat tools that make online business personal again. Four Irish founders launched the company in 2011 after realizing websites had lost the human touch of face-to-face service.
The Founders • Founded 2011 by Eoghan McCabe, Des Traynor, Ciaran Lee, and David Barrett in Dublin 📍 • Now employs 800+ people across San Francisco, Dublin, London, Chicago, and Sydney • Started because the team couldn't find good tools to talk with their own customers online • Moved to Silicon Valley after selling previous startup to Rackspace
The Product • Core messenger creates chat bubbles on websites and mobile apps for real-time customer conversations • AI agent "Fin" handles routine questions using company knowledge bases • Unified inbox manages chats, emails, and social media messages in one place • Product tours guide users through apps step-by-step • Serves 25,000+ companies reaching hundreds of millions of end users
The Competition • Battles Zendesk (170k customers, traditional ticketing focus) and Freshdesk (affordable, simple) • Competes with Salesforce Service Cloud and HubSpot Service Hub for enterprise accounts • Faces newer AI-first startups like Ada building chatbots from scratch • Differentiates through conversational approach vs. formal ticket systems
Financing • Raised $240M total from Social Capital, Bessemer, Index Ventures, Kleiner Perkins, Google Ventures • Last valued at $1.3B in 2018 Series D round • Generated $343M revenue in 2024 (25% growth) • Cash-flow positive since 2022 with $100M+ in bank
The Future ⭐⭐⭐⭐ Strong position but fierce competition ahead. AI features drive new revenue streams while tech giants integrate similar capabilities. Mid-market focus creates pressure from enterprise players above and budget competitors below. 💪
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