I like to bookend the New Year holiday with two posts, one looking back at the year that is ending (What Happened) and one looking forward to the year ahead (What Will Happen). This is the first of these two posts. The second one will run tomorrow.

Here's a top ten list of things that happened this year that really matter.

1/ The end of globalization. The Trump Tariffs represent a fundamental change in trade policy, and if they remain the approach of future White Houses, it will mark a return to protectionism and the end of the Free Trade era in the US, which has been the default policy of the US for my entire adult life. Whether you are for or against this change, it is massive and means that the rest of the world will now have to pay to access our markets in the US, making the reshoring of critical infrastructure possible. One thing I am less sure about but super interested in is whether tariffs can become a significant revenue generator for the US Government, as was the case until 1913 with the introduction of the modern federal income tax system. If tariff income can make a significant reduction or elimination of the federal budget deficit in the US, then that would be another major economic shift (away from deficit spending).

2/ Google got its mojo back. From Waymo robotaxis running wild on the streets of many of the most populous cities in the US to Gemini coming hard after ChatGPT, 2025 was a banner year for Google/Alphabet and a reminder that owning our data is key to owning us.

3/ The left got its mojo back. 2025 started with the left in shambles after being routed in the November 2024 election and ceding all four pillars of government if you include the Supreme Court and you should. But a 34-year-old socialist in NYC showed the way back and Make America Affordable now stands as the counterargument to Make America Great, and prediction markets currently give the left a 76% chance of taking back the House in the Nov 2026 election.

4/ The end of writing code. I get to sit next to a software engineer in the USV pit, and boy has it been fun to watch Spencer make software. He doesn't write code the way I did when I was his age. He uses agents to generate the code and then stitches software together the way a prefab house is assembled. My partner Albert wrote about the significance of this shift yesterday and it is huge. Albert said, "Coding agents are doing to source code what compilers did to machine code: push the code below the interaction surface". I spent fifteen years working tirelessly to get computer science classes into the NYC public school system and the hardest part was teaching kids new languages that they needed to master to instruct machines. Now they just need one of many coding assistants and an understanding of how to do the stitching. That is a skill we still need to teach, but it is an easier skill to teach and the results come more quickly. Like Instagram made everyone a photographer, AI will make everyone a coder. And that's a great thing.

5/ GLPs are making us healthier. This is not a new trend. GLPs have been with us since 2005. But in 2025, we went from 6% of the US on GLPs to 12% and surveys suggest that 25% of us will be on one by the end of 2026. This is leading to a massive drop in obesity and diabetes, twin scourges of the last twenty-five years, but also massive drops in alcohol and drug addiction, which may also be a factor in the largest one-year drop in serious crime that the US has ever seen.

6/ We soured on our phones. The most significant shift has been the movement to take phones away from kids in schools, and the resulting increase in socialization, play, and more good stuff. But I think this is just the tip of the iceberg. Our almost twenty-year love affair with the smartphone is over, and everyone I know wants to use it less and reduce their reliance on it. This is bad news for Apple.

7/ Scale is hitting its limits in AI. OpenAI's brilliant move was to use scale over everything else to train large language models. And it worked. We got LLMs that can do magical things. But in 2025 we saw scaling reach its limits and new tricks, like distillation, fine-tuning, and reinforcement learning, produce significant improvements. The emergence of DeepSeek in January 2025, which was trained on significantly less hardware, was the first shot across the bow in the war between brains and brawn. This is bad news for OpenAI and others who are raising endless amounts of capital to win the scale war.

8/ Sports betting goes onchain. Prediction markets, which started out as a way to speculate on politics, moved into sports betting and went vertical. While neither of the two main prediction market providers is truly "onchain", I expect that they will ultimately move there for many reasons, including cost, speed, finality, and more. What this means is the "house" will be replaced by a trustless decentralized system known as a blockchain, and as we saw with DeFi before, this will lead to better markets that are much less extractive and are 24/7 and fully global. We can argue whether betting is a vice or societal good, but it is a fundamental human behavior that has been with us forever and now it will be onchain.

9/ China is winning the next war. While the White House and seemingly everyone else in the US obsess about winning the AI contest, China is winning the next war, which is electrification (which, by the way, is what powers AI). China installed over 300 GW of solar in 2025, bringing its solar installed base over 1 TW by year's end. The US, by contrast, is expected to deploy about 300 GW of solar over the next five years. For anyone who thinks this is about climate change (it is), this is mostly about economics. It costs about $0.05 per KW to generate electricity with solar at current manufacturing economics, and it costs between $0.05 and $0.10 per KW to generate electricity with natural gas. China is building a less expensive energy generation system than the rest of the world. This is bad news for the US.

10/ Streaming won. It probably won a decade ago or more, but in 2025 we saw Netflix beat a bunch of legacy studios in the bidding war for Warner Brothers/HBO. Owning the end customer is generally the better business model. When you can own the production and the end customer, you win.

OK, that is it for the rearview mirror. Tomorrow we will look at the road ahead.

In 2013 and 2014, USV made a number of payments-related investments and we went deep on both consumer and business-to-business payments infrastructure.

By the latter part of that decade, we had come to believe that the credit card system, and the interchange fees that make up much of the cost of the credit card system, is eventually going to go away.

Since then, we have had an active investment thesis that we called The End Of Interchange.

We use Notion AI to maintain a thesis description based on past meeting notes, emails, and internal discussions related to the topic. Our current thesis description says:

USV has had a longstanding interest in the end of the interchange/credit card system and the move to stablecoins and bank-to-bank direct payments.

The credit card interchange fee model—where merchants pay 2-3% per transaction—is vulnerable to disruption from:

Every year I put together a playlist at the end of the year with some of the new music I found and got into.

A bunch of these songs are under the radar which is my favorite kind of music.

So I hope you find something new that you like in here.

I like to bookend the New Year holiday with two posts, one looking back at the year that is ending (What Happened) and one looking forward to the year ahead (What Will Happen). This is the first of these two posts. The second one will run tomorrow.

Here's a top ten list of things that happened this year that really matter.

1/ The end of globalization. The Trump Tariffs represent a fundamental change in trade policy, and if they remain the approach of future White Houses, it will mark a return to protectionism and the end of the Free Trade era in the US, which has been the default policy of the US for my entire adult life. Whether you are for or against this change, it is massive and means that the rest of the world will now have to pay to access our markets in the US, making the reshoring of critical infrastructure possible. One thing I am less sure about but super interested in is whether tariffs can become a significant revenue generator for the US Government, as was the case until 1913 with the introduction of the modern federal income tax system. If tariff income can make a significant reduction or elimination of the federal budget deficit in the US, then that would be another major economic shift (away from deficit spending).

2/ Google got its mojo back. From Waymo robotaxis running wild on the streets of many of the most populous cities in the US to Gemini coming hard after ChatGPT, 2025 was a banner year for Google/Alphabet and a reminder that owning our data is key to owning us.

3/ The left got its mojo back. 2025 started with the left in shambles after being routed in the November 2024 election and ceding all four pillars of government if you include the Supreme Court and you should. But a 34-year-old socialist in NYC showed the way back and Make America Affordable now stands as the counterargument to Make America Great, and prediction markets currently give the left a 76% chance of taking back the House in the Nov 2026 election.

4/ The end of writing code. I get to sit next to a software engineer in the USV pit, and boy has it been fun to watch Spencer make software. He doesn't write code the way I did when I was his age. He uses agents to generate the code and then stitches software together the way a prefab house is assembled. My partner Albert wrote about the significance of this shift yesterday and it is huge. Albert said, "Coding agents are doing to source code what compilers did to machine code: push the code below the interaction surface". I spent fifteen years working tirelessly to get computer science classes into the NYC public school system and the hardest part was teaching kids new languages that they needed to master to instruct machines. Now they just need one of many coding assistants and an understanding of how to do the stitching. That is a skill we still need to teach, but it is an easier skill to teach and the results come more quickly. Like Instagram made everyone a photographer, AI will make everyone a coder. And that's a great thing.

5/ GLPs are making us healthier. This is not a new trend. GLPs have been with us since 2005. But in 2025, we went from 6% of the US on GLPs to 12% and surveys suggest that 25% of us will be on one by the end of 2026. This is leading to a massive drop in obesity and diabetes, twin scourges of the last twenty-five years, but also massive drops in alcohol and drug addiction, which may also be a factor in the largest one-year drop in serious crime that the US has ever seen.

6/ We soured on our phones. The most significant shift has been the movement to take phones away from kids in schools, and the resulting increase in socialization, play, and more good stuff. But I think this is just the tip of the iceberg. Our almost twenty-year love affair with the smartphone is over, and everyone I know wants to use it less and reduce their reliance on it. This is bad news for Apple.

7/ Scale is hitting its limits in AI. OpenAI's brilliant move was to use scale over everything else to train large language models. And it worked. We got LLMs that can do magical things. But in 2025 we saw scaling reach its limits and new tricks, like distillation, fine-tuning, and reinforcement learning, produce significant improvements. The emergence of DeepSeek in January 2025, which was trained on significantly less hardware, was the first shot across the bow in the war between brains and brawn. This is bad news for OpenAI and others who are raising endless amounts of capital to win the scale war.

8/ Sports betting goes onchain. Prediction markets, which started out as a way to speculate on politics, moved into sports betting and went vertical. While neither of the two main prediction market providers is truly "onchain", I expect that they will ultimately move there for many reasons, including cost, speed, finality, and more. What this means is the "house" will be replaced by a trustless decentralized system known as a blockchain, and as we saw with DeFi before, this will lead to better markets that are much less extractive and are 24/7 and fully global. We can argue whether betting is a vice or societal good, but it is a fundamental human behavior that has been with us forever and now it will be onchain.

9/ China is winning the next war. While the White House and seemingly everyone else in the US obsess about winning the AI contest, China is winning the next war, which is electrification (which, by the way, is what powers AI). China installed over 300 GW of solar in 2025, bringing its solar installed base over 1 TW by year's end. The US, by contrast, is expected to deploy about 300 GW of solar over the next five years. For anyone who thinks this is about climate change (it is), this is mostly about economics. It costs about $0.05 per KW to generate electricity with solar at current manufacturing economics, and it costs between $0.05 and $0.10 per KW to generate electricity with natural gas. China is building a less expensive energy generation system than the rest of the world. This is bad news for the US.

10/ Streaming won. It probably won a decade ago or more, but in 2025 we saw Netflix beat a bunch of legacy studios in the bidding war for Warner Brothers/HBO. Owning the end customer is generally the better business model. When you can own the production and the end customer, you win.

OK, that is it for the rearview mirror. Tomorrow we will look at the road ahead.

In 2013 and 2014, USV made a number of payments-related investments and we went deep on both consumer and business-to-business payments infrastructure.

By the latter part of that decade, we had come to believe that the credit card system, and the interchange fees that make up much of the cost of the credit card system, is eventually going to go away.

Since then, we have had an active investment thesis that we called The End Of Interchange.

We use Notion AI to maintain a thesis description based on past meeting notes, emails, and internal discussions related to the topic. Our current thesis description says:

USV has had a longstanding interest in the end of the interchange/credit card system and the move to stablecoins and bank-to-bank direct payments.

The credit card interchange fee model—where merchants pay 2-3% per transaction—is vulnerable to disruption from:

Every year I put together a playlist at the end of the year with some of the new music I found and got into.

A bunch of these songs are under the radar which is my favorite kind of music.

So I hope you find something new that you like in here.