All in pod 100 113

Jake out do you have intros today no I don't have time for intros oh come on all right fine he started as a nerd with no followers on Twitter now he's a nerd that gets recognized when leaving the [ __ ] he turned water into wine he just wants to please us now he's a mixture of Kermit defrog and a science nerd Jesus he's the man with the stands the queen of quinoa the Sultan of science the prince of Prozac the Lord of Lexapro he gets stops for selfies all over town my producer fee gave him a mental breakdown the zultan of Zoloft Mr David Friedberg it's true it did give me a breakdown but you're over it now you just name dropped three ssris in that intro is incredible well I talked to his I talked to his psychiatrist he said he's working on the cocktail yeah save some for me oh oh you speaking of you he's got a very quick wit and impeccable grammar known for building beautiful products that don't work oh my God like Colin and Yammer he used to invest in SAS quite a lot now he's fighting a brigade of Ukraine Bots he's spending so much time in his bunker it's starting to get smelly we see him only three times a week all in Tucker and Megyn Kelly he'd invest in your startup if you had the Knack but right now he needs that cash for his GOP Super PAC the world's biggest [ __ ] the Rain Man himself Mr David sacks that's all that's a repeat joke that's not I know but it kills every time so I'm gonna keep repeating it until you tell you it's friends with his white truffles he scaled Facebook to a billy that wine collection it's just [ __ ] silly he's on the world tour meeting with princes and kings is he talking luxury sweaters or maybe bigger things the dictator himself chamath polyhapatia that was really nice actually wow I mean I appreciate it you were obviously trying to get invited to dinner tonight because I'm trying to get off the alternate alternative list he's trying to get off the alternate that the email was harsh nine was alternate all right you were trolling me I know I have a seat as for me I'm the world's greatest moderator who can take a note compared to these guys I'm just a millionaire who's broke the all in Summit almost killed us but we came back from Death store I knew he peaked when Friedberg took over the Dance Floor we love the fans but we love each other more thanks for the first 100 fellas here's to 100 more really good wow that's really really good look at you touching surprisingly you came prepared today first time he fought after 100 he finally to prepare so that was the note just prepare your job just do your job do your job do your job do your unremutirated job do your job speaking of unremmediated we heard that somebody's grifting off the Pod oh yeah so good point what we heard sex is that you got a big care package from Montclair yeah that's true what what I think we're all going to declare today is that we all want to wet our beak and if Montclair sends each of us a care package we will all wear Montclair gear at episode 100 of course my brand go to your own brand yeah we decided to jamasca Laura piano I got Montclair you go get like you know Izod or something I saw it actually I got eyes on too you have to just uh I got Uniqlo we got Gap Kids for Jay cow it sucks you didn't you didn't declare your Moncler gift package that was the discovery we made this weekend so I want to thank I want to thank the folks that there's a company called and they sent me this uh gift actually this hoodie this Montclair hoodie which I never said what is this plug they send you a hoodie for 1200 or from Montclair yeah these guys are getting hundreds of thousands of dollars yeah how bad is your portfolio that you're grifting did you put this Montclair stuff onto like eBay after you got it I was already wearing it they sent me more so I'm gonna wear this hoodie is pretty cool what can I say I'm not gonna work it's three cents and all of a sudden you're grifting uh hey just for everyone listening I'm looking for a wardrobe too soon okay just send my package to my own let me tell you something there's no upgrade that's gonna help Freeburg I think you're [ __ ] no I'm gonna bring you guys Montclair shirts to the poker game tonight gee thanks sax appreciate that how did how did you guys even find out that he got this gift we're at his Fleet Week party and there was an angel some uh Blue Angels party and there's someone there who started telling me like did you hear the sex cut this whole thing oh somebody there's a rat there was a I'm not telling you there's a rest but he's got to leave he's got a mole we were talking about the podcast we were talking about 100 100 it was away 100 no no it wasn't what way no 100 was it Jeff I know what are my one of my friends was in the man cave and he saw this like care package from Montclair and he really admired this like jacket it was like a puffer jacket but with like wool sleeves or something so you gave it to him and I gave it to he liked it so much I'm like I'm like here you take it you're not even on the Pod he's not even on the podcast give it to producer Nick so he was walking around with it he was really appreciative so maybe he said something or well see let's just say there was a lot of conversations going on about your care package socks well and it makes us Wonder sacks are there other care packages that have come in and like have you been promoting other stuff on here so who makes the captions behind the magazines that you wouldn't want how much of your Laurel piano have you actually paid for over the past year that's 100 here 100 I would never I would never accept it for free it's important look wait no all joking aside it's hard if you're running a clothing business especially if you're like a small Niche provider stuff so yeah you have a responsibility to pay for this stuff not to grift and get it for free I know when I was at the Laura piano store on 57th Street in Manhattan the 18 000 square foot store I was thinking the same thing these poor people how do they survive well literally 170 square foot renters Friedberg exploiting poor baby goats well whatever I mean the fact is the Market's down there's gonna be a little grifting on the margins it's understandable [Music] let your winners [Music] we open source it to the fans and they've just gone crazy with them Freeburg he loves to produce every 17th episode he does a great job oh no I like to prepare or at least know what the heck we're going to talk about when we get together oh God all right so first up on uh freeberg's curiousness this is uh free bird this is how you're gonna do it let's skip ahead to the next section come on no no okay so um go go go why do you think chamoth people love the podcast why do you think they listen why do you think they love it what is the the phenomenon what what lightning has been captured in this bottle first is I think that they appreciate our friendship it's kind of like odd and quirky and I think a lot of you know it maps to like relationships that they have amongst their own friends so that's what makes it relatable but the second is that all of us uniquely have a point of view about stuff that matters more and more in the world I think that's just the basics of it like it's not like technology is going away and it's not like its impact in the world is going away and the more it becomes mainstream the more it's important for a lot of folks to understand what's happening and I think we provide a pretty unfiltered view of it and we do it where and this is a lot of credit to sax more than anyone else on this show to take a Counterpoint and steal man what would otherwise be controversial views and if he didn't have his three friends around him that would make the Pod meaningfully worse I think can you evacuate for people who don't know what steel Manning is what that means well just it just means like to have intellectual honesty around a point of view and actually put your best foot forward and trying to explain it even when it's not Orthodox even when it's not what the mainstream would say is right and so what it actually does is it creates a contrast against every other alternative that you have to learn about things which you find incrementally is biased and I think that's what we've gotten right we are four friends that have a reasonable point of view rooted in some amount of success and I think that that's important because it gives us credibility and we take all sides of issues yeah and oftentimes it is not the obvious simple reductive answer and I think that that's where um it really shines just so people know about the steel man argument you want to make sure people are currently I think most people refer to it as the act of presenting the other argument in the strongest way possible to be intellectually honest like the opposite exactly obviously because the way the way the debate happens on Twitter and so forth is it's almost like the intellectual debate is uh being attacked uh using opposition research tactics like or a political campaign so in other words they go back through anything you might have said or written take the the thing that was most wrong or at least justifiable or the thing they can even just take out of context and then they'll try to make it about that as opposed to the argument you're actually making and we just see this tactic over and over again and it's not an intellectually rigorous way of having a debate about something you don't learn anything right and deep down inside you know that it's contrived and that is the in a nutshell so it has it almost in many ways has less to do with how good we are but frankly how bad all the alternatives are so even if you wanted to learn about tech and you go up and you sign up for these newsletters or if you look at some of these Tech sites they're really terrible and they have done an increasingly terrible job over the last five years in telling the most important things the truth and everything in between and so if you can find a source for an hour a week that is trying to tell you how basically the world is going to come together in a really integrated multi-faceted way it's not like we're right and it's not like we know better than other people in fact many times a lot of the criticism I get is how dare you talk about X or how dare you talk about why because it makes people who are experts in that field you know feel like how dare you come into my realm and even have an opinion on you know uh what Russian politics was like in the 1980s and those things really annoy these folks because they feel that those opinions and that knowledge should be cordoned off and held tightly as this secret that only they are allowed to talk about into the world and this is the point where with the internet all this knowledge is accessible so the value of that knowledge in my opinion is the least it's ever been it's the interpretation that's valuable and it's the ability to actually like think narratively around how all these things connect and this is where I give a lot of credit I think you guys do an incredible job I think the way fried Brooke thinks is super unique I think the way that saxis thinks is unique I think jaycal your courage to basically fight back is very special all of it together is a really unique recipe it works and what I will tell you consistently is the number of people that listen to this of import and influence I am constantly shocked and if you are not sure of it you need to get out of this stupid little Echo chamber of Silicon Valley go to New York go around the world and if you're in the right meetings it's incredible how folks are getting educated using this pod and I think that's that's really amazing yeah I think I I think there's like been a tendency in like what we call Media today historically kind of you know communication amongst humans it was very slow for a communication cycle to go from beginning to end to close because we had print and books and then telegraphs and telephones and then television and then and radio and the internet I think has really changed the cycle um the loop cycle to the point that you know a story iterates and proliferates very quickly a lot of people talk about the new cycle being very short nowadays and what that means is that there is a group think approach to resolving to a point of view on what the news is so the news comes out everyone iterates on it they form their point of view and all of a sudden everyone's on the same point of view and so there is no room for Dissent or debate or discussion because the cycle closes so quickly and everyone coalesces around the same point of view and nowadays I think we see not just that unipolar behavior but we see this bipolar Behavior where everyone coalesces on their point of view and how their point of view is is the opposite of the other side and everyone has their own heuristic for what the other side is there's this populism versus elitism sighting there's this red versus blue sighting there's this Us Versus Them citing US versus China citing everything is now bipolar and so you very quickly coalesce around what your poll says and what your poll is instructing you to believe and that is what is fundamentally wrong with how the system is working today and I think what people find refreshing about a discourse that doesn't succumb to that bipolarity as a standard is that it provides people the ability to have a real rational out of sync point of view that maybe changes one's point of view and changes one's mind in a meaningful way and I think that's what's really missing today and I think maybe sometimes we do a good job and we touch on that and so that's what I would strive to do is to always try and avoid that bipolarity on everything you know the um Zen Buddhists call it dualistic thinking you know the human brain and generally the universe seems to evolve into this kind of dualism on everything and it's not really always the case that there are Shades of Gray that there um is Nuance uh that there is a complex uh dimensionality to things that I think people really if they take the time to understand recognize that maybe it's not left and right maybe it's not Elite and populism maybe it's not all black and white and that's an important hopefully framing that maybe we can bring bring to light through our diagnosis of what's going on in things right now yeah and I I'd like to add to that I think there's there's a ton of great journalism going out there we see it um there's a ton of great sub Stacks out there people go deep there's other great podcasts out there and right now it's a tumultuous time for media journalism and and getting information and do what trust what sources do we actually trust who actually is thinking in a crisp way um and informing people and you know having been a former journalist when we were journalists we knew that we would get 10 20 30 40 of a story we would publish it and we would try our best uh but journalism has changed dramatically in the last 20 years and I can tell you journalism is dead sorry okay I'm sorry there's some great journalism occurring it's on the margins it's irrelevant and I'll tell you why because the facts are known instantaneously on Twitter and through the internet we don't need people to relay facts we need people to wrap facts in context and allow us to come to our own conclusions that's why I think journalism isn't what it used to be that's why people who are historically journalists struggle because now they actually have to create context and narrative and have an opinion but when you publish that into the Wall Street Journal or the New York Times it becomes very confusing they don't know that that's what they were supposed to do that's not what they used to do that's not how Pulitzer prizes were were historically given out and that's why everybody then you know Rants and rails about things kind of going is you know if you if you look at it as journalists people don't know this but journalists are being compensated they're little salaries in many cases are based on their follower accounts they're based on what audience they're bringing to the table and you see this in sub stack sub Stacks just said we're going to hire the top journalists on who have the most followers on Twitter but you have to change the word so that you change how people think about it these people are not journalists these people are opinion makers okay in some cases they're doing journalism in some cases no no there are some cases where they're actually doing real journalism there are people doing investigative reporting still it's not the majority of what you see but it still exists it's just a very much smaller percentage but putting that aside if you think about but you can't wrap a virtuous blanket around every a thousand people because of the acts of one I'm not and I'm not I said there's a range here it's a small percentage but this is what do you think that percentage of content creation I put it at five percent so that's you know one out of 20. yeah shocked yeah anyway I think it's less than one percent but let me just finish this one thought here you know if you are going to be hired and compensated and we we talk about systems here a lot so just thinking from first principles if you're a journalist if you're a writer opinion writer whatever you produce content for Wall Street Journal for podcasts Etc today let this sink in your follower account is what your book Advance is it's what your compensation is it's who hires you now if that's the truth and it's it's not all the time but I think that your job is not to relay facts we can get facts exactly let me finish my thought here and so then what happens is how is follower account on Twitter actually derived how do you get that follower count by being tribal and so what's happened is journalists that became tribal they get big followings they give spicy takes they pick a side and then their compensation follows it and that's why New York Times said can we all stop on Twitter and they literally put an edict out then you look at this podcast I think people look at us as you know in their mixture podcasting long form taking the time week after week to spend 90 minutes chopping these things up I think that's what to the original question Freeburg you had is what people find so great I I when people ask me I say it's really about the fact that there's a there's a friendships here and it's funny but it's also informative and it it's insightful and at times as you're pointing out your mouth you know random acts of bravery and taking positions that are not popular and and to think that you and Friedberg almost blew this up over a few hundredk I didn't oh yeah no the two of you equally should share I wouldn't classify it that way by the way here we go now the bad feelings are ready getting spicy I'm more of an ethical framework but yeah that's mine go ahead that's even worse look at Jim Bob stirring the pot just to chime in on this point I mean I think I'm in violent agreement with you guys but I'd frame it a little differently I think the reason why people seek out our podcasts and other podcasts and sub Stacks is and and sort of this kind of independent journalism and are willing to pay for it is because the mainstream media has become totally devoid of substance it's as partisan and idiol and ideologized as it's ever been reporters are extremely ideological you look at the New York Times The Washington Post the your major television networks it's all kind of the same thing and yeah there is like you know a little bit of an echo chamber problem in terms of the partisan politics but the mainstream media is the most ideologized it's ever been I mean just to give you one small example that we talked about in the pod the you know we had two quarters of negative GDP growth which the media is always considered to be the definition of recession and then all of a sudden they said no we can't know what a recession is anymore because they know that'd be a horrible headline for Biden right before the midterm elections that's more of a partisan version I think on the you know a more ideological version would be just around this Ukraine war I mean it's just incredible how biased the coverage is they don't even present the other side of the story like it's called the meershimer take about how we got to this point that we're in so the American people just aren't being informed at all I you know we we love to talk about how the people of all these other countries are being propagandized by their governments we never talk about how propagandized the American people are the media does not present the other side of the story at all on how we got into the Ukraine war and how we're now at the brink of what Biden calls Armageddon that we see you know effectively short formed and short form meaning it can be presented in a sound bike or on a tick tock clip or in a couple paragraphs where someone's attention span before someone's attention span lapses out always misses the dimensionality that got us to that point and so there's one perspective one point of view on one dimension and the dimension like tax is talking about about the time and the history of the Dynamics of all the countries and all the people and all the interactions that have happened for the past couple of decades that led up to this moment but then this moment is taken in its context alone and reclassified as being something that is good versus evil it completely misses the entire storyline of what happened it's like going to be end of a fairy tale and saying here's this moment of what happened and all the build up and all the things that occurred are often missing and all the different sides of the story are missing and I think that that's really what makes it so difficult today to feel like you can trust Authority and that you can trust the the media that's presented to you as a consumer not just in the US or in the west but around the world because there's so much that's left out and manipulated and kept away and what people are waking up to is the fact as kamath points out that so much of that information the direct information is available now and so this investigation this ability to uncover the data and the story lines and the perspectives that are typically missing from one form of media is making people realize that there's so much that's being left out the lie about this 100 100 and I think in this podcast that's what's really shocking to people nowadays and I think that's what makes maybe to some degree hold our conversations a little more appealing I'll I'll drop to you in a second there sex but I did see this happen in three specific topics that we discussed here uh if you remember we talked about abortion and we were on that topic very early and no one wanted to talk I remember when we started talking about the number of weeks maybe how Europe looks at this that wasn't part of the popular conversation it was always just are you against Choice are you for killing babies it was like a very two-dimensional look at it immigration same thing nobody would talk about the numbers nobody talked about recruitment nobody talked about the point systems used in other countries it was almost like those basic things were not allowed to be discussed why can't the media discuss those nuances and freedom of speech is I think the biggest one and the search for truth you know nobody wants to talk about the fact that the ACLU used to actually protect unpopular speech and unpopular speeches you know the hardest thing in the world to protect but how did that become something we can't even talk about now right and and just the snap uh silencing of any opinion whether it's Chappelle or you know pick a topic in freedom of speech Trump Etc you know who gets protection for freedom of speech and we'll talk about it later on the news with Alex Jones obviously a very uh controversial topic as well go ahead sax do you want to add something to it well I think just to take this Ukraine situation as an example I think the media's biggest power is the power to Define when time begins on an issue well like right with Ukraine we're part of an escalatory spiral that's been going on for well more more than eight or nine months this issue's been going on since 2000 decade yeah for a decade so in other words if you come in in like the seventh inning okay so it's a free Works point you come in at the end of the story and it's been an escalatory spiral but the media just pretends like time begins on February 24th of course you're gonna have a certain kind of view on the subject whereas if you know the history of the situation if you know that back in the 1990s you had people like George Kennan who was the architect of our Cold War containment policy you had uh William J Perry was Bill Clinton's defense secretary you had Henry Kissinger you had John meersheimer all warn that bringing NATO right up to Russia's front porch was extremely provocative to them that they would see that as a provocation it would eventually lead to a moment of crisis when that moment of Crisis finally came you know we're not told that this was predicted we're told that anyone who says that this war has anything to do with NATO expansion is basically a Putin apologist and is spouting Putin talking points all right let's not let's not let's save some of that for the Ukraine talk we're going to talk about it you could agree or disagree with that take but the point is the media doesn't even portray it they really just pick a side and they I think I like your analogy of like just coming in for the last 15 minutes of the game and just describing that you know we you need to have a deeper discussion of how did we get here how did we get here on immigration why don't we have a point system why do we look at people suddenly coming from South of the Border differently than we did just 20 years ago how did that become a politicized issue what's the right solution here especially if we can't hire people for basic jobs in the United States everybody wants to know this question what's your favorite you have a favorite moment or a least favorite moment a a great moment in the show history and then I guess we'll move on maybe to some audience questions here but let's let's get this one because an embarrassing moment your favorite moment your least favorite moment a moment now you look back on and you you're particularly proud of tomorrow I love the cold opens I I think that they are uh unbelievably human and funny and normalizing they are by far the best part of the pod and yeah that's my that's my absolute favorite part by by like miles and miles uh it's actually got a favorite moment other than Ukraine other than Ukraine I know you got Ukraine on the brain probably you when you started talking like Joe Pesci the Joe Pesci voice do it on command I'm [ __ ] a [ __ ] bad idiot uh no seriously you have any other favorite moments um or things you're particularly proud of things that people tell you you know hey I love what do you I love this part of the show I'm also proud that we we were able to air our Dirty Laundry a little bit in public and still get over ourselves and our own Egos and we're still here I think that takes a lot of courage and a little bit of a little bit of maturity that's that's not in uh public visibility all the time in the media I like that sentiment a lot I think there's a lot of people yeah they were uncomfortable about it you know I I think there's a lot of personal growth that's going on here uh for everybody involved yeah a Freebird you got a favorite moment other you know I don't like it when you and sex fight that's just that's your least favorite moment I literally turned I turned my headphones off and I like do some emailing it really is just it really is just this political thing but yeah it does come up you know I don't like the fact all the moments I've been interrupted by you that like that just happened five seconds ago like you know those are usually pretty tough go ahead I don't know what I what I did enjoy I did enjoy meeting people at the summit who shared that this has been like a really important thing for them to listen to I I think I I was at a Pete's Coffee in the city and some guy came up to me this was when early after uh early when we were doing the podcast and he was like listening to you guys has really helped me get through covid and he was like locked in his apartment and he didn't have a lot of friends and he didn't have a lot of people to talk with and just being able to hear through you know kind of a good conversation around when's this going to end how's covid gonna you know what's going to change in the city and hearing our friendship really made a big difference for him and it was actually really interesting that was off the show but it made me realize that this show actually is impactful and helpful and made gave me kind of the energy to keep going even though I've had uh frustrations um in the past so I don't know I like I like those moments a lot to be honest that there's real value here for people I also I thought the summit was a lot of fun I mean I had a good time well you know it's uh I I think we're steering towards I think we're staring towards Summit 2023. that was me starting the pot a little bit George 20 I'm done listen as far as I'm concerned you do it you produce it or you hire a producer I'll show you I'm if you I don't need to make a producer fit you can do it you can take the producer free whatever it is all right guys I got a couple of questions here from the audience you guys uh see this list yeah we can stand out for you guys well you pick you pick so here's a question um we got it over email from Nathan and Nathan said we know the reasons uh the reason you guys started the Pod what is the motivation of each bestie to continue doing it every week and I asked myself that every week that sex is therapy hey it was that was Derpy yesterday I was thinking about taking a break not because I don't like doing it but it is time consuming and I do want time to get back to doing some business writing I was on a pretty good track to publish a book about SAS before he started doing the Pod I had written a lot of business blogs and this is kind of taking a break how many weeks because wait 10 weeks what are you thinking maybe like a month or something yeah oh four weeks ah wait you can take that's not a big piece maybe I don't know 40 times all right there's there's a I've got like a right now it's like doing jumping jacks in his backyard put me in the game well we could do that I mean I've got like five half written business blogs in my Hopper that I really want to finish and um so I don't know the show does take a lot of cognitive energy is what you're saying it takes a lot of those things a lot of your time each week sex I mean as you guys know the taping is only a couple hours but then it's just keeping track of all the issues and then you know if I'm preparing takes for this pod I also turn some of those takes into articles this is foreign because he is the most heterodox is the heaviest and this is like poorly understood it's easy to just basically be on the side of the current conventional wisdom or to not have an opinion and to talk about things that are orthogonal but David is consistently the one that Wades into the middle of the ocean and it is it I can I can understand why no because he he knows and that he has to be more prepared than the rest of us yes because he is more open to the attacks from all of these nitwits he just did I mean on Twitter I'm being told these are like uninformed nitwits you know they're they're the cancer the cancer of people who comment on Twitter is the following they suffer from the worst kind of cancer which is a lack of belief in themselves and so what they do is they point to other people and try to convince yet more people to not believe in them but that has nothing to do with anything it's just misdirection from their core problem which is they don't believe in themselves and so you know David has to fight all of that stuff off but he has to fight it off with logic which must be exhausting you know my Approach has just been to turn off comments and to not start this is the single biggest problem I think with social media is it's at this heightened point where it's this virulent strain of a lack of belief in oneself that manifests in this hatred that you direct to anybody else that believes in themselves interesting interesting Theory yeah and I would just just to add to that you know it's not like I haven't heard any of the arguments that they're making no I guarantee you they have not heard the arguments I'm making but but I've heard all the arguments are made 100 I'm totally familiar with 1938 Munich Neville Chamberlain all this kind of stuff I just don't think that is the correct understanding of what's happening right now I think the correct historical analogy is either 1914 with World War One and the blank check guarantee or is 1962 the Cuban Missile Crisis the people on the other side generally don't understand that they are just kind of part of this like Twitter mob who's buying into the current thing and whatever they're told by the media so it it is it is a little bit exhausting I think that that's what people don't realize is you know you when this thing got very popular the two or three days after an episode comes out becomes your text your email your DMs and your replies become filled especially again I would I would encourage you to keep doing this thing and just to turn off comments and don't look back yeah it's hard for the first few weeks and then you realize 99 of people who comment have nothing important or useful or interesting to say like zero like negative zero and you forget that there's like 99.99 of the world that just reads your content and couldn't even care about their comments but it would still be time consuming I there is a bunch of business blogs I want to get done so I mean I said you take two weeks off you come back and see how you feel I mean you can do it week by week too I mean just take one week off and see it I think you'll I think he'll come back he'll be back of course he'll be back great great question from Nathan thank you for your participation that's Nathan um next question I actually like this one I'm gonna pull it out it's an email question from Juan T oh hey wanted uh wanted uh Bill Gurley recently put out a piece explaining how this might be as good a time as in a decade to build a company how are you guys seeing your own portfolio companies trying to take advantage of the situation and I guess I'll add do you guys agree and how do you think about this as a moment for company building okay I could take that one I am seeing a lot of the companies that were you know had done a great job racing around seed round series a never got product Market fit now wrap it up right they're they're shutting down they're doing the wind down process and then we're seeing lists of very talented people and I've talked about this before on the show The consolidation of talent behind the winning ideas the the the experiments that actually worked products that got some traction are now having an easier time hiring talent and so to Bill's point he's got a lot more experience in this than the four of us put together is absolutely right when you build in this down Market yeah it's harder to raise money of course but Talent is what makes great products and products that Delight customers get the flywheel going and if you survive through this and you have that Talent you're not going to face 20 copycats and there's not 50 new products coming out a day people have more time to actually engage and try a product which they've been burnt out on and the peanut butter spreading you know we have this thin layer of peanut butter Talent now it's getting Consolidated in the winter so absolutely a great time for five CEOs with and Founders or you know 10 Founders across five companies to consolidate down to two do those tuck-in Acquisitions and get focused and build really good teams and cut the weakest people on the teams there's a lot of weak talent that have been overpaid and aren't actually contributing to these teams and they need to get cut and then you pull in the All-Stars it's a fantastic time he's 100 right all of the if you look back in history since 2000 all of the best performing funds of all times were the ones that were formed right in the middle of the downturns 030809 these are the vintages that have always been the best and what that means it's a proxy for investing which is it's the hardest time right now it's when you have the shakiest hand when you're writing the check but it'll probably be where all of the real money is made or the real generational wealth both for the entrepreneurs who have the courage to start and the investors who have the courage to invest there was a story that I heard in New York I was talking to a really well-known hedge fund or family office and they were talking about how they were meeting with a CEO of a fintech unicorn very well known fintech unicorn and they said they left the meeting and they said this person had an unbelievable disrespect for money and it was the most arrogant interaction that they had ever heard and they said under no circumstances would we invest in this guy in this company at any price and you know lo and behold a year later that company is now visibly going through a bunch of hiccups and it just reminds me that Jason we've always had two problems when times are good problem number one is that there's never been a check and balance on that kind of behavior a lack of respect for Capital and uh and a almost a disregard for business models which is just inexcusable and I think it's partly the fault of a very young entrepreneur but it's also partly the fault of a board who doesn't know how to direct that person enablement is real yeah but then the second the second thing is we've always had this you know this big Tech put on the table where every time you would try to really hone in on running a lean highly efficient organization the alternative would be to go work at you know Google Facebook Apple Amazon Microsoft where the terms were just completely different to what the experience was you know at a startup and the bigger the Gap the harder it was for you to be able to hire and retain good people without just copying them and now that that's also coming off the table that is a key moment so Gurley is a hundred percent right there is no longer the big Tech put those are the generals that are about to get shot over the next eight to twelve months in my opinion in the public markets in terms of market cap and employment and perks and then second is that these really thoughtful investors who felt pretty deeply disrespected will now be able to call the shots and these Founders will have to come back hat in hand and either apologize or just completely find a different religion and I think in that you'll have a lot of amazing opportunities to build companies I think it's well said tax what are you seeing yeah I think that's right I mean look when times are as frothy as they were a lot of bad ideas get funded and there's a lot of bad behavior that occurs I don't think all of it's intentional some of it is just the lack of discipline that when capitalist is so freely available people are building their businesses in ways that we're optimizing solely for one variable which was Top Line growth they just weren't paying enough attention to gross margins or burn and when you then have a downturn in capital is not so available you have to build your business in a much more Capital efficient way and you can't create fake businesses where you're buying growth that's not economically Justified you know where you've got negative unique economics around the growth so I think that this downturn is going to create a ShakeOut it's going to weed out bad ideas bad practices and and a lack of support Focus bad boards and yeah one-trick ponies you know there's just a lot of one-trick ponies out there who've optimized growth but don't have a real business and it's going to require it's going to require entrepreneurs to to play sort of more like multi-variable calculus or math not just single variable it is extremely difficult to convert TDPI to DPI you know the value of paper values into actual distributions and that takes a skilled hand and I think that a lot of young folks were hired into Venture that fundamentally did not know what they were doing they've neither ever built a company or helped build a company or actually learned how to generate returns but they became very good at buying you know free call options on companies you know I remember like a lot of people the way that you these young people I remember I heard a story that you would sell against Gurley right so let's just say you were trying to do a deal and Bill gives you a a term sheet from Benchmark and you get you know somebody else the Young Folks are like oh Bill's too negative and he doesn't get it and they would try to convince these entrepreneurs that you know these rainy days don't happen my experience with Gurley is he is the most sophisticated investor of Our Generation and what I mean by that is you know he was trained as an equity analyst that really understood business models and cost of capital and so in A Moment Like This the way that Gurley would help you on a board is meaningfully more important than how some you know middling VP at some Randall startup who's now a you know a junior partner at a venture firm because that person has literally no clue and so these companies are going to go through a very difficult moment which again is the reason why a good Steady Hand who knows what they're doing will make a ton of money in this next cycle and for people who don't know tvpi let me just give you a quick definition this is the total value divided by the paid in capital so total value is distributions like hey here's your Robinhood stock here's your Uber stock here's Cash Plus the net asset value what's that fancy word for the value of the uh shares of the companies that haven't had an exit and so you divide those two numbers you get a ratio 1.5 1.2 Etc but to schmatt's point net asset value is debatable in some of these right and distributions are what matter you can't you can't eat the uh the irr you got it you got to eat the stuff that's been distributed yeah all right let's keep going I've I'll do one more I'm going to skip over well I'll just the the question on Twitter that got the most votes was what's the exact net worth of each bestie uh I would make the case that that's probably not the best way to measure oneself and you know I don't think we're gonna do it I also would argue that we're probably all exposed to a lot of Fuzzy Math With Private assets that we own and in terms of companies who cares like how does that correlate with happiness in life it doesn't right so it doesn't really stupid question and I don't think it's a big focus in terms of objectives I'll say the next uh one that got a lot of votes which I really like it's a lagging indicator and a byproduct of what we do there are moments when what we do reflects in value that frankly where we are over earning and then there are periods where what we do is under reflected and we are under earning and so the through line has to be that you need to survive in both good times and bad times which means you got to like what you're doing and if you get caught up in a numerical number there's all kinds of math you can do to make it look a lot bigger than it is but it's all meaningless yeah I would argue you're as long as you're actively developing yourself over time the weighing machine will do its job somebody told me in my 20s when I was at AOL he said you know if you're because at the time I you know I grew up on welfare I thought the goal was to make money I didn't know any better I've learned later that there's a lot more leading indicators of happiness and things that actually cashier create happiness why truffles white truffles um I was gonna say friendship my family but yeah friendship and family laughs I Define it as laughs and friendships you know friendships but uh but but he said to me you know your goal should be to just be in the upper few percent of your age bracket and just enjoy what you're doing and he said let time take care of everything else because as long as you find something you're you know you decently enjoy and are good at you'll just get better and better at that thing and then at some point you know you will lose track of what the you know measurement of that is because you're just too caught up in in how much you enjoy doing the thing and I thought that he had no idea what he was talking about and now 25 years later I can tell you he was totally right totally right yeah by the way this this was a question I was trying to skip over so no but it led to a good Fork yeah okay what is happiness yeah yeah I think after you know observing outcomes for 25 years in Tech what I would say is that if you're a smart hard-working don't have behaviors that sabotage yourself and you know take intelligent risks you will be successful in this business I mean technology is such a wind at your backs it's such an engine of wealth creation how can you not do well but the exact magnitude of how well you do I think is ultimately it is substantially affected by timing and you know like if you were employee whatever number X at Google you're going to do better than most Founders even of the Unicorn company and when you found your company and then when you exit what the market is doing those things have a huge impact on the ACT on the magnitude so you know whether you end up being you know a billionaire or a centimillionaire you know a Deca million or whatever you want those things are very affected by timing and chance but not whether you're going to be successful at a substantial level and so it just you know be smart be hard working don't sabotage yourself you know get into Tech and you will do well trust the exact amount of how well you do will be dependent on some you know stochastic factors but not the fact that you're going to do well we are enormous beneficiaries of having been born when we were because we are a bunch of late 40 and early 50-somethings that in the prime of our career in Tech um the Federal Reserve took rates to zero and we had no idea a priori how important that would be in all of our outcomes but they were and even more importantly PCS Internet and mobile happens all of that hard work was done beforehand by an entire court of people that had to fight much stronger headwinds than we had to fight so you know David I just want to build on that like we were extraordinarily lucky and so don't get caught up in that because there's all these factors you don't you cannot control I'll say one more thing that I think is the most important observation I've made in terms of whatever it is Building Wealth over time is to make sure you're building equity uh in yourself if you're in a Services business and every day and whether that's serving the clients of the company you work for or just serving clients on behalf of yourself and everything you do is a transaction and that transaction doesn't build on itself doesn't compound value in some way then you're missing out on an opportunity every year that goes by that you're earning income where you're not building Equity uh is is a non-compounding year and it's compounding Equity value that I think ultimately pays off for you as an individual and I can give a lot of examples of this but if you're in a let's say a brokerage business and you just do deals and you might make have a good year you might have a bad year the real question you need to ask yourself is what is compounding are you growing a client base are you growing your skill set are you next year able to do more things or have more options than you had this year and if the number of options you have is declining or static every year then you're limiting your Equity value and that ultimately will translate into limited wealth creation can I chime in on that point around Equity so yeah when I discovered what Equity was this was when I was in law school and actually the guy who explained to me was Antonio gracias a light bulb really went off for me because my dad is a doctor and I was on a path to becoming a lawyer and in both those cases you're a professional the way you get paid is you more or less charge an hourly rate and so the amount of money you can make is capped right just take the number of hours in the day and in the week multiple apply it by your rate and that's the most money you can make in a year and the difference between that and Equity is with Equity you own a piece of a business and that business could be ultimately worth you know any amount and so your Equity could therefore be worth virtually any amount and so you're uncapped and so just you know if you want to have outside success you have to have equity in something I think that is exactly right if you're just basically working for wages you even if you are the best at what you do and you get paid an insane hourly rate you again you can be successful but you're not going to be uncapped and so that is the beauty that's the beauty of Silicon Valley is all these companies offer Equity to everybody and it's not just shares in something you can actually get equity and create leverage in your life in this era more than any human has ever had in any era prior because of software and Computing and automation you can create a website that prints cash for you every day if you wanted to you can create a service that you get leverage out of and there's Equity value in that and I think that's really key because then you can go build another one another one and you're building value over time and that's just the most simplistic example of how technology today provides leverage that can really allow anyone to pursue a path of equity and and I think you make a good point about what what are you getting leverage off of yeah so there's there's a bunch of different things so the old way was leverage off labor and I guess if you were to own like a consulting firm or like some sort of factory then the more people you have working the more money you'd make the other way would be like you can get leverage off Capital like a fund manager or you can get leverage off of Technology because software can basically create these super scaled outcomes so you need to figure out like what is it you're getting leverage off of yeah I'll go so I'll do the last one which I thought was a really good question and I got a lot of votes from Marcos Ortiz if you had to start from scratch no money no connections only the knowledge you have right now and 100 bucks what would you build in 2022 I would build something in energy transition or in life sciences with a hundred dollars yeah I would build a startup incubator Venture fund of some type a way to fund entrepreneurs and just be a capital allocator much earlier in my career I would create a B2B software company that actually I'm already creating it so I haven't unveiled it yet but there's something I'm incubating right now let's go David go whoa where's the bad week wait whoa whoa wait what your beak what is going on here I haven't gotten the subscription I've not raised money yet my subscription documents sir you can think of this idea as Yammer 2.0 so Jake how you're not in because you criticize the Amber but it was a joke I gave of you though I let you win TechCrunch fifth yeah I put the [ __ ] fixing for you David just to put my pitch in I ran Eamon icq helped Facebook was an investor in Yammer was the for series a investor in slack so I'm ready for you yeah I'm right here you were there for us when we needed you back at Yammer days unlike J Cal what are you talking about your meme let me in let me leave it one million round round thank you did you just agree on TV yes well assuming hold on there's one thing you have to do which is you've got to rip out slack and use this instead yes 100 100 I will do that just so you know Community well I'm gonna be very honest with you the day I left Facebook I stopped using it the day we sold we distributed slack stopped using it so don't worry about me I am right I am 100 alive with you I'm all in I'm all in absolutely all right let's do the show let's do the show Freebird you didn't answer that question what would you do well actually I would get some water vaporizers and then I would get some molecule and I would make a new super protein that was made out of good sorry let's keep going I like it I think it would be something with the protein slurry you'd make some kind of steak that takes better mistakes it's some type of protein I would definitely build a business again I think the you know the challenge is uh As you move past that stage in your career where you know you have the willingness and the time to be a hundred and twenty percent building one product every day uh it's it's really hard to go back to that and I think if I was in a position again where I had no money and had no I think that's the key part of the question not the hundred dollar part yeah I think I would go back to building something I do think the intersection of Life Sciences with software creates this era of opportunity it would probably be something in the realm of AIML meets Life Sciences where you can actually work in a leveraged way with software to drive outcomes in these important markets so I would actually create right yeah we could have started something yeah maybe we can still oh okay the co-founders sax will let you in the pre-round if you let us in your pre-round okay sounds good okay all right Kelly you want to take us forward should we go forward okay let's see what's on the docket we've got Russia's invasion of Ukraine you had Biden last week saying we're facing the risk of Armageddon how is that not the top story go taxi poop go take it all right here we go let me just queue it up for uh sax fine last week so we're facing risk Armageddon that's your tia okay we go and then Leon Panetta just let's teed up Jayco we don't need everyone knows what's going on Leon Panetta just who was the former Secretary of Defense and director of Central Intelligence wrote an op-ed for Politico saying that intelligence analysts have now raised the probability of a use of a technical nuclear weapon in Ukraine from one to five percent at the beginning of the war to 20 to 25 percent now is what he says so and I don't think he'd be saying that if this wasn't pretty much conventional wisdom in Washington now I mean Panetta is sort of an uh very respectable figure in in the Beltway so you might have said it right for the first time said that we're facing the most dangerous situation and the highest risk of nuclear war since the Cuban Missile Crisis he called the risk of Armageddon the problem is that nobody is willing to say what we should be doing differently to avoid this situation so you know people are always attacking us or having a point of view on foreign policy first of all this affects us I don't know why we're not allowed to have a point of view but you know in in our business thinking where there is an existential issue you have the attitude of drop everything and figure this out if somebody told you that there's a 25 chance of your company blowing up maybe in the next few weeks you would drop everything and focus on that problem but it's like you know after the Armageddon comments it's like the media just passed over it it's like oh this is like crazy Biden or whatever it was minimized it was textualized the White House walked it back nobody's really focusing on this and what we should be doing differently and in fact what Panetta recommends and Petraeus said the same thing is that if Russia uses attack nuke in Ukraine then we should respond by attacking Russia directly now if we do that we are literally in World War III and remember at the beginning of the war Biden was really clear that we weren't going to get directly involved he vetoed the idea correctly of of the no-fly zone which would have required us to shoot down Russian planes Biden remember he was asked in the press conference at the beginning of the war by Lester Holt he said Holt said you know Mr President what if Americans are trapped Behind Enemy Lines in Ukraine would you send in American troops to go get them buy and said no I think very properly said no because he said listen we do not want to risk War III but now because of mission creep and the slippery slope and we've all gotten more involved in this war we've gotten more emotionally committed you now have Panetta and Petraeus calling for us to directly attack Russia and get in World War III the Russians almost certainly would respond with nuclear because that's all they've got they don't have the conventional forces to stand up to us so look at how close we have now gotten to the brink of a nuclear Showdown and has anybody reassessed is any anyone calling for us to reevaluate because that's the conversation we should be having right now and free break this brings up two points that I think you you can comment on Naval uh actually the founder of angelist angel investor and uh just public thinker I would say public intellectual he came on to call him with the two of you and he you know outlined like who does get to have an opinion on Ukraine and other issues which has dovetail with this like who gets to be an expert in the world today and of course at the same time not only Sachs has been commenting on hey what's the off ramp here Elon has been talking about hey you know how do we get out of this do we have some votes uh you know by these uh regions that have been annexed or that are in dispute AOC now is getting criticized under for people shouting her down at a public event today or yesterday that she's a war monger and she won't speak out against War how do you frame the public dialogue about this Freeburg and then do you see a potential off-ramp here other than Putin leaves Russia which is I think the public stance uh by a lot of folks you know Putin can end this he just has to leave Ukraine in order for this to end so two questions there for you free bird it's very hard to have good dialogue about any situation where an argument could be made on the grounds of morality in an absolute sense making it really difficult to have a discourse around what the right thing to do is because you don't agree fundamentally on the objective you're shooting for one side says the objective is to preserve the Integrity of democracy and the freedom of people and the other side says the objective should be to secure the interests of the West and the United States and preserve the world from nuclear Holocaust I think that's what makes this a challenging conversation the objective can be reframed and then from that objective each side can make their own case without being forced to take in the point of view of the other side and it's why we're at a bit of a standstill and it's also why it's so easy to get swept up in a mass point of view a coalesce point of view of the masses that makes one feel good about what may end up being a very bad situation it feels good to say I'm doing this for freedom of the people I'm doing this to save lives and the end of the day it may cause a nuclear war and it's okay because I feel good going into this debate that this is the right thing it's the morally Superior thing to do what's very hard is that we can't actually say as a group our objective should be to preserve the Integrity of democracies around the world to an extent and that's a nuanced point of view to an extent means I'm willing to preserve the democracies through certain actions but I'm not willing to cross a certain line and absolutism doesn't need to come into play that's what I think is making this such a very difficult conversation and it's why it's so hard to actually have a conversation around it and it's really I would argue the most poignant and the most dramatic moment in what we talked about earlier which is this deep-seated kind of you know bipolarity and once you're sitting on your pole you don't want to come off and you don't realize that so much of the dialogue is in this middle and we have to come to some point of view that maybe this isn't about an absolute outcome it's not absolutely going to be nuclear war and it's not absolutely going to be the end of democracy there's some conversation in the middle that's very difficult to have and people that work somewhere in the world hopefully ambassadors foreign policy people State Department people hopefully are having the more nuanced critical conversation about how do we resolve to the maximal outcome that doesn't necessarily take us to an absolute end to that point it's going to be an imperfect outcome here I think this is much much simpler than all of this Leon Panetta is a senior counselor to this defense Contracting agency called Beacon Global strategies who works on behalf of Raytheon I found that out while Friedberg was talking in a two-second Google search I suspect that if you looked for petraeus's conflicts of interest you would find that through some Byzantine set of you know strategic Consulting organizations and whatnot he also works on behalf of the defense industry so you have these people who will generate more revenue and more profit if there is a massive war and those people have been trying to push us into a land war in Europe since this whole thing started and so this is just yet another attempt it's just the most final way of doing it so I would just encourage people whenever you see all these folks clamoring for war um it's just to keep in mind that they are riddled with conflict and that you can find it out again this information is sitting in plain sight on the internet and you can figure out whether this person is is really advocating a truth that makes sense or they're getting paid to shill um a revenue generating mechanism for some part of the military industrial sex how much of this is people talking their book their book being the military industrial complex in your mind I think it's a big part of it I think all these Washington think tanks are funded by defense contractors I think it's short-sighted obviously because if it leads to a nuclear war there's nobody with the defense industry there won't be anything left so but look I think that I think that Washington is wired for war in part because there's a huge Lobby for it for all these defense contractors and what's the lobby for peace I mean there's no one really arguing for peace speaking of this Elon oh I I'll tell you what I'll tell you what's lobbying for peace and I'm going to connect what may seem two disparate ideas together but the single biggest thing I think that will prevent nuclear war is the inflation that we're feeling and the reason is because it allows the FED in my opinion for the first time really in the last 15 years to act properly and if they hold the line and they take interest rates to four or five percent I think one non-obvious outcome of all of that is it becomes extremely expensive next to Impossible to finance military adventurism abroad and that's a practical economic outcrop of really you know meaningfully High rates greater than zero and so I actually think the reality is that for a lot of these governments the more that inflation sticks around the stickier it is the higher rates are in general the bigger the problems at home are and the less prone they're going to be likely I actually think that explains that explains the escalation of this rhetoric because people want to try to make this issue and put it on the table but you understand that you know these folks don't say it's a 90 likelihood they go from one percent to 25 which if you understand probabilities is effectively a left tail risk that's effectively the same and the reason they're trying to do it is they're trying to get it back David as you say to time stamp it to get it in front of people's perspectives to make it important in a moment where everybody increasingly not just in the United States but in the UK in Europe are looking internally and trying to figure out how to keep their economies in a reasonably functioning way and how to make sure that their financial and other infrastructure keeps working so you're saying and that is not necessarily a priority when rates are zero but when rates are four percent I mean just by the way if you guys saw what happened today it was the competing of two narratives this week there was a financial Narrative of the UK having to bail out their pension system right of all of a sudden the pensions being forced sellers of those four sellers now you know uh spilling into the United States debt markets around Clo's and collateralized Loan obligations and junk debt which then could theoretically spill as a contagion into other parts of the market that was narrative one and and all of that by the way is a result of hiding inflation and the you know fed moving up rates and you know other countries being forced to to attack inflation with higher rates and creating all these dislocations narrative one versus narrative two which is hey all of a sudden we have to put the nuclear risk on the table and if you actually saw the print that was spilled the disproportionate amount of the rhetoric actually focused on the former narrative and not the latter and so I think that that's why the these folks are escalating the rhetoric in order to kind of create an equality so that they get enough print they want that version of the outcome what you're saying is you have the world saying we can't afford to have this conflict we are broke well not too many chaotic issues the world is saying we are increasingly under enormous domestic pressure and as a result we cannot spend on things abroad we can't afford this and then on the other side saying well we need you to afford this so nuclear is going to happen there's going to be a nuclear and there's a small attention there's a small strain of folks who would economically benefit yeah who are now ratcheting up their rhetoric so that that second path is more and more on the table what do you think of this freeberg this analysis that shamoth has these two polar these two uh groups vying for the attention and or budget of the world the the military-industrial complex versus yeah uh citizens saying our country can't afford this we need to focus inward not citizens the central banks but I think the central banks influenced by citizens right like there's a whole system here we're talking about people are you know watching their questions away they're watching jobs get cut if I was a betting man I spent that I I would guess that the next half a trillion to a trillion dollars that is spent in Western world economies will be to subsidize something that's broken internally inside of one of our countries whether it's the UK pension system or whether it's the high-yield credit markets and it will not be the finance military adventurism in Russia people um so there's an article today in the Washington post about how the U.S government's Debt Service is going to be around 570 billion this year which is a 45 increase Biden's budget for 2023 is only 1.6 trillion so you're talking about something like over a third now of the official budget is already going to Debt Service because it's not variable right it's a variable right exactly because so much of it is is um it's not locked in long-term rates so because interest rates have gone up so much The Debt Service gone up and interest rates are still going up and so you know druckmiller had those points around how the debt services within a decade is going to eat up practically the whole federal budget so trimath is right that we've never really had to choose between guns and butter before in the past it was just let's just do both and we'll rack up more national debt I do think there will be more and more pressure to question this type of spending and why we've already given Ukraine 80 billion dollars in handouts when we can't afford to basically pay for you know major entitlements at home so I think there'll be more pressure now I think I don't know if that pressure is going to come in time though to de-escalate this Ukraine it's more it's not and that's what concerns me and just to just to cut to the chase on this I think where the rubber meets the road on Ukraine is Crimea it's and why because the Russians have a major Naval Base there at sevastopol it's the home of the Black Sea Fleet and they will never give that up they are willing to use nukes I believe to basically protect that asset it's a vital interest of theirs hold on 80 of the population of Crimea they're Russian and three quarters of them according to polling that was done by Gallup and by a German polling firm so not Russian polls indicated that they see themselves as Russian and only part of Russia so if we supported self-determination we'd be fine with Crimea being part of Russia but here's the rub Ukrainian nationalism demands that every square inch of Crimea goes back to Ukraine and it is State Department policy right now that we will never recognize Crimea as being Russian will never recognize the annexation which happened back in 2014. so something's got to give here something's got to give either we have to sit down zielinski and say to him listen you're not getting back from me yet we're going to make that part of a peace deal or we are going to back the ukrainians in their military effort to retake Crimea with the result that I think is quite likely that the Russians will be willing to use a tactical nuke to prevent their total defeat so at some point we're gonna have to choose here which of these outcomes do you want do you want to basically go for a negotiated settlement which means telling the ukrainians they cannot have everything they want or do you really want to risk a nuclear war to take back Crimea which is Russian and the people there see themselves as Russian so we need to make a choice here yeah so Elon put out a tweet for and got Savage for it and he outlined sort of what you're saying here so do you think his plan he said redo elections of annex regions under U.N supervision Russia leaves if that is the will of the people and then he says Crimea formerly part of Russia as it's been since 1783 water supply to Crimea assured as you're saying Ukraine remains neutral should the West Force Ukraine to accept these type of terms essentially elections and I don't know why Crimea wouldn't be part of that election process do you think U.N supervised elections in those regions should occur and we should force Solinski to do that so he who pays the pipe or calls the tune of course we need to have a point of view on how this war should be resolved should we force him to do that listen it's not about Force they can fight on and do whatever they want as long as they want hold on with our support American weapons so you think he should do that weapons if he doesn't if zielinski wants our weapons and support which appear to be infinite we should not give him a blank check guarantee the blank check is how is what started World War One the German Kaiser gave Austria a blank check guarantee and it led to World War one that is how great Powers get pulled into the wars of minor powers and we absolutely have to have a point of view on how we do not get pulled into this and I think our one of our lines should be that we are not going to fund the ukrainians in retaking Crimea got it so just to put a to clear this so we can move on to the next topic you're in support of removing or not giving further weapon support to the Ukraine unless they negotiate this it's not going to come to that we need to have a point of view on how you are in support of stopping our support if they don't sit down and negotiate a settlement here that's what you would do America needs to have a point of view of what is in its own interests what is in our interest is for this to get resolved diplomatically at some point through a negotiated settlement not for it to escalate into a nuclear war that we could get pulled into the only way that's going to happen Okay is if Crimea goes back to Russia I'm telling you they will be willing to pull out all the stops they could even use Tech nukes before Crimea but can you answer the question though that I asked three times would you remove American support and weapons if they don't accept that if Ukraine doesn't accept that would you be comfortable taking away our support in wealth I don't think it's going to come to that but yes we should be willing to threaten that okay that's it I'm just trying to get you to answer that one question hold on a second they are a client state of the U.S they do not call the shots we're America we call the shots we're the big dog here all right that's the bottom line and you really want to get pulled into a nuclear war but I do not I just wanted you to answer that one question if they don't let's get real okay it's not about our future you know we're our American nationalist at least I am I'm not a Ukrainian nationalist I support self-rule I think we accomplished something by preventing Kiev from getting toppled but I want to support self-rule for the people of Korea it's time for a settlement in Saxon I think the most important thing that we can all be thankful for which I think will prevent a lot of wars in the next 10 or 20 years is inflation and non-zero interest rates it's just going to be really tough like you know the UK cannot do anything right now other than make sure that they have foreign currency reserves to back up the pound which they don't really have that much they're going to need money to bail out their pension system whoever thought it was a good idea to allow pensions to run levered risk was it's obviously insane could you imagine if it turned out that the teacher's pensions and the firefighters pensions in America were running levered long I mean this has to get resolved now I mean it's just another Breaking Point yeah it's clear you know what a pension is I know yeah it's just no no I'm saying it I I'm saying don't use some fancy intellectual argument I'm saying practically speaking the treasurer is not allowed to call Goldman Sachs and say I'm going to run two turns of Leverage on this money that is not allowed to happen in the United States okay I get in some fancy way it could be thought of as levered long with you know all kinds of indirection but that is not how the world works today practically speaking it is how the UK Works a treasure in a UK pension system is allowed to call a an investment bank and actually run levered that is insane okay so my point is when rates are non-zero all of that Jig Is Up governments are forced to batten down the hatches and you know husband cash for God knows what will break in the system and I think that that is and and as disruptive as that is it may actually be the bulwark against War The Jig Is up folks uh I mean I think that's what we should take away from this is we can't afford this and the United States is funding it we have to force a settlement here and it will be a profile it may be the silver lining of inflation okay Andy jassy's uh had an all hands meeting Amazon is freezing hiring for corporate roles in its retail business almost 90 VPS or higher level execs have left Amazon since 2021 earlier this week there was an all hands presentation and the slides were leaked to Business Insider some of them constraints breed resourcefulness self-sufficiency and Innovation there are no extra points for growing headcount budget size or fixed expense of slide instructed employees to accomplish more with less sounds familiar sounds like something the U.S needs to do and foreign policy needs to do Amazon leadership team urged employees to double down on frugality chassis also spoke in the meeting just a couple of quotes and then I'll get your thoughts chimoff it's on a lot of people's minds and of course none of us know for sure what's going to happen but there are a lot of signs that point to this being a difficult and rough economy ahead of us and I don't know how long that'll last but I think it's one of the things that we are thinking about and we've decided that we're going to be more streamlined in how we expand in 2023 good companies that last a long period of time who are thinking about the long term always have this push and pull trimath what do you read into this I'll say uh three quick things one is that today Thursday October 13th we had an inflation print which was worse than expected and the markets are materially higher right so you know strange why well I you know we talked about this a few weeks ago but you know my thought then and same is it's the same that I think now is that we've effectively seen the near-term bottom and we're now consolidating and so every opportunity people have to justify that most of the news is behind them they take and they use that as a reason to buy okay so that's number one which is that we are sort of near the end the second however is that if we do see another leg down there is really only one cohort of company that hasn't been really whacked and I'll summarize it very quickly by saying it's Microsoft Amazon Apple and Google that's it even Facebook has now been sort of put into the bucket of everybody else where you know we've been crushed 60 70 80 in those companies so so so what does that mean well those four companies are now being identified for what they may be which in capitalism is called over earning okay they are making more money than we think is appropriate this letter from Andy jassy is his way of effectively telling his major shareholders that he is now moving the business to become more of a cash cow business Tim Cook made this incredible decision in 2016 1718 that effectively did the same thing that's when Buffett came in that's when he established a huge ownership in the stock that's when the stock absolutely ripped because it moved into a different bucket in people's minds it became growth at a pretty reasonable price and I think Andy is making the case that Amazon is going to become one of these GARP stocks growth at a reasonable price he's going to generate a ton of cash flow he's going to keep expenses nominal he's going to return a ton of cash to shareholders with BuyBacks that's the reading in between the lines of that letter I think it's a really profound statement and a very smart move because you haven't seen that letter or a version of that letter yet for Microsoft and you started to see hints of that letter from Sundar where he said you know it's it's and he's not he's saber rattling he's not there yet he's in the appetizer part you know he's emus Bouche where he's like oh you know guys you got to work harder hey guys let's create some fancy acronyms but sundar's got courage no no but he's got courage he is going to rip the Band-Aid off too and so I think what it means is these three and maybe these four companies are going to draw a hard Line in the Sand and say we are not over earning do not abandon this stock that again will help put in the bottom in the stock market what do you think free Burger you worked at this company and uh you know the the the principals across the board the saber rattling will turn into saber swinging uh in Q4 q1 you think Google Apple Cuts coming Amazon is affected in a different way because they operate this physical supply chain business they're delivering Goods to people's homes that people are buying so they're they're uh they really have to uh change their trajectory very quickly it was incredible you guys remember when covet hit you tried to place an order on Amazon it was like three weeks to deliver because the infrastructure wasn't there to do it so they actually were seeing more orders than their system had predicted and they did massive build out they hired what a million people or something uh in their network uh to meet demand and then over the next year uh earnings went through the roof uh their infrastructure and employee head count went through the roof and now we're obviously coming back down the other side of a mountain and they're having to shift uh strategy and and shift their operating model yet again there's a a broader set and that's because they're in the direct Commerce business Microsoft Google and other kind of software companies some of which benefit from advertising which is almost like a first derivative on the consumer Market or a first derivative on the spending of companies that sell to Consumers have a little bit of a different calculus they're a much higher margin business 30 ebitda kind of business with ebitda margin business with a very uh distinct kind of set of challenges on how advertising revenue is going to be affected over the next couple of quarters and balancing that against their Cloud platform which is sold to Enterprises and their media consumption platform which is generally like YouTube at Google's case which is less affected so it's not as much of a direct calculus I will say what's happened over the past decade which we're now seeing change is these companies have had extraordinary growth uh hiring people to no end there's always been you know kind of this extended expense on Capital on human capital and that expense on human capital has driven the average cost per employee through the roof and it's not just the salaries it's the cost of the rsus it's the cost of the facilities and the free ice cream and the gyms and all the other stuff that's gone on to compete that's now changing and so it really is creating a different model for operating that hasn't existed for the last decade where everything has been you know how many more things can we throw in the kitchen you know throw like the kitchen sink at this problem to get all the human capital here and I think that's really you know what's what's going to kind of structurally change in the valley it's not as acute as what Amazon is dealing with it does feel like um that is those are the last cities to falchum off they are the ones they are the ones that take the index to 3200 if we're going to try to do it there's only one place to look you've whacked everybody else everything is down you know 50 to 90 in some cases so and then finally you know and by the way sorry just just at the end of life of last year a quarter of every s p dollar was crowded in those names a quarter so you got to go there yeah I mean and also they're automatically bought right they're automatically bought by these index funds and and so who's at the wheel saying we're not we're going to take the money out of them right who who in their right mind is taking money out of apple Amazon and Microsoft where do you put it I guess is everybody's question right trim off like if you take it out of there where do you put it well no I think I think it's just that when when you have patterns of selling typically as I've seen it uh my experience is that initially it's the algorithms that really start to push a market in a direction then you have you know the more traditional fund complexes that's the hedge funds and the long onlys they follow suit and then the last group tends to be retailed and it works in reverse the other way as well and so you know obviously there's exceptions to all of these but as a general rule so if retail starts bailing on Amazon well they are right now and apple yeah they are sellers now but okay now time to buy it right but again this is this is where sort of organized Capital now is finding a bottom again like when you start to shake just think about the psychology of like being delivered bad news after bad news you go through the cycles right there's denial there's anger there's depression there's bargaining but then at some point there's acceptance and in that acceptance phase you're like yeah you're right things are bad but when you see a market rally into a print like this it's uh it's really really interesting psychological Turning Point as a proof point to what you're saying sax uh chamoth and sax I want to get your comment on this Venture Capital firms like Sequoia Excel and others that have now uh changed their status as you know just private companies but also dabbling in public are buying public equities which basically means they see more opportunity in public underpriced tech stocks growth stocks Etc then they do in late stage private companies correct and you saw the Wall Street Journal story I'm assuming sex yeah I saw that what is what do you read what you read into that is it overblown or is it indicative of something I think it's probably overblown because Sequoia created that fund that is a hedge fund and an Andreessen Horowitz became a richer investment advisor so they could buy public security so I look I don't think most Venture funds are all of a sudden investing in public markets we aren't even allowed to do that as far as I know nor will we ever try to so I think probably it's exactly you have to give up socks your VC exception exemption but you could do it you could do it yeah yeah I mean we wouldn't want to but it's kind of the point but look I can't explain why the market did what it did today it could have liked him I said it could have been some sort of algorithmic you know buying or selling um but I just think that the overall news today was the economic news was just another really bad report I mean just look at these headlines from The New York Times today okay I'm going to read you the headlines on a single sort of scrolling page here number one inflation came in much faster than expected bad news for the FED takeaways from another painful inflation report three disappointing inflation data keeps Democrats on defense out of midterm elections four food prices climb again Weighing on household budgets five rent inflation remain tepid a troubling sign six used car prices aren't declining as much as economists of the host slow down get give Freeburg a chance to take some time take his Xanax for you gas prices fall slightly but overall energy costs are soon expected to rise and eight retirees are getting an 8.7 Social Security costs living raise the biggest in decades I guess that one is sort of positive but it's like literally negative headline efforts in the New York Times but can I reinterpret that for you I think I think the way to think about it is this gives the fed the resolve it needs it's going to go by 75 it's probably going to go another 75. we're going to have rates by four to four fifty to five percent probably within q1 which means if you're trying to figure out where the bottom is it's roughly now ish and so that's why you see smart money David shaking this thing off um and starting to enter the market and so again and the other version interpretation is when rates are four or five percent the cost of servicing United States debt is so meaningful as a percentage of their budget the incremental spend that they would need to make to enter a new war is too much I think I love this point I love this point where we're we're weaving all these things together so so right so on the economics page of the New York Times disasters headline after the disasters headline then you turned the foreign policy page you got Tom Friedman writing a column here saying we are suddenly taking on China and Russia at the same time and Tom Freeman historically has been a huge Hawk and he is even saying he's saying yeah pump on the brakes never fight Russia and China at the same time yeah so he says we are an Uncharted water Waters I just hope these are not our new forever Wars It's Like Whoa so basically look our economic base our economy is crumbling at home at the same time that we are doing unprecedented saber rattling abroad this does not compute we we need to take a timeout my prediction but my my prediction is that we will not enter a new war with rates flexing up as aggressively as they are I love it I love weaving these two stories together I think it makes a lot of sense we didn't have time for Alex Jones but we'll save that for another episode gentlemen I think it's our best episode ever it's an honor and a privilege to spend this hour or so with you every week I love you like brothers and it's been a great hundred episodes I look forward to a hundred more sacks if you need a mental health break Dr friedberg's oh no he's got him doped up David David will be back next Friday I just want to say hey David don't read your replies get off of that I just want to say how much I love you guys and I'm really proud of what we've created and I'm really excited to get to the next hundred and uh I'll see you guys tonight I'll break out the light so we're all you want to keep going that's the news today I will say that Jake house moderation has been a lot better since he got brigaded that is his way [Applause] I love you I love you Freeburg let's see if we can get sacks to do it it's been 100 episodes he hasn't said it yet but I love David Zacks David's are you coming tonight taxi before you coming yeah I'll come I'll come you're coming oh wait wait wait wait uh let me check I'll get back to you offline I'll see you tonight Rain Man Davidson I'm going home and I said we open source it to the fans and they've just gone crazy [Music] it's like this like sexual tension that we just need to release somehow we need to get Mercies [Music]








welcome everybody to episode 101 deutsax is on vacation sitting in Brad gershner from altimeter group welcome back to the Pod Brad how you doing it's good to be back good to be back I mean first you first you guys uh you know tilted Friedberg and now a little bit on uh sax is getting attacked on Twitter and so you roll me back in when yeah when you got a little problem whenever the brigad dunes come out Brad gerstner comes I think sax will be okay but shout out to sacks you know who probably hates the term brigadunes the nitwits that are in the brigadunes Cricket Tunes oh the Brigadoon it's all gonna end at some point because I think the Brigadoon new ownership at Twitter is Gonna Change like the whole spam the Rogers and Hammerstein musical right yeah yeah yeah but now I think brigad Dunes could stick I don't I've never heard anybody use that for the Braves rolling calling the Twitter mob the brigad dunes is a good new thing I like yeah it's pejorative it's funny it Seasons everything a little bit tones it down I like it it feels goofy it completely disempowers them they really want to be taken seriously but they're just a Brigadoon I mean to be a pretty dude though you have to have four or more accounts and you have to reply to each of those accounts as if it's another conversation yeah when you retweet something as a social justice Warrior as an example you're trying to join the Brigadoon ah got it it's just a different Brigadoon it's a brigade Jacob are you sometimes a Brigadoon right you're part of brigad Dunes Jacob no I'm not part of anybody [Laughter] nice for my brother [Music] [Music] well anyway uh Kanye West can't leave an amazing career alone and he is going to buy parlor which apparently Candace Owen's husband George farmer had created so he's gonna buy his own social network if you don't remember parlor is like a really shitty version of Twitter that never seems to have worked or been stable it crashed the first 10 times I used it miraculously this steaming pile of garbage had raised 56 million in funding and Kanye is on a social media media tour saying horrific anti-semitic stuff he seems to be having a mental breakdown again uh there's a big discussion now I guess should people be platforming them to the point uh that he's doing three four five hour interviews with people and it does seem like it's acute mental illness slash breakdown I don't want to like diagnose anybody from afar here and I'm not qualified you just did well I mean he has been in public about his struggles with mental illness it's not a huge leap for any of us that have had family members have manic episodes I mean this is clearly America it's pretty much right out of the textbook so my question for you guys is what you have somebody with great wealth great creativity he's obviously a savant in so many different categories with a huge social media following plus money plus Fame and then you add social media to the mix which is an accelerant and then all of these you know Tucker Carlson and every other publication every podcast using this moment I think in a way to kind of I don't know get ratings off of this train wreck I find it abhorrent to interview somebody when they're in a manic episode like this I'll be totally honest I wouldn't do it what is your take on this I have a family member a blood relative that is in severe mental health crisis if the emails and the text messages that this person sent were public you you I read these things and they've severely severely impacted me to the point now where I have like a rule that when they're in a manic episode I just kind of harvest them and archive them just in case something bad happens but I can't even take the effort to read it and because it takes such a toll and then I feel really guilty because I think maybe there's a something in there where I could be missing something so this is what when you're in the middle of a of of of a severe episode this is what the family and the loved ones of that person is also dealing with so I have I have no idea what's happening with Kanye but what I would tell you is when you're in a manic episode the more the the thing that you need is for the people around you to try to step in to help you and it's really freaking hard and I can tell you that in I've seen this person in my family say and say things and do things that are just so beyond the pale yeah and it's part of when they're in that moment and the whole goal is to try to get them out get them back on their meds get them rebalanced it's a really really complicated thing to deal with well look I mean the guy the guy's buying a social media platform I think it continues to support the point that I've made a few times which is I don't think that anyone has a monopoly in social media networks we've seen every couple of years uh competitors emerge people Proclaim Monopoly those monopolies get uh destroyed by the next thing you know from Friendster to Myspace to Facebook to Instagram to Snapchat to tick tock and I think that the the reality is the users of those platforms ultimately coalesce around a set of standards they want to see happen on that platform and those standards become kind of the editorialized or produced model for how that platform should operate because that's what the users say they don't want anti-Semitism they don't want what they would call kind of challenging an institution they don't want fake news whatever the the classification is there's an editor or an editorial board that editorializes what is and isn't allowed to be set on that platform and ultimately there is a fringe Voice or a voice that feels unheard or feels like it cannot speak on that platform and what we're seeing now with I think Elon acquiring Twitter and Kanye acquiring parlor um and generally a number of kind of emerging networks uh like uh what's it called rumbler as an alternative to YouTube communication maybe what's it called Rumble I think yeah I think it's it's a really clear supporting fact that there are going to be Alternatives and that these what we thought were monopolies and what kind of became digital Town squares and almost infrastructure are really just application layers they're editorialized and there are going to be competitors and I think there are folks that want to have a voice that feel like they've been editorialized out of the existing networks like Kanye like Trump like Elon to some degree and they're um you know those that have resources they're changing that and I think that speaks to a really healthy competitive market so having folks like Kanye step in and try and create a new platform that has alternative voices long term I believe in freedom of speech I believe that we should have alternative voices but I also believe that consumers and customers should be able to choose what platform they want to be on based on the editorialization that happens on those platforms and I do believe that the owners of those platforms should have their own rules because it creates a different differentiated product Jason is that why you we're hoping to get comment on or this idea of the media Feeding Frenzy feeding on Kanye's mental breakdown yeah I was talking about the media frenzy that's the thing that I think is pretty abhorrent here in fact YouTube just pulled a bunch of the interviews he did recently because there's so much anti-semitic stuff in it and you know when somebody's in a mental breakdown like this which I think it's pretty clear he's in you know they do this behavior and of course it's hurting them it's to your point you know I'm sure it's hurting his uh kids or or Ex-Wives or ex-wife and you know can I ask what's that can I ask who do you think is to decide that because he's done interviews where he said I have episodes and those episodes actually provide me with creativity yeah yeah I think it's up to the post the person who is the host of that show who has to make an editorial decision and so Tucker Carlson's going for Ratings or if somebody else does it and they want the ratings because Kanye's a big name that's you know I get it he's he's a great Gat right and if you are somebody who likes to interview people that's like a lifetime get that could be the get that you know makes people learn about your podcast I just think it's unethical to do that when somebody is suffering like that to then feature them and to platform them in order to get your own ratings that's a personal decision let me ask you a different question though so I wouldn't do it would you hold him accountable for what he said well this and this is the Nuance you know and I think we do have to think about that because anti-Semitism uh exists in the world he's got a big fan base that means if he's got people in his fan base who are also having a manic episode they could then be inspired by what he's saying to do something horrific and cause real world harm and and this is where you know the accelerant of social media I think is particularly dangerous you know in the old days if somebody said this stuff on a talk show maybe they don't air it where they say it it's in the newspapers but when he could have a continuing dialogue across many podcasts a week he's done like 10 podcasts in the last week he'll he'll go on air with anybody and then he has whatever tens of millions of followers he's reaching hundreds of millions of people all you need is one person who's mentally ill to then go do some horrible thing in the world that we've seen happen many times and that's what I'm concerned about you have to understand your the it's the law of big numbers basically Tomorrow there's a large number of people yeah just to give you a sense of it you know when this family member of mine um you know we've had we've had to have interventions we've had police we've had um the government get involved in Canada we had had their driver's license taken away then I mean it is an unbelievably complicated set of interventions and I am so thankful that she doesn't have massive social media awareness because it would just be chaos and I would hate that you know because of their Association to me that this person gets more attention than they should in a moment where what they really need is help and I think that that it should be the governing principle in moments like this where if a bunch of your family members or your health care providers or whatever can raise their hand and say hey hold on a second this is completely off the rails you know Freeburg to your I don't think that editorial Freedom matters in that point I think there's just a more Humane idea around get this person off the airwaves and like allow themselves to add it get out of that Loop settle down yeah yeah and and typically what happens is that you know these folks at Lee again and just in my experience will have titrated a medicine well and then when that titration fails their ability to regulate their emotions fail and this is the loop that they enter and you know you really have to find a way of like taking all of these mechanisms off the table so that they can re-regulate themselves and I think that as a society we have to sort of move towards that so that if you know family members can call Twitter or Facebook or Instagram or whatever and say listen or the doctor you know here's the doctor's note like you have to be able to shut this stuff down because you have to mute all of these other things so that this person can then get back into a mode where they re-regulate that should be the priority yeah compassion for the person yeah it's and it's not forgiving what they say but it is having maybe a little bit more compassion in that moment to get them back to their to their children this one's a little easy to say hey Kanye's having a mental breakdown because he's talked about mental illness in the past it's a lot harder to make these you know supposed determinations as a reporter or a podcast host if someone says something crazy and then it's easy to raise your hand and say hey they're crazy cut it out or there's some mental health issue going on here but Freeburg if he's not if he's not having a mental issue right now then he is a horrible human being who is an anti-semite who is spreading just the most vitriolic horrible things you and tropes you could ever imagine at a time when you know uh there's enough division in the country and somebody could get hurt you know uh so either in either case his accounts have to get paused if he's going to say anti-semitic stuff on them that's that I mean there's really clear guidelines across all these platforms on what's inappropriate and certainly I think folks will start to adhere to them I guess if I had anything to contribute I mean I think Chima said this well about a mental health angle but what I would say is I actually think that the social platforms have done a reasonably good job the fact that he's buying parlor I think is evidence of the fact that there actually is an editorial layer yeah that's doing a reasonable job it's a tough decision ever there's always going to be a long tail of podcasts somebody will you know somebody will go grift off of uh you know an episode or whatever but I think you know a few years ago we were talking about no editorial standards and I think today you know across these platforms obviously there's attention there's a tension that's existed for a hundred years plus around free speech on these platforms I get that tension but I think uh a little credit where credits do we're seeing we're not seeing these memes spread like wildfire uh in part because the platforms with the most reach are doing their job snaps down 30 percent today you guys see this I think it's it's related in the sense that everyone historically talked about social networks as being these uh you know the network effect where you know multiple people get on and they link up with you with each other it's harder and harder to break the network and it gets bigger and more valuable and can generate more Revenue clearly not happened over the years with Twitter to the degree that people thought it should have and now clearly it's not happening with SNAP I think it also speaks to this idea of fragmentation I don't know if you guys want to talk about snap but pretty significant decline from well here's the here's the 60 they were 160 billion market cap and today they're trading at 12. they're down 91 from Peak to track 91 yeah here's the important thing to note which is that if you look at the Mau growth of snap it's actually been extremely steady and they've had an incredible March forward and I think that they're roughly around 350 million Nick I'll send you the dis right I'll send you the link yeah I think it's like the Dow you count is incredible it's incredible so it's like yeah it's a service that is incrementally every day more relied upon than the day before and it's a service that's providing a set of features that is incrementally more important to a larger and larger group of people so how do you then square that with its stock performance and in my opinion I'll just be really honest with you and I don't know Evan Spiegel and I've never trafficked in Snapchat at all okay but it is the most glaring example of corporate misgovernance that has ever happened on the internet and the reason is when you look at what happened in the IPO it basically created a governance structure where the common shareholder had all voting power taken away so a hundred percent effectively the de facto voting power stayed with the class that was held by the founders and so you you do not have a normal check and balance and it was egregious other companies would have voting programs where it was 20 to 1 and you would sometimes say oh it only should be ten to one or it should be 50 to 1. this was like a hundred to zero and what you have now is no real feedback loop because there is no person who can own enough equity with enough say to sit across the table from that CEO and say Here's what you're not seeing and here's what you're getting wrong and I think you're always better off by having those kinds of people be able to get a meeting with you in the first place and have a vested interest where you take them seriously but how would you receive a meeting when you're sitting across the table from somebody in the back of mine you're like wow this person has literally no say in what I do after this meeting ends literally none you can't vote even to even it's different than alphabet and meta at ten to one because they I think they both have dual class right that yeah I think zero is in my opinion a deep sign of disrespect I think you can I think you can agree you know that um there is a separation between you know the voice of the common shareholder in these companies and and the direction of the companies but I think it obscures what's going on chamoth I totally agree with you if you look at usage the number of customers walking into the store um snaps gone from 265 to 360 million dau's Twitter 190 to 240 meta from 1.8 to 2 over the course of the last three years they're all growing more people are walking into the store and using the service the story here is all about pricing how much is each of those users worth I mean apple is the apex predator of this entire Market we wouldn't be having this conversation but for the fact that Apple's changes with idfa literally pickpocketed the industry two billion dollars this year under the auspices of privacy and so if you look at these companies usage up pricing or arpu down okay recently Apple's come under a bunch of pressure so now they're out with scad 4 which is their update to uh the the the ad policy post idfa that allows you to Target advertisers or individuals with 10 000 attributes instead of a hundred attributes so we're gonna see some realignment I expect that the real question is what happens to arpu next year but to me the story here is that the usage in the health of these core platforms is remarkably sticky yeah for all the things we say about Instagram I mean Tick Tock has had explosive growth 30 growth each of the last three years but even the incumbent platforms a really sticky usage this is about how they're monetizing those users and the real story is Apple yeah and if you for people who don't know idfa is the identifier for advertisers some people refer to it as made mobile ID ad ID I'm sorry um and so what that does is it lets you track a user anonymously across have you ever have you ever owned and have you ever owned any clicks to a sound have you ever owned Snapchat stock no why not um certainly governance is a key component of it but the second thing is like do you have do you have any belief that you could even get a meeting with the CEO and management where they would listen to you appropriately we've certainly got meetings with management before so yes I believe we could whether or not that impacts you know how they build product how they how they run the business you know the influence Etc but again I I think that's not really the problem here but the point I would totally agree with you on Shima we've had 10 years of where the cost of capital was Zero 10 years of hyper growth for these social networks right in each of the last five years Facebook has hired more people in each of the last five years than they had 10 years after the company was founded okay so as we've seen this growth begin to turn over I have seen the companies really slow to react to right-size their behavior that they had over the course of the last decade to put themselves in a position to compete for the next decade so it's one thing just to throw your hands in the air and say well this is all Apple we couldn't do anything about it but we we really haven't seen leadership in terms of cost control we really have we all know these companies yeah of the of the major companies Brad snapped into a 20 riff that had 6 000 employees or so and they cut 20 percent Facebook is the one that's perplexing because they seem to be massively oversap staffed as you talked about and they have been massively um they've had a massive decline in their uh stock price and they are the one who is affected most by what Apple did in terms of app tracking transparency is I think that there's a perception though I mean I'm still stuck on this issue I really think that stock prices tend to ebb and flow based on sort of like friction or momentum and when there's momentum more and more people can easily underwrite it and when there's friction fewer and fewer people can underwrite it and so I think that if you are a CEO of a public company you have to think about how many headwinds do I have and how many Tailwinds do I have all the time and some of them are in your control and some of them are not at least in the case of meta as with Apple and Google they meta is forced to copy the best decisions of these bigger companies why because they were one of those biggest now they had may have been the smallest of the biggest but it's going to be very hard for meta eventually to not Converge on those same set of decisions and the most important one is what Brad just alluded to which is that there was a point in 2016 and 2017 where you literally could not give away Apple stock and the big turn of the dial and you know some say it was Carl Icahn who knows was this theoretically this famous dinner that Carl Icahn had with Tim Cook where he laid out a plan and it's like listen you need to start managing costs better managing Opex better return a ton of cash buy back the stock and you'll be a darling and Tim Cook was rewarded and he's he's been rewarded with an incredibly performant company and so you know Google is slowly inching towards that plan Microsoft is in that plan and so the only Big Four Horsemen that hasn't really gotten the script yet is meta but they will it's just we're just debating when and so there's a perception that you know meta will copy what the rest of these big guys do but these other long tail companies the headwinds are just greater and so when you you know don't have a company that can be broadly owned by intelligent thoughtful investors that's a headwind right when you give nobody votes that's a headwind and so that's why you see a company that's continuing to grow impact not being able to translate that into economics and if I were the board of that company that should be a wake-up call because eventually that'll flow into the morale of the employees and the ability to retain and then the ability to invest in the future and I think the simple answer is enough with all these you know gymnastics around control you know if you looked at Elon the most incredible thing from day one was there's common stock you know and his whole thing was like I'm just gonna do the best and you know what if I'm not the best I'm going to be out he literally said vote me out vote me out he's never ever played these games so in this funny way control is a symbol of a lack of ability to run the business masterful Mastery of a business you can translate that to being I'm just going to have common stock um tracking back to the high voting class for Founders was that they would be challenged by the investors in the market and you can see the things that Carl I can and others ask for they say we want to see you cut Opex we want to see you pay dividends we want to see you buy back stock and we want to see you grow and so the trade-off then in the mind of a Founder uh that that that started this business and scaled it to billions in revenue is well that means I've got to make short-term decisions over long-term decisions I've got to make the I got to give up some of my long-term opportunities to trade for my short-term opportunities that's that was the argument I think originally for the voting class and you can read this in Google's Founders letter as well does that not apply any Founders at Google don't even show up at the company why do they have to have super voting control they don't probably even know what's going on inside the company I just want to hit on zuck's point because Zuck has said look you know this this VR AR metaverse stuff in the future it's everything this is where I want to invest our resources so look what happened but look what happened they they made a missive they said we're going in this direction investors really smart thoughtful supportive investors including Brad were like uh hold on check your role and they capitulated now to your point did Super voting control come into play there no of course he could have said you know what guys pound sand I'm gonna do what I want instead he's like I'm a smart guy these guys are smart guys so I'm going to make the smart decision so in my opinion all of these things are red herrings these are in directions right so this idea of I'm just going to take my toys out of the sandbox like a crying baby is what super voting control means to me as a shareholder Brad okay I think the era of super voting control for Founders uh taking companies public is over nope should it be you know I I think it's again when Facebook was doing really great and Snapchat was doing great nobody complained about super voting stock okay so I I think that you know my preference would be that I partner with a company where I know the founder whether irrespective of their votes right listens cares and has the mental flexibility to make course Corrections right and and the reality what I'm trying to point to we have lived through a decade of excess everybody knows all these companies could do exactly the same Revenue David this is the push back to your point unlike what the Google argument was exactly the same Revenue with vastly less investment in terms of people Etc right a 20 riff that meta would literally only take them back to where their personnel expense was in 2021 yeah nobody argued in 2021 and they said they were going to do this too Brad right and just hasn't happened yet this is this is part of the problem Jay Cal everybody so why 10 percent why 10 you've doubled this the number of people working in the business over the last few years right there's nothing magical about 10 the real question is what is the optimal number of employees to produce the best outcome for our customers and our advertisers and what Bill Gurley has pounded on and we've all talked a lot about there has been in a zero cost of capital world a unilateral March two more more of everything invest in everything hire more people Silicon Valley would do itself a favor these big companies vacuumed up every single engineer in Silicon Valley they ought to return that pool to the startups that are actually inventing the future they don't need this money in place I mean last night I read a report came across Bloomberg the the elon's talking about 75 reduction at Twitter yeah so that would leave Twitter just to give people some context here that wasn't that that originated in the Washington Post that would take them from around 7 500 workers to maybe two thousand eighteen hundred and so he's starting from first principles how many people do I need to build the next generation of Twitter that's the question start with a blank sheet of paper and ask that question you'll come up with very different answers I think that you you can correlate these kinds of uh governance overreaches with zero interest rates that dog doesn't hunt when rates are at four or five percent I don't care who you think you are but when you try to go public in uh over the next four or five years if rates are sustained you know three four five percent that will be the check on all of these people's overreach because you will have you know liquid Alternatives that on a risk-adjusted basis seem better and when rates are zero and everybody was forced to own Tech we all gave up our standards we all stopped saying you know oh you know the things that we used to think were important before like one person one vote you know uh a check between the board and the CEO a check between the executives and the shareholders it all went out the window no discipline no hygiene right because when interest rates are at zero percent you have to remember right how does how does the the structural basics of of the financial markets work it is meant to make money on half of every single entity and person and thing in the world from a pension fund to a university to a research lab to a government to an individual but in that ability to make money when we took interest rates to zero forty percent of what we all used to own bonds yielded nothing and so we just completely whipsawed to the other side and said we need to own anything that grows so Tech got a disproportionate amount of attention but in that we lost our standards and we are now going to go through the hangover of dealing with it and so you know snap will be an example of where investors are going to abandon that company because because it's just there's no point there's no governance there's no ability to have a conversation it's in the too hard bucket so people will just leave it it'll be uh stranded and it'll be a refugee in the public markets I think meta will be fine eventually because I think that they will revert to the mean and the mean is Microsoft Google and apple and we already know what that Playbook looks like so I think what Brad predicts is more likely than unlikely and I think in the future to David friedberg's point I think it'll be very hard to justify these things you know Bankers will be able to push back because the buy side ultimately guys like us who have to buy the stock when these things go public will say nope you want to have these you want to have these dumb governance games no not for me I'll just go buy something else I'll go buy more Tesla where it's one person one vote why you know so it's hard when the best CEO in the world is like judge me keep me fire me on an equal basis and everybody else is like I'm smarter than this guy and so you know what let me make sure that whenever I feel like it I can throw a temper tantrum and take my toys out of the sandbox and let's use it there's analogy here it doesn't work look at look at um Steve Jobs ousted from his own company company company made a huge mistake asking him some people argue it was a learning experience for Steve to get better at his job he comes back and he absolutely turns the company around so there's an example thus far you've proven that the two most impactful and important CEOs of the last 50 years had the courage to basically say let my performance do the talking not my protective Nanny control correct and Steve's performance was light in that first period he had some problems and uh and he learned and he still won but this is what the greats do the greats know how to perform not you know use some no trade clause to make sure that you can just sit there and underperform forever do we think Brad when we get to the sort of macro look at this let's assume we're in this 405 or three four five percent interest rate for some extended period of time let's call it a decade what does the tech industry look like because it does seem if Elon does with Twitter what seems to have been leaked here correctly uh according to all reports and there's a 20 rifat uh Facebook and we start to see people take the medicine is that the ultimate setup for now hey these companies are being run to throw off cash and we have some way out of this uh what people think is going to be a very hard Landing well I mean you know first just let's talk about you know where rates are three you know today you know we're at 4-3 on the on the 10 year I mean Technology's performed incredibly well for a long period of time with rates in this in this range so the adjustment period is very difficult right and so when when you look at the convexity in going from zero percent interest rates to four and a half like that has been a shock to the system it has been destabilizing to multiples multiples were basically infinite last year and now multiples have come back to reality and so I don't question in fact I actually think free Capital was a weapon of economic destruction right free Capital hurt good companies from being great companies they hired too many people their margins were too low you know SoftBank funding all of these Rideshare companies around the world to compete with Uber meant that Uber even though they're a market leader did not have Market leadership economics and so the ringing out of the system of that excess that grift that stupidity that's going to be good for the fundamentals of these business but the transition from you know that low rate environment to the high rate of iron is dislocating for investors it's dislocating for management at these companies and it's going to be this this is not you know a a six-month phenomenon we're going to have two years of ringing out right because there's no bailout here by the vet there's no v-shape recovery for these companies this is now going to be I heard somebody say this week if the last 10 years was about beta the next 10 years is about Alpha not all companies are going to do well not all companies are going to bounce back this is going to be about what companies have the courage to build great products and to drive a great business model that allows them to compete and continue to invest at high rates in the next wave of innovation whether it's AI Etc and so um you know to me the markets jcal have largely put in a box at this point inflation and rates right rates have come up 65 percent in the you know from 2.7 to 4 3 in the last 60 days and the Market's basically sideways it's down five to ten percent rates are up another 10 percent in the last two weeks and Google and apple are up that tells me that the Market's gotten you know gotten its arms around rates and inflation what the market really is worried about now are two things number one is earnings and number two is the long tail of risks on earnings there's kind of a conventional wisdom emerging from a from from many folks that 3200 is the bottom or maybe 2700 at the bottom that we're going to go from 225 and in s p earnings back to 200. that seems to me to be you know again a lot of people making that bet I don't see any evidence in Q3 earnings United Healthcare United Airlines Schlumberger Tesla Etc their earnings are up on a year-over-year basis they've guided now to Q4 their earnings are going to be up on a year-over-year basis and the consensus expectations in q1 are the earnings are going to be up on a year-over-year basis to go from 225 bound down to 200. we it can't just be a slowing of the rate of growth of earnings you have to reverse course entirely so we have to see something we're not seeing yet so on an earnings growth that's where the mark there's some tension in the market then finally what I would say is there are a lot of big brains in the world who look at this level of dislocation rates going on the two-year or on the front end of the curve from zero to four and a half and drucken Miller or Soros would say negative reflexivity [ __ ] breaks when you have this much volatility in the world the world is not equipped to deal with these exponential moves and so there's a lot of concern in the world whether it's about Ukraine Taiwan UK bonds the Japanese Yen nobody knows what it will be but they're just saying demand a higher margin of safety because the propensity the likelihood that ship breaks when you have this much dislocation is higher so I don't know Black Swan could come any minute and could cause another downdraft but last year we were all sitting here and said asymmetry to the downside multiples at all-time high interest rates at all-time low we saw that starting to roll over we saw smart people Elon bases Etc start to sell into it as I sit here today yes we're going to have harder times ahead economically but it feels to me like a lot of it is priced in I don't think we have huge asymmetry and skewed to the downside I think that's like fighting the last battle it's not to say in this distribution of probabilities one of those events can't occur but from my vantage when stocks the average stock down 20 percent stocks like meta down 50 to 60 percent a lot of stocks down 70 80 90. that doesn't seem like the time to call The Big Short that seems like a time to be like new channel to positive should we go to tvpi DPI and talk about the privates I just want to say one thing about a favor question uh which kind of ties into some of what Brad said but you you asked the question about does this mean that these companies are now going to kind of cut costs and start spitting out cash I think there is certainly a market incentive to do that to keep share prices up and the companies that can do that are certainly taking action with the head count reduction across some of the big guys what I think is going to be interesting and what a lot of people are watching is how many of the small and mid cap guys can actually do that and those that can't will it will become pretty evident pretty fast and they're going to end up in the [ __ ] um you're talking to a Peloton or something like that it doesn't matter across SAS across consumer across D to C across Hardware everyone is now saying can you actually earn and at this point you should have enough scale that you should be able to earn and if you cannot the market will punish you for it and that's certainly what seems to be the incentive and the pressure in the on the buy side to the the executives across all these organizations today so I think that's a big trend of what's happening right now is everyone's going through their portfolio spending time with management and asking can you earn can you actually get this business to generate cash what is the path show it to me prove it to me in the quarterly results and if you can't then you're not fitting in a bucket that I can own you the only irony there Friedberg is that that comes as a surprise God forbid we should actually expect companies to prove unit economics and and to make profits yeah but when you when your interest rate zero you divide by zero you get infinity so you know you were able to kind of explain everything away into the future now you actually have an interest rate at five percent I Gotta Be You Know making uh I'm not gonna pay a lot more than 20 times earnings and I want to see that that's really my earnings you know I want to see that you can actually earn there is a person at Brad's investor date who Brad interviewed and I won't say his name but he's a star of stars he's a bit of a goat and he had I'll just say the generalized version and said the following which is so true it's like we've gone through an entire decade of under training an entire generation of people in Silicon Valley you know we have under under trained and under-mentored the product managers the engineers the senior executive management the CEOs many of these people unfortunately are not um they don't have the skill set to execute at a high level at any point in the cycle except when rates were zero like many business models and now that rates are not at zero these people are turning out to be extremely underdeveloped and unable to run these businesses and when he said that it really struck a chord because he's right and you know he was also saying it just got even more exacerbated in this era of remote work because now there is even less opportunity to mentor and to coach and to talk one-on-one and people think you know that this is a boon and it's not so you know we we're going to deal with also the aftermath of an entire generation of Highly underskilled companies because the executive and Senior leadership and CEO ranks of many of these companies are not in a position to win if I may there was an interesting moment this week when we talk about this discipline that has been lacking the last couple years a hundred and one million dollar funding led by kotu uh Lightspeed Venture partners at a one billion dollar valuation for stability AI uh this is a for-profit company built off the backs of the open source project stable diffusion they have no Revenue they have no product they've been around for you know a millisecond any thoughts on this type of funding happening pre-product pre-revenue on an open source project I mean there's still there's always going to be these these asymmetric bets that people think if it works it's worth 100x and they'll price it as they price it I think I think what we were just talking about is a little different which is how do public markets rationalize evaluation uh these businesses need to start earning for the public investors to be able to represent to their investors that they're doing their job and making sure that they're holding management accountable to demonstrating earnings potential but these early stage bets you can see valuations range depending on the asymmetric outcome potential of the and you know what the upper and you know what the upper bound is the upper bound is that when rates were zero and governments were printing money more than they could get their hands on the top five tech companies represented a quarter of the S P 500 but there was a pretty steep fall off and everybody else represented the next you know about 10 percent of the market cap so the point is that we had bounded outcomes when rates were zero the average market cap of a successful company was around three or four billion dollars so I'm not going to judge this company at all and those investors are very smart investors Lightspeed and CO2 what I will say is at the end of the day there's a terminal buyer of these companies and we had a period of time that we can look back on to understand that when the party is absolutely rip roaring the alcohol is free you know everything everything is going well yeah we know what the upper bound is which is the average company if you were able to get out would be worth about three to four billion and then there was a very very steep dispersion where then there was four companies that were you know a quarter of the market cap and a few in between so if you do a deal at a billion the overwhelming odds is that the terminal exit multiple is going to be somewhere between a 3X and a 4X x of dilution and X of all of the other Capital that comes in and all of those features that may be attached so I think everybody should be allowed to make different kinds of bets and you'll see over time um which kind of deal can generate which kind of return this will be a really interesting data point the the common thinking was these kind of deals were not going to happen in this kind of a market so when you saw this kind of deal happen or some other that we've talked about privately what do you think is happening in terms of discipline in the private markets I think I think I think maybe you should tee this up with Brad because I think that what I have to say follows on okay with him but there's a there's a there's a macro view of the Venture industry that again it's like everybody wants to never look at the past everybody wants to assume that this time is different and there's some work that he did which is really instructive jcal to help answer this question I think so yeah maybe you should ask him and then I'll jump in afterwards this is the TV tvpi uh study yeah so I mean Brad in relation to my stable diffusion and and yeah DPI maybe you could well you know we we shared this with our investors at our investor today that that you guys are at this week this is a modern industry it's only been around since the mid 90s right so the history Adventure you know is uh you got to look at when you look at returns it's to say by the way what an incredible chart you guys put this is so good yeah let's describe the charts for people the truth hurts so break down let's go ahead Jake Al do you want I mean just so if just for people who know we on Spotify and on YouTube you can search for all in episode uh 101 and you could uh see this chart if you're watching the video if you're listening um the video describes 1997 to 2020 there's an orange line across it with the DPI average uh so why don't you define DPS you know what we did is we took the top quartile of data from Cambridge Associates who invest in all across the entire Venture industry is widely used as kind of industry data and we just asked a simple question of the top quartile top 25 of venture capital firms right what were in those vintage years of the fund so funds raised in 97 98 99 fine what were the average cash on cash returns right tvpi is what your mark is that's where you're carrying the marks total value to paid in capital so this could be just so we're clear because it's a little confusing to people you have a company on your books that on paper is worth 10 billion you had put in at a billion and on paper you've got this 10x return right correct right cash distributed to your investor so that's cash on the barrel head so the reason if you look on this charge and just just to build just to be very clear for everybody the whole goal is to be able to convert your tvpi so what your theoretical book is worth into DPI which is here's money back to my investors and what you want on this chart is the blue line to catch up to the gray line so you want the Gray Line to be as high as possible and eventually over time you want the blue line um to come up correct right so the blue line here we're looking at 2010 just for one example you have a 4X for the tvpi you 4X everybody's money but the Blue Line only got up to it looks like 3.5 x maybe or something in that right but let me just point out because that's an interesting Year Jason yeah we were coming out of the 2008-2009 period everybody was despondent they said I'm sure they said what you just said about stable diffusion don't invest in anything everybody's stupid but they were incredible companies that were invested out of that vintage right Snowflake and [ __ ] out of our vintage shortly thereafter so maintaining this Duality that yes the world sucks but the the secular curve of innovation continues so that is a vintage where people actually got things sold got them public distributed the cash back to investors the real question is this on the vintages between 2011 2012 and now how how much of those gray lines how much of those marks look those are historical marks marks have never been this high how much of those marks will actually return turn into cash on the barrelhead and how much of those will actually just be mean reversion it'll all get marked down and the returns at the top quartile will look much like the returns did in the period between 2000 and 2007. my hunch is that by the time the cash is actually distributed the returns are going to revert to that orange line mean which means there are hundreds of billions of dollars in markdown sitting in LPS and GPS portfolios that are likely to come because nobody really thinks that the deal is done in 15 16 17 18 are going to be that far above the mean return and so people also understand this these are vintage ears so these are funds formed in that year and so this Trails a venture fund takes about 10 years they're formed without Concept in mind to become realized so if you're looking at you know the year 2016 and 17 these are but five-year-old funds at this point right correct yeah so they they do need time for these companies to grow how much of this tremoth and Freiburg do you think is attributable to entry price because entry price during 2017-18 1920 is going to be extraordinarily High entry price I.E the value of the company when investors invested in 28 2008 to 2011 when I had a lot of my hits was pretty low I invested in Uber Thumbtack and um you invested in Uber com those three were 15 million dollars combined almost three evaluations did you you invested an Uber uh yeah maybe third or fourth semester I can't remember let's talk about entry price because entry price does matter Brad uh or maybe Trump you want to take an entry price for Freeburg well look there's this I think I think what that setup is that's probably a chart that most VC organizations don't even look at because if you looked at that chart um you would have to take a real investing approach to things so if you were looking at that chart as a GP there are two takeaways the first takeaway is oh my gosh what is the sum of the invested dollars Above This Orange Line since 2012. 2011. right because all of that stuff could just basically get whacked if we mean revert and the answer is about five or six hundred billion dollars of paid in capital so then you would say oh my gosh well if there's five or six hundred billion dollars of impairment coming down the pipe maybe more maybe it's going to be 750 million because the other thing to keep in mind is over time the the orange line has a tendency to go down not up right because as you add more and more of these things and some slight performers you have a general Decay function in every asset class as it scales in size so this this Orange Line theoretically goes down which means more of those gray bars get destroyed okay so there's let's just call it 600 billion or 700 billion the most important thing you would want to do is now look inside your portfolio and try to answer the question uh oh um How likely am I to see that impairment and Jason this is a proxy of answering your question the important question for a venture fund which then has a downstream implication to the to the entrepreneur is now what do I do knowing that all of these gray bars could get destroyed Nick go to the next chart while I calculated it for you guys so I'll give you the answer here's a simple thing and you know this is publicly available data now why did I do this because when Brad showed me that chart my immediate mind went to how do I make sure I'm not susceptible to losing a ton of money well what happens in markets is that when things go down the things that are highly correlated go down the most because they are the things that are the most highly trafficked which means that they're the things that have the most investors which means that in an up Market they have the propensity to have the highest prices so we put we you know pulled all this data from pitchbook and we just started I just took a smattering of firms here and recent index Greylock Benchmark Sequoia GC Founders fund tiger Excel Kleiner coastla and us you could pick anybody because this data is publicly available and I started to calculate the overlap coefficient so how how correlated are you with other people's portfolios trying to estimate at the upper bound and at the lower bound what will happen so Jason this is a a proxy of answering your question what about entry price well if you have a very low correlation which touch would we have you're less you're less exposed to bad entry price because it wouldn't have been a bidding war to get into these companies exactly you picked your right spot you you went into areas that were earlier so you were able to risk manage a little bit better but if you have a highly correlated portfolio now your marks become very susceptible so my guess is if you take the 700 billion dollars and you calculate it for all the VCS and you look at their correlations and their overlaps you can probably guesstimate where that 700 billion dollars of impairment will come to and you can you can lay it out across any organization that you're interested in trying to find a solution for by just stack ranking them and by looking at the at the at these correlations and this is by the way to be clear nothing about the quality of the organization or the people but this is just simple portfolio mathematics and how portfolios tend to play itself out in moments like this well and there's some interesting data in here as well a freeberg you probably are aware of where some fund like let's say Founders fund and coleslaw have a close relationship because Keith were boy was at kosa and then he moved to Founders fund so you see that nice dark purple there where they have a high correlation Investments interestingly index seems to just follow Benchmark and Bill gurley's Investments and plow into them that seems like the highest correlation see here's the thing if you had to steal man the defense of that strategy Jason I would say in an up Market Benchmark is a 500 million dollar fund where I get no allocation if I was a smart LP and I did this work I'd be immediately knocking on index's door saying can I put money in you because in the back of my mind it's basically getting leverage on benchmarks portfolio yeah you figured out how to follow them yeah yeah but when the cycle reverts and you know you're not the only one that wants to copy benchmarks portfolio everybody does and if these correlations are too high and the overlaps are too high then you start to get into a cycle where you put yourself in a position to actually suffer from the market beta much more even when you can benefit from the market beta in an upcycle free break you want to analyze this chart and chamat's uh thinking here his theory I don't know I mean I just think this has become a pretty competitive market and a lot of the values been competed away well I mean I think for a lay person please yeah the long-term value creation of Technology of new technology is going to remain high the Market's going to pay for that and so you know new market value creation new market cap is going to continue to be built every year what's happening when venture has a low multiple is that number one the good companies end up the founders end up owning more of the company and they end up you know having a higher percentage ownership when the company ultimately gets sold or goes public because they were able to get VCS to compete against one another and as a result pay a higher valuation and as a result buy less of the company and then number two is that because the VCS that couldn't get into that company still had a bunch of money to manage they wouldn't put money into crappy companies so you know it's a lucrative business you guys everyone's in that business because it's a lucrative business and that certainly it takes a decade to realize whether or not you're good at it so you know you have this period of time as Brad shows that maybe a decade before the lp Market learns who is and who isn't bad and meanwhile those folks who got competed out of the good deals you know they don't look very good and the folks that are left in the good deals own less of a company and their returns get diminished and you know I think ultimately this Market is I'm probably going to end up being a multi-decade cycle of capital in and capital out we're probably at Peak Capital being managed in Venture funds right now and it'll likely decline for the next decade Brad Howard yeah Brad how would LPS look at chamat's analysis there and how do they look at the Clubby nature and overlap you know writ large in our industry and then whatever other insights you have yeah no I I mean I think uh very much disagree with with David that all the returns are getting competed away the the huge difference between the Venture market and the private Equity Market or the public market is it the Venture Market is unquestionably a power law Market okay 90 of the gross profits and the returns go to 10 of the deals and 10 of the investors right so we just showed the average of the top quartile but if we show Benchmark one or two or Benchmark six or seven it's ridiculous right the cash on cash returns over 20 years on those funds let's just go ahead and explain that to folks most Venture firms here are getting 2x on average that's the average and is that average for the top quartile or all VC firms it's the top quartile of VC firms their average is 2x yeah this is at the upper 20 to 25 percent would include the 75 bottom what would the trash Brad let me ask you a question What If instead of looking at the top quartile you just looked at the top 10 Venture firms yeah because the number of venture firms has exploded over the last decade and a half let's see and so I think the point that you're not getting is the top 10 changes every vintage and and the problem is if you are aping the wrong portfolio in that vintage you'll get run over right and so the real goal of this and I I also tend to disagree freebrook with what you say I don't think the returns are getting competed away I actually think it's more Alpha than ever correct and you got to be a good picker and if you're a momentum investor you just need to be aware on the way in that you are going to put your portfolio under tremendous pressure in drawdowns I think the other thing the other thing it does this idea of the industrialization of venture the softbanks the Tigers like like it's a myth you can't industrialize that you can indust you can build an index fund to the public market because you can buy every company you might even be able to build an index like Fund in private Equity because everybody can go bid for every company but Venture the founder chooses you that early GP chooses you and so if you try to build an index fund that misses the best deals and I think there's adverse selection the bigger you get the less likely you're to convert the best deals now you're really in trouble Brad do you think an index of first time VCS outperforms kind of that you know top quartile index so you know there's some LPS that select in to just solo GP first time fund manager first time fund or you know maybe second time but solo GP but it's kind of like you know first into the market before you really scale up that's where so many of the returns are found it's a lot of funds like MIT they look for emerging managers because you tend to be younger hungrier you have experience you've got a lot on the line but certainly if you look at the hundreds of startups in VC land over the course of of the last several years uh 99 of them are probably garbage and will fail and and won't work so the All-Stars will be All-Stars and and the rest won't somebody asked me I use this analog they said hundreds of new people have come into Venture and I said yeah it's like it's kind of like a marathon you're right we had 500 Runners and now we have a thousand runners but from my vantage it's the same five to ten Runners competing for the podium week in and week out in that top ten in that power law it doesn't change a lot yes there have been people break in we know how hard it is to break in to Silicon Valley nobody invited altimeter to the dance nobody invited Social Capital to the dance nobody invited Jason and Candace to the dance it was the opposite they locked my doors because it's a highly lucrative business dominated by some incumbents that had huge Brands they didn't want to share the fruits of that we showed up we worked hard we build incredible teams we had conviction right and we were we also had good fortune right yes we were smart we were we placed some good bets but you also have to get lucky in this business we were lucky to be born at this point in time lucky to start when we did in Silicon Valley I'm going to finish just with this one point this whole experiment of venture capital is less than 30 years old the Modern Age of venture capital is 30 less than 30 years old we're going through this period where everybody wants to [ __ ] all over the industry you know tvpi is going to come down all this other stuff I think that Venture my dad when he went to start a business had to borrow money mortgage the house think about the friction for somebody with a young family if the cost of failure was losing your house putting your family In Harm's Way versus some young startup in Silicon Valley today where the consequence of failure particularly if you if you conduct yourself with Integrity is that you learn a lot right there's no losing a house there's no cataclysmic outcome for your family so to me when you look at the economic unlock that we have in this country by reducing friction to invention by reducing friction to experimentation I am incredibly bullish on the future of venture I think Founders are the engine that drives the world forward right that's where we get electric cars that's where we get rockets that land themselves that's where we get mRNA vaccines and so there will be cyclicality there will be industrialization there will be big funds in small funds but the reality is that this ecosystem is a massive competitive Advantage for this country I think when we look forward at the information age over the next 30 Years the power of this ecosystem is more strategic advantage to this country even than natural resources I'll say I'll say something orthogonal to this which is in order for that to happen just to build on the point Brad of of your guests that you think we have an entire generation of uh financially enumerate General Partners at Venture firms and Venture needs to be a pillar of growth in society and I think people need to have more financial tools and underpinnings to do their job why because over these next 10 years when maybe you have 500 to three quarters of a trillion dollars of value destruction and it's because you didn't think about portfolio construction properly that entrepreneur that needs your money you will have to say no to them or renege on a deal or let them down and the reason is that you didn't think about that on the way in and so these are practical skills that every other part of the financial asset infrastructure has to learn we are taught the hard way you know we are taught in the public markets how to think about dispersion correlation Alpha Beta you're taught in private Equity how to do it you're taught in every other asset class and we romanticize venture to think that none of that matters but in a moment like this you will see how much or how much it doesn't matter and if you're going to live up to the to the actual commitment you make to an entrepreneur you better get financially smarter is what I would say all right let's uh move on do you want to go to uh stock picking or Lyft versus Newsom on this prop 30. I want to hear that Friedberg dive tribal stockpicking you do okay I want to hear it on here well anyway there's a bunch of people talking about uh index funds versus um buying individual shares and being a stock picker Elon and Kathy Wood uh got into this on Twitter and we all know the arguments for passive versus active and there's large active funds out there uh that are just programmatically buying and Elon and many think that active would be better for society or a bit more active free bird what's your take a business is a over time it's supposed to be a machine that takes money in and puts money out and then there's money left in the machine it's like a box money comes in money goes out and over time the objective the money coming in which is sales or Revenue exceeds the money going out and the Box Grows Right the assets grow and the best way to look at that is in the financial statements of that business you know the income statement the balance sheet the cash flow statement but we and then there's this narrative that can be layered on top of those metrics that measurement of how well that business is performing over time and that narrative is what drives a lot of investment decisions uh today right I see whether it's an analyst writing an analyst report or a portfolio manager or an individual picking a stock everyone's got a reason why they're buying the stock and they say here's my thesis and what happens is everyone looks at that box looks at that business looks at that thesis from a different angle and there's always something you're missing so there you know there's some element that is driven by imperfect information and in some cases it's just heavy bias you know you look at a stock you're like hey I really like Disney plus I really like the subscriber growth but the question fundamentally is over time what is the revenue generation and the profit generation potential of that one thing you're looking at and what are the hundred other things that are going to contribute to that business that box taking in more money or spending more money is that box going to run into a regulatory problem is it going to run into a customer problem is it going to run into a Content problem is it going to run into competition the number of issues and opportunities that any one of these businesses can and will face is infinite and every participant in a market is looking at some different set of those opportunities or threats and every participant in that market is making a difference value judgment and so very often people will buy a stock because they see their sliver they convince themselves that based on the sliver of the perspective that they have that this is something I want to own they don't do the work on what's the income statement balance sheet cash flow gonna tell me over time about the quality of that business and they don't do the work on what the valuation of the business is relative to comparables relative to Future earning potential and I just wanted to have this diatribe because I see so many individuals doing stock picking and over time because of this Myriad of things that could go wrong and will go wrong or may go right or won't go right or the regulatory thing or the market thing or whatever interest rate thing hits that stock and the stock price goes down eventually everyone gets hit on the head and everyone reverts to mean or below mean meaning the average of the index over time or underperforms that index over time and so I mean for me I spent two years I I know we all went through some sort of investment banking training I spent two years out of college without a I had no Finance econ or business background I worked in Investment Banking learned how to read an income statement balance sheet cash flow learn to understand how business performance ultimately translates into Financial outcomes and spent a lot of time on valuation and figuring out just because you like the story of a stock you like the story that the CEO is telling you it doesn't necessarily mean that you're paying a fair price so if you if everything they do goes right this price can still drop and I think that this is a really important set of lessons for people that are individuals that are doing stock picking which is to number one message and this diatribe is specifically targeted towards day Traders retail correct I don't know if it's just them I think it's just generally like make sure you understand how to read and ink buying a stock you know what the total value of the company is based on the price you're paying and how do you justify that that total value makes sense relative to your model of the future outcomes for that business and then number three recognize and be cognizant of the fact that whatever one thing you're seeing that you think you've got some Edge or some advantage on because no one else is seeing it there's 99 other things that you're not seeing and this is where everyone learns this lesson over time and everyone gets bonked on the head at some point and making these decisions and it's why every stock picker or nearly every we can talk about the greats at some point here and where Alpha can be generated and so on but generally most stock Pickers over time underperform the index um and it's just particularly with the retail movement of the last couple of years I I see a lot of thesis here's my reason for buying this talk that excludes understanding the financials understanding the valuation metrics and also excludes the whole Litany of things and all the diligence that goes into thinking about all the other angles you might be missing a bottle it turns out that it's hard to be good at anything insert the blank takes tens of thousands of years of practice in investing I think what I have learned is that it's very easy to get caught up in the Mania I have also learned in the last decade that you know we really benefited from zero interest rates it was a tie that lifted all boats and I have learned how to think about correlation and the difference between Alpha and beta and how to construct portfolios that I think can be all weather portfolios to friedberg's point those are nuanced long tail skills that you'll only take up if you're really passionate about the craft it's not dissimilar to a person I'm just going to use golf as an example who learns how to hit a fade versus a draw and who learns how to really manipulate you know their wedges in very specific ways and these are all long tail skills that come in when you decide you want to master something and it's just important to note that that Mastery is required to be really good because otherwise there'll be times where you'll go out on the golf course and you'll crush it but then you know there'll be other times and most other times where you can go and get run over because it's hard so that's my only comment is that this is like everything else it's not nearly as easy as it looks like Brad you pick stocks for a living should retell how involved should retail investors basically they just buy an index I don't think it's fair to say retail what I think my point was really about no his point is everybody okay sure everybody my point is saying a thesis and excluding all these other factors that are critical in making a decision about what you're buying and whether you're paying the right price means that you have to make sure that you're expanding your point of view on whether or not a stock is worth buying at the market price today and I think having that broader perspective is what I see missing in 99 of the chatter on Twitter 99 of you know folks talking about what thing to buy maybe they're buying it and I think it's critically important you're saying that most investing that you see is very narrative driven and that narrative can sometimes be so powerful that it overpowers all the other elements that one should be doing to get a full picture of why you should be buying something is that I think that's a fair summary tomorrow yeah yeah and I think it's um you know it's and it's it's it's just about how so much of what goes on on CNBC on uh a lot of Reddit boards not all of them there's very sophisticated folks there doing very sophisticated financial analysis and looking at all the angles of a stock setting the valuation but so much of these conversations exclude what you're paying and what you're getting and exclude the broader context of all the things that could and may not happen with a particular business and as a result at some point one of those things blocks you on the head you lose 50 and you're like oh my gosh and sometimes and sometimes if you try to inject that logic into those channels you'll get brigadooned bring it it'll be absolutely brigadooned Brad what do you what do you think uh in terms of people's access to markets I guess would be another way to look at this and people's propensity to just you know gamble let's call it or maybe not make thoughtful decisions I kind of think if our friend Bill Gurley was here he'd be like this is a five-minute conversation about the statement of the [ __ ] obvious um you know this is stock picking's hard really is that the theme of this section yeah stock cooking's hard very little Alpha has ever been generated in a sustainable way even by the greatest people of all time I think you know maybe something that is a little bit useful to add two things not all good companies are good Investments price of Entry matters okay so I hear a lot of people saying well I'm gonna buy that because it's a good company that I don't even know what that means exactly right good good relative to the price of Entry but the second thing is the single greatest power we have as investors the Green Greatest single source of alpha right other than stock selection so choosing the right company time Arbitrage okay so do you have the ability to own something that is a growing asset over a long period of time so that if you got number one wrong you bought it at the wrong time [ __ ] happened in the world they miss a quarter Etc that you're not forced to lock in those losses because you over allocated to that so this idea around portfolio management is a principle component of overall stock picking is it's just absolutely critical so I think it you know I don't really I love the fact what I put myself through college I put myself through law school through business school day trading stocks out of the back of the classroom I'm grateful I live in a country that let me feel like I had some Alpha and that I could do that and I could go read the newspaper and sort it out and I wasn't building sophisticated Financial models so like you know I think there are ways that folks can do this there are a lot more ways to lose money than there are to make money in a sustainable and durable way right and so as investor what we try to do you know we've got 90 percent of our portfolio and our top five or ten companies okay I'm not an index and the deal I have with rlps is I'm very transparent with them they know that we're going to own companies in size and it's that portfolio concentration and our time Arbitrage holding companies for three years or longer that is a strategy they choose to believe in and sign up to but I know a lot of greats who would never subscribe to that strategy so know your strategy execute it allocate a reasonable amount of capital so when all of these unknowns that day Friedberg talks about come along you can react accordingly and you know the final thing is if it's not fun for you right like if you're actually not passionate and curious about like studying this stuff and learning about it not everybody is then don't do it right then don't do it then just put your money in it you're not going to be good at it the analytical depth and rigor that the greats employ to be successful at picking stocks at picking businesses and investing in them and selling them at the right time over time it does not make for good Tick Tock content it does not make for Good short form content and I think that's why we've seen this dumbing down and this kind of short form thesis-driven Narrative Approach to content creation around markets and stocks that ends up causing a lot of people a lot of harm uh you know you watch the Jim cramers of the world I don't mean to disparage any one individual but that sort of content that's like this is a great company we should buy it like let's go and uh the the depth and rigor takes a lot of time and a lot of effort to really do right and then you get hit in the head you know when we um and that's that's what I've observed lately and in a really kind of flurry way particularly across social media and so on that's uh that's why I just wanted to talk about this topic today just to build on top of what you're saying Warren Buffett made this very famous bet in 2000 it was him versus a bunch of hedge fund managers and they were able to pick a basket of hedge funds and he said I'm not even going to pick myself I'm going to pick the s p 500. and the low-cost ETF the Vanguard ETF and he said we'll check in like 20 years later anyways you know the punchline of the story Buffett won he won like a million bucks that he donated to charity and these hedge fund folks lost and so to build on your point Jason time and time again the smartest investors in the world I.E guys like him have shown us that the most predictable way to make money if that is your goal is to own the S P 500 which is you know a dynamic index of the 500 best companies in the world so there are these people doing all the hard work for you and they have very strict criteria of who's in S P 500 company or not now yes if you cherry pick other companies that are not or you concentrate in some will you generate better returns absolutely but systematically over time that thing has lurched forward at eight percent a year you know nine percent a year if you invest dividends you can approach 10 a year um and so if if you really want to just grow your wealth that's a very simple Steady Eddy way to do it and to take a small amount and then go and you know experiment with it to learn make sense but I think it's important to make sure you're going Their Eyes Wide Open to try to actually learn Buffett of course says the index works really well but then he's got 50 percent of his public portfolio in apple over the last few years so he clearly believes in Alpha as well but you know back to friedberg's point since we brought up Buffett you know somebody asked Monger why can't why can't people just copy what Buffett does and he said because nobody likes to get rich slow nobody likes to get rich though if you wanna what did a zero percent rate environment remind us all over the course the last few years everybody had a grift everybody had a get rich quick scheme I don't care whether it was crypto flipping or whether it was house flipping or whatever it was everybody thought you know this was easy and frankly looked at guys like us oftentimes and said you're the dumb ones you're playing the game that's really hard why don't you just you know uh flip some crypto and I think we're back to a world that if you really want to you know by the way yourself how dumb did you feel I felt so stupid all these tokens minting minting billionaire billionaire billionaire billionaire billionaire billionaire and I just I just sat on the sideline to your place it just made you it made me feel so stupid I felt super nice just like I I what who's the customer and how much do you charge them and when you can't get that basic answer of who the customer is and how much it costs for them to buy the product or service the Brad's point I think the punch line is and then you know at the 11th hour it's like there's a tendency to just capitulate and say okay forget it I'm in and that's when all the money gets torched real quick there's a proposition here in California where we vote on specific uh ballot measures not every state has this but we have prop 30 coming out this is a 1.75 tax on income earned incomes earned over 2 million for the next 20 years in California which by the way had 100 billion dollar Surplus that would go towards clean energy this was proposed originally by environmental groups but uh Newsome has come out to battle against this which would seem counter-intuitive because he's so Pro environment what this would do is spend about 80 percent of this hundred billion in new tax revenue over the next 20 years 80 would go towards charging stations for EVS and motivating customers to buy EVS 20 would go toward to combat the uh crazy amount of wildfires we're having here he uh gavinusum that is called this um a cynical scheme devised by a single Corporation Lyft to funnel state income tax revenue to their company Lyft has provided almost all of the 40 almost 48 million in funding for this prop 30 and the reason is because California is going to require 90 of ride sharing miles to be traveled by zero emission vehicles in 2030. you know on top of that that California is going to not let you sell anything other than EVS in 2035 if this continues now you've got a bunch of people on the other side of this doing anti-prop 30 including the California Teachers Association because they want the money read Hastings over at Netflix Moritz over at Sequoia Sam Altman over at open AI what do you think of this um Freeburg I'm curious sorry what side are they on Jacob no they're they're saying don't do this because they are trying to control taxes and they're on Newsome side Newsome side hey this is a grift by Lyft because Lyft is concerned that they're gonna have to you know bear the brunt of 90 of miles so I guess the I don't know if it's original sin but the the one of the levers here is Lyft is got the majority of their rides are in California Uber has stayed out of this because they don't have as much exposure because the number of rides in California is a smaller percentage of their overall Revenue Brad you have some thoughts too here I think so Freeburg or Brad I'm just looking at the board of directors and Lyft and thinking to myself good God what are these people thinking spending 40 to 50 million dollars on this it just seems that they've totally lost the script the company has way bigger problems way bigger problems to focus on right than you know this measure have a little faith in the system that if we don't get to a place where this is reasonably practical over the next 10 years then I'm sure we will evolve right uh the legislation around this you know kudos to DAR and the team at Uber for not Running Scared on this right for not trying to push this through these corporate governance initiatives guised as referendums in this state I mean this is just bad politics bad policy I mean we got Valerie Jarrett on the board of this company you've got political sophistication on the board of this company I want to be you know I wish I was a fly on the wall I want to know the conversation that went down and who raised their hand and said this is the highest and best use of 40 million dollars of our money crazy yeah right makes no sense Freiburg you have thoughts on if I mean you've talked before about how you think the free market should solve this what is the what is the governance structure of lift guys I knew that was coming I knew it was coming did they have security shares here anybody look I don't know the answer to that so I think that the tax rate in California is high enough now that we all have friends friends in our poker group who have left for the State of Texas or the State of Florida where there are lower tax rates and where they feel like they're getting more value uh for their tax dollars there's certainly a calculus going on with Newsom I believe in you know the impact that having higher tax rates would have on what is clearly not just a theoretical but an actual evidenced um you know Exodus from the state of wealthy and high-income earners this could be like you know at some point there's a Tipping Point that looks a lot like France where you raise the rates high enough enough wealthy people leave and the net tax dollars actually go down like what happened in France when they introduced their wealth tax then they reversed it and everyone came back I will say I don't more important long-term point I don't see a world where we don't have over 60 tax rates on the wealthiest people in this country at a federal level if you look at um if you assume a five percent long range call it 15 20 year uh Horizon for uh for interest rates even four percent on 30 trillion dollars of outstanding debt and you assume that the voter base will never vote to reduce Social Security or Medicare uh entitlement programs and obviously the defense budget won't get cut we are not going to see a situation in this country on a federal basis where we can actually meet all of our fiscal obligations without incremental tax revenue and I think it is much more likely that you know look whatever happens with the state initiative happens but I think it's very likely that over time the only way for the United States to uh to bridge its fiscal Gap is going to be to raise income to increase the tax rates I don't see another solution because I don't think that the federal government or in our kind of democratically elected Congress we're going to see a system that's going to say hey let's go for austerity measures let's reduce entitlement programs both sides will say that it's just not going to happen so tax rates higher tax rates I think are coming well you know maybe California will skip over this particular generation but I don't see how the United States continues to thrive over the next 15 to 20 years without tax iterate that will today seem exorbitant well in the last 20 years we blew through a debt to GDP that was I think 57 percent and it basically doubled and so David to your point when we wanted to feel prosperous what we did was we financed it we went out and we you know put out a ton of debt in order to make sure that our entitlement spending or our defense spending or whatever the things were that we need it as a population to feel like we were growing and moving forward as a society we had so that is the Practical nature of what happens and look a lot of people think that there is some upper bound to debt to GDP and I'm actually of the opposite view which is I think that you know the quote unquote invisible hand justifies us moving debt to GDP to higher and higher rates so the first time the United States went past 100 percent we thought it was the end of the world it turned out it wasn't we'll eventually go past 200 somebody will clamor and you know be anxiety riddled but they'll take some ssris they'll be okay we'll keep moving forward then we'll get to 300 percent we'll keep moving forward so we are in a debt spiral that is a feature not a bug of how Democratic societies work as a companion to that I do agree with you that taxation kind of is a pendulum it it Ebbs and flows and you know we're in the part where it's going to go higher before it goes lower but I want to tell you a story which is that in the beginning of this summer or sorry this fall I was in the Middle East and then I was in Asia and they have very different taxation schemes right and many of them have zero corporate gains tax and you know sometimes zero income tax but then the opportunities for them to be able to invest and drive returns is also commensurately lower meaning there's not as much Alpha in most of the opportunities that they see whereas if you go to California you have to pay 60 tax but then you know you could be an angel investor in Uber you know and all of a sudden take 25 000 and turn it into a hundred million which is UN ungodly it's incredible so I think that in my opinion actually like there's actually this beautiful symmetry where even if taxes are high your earnings potential is commensurately higher such that the net that you're left with is the same as if you were in another place where taxes may be zero but you're just not going to get exposed to the same ways to make money and I think obviously there's Corner cases where that's not true but I don't think sweating taxes is a really important waste it's important way to spend somebody's time I just think it doesn't matter Brad funnel word I would just say the beautiful thing about Federalism is we get to a B test in real time uh different points of view and so we're seeing it the biggest a B test maybe in the history of federalism between the state of California the state of Texas and the State of Florida and it's not just tax rates right when when Elon leaves to go to Texas we have the head of the California General Assembly right changing her Twitter profile to say Good Riddance and flipping the flipping the bird to Elon right there is a hostility toward business that has emerged in California that I think is commensurate and related to the tax rate but also separate at the same time we have the mayor of Miami texting us asking us to come down for a visit we have friends uh in Texas who are literally politicians who are marketing their state to people in in California and we're going to be able to political scientists will look back in five or ten years and they'll be able to answer those questions for you but I suspect that that makes us a much stronger place for experimentation than countries like France where it's all or none and just to give people an idea to Jamal support about point about debt to GDP here's the chart early part of our lifetimes 50 percent 1990s 60 70 percent uh after the Great Recession the pandemic 120 Japan's at 200 I think so there's obviously it doesn't it doesn't mean anything I know that your payments at some point yeah I really don't think so because I think what will happen is you'll just move the yield you know the yield to maturity will move out and you know we'll issue again you know this is the funny thing we talked about this last night at poker like you know Trump's ideas some of them were actually very brilliant they were just packaged through this lens of being a total goofball so you could take it seriously but 100 Year bonds when rates were zero now looks like oh my God what a brilliant move well I mean if you could take a 50-year worldview about climate about nuclear energy about semis we didn't get to semiconductors again this week we got so much good stuff but you know we do need to take very long multi-deca looks at investment and why not make a 25 or 50 year bond for semiconductors can I actually just do a small PSA sure quickly public service announcement from Tremont the more you know go I went to Blue Bottle Coffee today and I asked for a latte and uh they gave me a latte with oat milk that's their default which is disgusting and I find out I find out that is now their default and brutal and I said there's a lot of normal people that don't want to ingest that chemical spew into their body and so this is just a shout out like just a comment to Blue Bottle like can you please realize that a lot of us are normal we want to come to your store and then you know not have to ask for the long tail alternative can you just serve the things first you're signaling coffee shop yeah most of the people still drink milk okay um I'm not trying to Brigadoon you blue bottle but I'm not going to go to you anymore as a customer because I find this stuff really dumb like can you just have milk so that I can ask for the oat milk if I want to versus giving me chemical stuff that I don't want I don't want that yeah that's and and complaining about oat milk is that what's going on no it's this is this is where we are moment it's just like I just want milk I want a latte I mean I want to go and support you guys I want to maybe you know maybe the cow doesn't want to make that milk for you after its baby was ripped away from it oh boy here we go you know here we go it's day we and we we survived 90 minutes and here it comes is the point you know did the cow agree to be in service to you to make your milk you think I need to have a verbal contract with cows I mean well yeah I mean are we going to do the olive fed beef next week or not the best translator of the cow human protocol who who is it you is it one of your friends like what I don't know actually I am working on a neural link I'm not sure I'm not sure that the default assumption that the cow should be there to do whatever you want it to do is a fair assumption I think that'll change over time but it'll take some time I I think that that's completely fair and reasonable but what I'm saying is right now while there's an entire you can't believe you said that economy is made my will well there's an entire entire economy of people that shouldn't get rolled over because you want to impute the emotions of cows I'm allowing you your freedom to want to impute those emotions of cows while I would like to support the dairy industry and buy milk so can I please do that no I want to impute the freedom and rights of the cows but that's going to take some time but sure go ahead have your milk for now and you're allowed but I right now will take the side of the Dairy Farmer I just want milk did anybody get your chicarin outrage your trim off Karen outrage shut your Karen on tape is this trending on Tick Tock yet when you admonished the barista's fault I just think it's I didn't make a scene or anything I just got it I taste it because I just said can I please have a latte assuming that it would come with milk like most normal places yes and now I have to actually ask for milk because they think that this chemical composite stuff that's called oatmeal have you looked at the ingredients we had this conversation yes we didn't even get to MailChimp CEO Ben Chestnut who is you know like one of the kind great CEOs of Our Generation getting yeah his memo is his last name really Chestnut I believe it is yeah his sister is a great guy I've met him so many times incredible human and he's been ousted should we do outros because you didn't do intro did you happen all right so here's the outro yeah four uh for the Sultan of science the queen of quinoa himself climbing the Stray Cat leaderboard as we speak David Friedberg follow him on his Twitter handle where you can get all kinds of hot takes from science to Ukraine at Friedberg is talking about I never tweet I know that's the joke okay so with with us again the anchor he'll be doing a Twitch streaming where he translates the emotions I'm actually doing my cooking show which has a base of oat milk it's my oat milk top 10 beverages tonight on Twitch just follow stray Friedberg get it I don't want to get brigadooned by the oat milk Lovers by the way they're coming they have milk stands are coming for you man you listen I don't want that chemical stuff in my body but I'm not going to stop you from doing it I'll do a diatribe on chemicals in oat milk next week what should we drink if you did have a choice Freeburg if you didn't want to drink the chemicals in a Oatley what would you drink what would you advise what do you drink I don't know I'm gonna drink soy milk oat milk whatever okay all right but you okay but you're okay and uh um bringing tasted milk I drink the beautiful glass jar no I'm asking free burgers three dollar returns for each glass bottle I returned them and get them from goodies have you tried have you tried look I'll tell you what is going to happen in the next he's never had milk in the next 10 to 15 years most of the milk you buy at the store will be identical to cow's milk same protein composition it will be built in a slurry I mean you can make fun of it but you do work in the tech industry but yeah I mean Precision fermentation is the future of making animal proteins I'm telling you there is an economic model that will work that's great you know but I'm saying by the way between now and then can I just do things number one is there's a taste in a flavor profile I've grown up with that I would like and I don't think I'm a bad person so I'd just like to have that okay not be made to feel guilty about it okay and and and number two I don't want to put chemicals in my body okay so if I can find a natural thing that I like can I please just drink that can I just please blue bottle have that in my and coffee without having to explicitly ask for it yes you you will get that and number two they're short it's still owned by Nestle and they're the largest Gary but has still has a short on Oatley so let's just keep this going for just two more weeks okay let me ask you an ethical moral questions no I'm joking he does not have a short I don't even know if oatley's public I'd rather you ask me an ethical moral question than a political one so I'm going to yeah I mean we got a break from Ukraine this week would you have a if the synthetic version of milk or steak was made like and is a protein that is exactly the same to a cow would you have a problem morally with eating and or drinking it no so the objective of what's called Precision fermentation or some people call it biomanufacturing you take the DNA from the cow or from the chicken you put it in a yeast cell or a bacterial cell and you put in a fermenter tank you put sugar water in the tank and the yeast Cellar bacterial cell eats that sugar water and it spits out that protein you've programmed that organism to make that protein and instead of growing a whole cow or growing a whole freaking chicken you're growing the protein no because no animal died in the making of the process you know you're not taking can I quote Dave Chappelle here go ahead yuck all right it's identical to the protein you're eating otherwise tastes the same it's the exact same compound oh like there's nothing about it that's different and thanks to the dictator thanks to the southern science and for the fifth bestie coming in and and doing a great job today on behalf of our friend this [ __ ] David sacks who is busy in a secret clandestine peace uh making junket to Ukraine I am the world's greatest moderator Jason Kyle Kennis we'll see you next time on all in love you boys we'll let your winners [Music] and they've just gone crazy [Music] besties [Music] release [Music] [Music]










my stance really took over the comment board yeah sax how was your week off when uh you you gave up on the Pod for a week and then did four media appearances for 90 minutes each on other pods you did six hours you took off from this pod to give your ratings to Megan Kelly and uh Dave Rubin yeah I did uh 45 minute hit with Dave Rubin on Ukraine so be sure to check that out and then yes I do but no Megan Megan Kelly uh Friedberg and I did that the week was that this week or okay surprisingly she didn't invite you back yeah I don't know what could have happened it was so great it was so great that was awesome I love Megan kelly didn't she call you a prick yes you did yes she did [Music] [Music] sax we have not had such negative panning comments on YouTube since jaycal got brick of doomed for his uh Pro Ukraine for sacks not showing up I get doing for asking him a question then I could bring a dude from him getting rigadooned I don't know maybe it's just honestly when will you guys realize that there are three to five million people a week that listen to this podcast a hundred nitwits who comment on YouTube they're neither right nor wrong they should just be completely ignored turn the comments off the only thing that matters are the ratings if you care about that at all and last week was one of the best rated shows we've ever done I think it was highest rated after elon's episode it would have been even better with David so we should bring a dune the brigadooners those nitwits should be ignored I think this is a little bit like a band where like you can't mess with the chemistry of the band and that's the lesson even though there's a lot of infighting in the band like it works and so you don't want to second-guess it too much well and then if somebody from the band gets sick and somebody sits in some incredible guitar players sit in people are like that's not have the T-shirt of I need my guitar player back all right anyway well I'm just glad Ringo showed up 22 minutes late welcome back Friedberg uh let's get started I don't mean to [ __ ] with the bed I'm not gonna [ __ ] with the fan Ringo was an underrated drummer Freebird you have a role here that's amazing I think you're more alive maybe bass maybe bass player you know I'm John bass guitar George Harrison George Harrison yeah actually George Harrison very underrated but you know I'm I'm pretty clear have you guys ever heard uh the version of Blackbird that Paul McCartney did just with the ukulele no I'd like to hear that maybe one of the best songs ever recorded one of the best records I've ever heard fantastic incredible all right listen there's so much to start with but I've black birds swimming in the dead of night night take these broken wings and learn to learn sax were you at a building on Market Street Yesterday by any chance no fly zone the homeless shelter well I think you can talk about Abandoned homeless shelter I think it's fair to say that there will be a lot of people that we know that will go and help make Market Street better make Market Street Great again make marketing absolutely absolutely I'm looking forward to some tofu salads and meditation Namaste literally I think 8 000 square feet is meditation rooms that haven't been used in five years quite honestly though like on the other side of this I would say parag agrawal does deserve a statue for shareholder value creation what 54 20 a share which by the way we said was going to happen and it did happen was ginormous in this market and I just want to see the look on that barista's face when they're warming up the oat milk very very tough knuckled uh company Builders walks through that door yeah the only has left the building let's just leave it at that wow so I guess we can talk about it now uh Elon has closed the deal we can talk about it now well no I'm just saying sax and I could not talk about this because we had you know we couldn't talk about it for legal reasons they deserve a statue in front of the bronze statue for shareholder value creation Market Street in front of that Twitter building best um Tech CEO of the year girl hold on a second so your theory is that he did such a bad job in terms of suppressing viewpoints and and censorship that he actually induced Elon to want to buy the company so he could fix their censorship problem no my theory my theory is simpler than this which is they got great representation to do a very bulletproof deal and it turns out that contract law still matters in the United States and Elon did the right thing and just said you know what I'm gonna own this thing and probably double or triple my money so I'm just gonna go and do it and I'll do it for the benefit of everybody else but my point is more that they and the board had the wherewithal to fight because you know that they could have easily gotten intimidated and capitulated and in doing that whether they were right or wrong or good or bad is irrelevant to me they represented shareholder values well and they got shareholders paid in a moment where the stock market is still down 20 30 40 percent where big Tech is down 50 some of these big tech companies are down eighty percent these guys sold the company at a premium and so that just you know we just have to acknowledge that that happened that's all well and just give you a little bit of background on Twitter historically you know in 2013 the stock was trading at 69 dollars and it got sold for 54. like this company has been sideways for a decade essentially in terms of its market cap and so but there's no doubt that I think Elon can turn this around pretty quickly and make it massively profitable I think and clean up the bot problem very quickly if you can land two rockets at a time create self-driving cars I think you can figure this out this isn't rocket science and elon's done rocket science so I think he's going to figure it out right yeah for what it's worth I think elon's really excited about it and yeah there is tremendous potential at Twitter I mean the company's been sideways because it hasn't done that much in 10 years but there's so much you can do with that product it's just you know there's a ton of potential I think the best way to think about it is he bought a quarter of a billion miles for 44 billion dollars and in the grand scheme of things that is I think going to turn out to be pretty reasonably cheap especially if he can layer in a few of his bigger ideas and uh and I think that those mouths the value of those monthly active users could probably double or triple pretty quickly right I think that was the so I just sent you guys this link from this analyst and he said that Twitter was bought at 172 dollars per monthly active user compared to 81 dollars per monthly active user at meta where they said today so but that's but that's for a very different point which we can double click into because meta is its own bag of you know it's a little bit of an unfortunately you know already attached to it well and I'll explain why because the met the meta problem is it's it's a deep and a very dangerous situation that they've put themselves in which is why their male values are this low but you know if you had done this analysis a few years ago the trade was looking at meta's male values being so high where you would have said why isn't Twitter doing more so I know that this this is a little bit in my opinion cherry picking yeah well I think making everything verified and a path to verification which Elon has talked about publicly many times and payments uh you know he's talked about publicly many times just those two things alone could make the experience of being on Twitter absolutely delightful if everybody could verify themselves this thing could turn around so quickly I'll say I'll say what you're saying in a slightly more I think the most powerful change that Twitter could make today is there are two classes of users people who are verified real world identity yeah and people who want to stay Anonymous correct there is a hundred percent distribution fire hose for people who are real and there is a fire hose for fake people or fake names that you need to pay to amplify just that one simple change will cut through all the nonsense because if you want to see where the money is being spent you will be able to see very quickly because otherwise there'll be virtually no distribution for anonymous fake people and it'll Force those people if they really want to be heard that and that there's something valuable to say to spend against it well this really is about the brigad dunes and elon's been very clear about this you know it's pretty easy to get rid of the Bots and if people are opting in to putting themselves into the top class of verified users well that's a revenue stream right and so all of a sudden you know I don't know how many millions of people would instantly say I'll pay for this for five or ten bucks I think you're verified I think you're right and I think like what we want to do is like you know no offense to all the people out there although I don't really care but no offense but you cannot use Twitter as a coping mechanism okay like I get that life is hard or that you know life hasn't lived out to your expectations or you know there's envy and whatever of other people but to go out there and spew hate doesn't solve anything are you talking about brigad Dunes well there's also just a lot of people that are just in general they're just they're just mean and I'll give you a perfect example there's a woman that I saw on Tick Tock and she's like uh you know been married for 13 years mother of two kids and she was she had a thing that went viral where she was talking about who's in charge her or her husband and it was a very funny little thing and so I've I followed a couple of her videos just to see what else she had posted and one of the videos was how she has some complicated health issues which she was very public about PCOS and how it causes you know issues in losing weight and she posted a pre and post picture of her which takes a lot of courage and she was like brigadooned and it's like what is wrong with these broken people yeah that have to give this woman a hard time and it just it so to me these social media channels are not coping mechanisms they were never meant to be and so you know if they have to go to 4chan or a Chan or Reddit or whatever better to sort of create these honey pots of hatred than to have it spew everywhere because it makes for the rest of us these platforms to be unusable well sax you were the CEO of PayPal with Elon and Roloff and TL and everybody and that crew over 20 years ago and verified you understand pretty well because you yourself have been brigaduned of late and you've experienced this firsthand the psychological torture that made you take a week off from the show in fact because you were so under directs I'm kidding you had a planned week office you're allowed to have occasion which of the two ideas is the bigger idea payments making Twitter into PayPal including that x.com which was the original name of uh that was elon's payment company and he owns a domainx.com which is a bigger idea the payments or the verification which is the bigger idea for increasing shareholder value which would you do first I mean payments is an entire roadmap right so there's a lot that could be done there explain well I mean it's it's about I mean you could layer on a lot of services on top of that so it's not just like one feature look I think they're both compelling in terms of where they could lead I think what's amazing about Elon as an entrepreneur is he always starts with a mission and then he figures out how to turn it into a great product and a great business so for example with SpaceX the mission was to get to Mars to make life multi-planetary you would think that be a spectacularly unprofitable business but in the course of pursuing that mission he figured out the launch business and then the satellite business was starlink and I think starlink's going to be a phenomenal business phenomenal and like and likewise with Tesla he started with the mission of moving the world to sustainable energy yeah and in the process of doing that he created the world's best car not just the world's best electric car but I just think it's the best car in the world and Tesla is this amazing business today it's so far ahead of every other car company so look I think what's cool about what Elon is doing is he's starting with this mission of restoring Twitter to being a free speech platform of being the Town Square it was always meant to be and in the process of doing that he's going to figure out how to make Twitter into an even better product and in into a great business which is not today I think Twitter's losing you know a few hundred million dollars a quarter so there's work to do on all those fronts but um I think you know it's really impressive to see and you know he's still operating at the top of his game I mean 20 years after PayPal some of us are just doing a podcast but he is uh he's still alive some of us are exhausted I know I know we're tired but we're tired and he's like working 68-hour days he's been leveling up for 20 years and at this point he's like a level 99 Mage or something no he's like a crazy it's amazing to to see Freeburg the biggest issue I perceive in the short term for Twitter is going to be what to do with people like Trump and Kanye West or yay and of course that's all going to seem like Elon is making those decisions as an individual as opposed to for the platform Etc should he let somebody like Kanye West I'm sorry yay is Alex call himself who is in the middle of an obvious manic episode back on the platform should he let Trump back on the platform how do you think he should handle those two polarizing individuals specifically look I mean I think this is what's going to be really interesting to watch because there have been very successful very inspirational very intelligent very creative entrepreneurs that have started and built generally kind of open platforms at the beginning only to over time be challenged with the content that doesn't feel appropriate and then they come back and they make the necessary kind of moderation guidelines and they make the necessary edits to the way the platform operates this is how Google operated originally you know and then they ended up saying you know what if we're going to be in China we do have to create a censored version of the internet and they did that and that was controversial with YouTube they've got a lot of censoring and it was supposed to be just a generally open platform for anyone to use and they were even Larry and Sergey were kind of flouting dmca at the beginning and they were like it's not our job to monitor copyright you have to file a takedown notice and they kind of wave their hands in the air over time they realize that that could actually damage and completely ruin the platform and they had to go in and create guidelines and moderation systems and um the same with crew of EV and Jack and Twitter the same with crew of the founders at Reddit and I don't know if you guys you know remember that period of time when Ellen Powell was CEO of Reddit and she went in and cleaned up a lot of the bullying and harassment and nastiness that was going on on Reddit and she got a lot of controversy for why are you closing it down why are you censoring it Elon is a reasonable person and he's going to be faced with unreasonable people on this platform and when that happens he's going to have very tough decisions to make about what kind of platform he wants to have what's the quality of that platform you need to look like and then all of a sudden he's gonna have to look in the mirror and say did I step on the wrong side and you know he's he's idealistic and it's great and it's wonderful and I hope that he's successful but to some degree some amount of moderation is going to be necessary to create a high quality product would you if you were in charge or sell Freeburg would you put Trump back on the platform and under what circumstances and would you allow somebody like Kanye West back on the platform at some point obviously easily yeah you personally yeah look my content moderation guidelines you know it gets very nuanced very quick what do you allow people to say what are you not allowed to say and then if they violate them is there the opportunity for a lifetime ban I don't think so I don't think anyone should have a lifetime ban on these platforms so I'm totally would you do that for Kanye West who has been saying crazy anti-semitic stuff which has real world danger that's already started to spell over where people are putting up banners like Kanye's right about the Jews and they're putting up banners like over the you know 10 Freeway as you may have seen in Los Angeles how would you deal with Kanye specifically in a manic anti-semitic episode that he's been in look I think I think the question is anyone that's saying anything racist or what you know whatever might be deemed kind of uh to fall in that category there is a tagging mechanism and you have to figure out how to create the tagging mechanism based on that tagging mechanism the default is it's like when you go to Google and you search for stuff they exclude porn so all porn content that's indexed on Google index servers um is index is porn and it's default off there's a safe search thing you got to turn um I think off or something to access stuff that Google deems inappropriate sure how do you how do you do that and by the way I'll tell you when I worked at Google we used to have pizza weekends where you would go into the office on the weekends they give you free pizza and everyone would tag you know you'd watch porn and you would tag porn and so you basically go through the indexing servers they show you images and Google images and you click porn or not porn and it was just like hey come and volunteer come and help us do it and there was all these Engineers sitting in the freaking cafeteria attacking porn but actually you know that happened to sax and he saw Tucker Carlson and he said yeah that's porn I think it's my personal support yeah so I think Montclair had yes I think the same mechanism is needed on these social networks which is that you have to figure out well you have to figure out a way to use AI got it to tag content and then think about them is cable just let me finish for one second you think about them it's Cable cable stations on a cable company so they're the cable company and there's different stations and you as a user decide what do you not want to opt into and what do you want to opt into what content do you want to exclude from your version and your experience of Twitter and if you're okay with the stuff Kanye says you're okay with the stuff Trump says you can keep that stuff in if you want to exclude that type of content it's it's excluded for you and I think that's what Twitter ultimately has to become what do you think chamoth would you put Trump back on the platform and seeing you know Kanye West having this manic episode and saying you know basically participating in hate speech explicitly how would you handle those two specific instances in 2022 going into 2023. I think that there has to be a way where nobody is banned forever okay I think that it when somebody is banned temporarily they can be banned for any reason that violates a term of service that's well understood and uniformly enforced got it and I think that's the right of a private company but there has to be a way to get back on in the case of both of these folks there should be a way to basically you know have because of the the step uh the the quantity of their reach some sort of almost like tribunal or you know mediator that can understand what's going on because if somebody's going through a manic episode it's absolutely right to turn that off I mean these guys should have turned him off much much sooner because when you're in the middle of a Mania and I said this last week like you know like for example like this this relative of mine when they're in a manic episode it's 60 70 80 emails a day and text messages a hundred texts that I get and they're honestly they're vile yeah okay and they don't even remember them half the time and and you know they go through paranoia they go through Mania they go through these periods where they think they're completely right they go through these periods where they look completely sane and normal so yeah so it's a tough the most important thing when you have a family member in Mental Health crisis is to get the phone away from them that is a weapon that only continues the loop and to re-regulate this person and then there should be a way to prove that you're back in a re-regulated state to get these tools back but I think that that needs to we just need to acknowledge like there's just a lot of people with mental health issues there's a lot of social media there's a lot of damage that can be done it's not to forgive these people but it's to explain that in moments you've got to shut these channels down and then give them a way to come back when they've re-regulated sex how do you think about it well with regard to Trump I don't know what the continuing reason is for him not being allowed on the platform remember that when he was banned it was considered to be a temporary measure because he was supposedly inciting a riot right so I think incitement to violence is legitimate grounds for taking down speech but once that breach of the peace is over I don't know why it would become a permanent ban as opposed to a timeout so I don't even know how the companies continue to justify the ban on Trump except for the fact that they just think that he's a threat to democracy well I don't think that's for social networks to determine is that who gets to participate in our political process so it's not actually the first thing I would do but do I think that Trump should be allowed back yeah I do with regard to Kanye it's a little more complicated because like you're saying it's hard to know whether he's having a manic episode or he's just you know being Kanye what he's saying right now is probably not in his own interest and probably it would be in his best interest to have a timeout but what I would look for guidance here is there is a Supreme Court decision and my general view on on the content moderation is that these social networking companies should be looking to for inspiration to stream Court decisions because Supreme Court's been wrestling for these with these issues for hundreds of years whereas social networks are just making it up as they go along and there are nine major categories of speech that the Supreme Court has said are not protected because they actually are dangerous speech so for example in this decision called chaplinsky versus New Hampshire which came out in 1942 the Supreme Court held that so-called fighting words were not protected and they Define fighting words as speech that tends to incite an immediate breach of the piece through the use of quote personally abusive language that when addressed the ordinary citizen is as a matter of common knowledge inherently likely to provoke a violent reaction so you know I would use that type of decision by the Supreme Court as inspiration to say that racist misogynistic homophobic and other sort of racial racial and ethnic slurs yeah shouldn't be out on these networks because it doesn't do anything to enhance the public debate now there is a question like could Kanye frame his arguments in a way that is still incredibly offensive to us but doesn't you can say slurs yeah for example he could say hey here are the top 10 media companies here are the executives here's the percentage that are Jewish and this is you know my concern is that this is a and here's the percentage people who are Jewish in the population you could some [ __ ] like that and then you're like okay did he say something anti-semitic you know and you're kind of in this bubble area and there's always going to be edge cases and people are always going to be pushing the envelope and so listen just because we find it offensive and you know it's specifically offensive to me uh that doesn't mean that it should automatically be banned and you know I think slurs slurs banned or out but but arguments I don't know that we should be banning entire categories of arguments and and look part of the problem here is that lots of people are hearing the arguments that yay is making whether he's making them on Twitter or not and because he's there's a total ban people can't really engage with him on Twitter and so he's not getting off-ramped from this Rabbit Hole he's falling into and nobody else who might be a fan of his is hearing the other side of the argument so I don't know that it's ultimately in the long-term interest of the Town Square to be banning you know the argument the you know ACLU and other people have is like hey you put a little sunlight on these bad opinions at least everybody knows who has the bad opinions and you can fight them paradoxically I mean do you really want these folks going to the dark web and you know being untraceable there is some value in kind of knowing who's getting radicalized and hopefully exposing them to other opinions in the same conversation that can all framp them yeah I mean paradoxically while we're talking uh Elon just tweeted at 11 18 a.m Twitter will be forming a Content moderation council with widely diverse viewpoints no matter no major content decisions or account reinstatements will happen before that Council convenes so he's going to take the same approach that Facebook has they have a council as well that Zuckerberg tried to set up so I think he realizes there should be a thoughtful uh discussion sexy gonna be on that Council I have no idea that sounds like a uh the worst Purgatory you could ever be in is to be the person who has to make these decisions like talk about a no-win situation I'm curious shamath we talked last week about Kanye and then Lex Friedman dropped his episode Lex came at it with uh he pushed back on Kanye I don't know if you watched some of the highlights I saw some of those he pushed back pretty hard I watched the whole thing okay so he pushed back really hard on the anti-semitic stuff and we had a discussion last week I said hey you can't platform this guy but it looks like Lex had a specific point of view which is he has a friendship with Kanye of some level and he wanted to try to convince him in this manicness that he's wrong about things did do you think Lex succeeded and he should have done it I obviously we won't question Alex's intent we know I I have had replace Lex with me and Kanye with my relative wasn't on television or whatever but I've had these same kinds of I'll call them interventions and like I said this person goes through periods of lucidity periods of mania periods of paranoia periods of anger and so that's all I saw when I was watching this thing is just what a lot of people in the United States deal in the world deal with when they have relatives who are suffering from one of these things and you know my relative has said the same thing there's nothing wrong with me you know I don't need medication I'm not on these meds blah blah blah I don't want to judge because I don't know him but I'll tell you in my situation trying to like you know for example like this person thinks that you know myself and one other person like we hacked into a computer system of the place that they worked to manipulate the financial records to point to this person as having committed a fraud and has and then thinks that people are now listening and bugging the phone I mean there's all kinds of stuff over and over again and then sometimes they don't think that and sometimes they do and it's like it's magic what I'm trying to tell you is like when you're not when you're in a normal State a regulated State and you're talking to somebody who's dysregulated it's not two normal people having a conversation where you're trying to get them to see the logic of your ways so again I just think that it's not it's not a thing that should be litigated in the media I think it is a thing that is where people that care for this person need to surround them and get them with a doctor to help them rebalance in in in the in the case of our family what it turns out is that this person needs to constantly be re titrated the drugs for them to be regulated that may be different for other people and I don't know Kanye's situation so anyways I I see all that and I and and I and I go to my own family situation which I'm which we actively deal with today and I don't have much of an idea of what to do about Kanye because it brings up too much stuff about what I'm dealing with in the real time with my own family I'm sorry you're going through that and I uh yeah like I said I mean I think Lex had good intent I don't think it's worth doing no he's from somebody he's incredible you know he's a really beautiful empathetic person Lex is in general yeah so I think he tried to do the best job he could so I saw I saw part of the The Lex interview it was two and a half hours and I wasn't going to sit through two and a half hours of it you know I went to the I went to the chapter titles and I was in the middle it was like Holocaust and like right and I was like okay let's just go right to the train wreck yeah so I skipped to there but anyway I think the argument that that Lex should have made or pointed out to Kanye is like go see the the new Elvis movie which is all about how an artist basically got taken advantage of by his business manager and you'll see that this idea is a very familiar Trope in the music business but that manager uh Colonel Tom Parker he wasn't Jewish he was a Dutch con man pretending to be a southern pick so this can happen and it's a very common story and it's got nothing to do with the uh religion or race or whatever of the the business people so and in fact the person in that movie who has the best advice for Elvis is BB King who says to Elvis at a very early point in the movie he says if you don't do the business the business will do you hmm and so look I think Kanye again if I was to sort of Steel Man and respond to it is listen you know what you're describing is a pretty common of artists being taken advantage of is is a common issue it goes back a long time and it's got nothing to do with religion and quite frankly you know there's probably a lot of other Jews in your life who've helped you I mean I wonder the last time you went to a doctor did you notice whether they were Jewish or not you know and so he's developed a little bit of a fixation here of noticing that some people are Jewish but probably he's not noticing when other people are Jewish you've probably helped him yeah so that's probably like the argument I would have made with him you know if I were conducting that interview and you make the argument to a person who's in a manic episode and that just there's no limit they don't even realize what they're saying they forget what they say when they get through the manic episode these parents these paranoias don't tend to come up when you're in a regulated normal State exactly all right let's talk about uh meta Brad Gerson was on last week we've had an ongoing discussion about big Tech entitlement spending the number of employees at these companies on Monday Brad I I think you know got a little worked up on the last pod maybe and dropped an open letter some might say activist he would say constructivist to Zuckerberg and the team over there hey maybe pump the brakes on the cap ax maybe do a riff maybe become profitable anyway the uh revenue and the the third quarter was a complete utter disaster for meta and the stock has plummeted and been under a hundred dollars a share I don't know who wants to start on this one but okay look there's a lot to unpack here so I think I think we should take our time because I think one part of it is meta okay but one part of it is actually about what we talked about a few episodes ago which is like this big Tech put right where they Define the rules of the game on the field for every other startup and I think the third part is just about like the era of big Tech being over and what it means for the stock market if I think if you section it out in those three ways Jason we can have a pretty rich convo I'd love to tease somebody where do you want to start okay so let's let's start with meta so Nick can you please throw up Apple versus meta for a second and let me just give you guys the the talk track and then maybe we can go from there so when you look at Apple versus meta there's this really interesting thing that comes up which is in 2016 you know and we've said this before you could not give Apple stock away they were generating a ton of cash it was sitting on the balance sheet in many ways Facebook was doing the same thing and there was this famous dinner I don't know if it was a dinner that ever happened but that's how the the lore is told between Tim Cook Carl Icahn and I think Luca meistry the CFO and in it what carlikon said is listen I have a below the line suggestion for apple and what does that mean if you look at a p l you have your revenues that's above the line you have costs that's also above the line and then you have your profits and then it's what you do with the profits so what he was suggesting is below the line the fact he had no suggestions for how the business should be run he just said give us back the money and we will reward you the stock price will go up and what's interesting to note here is the black line is the performance of Apple stock as as they've given back and they've used a ton of their own balance sheet cash to buy back the stock okay so they've spent 396 billion dollars since 2016 to buy back stock in the same time Facebook has spent almost 100 billion now here is here's where you start to see the Divergence so you would have said well shouldn't Facebook's stock have reacted in the same way and for a very long time it actually looked like it was right until about September 21 and then obviously this thing fell off a cliff and the reason why it started to fall off a cliff was somebody started to notice that hold on a second even though you're buying back all these shares the bottom of the funnel right you're leaking all of these shares to all of these new employees why are you hiring so many people and this is when people started to uncover what was happening above the line at Facebook and is what caused this massive dispersion so Nick if you go to the first chart so what has actually been going on above the line here's what's going on if you look at the light purple bar Facebook in the last two years have spent 25 billion dollars on reality dabs and they said that they're going to spend you know meaningfully more in 2023 and then sustain that investment for a while so if you do a little bit of math if they spent you know they spend around 4 billion a quarter right now so 16 billion a year that'll go to 25 billion in 2023 and then they'll sustain that what that means is that over this you know 12 or 13 year life of reality Labs as we've seen it these guys will have spent a quarter of a trillion dollars and what I did here was I just wanted to understand hilarious I wanted to understand a quarter of a trillion dollars in the context of other major leaps in humanity so at the left is what Apple spent in its entirety by the way these are all inflation-adjusted dollars for today Apple spent 3.6 billion dollars to create the first iPhone and what they did was they said every subsequent version of the iPhone would only be funded from the cash flow and profits of the generation before it right so they used consumer demand as their guiding principle so it was a very incremental approach iPhone 1 iPhone 2 and now we're on iPhone you know 14 or whatever 13 but the point is it took 3.6 billion to get that Juggernaut off the ground um the Manhattan Project will cost 23 billion in today's dollars to create the atomic bomb Tesla in its entire life spent 25 billion to get to free cash flow profitability and they took this incremental approach as well will create the you know the the coupe uh the Roadster then the model S then the model X they iterated their way they used customer demand and all of that Revenue to fund future growth the cumes spend on Tesla was 25 billion Boeing spent 32 Google and other bets has spent 40. the only thing that I could find in history that is comparable to what meta has basically said they're going to spend is the entire Apollo program which cost in today's dollars a quarter of a trillion as well so the problem is that below the line meta was doing the right things above the line they've created I think an enormous set of pressures for themselves which is you know if you think about the Apollo program this was 13 years of building Rockets getting to low earth orbit then getting to be able to you know orbit the earth then eventually building an entire infrastructure and capability to land on the moon and get back so there was a lot of incremental progress there I think what people don't understand is where is this quarter of a trillion dollars going and is it going to be a leap in humanity at the scale of the Apollo program because it now is becoming the single largest Capital allocation program in capitalism history nothing comes close so I think that that is a really interesting maybe jumping off point to talk about what's going on inside of this business it's I think they're doing all the right things below the line but there's this one major big red flag above the line that has to be probably better explained by them if they want to have long-term shareholders and basically what happened was when people heard this they said this is a dumpster fire we're out here sax what do you can ask the question what happened with the whole uh Brad gerstner's uh proposal was that actually discussed on the call on the earnings call they you know they ignored well I I don't want to say it was totally ignored because I I do think that they should be given credit for a couple of things I think that the Core Business continues to March forward and they basically said look we're gonna slow head count growth some teams will shrink I think the problem is really in this reality Labs the amount of investment that they're making is so outsized and so abnormal and doesn't compare to anything anybody's ever seen I think everything else in the business seems to be actually quite functional so the problem is that this above the line thing though has become so big it could sink the business you know it's very very hard to see an investment case for a quarter of a trillion dollars of money in the door before you really start to see something magical now they may have something super magical that nobody knows about that they're going to unveil and say ha See told you and maybe there should be a set of outcomes where we plan for that but the reality is it's you know 25 billion dollars a year for the next umpteen years and it's it's and I think it's 10 billion where did the 25 billion come from no this number it's 4 billion a quarter right now so 16 billion a year and they said that they're going to significantly increase it to 2023 so I just assumed it was a 50 increase maybe significant means a hundred but 16 goes to 25 and they said they're gonna keep going at that pace and so if you run that out till 2030 that's how you get to 250 billion dollars you think there's a business here in vrar Saks you think this will be the next platform I guess that's a a key question to ask here yeah I mean I I like I actually like these Oculus products I think it's a very cool product the question is really just about the magnitude of the investment level but I think there is a future in VR and AR and it is a you've tried the Oculus headset before it is like a very magical you know experience with software one of the most magical that I've had the question is just we're talking about magnitude and time frame this I think also comes to mind for me sacks like uh I everybody seems to you know try and then say Oh My and then say goodbye to these headsets like people buy them they try them and they're like this is incredible but there's no use case for them on a regular basis we just invested in a company that is creating professional flight simulators using VR as a component education yeah I think training is actually a huge use case huge and by the way these are not like video game flight simulator programs these are actual they create physical cockpits with knobs and dials and stuff it's just that the pilot is using a professional grade VR headset and so they're able to load you know a lot more training programs and scenarios and they're able to train on more planes they can like change up the cockpit by the way the the cockpit's on Gyros so it actually moves around let me put a date in a different way I think that we should assume that VR and AR is going to be a really important part of our existence and I do think that as David said many of these experiences are magical I think what investors reacted to was spending 25 billion dollars a year needs to be measurable somehow and I think what they said is the things that we're seeing don't necessarily tell us that this bed is going to make any sense at that level of spend so if you were spending 2 billion a year or 3 billion a year I don't think people would have said anything it's just a magnitude relative to the progress that's being demonstrated publicly and and that's the thing that I think the Tesla program got right the Apple phone program got right the Boeing program even the Apollo 13 program for that Quantum of spend so it's not to say that you can't spend a quarter trillion dollars over the next decade but you gotta eat what you kill you have to be able to show progress in a way that says Ah this this investment is tracking Freeburg I think the biggest issue he's having is he's trying to build a moon shot that you'll only get to see when I'm done it's like hey I'm behind the curtain over here I'm Willy Wonka I'm gonna come out with the most amazing chocolate bar in 10 years and after I spend 100 billion dollars but don't worry it's going to be awesome trust me shareholders it's going to be amazing and with consumer products in particular not guys you keep saying 100 it's 250. yeah whatever it ends up being I in general I think consumer products you want to see them in the market and you want to iterate to success tell me one consumer product that launched and didn't iterate after launch and didn't kind of evolve over time in a way that responded to what the market was telling the Builder into that product but free Brick In fairness to them they're doing that too it's just I think what people can't square is we see the next gen oculuses and then we see the spend and we think that they're upside down relative to what we're seeing in terms of progress I think that's what people are reacting if you were spending 5 billion a year this wouldn't be an issue to a month right a nothing Burger nothing people would say good idea throw a long ball I think that there's two kind of ways to think about the distinct things that they're building one is this Hardware platform with oculus and a better kind of experience for immersive experiences whether that's VR or ar the second is what's all the software layer look like and what goes on in that platform that's where this thing seems to be pretty short and where people seem to have a lack of confidence and conviction the hardware seems super interesting but I gotta tell you epic games just raised money earlier this year at a 31 billion dollar valuation if Zuck was a smart guy he would go to 10 cent and cut him a check and buy the whole thing for 50 billion and you know buy those guys because that's a platform that has a couple hundred million active users is making money has a really deep immersive but two-dimensional experience it's not 3D it's not on VR right and on top of fortnite and on top of their um their engine that they've built um there are just countless experiences and worlds and interactions and models that exist today that are already active that are being iterated that have been evolving for years and if you look at where fortnite and some of the tools and experiences that have been built into fortnite over the past couple of years sit relative to when fortnite was first launched I don't think that Tim Sweeney and that team would have ever said hey this is where we're going to be in a couple of years that's what we're going to be doing it was part of an evolutionary experience of building a great platform and having an Engaged user base and unfortunately there doesn't seem to be a great engaged user base in the software layer of what he's built here today making it very difficult to track a path to get consumer feedback and to identify where that goes over time the hardware experience totally understand that that takes time to build something incredible also should be in the market and getting iterative feedback but really that that software piece is what what feels short to your point I think that that's another great example of a below the line decision that they could have made with all of this money you know if you compare what Brad asked Facebook to do on Monday versus what icon asked Apple to do in 2016 you know icon basically said just make this below the line change and everybody will be happy it's a Do no harm solution none of us are getting in the way we're not telling you how to run the business the thing that I think that you know what Facebook had to react to was Brad suggestions were fundamentally above the line it's like you know firing 20 of the people or 30 or changing the capital allocation would require some changes to strategy and I think this is a a good moment to recognize it as as much clarity as Brad's letter had and as much sense as it probably makes to Outsiders looking in the minute you have to tell companies how to change above the line it's just a good reminder to me that no it's not going to happen because these folks will not want to make those changes they don't you're saying Zuck won't make the changes I think it's natural human psychology I think you want to make those changes yourself you don't want to be told what to do got it sax what do you think this is going to do to governance in Silicon Valley writ large probably nothing really excited it's not going to change anything well it is it is interesting if you look at elon's Twitter deal there is no dual class everybody has this is one class of security this is one type of stock so it's simple majority voting Elon actually had the choice of doing dual class and he decided not to so that's pretty interesting so if people want to follow elon's example then they would you know not not necessarily go for adults Tesla doesn't have super shares either and you said it many times if you want to vote me out you can vote me out right SpaceX either yeah he's putting his neck on the line I don't know I has a SpaceX should I have no idea class structure yeah I can't remember SpaceX isn't public yet so maybe it doesn't matter like they haven't reached that decision Point yeah yeah yeah yeah I will tell you I just I think starlink has such a huge opportunity I just got starlink for two locations as a backup because you know you lose your internet a couple times a year and you can get these routers now that'll fail over so since I'm doing business like I can't really lose the internet so for a thousand bucks a year I can have starlink as a backup and I started using it and uh the speed is getting pretty compelling already uh like Zoom calls you can't tell the difference right now most of the time and certainly for web browsing or watching a movie you know it just works so I I could see many companies putting in starlink even if they have a fiber line or whatever just as a backup that business alone could be ginormous just to provide both sides of the story here I mean the reason why dual class emerged and was seen as viable is that if you look at the historic performance of internet companies the ones that have done the best perform the best are the ones where the founder stays involved for a long time and the ones where the founder checked out like after a few years and hired a professional CEO those are the ones that went off the rails it happened again and again so there there is an argument for dual class in the sense that you keep the founder involved and you sorry you avoid a power struggle that's not what happened well but that was why it was considered acceptable well I think it was considered acceptable because in the Google bake off all these Banks were clamoring so hard and you know there were two vectors of iteration one vector was on the way that you know Google wanted to do this uh IPO process they pick Credit Suisse they did this Dutch auction the other one was the bankers basically pitched them on a dual class voting control structure and was Morgan Stanley Morgan Stanley and once Google got it everybody else was able to copy because all the bankers realized that if you want to win a bake off you're not trying to win over the CFO you're actually trying to win over the CEO and giving that person control turned out to be an incredible commitment uh and a way to win the deal and so I actually think it was never a governance issue or a reflection of how value was created it was just basically a feature that you that one Banker used in an IPO Bake Off to try to differentiate versus another this is why you know like I said like Elon has never cared about that stuff because it's like if I'm not doing well vote me out which is so clarifying because he realizes that that's actually the best check on him making bad decisions you know and I think part of it is why he's done so well you know one class has thought he was able to negotiate an incredible compensation package and it's he's he has Clarity a lot of the few things of the business that matter but I think he's also more compelling than some of these other guys and there may be some degree of feeling like this is a mechanism that other people need that Elon has a degree of confidence and a degree of of Charisma and salesmanship that gets him what he wants I just want to read you guys the excerpt from Larry and sergey's Founders letter from the IPO in 2004. as a private company we've concentrated on the long term and this has served us well as a public company we will do the same in our opinion outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly Market expectations sometimes this has caused opportunities to manipulate Financial results in order to make their quarter and they go on and on and on and they say look you might ask us how long is long term usually we expect them in a couple of years and they go on many companies are under pressure to keep their earnings in line with analysts forecast therefore they often accept smaller predictable earnings rather than larger and less predictable returns Sergey and I feel this is harmful and we intend to steer in the opposite direction I think that the statement that they made really resonated in Silicon Valley at the time particularly during this era of what people were calling web 2 and the internet was being rebuilt and all these businesses were starting to thrive and it was like we have this massive road ahead of us this long road ahead of us and we can really change the world but in order to do it well in order to do it effectively we have to as entrepreneurs as Engineers be able to have the freedom to operate for the long term I don't think it had anything to get stuck in the short term had nothing to do with anything that there was no pressure on them it's not like they shied away it's not like that super voting control allowed them to make one seminal decision there were quarters where Google was getting a lot of heat for the amount of money they were spending on capex because they were building their own data centers they were building their own server first they were building their own eventually dram they started to build their own switches every element of how Google built a competitive advantage over time was difficult for analysts to understand but you're not saying but you're not saying the obvious thing the reason why they were allowed to do it in the end was because more and more users used their product because it was better and better and they consistently meet and beat every expectation this is not I didn't need to use this option this was not I didn't need to call this option this is not a company that went back and forth between meeting and missing expectations okay they were up and to the right they were they were up and to the right is correct that is the general principle but the time to return the roic the time frame to hit their roic targets was long and it was hard for people to get that when they bought YouTube true that is not YouTube David watch YouTube and they spent tens of billions of dollars investing in YouTube before generated cash again I think that that would yeah but you're not math you're not what you're saying is not true it is not mathematically true what you you're saying there was no 13-year royk play that they executed on not true and you can just both agree they put their own they put their own fiber optic lines across the oceans the capex I understand scrutinized and not well understood I get it you can read but tomorrow you can read the analyst reports and see how difficult this was all I'm asking for you to do is look at a head voting shares is what gave them the ability to do this [ __ ] I think that if you look at their performance their ebitda margins and their roik was exceptional when they were making those investments in fact I would say the opposite I would say that they were surprised by hi how by how high quality their business model was they were generating so much cash but they were probably thinking back in the day was oh my gosh we need to make sure that we are actually making long-term Investments and now we have the ability to do it because we have all this cash we didn't expect and we should probably bleed off cash so that we don't show 50 gross margins to raise all of the attention of regulators and everybody else and so what do you think Zuck is doing what's different today I think that they have an incredible core business because he's got good business good ebitda margins good Revenue growth what's different they have an incredible Core Business and they have decided for whatever reason to make an enormous bet and that bet could be a very good bet but the way that you make a bet and you've said this well is you have to look at incremental progress and you have to demonstrate that all of these bets make sense because the problem is when you get compared to the Tesla program look Tesla is Reinventing an entire category trillions of dollars of energy generation and transportation but they did it on in one year of meta reality lab spend Apple reinvented an entire compute platform on one quarter of meta's reality lab spent that's not a judgment that's just a numerical observation so if you want to get people on your side you just have to be able to double click into that in an elegant articulate way and say here are all of these things that justify 25 billion dollars a year hey guys let me show you a chart here's a chart of alphabets Capital expenditures by quarter and here is their revenue the blue line at seven billion dollars right now this is my point yeah they struggled to find ways display they they create a Project Loon they were gonna do balloons guys they wanted to do fiber they wanted to build they wanted to build they wanted to build at one point a ladder to the Moon a ladder they thought they could go from Ted to them but yeah whatever an elevator is in that seven point to climb there right the elevator was in the purple line yeah and somewhere in there they spent a billion or whatever on maps and it ended up being a phenomenal asset when the whole world moved to mobile I think we're not seeing the obvious thing we spent a lot less on them we're not we're not we're not saying the obvious thing which is great leaps of progress in humanity are not correlated to Dollars all the time in fact most examples are the exact opposite which is it's more about small and extremely Nimble and talented management teams that generate human progress and again if you go back to that first chart of Apple versus meta you know the fact that you've hired so many people to work on a category with so much money it just violates a lot of pattern recognition that people have historically seen so all I'm saying is maybe this is a great bet they just need to do a better job of explaining this would have been so much easier if you had just put yourself just I'm saying this could be this could have been such a better transition he should have put Cheryl Sandberg a CEO of the Facebook Corporation he should have become CEO of meta and then he should have ran that other business to print even more profits and then if you look at some of their forays into building a super app they edit Facebook Marketplace to Facebook and it was a huge hit they started to pull the a Commerce string over at Instagram it started to work there's just no focus on those products if you look at the Facebook collection of billions of users what apps could you add to that you know whether it's payments they did the whole crypto thing they gave up on that it seems like there's no leadership on the Facebook side that actually wants to take take swings over there they just are obsessed with this one thing it makes no sense to me I I think that there's probably part of it which is that you know when you're working on a thing for a long time there's a certain personality type that loves the Mastery that comes from working on the thing for a long long time yep and then there's a different personality type that likes more shiny new things yeah and you kind of have to have a balance of all of those different people um and so maybe what we're seeing as well is that you know you're right maybe the boring business was just labeled too boring internally and there wasn't enough heat around wanting to work on it forever nobody wanted to keep grinding and so you wanted to throw these big Hail Marys all I'm saying is you just need to explain the Hail Mary all right let's by the way let me just ping you on this so the um meta spend in the quarter relative to their revenue it's about 15 are the the virtual reality stuff it's about 15 billion 15 does that sound right I don't know but they said it was 4 billion this quarter yeah so 4 billion out of 27 of Revenue so it's about 15 and alphabets last quarter Revenue was 70 billion and they spent about a billion billion let me show you I actually I actually have this chart handy because I was talking about it on which is 1.4 so on a relative basis alphabet is spending one tenth of what meta is per dollar earned or top line revenue earned um on their other bets category so tomorrow do you think it's a relative spend problem that because they're spending 10 times as much as a percent of Revenue that it's causing so much heartache even if it is directionally correct if you want to see the capex versus Revenue here's that uh on the screen right now yeah no we know we know what we haven't shown this is Google and and meta on the same chart the blue line on the red on the bottom nine billion in capex for Facebook 70. for Google is this your new like charting tool that you guys have built yeah no no this weekend startups all the time what do you use what is it yeah actually beep it out because I don't want to give them a free response I'm not giving a free promo they didn't let you invest whatever I mean truth comes out they didn't let him invest no no they've been around forever they've been around forever it's a good product I've used them just a beef that's a good product listen if we're gonna promo something it's gonna be call in or can you throw up the histogram super gut this is super gut charts so look this is the new charting feature on Colin I think the problem is look here's the problem let's just say that you're an analyst that works at a large hedge fund or a mutual fund and you woke up on Wednesday and you you know had a decent day and then you went into the earnings call believing that you know there's a this is there's a value play here and there's a lot of upside which I think there is actually you know this company can throw off an enormous amount of cash but then what you hear is okay we're spending four billion a quarter that's going to go up materially and then we're going to keep 23 spending levels roughly the same in the to the Future so then you have to go back and build a model you're going to be hard-pressed to not get to this number maybe you don't get to 250 maybe you get to 200. my point is all of a sudden you have to go back into your you know portfolio manager and say uh you know they're going to spend all of this you know after tax cash flow on this stuff or sorry not after tax capsule but you know below the you know above the line spending on this stuff which won't come back to us as shareholders and we're going to dilute the stock two or three percent a year so that's another 20 dilution and it just becomes what I again I've said this before it you move the stock into What's called the two hard bucket you know from the it's obvious to wow that's really tough and I'll just take a wait and see approach you know I think yesterday there was a quarter of a I think a quarter billion shares that traded hands uh of Facebook just a ginormous number and so you look I think you think that's tax loss harvesting too at the end of the year maybe some people want to take the loss so there's tax loss harvesting for individuals by the way there was a couple comments which we should talk about and explain what tax loss harvesting is but a bunch of these mutual funds year-ends are actually October 31st so to your point Jason you know the stock basically gets decimated 20 you know 25 percent in a day the T Rose and the fidelities are like all right book the tax loss and be done we'll we'll re-look at it next year quote unquote next year so you know if you put on the spread trade so we talked about the spread trade there was a big hedge fund manager that you know on November 6th right when we were basically calling the top of the market told people to sell one of the trades that he put on Nick if you want to just throw it up was this long Google short meta spread trade he called to tell me that you know he closed it out yesterday this is how that trade did so yeah there was just a lot of folks that just kind of like went to the exits and said you know what we're kind of done for the short term I just think that it's it's a it's a moment in time where those folks have to realize that they just have to explain a little bit better how they want to spend the money and show a little bit more incremental progress that justifies that level of spend otherwise people will be a little skeptical they'll build their own histogram and it'll violate too many rules and so it goes into the two hard bucket okay we got macro we got Ukraine and well I think I think the you should talk about big Tech because Amazon puked as well Jason the can you just throw up the big Tech chart because I think like you guys should see this because I think this is very important for Silicon Valley Amazon reported their Q3 earnings yesterday Thursday total revenue 127 billion up 15 year over year five percent quarter of a quarter net income was 2.9 billion and they're predicting uh they're they're giving slower guidance going forward I mean what's incredible on this chart is that you know when when everybody talks about being along the S P 500 it was always really a proxy for being long Amazon Facebook Google Microsoft and Apple and at the peak you know in May of this year it was still you know 25 cents of every single dollar of the S P 500 were these five companies and you know we always said the market bottom will be when the generals quote unquote get shot you know to borrow a Fraser and Gavin Baker and it looks like the generals have been shot yeah and what's incredible is this week every single one of those companies other than Apple really reported pretty crappy earnings they got totally taken to the woodshed the percentage of the of these companies as a percentage of the s p is now you know off by 500 basis points it's down to 20 yet the markets are ripping higher today so I think it's kind of what we talked about three weeks ago like the bottom is kind of in for the short term you know so it's really exciting actually to see I think this is the point where you have to now start to get pretty constructive about where things are going because if this stuff could not bring the market down it's hard to see something other than an exogenous event probably some Russia Ukraine event really having a negative impact so to me I'm kind of like I don't know it seems like pretty bullish for me also GDP was 2.6 so I mean the this this very weird conflicting data we had two negative quarters of growth we're in a recession then we have a the third quarter is up 2.6 so okay but remember Jason I I said that we were gonna have a double dip that was sure that was most likely thing so we had this sort of mild technical recession based on nominal GDP growth not being bad but simply not quite keeping up with the inflation rate yeah now things are a little bit better but I still think the huge recession is to come next year because all the interest rate increases we've seen so the FED is you know pedal to the metal on interest rate increases just like they were pedal to the metal on printing money and so first they you know they were too loose and now they're probably being too tight too fast so I think we're headed for a huge recession next year and I think you're seeing that in in the softness of all these forecasts yeah look at that look at look at the the mortgage uh rates right now something like 7.1 percent um they broke the backs of the housing market the inventory and prices inventory shot up prices have shot up new mortgages have uh gone down and you know we we talked about job openings here's the the Fred chart for job openings real quick you can see the the peak we were talking about we were wondering if that would come plummeting down well here it is folks yeah plummeting down from 11 million uh losing a million in a month yeah job openings coming smashing down there's the FED fund rate you know that's a pretty high ramp so you think double dip recession what do you think Freeburg chamoth in terms of what 2023 looks like you're sort of saying a bottom is forming I kind of agree with that I think the stock market is going up then it'll go back down because I think what David said is right but for the short term this thing is going up short term up we've generally been positioned for it to go up and uh and at some point we will reverse and position for it to go back down but it's going up sax it seems like you took a week off from the all-in podcast and people stopped talking about Ukraine uh you want to give us an update I mean obviously the war is not over but it does seem like it it somehow has fallen out of the Public's Consciousness a bit I don't know if I go that far there was um the big event in the Ukraine war debate this week was that the house Progressive caucus put on a letter signed by 30 Progressive members to merely suggest that while we continue to fund Ukraine on a virtually unlimited basis we also in parallel open up a diplomatic track with Russia to mitigate against the threat of us being drawn into the war and specifically a nuclear war and just that very I'd say Anodyne letter that very tepid sentiment really they weren't questioning in any way the providing again of virtually unlimited support to Ukraine that met was such a fierce reaction on social media and in the traditional media that I think all but one of the signatories recanted or walk back the letter and kudos to representative rokana for not being one of the people who recanted he so tall and gave an interview on CNN and MSNBC saying why has diplomacy become a dirty word I voted for every single appropriation to give Aid and weapons to Ukraine I'll continue to do that but I don't see a problem with us maintaining diplomatic relations we might need those to avoid an unwanted escalation well and here we are kudos to him for standing tall but it's amazing to me that the progressive caucus which used to be one of the groups in Congress that questioned American involvement in Foreign Wars like the Iraq War they basically they they have moved off that and they they threw in the towel so quickly on this it was really kind of pathetic to see I mean it really like this is back to Shakespeare like politics makes for strange bedfellows you find yourself aligned with the most left part of the democratic party in trying to just say hey maybe we should negotiate peace a little more further wants to pursue the right foreign policy and I don't really care which party has said you would you would actually donate to anybody who is pushing for that so did you actually make any I mean I I just happened but I I plan to donate to members of both party who push for a correct foreign policy which I believe needs to be a little bit more restrained a little bit more questioning of what is in it for the United States and we need to be careful about overextending ourselves and we need to ask what is in America's vital interests you can support ecoc be coming to the uh with it with AOC she's proud she recanted so she's one of the ones that were candidate what do you think happens in a situation like that well how do they get them to recant yeah like why what is the point of recanting something that was so benign it's not totally no but what do you think like what what's happening behind the scenes like why are people so afraid to say that you know you can be in support of Ukraine but also still try to find a resume why was that turned into such a Scarlet Letter it's a great point and I think it just shows the heat right now on the issue here here's what I think does it do that or does it just show how the progressives as just kind of clown tones I mean it's it's kind of sad I mean jayapal who is sort of the leader who put out the letter threw her own staff under the bus and I guess there was this snafu where the members all signed this letter in July and then held it for a few months and then they put it out two weeks for the election I can see why that timing didn't make sense I don't know why like they release it now not two months ago not three weeks from now after the election I can understand all those political considerations but once you put the letter out to stand by it don't throw your own staff under the bus because like you're saying the letter was really a pretty Anodyne statement of Hey listen do you think we can just have diplomacy on a parallel track at the same time that we're arming Ukraine I just don't see the downside but look here's why I think they took so much heat is there's a lot of people on this issue Who start with the end result of what they want and the end result that they want is uh Putin and Russia leave Ukraine with their tail tucked between their legs and they basically don't get one square inch of Ukraine they believe that is the only acceptable moral outcome here and they may be right about that but then what they're doing is they're kind of reverse engineering all the beliefs that they have based on that outcome that moral outcome they want to get to so for example for the longest time you heard things like Putin is definitely bluffing about using nuclear weapons well how do they know that they don't know that they can't say that for sure but it's what they want to believe because if you believe that nuclear war is a possibility you might not go all the way for that Maximus position of the only acceptable outcome here is Russia leaving with this tail tuck between its legs and I think I think the same thing is happening here with diplomacy is people who want a certain result in the war are afraid that diplomacy might result in something less than that that's not a reason not to engage in diplomacy and it's not a reason to deny the potential of this war to spin out of control potentially into a nuclear war sax is like a walking thesaurus so Jacob for you I looked up Anodyne and it means not likely to provoke dissent or offense inoffensive often deliberately so yeah like uh whatever I mean listen I got a thesaurus over here also I didn't know what it meant so thank you but seriously what is the I want to know of the Fallout from two things and then we're going to do science corner so number one what is the I've been getting a lot of oat milk stands emailing me different brands of oat milk have been emailing me this week just give us an update generally speaking on the ultimate milk crowd and your inbox tomorrow oh they're trying to they're definitely trying to Brigadoon me but what these people like you know what's so funny about these folks they have no judgment clearly because they can't even say you know what it actually tastes much crappier than these Alternatives but I choose to for XYZ reasons that I could respect it's the oh my God it's incredible and it tastes so much better you know look at this little mustache disgusting it doesn't foam properly it tastes like dishwater it's ridiculous and then Saks discussed this this horrific uh illustration of you in the New Republic I saw um look like Dolly broke and they use Dolly to make that illustration no offense to the illustrator we're gonna paid a thousand bucks well it was like it was free ozempic sacks I thought it was yeah that's the problem if you're chubby sacks or chubby J Cal it sucks when people base an illustration on a previous one but it's like a dream I mean you look like well look they got Elon and Peter up there too it's such a stupid hit piece Elon looks like Hugh Grant uh Peter Thiel looks like he's rolling on uh Molly he's got molly jaw and also he's uh he he you show a lot of stubble which you also don't have but look how fat they make you look look at your feet look like yeah Jesus my Lord but what I mean what's going on in terms of the general reaction to the amount of attention you're getting for political commentary now sex David sacks will be our next secretary of state well no I'm here for it I can't wait I'll go along that David sacks will be our secretary of state within two or three presidents he's got to make a little more cash My Views My Views are so out of step with the foreign policy establishment I wouldn't buy you a win that's why you that's why I wouldn't feel the need to be so out there on this issue if the foreign policy establishment was doing its job if you actually had you know people from the policy Elite going out there saying sensible things about Ukraine it wouldn't fall on me or people like China like Elon basically posted that straw poll on Twitter which was totally reasonable got condemned for it and then Bill Ackman actually who's been in Twitter spats with me before we've been on opposite sides of issues actually came out and retweeted something I wrote as basically being supportive because the weird things want this war to escalate out of control I think the weird thing is people are there's a group in the in the media class other podcasters other journalists who are saying you have no right to talk about this topic and I what I said is you know Hey listen sax and I could disagree about things on the margin here or there but I'm glad we're having the discussion shouldn't all Americans be having a discussion about our foreign policy and what our goals are that's our civic duty is to have this discussion so whenever you hear the political class the podcasting class the coastal Elites which we are part of when they tell you you can participate or this person can't participate in the discussion because they're successful in this other aspect of life that's complete [ __ ] everybody should talk about this and disagree or agree and try to work towards some common understand ending you're right so first of all whenever they say listen to The Experts and you're not an expert first of all they're expressing an opinion themselves and they are expressing equally passionate opinions on the other side about this whole Ukraine war so first of all why are they allowed to have an opinion so whenever somebody uses this you're not allowed to have an opinion argument it's always very selective and it's only applied to people they disagree with not to people who are equally inexpert on their side of the debate so that's Point number one hold on point number two is I've listened to plenty of experts okay I've listened to the IR scholar John mearsheimer I've listened to the International Development Economist Jeffrey Sachs I've gone back and listened to our former ambassador to the Soviet Union Jack Matlock I've read George kennen's interviews I've read Bill Burns our current CIA director on this matter there are plenty of experts who warned that our policy of trying to bring NATO right up to Russia's border would eventually blow up on our faces it would poison our relations with them and lead to conflict and this war so there are plenty of authoritative sources going back many years on this topic and the problem is that the people on the other side of this debate simply want to memory hole all of these warnings and deny that they that this war was ever predicted because if this war was predicted it means it could have been avoided and they don't want to admit that this war could have been avoided or how about this how about war is messy resolving things internationally with dictators can be very hard and nobody wins in some of these cases no there's no perfect outcome here and you could hold in your head two things number one Putin's a dictator we need to hold the line and make sure he doesn't invade other countries and number two yeah you probably want to keep normal relations with these people and negotiate with them to resolve conflict I'm getting a little concerned about the saber rattling on both sides in China you know we're escalating all this chip stuff we're escalating and Xi Jinping is taking complete control I'm wondering who's going to meet with him who's going to talk to Xi Jinping about how we could collaborate together who's left to talk to him Tim Cook there's a there's a bunch of unforced Errors happening in China how do we de-escalate well there's a bunch of unforced errors that you have to let play out because they have huge economic implications so I don't think this I don't think this is a time for again I think David's generally right we do not have time for adventurism right now because even before we engage in some of these other places there are a lot of you know uh headwinds that are working against for so for example in China you have these massive demographic headwinds that are just building um we have to see what the chips act does in terms of follow-through to China's ability to expand militarily or technologically there are all of these things that that you owe as a citizen of the United States to see some more data on the ground in terms of its empirical impact before you re-underwrite a different strategy right now the strategy is working you know we we are observing this you know one China policy I think that's the right thing to do and now let all of this other stuff play out can I say one thing about this yeah so what the administration did in Banning uh China from buying from us or any of our Allied countries these Advanced semiconductor chips that's what they did they'd only banned the sale of trips to China they banned the sale of equipment that could make the chips and they even prohibited American citizens and companies from working in China to basically help them set up their own foundries and and Chip Fabrications so they are essentially cutting off China from Advanced chips that's the goal here and you know we've talked about on this pod before how chips are the new oil right these Advanced semiconductors are the new oil so this is almost like an oil embargo of China if you go back it is yeah if you go back and look what is the reason why the reason why is they don't want these in weapons correct that is the stated reasons that's the tip of the spear but I think the more impactful mechanism is to prevent an entire layer of infrastructure to be built in China that allows them to advance all of these next Generation cyber capabilities including a whole bunch of things in AI that we want to make sure that as often and as often as possible is is for the United States and our allies as we choose so all this next Generation silicon will do a lot more to push that forward and so if you put that in the hands of Chinese technology companies or Chinese governments or the Chinese government in the parts that are actually technological you actually increase the surface area in which you compete by preventing that technology to go to them you decrease the surface area in which you're competitive and they are one or two steps behind and have and are forced to build it themselves so Friedberg if that happens do you think that China escalates and says well why are we building iPhones here no I think China makes decisions a little differently than perhaps U.S policy makers and foreign policy makers make decisions they think forward and calculate the series of events that will follow from that decision whereas we are typically reacting to some event that's happened in the past not necessarily always thinking through the second and third or third order effects and consequences of our decisions so the China calculus would likely look something more like if we were to say stop making iPhones here we would estimate that the US would do the following to retaliate back against us and as they do through that calculation you end up realizing pretty quickly that there isn't as much to gain as there is more to lose by doing that that would be my guess I'm no China expert I'm no foreign policy expert but from my understanding of how Chinese policy makers do think and do make decisions it's much more about what's the rational calculated set of outcomes that will emerge and evolve from this decision and in my experience talking with people in the United States that are in various communities of influence it's much more about let's do what we consider to be the right or moral thing right now and in response and in retaliation and let's do an eye for an eye so that's why I don't think that they're likely to be the first step in an escalation escalatory ladder there'll probably be a few more series of provocations before that may happen at which point it may need to be kind of an inevitable step that they'd have to take but again I don't know I mean so so in terms of the motivation for this I think it's pretty clear this is an attempt to hobble the Chinese economy not just that all their weapons programs but their economy itself and hold them back and slow down their rise and their rapid growth now is that a good idea I mean I think what this shows is we've moved from sort of economic logic which is about finding Trade Surplus and win-win scenarios to geopolitical logic which is about balance of power and this sort of ban on sales of semiconductors to them it's very much geopolitical because it's hurting our companies but it hurts China more and so it's about it's about it's about increasing our balance of power against them and now listen I think you can make the argument that we were overdue to be thinking in terms of great power competition and geopolitical rivalry and this is an attempt now to correct the bad decisions that were made 20 years ago in terms of how we fed the Chinese economy until it became a pure competitor of the United States so I think you can make those arguments the the thing that concerns me most about it is do our leaders really have the bandwidth to manage a second front in the sort of great power competition right now while we've got Russia and Ukraine going on on the one hand are they really ready to manage an escalation of the competition with China and to freberg's point have they really thought through all the second third fourth order consequences of this have they thought through the incentives this may create on China for example to take Taiwan I mean if Taiwan is the place that makes all these chips through tsmc for example and we have now cut them off we have now embarked them from these chips does it strengthen China's incentive to go after Taiwan does it strengthen China's incentives right now to help Russia in its war in Ukraine in retaliation because they don't want to see they don't want to see Russia decisively defeated and then they will solely be in the gun sites of of U.S Hawks so I think there's a lot of things that could go wrong here when the U.S is now escalating geopolitical tensions and competition not just on one front but on two fronts and and especially given how weak the U.S economy is and that we're headed into a major recession next year it just feels to me like they are you know they are um kind of putting their foot on the accelerator in terms of geopolitical risk at a time when we're not really in a great spot to be taking those risks also on a foreign policy basis is there no Common Ground are there no things we could collaborate on and work on together right and that's the thing that seems to be missing in the foreign policy for the last couple of administrations is are there things that we could be building together are there things that we could be working on the environment energy sustainability education I I don't know what it is but it felt like you know with China for a couple decades we felt like we were working in a very collaborative way and now it feels like every single instance is adversarial right because the problem is that those policies of constructive engagement that you're talking about fed the Chinese tiger until it became a dragon yeah another size of uh Vega or something that that's also 100 levels and the U.S policy establishment in the pentagon look at the rise of China and they're like what have we done we have created a pure competitor to the United States we need to stop their economic rise and I think that again I think there is a geopolitical logic and strategy to what the administration has done but I question the timing of doing it at the same time that we have this unresolved war in Eastern Europe well it is nice that we're seem to be getting some of this onshoring of chips and that money is actually starting to flow it does seem like we're thinking a little bit like in decades and strategy say the other part I think Biden and blinken have done a good job they've done a good job on this right now they've played it well well I don't know about that I just come on first of all questions did a horrible job hold on a second Biden Mike and did a horrible job hope the tiger hold on hold on you poked the tiger no hold on they I'll tell you where they did a bad job is last year they had a whole year to negotiate to avoid this Ukraine war from happening but I didn't even had a summit with Putin on June 16th last year they never engaged in diplomacy and now they have stacked this geopolitical risk with China on top of the risk they've already created in Ukraine I this policy may or may not ultimately turn out to be correct I like I said I can see the strategy behind it but I do not believe that Biden and blinken have thought through the second third and fourth order consequences just like Friedberg said so I think it's a little early to be giving them credit on this all right uh free but you got anything in the science Corner we gave we gave saxes red meat and he ripped it to shreds now it's time to give you your soy tofu Burger I'll give you guys a quick uh a quick science Corner please please so we've talked in the past about the human gut biome 10 trillion bacterial cells living in our gut biome and it turns out and there has been this theory for many years that a lot of human disease actually originates in the gut and there's increasingly evidence of how and why this happens so it turns out that your immune cells can sometimes see a protein on the outside of a bacteria that sits in your gut and it attacks that bacteria and it tries to get rid of it that protein can look a little bit like a human protein at some cell in your body and so that then triggers an autoimmune reaction meaning you are now making these antibodies to proteins that look a lot like your proteins in other parts of your body and then your cells start to destroy yourself and you end up having inflammation and disease and they found evidence of this across a lot of disease States so just the other day published in the journal science translational medicine was a really interesting paper paper by a team that identified a very specific bacteria that we find in the gut that can actually trigger rheumatoid arthritis and so you know I think two million Americans have rheumatoid arthritis it's a really debilitating inflammatory disease and we never understood where the inflammation comes from why is the human immune cell creating antibodies to attack its own protein in the joints of the body and now it looks like that the protein that we find in the joints of the body has some overlap or three-dimensional structure that looks similar to the protein we'll find on this very specific gut bacteria that they found which creates obviously a path now for if we can stop that gut bacteria from proliferating or you know existing in the gut over time that can have a reduction rate of rheumatoid arthritis did they guess what the mechanism of action was so so this technology so the mechanism of action is typically what's called generally speaking protein mimicry and so protein mimicry means that there's some so think about a protein as being like you know a a clumpy Rock and there's some part of the clumpy rock that looks a little bit like the part of another clumpy Rock and that's the protein think about that as being the protein on the bacterial cell and the protein in your joint cells and so your body makes an antibody to that little part of the rock on the bacterial cell to get rid of it and then it that there's some overlap that looks a little bit like your own cell and so that's called protein mimicry and because of the ability now to do DNA sequencing and now with um uh you know some of the alpha full technology we can actually take the genome from that bacteria predict the 3D structure of the proteins created that by that bacteria and then potentially identify that there's a mimicry or overlap between our own protein and our cells and the protein of the bacteria which is why we're having autoimmunity which now our immune cells are not just protecting the bacteria we could solve arthritis we solve for arthritis and so there's a lot of disease states that are starting to look like this so the combination of DNA sequencing and our ability to identify organisms in the gut biome and by the way so much of this goes back to the gut biome we're finding all these disease States from lupus to Sjogren's to rheumatoid arthritis that have some linkage back to some bacteria that shows up in your gut and so now we can be very targeted potentially about eradicating that bacteria from the gut or you know kind of changing our gut biome in a way that ultimately resolves to eliminating that disease risk and so it's really fascinating yeah any thoughts on this cup bio I mean I always knew the solution was either in friedberg's gut you know or anything in his gutter on Uranus every bird again do it again the joke didn't land all right here we go one more time okay you can't allow till after you land the joke come on do it again start coming it was coming around the corner and by the way you guys three two all right chamoth it seems like very interesting science uh they're coming in the science corner 50 pounds I didn't even get it out I mean oh you tried to get it out of his anus like a little turtle coming out of his name but you couldn't get it out it's like the entire science quarter is just here for us to beat up the nerd and throw him in a locker oh my God you ever see Smokey in the Bandit when they have the the reals at the end sax I just keep losing it that's what this is done oh my God it's like I'm going to say sides quarter and people are going to just start laughing and thinking about free brexitas all right listen welcome home sacks we miss you for your week off uh uh we missed you David thanks guys thanks and uh we'll see you over on Market Street no announcements right now no testimonials no announcements I'll see you at yoga doing our second homeless shelter we're volunteering today right yeah volunteering let's see over at the homeless shelter yeah if you could get me a tofu salad with extra tempeh before uh free Burger don't don't go don't get me started on tempting I'm gonna go I'm gonna pour all the oatmeal out I'm going right to the cafeteria I'm going right to the cafe I'm getting all the oatmeal right down the tree there should be there should be one milk non-lactose alternative and then one black coffee and that black coffee that's it if you're lactose intolerant yeah lactose intolerant milk they'll have one if you have one thing without lactose so whatever that is can we wrap the show now no we're having too much fun can you imagine can you imagine the distribution of gluten-free snacks I mean they should have a few but you know all kinds of different snacks and by the way the keto snacks have horrendous amounts of chemicals in it the xylift hall what is Xylitol well screw up your stomach man do not have that horrible favorite you want to tell everybody about Xylitol and the impact it has on your anus no it seriously does I think xylitol is the thing that gives you a lot of gas and you just keep ripping I think it's really bad for you here's an idea way to go Jay cow yeah now he's going to turn into a school well that's your fault you were mean to him you came up with the anus jokes that was all I've been doing that joke for five years with him you're a bully I'm not no no freeberg off the shelf you brigaded him we break a dude our bestie sorry bestie all right four the dictator himself chimath polyhapatia going into sweater season I might know it's going to be a big big Q4 for us big Q4 and the beep of the beep Corporation David sacks oh if you mean the general partner of craft Ventures yes the general partner Adventures that's it and the queen of quinoa the prince of panic attacks the ambassador of your Uranus David Friedberg we will see you next time I'm Jake [Music] we open source it to the fans and they've just gone crazy [Music] besties [Music] is [Music] [Music]