Why a Do-Nothing Congress could be great for markets | E2359
November 5, 2026 · 1 h 25 min
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DEBRIEFWritten and voiced by AI from the episode's audio
This Week in Startups explores the political aftermath of the 2024 election, where Democrats gained control of the House and Senate, creating a divided government. Despite overnight market fears of a correction, markets rallied—a phenomenon D.A. Wallach attributes to uncertainty reduction. The conversation pivots to how political gridlock actually benefits business by preventing chaos, while examining technology's narrative problem: AI and automation threaten jobs, making data centers and autonomous vehicles political liabilities despite their economic and safety benefits. The panel discusses how AI adoption must reach everyday consumers through tangible benefits (cheaper homes, better healthcare, personal agents) before sentiment shifts. The episode also covers venture capital structural changes at Sequoia, the rise of capital-efficient "alocorn" companies, unsustainable margin compression in AI infrastructure, GPU constraints coming in 2027, and emerging tokenized derivative markets that could disrupt traditional securities regulation entirely.
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Today’s show:
Democrats took the House and Senate, and overnight trading suggested a huge market drop. But in the morning, the markets went another way, and D.A. Wallach thinks he knows why. A Congress that can’t get anything done can’t do anything BAD, like start a war or a tariff fight. The only thing markets hate than gridlock is uncertainty.
On the first post-midterm This Week in VC roundtable, Jason is joined by Wallach (Time BioVentures), Elana Gold (Two Roads Capital), and Tomasz Tunguz (Theory Ventures).
Together, they work out what a split government could mean for tech and venture. Data centers are now a political target for both parties. 2027 might be the last major window for big M&A. Plus, D.A. worries that an intergenerational war could be brewing, between the people who own AI’s upside, and the young workers who fear getting replaced.
Plus thoughts on Cava’s 22% layoffs, Sequoia shutting down its Scouts and Arc program, the SPV “boiler room,” and more.
Guests
D.A. Wallach on X: https://x.com/dawallach
Time BioVentures: https://www.timebioventures.com/
Elana Gold on X: https://x.com/ItsElanaGold
Two Roads Capital: https://tworoads.vc/
Tomasz Tunguz on X: https://x.com/ttunguz
Theory Ventures: https://theoryvc.com/
Relevant Links:
NBC exit poll: 56% say AI and data centers were a crucial or major factor (DCD): https://www.datacenterdynamics.com/en/news/nbc-exit-poll-56-say-ai-data-centers-were-a-crucial-or-major-factor-in-congressional-vote-decision/
How AI backlash shaped the 2026 midterms (TIME): https://time.com/article/2026/11/04/midterm-elections-results-ai-industry-data-centers/
Musk on chips outrunning electricity in 2026, with Elon's reply: https://x.com/elonmusk/status/2117649850644705591
Panthalassa raises $140M for wave-powered AI compute at sea (Tom's Hardware): https://tomshardware.com/tech-industry/artificial-intelligence/palantir-co-founder-peter-thiel-backs-usd140m-wave-powered-ai-data-center-startup-panthalassa-aims-to-run-offshore-compute-nodes-using-ocean-energy
Marvell to buy Lumentum in a $115B deal (The Next Web): https://thenextweb.com/news/marvell-lumentum-acquisition-115bn-all-stock
San Francisco mourns bodega cat killed by a Waymo (CBS SF): https://www.cbsnews.com/sanfrancisco/news/sf-mission-district-mourns-store-cat-killed-by-waymo