all right everybody Welcome to episode 149 of the Allin podcast with me again...

I'm recording yeah how's my hair Nick do I look ridiculous and should I wear a hat oh my God I went to the teaching Salon in for a haircut a few days ago the teaching Salon ten dollars you got ten dollars worth of value my neck was literally bleeding the guy cut my neck like six places it's diagonal on the back and he was stoned the whole time again why would you possibly do that there was nothing available I told my wife I'm like get me any hair appointment anything I just gotta get my haircut in so long and then she's like oh I got you an appointment at the teaching school oh I'm like that's high-end all the hair salon stylists go there must be awesome this guy butchered me guys worth over 100 million he got a 10 haircut ten dollars and then he's like what would you like to tip you shouldn't be a Barber get a new career [Music] tonight love you guys all right everybody welcome back to the all in podcast episode 141 chamath polyhapatia has gone missing somewhere in the Mediterranean we've sent some search crews out we got some beacons we're trying to find him but he is not here today there will be no conspicuous consumption or discussion of truffle season or wine but instead we went to the BG squared if you got to come to all in Summit 2022 one of the highlights of the event was having two Bee Gees Brad gerstner and Bill Gurley on the Pod so we thought for All-Star summer we would bring in some All-Stars here welcome back to the Pod fifth bestie Brad gerstner and Bill Gurley how are you sir I'm doing great thanks for having me on Bill you you don't do a lot of press you don't do a lot of pods and I know you're on a lot of boards but you're not part of benchmark's next fund so people are wondering are you retiring what are you up to I know you're still got all these boards you're on but what's Bill Gurley up to these days yeah I appreciate that I'm as you mentioned I'm on nine Benchmark boards still so I'm working with those and and doing the classic work that I've been doing my whole career second thing is I've I've started I've done a handful of Angel deals about 1 100th the um the frequency of Jay cow here but but a few so dip in my dip in my toe in the water and then third I've been working hard on on a book I've got a co-writer we've been doing a ton of research we've got a proposal ready to go in an agent we're going to go out to publisher soon oh well you should just do Harper business I'll put you in touch with Hollis that's the winning publisher that's the best business publisher in the world and uh perfect Harper Collins business the world's greatest publisher world's greatest publisher um yeah it's it's a further development of a of a speech I gave at the University of Texas business school about how to Chase and succeed in your dream job oh nice oh so like career advice letter to a younger girly is that what this is a letter to a younger Builder I didn't want to do like oh here's my you know thoughts on Venture Capital that didn't feel right this is some I'm more passionate about and I so might I hope will be impactful to a lot of people I've already gotten quite a bit of feedback from people that have been moved by the the the shorter version on the uh on the presentation well when you when you look on your career unpack it for a minute um what do you think the things you got right where or the things you know you might change in terms of your career and and being happy and finding your passion yeah I do feel super fortunate that I was able to do you know my my dream job for over two decades and I love Innovation I love betting and gambling and I love the combination of being able to Think Through markets and disruptions and and to be able to place bets and all those things are super exciting things I got right um studying history which is something I talk a lot about and we'll be talking about in the in the book like knowing who the the Patriarchs were of your industry and knowing what they thought I think is super powerful in any endeavor and then networking you know just like crazy which I think is actually easier today so those are a couple of the themes that we develop networking and studying history specifically you and I have had many conversations about biographies we both share a passion for those top biographies not of business people but that had an impact on you and then I'll go around the horn top biographies that had an impact on you preferably ones that are in business but if it is business I guess it's okay one that actually led to me developing this theme was was learning more about Danny Meyer's Journey who is the renowned restaurant owner in New York City and the founder of Shake Shack but he had a career where he was in sales he was about to go to law school and his I think his uncle told him what are you doing you know you want to be a restaurant owner and he stopped that day took a job at 10K a month or 10K a year he took like a wow 90 pay cut and started studying and that gets into the History part but he just started studying and obviously the rest is history for those of you that know about Danny Meyer setting the table is the book yeah that is the book Union Square Cafe Grand Mercy Tavern amongst some of his great restaurants going around the horn here Friedberg you have a favorite biography you read or something that impacted you young in your career and then do you feel like you figured it out and what did you what would you change about the early part of your career so the same two questions that's a three very loaded questions I don't know how to pick which one you want to answer that one I will tell you when I was running my company in 2011. yeah the Climate Corporation I read the Walter Isaacson uh biography of of Steve Jobs yep and he actually profiled a number of jobs as management techniques my only operating role prior to that was working at Google so that was the only management experience or exposure I had had and then reading about how jobs ran his management team it actually changed my behavior going into the office I I took a very different approach and I saw the results almost immediately what was the primary thing that impacted you well first of all like having the Cadence and the and the directness with the team engaging the team fully in discourse immediately making decisions getting everyone to commit moving forward very quickly I was a first-time CEO so I never had a good Mentor and reading those segments of jobs as management style in his biography was just a really great tool to add to my emerging toolkit on how to be a manager and how to be a CEO and how to run a company uh that was big for me I could rehash everything about early on in my life I don't think that's a good use of Walter but yeah isaacson's book on Elon coming out in a couple of weeks which should be interesting I I sat for an interview with Walter for that one so I'm interested to see how that turns out yeah I did too I I was asked to I didn't uh yeah we were asked to you didn't do it no I did it I did it you know I don't I didn't ask to do it I got asked you know if I would give some anecdotes I think sax also got asked if he would do some anecdotes so I think it's going to be pretty good and Walter was hanging around he's been putting passages out on Twitter right yeah I mean he's such a good writer and just watching him you know David and I were at Twitter for a little bit and you know just being he was hanging out he was like you know in the corner of the room like participating in a lot of these meetings yeah so he was there basically during the whole transition I think that was going to be the ending of the book is you know he had to cut it off at some point but he was there for the first month of the transition you have the Twitter takeover and for rocket launches and everything in between so he I mean watching his biography technique is uh it's pretty intense I mean he spends a long time with the subjects and you know just taking notes and talking to everybody around him so he would you know peel off sacks or peel me off hey uh could I ask you a question about this or ask a question of this what do you think of this speaking of books I'm in the rare position of needing your advice oh okay maybe sort of a compliment okay Harper College I'm going to do a book about how to create run scale operate software companies which will be an extension of the blog I've been running for a couple of years which I haven't really been active on mainly because I've been using that time for this pod but I was writing it a pretty good clip until we started doing all in pod so I want to get back to putting that together yes and I could go chapter by chapter you know here's how you should think about marketing here's how you should think about sales here's how you think about Finance metrics and so on but I'm not sure that's the best way to present the material so yeah do I just write the book that I think it should be or do I work with a publisher on what the business book should be and they'll kind of give me the guidance so it's a great question you are in a unique position where you know you're successful and you have an audience for the book and success for you is for you know great Founders to read the book and for it have impact as opposed to somebody who's an author who just wants to be published right so you have a different reason to do this I think you should write the book you should decide who you want the audience to be and what you want to get out of the book and you should forget about Publishers in the whole grand scheme of things then when you write the treatment you write the first five chapters or so then you can bring it to a select group of Publishers you can get an agent I can introduce it to two or three agents there's you know top two or three in this field and um I think what you should do is the business advice is out there right and the techniques are out there but what you have is you have War Stories so the technique I used in my book Angel was to you know talk about techniques and investing that I had learned from other folks including Bill Gurley and Michael Moritz or whatever but then I would give my anecdotes things I had experienced personally and what that does is it makes the examples let people really get some narrative out of the book and so the lesson combined with the actual practical experience that's kind of the magic of these business books I think do you have a favorite biography yourself sex either business or non-business I don't know if they I read a lot of business biographies one business how to book hmm back in the PayPal days you know I didn't have any real business education good to Great do you remember what it was it was good to great yeah I mean that was the seminal book at the time yeah so I read this book and literally one chapter was on how you should stick to your core idea and then the next chapter was about how you should be flexible so I'm like well both of these ideas are right situationally yes but so how do you decide so right I came away from the book thinking this isn't really going to help me because it doesn't give you what you really need which is what are the specific situations in which you should apply a given principle hmm yes and I kind of came away from like thinking that business self-help books just weren't that they're too theoretical and weren't that helpful well then this is where biography has really become helpful because you actually get to see why the you know technique was deployed Brad do you have any business bios that you uh related to that about sex sex do not write a how-to book yeah right write a book about your visceral experiences right that just you happen to teach people how to along the way right you have a lot of you know I I just think the story is is powerful unbelievable is it calling Zoom bombing when you just zoom hold on thank you to the starlink team yet again coming to the rescue the All-Star Game no no I just wanted to come and say hi guys you have to hang this is the Black Mirror version of The Brady Bunch right here what happened are you lost at sea we tried to get you we will find you the yacht was missing the dinghies missing we sent out search Crews hold on your camera angle you look like Tiger Wood in this shot a guy a guy that I work with each month through the Michael bridges of the all in podcast and that you haven't missed a podcast since the beginning so then that's the only reason why it's in your head yeah yeah it's in my head love you guys uh enjoy the podcast I'll talk to you later I'll watch the Iron Man streak continues he's drunk that was a drunk yeah remember he's nine hours ahead Jake how to answer your question yes please Teddy Roosevelt man in the arena Phil Knight Alexander Hamilton those three for me that like the takeaway the the red thread that connects them is do that matters do stuff that matters your life is short get in the arena major in the majors but do stuff that matters so they all were Inspirations for me both in terms of how I organize my own life but also how I think about investing fantastic and I'll give you a couple of ones that you may not have thought of something like an autobiography the biography of Akira Kurosawa the famous film director absolutely outstanding great recommendation I'm gonna I actually wanna read that that's a great question I'll read that who wrote it Akira Kurosawa it's an autobiography oh it's his autobiography autobiography born standing up Steve Martin Bill girlian talked about this one and it really is fantastic I've actually listened to it twice um and that's one of the great things about these biographies you listen to him a second time here's another one sax this is critical for you on writing [Music] Stephen King oh Stephen King huh on writing might be top five for me of all time and he really goes into like the story of Harry he wrote like a small treatment of Carrie he was a math teacher he threw it in the garbage because he was so frustrated with his wife sees it in the garbage she reads it she says this is incredible you should keep writing it he writes it he sells the book for ten thousand dollars he's getting paid like nine thousand dollars as a teacher he can't quit his job and back in the day they used to sell your hardcover rights and your paperback rights separately if your hardcover went well then you would do a paperback and go Mass Market he gets a call they sold the rights to the mass Market book four hundred thousand dollars the paperback this agent gets on the phone and says it's forty thousand dollars and he thinks he hears forty thousand he says well forty thousand dollars that's incredible that's four years I might be able to quit my job as a teacher because I know it's four hundred thousand it says okay so forty thousand dollars divided by nine it's like maybe it's even closer to five years he says no you're getting four hundred thousand he can't believe it and that was basically the story about Stephen King but it'd be great great to listen to prior to writing a book he's uh absolutely it's it's super amazing most people don't know this fact but King wrote The novella that became Shawshank absolutely yes he's got a lot of those you didn't know it and then the Malcolm X biography is amazing too if you haven't read it so those are just non-traditional ones of people following their passion one of the things about it is the extreme effort and the Decades of perfecting a craft that I found super appealing about these nothing happens uh easily in your honor Jay Cal the rest of the episode seven seconds Seven Samurai by the way if you're a startup founder entrepreneur or CEO best film to watch because well yeah I mean there is none of those there is no giving up you do what it takes and you persist I think persistence is one of the biggest I've talked about it's one of the biggest predictors for success and there's a character that emerges once you're facing challenge this film does such an incredible job of demonstrating the essence of that character yeah um I think it's also a similar character that's needed in his biography you'll see that a number of the actors in that film occur in other films by Kurosawa uh do you know who that star is though yeah exactly it was his viewers he was he was score to De Niro Scorsese yeah sort of modeled his relationship with De Niro after Kurosawa and George Lucas Kurosawa Francis Ford Coppola were all Disciples of kurosawas you know incredible well the um seventh Samurai was remade as a western the municipant seven with I think Steve McQueen and Yul Brenner yep a lot of Chris always movies were remade as westerns yep it just works pretty well and they were they were all scored by any Amore County a lot of them by you know Marconi which I was listening to in the coal plunge I started doing the call play oh my God I it's I would just like to say I'm just a hearty you this is such a random show we have nothing well we'll get there but I mean I just want to start the podcast by saying you today is there anything else that's going to be talking about on the show I'm like I don't think so Joe Rogan and all these who said in order to be like successful you have to jump in a coal Plunge because now I've done it four times out of the last like I'm doing it every other day and they're right I feel like a superhero after I do this anybody doing cold plunge here besides me and Tremont nobody occasionally well I mean I was in Mexico occasionally and they had this this cold plunge thing and I we did it every day that we were there at the hotel but then we came back well it you get this endorphin run chat uh Rush afterwards it's incredible and then afterwards now when I go to the gym I only do like a 10 minute ice cold shower afterwards like it's critical to like and it feels amazing you feel like so relaxed after you I did I did six I did five or six minutes at 58 degrees I've been lowering it two degrees a day but the first day I did it at 43 or 44. for like 45 seconds and my body started shaking I got hypothermia instantly Bill you've done it you've done this nonsense occasionally Jason I'm still not convinced there's any medical uh benefit too but you guys shoot it's very trendy it's very true I have an inference so I'm doing inference my last week has been failure completely you just sit here and you take your bike into the cold plunge and then you ride it into the infrared Sada and then you go play Pickleball yeah okay and you're wondering why everybody hates us um lifestyles of the abhorrent one percent all right listen a couple other rentals that are Kurosawa films are worth watching actually he did he did versions of Shakespeare which I think is really interesting absolutely so Kurosawa took on Shakespeare and then Hollywood kind of adapted Kurosawa but a couple of really good ones thrown up blood was kurosawa's adaptation of Macbeth and then Rand was his adaptation of King Lear two of my favorites worth checking out Hidden Fortress also Grant in Fortress became the basis for Star Wars or it was a big influence yeah the R2D2 and c3p characters C-3PO characters who are like sort of telling the story are in the Hidden Fortress you can see the direct descendants here but for me the genre I love for Curacao is his film the wah era stray dog high and low I mean these are exceptional films and high and low I wanted to remake when I was thinking about being a film director and it turns out Spielberg owns the rights high and low incredible story but we digress here you got you just one one last anecdote oh no the TV Show Breaking Bad was inspired by ikiru the Kurosawa film yes about a guy who finds out he's gonna die and when he finds out he's gonna die suddenly he becomes one of my true self like with this true like nature comes out so an incredibly poignant film that obviously the extraordinary uh TV Show Breaking Bad yeah the curo is um means to live in Japanese and this is the story of uh somebody who has basically lived a modest amid it's somebody who lived a midlife but then at the end decides he wants to do something meaningful with his little pittance of money and to make an impact on the world and so he decides he's going to take a a parking lot that's disgusting and filled with garbage and make it into a a kid's playground so people can enjoy their life it is and it's also it's um as an old man so in a way this parallels their careers and trying to do something important there's another one I live in fear so those two to live and I live in fear are about aging and getting old the genre if you don't know Kira korsawa you know just you're gonna need to be a little patient because it doesn't have a Thousand Cuts per minute like modern films it's not the Transformers or a Marvel film but it's well worth it if you can get your ADHD under control I would start with the Samurai movies yeah Seven Samurai thrown to blood and ran yeah you go there and then there's I mean if you want to go super intellectual roshamon yeah which is about yeah so there's your uh USC uh Film School Divergence save a hundred grand okay we'll see you all at UCLA yeah okay VC market update Carta has released a series a funding map covering the first half of 2023 but the date is what's interesting they covered and Carter basically manages cap tables and stuff like that for folks original company was e-shares I think is a funding map which just shows like how much money was raised nothing really too consequential in there but what's really interesting is the data on series a rounds series a rounds are typically the rounds when a benchmark or Sequoia a craft come in and you know join the board and put in a significant check before that you have angels and Seed investors and after that you have growth funds but the series a is considered like a seminal moment in the history of a startup median round is now seven million Rays that's down 26 year over year and this is all data from the first half of the year it's the first half of 2023 versus 2022 which was a really crummy year we're down from the crummy year 26 on the dollars raise seven million and the the pre-money valuation 40 million down 17 so last year it was 11 million raised on 48. I don't have the 2021 data here but it would be even more so just right off the bat reactions oh sorry you Bill Gurley to what we're seeing in this series a space this is a return to normalcy I mean the series A's back in the you know Uber days and Airbnb days where what five ten million bucks on a 30 million so this is return to normalcy yeah I don't I don't think you've gone quite back to that line right and so I think there's still a significant amount of competition at that level and um I the fact that it's awful a little bit is is noteworthy but it's not like off 50 right I think that market remains competitive I think there's a number of great people out there investing at that level and I and of course the AI deals like one thing that might be interesting is if you pulled the AI deals out I bet those numbers would be more akin to what they were two or three years ago because those are being done at 200. is the reason you went to Angel Investing or seed investing let's call it because it's so crowded and competitive at the series a level and what seed investing is now is what series a investing was for the 20 years of your career okay I think if I were practicing institutionally I would I would State the series a level and dig board seats and try and get as much ownership as possible which is the then the Benchmark strategy I I um this is more of a hobby thing for me got it and I don't want board seats anymore but it's super super crowded at series a still to this day yeah I said it was competitive I don't know that it's super crowded I think a lot of people realize that if you can get two and a half or three percent management fee investing 300 million dollars at a pop that's an easier lifestyle than actually taking board seats and doing work and so I think a lot of money and activity got pulled into the late stage Market nearly every firm started doing that and and once the once the center of gravity goes there and affirm you know and you're investing 200 million a clip can you imagine the Monday meetings like who's paying attention to the person that's putting 5 million out at a time like it'd be hard it's like going to playing high stakes cards and then you get invited to you're playing 100 200 and you go to 510 games except there's a team and who's paying attention to the person playing in the little game and so I actually think the number of people that practice at that level has actually gone down huh but that doesn't mean you know the the business since I got in only got more competitive and so there's still enough and and and the other thing is the founders have learned how to play however if there's 10 people doing it they know how to play them off of one another they're very skilled at it yeah that's a that's a weird thing that happened is like the Playbook because of podcasts because of blog posts I mean just how to how to run a company and then you know how to you know negotiate with VCS has it's all been unpacked sax what are you seeing uh you're a series a investor you compete with the Sequoias the benchmarks uh heads up for these series days what are you seeing in the series a and what do you take from this data being down 26 year over year which probably actually means probably 50 down from the peak uh what are your thoughts well yeah the The Venture Capital Market peaked in Q4 of 2021 in terms of both valuations and the amount of money that was being deployed and it kept going down throughout all of 2022 and I think it bottomed out in q1 of 2023 basically in the last several months and I think now the pace of deployment has sort of stabilized and it's kind of stabilized at a pre-pandemic level so you know maybe a 2019 level now I think that probably amassed some big differences by round so like you're saying series a rounds are more competitive there's relatively more action there I think the late stage rounds Brad can speak to this the capital there is dried up I think considerably more and those rounds are much harder to get and the reason I think is because that when you have more operating history then it's harder to raise around based on narrative whereas when you're at a very early stage you can basically just raise money based on a dream and a story the way I frame it to people is when I'm and part of this is my fault because I'm training people in our accelerators and pre-accelerators I tell them you're either selling promise or performance and you know once you start having customers and numbers and retention you know someone like sax is going to be like give me the data and they're going to look at churn and say yeah this business is too much turn it's a leaky bucket whatever but when you're solving promise it's a lot easier than selling performance I'll tell you guys a CEO that is a well-known CEO public company now he told me and I think girly I think you guys were investors um he said as soon as we started having Revenue our valuation felt like it went down as soon as we started making profit our valuation went down because at that point you're you know you're judged on the quality of that stage of the business whereas before you could paint a picture with a thousand words about the different pads you might walk and everyone wants to believe the optimistic path will be walked and so you can boost your valuation boost investor interest but once those numbers start to come through it it really changes the investor criteria for how they assess the value of the business well a lot of people will state if if they have a product launch coming they'll they'll tell you to raise money old saying it's better to raise on the sizzle than on the stake yeah unless the steak is pretty high grade yeah obviously if the steak is great then yes that's the best time to take that disc off the table Yeah Yeah but but just to recap I think where we are I think the Venture Capital markets have stabilized for funding new companies I think there's a Mania going on with AI both in terms of the size of these rounds and the valuations it's like 2021 for a lot of AI companies we're not participating in that craziness we are doing some seed checks I would say in early stage AI companies were kind of calibrating the size of the check with the stage and amount of risk and I think that's appropriate so you are going pre-series AC putting in that's a 500K one million dollar check seed is what makes the most sense I think for AI startups because if you wait for a later round then they're not being priced based on fundamentals at all yeah yeah which exercise is that 500k million we just did one of a four million dollar check where he let kind of a bigger seed round got it fantastic I love that those are called seed runs today I mean it used to be three to five million what's your series a but yeah sure seat around three to five I still don't understand the term precede so just to finish the thought I think where we're at and you know Brad can can chime in on this is I think the Venture Capital Market is stabilized for new companies new fundraising however I think there's going to be a one to two year period of distress for all these companies that raised in the peak yep 2020 2021 and are now running out of money and they don't have enough Revenue they're not growing fast enough and or their burn is too high and all those companies are gonna be facing down rounds or restructurings or they're not gonna be able to raise well people are also marking their books now we're starting to see the marking so we're going to have probably a one to two year period of distress for all those bubble companies while we have a little bit of a Resurgence for new companies I got another topic I'm going to go to here related but bradwich want to let you chime in on the late stage there because you operate in the BC stage yeah I think uh and this is related to the topic I suspect we're going to transition to but listen there is a lot of activity in venture today right and we're very reflective to the stock market people were really scared in Q3 and Q4 of 2022 started in 2021 but Q 2022 was scary to people because public market valuations for growth companies were down over 50 so we really saw you know IPO markets Venture all all start to slow down coming out of that we've seen you know Stock Market within you know 10 of all-time highs we see you know this wave of AI occurring what I would tell you is under 500 million maybe under 600 million right series B and C rounds are as hot as I've ever seen them in data infrastructure and Ai and software Etc um so there is a lot of competition there the later stage stuff which as you know I call quasi-public so if a company is over a billion dollars right now you're you're very reflexive relative to what's happening in the public markets we're starting to see activity I just read whiz raise more money it's got 200 million dollar ARR raised at 10 billion so those markets are 50 times Revenue yeah we did not participate um 50 times Revenue yeah no so there is definitely activity I know a deal we got called on yesterday raising two and a half billion at 100 billion there is a lot of activity however sax is right there is you know remember we had a thousand unicorns at the end of 2021 and I've said a hundred percent of those are going to do a Down Round and we're still in the early stages of that reset to occur there was some you know there's a report out this week that lots of people comment on Twitter where public markets were down 50 and private marks were down I don't know five to ten percent like that will all normalize it's all going to be down you know the same so that's the only place I don't see activity underperformant companies that were valued over a billion dollars those are debt on arrival until you get to a market clearing price and we're not there yet okay so the other big issue here is a lot of money was raised by VCS or you know commonly known as dry powder in the industry but there are some misconceptions about this dry powder people are saying oh my God all this money is going to come flowing into the ecosystem Kumbaya it's going to be the Roaring 20s again however uh bill you did a little tweet storm what people don't realize is when we refer to dry powder at VC firms the VCS do not have that 250 billion dollars or whatever it is quarter trillion dollars sitting in their bank accounts that money is sitting in another person's bank account LPS Harvard's endowment Calpers Sovereign wealth funds Etc it has not been drawn down by the VCS yet so Bill why is this an important fact for people to understand and what are the Dynamics that LPS are dealing with yeah and there's a ton of Dynamics between the GPS at the Venture capitalists and the LPS that those endowments that Brad started to hit on one of those which is the marks aren't in the right place and and so so the thing you just explained critical Jason which is you don't actually have the money there's no there's no Venture firm sitting around with you know all of the money that they've got committed to their Fund in a bank account that's just why not why does that not actually occur because people would say oh you raised a billion from these folks they gave you the billion right one of the the brilliant realities of the way that a LP agreement works with a venture fund is they're not on the irr clock until they actually pull the money down so they explain what that means yeah they charge fees based on the total committed amount but they don't actually draw the money down and get gauged on the performance of their investment until they need it and so a classic Venture firm will do five six drawdowns over a 10-year period of a fund and so they don't act they literally don't have the money a couple of other things worth noting so and some of that I didn't put in the Tweet but the marks aren't right and everyone kind of quietly knows that the marks aren't right but there's actually no incentive to get to Marx right here explain what a mark is to folks so private companies have evaluation that's assessed either by the GP themselves in most cases which is a bit of a conflict of interest sometimes by your auditor he and wire whoever's auditing your Venture fund but of course the techniques they have for assessing valuation are extremely crude because they're not Market based they're just they're not public companies yeah and so there's actually not a way to know they have an extremely complicated cap tables the other thing is many LPs are actually bonus on the paper Mark and this is something that a lot of people don't realize and so they don't have an incentive to dial around to the GPS and say get your marks right because it's actually going to reflect poorly on them if they were to roll those of them both of the lp and the GP are in a dance there hey we know that stripe is not worth 100 billion right now it's worth 50 billion but if you mark it down I don't get my bonus I'm the person who's giving you money for your next fund and so when we're assessing hey how much are we going to give you for your next fund we're going to look at the performance of previous funds as an indicator push back on what you just said I agree with what you just said except no one has the explicit conversation it's an emergency it's an emergency Behavior it's emergency dynamic system yeah show me an incentive I'll show you an outcome kind of situation but there's no I've never heard of an LP like brow being GPS to get their marks right like especially on the downside never heard of that ever those marks can be done by an audit like I said they could be done by a round of financing and then there's a secondary Market weird secondary Market secondary Market can do it and sometimes LPS have this weird situation where different Venture firms are marketing companies like radically different prices oh which creates some interesting Dynamics okay so I did this series I did the seed round of stripe where I'm Y combinator and I say you know what 50 billion is fine we'll go to market at 50 billion because we we invested at 2 million in stripe but then whoever did the you know series G or whatever it's up to we did the 100 billion dollar Mark is like ah we'll mark it down to 90. but you know somebody Calpers or Harvard has two has the same share class there's two different funds at two different prices so then you could really triangulate on reality huh another Dynamic that uh that makes the powder less less dry that that I didn't mention in the Tweet storm imagine you're on your first or second Venture fund or imagine you're a fund that used to just have a One Fund but they've expanded to four funds okay now imagine you don't have a lot of liquidity proof points on those funds do you really want to run out of money and go test whether or not you can raise your third fund or your second fund or do you kind of want to wait and see if you can develop some track records so because you may be facing the imminent death of your firm if you run out too quickly and and go back to Market and there is no market so I have 100 I have a hundred million dollar fund it's my third fund okay what pace am I going to do this I'm going to do it in 24 months or 18 months like maniacs we're doing during the peak or am I going to take a 36 month approach a more traditional three-year deployment if I even if I take a 40 month deployment hey I got time to work out all these issues in the previous portfolio sax you've heard this sort of dynamic what are your thoughts on the dry paper issue you yourself have a lot of dry powder I understand so how do you think about it we do have a lot of dry powder and we're growing really slow I mean there's no feeling that we have to rush out and deploy this capital and one of the things that's interesting about the period we've been in that's been surprising to me is that art metrics actually haven't changed I mean the the things that we're looking for in a software company haven't really changed we look for a certain amount of ARR certain growth rates certain amount of net dollar retention a certain CAC a certain Capital efficiency that bar hasn't changed for us but the number of companies meeting that bar has gone down considerably because they have headwinds because customers are in austerity measures or companies are going out of business and saying hey let me consolidate my SAS tools Enterprise buyers are sharpening their pencils they are trying to consolidate vendors there's a lot of headwinds in the buying cycle right now yeah and it's a little bit like I don't know if you remember in the.com Crash 20 something years ago oh I remember it yeah so back in 99 2000 the conventional wisdom was that the company you wanted to be in was Yahoo because Yahoo is profitable and when all these startups went out of business Yahoo would be the way that you could own a piece of the future of the internet but you wouldn't have to take all the startup risk and then it turned out that all of Yahoo's revenues went away because their revenues were coming from Banner advertisements bought by startups which were funded by VC dollars so when you had the whole.com crash Yahoo's business dried up yep so then Yahoo lost whatever it went out it turned out a lot of people weren't wearing swim trunks it was yeah so so Yahoo's business was actually highly correlated with startup funding and I think there's been an aspect of that with a lot of these companies where you would think that they're pretty insulated from the business cycle even like especially the enterprise software companies there's a lot of software companies that were selling to other startups that was pretty obvious they're going to be impacted but even the ones selling to Enterprise companies have been affected in subtle ways and there just aren't that many startups right now hitting that same bar that they were hitting just a couple years ago freeberg your thoughts on this LP GP Dynamics and dry pattern I mean I think I mean one aspect on the same front of uh VCS being somewhat reticent to deploy more capital it's flowing through to the lp space and Gurley can probably Pine on this for a sec and probably Pine on this too but and all of you guys obviously could but it's been apparent in the last year that LPS are wondering what do they have what are these portfolios ultimately really going to be worth what's the actual cash distributions and I think there's these new rules regularly where you got to distribute five percent of your assets each year to the institution that you're mentoring they'll explain this you're an endowment you're obligated to not just grow your endowment both either from the board of the like the Alabama Board of Trustees of the University or I think there was a tax provision put in that if you're not Distributing five percent then you're exposed to tax on the returns and so there's a there's a unquestionable potential issue with LPS around their own liquidity so they've all followed the Dave Swenson model where they've all got 50 percent or even more in illiquid assets you move into a cyclical decline where the number of IPOs and liquidity events both for VCS and PE remember PE is way bigger than BCS private Equity aren't coming and then the drawdowns keep coming and so you have to meet the drawdowns you're not getting any liquidity your constituent needs five percent liquidity and now you got a cash crunch now you you have cash crunch as an LP and I think GPS are aware of this issue so you know do you want to provoke that or not right you run early or you run late you don't want to be in the middle so I'll just say like anecdotally it it seems LPS are more reticent I've heard several folks talk about how they're reducing commitments by 50 two-thirds or in some cases a hundred percent particularly after the the mad rush for Capital over the last couple of years or Capital commitments I would say for the last couple years and so the downstream effect of that ultimately as the current funds get deployed there are fewer new funds and less New Capital being committed from these LPS into new funds and you know fast forward two or three years and there's going to be less Capital available and so it keeps the bar High uh this is a while this is you know and so the bar I think is only going to get higher over the next couple of years as that Capital cycle moves its way through the system it's probably worth explaining what Freeburg was talking about in terms of a commitment so you may have a let's just say University X has committed 25 million to funds three through five for Venture fund Z and now they're saying in the next fund we're going to be at 10. instead of 25. when they say they're making that commitment that Capital gets deployed by The Venture investor over the next on average probably five years so the reduction in a commitment this year means that there's less Capital to invest over the next three to five years and so that gets played out as we fast forward we're you know we're still sitting on funds from the last couple of years as those funds get invested the new funds are going to be smaller there's going to be fewer of them which and that's when the market gets much tighter is in the next couple of years you know Brad this seems like the greatest setup ever feels like the setup last year buying equities when everybody was scared if everybody is tightening their belts if VC funds are not going to deploy this feels like the time to be deploying so maybe you could talk a little bit about this austerity measures coming or just belt tightening or some people may be getting out of the Venture business who shouldn't have been in it to begin with all of this seems like a great setup for more discipline and more disciplined Founders if the VCS have to be disciplined doesn't that trickle down to the portfolio companies 100 but and while this might happen while this might happen I'm going to take the other side I don't think that's what the lived experiences of most VCS in Silicon Valley today on series a series B series C is certainly not in the area we're competing we're seeing four or five 600 million dollar deals get done on zero Revenue two three million dollars in revenue and so let me just throw out perhaps an alternative view as to why this might look a little different than the world of austerity that we saw in 2002 2003 2009 10 and 11. the first is right the stock market is near an all-time high and we know that you know the Venture markets are reflexive to the stock market we talked about that the second reason which I think is interesting is most firms on average are a lot bigger okay that creates two issues we have a situ situation where younger partners and principals who all did deals that were overvalued over the last few years they want to put some points on the board in a reprice deal because they have to have some winners so you have this principal agent problem the people who used to check them were the senior Partners right the the investment committee but now they have a lot of mouths to feed so when you put money to work you pull down more fee and so you know these funds now I mean if you're tiger or some of these big funds you have giant cost bases that you've created because of the the size of the firm that you created the third is the nature of LPS and Bill mentioned you know Dave Swenson in 2002 MIT Yale Harvard they would call you know who were the early backers of venture firms they would call these Venture guys up and say listen we're hurting there were a lot of markdowns we need to slow down the pace of deployment right and so they were a factor LP said Slow It Down I'm not hearing that out of LPS today okay and I think one of these changed I certainly am hearing it out of traditional LPS some family offices some endowments but pensions Sovereign wealth funds Etc who now represent a much bigger percentage of the total Capital base of venture they have money coming out of the ground every day that they need to deploy like they did in private equity and so again I'm not saying this for certain and certainly there are more Discerning Sovereign wealth funds than others who are saying don't speed up the pace of deployment but I'm wondering if that nature that change in the nature of the lp base is also contributing to this you know as sax called AI Mania yeah I mean we see it in Hollywood some new uh actors come in they want to build a brand we saw the Russians do it we saw the Japanese do it they only seen China do it people come in new entrants at the table they get splashy cashy they want to place a lot of bats they want to make a name for so I pulled a brand so that's an interesting Counterpoint our entire business of course is based on exits the highest form of exit I guess is an IPO an overpriced acquisition would be the second and it was a secondary market for shares as a distant third looks like the IPO window might be cracking open a bit and uh some people are being forced the guns to the Head arm owned by SoftBank masioshi-san looking to raise 10 billion at a 50 60 70 billion dollar valuation could be the largest IPO of the Year instacart looking at a 12 billion dollar evaluation Reddit kind of went dark they had a couple of problems with their Community but they were in line stripe obviously in line clavio's got a five billion dollar evaluation and then we saw a couple of uh what I'll say are non-traditional companies going public something called shark ninja I saw in public we had a little conversation about this Brad kerstner they have a market cap of 4.3 billion they had a pop of 40 percent kava a Greek food chain they went public and have a market cap of five billion dollars surf air a company I'd passed on investing in what was intrigued by they do Pilates uh shuttles between places on the west coast here little short runs they did a direct listing in July marked a cap of 85 million didn't go well Bill Gurley is uh the IPO window opening or are people kind of on the ledge who have no choice but to jump and hope for the best one thing we didn't probably spend enough time on in the last topic which I'll just hit on briefly is the complexity of those unicorns so Brad mentioned I I saw a deck that said there were more private unicorns than public tech companies so for a billion dollars at one point in time um which is shocking but those because those companies grew up in the 99-20 to 21 time frame where you could raise money at excess evaluation their cap charts are very complex and rigid they have different licked preferences at different places and and and they've got board members who all have different marks and are all very worried about whether this thing can get to a certain place or not and so it's very difficult to come in and do another private round in those situations you might have to you you might have to put the return in a guaranteed pick dividend to IPO or some complex derivative and a lot of people I think Brad would agree with this a lot of people just say they opt out and say no this is too hard I'm not going to go in there and negotiate with five different constituencies on how to do is you can't just do a simple investment because of that okay so it's gotten too complex which then if the buyers of those shares do not want to be involved in that crazy okay stripe Worth or just pick stripe as an example 50 billion or 100 billion and the last investors are at 100 YC in a two million yeah sure maybe a bad example just because they're total lick press stack may still be a fraction of their market cap for a lot of these unicorns the lick press stack can be very close to their market cap or their today's valuation and that's what creates so you have a billion Central problems you got a billion dollars in investment in the company and liquidation money that has to come out to pay those investors but the company's only worth two billion or a billion and now it's yeah when you get to that place sometimes going public is just the easiest way to clean it all up because everybody converts to Common and we just the company starts trading and reality is reality it's kind of like taking the medicine yeah and I think that happened one good example was square at one point had done a derivative financing on top that was somewhat problematic and they just felt like they had to get out and they did and it cleaned up the capture and one thing I've been waiting on we'll see if it happens but because of hyper competition and investing in 99 2000 20 20 21. there was a term removed from most term sheets it gave investors the right to protect their lick pref on an IPO that's gone in most of these cases so you could convert lick press under which for a founder or an early stage angel investor would be a huge win got it whereas if you sold a company in m a the lick pref would play does that make sense yes so the last investor comes in they're getting a multiple of their money back except in an IPO right and so the IPO happens you know yeah and I suspect most of those late stage investors keep assume that their investment has a debt-like floor on lick press and if this were to start to happen or Recaps which can also be done self and self-inflicted Recaps I have seen many times just to get past the structural complexity either one of those things could wipe out that lick press so net net early more IPOs are going to happen I think there's two things I think that complex cleaning up complexity is a great reason to for the public market and Brad already said we've seen a massive recovery in in software stocks like the marks are better than they were two years ago so Brad or sax uh just m a wise we've seen Lena Khan we've discussed it many times seems to be saying all business equals bad any merger equals bad she's gonna you know attempt to throw cold water on any merger that's happening so M A seems to be being taken off the plate by not just Selena Khan but also the eu's is seems to be turning the screws so if we don't have an m a market then that means there's only an IPO mark correct I mean that's just another one of the reasons that is pressuring these companies these companies need to raise Capital so just to double click on what Bill said and put some numbers around it right because we read a lot of stats about how many IPOs there were so I had the team pull some figures 480 IPOs us IPOs in 2020. 1035 so a huge bubble in 21 181 in 22 and 123. okay but I think that overstates right because we had a lot of spacks and crappy IPOs so it really overstates the quality IPOs so you know we're one of the major buyers in Tech IPOs so I just went to the team and said how many IPOs were we tracking and did we consider participating in during these years so that was 46 in 2020 100 in 2021 the three in 2022 and zero year to date in 2023. okay I don't want to be in the Greek food uh so but what I would say is I just returned from Deer Valley this week where Morgan Stanley's putting on a conference talking to their big potential IPO buyers we are now queued up as you and I we had this tweet exchange Jason this week and I said you know in that exchange the world's normalized fear of covet's past hyperinflations passed Etc first class IPOs are coming and a bunch of down-round IPOs are coming so let me just explain really quickly on that right you mentioned instacart right super high quality company I think it's last private round was 50 or 60 billion in the bubble and now it's rumored to be going public at somewhere around 10 billion dollars okay so that represents the reset that will have to happen and as Bill said if you were a investor in that last round of instacart and you were buying preferred shares and thought you were protected that preference is washed right so you're going to be down 50 60 70 percent on those preferred shares because you're going to be converted into common in that IPO it's the right thing for the company to do it's the right thing for the investors to do it cleans up the cap table so that is an example of you know the Down Round IPOs of high quality companies that you're going to see come public then you're going to have folks like arm like bite dance data bricks would be another one of these I think that you know sneak that would be more in that instacart camp you know like there will be some discount relative perhaps to their fully diluted last rounds valuation but these make no mistake about it or high quality companies that will lubricate and altimeter will compete for those IPOs because these Bankers are hell-bent on pricing these IPOs at a discount to fair value they need them to work they need to bring buyers back into the IPO Market because these companies need liquidity so suddenly the banks need to get wins for the people buying these shares as opposed to in the past they were like yeah we're just selling a security at the market rate whatever that famous the famous monologue from what was the movie was that Jeremy Irons who gives that monologue we're selling securities to informed buyers and that's it I mean it's a pretty dark scene so it won't be a light switch Jason but I do think Margin Call Margin Call thank you it was Jeremy Irons I don't think it'll look like a light switch but it will be I think we're gonna see five six seven IPOs good size IPOs in Q4 we'll probably see closer to 10 in q1 and then it will start opening up in the back half of next year in part because Boards of directors will begin to realize you know what we have to go public if it's down round who cares it's acceptable and this is really healthy we need these companies and by the way I'm in the bill Gurley Camp you should not stay private forever you should get your company if you have 100 or 200 million in Revenue get your company public innovate and grow in the public markets with the discipline and Cadence at the public markets and if it's if it's a you should expect the prices lower because the world was out of their mind in 20 and 21 and multiples of reset a news story with me just about some of the incredible returns in the golden hour venture capital Washington University Duke University some of these endowments just exploded in value yeah I remember when this article came out it was September 29 2021 less than two years ago yeah and we were all feeling really good yeah about our industry yeah but as it turns out the whole thing was inflated by all the free money that the FED had air dropped so you know the public markets were really frothy it was basically very bubbly especially for growth stocks you had all these new IPOs and spacks and so forth and they were super bubbly and the result was that the returns both realized returns and on paper for these endowments were massive so if you think about the lp the lp Community if they're making commitments in 2021 the way they do that is they look at the total value of their endowments and then they allocate a certain percentage by asset class so they'll allocate a certain percentage to public markets certain percentage to real estate private equity and then VC so if the overall value of the endowment is really big then that percentage that goes to VC is going to be really big too and then what happened is you had this huge correction over the next couple of years and so one of the things we heard from the lp Community last year is a problem they called the denominator effect which explained yep well the value of their portfolios had gone down a lot because the public markets were down was it something like 50 50 in some cases yeah for growth stocks and like 15 20 for the entire market right so the value of the portfolio was down but the Venture Capital part of that was not down both because of the the lag in getting fresh marks and then also because they had already made commitments to new VC funds at the peak of the market so all of a sudden the percentage of their portfolio that was VC related roughly doubled and so that's why all of a sudden the lp commitments have dried up is because they're over allocated to VC yeah now all right as the public markets have come back this year then that problem mitigates to some degree but yes I think it's still out there and I think this is why you're seeing certainly domestic LPS really slow their allocations to venture capitals they still have the denominator problem now I think that's less of an issue overseas I think Jake how you observed that the the four seasons of the the bar at the Dubai look like the Rosewood when we were there I literally got stopped four times from the elevator to the front door I am not kidding four people stop me that's two more than would stop me at the Rosewood going to the front door it was you should recognize that as a hyper attraction or for where available money was yes relative to the US Dollars and whether they were available or not yeah I think we're in for a period here I've just it continued distress and pain even though the market is sort of normalized or stabilized now again I just think we've been in a huge software recession for the last year yeah I think that it's been masked by the fact that the rest of the economy seems to be okay but this is the worst software recession we've been in I think since the.com crash I mean the buyers have been laying off employees by the thousands and since software is bought on a per seat basis yep the the market has really condensed we had one startup that was selling to Twitter and they got a renewal and I think they're 100 off 80 off because elon's laid off eight percent of the employees yeah and that's before negotiating the last 20 which you could negotiate 50 off that I told them they did a great job who's getting that 20 because elon's can't see everything yeah I was like really impressed they were able to renew it 20 of last year's value you know what we need a vendor we had a bender and this Bender went on for far too long and you know what if you go out you know two three nights in a row until four or five in the morning that next week is going to be painful and suffering that's what the industry is going through it's just going to take a lot a lot of coal plunges and infrared and pickleball and to feel good again one thing I would like in retrospect that I think Super interesting about the Venture Capital cycle one I think it's inherently cyclical and it's always going to be that way unless we fundamentally change the structure of the industry because it just invites competition and there's no barriers to entry but I went and talked to some LPS that have been in the business for a very long period of time and a vast majority of the reason Venture outperforms other asset classes has to do with these tiny Windows when you have a super proudly market and if you don't if you aren't around for that part you know if you strip those years out of a 40-year assessment it's actually not that interesting an asset class which highlights the need for Venture funds to get liquidity at the peak yes right when we are at the peak is when people get the most Brazen the most confident and they start talking about how we're going to hold forever and so you had Venture firms with the biggest positions they've ever had in their entire life go over the waterfall and and basically evaporate what could have been returned yeah I mean diamond diamond hands can come back and bite you and you've said famously you can't what was the line you had to candid iron are well you can't I don't think I said it but it's been said yeah since we're on our movie Bender here for those of you who haven't seen Margin Call just one of the great scenes this is the best scene the whole theme by the way is like the best scene I think of modern Finance films so good look at this murderer will be selling this too same people we've been selling it to for the last two years and whoever else will buy it but John if you do this you will kill the market for years it's over and you're selling something that you know has no value we are selling to willing buyers at the current fair market Price so that we may survive oh man you can rationalize a lot on Wall Street man but yeah what Bill's saying is that the opposite took place which is VCS drink the Kool-Aid and didn't sell when that we're at the peak of the market they also got caught up in a competition of trying to to uh appeal to the founder Community is saying hey we're in it forever we're going to hold forever we're your best friend forever but Bill there there was also this element that drove that strategic ration office data set which is the best performers in Tech generated most of the value after they went public I mean you know there's a trillion dollars of market value generated in Nvidia in apple in Google in Amazon all over the many years post going public and you know if you read sequoia's notes when they kind of made the transition that they made they said we don't want to you know walk away from the power law that the power law continues to accumulate and accrue even in the public markets and we want to continue to participate in that because there's another 100x upside coming from here in the ones that we select we want to stay with not necessarily we're going to stay in all of them yeah there are some that we believe are still 100x upside from here and just because there's an IPO doesn't mean that we want to exit the position that there's now more Capital available to them more public currency they can use to do transactions to hire Etc and we want to participate in that value creation totally and the last double could be the biggest right bill I think the total number of companies that meet that criteria in the history of the Venture industry is like 10 or 15. yes and you name many of them and the problem is that the rhetoric becomes common narrative and becomes part of the ethos of the firm and people want to apply it to every single company to everything that's right right totally that's not true I mean I I don't want to get too specific here but you had to come you had you know you do have some let's say uh seasoned vets yourself included Bill who when given the opportunity to get liquidity on an incredible investment will do so Fred Wilson sold I think all of coinbase when it goes public he just clears the position when things go public that's been his philosophy kind of the antithesis of what Sequoia and Roloff are doing with some of their Holdings and then we've seen uh wework has an existential crisis they don't think this might be a viable con uh concern anymore but famously Benchmark was able to sell shares at a very high valuation at some point and lock in an incredible return yeah yeah okay there it is yes okay so let me see a question Bill about getting older well let me ask sax a question let me ask you questions to be the world's 17th the best moderator to go sex you you have an investment in SpaceX right I mean there's been a lot of secondary action in SpaceX why would you not sell SpaceX at this valuation today or maybe did he as you kind of think about this yeah I think we were going to wait till the company IPOs I think that would be our default when it goes public sex do you then think what's the upside from here or do you think my job is done I think my job is done yeah I think my job is done I think what we would do is just distribute the shares and then each LP can make their own decision that's about whether they want to hold it or not yeah yeah one of the nice things about distributions is that nobody has to sell so everyone can make their own decision about whether to hold or not yeah once the company is public and the public has all the information through disclosures the odds that I know something special that a seasoned Public Market investor doesn't that's probably pretty low I mean they're great Paradox of what we all do and Brad you have both a public and a private portfolio I started trading public market equities to get better at my private Behavior Bill you've done that forever is public markets you can't trade on inside information private companies that's all you're trading on maybe you could speak to a little bit about being what do they call it when you do both crossover investors does that make you a crossover investor is that the proper term well Bill gurley's the original crossover investor he's been trading public stocks since you know and he's been doing that yeah researching him you know but you know the fact of the matter as has Warren Buffett and you know who would laugh at the idea of a crossover fund he's been running one of the world's largest public portfolios and private portfolios forever he would say I invest in great companies that are mispriced there are moments in the market cycle where late stage Venture is mispriced to the downside and there are moments in the cycle where the public markets are mispriced to the downside what we saw in 2021 is the private markets were crazily overvalued in 2022 we had this massive correction in the public markets we believed that they overshot in part we believe that because we didn't think we were going to have hyperinflation forever Etc and so you and I invested in you know meta and a lot of other things that were on their ass you've got to buy in the public market when there's blood in the streets right as as War as Buffett says buy when they're blood in the streets and sell when there's trumpets in the air and you know there are definitely blood in the streets when you saw things down 60 70 80 90 percent now does it feel like trumpets to you now or does it feel like trumpets next quarter or the quarter after if you look like people are polishing those trumpets right now yeah I mean a lot of it obviously depends on your view on what's going to happen in the economy fundamentally and I'm happy to shift to that but what I would say is this remember the chart that I've showed many times about software internet valuations we were you know 70 above normal and then we were 30 percent below normal and now we're closer uh to the trailing 10-year average of internet and software valuations there are always outliers on both sides of this but I would say a lot of the positive Arbitrage that we saw in 22 has been squeezed out of the public markets and we're close to fair value so now if you want to generate Alpha this is going to be about picking individual winners versus individual losers this is going to you know like the beta trade on ma on global macro I think has largely played out you know the catch up back to kind of fair value and now I think there's a debate between kind of hard Landing soft Landing are we going to have a re-acceleration inflation or not every operation where you come down on these major issues I think dictates whether or not you know now can I correct something you said Jayco yeah please all right all right so you said that public markets inside information isn't allowed whereas private markets it's all inside information I think that could give viewers a misleading impression of what we do as VCS okay the way that around typically comes together it's not like we get tipped off by some Insider at the company and some you know nefarious way what happens is that the company chooses to engage with us or a select number of firms in a process and then gives us their metrics and you know gives us the business plan it gives us the forecast and it's all done in a very above board way it's not like we're being tipped however the part of it that I guess is true is that a private company does not necessarily engage with everyone in the world on a website a quarterly report and say Here's what our revenue and our costs were and here's our earnings although some private companies do start that process by and large they by and large they're selective about who they want to be on their cap table and that's the big difference in private a public company doesn't care who's on its cap table it doesn't really know who's got you know Apple doesn't know every shareholder and who's got an account set E-Trade or whatever Charles Schwab I mean they may care who their biggest shareholders are but they don't care who the average shareholder is whereas a private company really does care and part of the reason why they care is because these startups are highly risky and they want to have investors who have a track record of behavior where they don't have to worry about being they're gonna lose every time something doesn't work out which is most of the time so I think there's good reasons why startups want to control who their investors are by the way there's also the issue of value add right I mean other things being equal Founders and startups would rather have investors who can help them as opposed to Simply you know John Q public yeah I mean you mentioned both scenarios you don't want somebody who's a neophyte who's going to cause chaos and be upset when Revenue goes down or things are swinging up and down and yeah if you're public yeah buy the share if you want or sell the share if you want it's a Marketplace sorry just pull up this this image I I just posted this is from you know you guys know Gokul rajaram Gokul is a great human we used to work together at Google then he worked with Jack at Square he's at doordash today and he was a leader at Facebook after Google but he did this tweet last month any Tech Venture investor who Compares their funds returned to the s p is being naive or disgenuous the correct index to compare to is the QQQ you know the NASDAQ Composite and its performance has been mind-boggling and as you can see here over a 20-year investment period if you basically just buy the top 10 public tech stocks and at the end of each year rebalance to the top 10 at the end of the year your multiple over that period of time is 24x 20 years yeah and over a ten years there's quite a bit of hindsight bias here and saying we're only going to look at the top ten right it's like how do you determine you know why not top hundred I mean are you willing to say that for the next 10 years that you should only buy the top ten what if over the next 10 years it's more of the field versus the top 10 you know the next 25 yeah I think comparing VC as an asset class to the NASDAQ makes a lot of sense yes I think that's fair yeah and that's that's the second column from the right which is basically yeah 5.2x over 10 years so if you're not beating 5.2 x which is a totally liquid investment if you just bought the QQQ index what this really shows is Apple Google Facebook and Amazon have had a massive run-up well that's not that's not what they show that's that that's actually not true jcal because if you look at just the static it doesn't you know outperform it's the rebalance that outperforms which is whoever's winning in the market meaning whoever's gaining market value each year is you then you know double down your dollars into for next year and that's changed over a 20-year cycle over a 10-year cycle and it really starts to play out over time but I mean yeah if you just look at the QQQ that's the Benchmark as an investor as a private investor and you know gokul's comment in his uh in his tweet is that uh you know if they can return call it seven to eight X over ten years or in this case 5x over 10 years you could argue that a venture fund needs to return a significant premium probably a 25 30 premium due to the illiquidity and the riskiness of the investment cycle there whereas the QQQ could just sell anytime you want so you know call it a you know you know you need to kind of be demonstrating a 30 premium to the uh 5.2 x tenure which is um about six and a half seven X called 7x cash on cash I mean according to this the Venture asset class is super over funded so why why is that then girly do you have a point of view yeah I mean it would be completely speculative but I I do think if you look at the structure of endowments you know you've you've had a few people really leading the way in terms of a Playbook with Swenson you know Dave Swenson uh who passed away recently but but Dave Swanson he ran yells and downman and is considering and I think you know the vast majority of people decided they were going to follow that Playbook which had a you know oversized investment in illiquid assets PV Venture real estate uh Commodities those kind of things and I think it led to just a massive like and and these things take forever to figure out if they're right or not um if your portfolio is over 50 percent liquid like who knows what's right and what's wrong you could do a wreath you know you could there were years where Yale was printing like 27 percent year and then in in one reset no nine wiped out you know a ton of that so it's super hard to know but but I do think that philosophy became broadly adopted yeah well look at um can you pull up this chart real quick this is a chart from statista that is value of venture capital investment in the U.S from 2006 to 2022 and what you see is there's there's basically a few different levels before 2014 call it the industry was basically a 50 billion dollar a year industry in terms of deployments then you had a run-up where for several years it was around 100 billion and then in the pre-pandemic Years 2018 1920 was around 150 billion a year of deployment and then it went totally nuts in 2021 it was 350 billion it started to come down in 2022 to about 250 billion I think where we are right now is kind of at that 2019 level of about 150 billion a year the question is like what it should be I mean should this be a 150 billion a year industry should this be a 100 billion a year industry should this be a 50 billion dollar a year industry yeah it sounds like 100 to 150 would would have been the steady state and all some portion of this is stay private longer having an impact where those last couple of rounds were the big huge juicy rounds and if people had gone public in year seven eight nine like Microsoft Google not Google but Microsoft let me Google when what year was Google when it went out eight you know going out a little bit earlier would have chopped off some percentage of this girl yeah and I I I do think one of the most interesting things to watch is going to be how these 1000 unicorns private unicorns play out because not only do they have the cap structure problem but they lived and grew up in a day and age where they were told growth at all costs and it it's super hard culturally to go from that type of execution to the principal type execution you guys have been promoting over the past several months it's just hard it's not impossible but it's very very Google went public in year six yeah that's 23 million of total Venture raised I think prior to IPO think about what that means if a lot of those unicorns are fake what does that say about innovation in the American economy we had this narrative over the last decade that the pace of innovation had fundamentally increased because of the availability of tools and Technology and so you had a lot more unicorns being created I mean I remember back in I don't know like a decade ago or 2010 era let's say you know there were maybe was like 20 to 50 unicorns a year maybe 20 unicorns a year there were arguably 10 to 20 girly great companies formed a year in Silicon Valley or in the tech industry in the west I mean I remember when Andreessen kind of gave this this talk about it maybe a dozen years ago he said the number was 17. there's like 17 important companies created every year in Silicon Valley and your goals VC is to be in one of those 17 then all of a sudden we had was it like 100 200 300 unicorns a year yeah I mean if you and so the questions I mean them are real well I mean Brad was just talking about that you're giving a 50x multiple 50 times Top Line I'm not talking about earnings folks I'm talking about Top Line If you get 50x to every company then you only need 20 million dollars in Revenue to be a unicorn and that's unrealistic when compared to the public markets where things are trading at five times Top Line and 20 times earnings if it's high growth right so is it just a different Market all right there's a major slowdown in China or we could talk about Portnoy and binary question markets just real quick I'd spent a lot of time on the island of Maui I think it's really sad I don't know if you guys ever been to Lahaina the whole town beautiful town it's so sad yeah it's gone I just wanted to make sure that we mentioned it because uh yes pretty depressing what happened I don't know if you guys have seen the wildfires in our families we all went to that area from vacation my favorite remember that sucks yeah Maui's my favorite code of 13. yeah yeah I mean Maui's my favorite place on Earth um been to Lahaina so many times it's super sad what happened I just wanna send a message on the water with those old buildings and porches gorgeous and it's it's just all gone right now so yeah this global warming thing and these fires and wind man what a hot summer I mean we could do it in southern Iran check this out the temperature hit 155 degrees it is nine degrees warmer than it's ever been off the west coast of uh the United States right now there was 90 degree ocean temperatures off of the Florida coast the sea surface temperature in the North Atlantics the highest it's ever been by uh I think seven years or is it all the hoax look the the peop people want to debate all day long about anthropogenic climate change I'm telling you with like absolute certainty the data right now is unfucking believable how hot and how dangerous the Earth is becoming and we're seeing not just the fire in Maui the sea surface temperature which increases the probability of severe tropical storms and hurricanes in the coming season it's un unlivable you know watching in Saudi Arabia in Dubai 130 degree temperature 95 degree overnight lows if you don't have air conditioning you will die yeah in a lot of these places so there are parts of the Earth where people cannot afford the amenities and the luxuries that we have so is it a world just it's just saying there is no hope there is no hope this fall right in front of you yeah the Earth is warming the amount of extreme weather is increasing the significant effect of that is is becoming apparent and you know it's we could debate for hours about what quote can you do about it but there's just a series of really awful things happening right now yeah um and it's becoming more frequent and more apparent that this is a pretty serious thing that we're oh yeah all you have to do girly is follow what you're doing down there in Texas which has is it the highest renewable energy percentage of any state now is Texas greater than California so one of the biggest accessories I saw some politician from Texas saying we got we got to get off all these results there's no Silver Bullet if you want to talk about the you know the fundamental challenge that we all face in terms of whether atmospheric carbon is driving heating or not if you if you follow that track there is no Silver Bullet there is a lot of things that have to go right in a coordinated way and there are Market incentives that make it very difficult for any of those things to actually get done all the way through but renewable energy and nuclear you would say are important two of the most important yeah they're still industrial production I mean there's just like you the the list goes on you know systems in agriculture there's a lot to clear history what's the clearest path I mean if you had to if you said hey put 90 of your effort on these three things it would be nuclear Renewables painting people's roofs with white paint like this new uh paint That's reflects stuff I mean what would be in your truck that's not going to change much no let's see this conversation another time we've got Brad and Bill here I think but honestly I'd love to have this conversation we should put on the document next week we'll do a big thing here yeah so just wrapping up here on sort of uh macro it'll give you a little macro Brad CPI seems like it's measured and consumers seem like they're running out of money and starting to tighten their belts unemployment still all-time low still 9 million job openings feels like um this is the steady state for the next year or do you think hard Landing no Landing soft Landing well maybe Nick can bring up the first chart this morning we had CPI reported we had the smallest back-to-back monthly gains in core CPI in over two years back to point two percent annualizing just over over two percent now so on a year-over-year basis it was 3.2 percent now remember it was only six months ago that people were still hyperventilating about you know this 9.1 percent we saw last year that everybody on this pod I think was largely in a grievement that was coveted stimulated but you know the blue line here represents the consensus estimates of folks like Goldman Sachs right which is pretty similar to what the fed's own estimates are if you go to the next uh slide here Nick this is what people the current market is betting will happen to the FED funds rate so the market is saying like you know you've heard shamase many times higher for longer I happen to think we'll have higher rates for longer too but the market is saying we're worried about an economic slowdown that's going to force the fed's hand so the market is betting that the FED funds rate will come down either because inflation continues to roll or because the economy continues to slow and so this third slide which I think is a really interest one which which nobody really talks about but this is the reason I think drucken Mill and other are worried about recession there's a measure by the San Francisco fed which is called the effective funds proxy rate okay so this is not the FED funds rate this is what they say the total impact of quantitative tightening plus rate hikes are and we're now back to the highest level on that proxy rate since we've been since May of 2000 it's up over seven percent I think that's the reason people are looking at this is blue line up over seven percent that's the highest effective rate calculated by the San Francisco fed since all the way back to May 2000 and this is the concern a lot of people could you just explain that why is the effective rate three percent higher than the official rate because of quantitative tightening because there's a lot of other things going on in the economy the impacts interest rates the rate at which you can borrow part of it is there's just less money in the system some kind of crunch basically exactly like just because the rates four percent doesn't mean you can get out you can't borrow nobody can borrow at the 10-year rate okay so if you're a company or an individual and you want to go borrow you have to buy at a much higher rate so that is where the rubber meets the road if you're trying to borrow to buy a house borrow to buy a car our borrowed to expand your business the the Blue Line represents a much better you know calibration for the level of tightening in the economy so there is a a very strong debate and I would say the Market's actually betting here that the FED is overdoing it because of what you see in that blue line and that the economy is going to slow the lag effects of this tightening have not yet been felt and so this gets back to the question we had before which is where are we in the cycle and whether or not we're going to continue to have growth now really interesting Jason Bloomberg's headline today was the summer of disinflation and we said on this pod six months ago we said it's more likely by the end of 2023 we're going to be talking about disinflation than inflation and lo and behold not only not only are are we seeing signs of disinflation air tickets down 18 year over year but China just posted actual disinflation yeah right so prices are coming down people are going to be surprised that there's more products or services available at lower prices which then could infect the salaries because hey we're not making as much money at this company we've got to cut salaries I mean we know that the FED at the start of covid was more like the the curses of disinflation are almost bigger than the curses of inflation and China just saw CPI down three tenths of one percent in the month this week annualized that's over three and a half percent that is a major problem for China so I think you have some some yellow flags here right that say do we have too much tightening if one of the global engines of growth is experiencing this level of disinflation that's going to impact the global economy and Global demand Etc so yeah um I think it's been the pattern of the FED right they they seem to react late and then they overseer this has been the veeam and so there's also just to add one other Cloud to the Silver Lining it's the amount of debt that's out there correct so both private debt and government debt yeah Consumer Debt is high this real estate commercial real estate's high I got debt everywhere and people are going to have to Belt tighten and maybe austerity and stop spending on some YOLO trips but if your salaries keep going up hmm well it's got 300 000 followers so we have we have record household debt 17.1 trillion record Mortgage Debt 12 trillion record auto loans 1.6 trillion record student loans 1.6 trillion which as drunken Miller points out have to start being repaid I think as of September yeah because Supreme Court overturned uh binds unconstitutional debt forgiveness yep record one trillion in credit card debt that I think should be pretty worrying because credit card rates are now around 25 percent it's not a credit card debt it gets the interest on that is it is obviously floating and so when rates go up to you know where they are now then it gets it gets very putative so David precisely and this is remember we're seeing inflation rollover huge and we have a chips act and an infrastructure we have massive government spending going on and we still see inflation rolling over so I just find it interesting that within six months we've gone from worrying about hyperinflation to Bloomberg running a headline Summer of disinflation the last piece of it is government debt so at the rate that the government is racking up deficits the treasury is going to have to float something like 3 trillion of new t-bills by the end of the year and we're rolling something like 9 trillion of Old Government debt over the next 18 months at new higher interest rates so there's a lot of debt and we'll continue that discussion next week as well as the global warming one hearts and prayers out to the the fine people of Maui who invite us to come to their incredible Paradise we hope you all stay safe and have a great recovery you're in our thoughts and prayers for Brad gerstner the fifth bestie for the architect David sacks and the Sultan of science I am the world's greatest moderator and officiant if you're getting married uh and four Bill Gurley Bill girl you have some anecdotes about the all-in Pod you were talking PG squared close on closing on an anecdote here and close us out obviously huge hats success you guys have had when you first mentioned you were going to do this I don't think anyone had any idea that you would reached this level and I know the hard work it takes to for you guys to do this weekly it's amazing um but I was walking down this do you guys share anecdotes about people mentioning all in I was walking down the street in Austin a few months ago and a guy came up to me goes are you Bill Gurley so yeah and he says you're that guy they sometimes talk about on all in right yes there's your subtitle if you remember the guy they talk about it sometimes Tombstone there's your Tombstone to your point bill it took 10 years of hard work by jaycal for the rest of us we just walked in off the street exactly thanks I got you all on my shoulders that's why he thinks he deserves more than 25 holding you all on my shoulders but he don't get more than 25 Jacob where are you running off to why do we got to shut this down saxoned early and I may stay and just keep talking the world's greatest moderate and we'll see you all next time on the all-in podcast bye bye we'll let your winners Rock rain man we open source it to the fans and they've just gone crazy [Music] foreign [Music] [Music]








oh my God sax looks like I got hit by a Mack truck you okay little fella oh how long were you out last night oh boy did you see this the message I got the text message and I was like what the is going on over there I gotta get back to the United States timestamp 1 39 a.m Pacific I'm still out drinking tonight there's no way I'm making 9 A.M I'll do 10 a.m to noon this is sax the negotiation has uh begun and I'm waking up it's my last day on the boat I'm trying to get off the boat in a reasonable Manner and that's the first text message I get that's the first text bad six minutes later Drake just came in better make it 11. [Music] let your winner [Music] [Music] do you want to tell you the story so the thing I would compare it to is do you remember that episode of Seinfeld where Costanza stumbles onto the model bar you know he finds the place that all the supermodels are hanging out and he calls it Shangri-La because it's like this mythical place and he spends the rest of his life trying to find Shangri-La again but he can never find it yes that was you last night in L.A well so we were just out having a few drinks at this private club that's uh new in town it's just me and you know my Wack Pack and the room is it's just you know a few of us having drinks hey sorry who who is your whack pack we can bleep out these games are on salary versus yeah yeah yeah he's like an NBA player it's like he rolls it with six people what percentage of the payroll two or four what percentage are your friends yes um he's doing the calculation about I guess about half received some sort of monetary payment for me not all of them are direct employees some are vendors okay got it you know yeah of course real estate brokers oh my God so yeah they're on they're fee based they're fee based yeah but you could call it an Entourage wait how many how many rolling your entourage how many are there five four I'm gonna say six I think we had about five people out okay that's that's an Entourage that's perfect because that you can get into the club with that it's more like a private club it's not like uh like you know a different kind of Club yeah now you're a member of this club yeah I'm a member got it okay all right so we're just hanging out there having drinks and you know the room's empty it's just us and all of a sudden there's like a subtle Vibe change that happens and we look around like five minutes later the whole place is full and it's like Shangri-La basically oh man and we're like what just happened what happened and then Drake walks in ah or like oh okay got it he performed at a concert in LA that night so the after party was basically at this place so it's not like we were hanging out what were you drinking are you on the tequila still or what are you on right now you seem to love that tequila yo you won the Ranch Water still yeah I used to like bourbon or Scotch it but now remember that sort of Highly refined tequilas are better so the Colossal is probably my favorite right pesado yeah these reposados are on yejos are really great and I I've advocated to this group that we should actually have our own all in Tequila label I'm in I'm in so we'll see if the fans like that idea let us know in the comments we'll work on it but now what do you how do you drink it are you a neat guy you put a couple of ice cubes in or do you do like a bill Gurley Ranch water situation what what's the range what what do you mean by Ranch Waters you take a topa chica some tequila and then what you put a couple of limes in it free bird because you're on this Ranch Water kick too aren't you I had a little Ranch Water the other night I had some ranch water last night you hear my voice a little too much Ranch Water but chocolate is just that's just it's a seltzer water right in a glass bottle from Mexico like but it's fair it's a fancy Seltzer and then you get lime juice in it and it's just you know it's a very like it's basically a double tequila on soda with some water so it's it's like a margarita minus the sugar no sugar yeah no sugar it goes down very smooth very refreshing you got to have a good tequila for it to work yeah I don't bother with the mixers or the fruit or any of that stuff it's just uh I'll drink it on the Rocks I can't be bothered with anything that is ranch and water just seems so down mark it seems nasty yeah no it's a Texas thing it's a Texas sound Market no if you're drinking a high quality Spirit you don't need to mix it with anything you know if it's if it's a bad Spirit then you gotta put all sorts of things in it but you don't add Seltzer to white wine to a good wine when Bobby Baldwin was still running the Aria and I was super gambling at the Aria my host invites me and there was a huge Chinese junket at the same time and I'll never forget it these guys had ordered every bottle of Screaming Eagle okay so whatever five six thousand dollars a bomb and Welch's grape juice said they were mixing up screaming I'd never seen anything like this before or since it was unbelievable this is like a joke no that's how they drink it come on no they asked for the most expensive bottle that they had the most expensive California bottle the bat these guys pull out a case of screaming eagle and they just start pouring we were playing together pouring half Screaming Eagle hop Welch's grape juice like those grape soda I gotta be honest that does sound pretty good I don't think you need a screaming eagle exactly yeah yeah that's pretty nutty it's like a sangria the big thing now that they do is they put the big ice cube in the drinks you know The Big Cube yeah but I you know I think I'm I'm old-fashioned I prefer the the multiple rocks you know not The Big Cube because I actually I want the ice to melt a little bit you know I want the I drink you want to open it up you want to open it up it's a relationship it's a relationship with the drink how does it start how does it end exactly David I want an honest answer do you have in the mausoleum an ice cube mold of your face not uh some super fans just put that in the merch store not in my face but we do have our own ice cubes we do have our own big cubes actually there's a there's a room off of the kitchen which is the ice room so they bring the ice down from Antarctica and they cut it uh most of it melts because it's not there but yeah it's the best socks is the best he's the best but you it opens up right so tell me more about the relationship you start you got a very powerful strong relationship with it and then you want ease into it it gets you know I mean the reason why they do The Big Cube in theory I mean it looks cool but is because when the ice is kind of in one Cube like that it doesn't melt or it doesn't melt as fast and so it doesn't water down the drink but I want the ice to melt a little bit uh you know make it a little easier to drink when we drink Scotch yeah sax when you're drinking bourbon is the whole shtick around Pappy Van Winkle Is that real or is that just like marketing it's a little bit like screaming eagle which is to say it's good but is it 10 times better than the you know 300 bourbon no so there are other good Bourbons but Pappy is very good it is undoubt very good and what what makes a bourbon good versus modern average versus shitty it's uh I'd say like can you taste it like wine like you can taste the difference in wine or not really it's about how smooth it is personally I don't want bite in either my bourbon or my tequila so you know how smooth that is and then bourbon compared to Scotch tends to be sweeter but you don't want to be too sweet so just getting that balance right you know the these new tequilas are kind of like that as well you know you choose how much bite you want how sweet you want it three things you don't want to bite in Bourbon scotch and whoa whoa you just ever have a drink with the Collins ice you ever have the Collins ice do you know what that is check this out whoa this is becoming a trend they cut a very long uh rectangular ice what do they call that high ball is that a high ball or is a highball the shorter glass I don't know no I thought eyeball is the short Quest no that's a short glass which makes no sense because they call it a highball but anyway there's a funny meme where you take this drink and you they show this and it's like what happens when you're Venture capitalists after Venture capitalists get their preferred and their liquidation preference and they pull the ice cube out and there's one ounce of drink left that's great that's the Press stack right there there's the prep stack this explains depression your comments is the liquid around that Ice Cube that's really good that's really good that's really good oh man can I admit something which may be totally derided but I have to say have you guys ever had a cosmo in a short glass so meaning not in a martini glass but just a cosmo in a sugar glass in a guy glass yeah yeah a guy glasses I think when a cosmos made well it's an incredible drink um do you guys too many ingredients yeah nobody here is going with you on this one pal you're on your own alcohol but when I do yeah it's it's a cosmos there are so many better what about a like a great Negroni it's not sweet enough for me I like a cosmo yeah and a margarita I like well I guess I like sweet drinks I like margaritas just did it it's a good background what is oh there's the Entourage background yeah I'm friends with a lot of the Entourage guys now uh I know Adrian uh and I know Turtle who uh is a big Knicks fan so I'm friends with two of the four two of the four not really nice guys like when you say you know him you mean you've dm'd with them or you've done something in human life I've hung out with uh Adrian Grenier many times he's he's a big attack he's got a he's a he's a uh like a venture partner in a fund and he lives in Texas well-known public that he's in the Austin area um so I've seen him many times I think sax has to he rides in our circles and then um yeah turtle is a huge Knicks fan and I'm in a group chat with him where we talk about the Knicks so shout out and they're bringing it back by the way there's a big fight between I guess Mark Wahlberg no two of the creators but the whole cast wants to come back and then they want to do like what would Ari Gold be like in this era of cancellations and political correctness and I think that would be because it's happening also he's got to be a softer character too now that he's grown up he's matured he's past the the Heyday of his career he's reflecting on life a bit it could be really good well that would be a plot line yeah get you you put him in the middle of the cancellation crisis yeah Jerry Ferrara they probably has to issued an apology of some kind something from the past some text he sent to some producer in the past yeah what would be great is if I think the best Entourage reboot would be making him the head of like Disney or something like he's in charge oh my God you're his Studio and then by the way are you seeing this Snow White the backlash oh here we go go welcome bro go ahead here's your right here I I don't care I'm not gonna see the movie and I don't care much it's another Disney it's another Disney faux pas where conservatives are backlashing against this revisionist take on Snow White the dwarves apparently are no longer Dwarfs they're just people with like funky hair no way yeah really yeah they made them non they made the doors non doors I think they're still called dwarves but they're you know normal height people so Lord but they've got like blue hair or pink hair or whatever though well this is the thing the term dwarf I I think is not I think there's some in the community some debate if it's offensive or not so I I don't know if it is if it is apologies in the small person community like what community the person uh there is a term person of short stature little person and dwarf those are the commonly used terms uh according to the internet I don't think you get canceled for those but I do think it's a sensitive subject um and there are some differences of opinions anyway somebody who is a person of short stature um complained about this and then a bunch of folks who are persons of short stature were very upset because how many iconic roles are there four people who are are in this right well this is kind of an ancillary issue Jason the the main thing that's race tackles is that the actress who plays Snow White has been giving all these interviews in which she's trashing the original movie and of course he's saying that Prince Charming was a stalker in the original and so they had to change that and yeah that that Snow White was the original Ip of Disney that was the first big movie they did that put them on the map I think before that it was more like short animated films and I think Snow White was the one that Walt Disney figured out we could make a feature length animated movie and it made the Walt Disney Company so you have here this actress is taking a lot of heat because she's saying a lot of things sort of trashing their original movie now I personally don't blame her because the things she's saying I think are the filmmakers intent and so really you have to question the wisdom of the executives at Disney who you know could have left this material alone they didn't have to go here yeah but they did decide to go here they did decide to do a remake and they changed all these things why even bother you know all you're going to do is ruin the Public's perception of the original yeah that'd be like the the new Star Wars people being like Oh my God Han Solo was a misogynist and it's like well yeah it was a scoundrel they literally call them a scoundrel in it like yeah I mean he's not the best guy but he has an arc and he turns around I mean it's a problem with trying to you have to look at Art uh in context obviously and uh you know speaking of which I don't know if you guys saw it there wasn't a need for them to rehabilitate that movie by remaking it in a completely different way yeah here's how you say it um standards have changed over a hundred years so some of the things that you might see on film or in Media or in books might be different over the last century and you might want to put them in context at the end let's move on but speaking of media are you guys aware of this uh song that has rocketed to number one rich man haven't listened to it Richmond all right so I just I thought I'd bring this up I think it's have you heard it Freebird great song great voice incredible can you play it because I I haven't heard it I have no idea let me play you a little bit I want you to just listen to some of the lyrics here and then for context nobody knew the song a week ago it got 25 million views on X in a week or three days and it's the number one song on iTunes right now number one track in the country here we go coming at you Oliver Anthony rich bad to Rich become an attitude for pay so I can sit out here and waste my life away drive back home and drown my troubles around people like people like me people like people I guess I could just wake up and not be true yes [Music] [Music] Lord knows they all just wanna have total control wanna know what you think wanna know what you do and they don't think you know but I know that you do is [Music] incredible when you hear the song I saw sax was getting into it this is popular song He's crooning the American voice it's the 80 million people who voted for Trump that you know if you read the top YouTube comment it's the 80 million people that feel like they don't have a voice that you know Trump was speaking to he sounds like Wesley Schultz of The Lumineers the beautiful voice but obviously the lyrics are what speak to people let's do a little um all in for the first time a little um cultural uh you know what would you call this appreciation of the lyrics here uh or an analysis I've been selling my soul working all day overtime hours for pay so I can sit out here and waste my life away drag back home and drown my troubles away it's a damn shame what the world's gotten to for people like me people like you wish I could just wake up and not be true but it is living in the new world with an old soul these rich men north of Richmond huh Lord knows they just want to have total control this is this is a key line they just want to have total control they want to know what you think Zacks they want to know what you do and they don't think you know but I know you do and so what's happening here is the uh author of the song The Lyricist is saying this is about big Tech this is about the CIA this is about the FBI tracking us and then thinking that we're schlebs that we don't know they're tracking us they don't know that track and worker man but the author speaks to The Listener and says I know you do just let it sink in huh do you have any uh lyrics here that spoke to you Friedberg I know that you're you're living this blue-collar life yeah I just want to wax philosophical for a second I do I do think that you know for all humans to find happiness in life they have to feel like they're progressing and if folks are not progressing because of challenges they face in the world there's always an orientation that the system isn't delivering to me the things that it was supposed to deliver or the system is rigged and corrupt against me that's been the case for all of human history it's certainly the case today and with you know you read Thomas picketty's book Capital he speaks so much about wealth disparity um in an era of globalization uh in an era of technification in an era when the world is seeing some people have extraordinary gains but most people not on a relative basis and that voice speaks to A system that is preventing those folks from finding that path in life that they believe they're due and that they think is obviously something that everyone should be born to be able to pursue I think it's beautifully said it's beautifully said it really speaks to the core and the Heart of what people turn this populism I hate that term but it's a lack of progressivism it's the fact that folks don't feel like they can progress not just in the U.S around the world today but really the US voice is so strong and so loud on this point it's why Trump was elected that the system whether it's the companies the people the institutions the large large federal government agencies are preventing folks clogging up giving people not delivering to the people the things that they said that they would and not enabling them to progress on their own and I think that's really this this song encapsulates the emotion of that feeling so well I think it also I think that's what's going on yeah it's beautifully sad and I think to build on that and then bring shamoth in here there's something unique about the American Spirit that we're never happy that we're always striving and I think this also encapsulate this that and if you look at the European Spirit specifically Italy where you are right now there are people who very much enjoy life and accept life and have uh maybe a little more peace and happiness and aren't trying to you know upgrade upgrade upgrade to get the latest version of whatever it is car Boat House you know iPod uh whatever and it's super interesting this lyric because it shows this frustration and if you think about the frustration freeware to your point we have the lowest unemployment in the history of this country in our lifetime I should say uh and uh Wars aside and and when we have 10 20 unemployment in certain groups people complain about that when people complain about their retirements We complain here about our portfolios and our Equity positions and them being down everybody in America complains it's why we are so uh successful is because we never accept it and we never actually take a moment to smell the roses uh any thoughts on that and then I'll just read some more lyrics and then go to sex and I don't know how to reconcile all of this with the other part of America which is you pull yourself up by your bootstraps and the system still roughly Works how do you make those two things work together it just seems like one cohort of people says the system is rigged another cohort of people say if you work really hard America will give you a better chance than anybody else and it still does and it still does a better job than it ever did and there are umpteen examples that they'll point to so who's right is it that they're both right I think it is that I was about to say I think it's it's both right sacks you could have a group of people uh who are unhappy with their current condition and there are people from around the world who look at America and say I want to be part of that system if only I could be in that country in fact all three of your parents Freeburg Sachs and shmob said that I need to get there I need to get to America sex with us on shabbat's point about this disparity this Paradox so the way I interpret this word populism is failure of the elites when you hear people expressing populist thoughts what they're really saying is that the people running this country the ruling class the elite has failed and we've just seen with two years of covid that the ruling class got everything wrong pushed these insanely destructive lockdowns lied about every aspect of the virus and pushed a vaccine that didn't work so I don't want to rehash covet but the point is just the elite the ruling class completely failed and yet their failure was covered up by the media it's the best example let's just say let's just call it what it is it is the best example right so I think people are justifiably angry about this failure of the elite combined with the lack of accountability because there's not honesty about what they're getting wrong and you see this pattern repeated over and over again so I think it's repeated in terms of how we got into this completely unnecessary Ukraine war it's repeated in terms of the crisis we've had at the border it's repeated in terms of the export of all of these industrial jobs to other countries and that has lots of cities collapse of cities the collapse of cities with you know again we have hundreds of thousands of people living on the streets I think all of these things have made a huge difference in the lives of many Ordinary People in the country and so yeah this is a land of opportunity for people who have certain kinds of skills listen if you are technologically inclined it's still a great country we're in this industry we know there's lots of opportunity it's always a great time to start a company but many people in the country have been adversely impacted by these policies and there appears to be no willingness of the ruling class to admit the problem and make changes the line Jason you quoted where it was kind of like they know we know and they keep doing it anyway it reminds me of a line from soldier knitson who said that we know they are lying they know they are lying they know we know they are lying we know they know we know they are lying but they are still lying that's the vibe I'm getting is this this uh Soldier knitson line Nick if you just pull up the link I just sent this is a a really important I think data set for us to all look at and for everyone to understand you know what's gone on in the United States this shows in 2020 per capita income in the U.S by quintiles so the top five percent of earners in the U.S you know since called the mid 90s have seen a near doubling of their earnings the top quintile which is the top 20 percent of earners in the United States have seen their earnings Climb by 60 since that time period but the rest of America the other 80 percent have been flat and I think what if you were born into the United States or told the story of the American dream the story of the American dream is you can come here work hard be smart make put in the effort put in the time and you'll be able to progress in your life in terms of Comforts and assets and all these things and for most of Americans that story has not played out they've worked hard they've put in the effort they've tried to be smart they followed the rules they've done what the systems and the governments have said you should do in order to get the rewards and they're left with flat earnings over several decades um and that's the story of America right now and because of this the top 20 percent the top five percent have acquired you know an outsized amount of the assets an outsized amount of the income as as we all know and have all benefited from and the vast majority of Americans so that have been working I have a question for free Freeburg do you think that we should Implement policies to change the lines on this graph that's exactly what I was going to ask yeah I want to reference you guys to the Tim Ferriss interview with Charles Koch from a couple years ago in that interview he gives a really good example and I'm going to mess this up a bit but he talks about how certain women that are hairdressers in the inner city they want to go do this hair braiding thing but in order to do it they have to pay thousands of dollars to school to get certified and then they have to go to the city to get a license in order to be able to do that job so the economic cost of getting there is insurmountable for them and there's countless examples like this where in the U.S we've created policies that have attempted to be forms of protection or perhaps be forms of income generation for cities and governments and so on that in the process unfortunately have limited the mobility of people that want to be individual earners and entrepreneurs in the U.S I think that is the first thing I would do to address this problem give every American the opportunity to be an entrepreneur to build their own path do you think that hair braiding licensing fixing that problem will cause the dashed black line or the blue line to shrink or I guess what I'm trying to ask you is should those lines shrink yeah I don't think it's the government's role right I mean I just want to know I want to hear I want to hear friedberg's answer Jason I'll answer the question okay um I've said this in the past if you shrink those lines you will limit overall progress and what I mean by progress is improvements in productivity improvements and advances in technology in business in economic growth because we've seen this many times in the past there's a certain limit on taxation so one Methodist attacks right pull more money out of the top earners and redistribute it the problem is when you do that there's less capital in the hands of those who have proven themselves to be good at driving productivity and improving access for goods and commodities and things that are cheaper for everyone so there is a cost to doing that and that has been this is this has played out I mean this is the Roman Empire this is the British Empire this is played out countless times in history in recent years it's played out probably half a dozen motivating you're evading the question I just wanted to know what you think what do you think I think that there's an important balance to strike so I don't think it's about taking away from the top as much as it's about enabling the bottom if that makes sense it doesn't because that's what everybody says they want to do and this is It's been 50 years of people saying that it doesn't work what yeah so he's not going to answer so you answer your mouth what do you think I'm just telling you there's a consequence to doing you know whatever we want to do to try and make everyone equal and end up here's my here's my issue the way that you present it like you tell it in a language and even I felt it where I was like wow this guy's really empathizing wow my God he's really but then the follow-up to like well what would you do is non-existent and I think that that's the real problem a lot of people want to pretend that this is an issue and they want to get the sympathy of the masses by giving the populist rhetoric of why this is an issue but when push comes to shove and the question is do you believe that the dashed black line or the blue line should be legislatively brought down to meet the other lines people just evade the question in my perspective the answer is no you cannot do that and the reason why United States GDP is where it is is because of that dashed line it's an existence proof of the fact that this is the largest economy in the world and so one has to make a really simplistic decision which is do you want economic Supremacy and then try to figure out ways of rebalancing things or do you not I say you absolutely must start with that which means that that dashed line and that blue line will always have a rate of acceleration that is greater than the other lines and that's just natural Opex leverage that exists in any company if you look at a company with 50 ebitda margins versus a company with 15 ebitda margins because one uses technology and the other one doesn't it's capitalism is right with these examples yeah Jamal that is the smartest thing you've said in 142 episodes of the only product but I agree uh 100 with your I think it's well said but then you should just say it I think we do a huge disservice by pretending to care and then not seeing the Ugly Truth The Ugly Truth is none of us want the government to try to bring that dashed black line or that blue line down we want them to stay out of our way that is the truth yep so if you talk to that guy that wrote that song and his 80 million followers he I don't think what do you say to them what do you say to them I don't know it's my honest answer I want to get sex good okay look I think when you see a chart like that the natural instinct is that you want to argue for redistribution you basically want to take from one of the top lines and just give it to one of the bottom lines and I think that only works to a degree I think it's important that we have a social safety net but what we've seen is that Marxist redistribution doesn't ultimately work it actually makes a society poor I think this is where Jamal is right the simplistic Solutions don't work we're not going to move from fundamentally a capitalist system to a sort of marxist redistributive system but that doesn't mean that we can't do things to improve the situation for the average American and I think there the policies are more complicated but I think we could have much more prudent handling of our fiscal situation so that inflation for example doesn't eat away the wages of American workers I think we could have a much more sensible immigration policy so that there's not I think a lot of competition for let's call it low-end jobs I think we could have had a better trade policy with China over the last 20 years I think there are things that we could do that were more nuanced that would have improved the situation for working-class Americans and we didn't do it and you compound that with again all these Elite failures around things like covet around things like Foreign Wars and let's add to this the Robert F Kennedy Junior critique of regulatory capture that the military industrial complex is bleeding this country dry and I think you add all those things together and I can see why there are complaints there have been three major responses over the past 50 years to this problem the one and and all of them involve creating budget dollars to fund access to every one of three major things which is Healthcare education and housing and it sounds good in principle it is a good thing to say everyone deserves to have access to buying a home everyone deserves to have access to an education everyone deserves to have access to health care the problem is when the federal government has stepped in to build the programs to provide these Solutions they've created extraordinary incentive problems that have caused asset Bubbles and have ultimately caused failure in the underlying system that you're trying to give everyone access to we have told every American that they should put all of their net worth and more into their house and as a result we've had to continue to drive up the price of housing in the US drive up create a housing bubble by pouring a ton of capital into keep that asset safe and protect it because it is where most Americans have put their nest egg we've given everyone access to an education by giving free student loans out and those student loans have caused an asset bubble in the price of education and we have tried to provide Health Care to everyone through the federal government that has no accountability and as a result the cost of Health Care has ballooned so I think the the one question for you guys is in the sense that most people are saying these are three critical things that I need access to but when the federal government gets involved and provides them the cost source and we have all of these bubble problems and disincentives that arise in the system and money gets stolen and yada yada what's the right solution then right how do you provide sex that that you know that 80 of Americans access to these things that you know boost their condition in life without causing what is effectively inflation across I don't I don't think those are these areas yeah I would like to start by just saying when we look at this chart I think it maybe looks worse than it actually is in reality I think when you look at the chart you say oh my God this is terrible but there are people around the world who are fighting to get in this country who want to be part of this chart now why do they want to be part of this chart is because they perceive that you know even the the middle quartile even the fourth quartile here the bottom quartile they feel like that's better than their lot in life in their country so this if you were to expand it and put a couple of other countries on it you would say hey even the the people who are in the fourth quartile in America are doing better than people in the middle quartile in another country and the opportunity is still here and that's my second point which is you know how easy is it or how possible is it for you know the Next Generation you know if you came here as immigrants uh like like many of you did and obviously you know my um grandparents did how easy is it to get from that green line to the orange one the orange to the red the red to the purple Etc that's the generation I think we need to focus on forget about all the programs forget about tax moving up how do you move up that's a wonderful point because I think the generalization that this chart is like chart porn because it's meant to be titillating but it tells a very poor story of that exact dynamic which is if you started in the green line which I did you know my parents my parents made thirty two thousand that's the most they ever made in their best year but most of the time with welfare we were on living on between 15 and 21 000 a year yet somehow you know we went from the green line to the dashed black line so the thing that this chart isn't really representing is is there enough people that go from green to Orange Orange to red red TO purple purple to blue blue to dashed black that's what really matters that's what that's why I think this chart is mostly pointless because if in fact what you saw was that in any given cohort of people they were not the cohort before that was in the dash black line you would say wow we're actually creating wealth distribution in a very unique way which is an entire new court order people are becoming wealthy in every generation if however it's the same 50 people that are in the dash black line obviously that's not good but our lived experience is not that so I think like the real question is like can we just be can we find a different way of actually telling the truth using this information so that instead of so that instead of bear hugging random populous sentiments and statements to try to win favor with people we actually just acknowledge the problem where it lies that individual that wrote that song which line is he on which line was his father on and which line will his children be on that's the critical question it's not that the lines shouldn't exist yeah and nowhere else on Earth would the three of us I mean you know Coach Line did you start on I started in the green I know I'm asking foreign yeah we had no money I don't know what to tell you I mean we you know my parents we moved to LA when I was six years old from South Africa and they work gigs their entire lives yeah I think my family went from fourth to the middle and then my brothers and I all went up to at least one or two lines Higher by the way another thing sorry I think that's I think that's the important story if you guys read some of the comments on YouTube which we always argue we should or shouldn't have but you know but honestly I just want to point this out there's to chamat's point there's immediate approximation of people based on which quartile or quintile they're in rather than an approximation on their transversal of the quartiles or quintiles or whatever well I think what what what's what's really true about all four of us is that we all transverse the quintiles we all moved from there to there and none of us were wealthy just a few years ago we all you know made our way in the world and in the United States in a way that we would not have been able to anywhere else on Earth and I do think that that is the most powerful aspect of you know American liberalism and democracy stuff I think this characterization of people based on their their wealth is what's so disturbing to me because you hear it's like identity you hear it from AOC yeah but but it discredits the fact that those people typically were not wealthy a few years ago that the people that should be celebrated are the ones that went from not wealthy to wealthy through the means of creating things that ended up being useful and productive or whatever the system uh asked for and they created value there and I think that the the lack of recognition of Entrepreneurship the ability for immigrants to come to this country and transverse these quintiles yeah but that was one of the challenges yeah that would require them to be a little bit curious about the individual and to not use the individual as just an object to win their argument and you know I think that's that is the sin of politics is that they're just using just different objects out there let me ask you the question then what do you say to the blue collar worker enrichment that this guy is speaking to in terms of the their ability to transverse those quintiles to to go from low income earner they they're a blue collar worker they work a union job or they work as a plumber or they work in you know some manufacturing facilities you're not supposed to grin him so by pretending like all of the this is what they hate they hate all of you people grin them stop grin them stop purchasing that you care that you really care and oh what was them but the reality is it is implicitly impossible for anybody on this podcast to talk about how this system has not worked for them okay and so what we need to do is actually take a step back and just acknowledge the fact that we were in the green line we somehow buy a bunch of fate and luck and hard work and opportunity that this country provided and so the real question is what did that guy can he do differently has he done or shouldn't have done that has kept them in there and one of the things that I would like to bring up that are that is really worth exploring for multi-generational Americans which is not talked about enough is when we introduced or when we I'm talking collectively we Lyndon Johnson really the war on poverty that had an inexorable change in the Dynamics of America in Black wealth in white wealth in the trapped amount of wealth the destruction of nuclear families all of these Trends started a few years post the introduction of the war on poverty and nobody talks about that so I disagree with you Friedberg when you point to health care and all those are secondary and tertiary derivatives of the actual war on poverty and that was Lyndon Johnson's signature legislation post the assassination of JFK and nobody really looks at what that actually did to change and potentially misalign incentives in the United States that have compounded to create this issue so I I would say to the Richmond person I have enough respect for you sir to not great and you and tell you how well was this graph I don't know what the solution is and I think we just need to talk and figure out to see if there are some ideas that that can improve the situation but some of them some of them do come to the fundamental incentives that the government has created that we need to either undo or change sex yeah I mean I think there's a lot of good points in there just to Echo some of the things you guys said I think my family came to America in 1977 I think my dad was making 27 000 a year so okay it was the it was green or orange or something like that one of the bottom one or two quintiles and then we moved up because he's a doctor and had that education so you know how you do in this country is going to depend a lot on what kind of education you have what kind of skills you have like you guys are saying now that being said I still think there is a policy role here I do think that a lot of the policies we've had in this country over the last couple decades have not been great for Working Class People and I think there are things we can adjust but to Jamal's Point declaring a simple war on poverty that's based around redistribution doesn't work because what we've seen is that it also creates a lot of dependency and so a lot of these policies backfire so simplistic redistribution is not going to solve the problem however I do think that having a policy response that does try to create more opportunity in these working-class communities again we didn't need to hollow out our Industrial communities by exporting jobs to China we didn't need to create all this low-end wage pressure by basically having an open border for so many years so there were choices that we made that did make life rougher for these people and then when they start to complain about it we censor them or call them deplorables and so I do think that the response that the elite has and that really the mainstream media has towards these people does fuel the alienation and polarization so we could be reacting we could be reacting a lot better to the complaint here I'll tell you what's happened I think is America went from you know a country where people pulled themselves up by their boot traps they believed in radical self-reliance and that they determined you know their fate and then over time we've solely looked at the government as the determinant of Our Fate and you know what handout what tax break for the rich you know what what can I get what Edge can I get on the system what angle shot how can I you know look at the government as a solution to our problems and what I think all sides of the political Spectrum need to look at and celebrate and this is why I think Chris Christie and vivec are like really good candidates is because they're not looking at handouts or blaming the government or looking to the government to solve problems but looking at your community looking inside yourself and saying hey what are the ways in which if I want to if I want to move up those traffic and remember some people work to live they don't live to work they just want to do their nine to five put their time in and spend time with their families or do their art whatever their job does not define them and and we are a biased group of entrepreneurs who are Define ourselves in large part by what we do in in our work doesn't mean we don't care about our families but we we put that front and center some people don't want to move up the lines they're happy and content where they are but the entire dialogue in America is about how unfair you know we split that tax base as you talk about Freeburg the spending and everybody wanting their peace and everybody wondering who got a bigger piece of the pie as opposed to wondering hey how can I improve myself how can I provide more value to the world how can I build a business how can I build a skill set and that's where the dialogue needs to move and I just when I hear vivec speak you know I disagree with them about a lot of things I hear Chris Christie speak I obviously disagree with them about a couple of issues but I'm liking those candidates and I'm liking the direction they're going Vivek has a great line which is victimization is a choice and you you see different versions of it on both the right and the left on the left the victimization is based on identity politics where if you're born into a certain group then you're automatically a victim regardless of really your circumstances on the right it's more again it's it's more of this populist critique where if you're a working class person then you've been victimized by those policies I think there's some degree of Truth in both critiques I mean I do think that policy makers have to meet people halfway we need to have policies that work better for working class we need to have policies that prevent discrimination at the same time people can't just buy into this victimhood mentality where they're like okay I don't need to do anything on my own to improve my circumstances the whole system is so rigged against me that I don't need to take any Agency for my own actions also and I think it needs to be both we have to have policy makers and people meet halfway on this thing I also think that there's a social Dynamic that's also worth exploring here which is that we live in a culture where a lot of people spend a lot of time projecting a version of themselves and that version of themselves is mostly meant to accrue Social Capital to them but by implication it's to make other people feel envious of them as well and that's the whole they'll call it the Instagram phenomenon and I also think I just think it's important to acknowledge that we live in a point where there's this heightened psychological Sensation that everybody else is doing better than you are and so you have to find these mechanisms of rationalizing and explaining and and I think that that's also very dangerous so Jason to your point there is so much respect you know a lot of the reason why I spent so much time in Italy is my friends here are just very very simple you guys met so many of them just normal everyday people and and they're happy and I have so much respect for that because they have a balance in their life and one of the things that defines him is they don't spend time in these media formats that actually exacerbate the sense of being less than everybody else competition and I find that consistent thread amongst all of these people that are really well balanced that at every strata of whatever line you're on the healthiest people in each of those lines are the ones that actually how the definition of themselves that comes from within that is multi-faceted that generally includes a deep relationship with one romantic partner and it includes their kids yeah there's everything else is very much and it's not defined by where you want to go and where you want to be it's defined by the day you're living I had a great conversation after a lot of wine and tequila and beer and I don't know what else wedding actually I forgot the guy's name so with Drake I said to the guys Italian Guys tomato I'm sorry forgot his name really nice guy and we were talking about the difference between Americans and Italians and how the Italians are all about let's just live for today enjoy our moment enjoy our experience enjoy our time the Americans all just want to talk about where things are going where we're headed what we're looking for what we're trying to achieve and so much about it's the irony is I've got my brother visiting from Europe this week and so much of the conversation difference that we've talked about is in America we talk about winning it's like everything is a everything is a contest everything is about getting ahead everything is about a challenge everything is about what's next how do I get to the next level scorecard scorecard and that's what's made us the greatest entrepreneurial you know Society the greatest 250 years of progress in human history yeah I disagree with that I disagree with that but it also makes you profoundly sad if you only live for the score card and not I don't think entrepreneurs have the best I don't think they're looking at somebody else saying I'm gonna beat that guy I don't think that that's where it comes from forget about the terms forget about competition just make it about progress where am I going and that we Orient ourselves around where we headed versus where are we today you know just enjoying this moment today the moment and I think that there's a big cultural difference between the US and the guy I was sitting next to at your wedding chapat these folks are just very much about enjoying this experience and not thinking about what's next and where we're going we come in everyone saunters around no one's thinking about what time we have to start everyone's just enjoying their time with each other and the Americans are all like what are we starting the wedding what are we doing this when are we doing that you know the litmus test for that I find is when you first meet somebody and I encourage all of you guys to try to do this is to not go to what do you do as the question right American question how long can you go without asking that question what do you do yeah and I find it's so amazing to actually have conversations with people where that question never comes up you will really really really learn a lot about people I think a lot of this also is like you know I was watching the center of Tim Scott I'd love to have him on the program I know he's maybe not got the highest percentage right now and we got a bunch of other uh candidates coming on the program by the way for the audience but I was just taken back by I saw uh Joy Bahar or whatever the host of the view is Joy Behar and she was just admonishing him that he doesn't understand systematic racism he's a black man and he's like I am the product of the American system I'm proud of where I got to and she was you know she's constantly trying to make him feel worse that the the the you know the conditions are terrible it's funny because like I was a very basically disjoint somebody basically saying that Tim Scott is not allowed to be proud of his journey basically that's what she did whose right is that it just take the win like just let him you know yeah it's really weird and uh I just want to take one other moment from the song because this song got pegged as like maybe it's propaganda I don't know if it is maybe this guy people started doing their like how do we take this guy down like the left and the right lunatics uh you know On The Fringe always try to do something happens that's nice or you know whatever we got to take the person down and maybe the guy is on the ticket who knows he's just an artist to me but he liked or had a playlist of 9 11 conspiracy theories but he says here in the song Lord we got folks in the street he ain't got nothing to eat and the obese milk and Welfare well God if you're five foot three and you're 300 pounds taxes ought not to pay for your bags of fun fudge rounds talk about the welfare state young men are putting themselves six feet in the ground because all this damn country does is keep kicking them down referencing I think you know Jordan Peterson and the suicide rate amongst young men and their hopelessness and you know Etc and it's very hard I think I would encourage people to be careful trying to pin this as a left or a right song this is about you know Working Class People feeling frustrated with the system is was my read on it and uh maybe even fighting back and taking a little bit bit of their power but a great song congratulations to him and I hope he writes some more tunes reminded me of pick a song like The River by Bruce Springsteen or Telegraph Road by Dire Straits just so many great um songs about the Working Man great congratulations on hitting number one and uh everybody else can tear it down and in the comments you can tell us we're out of touch even though we moved up the lines I think that's way why some people like this show and and you know have is because maybe we did move up a couple lines and maybe we might have a perspective at some point in you know how to do that let's move on I guess I think everybody got their shot at this all right The Big Short too Michael Murray he just made a bet against the markets this was trending I'm not sure how much of this is all true but there's been some reporting on it Barry's fund has recently bought 866 million and put options against the s p and 739 million puts against the NASDAQ these are headline numbers on the SEC there's probably more to it contacts obviously we all know the Market's ripped NASDAQ up 37 this year s p up 15 this year inflation getting cracked GDP looking strong unemployment on the floor number of job openings still above nine point x million pretty crazy to think about how resilient this economy is with pockets of disastrous stuff but what's your take on this Friedberg yeah I think the reporting's a little wrong on this so okay this came out of a 13f filing and on the 13f filing you when you report option contracts remember each option contract represents a hundred underlying shares and you don't have to talk about the strike or the expiry on the option contract when you do the 13f filing so we don't actually know what the strike or the expert is on the option that dollar amount that's being reported is when they take the number of option contracts multiply it by a hundred which is how many shares per contract and then just use the price on the actual underlying the index he may have paid a dollar an option he may have bought an option that was three years ago it could be much smaller it could be a short-term contract that's just a near-term hedge on the portfolio and we have no idea how much the actual dollar value of the contract is it could be really way out it could be just be a short-term hedge so we really don't know directionally or or magnitudinally how significant this this is so it's a bit of a misreporting without knowing the strike and the expiry we don't know how much he actually spent buying these puts and what the BET really means is that a near term better or long term is of his portfolio I mean have to disclose in the 13f what your short positions are and so all you have to do is disclose what your ownership is so my suspicion is that Michael probably has what's called the short straddle on and so a short straddle is when you're basically selling a call and you're buying a put and so you know we've talked about these a lot which is instead of taking a naked exposure for 1.6 billion dollars which seems very aggressive and risk on and he's not the type of guy if you look at his trading activity that does that kind of stuff his typical positions are 50 basis points 80 basis points 100 basis points so he's not a big risk taker so what he probably has on is what's called a short straddle and what you don't have to disclose in these 13 apps is the other side of the trade where you're short a call and so I suspect that's what that is so this is a big much to do about nothing it's good headlines in a yeah in a moment where there's not much to talk about it's August and the media you know this is the media business losing its business model and Google and Facebook taking all their revenue and Craigslist and Facebook you know Marketplace taking all there and Michael by the way Michael can go on Twitter and tell us that we're wrong but um dollars to Donuts he's got a short straw didn't he go off the Twitter he's like done with Twitter he goes on and off and he Auto deletes his tweets so I said a zapier up anytime he tweets he puts it in a slack room for me have you guys noticed the quantity without drinking this is myself oh whoa whoa you got ice cubes in there no but let me just say this look I'm I'm back in the United States next week so this is the end of the vacation it's end of a one month where I don't exercise except for swimming and walking I eat gelato every day and I drink wine every day so this is the end and then I'm back what's the weight difference day one to day 30. what's day one to day 30. look at that perfectly chilled Mantra Shea oh look at that the glass is completely see the condensation I see the condensation from here I've gained two and a half kilos so what does that I have a moderate four pack that's two weeks of Manjaro now no big deal yeah I know you'll be good you'll be back in the game with a little bit we'll get you back in the game kid I'm gonna see Jake Helen about uh in about an hour Freeburg and I are going on a love walk but you know we have a lot of romantic moments so we're just gonna do a little can I shift the very short yeah before just my last point on the bird thing the media needs to do a better job of making sure they understand these things just a bit because the headline is just a little bit weird totally without knowing all the contacts like it's very hard to be a finance Rider you know because if you're a great finance writer you could be in finance and be a capital allocator oh let me fix where's the gelato you know you know these two kids this past week were literally like jumping against the camera they were jumping in the sea these two kids were swimming without any help whatsoever it was the most incredible thing to see when little kids learn how to swim isn't it it's joyous it's joyous it's joyous okay back to you guys sorry I love you let's talk about wealth disparity from Italian Coast all right with your 500 Montclair hat let's talk about well let's party go no it's my Point's not about wealth disparity okay that's right sorry I think we should follow up on where the economy is right now and and what the macro situation is and why Michael Berry might want to short the market yes so in terms of where things stand today I think the consensus view of the street is that inflation is largely in the rearview mirror it was down to three percent last month and the bet now I think is that it will continue to remain low it will be in this two and a half to three percent range at the end of the year and therefore the FED will be able to cut rates next year and the market has rallied quite a bit in anticipation of that I think that is the consensus view I think there are at least two really big risk factors to that one is that inflation could still rebound we haven't really gotten that many months of good inflation data and if inflation ticks back up if there's another wave of it in the next several months and there will not be Ray Cuts next year and that means if its rates are higher than anticipated valuations come down so that would be a big risk factor to the market the other big risk factor is I think in the real economy it's true that the economy does not seem to be hurt so far by these huge interest rate hikes that we've had however there is typically a big lag in the impact on the real economy of rate hikes and I think you could still see these rate hikes take effect over the next several months and you could see a real dip in the economy potentially a recession and that would be a big risk factor to the markets because right now the markets are pricing in a soft Landing or no Landing we're just going to do a flyby right right so what is the evidence that there might be a lag well a couple of things and it really has to do with real estate which I think is the most impacted asset class by rate hikes you saw that the mortgage rate is the highest it's been in over 20 years yeah 7.09 and the rates I'm seeing in Florida and other places mortgages are like eight percent well if it's going to cost you eight percent to buy a new house and it used to be three percent a couple years ago you're not gonna be able to afford to buy that same level of house and you can't afford to sell your current house and buy a new one because your current house is financed to three percent you're not going to give up which mortgage to trade into an eight percent mortgage so we're already seeing a huge reduction action in the number of transactions in residential real estate and so that means that we're not seeing a lot of fresh marks in terms of where prices are but that doesn't mean the valuations haven't gone lower I think that as this washes through the system you could see a big correction in the values of residential real estate which is most people's main asset so I think there's a big risk factor there the other big risk factor is on the commercial real estate side there was a interesting article in the Wall Street Journal about distress funds are forming in anticipation of a lot of commercial real estate projects basically going under so the vultures on Wall Street are going to be looking to scoop up these projects I think the really interesting thing about commercial real estate right now is multi-family until now the conversation has all been about office space and we know that office space is impaired because of the high vacancy rates that this the sector just hasn't come back the same way from home since covid right exactly but now we're starting to see real distress in the multi-family sector now why has this happened because multi-family is full There's No Vacancy problem yeah it's hard to get a home and more people would be renting if mortgages on the demand side the problem is in the capital stack so let me describe the the problem of what's happened here is let's say that you are a real estate developer who bought multi-family you bought it at a certain price level let's say you finance it two-thirds with debt you now need to go out and refinance that project because let's say you did a value ad let's say you you basically did some improvements to it that means you didn't put long-term debt on it you can't put long-term debt on a project that's not stabilized yet if you want to do value-add work to it you get what's called a construction loan for two or three years so there's a lot of real estate developers who need to go out right now and finance these projects that they bought and they bought these projects at the top of the market so let's say you're going out now to refinance first of all the rates are much higher you're looking at paying eight or nine percent instead of the three to four percent that you had penciled in your model a couple years ago moreover there's another problem which is potentially even worse which is loan to value you had basically gotten two-thirds loaned to value a couple years ago but values were much higher now values are lower because again multiples have shrunk as interest rates have gone up and so the amount that you can Finance is much lower so you either have to top that off by coming out of pocket with your own Equity or you have to go to one of these mezzanine funds so now this is Insurance funds they are total sharks and they're going to charge you not eight or nine percent but like 15 so your Capital stack has basically is completely upside down you thought that you could borrow all this money really cheaply but now it is super expensive and this project no longer pencils meaning you're underwater from a you've got negative leverage on the project and so I think you're going to see again not just impaired office space now impaired multi-family and there is not I think a sector of real estate developer who is not in distress right now if they need financing in the next year or two that's what do you think what did you get a better rate from Hesh right David David what do you what do you do if you're long these assets do you just default on them and just give them back to the bank one major real estate guy told me that the the big guys like you know Blackstone he the words he used was they are throwing their keys at the bank meaning they are so underwater they're not even going to bother trying to figure out a workout they're just going to give the key they're just going to say to the bank you own this asset now and they're going to move on to the next fund there's actually what's his take at least that was you said you sent a tweet to the group chat about uh the last line of like hope which was called The Hope note which is like where one of these Mez financers just takes your property and then if they happen to hit your high water mark again later on that you would get that uh you would get some you know idiot insurance and get a little taste of the the sale you had a tweet about the housing thing what's your take well no my only bought around housing was that very much just supporting what Saks just said like we're in a incredibly untenable situation mostly because as rates go up mortgage applications go down and so what you're seeing is just like the number of people trying to transact is very small and so the inventory is very small and so Sac said well so I I don't really have much to add except that when you think about where this lands squarely in terms of the wealth creation that it's supposed to represent for most Americans it's a very physical situation this is I actually think the point like people talk about the political pressure from the White House to the Fed and I think that this actually is probably a very powerful lens with which to look at it and the reason is because this touches all voters in every state across all political lines and I think when people talk about is the economy doing well or is the economy not doing well and as a result where are your political leanings I think something like this actually represents a much larger percentage of how people represent whether they feel they're doing well than any other thing even earnings quite honestly because I think that a home is just such a fundamentally visceral psychological component of safety and so a percentage a large percentage or well and sixty percent of people own one and the people who own one are the people who vote so it may only be sixty percent of people but it might be 80 of Voters I'm not sure I think I think that that could probably be very well be true so my only point in that was just more that this could actually if if the FED is susceptible to political pressure I think this is the kind of thing that pressures them to move forward the point at which they start cutting and to start to let go the release valve just because there's just too much pressure in the system yeah there's talk of them doing a safety rate hike doing another 25 bips the end of the year just to be safe and you know I think one of the things we've learned here is I don't think the data really supports that no honestly but but they've made poor decisions this whole time and this is not like the feds you know impact with this tool is not like driving a car where you hit the accelerator you hit the brake and you get an immediate reaction this is more like driving a train where like it takes a little while to get up to speed and if you slam on the brakes this thing can come off the rails yeah and that's the scary part for me just to build on what Sac said the the most interesting thing about this for me is that typically we think about the FED as being very silent in election years they really don't try to get that involved mostly because they don't want to seem like they're tipping an election one way or the other the problem that we have is that rates are at a near-term high the tenure is ratcheting up faster than we ever expected it's rallied in terms of rates meaningfully more than anybody thought since the beginning of the year and so now we're in this odd position where will the FED cut and why will they cut and if they cut will they cut sooner than they would have if they hold on is it that they just want the country to enter a recession in which case they want to see quote unquote regime change it's a very interesting set of Financial and political politics that I don't think we've seen in recent years yeah well there's a lot of um real estate developers who are literally Hanging On by their fingernails and they're hoping and praying for a rate cut the problem they're going to have is that even if inflation doesn't rebound Even If the Fed does cut rates next year the rate that the FED Cuts is the short rate is basically the FED funds rate that's at five and a half percent right now even if they cut that to call it three to four percent next year there's no guarantee that the 10-year rate which is what real estate developers get financed on will move down right the 10-year rate is what is it now at like uh four point four and a half percent something like that and that rate may not come down a lot of economists are warning about this Larry Summers warned about this because the federal government has such huge financing needs and so just because short rates come down it's no guarantee that the long wait is going to come down and so there may not be this relief that real estate developers are looking for next year and again there's this Wall of Death that has to be refinanced I'll give you an example from my own portfolio I have a building just to simplify the evaluation of a couple of buildings but okay that's worth about 15 million dollars it's an office building okay there's a 9 million dollar loan on it that is coming up to be refinance at the end of the year so I'm talking to the lender about rolling it over and what they agreed to do here here are the terms they agreed to give me 2.4 million out of the nine secured by the building that's it they wouldn't roll over the nine that'd only give me 2.4 for the other 6.6 they wanted me to post additional collateral in the form of public Securities so they basically wanted me to fully collateralize the loan so in other words they're adding like a margin account on top of exactly real estate that's exactly right over collateralize the building with a bunch of security so why do you need a lot of Real Estate yeah yeah and they want me to personally guarantee it so but why don't you just sell the shares no you're still participating preferred in your building what the right no when I took out a margin loan on his own security portfolio right so what I said is listening I don't need this so I'm just going to pay it off so I'm going to pay off the building 100 and when this credit crunch is over whether it's next year or two years now I'll just refi it then but here's the thing the average developer can't do that like how do they go out and just get that extra 9 million let's just point out the opportunity cost to you you could buy treasuries that pay you five and a half percent so your actual cost on that Capital that you're using to finance the building yourself to buy you know to buy the debt uh it's costing you five and a half percent a year of quarter million free risk risk-free income for the uh for the nine million that's not a pleasant situation it's something that I can manage through but my point is that this is something that's gonna be afflicting pretty much every real estate developer needs to refinance in the next year or so and they don't have and they don't have what you have which is yeah exactly they don't have the chip stack and by the way my real estate guys tell me that this deal that I got offered is a good deal right now oh it's a good deal because that's a good deal at least they were trying to be flexible and work with me most these lenders they're just like not even open for business I heard there's just no bid I mean this guy these guys I know that work in commercial real estate debt said though they're putting out the syndicated loan um proposals to the typical funders and there's no bid they're like well just tell me the rate they're like there is no rate there's just no bit well interesting news so we've been talking a little bit about you know these uh Bond offerings Etc and uh you know the US is uh with the higher yield still continuing to draw buyers Japan very very soft in terms of getting people to buy their Securities and 127 billion the share into funds that invest in treasuries on Pace for a record year Bank America Corp said last week all right let's move on to we got Nvidia left on the docket we got hoppin as a peak zurp the founder sold out a lot of shares let's pick one of these stories or we got the SPF which is going to be big drama uh next year when this goes to court or sax we could go those other stories there's not a lot of meat on them I think let's spend five minutes should we do the indictment giving you your red meat oh me giving me my red meat I think five minutes of you ranting and doing your TDS and then we can rap all right well listen I don't want to speak to your TSS your Trump Stockholm Syndrome but I will say that Trump yes has his fourth indictment you thought the hat trick was a lot well now he's got four Fulton County Georgia 13 felony accounts but this one's incredible it's got a you know a lot of co-conspirators and uh all I'll say is uh there is a small town in Georgia coffee is I think the name of it and there are a bunch of election machines and a group of this whack pack went in there and committed a bunch of cyber crimes accordingly and it's not clear yet but when this thing goes to trial just keep an eye on that there's an incredible law fair uh article and we'll put in the show notes and um a podcast but I think that opening up the aperture of it is uh what's really interesting to me what I'm seeing is I think there's a lot of viable moderate Republican candidates that would appeal to somebody like me I have voted 25 Republican 75 percent a Democrat I'm a moderate but left-leaning moderate I would say um on social issues um fiscal issues I'm definitely in the Republican camp but I'm looking at Christie I'm looking at the VAC I'm looking at a lot of those kind of Republicans even Tim Scott and saying you know what maybe that's a better choice than Biden who is very senile and I think the Republican Party has its moment right now to disassociate itself and say enough with the mashugana enough of trump and you're starting to see Pence come out very strongly Zacks vivec is still boot licking I think and is still like trying to get the VP spot with Trump I think it's a huge mistake and I think um Christy and maybe it's time for your guy DeSantis who is in the pardon Camp as well but maybe it's time for him to you know maybe start criticizing him and then I think it's time to negotiate a pardon for both Trump and Hunter Biden pardon both of them get him out of political life and let's move on as a country I believe that you're going to see uh Chris Christie and vivec surge it's going to be a three-horse race with DeSantis and I think Trump's going to be out of the race in the next six to 12 months that's just my prediction your thoughts sacks well I want to give you a chance here to expound on your blue meat not red meat for you it's blue meat your TDs is flaring up again Jason I think it's no no TDS so let me let me ask you to expound on this pardon Theory because you you claim that you think that Trump is now playing for a pardon that that's I think he's playing for a party yes can you explain that how do you how do you get from here he is going to go buck wild he's you know lashing out Etc in the hopes that he can cause so much chaos because you're seeing him you know uh with these tweets that are kind of Border Lighting on violence and inciting people gag orders that kind of stuff I think he's going to keep pushing the envelope to the point at which he breaks the Republican Party makes Americans really burnt out because the Republicans can't win with him he's got like 30 support or whatever he's not going to beat Biden you've said that before I think everybody knows it he's the weakest candidate of the field uh and I think you guys really want to get a win and you want to move past him so I think this combination of the Republican Party flipping on him and you're starting to see the crack you know and people starting to criticize him once the evidence comes out can people see him in court and people hear the details of his criminal Behavior his abhorrent Behavior his behavior that Vivek Governor Christie you know either side of the aisle would never participate in I think there's going to be kind of the United States is going to say you know what pardon him blanket pardon if he just steps out of um public life and I think Biden's going to need a pardon too for Hunter and so I think this could be the solution for everybody to move forward it sounds crazy but I think that the stuff that's going to come out is going to be much worse than Watergate specifically you know again I'll reference the the article of some of the behavior of his whack pack and what they were doing you know in uh Coffee County like the beverage Coffee County Georgia when you start hearing what they did you know lying forging documents and basically committing computer crimes this woman who Trump uh Sydney Powell Trump put his fate in Sydney Powell and um Giuliani is a critical era and I think it's all going to blow up in his lap these people were lunatics they were committing crimes and I think they're going to get them and I think he's going to need a pardon so he's not built for jail I can tell you Trump is not built for jail well this is one problem with your theory Jason go ahead president can't pardon State crimes that is true I think they could be a grand negotiation this Georgia Rico indictment can't be pardoned well however I do think that there could be a plea and so this could play out I think they probably want to plea it out every all people want to play this stuff out right both sides that's it see what you're about to talk about I know and you know what if you want to talk about deep State conspiracies and sax believes in this deep State comparison here's a conspiracy I just think that you free birthdays I just think that you cannot think rationally when it comes to the stuff okay fine you didn't know that Biden appointed Merrick Garland you didn't know that these Georgia Georgia Federal and estate crime of course I do of course I've talked about it being not pardonable before I think there is going to be a grand reconciliation I think everybody's going to get together and say how do we move on and that might even be underway right now the one thing that's definitely not going to happen is Trump takes a plea deal he's gonna fight last second you know what's gonna happen I said it yeah I said it last August when they raided Mar-A-Lago is that the way they're carrying on with this these lawfare attacks on Trump we now have the fourth indictment apparently he's a mobster they're going after him with a RICO statue that was invented to get organized crime and mobsters and apparently these lawyers you relied on as Dopey as they were apparently they're like button men for the mob who have to be indicted as well into this RICO statute I think people can see this for what it is which is it's a I'm trying to think of the right word I mean it's it's basically law fair right they're bending the law in any way they can to go after Donald Trump and I know that his behavior wasn't wasn't good in this but I don't think anything might have been Criminal no I'm part of that 100 you don't think it's from okay interesting let's look at that Fox News poll where they asked do you think the Republican party let me say this you think the Republican party is going to cut ties I think the Fox News poll asked the right question which is in connection with efforts to overturn 2020 election did Donald Trump do something illegal something wrong not illegal nothing seriously wrong I'm in that middle I'm in the middle bucket God I think it was wrong but not illegal God look I think that what Democrats are doing with this partisan lawfare is that they are polarizing the outcomes they're either going to send Donald Trump to the big house or to the White House that's what I said back in August last year when they rated they're going to send him to the big house or the white house I'm here for the pardon I'm here for the pardon do you think the Republican party is going to support him or do you think they're going to break ties and try to move on they see the way in which the law is being misused as being weaponized in a partisan way to get one of the major candidates for president they're trying to drive him out of I know do you think the Republicans are going to stand by him as these as he goes to court in these things these trials start I think that the rally or cut ties of course they're rallying around him it's ensuring that he will be the nominee okay I think they're going to cut ties and Republican party is going to expel him okay do Jeff Bezos was going to run for president I think Jeff Bezos will run in his lifetime and not necessarily this one I said you know I think Jeff Bezos will run his lifetime I think Jeff Bezos is living his best life on a yacht with totally I know 100 million dollars and then I was like 500 million you're your yacht delivers his toast every morning Jesus watched Bob Iger try and get back in the ring he'll do he'll do five ten years he'll do five years Max five years Max on yacht he get bored out of your mind it's so crazy My Yacht has a support vehicle his yacht has a support country it's called Malta your support yacht is his thing he's uh it's five years that's the max you can do on again one year on a yacht sax did one year on a yacht never again he's done it's too boring yeah Jake out thinks there's a Groundswell to put guys with huge yachts in office I I think I don't think so listen to that song you played no I think Bezos trip he spent 100 million got to the first question the first debate boom he's out yeah no he he missed his window I will man Bluebird would have been great I've got Bloomberg's betting on the yacht Groundswell I mean a Boy Can Dream are you telling me you wouldn't vote for Bezos if he was against yes of course you would would you vote for Bloomberg of course you would you want an executive in here that's what the country needs a professional exactly who's your non-traditional candidate Freebird who would you love most who's you know like a you know not going to obviously run or like it would be a small chance yeah it's an economist who's an economist they're just terrible political speakers they're just not good at that would be your wild card hold on I'm texting I'm texting Nat to bring me another glass of wine oh God he's so drunk he's on the last four oh yeah that's class four on air we don't [Music] wild card if you had to pick a wild card non-traditional not for this election but for an election somebody who's not part of this Peter Thiel no no listen I've I'm I've supported other financially or at least verbally RFK Jr DeSantis and Vivek I mean how many more candidates do I have to support um can you guys do me a favor [Music] I just don't think it was organized crime it wasn't a RICO indictment I want to hear you say he should drop out of the race as an influencer in the party I want you to say you should drop out that's all I want you to say all right let's move on Republic as a competitor to stripe since 2018 this was incredible since 2018 audien has reported every six month period of growth at least 26 or greater and they reaffirmed a 65 ebitda margin and there they were down at one point today 40 percent cool holy cow and so if you remember if you look at if you look at adien what does it mean about stripe and I think the answer is that stripe at that 50 billion dollar round 55 billion round is worth 25 billion so there's a 50 markdown right there same thing that's happening in real estate yeah the reason why that it might be a buy might be a buy the reason those multi-family developers are getting whammyed right now is again it's not because of vacancy everyone wants their Apartments the problem is multiple compressions the value is much lower which means they can't get as much debt hmm so all of a sudden they got to Pony up a bunch of equity or get expensive Mez to fill out the Capital stock this is the problem is there's multiple compression everywhere more and it's just taking time yes it's more time to work through the system this is a train what is tripod where do you where do you buy stocks where do you buy strikes I think you're right I think that the almost perfect comp there so yeah you're right down 46 year-to-date that doesn't even include what happened last year yeah right the thing to remember about all these businesses stripe rdn PayPal is that they're middlemen businesses which by definition means that they don't have pricing power they actually have to reflect the prevalent pricing power of the incumbent sponsors of their technology so for example if you have a deal with McDonald's McDonald's bids you out to five different people and they pick the cheapest one right so your margins over time tend to be compressed and over time your share of profits tend to be compressed and you have to give up a lot so how do you maintain profitability so an IBN maintains 65 ebitda margins in the face of this Revenue decline the only way they can do that is by cutting staff using more technology and creating Opex leverage that replaces what they're losing so the real takeaway is that they this is a very tough tough business that is a race to the bottom and it is a surplus business that benefits the buyer I.E the Ubers the McDonald's the doordashes of the world not the seller I.E the audience the paypals the stripes it did what's the changing cost you know if you're if you're uber and you negotiated a deal for three years which stripe and then you go to adyan and you negotiate your next deal and they want to win it because they need the top line revenue and now you got a dog fight you know let alone all the other players these are all race to the bottom businesses and so tough business tough business if you have a very diffuse business model where you're trying to do too many things and so as a result you have a somewhat bloated Opex relative to a company that's going to do a lot less but do it just much better I think you're going to be very challenged yeah well uh you know this this could be the buying opportunity for a lot of these equities if you believe in them long term so Dan Loeb is placing a bunch of bats he bought some Uber he bought Nvidia you know he's he's out there buying up stuff so we'll see let's talk about day important I think this is like a very interesting one we didn't get to it last week pen gaming a gambling company and gambling's become legal in the United States Sports wagering has been accepted by the NBA ESPN TV shows everything it's been incorporated into I've been gambling for 30 years of course but now it's been integrated into um when I bought a piece of the Warriors the funniest thing was I got a call from the NBA because you have to submit like this huge application like you know everything open the kimono okay and they knew that I was a big Sports bettor and they were like hey will allow you to sports bet in Vegas if you show the tickets but otherwise you know they knew who my bookie was they were like you cannot call this guy anymore you can't Sports it was crazy okay don't worry don't say his name so Nick delete the thing about the first part that's small you're such an okay wrap it come on we gotta go let's go four I really needed you I love you guys so much no I really love you guys and I miss you I can't wait to come back I can't wait to be back with this book all right so am I gonna see you when I get to L.A I'd like to see you sure when you get here Thursday no Wednesday Wednesday like one oh yeah I'm here put me out the group chat with Drake Jay Kelly and I have a lunch date we gotta go okay so four the queen of quinoa the Sultan of science the architect the SAS hole himself and the dictator I love you guys drunky monkey I am undoubtedly the world's greatest moderator we'll see you next time we'll let your winners ride Rain Man I'm going home and I said we open source it to the fans and they've just gone crazy [Music] besties [Music] it's like this like sexual tension that they just need to release [Music] where did you get Mercies [Music]










Sultan of science what's going on are you still riding high after you're a big NASA Zoom interview your space station Zoom interview that was really fun shout out to Woody hoberg from the International Space Station astronaut Cal alumni Woody listens to the pod on the ISS while he works at the astronauts workout he said two hours and 15 minutes every day to you know obviously your body can actually got to work out a lot he's like when he's working out he listens to old episodes of the all-in Pod a buddy of his put him onto it he's become a big fan right on shout out to Woody yeah I got a DM from NASA astronauts I thought it was like some sort of scam or something I clicked on it because I follow NASA astronauts they DM me and I'm like obviously this astronaut wants to chat that's so crazy I looked the guy up seems legit he's following me on Twitter so we did a zoom call yesterday and I put it on Twitter the call I did with him is really fun honestly like a thrill for me an amazing individual this guy got his PhD at Cal in computer science did a thesis on convex optimization and applied to aerospace engineering became a professor at MIT for three years and applied to the astronaut program and got in fast forward 2023 in March he is the pilot of the crew 6 Mission the SpaceX crew 6 mission to the ISS and he's been on the ISS since March and he's coming back in a couple of days an incredible individual Amazing Story it was super fun to chat with him I don't think I've ever seen you smile or be more excited about anything you look absolutely ecstatic oh it was amazing did he have any comments on Uranus any thoughts on Uranus or no we didn't get there you didn't get to Uranus Cal you blew that let's try that again let me take a shot at this Freeburg so did he talk about going to the Moon yeah he's actually on the Artemis Mission and what about Uranus in 20 minutes did he go for Uranus hey hell I hear that we're trying to actually land on the South Side of the Moon the Dark Side of the Moon Yeah so he's actually honestly would he have an opinion on the dark side of the moon or I don't know the Dark Side of Uranus yeah three for three four three four three we'll let your winner slide [Music] we open source it to the fans and they've just gone crazy [Music] I just want to explain somebody was like why are you bullying Jake out why are you bullying Freeburg tomorrow's bullying this person he loves the attention our love language is breaking chops that's it we'd like to laugh and take the piss out because everybody takes themselves too seriously and then what's going on with the tequila are you guys serious about this because now I'm getting don't talk about that right now I'm getting 50 emails a day with people all right we'll talk about it I did run a poll asking people if they were trying all in tequila and the poll it nearly won okay and then I ran a poll asking what the most they'd ever spent on a bottle was if you price it around 200 bucks you can you can really maximize demand I think the demand maximizing function is probably around uh 180 190 dollars you do not need a majority of people to want to buy your tequila you just need enough that are willing to pay the right price no I agree I was just trying to see how much interest there'd be out there and in this poll I think it was 41 said they would try it 40 said they wouldn't and then the remainder was just kind of you know show me the answer I think if we don't have advertising ever but we have a nice sipping tequila because you know I don't drink a lot but I do like when sacs guys 32 000 votes so if you look at 18.8 so it's 79 is 200 or less that's the the sum of both of those two cohorts so like if you priced it at call it 189. you probably can get 15 percent and so you know you could probably sell several hundred thousand bottles a year I mean that's like a pretty real business okay but I need something smooth and I like it a little sweet is that a problem can I just give you my opinion I think this the thing that people get wrong just as a as a consumer and I think like I'm a pretty Discerning consumer the thing that I don't like is that people focus on all of this window dressing and they don't focus on the core and the core is that for example in wine there's seven or eight rating systems and over time if you buy enough wine and taste enough wine you can really figure out who's good at what and there's just nothing that replaces a highly rated wine it's exceptional and that kind of discernment is now moving itself into tequila and so I would just encourage us if we're going to make a bottle just make it an exceptionally good tasting bottle and one of the things that I saw in the comments was that people said oh you can't differentiate but then I see some other articles like comos which is the one that I tasted at the one and only mandarina that was the first hundred Point tequila that had ever been given out and so there are people that are starting to raid it and create these rankings and if we were going to put out a product I would air on Extreme product quality versus price point I invested in a tequila company I shared this with you guys called 21 seeds it was started by my friends Nicole cat and Sarika and they spent a lot of time in Mexico finding the right producer and they put fresh fruit it's a it's a female Niche tequila so the goal is to create a tequila that will appeal to the female demographic and they spent quite a lot of time trying to figure out how to actually get the flavor of fresh fruit without using artificial flavoring into the tequila and so there was this big investment in trying to get this thing to work this thing worked it took off and uh diagio bought the company but it was because they spent so much time on the quality of the product that I think they were successful and that's everyone else puts their name and label on a on a bottle of tequila and says hey this is my tequila but if you don't get the quality rights chamoth is totally right people don't buy a second time you got to get it right if you look at what the Rock did The Rock went in a different direction which is I think he has a very accessible and affordable tequila which I think makes sense as well it's just a different strategy and that also works for the rock because he has almost 400 million followers and so he can really play a volume game but I don't think that that's what we should ever do that we should stand for exceptional quality exceptional quality and this speaks to something else which is one of the biggest points of feedback that I get so for example I took three days that night or three days we took a little bit of a our own little honeymoon away from all the kids and we went to Villa Destin just to kind of hang on to Lake Como because I was flying out of Milan and ran into a few people there and the consistent feedback that I get from those folks is like they love hearing about these different places whether it's different brands different kinds of wine all of these things because all these folks are a little bit left out in the cold now they don't have like how to live life well and if you work really hard and you're lucky enough to then also have some amount of success why should you feel ashamed about it why shouldn't you be allowed to enjoy that and actually like pamper yourself and celebrate yourself and I say go for it so if we can find high quality products like this is the thing for example like I think there's different ways of expressing success when I was poor I was poor in wallet and I was also poor in mine and then somewhere along the way I actually became rich in wallet but I was still poor in mind and so I would wear these clothes that were gaudy and had huge labels Maples Dior and Valencia yeah man the haircut looked like friedberg's it was disgust it was gross and then I learned how to be rich in wallet and rich in mind which is then you go totally brand off and you can actually find things that are just like really well tailored well made they can be almost generational pieces of clothing or whatever and I think that it's great that you can find these things and tell other people because you find that there's a latent so many number of people that want that so Ed Villa deste as an example that is probably the Harvard of hospitality I've never been to a hotel that is more on point anywhere in the world than that one place incredible incredible ways in which one more time Villa Destin Villa D apostrophe e-s-t-e on Lake I'll give you one simple example Matt and I were like talking about this one kind of olive oil and the waiter at the other table heard he went to the kitchen brought back and he said here I heard I just overheard I apologize but and I thought this is incredible you feel so pampered and loved and taken care of the level of service and quality there was incredible and I think that there's so many examples of this where if you can have elements of that in your life you should do it by the way there's a very high chance that this is where I use all of you guys for the all in Summit in 2025. okay I'm still figuring out all the details I'm picking 20 25. my point is whether it's Laura Piana which is in my opinion the top of the top in terms of brand off really high quality clothes look at that place the point is like there's all these brands that exist that take enormous amounts of time to exemplify craftsmanship and care and I think that it's appropriate for people who can participate in those experiences to be able to have them and not feel ashamed and actually like enjoy it and celebrate themselves and do it so let's go high quality stuff not shitty big label tacky crap okay Nvidia has smashed their earnings massive interest coming into this earnings report obviously because we've been talking about Nvidia they've had a massive run-up everybody is trying to buy capacity to run language models Etc self-driving yada yada and it's not just the Googles and Amazons of the world you have startups trying to buy h100s a100s and buy this infrastructure you also have Sovereign wealth funds and countries buying these in the Middle East in Europe and you have traditional cooperations buying them this is the blowout of world blowouts in terms of performance Q2 Revenue 13.5 billion up 101 year over year that's extraordinary on that large of a number but up 88 percent quarter over quarter high growth in stocks is 20 30 year over year so this is yeah just very uncommon obviously uh Q2 net income six billion dollars up 843 percent year over year Nvidia is now worth 1.2 trillion it's closing in on Amazon 1.4 trillion and Google at 1.7 trillion dollars in terms of market cap and here's the kicker they're printing up so much money and so much profits rather that the Nvidia board is approving a 25 billion dollar share buyback that's a very large number in terms of share BuyBacks that's six times higher than what they were currently allotted yeah I guess chamoth when you see this kind of extraordinary run up what is the ramification going to be in terms of for the industry competition and then just trading this name is this peak Nvidia or is the peak yet to come well I think it's peak in one way but this is less about a commentary on Nvidia because they're clearly firing on all cylinders but you know it's a pretty well established rule in capitalism which is when the market observes that there's a company printing enormous revenues and profits they want to compete with them naturally to get their share of those revenues and profits and that typically happens in all markets then the result of that are just decaying margins in the in the absence of a monopoly this is what you should expect and so because in this market there's nothing really monopolistic about what they do what they do is exceptional and good but there are other ways and other systems and other companies that are developing chipsets and capabilities here to compete with Nvidia so it probably just motivates them even more and accelerates the path where you see competition I tweeted this out yesterday but one of the most interesting things that could happen is somebody like Tesla decides to either open source their chip or actually starts to sell their platform because if FSD gets to a reasonable level of scale that entire platform system is a learning and inference system for the physical world and I think that has tremendous applications you have something called risk V which is an open architecture spec to essentially compete and create different versions of different ships that has implications more I think to arm you have companies like Google that you know frankly spun their own silicon a long time ago TPU you have Amazon now talking about doing the same thing Microsoft has invested a lot of money in fpga technology so it's just yet another accelerant in this trend to create many forms of AI enabled silicon and so I think that that sort of it pulls that reality forward and let's think we're gonna have to figure out when the market prices that in because I think that that probably decays the Nvidia margin and upside over time again that is not a commentary on that that's just a market reality yeah margins get competed away for folks who don't know Tesla is making something called Dojo it's their own super computer here's a picture of it they showed that at Tesla AI Day last year and you have arms open source competitor is the risk five chip you're talking about it's an open source architecture for doing large jobs and so I guess my question to you Friedberg is if you look at all this capacity coming online do you think we're going to be in a situation where the amount of capacity compute being put online is going to outstrip the need for that compute because software is getting so much better and then maybe you know people are running hugging face jobs and various LMS on the new silicon from Apple and they're running it on their m2s and so do we need this much capacity are there enough interesting jobs in the world to for all this capacity and then might that also be a headwind against Nvidia when people say you know what I got enough I got enough capacity here I think the rational way to think about this is to try and calculate the efficient Frontier on compute use so the more compute you use the more it costs you the question then is if you double the amount of compute you're using for a particular application do you get twice the return on the investment if you triple it does your Roi on a percentage basis you know go up or go down so at some point you reach an efficient Frontier which is you start to see a declining or negative rate of return on the investment in the compute that you're using for a particular application and this is certainly going to be application and Market specific it's going to be largely driven by the data that is available in that market to do training to do tuning the Market's appetite to spend money for that particular set of applications that emerges from that compute that's being used and so we don't know today where the efficient Frontier is across each of these different markets and sets of applications and the market is finding that out in the process of finding that out everyone is spending a [ __ ] ton of money on compute and they are trying to get as many server racks as they can they're trying to get as many chipsets as they can they're trying to get as much server time as they can and everyone's got this idea that the more compute I can throw at a problem the return is going to scale linearly and it turns out that like with most most things the answer is likely not so we're at this point right now and I would argue a bit of a cycle that the there looks to be a bubble and what I mean by that is that there's a lot of inefficient spending going on as the efficient Frontiers are discovered across all these different application sets and so my intuition without a lot of actual data to back this up is that just anecdotally on what I'm hearing people doing in the market what companies are doing what startups are doing Etc everyone is throwing everything they can at compute and they're going to realize that they're going to need to rationalize those expenses at some time at some point so I would I would Envision Nvidia is probably writing writing a little bit of a discovery of the efficient Frontier wave right now and that this probably is not necessarily steady state sax we experienced this before as you remember from the.com era there was a massive investment very similar to this in fiber and the overspending of building the fiber infrastructure so everybody could get broadband and they could stream movies Etc happened in that 97 to 2002 time period a lot of those companies went out of business a lot of that fiber never got used people were working on compression algorithms while they were building our massive fiber and a lot of that fiber got sold I think Google bought up a lot of it other people bought it up and it was just a massive overspend so is this like the dark fiber of this era where we're just going to build so much capacity that there's just going to be not enough jobs to run on it in your mind well I think it's a little different than fiber in the sense that every year there's gonna be a new generation of chips and so these Cloud providers who are providing GPU compute they're going to want to keep upgrading the chips to be able to address the next generation of applications so I don't think it's quite as static as fiber where you kind of build it once and you're right that there was kind of a lot of capacity it was created eventually though the internet usage grew into that capacity but I think this is a little different because again you're going to need to upgrade the chips every year or two I think Friedberg is right that this is clearly a spike in demand that may not be sustainable I mean recall what happened here is that chat GPT launched on November 30th last year and really called everyone by surprise it kind of took the World by storm and over the next few months you had hundreds of millions of users discover AI I think it surprised even the open AI team I think when they launched chat GPT they thought it'd be more of a proof of concept but it ended up being a lot more than that and so everyone has scrambled all of a sudden in the last nine months or so to develop their own AI strategy and so again it was this giant platform shift that happened overnight so there is a tremendous GPU shortage right now and that's also what's leading to these almost software like profit margins by Nvidia because when everyone's clamoring to get a limited supply of these chips and there just aren't enough Nvidia can almost charge whatever they want and so I think even more than the demand the profit margins might not be sustainable but I think the reality is we just don't know what the steady state of demand in this market is going to be I think we can say that it can't continue at these growth rates but probably there will be some steady state of demand that's you know probably is at least where we are today yeah I don't think it's perfectly analogous chamoth but just to to bring up some historical context check out this article I was reading the other day the dimensions of the collapse of the Telecommunications industry this is August 20 2002 and it says um the dimension of the collapse in the Telecommunications industry during the past two years has have been staggering half a million people have lost our jobs in that time the Dow Jones communication technology index has dropped 86 percent the wireless communication index 89 percent these are declines in value-worthy of comparison to the great crash of 1929 out of the seven trillion decline in the stock market since its peak about 2 trillion have disappeared in the capitalization of telecom companies 23 telecom companies have gone bankrupt in a way of capped off by the July 21st collapse of Worldcom the single largest bankruptcy in American history so just a little history there of this it's not perfectly analogous obviously with Nvidia is not going bankrupt or anything like that but this over capacity issue is definitely going to be something but you had mentioned that in one of your Tweet storms in the past couple of weeks or these long form that you're doing on X previously known as Twitter you mentioned that what are the jobs that could be pushed to this compute and and what if one of them works I think you were doing a speaking that somebody tweeted out a little clip of so let's unpack that what do you think are some jobs that people might push here that we don't anticipate that could solve something miraculous in the world well yeah the framing is really like if you if you go back to like the the Gold Rush of the 1800s in San Francisco the people that made the money were the platform enablers right they were the ones that sold the picks the shovels the pans and the jeans right and that's where that's where Levi Strauss was born the the equivalent analogy the equivalence in that analogy today is NVIDIA because they are the the dominant pick and shovel provider so the question is well what are we going to use these picks and shovels to create are we going to find gold and I think the question is unclear and where will that gold be found will it be found inside of a big tech company or will it be found inside of a startup if you look inside of where these resources are being used inside of big Tech it is to completely Scorch the Earth on the economic value of large models and I think that that's very very good for all of the startups that come after it so what do I mean by this you know we were all so wrapped around the axle around chat GPT and then GPT in general and now you know if you look at the quality of llama llama 2 basically these big companies have decided no we're just going to make all these models extremely good extremely useful and very very free and so a lot of the resources are going there to subsidize economically subsidized and by implication economically destroy the value of that category that's going to be good for startups and so the question is what will you then build on top of these quasi-free almost free tools and so one area that I have been looking at for a while is in computational biology I think that that clip that you're talking about was just me talking with Lauren's Eve just around the ability to compute large complex spaces with very sparse information it's not it's a very difficult task today but tomorrow in an AI model that you can train you can literally characterize every single molecular permutation you could imagine you combine it with something like Alpha fold and you can understand protein folding and all of a sudden you can sequentially start to put tools together that could theoretically give you much higher probability guessing for specific compounds that could actually cure disease a different version of that is a company that myself and a few other people started I tweeted that out which is more in the material science space and we've had some pretty important breakthroughs there which is really about trying to invent Next Generation battery materials and we have one candidate that could be pretty revolutionary if it turns out to work we don't know yet some positive signs so there are there are some of these green shoots so my perspective is that a lot of the money that Nvidia makes today is going to be money well spent because it'll be going to the big guys big Tech Plus Tesla they are then going to create some really foundational platform Technologies with it whether it's Dojo whether it's FSD whether it's the full platform inside of Tesla that is the cameras plus the inference plus the training for all forms of physical world interaction whether it's llama two and all of that stuff will be given away essentially I think open source quasi-free to the ecosystem over the next few years and I think that'll be a really important moment which will create hundreds of new companies doing really clever cool things so we haven't yet seen the big breakout company yet and so I think that right now most of this capex is going to the big guys but the dividends of all the work that these big guys are doing will be seen over the next few years in the startups that get started in the next four or five years I love the California analogy ultimately what all that prospecting for gold did was create the state of California putting aside the Levi's and the genes and uh if you know anything about California's GDP it would be yeah I think these statistics are always talked about fifth tenth eighth largest uh it has a bigger GDP California than some of the largest countries in the world so this is a 2015 chart it's hard to find the updated information on this but ultimately that was the product of the Gold Rush is this incredible State any other thoughts on Nvidia before we move on to arm I think open AI had a potentially significant product announcement that's related to this so they just launched fine tuning for chat GPT actually version 3.5 turbo it says here fine tuning lets you train the model on your company's data and run that scale early tests have shown that fine-tuned GPT 3.5 can matric cgbt4 on narrow tasks so you can do things like fine-tune the formatting of the output you can fine tune the tone fine tuning also allows business to make the model follow instructions better so I think the point of this is that we're still at such an early stage of this and there are so many applications that are going to be developed and they're making the models more and more useful so Jason to your analogy about fiber what happened with fiber is there was a big build out of over capacity but then the number of applications kept growing until that capacity got used and I think we're probably going to see something like that here where there is a big build out going on of capacity and capabilities and that's going to lead to the next generation of applications and and I just think we don't know yet what the steady state of either demand or supply for these chips is going to be obviously the market got taken by surprise over the last year so you've seen again this huge spike in demand the supply cannot react fast enough that's led to gigantic profits for NVIDIA but it's hard to know exactly again what is the steady state going to be is it going to be like this or is this a one-time Spike and we also don't know what the supply will be once the manufacturers all adjust because now they know that the demand is there and to your point like the the big use cases are pushing us well past chips to to really be more like entire systems and these racks and so if you look like at Grace Hopper which is their next-gen design it's like a bunch of chiplets plus memory be on a huge board it's not a chip you're talking about system level manufacturing at this point and that will also create different kinds of use cases because for example today right now when you look at simple things like probabilistic tasks I think chat GPT and all these gpts are are pretty marvelous and pretty inspirational but deterministic tasks they're [ __ ] like you know they hallucinate on simple things like multiplication why because you infer multiplication and you try to calculate it probabilistically and you get these simple math functions wrong and so these are all these things where you the software has to become more and more sophisticated and actually be able to path and tunnel code into different ways of getting it executed and then bringing it back and stitching it together all of these things don't exist those are very rudimentary things that were solved in V1 of compute so I think that to your point David like we don't know where this goes we're probably going to go to a place that it's not just about chips but it's about systems but that's going to create this weird balkanization almost and I think that's where a lot of the profit margins will get eroded away because that will make it a much more competitive industry and there just isn't a lot of margin to capture when you actually Stitch all these things together yeah and if you think about what were the massive wins for all that extra fiber it was really two companies the first was YouTube which stopped charging people for transport on their videos before that if you had a video go viral your your server got shut down because you you hit your five thousand dollar a month limit or whatever you had set with your ISP and then Netflix of course right Netflix couldn't exist and all that dark fiber built that so we'll see with all this extra GPU what could happen and to your point about the the breakthroughs there you can now go into your chat GPT and you could put in custom instructions and so it asks you what would you like chat CPT to know about you and provide better responses and you know for example I told it I'm a venture capitalist I live in the Bay Area I'm looking for concise business information and then it says well how do you like how would you like chat GPT to respond and I said I'd like to see data in a table I like to see data in those tables with hyperlinks I like citations when possible yeah just to be clear what you're describing with custom instructions that was a feature I think they launched like a month or two ago a couple weeks ago what that is doing is uh prompt engineering basically it's pre-saving like all that Preamble that you would have to put in every single one of your prompts whereas this fine tuning as I understand it is more about fine-tuning the model to your team to improve the model for a certain kind of need or certain kind of output right so the example there would be if you had your email box or you had your Google Docs or you had a repository of all your slack messages or something your company had your company handbooks or you know all of uh chamat's letters he writes every year you could have that uploaded to chat GPS it's potentially very powerful I think for Enterprises I think the big Enterprise use case the most obvious one is that every Enterprise wants its own internal chatbot it wants its own internal chat GPT 8 where the employees can ask questions and the AI has access to all the company's information and it understands permissions and privacy so it only reveals information to people who have the right to see it that's kind of a tall order but I think that's what the market wants yeah they want the chat GPT for the company intranet yes and so I think racing to provide that and there was a interesting tweet by Nathan Ben H anyway he just said bye bye a bunch of startups because I guess a lot of stars were working on this fine-tuning problem that may be too glib because I think there's just a lot of Enterprises who do not want to share all their corporate information with open AI of course what if it's HR information then you have people asking like who are the most overpaid people in this company you know what if it's like the badge information and how many hours people are working or that's more about permissions Jason but even if open AI can nail the permissions problem I think this is a lot of Enterprises who will not want to trust their data to open an AI yeah they're gonna be afraid about where it goes this is why I think open source is taking off in a big way is that I think big Enterprises would much rather roll their own models and control it and do the fine tuning and that's why they're using tools like Mosaic and hugging faces they want to have control over it themselves that's an excellent point and that has implications as well into the hardware which is also probably a good jumping off point for arm because this that what you said is exactly must happen for the Integrity of an organization to want to use these things and if that happens then it just further further accelerates I think how the hardware will get abstracted and frankly quasi-open sourced as well all right let's talk Facebook did a great job of this because like when Facebook was building data centers they had to invent tremendous capabilities that didn't exist before and the market was really fragmented it was very expensive and what they did was they basically created these reference designs for servers and blades in the whole nine yards and open source the whole thing and it just you know in in essence destroyed a market but it created a hyper efficient market that then everybody could use and I think the question is that if it's happening at the software layer already now just like it did in web 2 software and then we see certain elements of web 2 Hardware been open sourced I think it makes pretty logical sense that you can expect the same things to happen in the AI world the AI models and the AI platforms and the all of that stuff will first get open source because it's a data Integrity security issue and then the hardware will get open source as well because you just want simple reference designs you can use and plug and play yeah if you want to look at that it's called the open compute project opencompute.org just a way to use open source to grind down the prices take out the margin I guess is what you're saying to make all these data centers uh scale right well so yeah so one related story here is this this happened in the last few weeks there's a company called core weave which provides Cloud infrastructure for AI training it's secured a 2.3 billion dollar investment in the form of a loan what court weave is trying to do it's kind of like uh AWS but for gpus so essentially instead of having to buy your own gpus in order to you know set up your own infrastructure you just basically rent compute from these guys but this is this is exactly why like none of these none of these companies will really be allowed to exist in this exact way four or five years from now because ultimately what people want is massive throughput right tokens per second give me as many tokens per second as possible and they don't particularly care again if you understand the model do they really care what the underlying substrate Hardware should be it doesn't seem like they should they should care what is the throughput what do I pay for it and by the way that is exactly what happened when AWS really start to scale because if you guys remember when we started to First abstract code into AWS why do we care about how much did an ec2 instance cost how much did an S3 bucket cost and that's all we cared about because that abstraction allowed us to not care about the underlying Hardware who was the vendor what was the con configuration it didn't matter and so in an interesting way we're going to go through that same Evolution here because it's just economically rational that that kind of Market exists you should only care tokens per second I think all right in other news oh by the way there's uh something called common crawl which is another interesting open source project that is getting a lot more attention today because they have crawled the web and you can use this common crawl they release it monthly and that's what a lot of people are training their data on now they don't have permission from all those people to do training data but they do have the ability for you to download an open crawl essentially what Google has and you have a an open source version of it so Carmen crawl was started and funded by Gil elbaz yeah he's a he's a friend Gill sold his company applied semantics to Google back in 0203 and a big part of his effort with common crawl is to that's happening is it AdSense [Music] AdSense so basically applied semantics could read a web page and then create the keywords associated with the content on that web page and then those keywords would trigger AdWords ads on the on the web page so they called it AdSense so AdSense started and the whole publisher Network at Google was born from the applied semantics acquisition and Gill was obviously a pretty significant shareholder of Google he's even in the S1 as one of the major shareholders he's a really great human being and his intention with this common crawl project was you know to make the crawling of the web the index and the caching available for all these different projects that might exist and he didn't at the time anticipate the uh the open AI application becoming you know the big breakthrough but when gpt3 was published I think they said that 80 plus percent of the waiting came from the content out of common crawl and so it's really been this uh this Amazing Project completely non-profit all funded mostly funded by Gill and um has really unlocked this opportunity for a lot of the open source alternatives to now try and provide solutions that can exist in coexist with open Ai and others in the commercial options in the world a small piece of trivia we were one of the first AdSense Publishers and so here's a story from October of 2005 weblogs Inc with student Gadget the the blogging company I started hit three thousand dollars a day in AdSense thanks to Gail and the team over there and we wound up selling it that's awesome and this is the story about it and and we were awesome in the S1 they had two examples of Publishers one was New York Times and then one was weblogs Inc they wanted to show like an upstart and this one and so a lot of history here and it's fun to go back uh down to and we were we were in the S1 for by the way Gil is going to be at the summit so uh oh go give me a hug you take a picture Charles Barkley had this great story which is like he is like over the moon about being a grandfather I saw this on 60 Minutes and he said it's because I want my grandchild grandson to Google me and notice that I did some things and then we can talk about it yeah and Jacob I had this thought for you like that's like that's a cool piece of Internet history that you're a part of yeah hopefully you're you're your grandkids will Google that and you can tell them that's right that's pretty cool or you know 1800 episodes of this weekend startups I just tweeted a an episode with Gary tan from 2009 that I recorded at sequoia's office and I just put it on the uh this week in startups Twitter account it's pretty funny to have baby face Gary tan from posterous on there all right arm officially filed it's F1 it's kind of like an S1 for a foreign company and they plan to go public next month arms Revenue last quarter 675 million down two percent year over year up seven percent quarter of a quarter fiscal full year 2023 2.7 billion ish down one percent year over year Farms major business uh just so you know is uh smartphones 99 of smartphones are built with arms chip architecture embedded systems they they have a medication systems yeah we'll get into it the problem is the market is totally moved when SoftBank platform it was probably like the last year where you know there was so much focus on the hardware and platform Technologies inside of mobile and tablets and all that stuff but in these last few years think of what's happened we've had a massive shift to AI right and so that's pushing a lot more pressure on gpus and whatever comes after that we have had a re-emergence of the popularity of risk V which is an open source competitor to arm we have had Apple in Source a whole bunch of their own architectural decisions in Silicon design because they don't want the dependency philosophy yeah well also they also care about different things like they care about battery life so that's why you know that's the focus of their chip architecture and so all of this just means that that market embedded systems becomes more and more constrained and commoditized over time which again as we said in capitalism means that future profits will be less than historical profits and so I think this is a very tough valuation to get right and trying to stretch to a 60 or 70 billion dollar print I think is really tough this is a honesty at 15 to 20 billion dollar company ouch so a question for Youth and I'll open it up to to The Davids why would SoftBank I know the answer but I'm asking you so you can explain it to the audience why would SoftBank take a company public with these headwinds with no growth being flat why are they taking it public now well SoftBank has the d-lever right they have a they have a very big problem which is that they have this forget SoftBank Vision fund for a second but SoftBank itself is a Telco operator that has ginormous piles of debt that they've used to finance the building of their business and so when you have contraction in your core business you become more and more at risk of breaching the covenants of all that debt and or you just like run out of free cash flow like all of these things really hurt your future ability to invest and so SoftBank is under a lot of pressure to just clean up the balance sheet and delever and so when you have an asset like this sitting there if you can sell you know 20 or 30 billion dollars of that call it to somebody and then replenish your balance sheet that provides tremendous liquidity and relief and they did that as well a few months ago with Alibaba they've started to I think now they may have sold out of the overwhelming majority of the position in Alibaba again because they have massive liquidity needs because they have so much debt so this is just part and parcel of them delevering the balance sheet so they're forced to get it out is I guess what you're saying and then we've talked sacks a little bit about other companies that are going to be forced they're on the what do they call it when you're on a pirate ship they make you walk the plank I'd say this is like the walking of the plank to an IPO you've got other companies that have issues where they just have to get public at some point so maybe the public markets are going to open up and uh in some cases it's going to be because people are walking the plank other cases it's going to be opportunistic so maybe you could talk a little bit about your thoughts on that I think it's hard to walk the plank into the public markets I'm not sure exactly what you mean by that because the public markets have to want to buy your issuance so if it's not a good company then you know in this environment they're not gonna be able to IPO well they're going to be able to iPad I think the question is the price they have no choice so yeah there may be a lot of down rounds into an IPO from the last private round which was two or three times what the IPO price is going to be maybe what you mean by walk the plank is that well you tell me but there are a lot of companies which have built up huge pref Stacks because they raise too much money at the Peak at valuations are too high and going public does allow you to reset your whole prep stack because all the preferred with all the rights and preferences converts to Common so post IPO you just have common yeah and so it is a way to like clear out all the structure and all the mess that has built up in a company and you can get to a real valuation that reflects basically the truth of what the company is worth another analogy might be the house is on fire you got it you're on the balcony you gotta jump or you got to stay in the burning building yeah but you know listen if your company's on fire I don't think you're going to be on IPO I mean it's it's going to be a tough scrutinizing public market for new offerings I think that the scenario in which you can IPO is if the company is fundamentally good it will be able to IPO at some valuation and that valuation may be a significant down round from their last private round those will be able to get out yeah and that's strike I guess now are you it could be striped yeah are you seeing David the m a activity starting to Bubble Up in your portfolio or in you know the back channels because I'm starting to see that a bit Founders are packing it in in some instances and saying you know what we want to try for m a or you know some companies are getting a little bit frisky and saying hey what's available in the market on the small side so you're seeing any any m a action not a ton yet but there's definitely a growing number of startups who are realizing that what they're doing is not working and they're not going to raise another round and so therefore figuring out a graceful exit whether it's an aqua hire or some other type of Landing ah got it those are those might be the accurate walking the planks yes those are the walking the planks you're going to start seeing a lot more of that for sure Freeburg your thoughts on the on the public markets here in relation to privates and people walk in the plank I don't think there is a public market right now there's no IPO window this arm thing is you know pretty forced it seems It's not like there's a ton of pent-up public demand to buy these arm shares at least that's what it seems so you know they're gonna go shop it they're gonna find out what the market tells them it's worth and and then we'll see Nvidia is going to help buoy it I'm sure there'll be an argument that you know all boats will rise and arm will be a beneficiary but I don't know if that necessarily leads into the IPO window being open again I think we've all heard the commentary from Morgan Stanley that they don't think the window's opening until Q2 Q3 of next year maybe I can't remember the exact commentary but as as we all know a lot of LPS in Venture funds and private Equity Funds are waiting for the IPO window to reopen before they're going to start reallocating Capital back into the private Venture funds because they need to get liquid in order to be able to recycle Capital back into the next class of funds so this glut right now this inability to kind of get companies public is certainly Weighing on folks you know you effectively have three options when you're running a private company you gotta keep raising money which means either raise private capital or go public and we've talked about the challenges of raising late stage private Capital if you've had a high private valuation in your prior round going public is very difficult right now because a lot of folks are still digesting and having indigestion from the last couple of years or you got to sell the company or you got to get profitable now on the sell the company side many of the Acquisitions that we're seeing with a few exceptions are generally more bolt-on and less like hey I'm going to pay some big strategic premium for some big strategic game changing company right now because all the buyers are dealing with their own shareholder issues and their own public stock issues right now then the you know can you get profitable it's really as you guys know where a lot of folks are going which is totally restructure your ambition restructure your plans and build a business where customers are willing to pay you money and where you can then take that profit and only reinvest that profit and not invest more than that profit and if you can get to that steady state you know you can live to see another another day another year another decade and those businesses by the way that we saw in the.com boom and the global financial crisis that that were able to do that during the the doldrum Death Valley March that everyone's going through right now they emerged Victorious they learned how to be frugal they learned how to be nimble they learned how to really focus on customer experience because they had to increase retention and they had to increase the prices they were charging they learned how to be efficient with allocating resources and so profitability became a core part of their DNA and their ability to succeed so I think this is really a a trial era and you know on the other side of this trial era a number of very high quality companies will emerge but in the interim I don't think that there's a an IPO path that a lot of folks can just check the box and say hey let's go ahead and go public even if the valuation Is Not Great remember an IPO process you got to over sell your book or the bankers won't underwrite it so if they're you know you can't just say hey the price is now five bucks and expect anchors are there if a company's burning money the big concern with going public right now is that there is no pipe Market there is no ability to do secondary to do follow-on offerings so the company can't raise Capital after it's public so unless you're actually profitable your option of going public right now really isn't there because shareholders don't want to buy shares in a company that may run out of money yeah and that's what it ends up yeah yeah and to your point if you take this third option and you you become really resilient and you have profits chamoth that seems to me to be the setup for the next boom that we could experience in the coming Years hopefully which is we don't have companies that are burning you know mountains of cash people are getting to profitable these businesses look great and then if the big companies are now you know having their stock prices recover and they've laid off 20 000 employees and they got people returning to the office and they're fit and they're strong hey that's a setup for strong companies buying strong companies or those strong companies that are private the m a market is dead as a doornail it's more dead than the IPO market so two days ago the European commission and the CMA in the UK said that they're probing Adobe Sigma because they have some concerns that it's going to limit competition in the market it looks like Microsoft will have to give a 15-year license to video game streaming to Ubisoft in order to get the UK folks to agree to Activision to their Activision acquisition so you're talking about the first case a 20 billion dollar merger that may not happen because the CMA they found their footing they clearly had a win in the Microsoft Activision thing and now they're probably going to find issue with the Adobe figma thing and the Europeans don't want to be left out in the action so they're jumping in so I think the m a market is effectively dead what it leaves is an IPO Market but that is very tenuous because you don't have a leading candidate that can really catalyze something and I made this prediction earlier but I think the only company that can really catalyze things would be if people are ready to do starlink I mean it's the most obvious natural logical thing that would just get everybody excited and off the sidelines and into the arena but that may take another year may not but it may in the meantime I don't think there's any company like instacart I don't think people are going to be jumping off the sidelines arm it'll be tough even stripe now is like a very complicated valuation trade and I think that that's a really technical thing to be involved in in an IPO like that a technical evaluation and so companies have no choice except to get profitable and get to default to life to use the famous Paul Graham quote dear that's the only path that's it yeah I mean Pat you either have to be default alive which means profitable or default investable which means that you're capable of producing metrics that a VC will fund but really that starts with 100 year-over-year growth there's a lot of companies that aren't growing very fast they're growing 20 30 40 50 60 growth refundable yeah or they're flat even worse some are shrinking so those cases they got to think more like a PE model than a venture model yeah and PE companies are cash flow positive they don't burn cash I put out this video a few months ago called VC or PE what's the right framework for thinking about your startup this was a oh craft Ventures YouTube this is a talk that I gave to our portfolio companies we recorded it and then published it really it should have gotten more attention but this was basically recommending to all those slower growing companies in our portfolios stop thinking that VC funding is always going to be available and start thinking more like a PE funded private Equity company which is to say you need to cut your burn to get cash flow positive you will then be able to uh control your own destiny so yeah this slide here if you're not VC eligible act realistically so we provided some guidance on what makes a company eligible for VC funding and you can see there's a good column there's a great column good starts at 2x growth grade is 3x gross margins good starts at 50 great is 80 net dollar retention good starts at 100 greatest 120 percent CAC payback good is 12 to 18 months grade is 6 to 12 months burn multiple good as one and a half great is one or less and then there's some danger zones as well this was to provide them with some realistic guidance in terms of whether they'll be able to raise another VC round or not and I can tell you like most startups in start world right now are in the danger zone it's a really tough environment and so you know listen if you're a startup with sub 1 million of ARR and you're in the danger zone you're probably gonna have to pack it in or maybe you package yourself up for an aqua hire but if you're a startup that has 50 million of ARR but you're in the danger zone just cut your burn you could basically make yourself Castrol positive and you could engineer an outcome for yourself a pretty good outcome my anecdotal experience is one of our larger Investments we brought in a private Equity Firm or they came in and my God it's been an incredible experience because the combination of how like a VC looks at a business and how a PE firm looks at a business in A Moment Like This is hyper additive because it's super clarifying it's very straightforward and it gives a CEO an extremely clear mandate from which to operate and then they become very measurable and I found it to be a really really healthy thing now PE guys can only get in involved in companies of a certain size so it limits 50 million and above in Revenue 100 million Yeah in our case it was a 400 million 380 300 more than 300 million Revenue so it's a big it's a big company but my point is just more that we were moving along a trajectory to getting to default alive but by adding that PE part discipline tool support boom I think we were able to focus on it probably a year to 18 months faster and with specific Precision because they have a very different toolkit and a reaction to mis-execution and that's extremely healthy yeah we had this happen you know meeting with uh just from the front lines we um we meet with we have 20 000 people apply for funding from our firm in large part I would say we doubled the number of applications after all in started so shout out to my besties here it's really helped our deal flow and we find companies and we found a company that was obsessed with all in and the two Founders were quants and they made this company called Stone algo we meet this company they've got very little money it's a bootstrap company and they got to a half million dollars in Revenue you know just on Sweat Equity and we find this company it's not part of the Silicon Valley you know accelerator system it's basically kayak for diamonds uh shout out to the team over there and we were able to place a nice bet on this company that was break even and you know put in uh you know a couple of hundred thousand dollars to to start start them down this um road to growing faster but what a delightful thing to find a profitable company in the world and so if you have a profitable company like and it's just 50 000 a month or 25 000 a month please email me Jason calagonist.com I want to invest in your company when you have that company small amount of Revenue profitable and you're not burning a ton you are so attractive to investors right now it's the highest attractiveness in the world and I just want to point out David as this Market has you know completely gone from absolute chaos the hair has gotten Tighter and Tighter you were in Crazy Banning and now you are tight tight is Right Sachs is focused he's deploying that LP Capital he's deploying that advice to SAS companies and it's no joke now folks General sax is here he is not crazy history Uncle he is sassax he's sassax is back this is like when uh Mark Zuckerberg started wearing a tie to work to start showing that it was serious yes yes with that slick back hair all right listen we gotta get going here we got a lot more on the docket I I think we just maybe I'm gonna jump the fence here and we just go right to the Republican primary the funniest thing last night was at poker we watched it you watched it during poker were you able to focus you have to hear Kevin Hart react when all these guys are doing it's one of the funniest things I've ever heard and the worst part of the poker was uh the magician here we go how can you both be playing poker here but also on the debate stage at this time which I thought was that was a funny joke but it was funny it was very funny all right listen I know everybody's I just want to go around the horn here Friedberg did you watch the debate who won the debate who had the largest gain net gain in terms of their profile in your mind after watching debate number one of the GOP David Friedberg biggest gain I watched the debate I kind of think about these guys on three dimensions which is the content how dynamic they are and their personality I think those are the three dimensions that people are going to be kind of assessing them on I think Nikki Haley did a tremendous job gaining interest with respect to her personality and her content burgum Hutchinson I don't think had a chance to move the needle on any of them I think Vivek was by far the winner on Dynamic he had the the hardest hitting biggest comeback with a very close second being Chris Christie but I do think that Vivek got taken apart when it comes to content and I have real concerns about his personality there's a lot of people that are just turned off by him that he seems a little too eager that he seems a little too smart for his own good the commentary about him being so Junior and doesn't have experience I think standing next to those guys on stage really showed to be honest Mickey Haley tearing him apart on his uh point of view on Russia and sax you know we can debate the point or not but I think she did a masterful I don't think she tore him apart I think the biggest dunk line of the evening was when he congratulated her on her future appointments to the boards of Raytheon and Lockheed yeah that was I think that was brilliant I just think he's the most dynamic character and I think people people do in a democracy vote on that they vote on how Dynamic someone is they vote on their personality and whether they can trust the person I think Nikki Haley shines there she seems extremely trustworthy and personable Chris Christie came across as very personable so you're big Winners yeah Mike Pence I would say under underwhelmed and Ron DeSantis man it's like he didn't show up are probably like you know across those Dimensions like you know the four runners and everyone else is probably off now let me get your mom and then sack you get to comment on both of there so I want to go to you last because you have the most passion here chamath who are your big Winners coming out of it in other words who gained the most last night welcome Brown do for you Buck and brown do for you I think that okay UPS settlement great I thought that I thought that Nikki Haley did an incredible job and I do think that Vivek did a very good job and I think what's interesting is that I'm fascinated to see what the Republican reaction over the next few weeks will be to Vivek and specifically what I'm interested in seeing is do the Trump loyalists start to were they incepted with an idea yesterday which is that this guy can give us a lot of the talking points we want without some of the heartburn and agita that we don't want and if he is able to thread that needle which is what I think his effective strategy has been he could really build momentum going into the fall so that was my that was my real takeaway is that he is refining A playbook look the guy is a clearly a really brilliant person well studied well prepared and dynamic as David said so he can you know clap back at people which I think is important but the most important thing that he's done is he has defined a very precise strategy to thread this needle of being close enough to Trump to frankly eventually go after him but do it in a way where he's slowly building credibility among Trump Loyalists and I think if you look at where other people made huge gaffs unnecessary gaffs was they took their beliefs and they confuse them with the strategy of winning and that doesn't work in the Republican party so when the candidates were asked about Trump and the ones that Drew a hard line and said that this guy's going to go to jail what happened they got booed and it just ended their ability to be credible for what they said afterwards I'm not saying that that's right or wrong it's just an observation so I think vivec is doing the smartest job of understanding the rules on the field and he's in the arena okay so that gives them a lot that gives them a lot now we go to sack sacks you heard Nikki Vivek Christie from Freeburg you heard yeah and Tim Scott so the vet clearly uh the buzz and the Search terms and everything it seems to be favoring Vivek as the big lift here do you think vivec is the Trump change agent without the indictments without the baggage without the Trump derangement syndrome insanity is is chamoth correct here that he's a more palatable version of the change agent that is Trump I think he's positioning himself as the backup plan to Trump so he's not criticizing Trump he is cultivating support within Trump's space again not to supersede him but I think to perhaps be a backup plan I think it is a smart strategy but let me back up a little bit here who won for you everybody else played the game biggest game clearly the biggest game was Vivek that's okay reflected in the polling there's a poll on Drudge Report in which 33 which was the highest number said that he won the debate 22 for Haley 18 suffer DeSantis Christie got 16 the rest were just non-factors so not scientific but pretty scientific but this is corroborated by Nate silver how to yes some stock this morning basically saying that based on the buzz on social media and the sentiments Google Trends he predicted that for vague we keep saying Vivek Vivek it's it is quite key he's gonna have the biggest bounce out of the debate partly that's a function of the fact that he was the least well-known candidate okay so this gave him a lot of exposure and he has a good orator I mean just the way he caused the energy the timber of his voice he projects well and he had a clear point of view in this debate you may not agree with everything he said but he had a very clear point of view and I expect that both the number of people who like him and the number of people who dislike him will go up as a result of this but I think the net effect of that will be positive now let me back up just give you a couple more thoughts on the debate first of all in terms of winners I think the Republican party in a way demonstrated that it is the party of ideas where there actually are debates happening because you saw here I think real differences between the candidates and I could break them up into really three categories if you like there's this Neo on wing of sort of Hardline foreign policy Hawks and he saw Dicky Haley's part of that and Chris Christie and Pence momentum Scott then you had this religious right faction where you've got Pence and Scott and then you've kind of got the Maga Wing which Vivek really took up the mantle of opposing Ukraine and defending Trump so you have three very different groups within the party who are battling I think for mind share within the party and to be the future of the party so it's not just about candidates and personal style but it really is about ideas you compare that to the Democratic party they're not even having a debate they're protecting Biden from a debate there could be a real debate because RFK Jr has really different ideas and he would like to take the party in a very different direction the direction of his father and Uncle Bobby Kennedy and John F Kennedy he's saying that we have moved away from where we should be as a party but the people who control the Democratic party do not want to have that debate they have shut it down completely there is no debate they're just protecting Biden so that's number one is I think we should give the Republican party some credit for being willing to discuss and debate I love the fact that you had a vibrant debate you had differences of opinions now it was a little like a UFC fight and you know zingers and back and forth but I did like the fact that you had people who in moderation was actually surprisingly good when they forced them to say like would you give Trump a pardon or you know what would you do in terms of support for Ukraine this was like really well done and they had that 30 second thing where they stopped people they said hey this is the 30 second one and they had to reign in Pence because he kept you know interrupting and they were kind of respectable so I just want to shout out to Fox for good moderation uh there were some crazy zingers in there as well and it seems like we live in zinger culture I think the the best Zinger goes to the moderator who said let's talk about the elephant that's not in the room and then they brought up Trump well Frank I don't know if you caught that one but that was pretty hardcore well so let's talk about winner number two which was Trump because Trump did not participate and he didn't pay any price whatsoever for that he barely got mentioned or attacked on that stage and then he did this interview with Tucker which started five minutes before in the debate which was kind of brilliant because once again Trump was able to suck up a lot of the oxygen maybe not all of it but a lot of oxygen without even participating in the debate it was a perfect bookend I watched both it was a perfect bookend you got Trump over here saying chamath I'm interested in your position but he said listen I don't need to be in there with these guys mudsling and they have zero or one percent uh and I I think he got the sense that he's excited to debate them when there's two people left or something like that what did you think of did you watch Trump's thing uh Freeburg or Tremont I watched both the debate and then I watched I do think Trump effectively won the debate night because you had all these guys going at each other and then you had Trump playing the trump card I'm not even gonna show up because I don't have to he literally made himself better than everyone else in the room by saying I'm not even it's not even worth my time to show up to talk to you guys go ahead and fight with each other I'll also just restate this this point about Vivek I think it became abundantly clear that his strategy his strategy is to Pander to the Trump audience that his commentary about you know God is real climate change is the numbers there's two genders he knows through polling through his understanding and his intelligence that this is what this audience that is the bulk of the voting members of the Republican Party want to hear and he is telling them what they want to hear and then uh isn't that the Java politician yeah I mean isn't that better than pandering to the military-industrial complex like Nikki Haley did there was a comment last night that I thought was really important which is that leadership is not about consensus and what he's doing is he is reflecting back the consensus view of the majority of people in that party in order to get himself elected rather than leading with a different message that casts a different opportunity the different light on the opportunity for this nation and I think that's really where he and others on that stage or he particularly falls short is that he speaks too much to what people already believe and say because he knows that that's what they're voting for Trump about and then the bet is that there's some chance not a hundred percent but some chance that Trump doesn't make it all the way he ends up in jail or people start to turn on him and then he's the front runner because he's basically captivated that audience yeah hold on but Freeburg and I will let you address it here chamoth just said the Brilliance of Vivek and his positioning here is that he understands how to win and he is playing this game and you call it pandering sacks as I've been saying it's understanding the needs of that audience the job of a politician sex is to win and to stay in office so I don't believe the Vex positions on a lot of the stuff I think he is pandering I think he wouldn't do what Trump did I think you know he's he's doing the part in promise because he knows he gets some votes so how do you reconcile this your job is to win right and you would rather see DeSantis maybe pick up on some of this action no as your preferred candidate then that's a good question Freeburg do you think that a politician's job when you're running for president of the United States is it to understand the conditions on the field and when or not I think the politician's job or I I don't want to say the job I think the opportunity to get elected in a democracy is to provide leadership to cast a light on where you think the country or whatever constituency you're supposed to lead can go to provide a sense of opportunity to provide a sense of optimism to provide a sense of what's not happening today that should be different rather than reflecting back to those people exactly what they want now the flip side of that is exactly what you're saying which is that I think what happens in a democracy is that people elect people that represent what they believe and I think that's what's going to happen he's raising his hand and he's saying I believe these things and he's going to get elected or he's going to put himself in a position to get elected if Trump drops out I just think there's a lot of people who are very smart who if they are too idealistic will achieve nothing in their lives and I don't think Vivek is one of those people idealism has a place in the world it's not on the debate stage when you're running for president United States okay sax you wanted to get in here go okay let's take the issue of Ukraine because that was one of the main issues that Vivek differed from the rest of the people on that stage there is polling by CNN that a majority of Americans have now turned against the idea of giving more Aid to Ukraine I'm sure that number is much higher in the Republican party if you remember there was an event Charlie Kirk who is a conservative influencer has an event called Turning Point USA and they did polling of their conference attendees the number one issue that everyone agreed on was Ukraine 95 of the attendees opposed giving more Aid to Ukraine Donald Trump only got 85 percent popularity so the base of the party is even more united against Joe Biden's policy in Ukraine than they are unloving Trump okay that tells you something and yet for Vegas the only candid on that stage that was willing to raise his hand like aggressively like full-throatedly not kind of a half-hearted to saying that he did not agree with Biden's policy on Ukraine what is wrong with all these other people on the stage that they cannot understand what is wrong with Biden's Ukraine policy which by the way is the signature policy of his presidency what is the point of Republicans nominating a candidate who's just going to agree with Joe Biden on providing AIDS Ukraine as much as it takes for as long as it takes is this your position here at Freeburg is that you know win at all costs let's call it the vague win at all costs play the game on the field as chamatha sang and just win the game versus being principled because you did have no no I think that that framing is such a setup can I can I just say something frame it how you are you you said playing the game on the field and Friedberg said having a principal here and having like an actual vision for the country so I'm taking both of yours look I think the framing is not as not what is wrong with Vivek but what is wrong with candidates like Christy and Pence and Haley and Scott where even though 95 of their party is opposed to Ukraine they are adopting Joe Biden's policy and their only criticism of Joe Biden is that he's not doing enough fast enough for them okay let's let free bird get in here they're completely out we got your point what the Republican party as it stands today we got your point but is it not Freebird what you're saying is that there is this profile and courage to to invoke that book where you there's something that's unpopular that you have to do and I think Nikki Haley Pence Christy and the other ones who are pro defending Ukraine from Russia their profile encourage uh Freeburg is that they will go against that 95 polling and say it's the right thing to do we should defend Taiwan we should defend Israel we should defend Ukraine against those are three different issues I know it's three different issues but they were all evoked by the Vivek himself so Freiburg your chance I think The West Wing does a great job of exploring both sides of this which is when do you have to break the mold and break the expectation of the people to do the right principle thing and when do you have to do the thing that you don't think is right but it's what the people want to have happen um and I I think that that's a obviously a balance that needs to be struck when you're in this position of being an elected leader in a democracy and so there's no there's no real answer I wish that there was like I wish Mr Beast had like a presidential process like he you guys saw his Olympics video that he did last week where he brought people and he created this like these like five things I wish that we had something like that to elect President that it was more than just oration because we elect the president today based on their oratory skills they go on stage and who has the best quippy comment the person who would be the most decisive Under Pressure doesn't necessarily win the person who can Inspire and attract and retain the best leadership the person who can have the best foreign policy interactions with other leaders doesn't necessarily win those are skills that show up in other contexts and when we put people on a stage and we say okay speak to the audience the guy who speaks the best looks the best it's not necessarily the guy who is best equipped to handle the challenge of the Bay of Pigs or you know the decision on whether or not I think you're being very difficult I think you're being okay you have the floor this is like that's kind of like saying why isn't it that it's the quarterback with the strongest arm that isn't the most successful why because that person is a [ __ ] loser and the person that's the winner is the one that can threat together a multi-faceted set of skills to win the game Tom Brady was drafted in the seventh round not the first round he wins the game because he has the requisite skills which is a basket of things and a Nuance of skills in different moments at different times and so I think that you're being a little glib by saying the person isn't cool under pressure or this or that it's not true the people that win these races have a greater natural ability to be a complete egoist but not a narcissist that is an incredibly Deft set of skills at a fair rare people have it gives them this energy to be out there talking to thousands and thousands and thousands and thousands of people may be saying the same thing thousands of times but being able to stay focused being able to be on point having a sense of what they need to believe know the details in a certain part know the high level in another part stay Punchy but stay affable stay that's the game there are a set of skills that it takes to become president you test the oration skills of a person when you put them on a debate stage you don't test the other complex skills that it takes to be president and getting people to understand the complexity of the role and all the other aspects of someone's personality are lacking in these [ __ ] debates but there are other these other skills are in play and many things other than just the debate like the campaign is a highly sophisticated orchestration of running a small little government Mario Cuomo famously said that you campaign and poetry and and government prose and there is a difference between campaigning skills and governing skills there is a gap there I would update it to say that you govern and prose and campaign and tweets you know so the campaign definitely puts a huge emphasis on a candidate's communication skills but that is not all just um gloss or style it also has to do with their policies and the nuances in their policies and how they handle pressure how good they are under pressure and how good they are when they're attacked so you know we put these candidates through a pressure cooker and kind of learn who they really are I'm not sure it's a horrible process so sex let me ask you a question yeah Pence has been in the Situation Room dealing with a foreign adversary Vivek has no military or defense experience he has no foreign State experience how do you assess vivec in his ability to address those critical issues that he's going to have to lead us through versus someone who's been there and done that and you know give a great question great question okay trust him you trust me listen Pence made that argument against a vague apparently not realizing that the guy he was vice president for was in that exact same position in 2016 no previous political experience right no experience being in the Situation Room the only reason why Pence got to warm his ass on a chair in the situation room is because Donald Trump picked him to be his VP oh but he wasn't responsible for making any important decisions he was basically clock in time as vice president give me a break and that's why he's at what is it one or one percent no one gives a [ __ ] about Pence that's what they said about Obama as well Obama had zero experience Obama barely could get elected before he became Senator and then president in a matter of four years and for Bush what happened to Bush they said that exact argument as well and what did they do they packed him with Rumsfeld and Cheney how did that end yeah I just want to also point out here that sometimes things get a little bit heated and when we get heated it's typically because we're we're triangulating around something very important I think what we're trying triangulating around here is that we are moving uh from an era of incumbents and insiders to an Era of Outsiders if to your point sacks post-trump we now have the two or three most fascinating candidates are people uh who do social media who do podcasts who do earned media like we talked about I think two or three weeks ago it's a really good insight and vivekism has mastered it and he is exactly like Trump and he's exactly like Obama to a certain extent in that those people were incredibly personable they knew how to talk on podcasts they knew how to engage people and I think that you know this spiciness that we're having here on the Pod and the spiciness that you're seeing with some of those candidates is that we're moving from traditional media defining these candidates to direct to Consumer direct through Twitter acts direct through podcasts this podcast included making people like RFK and Vivek you know very palatable people and Ross Perot I know I'm gonna get laughed after bringing this up who got 19 of the vote which is a serious number he went direct as well no he he got 90 pero because he actually went as an independent all the way and what Ross Perot did was the equivalent of what Vivek and RFK are doing on Pockets he bought television time you don't know that or some people in the audience might not understand who Ross Perot even is but look it up he bought television time and he went direct to the country with our budget I thought this is going to be the future of politics what we're witnessing right now is the transition from traditional media and the establishment defining who the great candidates are to the public and the people on podcasts and social media who are the tip of the spear on the Vanguard they're going to pick the winners and I think this could be the Tipping Point election Trump was the first Obama than Trump and now Vivek and RFK so I just like you all to maybe respond to that especially you sex since you've got this orange media issue up two weeks ago I partially agree with Freeburg in in this sense look obviously track record is important obviously the ability to be an executive executive functioning is important for the chief executive of of our country so I'm not saying that we shouldn't look at that kind of record and this is why was one of the reasons why I support DeSantis I think he's been a brilliant Governor he's done a superb job in the State of Florida he did the best job of all the governors during covid I think he did a better job than Trump did during covet so listen I think those things are important where I disagree is just because Mike Pence has again warmed a chair in The Situation Room as vice president to me that's just not that relevant experience I mean the VP is kind of a nothing job unless something terrible happens to the president they get tapped on the shoulder so I just disagree with what is relevant experience second I think it's important to recognize that the reason why Vivek has a lane here and the reason why Trump had a lane in 2016 is that the establishment wing of the party is so completely out of touch with what the base wants look the reason why Trump came out of nowhere in 2016 is he basically turned everything on his head he said no more bushes no more of these stupid Forever wars in the Middle East we need to build a wall no more of this open border policy and we need to reset our tribulation with China those were three Mega issues that no one else in the party was talking about and the the mega issue today is Ukraine 95 of the bases against it and they have left the fake this gigantic Lane to exploit why I don't know I mean they're trapped in Legacy neocon thinking that the US that was I think that was a great moment It's a combination of being trapped in Legacy thinking where we have to be the policeman in the world combined with all the big donors in the party okay many of whom are wrapped up with the military industrial complex want to contribute to that people can you just say it again what you feel like I'm not hearing no I think that being president requires being better more than just an orator and I think that the debates allow the best orator to show off their skills and capabilities on the debate stage I was saying I wish that there were other events I would love to see some set of systems to expose the candidate's success or failings and how well equipped they are rather than the person who can just give the best interview we all know this when you interview a candidate an engineer the engineer that gives the best interview is not necessarily going to become the best engineer you can look at their code to see if they're a great engineer you can talk to people that report it to them to see if they're a great manager you can learn more about their success and skills through more than just their oration on the stage and yes there's data in fact that we can pull from these people I was just speculating in kind of a pseudo-silly way about the concept of can we do more than just put people on a debate how do you hire a CEO for your companies well yeah what I'll tell you we don't do is we don't have the employees elect the CEO through a vote by having that CEO go in front I don't know but you're saying no I'm not the best guy for the job interview is part of it but you can interview we do reference calls right we we talked to them about their strategy and you know through the interview through the reference calls through looking at the performance of other businesses they've built and run and you know that can have a wholesome understanding of his candidacy and his ability to be president my point is I think that there are certain things like with Trump that had not been tested or tried that are going to come up in this role that they'd never done before in the past and I'm not saying look by the way I'm certainly not a big you know political career guys you guys know I think you know I I hate that people build a career around politics I think it's the most inane ridiculous thing and if we could go back and rewrite the Constitution that's probably the first thing I put in there the thing with the this line of thinking that maybe this is where I reacted so I apologize if I personalized it is that it creates the risk of exactly what you just said in this what you just said right now which is this blob class of people that use those arguments as the reason why change can't happen yeah why it might I don't disagree with that I don't disagree with that and I think that is the huge red flag about this line of argumentation around why out of the box candidates can't be evaluated by reasonably smart people of which there are 300 million of us in America that have the ability to see it and so I actually don't think it's as hard of a job as we make it out to be and that when you get 180 190 million different people voting I do think you actually get a pretty good wisdom of the crowds and take away Trump's UI for a second what sax just said is so profound because like what Trump nailed was three ginormous lanes that turned out now we can all agree with none of us wanted these wars everybody basically believes in that the Border needed to be closed and everybody believes that China has taken advantage in a way that has really hollowed out the middle class in America those were three totems that nobody would have touched and if we had allowed this whole thing of like oh Trump doesn't have this Trump doesn't have that he just gives cute nicknames to his advert series we would have missed that he actually had enough executive function to nail the three biggest themes of our current lifetime okay I think that's fair I guess my commentary can just be reduced down to the debate stage and saying who won and who should be is different than who should be president necessarily looking at the broader context presidential but the presidential candidacy is much more than just his debates okay yes there's a lot of other things going on if we're judging people just based on how well they talk and how quick on their feet they are Chris Christie is a great talker okay he's a media trained talker but guess what he got booed that was yeah it's a debate the dull point of the debate for me was that he I thought took a kind of like a low-key racist jab at Vivek when he was let me read it first person yeah the last person in one of these debates who stood in the middle of the stage and said what's a skinny guy with an odd last name doing up here was Barack Obama I'm afraid we're dealing with the same type of amateur standing on the stage tonight you felt was a little no not that it's when you thought that was Vivek like chat GPT essentially enough already of a guy who sounds like Chachi PT standing yeah here's like this Indian tech worker and I thought hey man that's what you read into it that's interesting I thought he was just saying he sounded as a Salvation Tech worker that's right that he was um that he was uh very like robotic and formulaic or something but what did you how did you read it because uh has the palace white guy on the panel there was something almost personal about the way that both Christy and Pence seem to reactive and make it was almost like who are you you young whippersnapper to be on the stage with me especially Pence I've been the vice president who are you you know here's what his quotes were dismissive and I think there was a resentment that even before this debate but vague was rising in the polls and those guys were going nowhere let me explain it and again it's not just oratorical skill it's the substance yes of the issues and where he's willing to go that these other candidates are not here are the quotes to respond to let me explain it to you Vivek I'll go slower this time now is not the time for on-the-job training and we don't need to bring in a rookie all this dismissive stuff from Pence to Vivek got some Applause because you know conflict and confrontation gets applaused by these lunatics in the audience who were like it was like well you also get an allocation of seats for your own team so yes and why Pence was VP is because a rookie got elected president yeah that's a very good it's a good side yeah that was very weird I thought the thing that was very interesting listen not to make it all about Trump but he was the quote-unquote elephant that was not in the room was the un uh dying support for Pence you had everybody say Pence did the right thing on January 6th what would you take away from that sacks because there were some there was a mix of booze and cheers for Christy when he kind of said like we need somebody who doesn't behave this way it's Unbecoming of the presidency referring to Trump so what was your take on is the Republican party in this audience trying to move past Trump given all these indictments I'm going to leave the Trump Stockholm syndrome and Trump derangement syndrome out of this just objectively yeah I thought DeSantis had the best response which is listen if we spend our time relitigating January 6 and looking in the rear view mirror we're going to lose to Joe Biden this is exactly the conversation and the debate that Democrats want us to be having I think that's factually true that if the Republican Party spends his time debating January 6 that's playing into Biden's hands so you don't think Trump can necessarily be Biden that these other candidates have a better chance of beating Biden is that what you mean it's a question focusing focusing on relitigating okay January 6 is not only is it a waste of time it's just a loser for republicans and by the way it's Trump's worst quality to keep hearkening back to the last election even I think his fans and supporters don't want to hear that who has a better chance of winning some pairing of these candidates sacks or Trump and one of these candidates versus Biden heads up you know does uh something like DeSantis Vivek or Haley and Vivek you know pick your combination here have a better chance versus Biden than Trump plus one of these I think it's tough to say but I I do think that Trump has really high negatives and in order for him to win the presidency he's got to flip something like two or three out of five states like swing states that voted against him last time and I do think that this is one of the stronger arguments that DeSantis makes is that you know I could deliver those States whereas Trump may not so I think there is an electability argument for DeSantis okay and so Friedberg hearing all this by the way I'm not saying that that's what's going to happen but I I do think we know that Trump does have very high negatives and yeah he's gonna have to flip some States before he's going to have a lot of Democrats and women come out to vote against him he supercharges the base in the way Hillary charged the other way because I say one other thing about of course to say it's just performance in that debate so I know that he doesn't stand out in the way that you know vivekers and these other candidates do because he didn't deliver any zingers and also he wasn't the brunt of attack I think we all thought that maybe there'd be a lot more incoming for him and the incoming really went for Vivek but I think that he had a strategy in that debate this is my interpretation it's not based on yeah go ahead any Insider knowledge or anything like that which was the way he answered questions was I think to be broadly acceptable to all the different factions in the GOP so like I mentioned there's kind of the mega faction there's the neocon faction and there's the religious right faction and his answers may not have been the ones that were most loved by any of those factions but I also think that none of his answers disqualified himself with any of those factions which is kind of hard to do given how much they're at each other's throats so sax if this was a poker tournament and this was the final table would you say the strategy for DeSantis was Hey listen I'm going to let these other guys shoot it out I'm just gonna sit on my big chip stack here I'm in second place you got let me let let's let the field eliminate themselves I'm gonna just protect my stack I'm not gonna play a lot of hands here he's just sort of sitting and waiting for it to get down to three or four people and then he'll mix it up some more is that the strategy I think he came across as the grown-up nobody really took swipes at him or shots at him and he didn't really take shots anybody else he did again try to focus the Republican party on what it's going to take to win he was one of the only people on that stage who had criticism of Biden I think it was a mistake not to criticize Biden's record that was such a weird thing that they were all going after Trump nothing about Biden the only attacks on Biden that I even remember from that and I were from Trump's interview with Tucker where he criticized oh God he he destroyed criticized Biden's lack of physical and mental acuity but look I think that if if the convention were ultimately to be a broker convention which all the different factions of the GOP had to agree on a candidate then I think this answers would be that candidate because he may not be the candidate who is most loved by any of those factions but I think he's made himself the most broadly acceptable to all of them the problem is I don't think that's the way that candidates are chosen you know I think that what happens in practice is that the factions are trying to feed each other and that one faction is going to win and I think it's probably going to be the mega faction so that's the problem I think with the strategy but look he came across the grown-up and he came across as the most broadly acceptable okay so if uh this is a final table of a poker tournament and Trump is going to sit down and debate three of these people who's going to be left to debate Trump and be the final three or four seats here which three I think it'll be DeSantis Vivek and it'll be either Tim scottron to give interesting Friedberg who are the final three who are going to debate Trump you know in debate number four or five I don't know if he's gonna show up I don't know why he would if he's up 50. I mean it would be it would just be such a trump move to not show up to any of these debates and just like get elected play the game how incredible a debate would that be if it was from DeSantis and Vivek fireworks my fourth would be Nikki Haley I think she did a good she had her moments in that debate I think she had good advice for the Republican party on the abortion issue yeah she did a really great job she pointed out how you know much money I thought that was a tea party moment for her that's when I warmed up to Nikki Haley a bunch and she's like listen we also approved you know six eight trillion dollars we gotta look at ourselves and it was like okay is it the Tea Party 2010 here I thought that was a great moment who do you who do you have left Freeburg everybody else played the game play along who will be the final three here to debate Trump if Trump shows up play along for the game I mean I'll give mine Vivek seems to be in a good place okay I don't know does Santa sends a lot of money yeah he's probably gonna stick around yeah so Vivek and DeSantis are we all have consensus Nikki Haley here's the crazy Christian look I don't think he's gonna show up we got your we got your point yeah yeah you're critical of the fact that the vague is having a boom or a surge based on his oratorical skills which I think you regard as being a shot away but you're showing no enthusiasm for DeSantis who actually has a track record of being the most capable executive oh no no I'm not by the way I didn't I'm not we're not talking about who I would vote for president we haven't even had that comment like we didn't even ask that question once okay so ask it now putting aside Trump who do you pick what was really interesting is hearing the governors speak about their skills I think Nikki Haley Chris Christie bergum DeSantis all had moments where they Shine from from Hutchinson from my perspective from a Content perspective which is where I was talking about at the beginning which people largely ignore which is that they actually had quite a lot to draw from and you know certain policy that seemed pretty strong here we go final question final question I want you to give me your one and two not Trump Saks we know DeSantis is number one for you so then who's who's your number two to pair with him who would you pair with me what to be the candidate to be that the ticket Republican ticket you're gonna go to santus one and then who do you put with them as a number two well for me to Santa send I think that the only candidates who have acceptable answers on What I regard as the number one issue of our time which is Ukraine because that could lead to World War III the only candidates of acceptable answers are Trump of vacant DeSantis meaning they've all been pretty clear they would de-escalate I think all the other candidates have basically indicated in one way or another so those three candidates are the only ones that are acceptable to me okay so we take Trump off if Trump doesn't run which that's my personal belief but just of the people who are on stage last night you're going to santis Vivek is your ticket who's your ticket after one debate not counting Trump if if the Republican ticket who do you think is Republicans I like to buy these deep out of the money options I think we'll go out on the limb I think that Vivek has a really good chance of winning this Republican nomination that's what I saw I saw like outright against Trump yeah and we're taking a trump off the table so just picking up for example for example no no no no I really do think he's he can in this thing and for example I thought it was very clever when he said that he had a line he said Donald Trump was the best let me be categorically clear Donald Trump was the best president of the 21st Century and I was like what and then I thought about it and I thought why is he saying it does he say it because he believes it or is he saying because it's like a a tactic and there's probably bits of both yep because I do think that there are elements where he fundamentally does believe that Trump has at least shined the path forward and so I think he does believe it to some degree but then I thought it's even smarter to have said it and again this is where I go back to I'm not sure that that's oratory skills versus like understanding you know Game Theory strategy and and strategy and being a strategic thinker and trying to win I thought that that was a very smart thing to have said and all along that evening I thought that he did the best job of preserving optionality for the Trump base to say you know what Vivek is all of the positive features of Trump without some of the negatives so let's just clean up the ticket and let's go again there's a long way yeah I like the call I like the call but who's number to buy that deep out of the money option and who's your number two then we're going one two here one two here either as to pair with a vague or your number two choice in terms of no then I if defect doesn't figure out a way to slipstream past Trump the Trump will win the nomination okay taking Trump out of the rest who's your number two okay great fascinating to see this happening I agree with what a lot of what jamas said yeah I think Vivek is positioning himself to be the backup candidate for the Maga Wing yep and he's doing it by never attacking Trump and by commenting him by the way saying that Trump was the best president of the 21st century there's only been three it was George W bush Obama and then Trump right oh sorry Biden sorry Biden's has been four George W Bush was one of the worst Presidents in American history yeah so it's easier Obama obviously a republican candidate is not going to think highly of Obama or Biden so it kind of narrows it down doesn't it yeah the intelligence of actually saying the words yeah I know I agree sax what do you think about vivek's unpopular statement and it may I'd like to hear whether it's unpopular with the bass but it was certainly unpopular in the room last night that the climate change agenda is a hoax which drew a lot of booze that was is that like is that a lightning bolt kind of thing to say why would he say that and what's the strategy it's like Trump saying he loves coal and he loves coal miners it's just painful to me a little bit like he was trying to see which agenda is a hoax meaning like all the ESG stuff is nonsense exactly but it comes across as him saying climate change isn't real and he's got to now deal with it climate change is strategic I think it's um but I don't I don't think you know what he believes Jake help but yeah his follow-up comment around that was he said that it is an economic yoke on our country because the combination of subsidies and the lack of expansion of carbon is what's holding back the country economically so that's I think I remember him tying these two things together so that's that's probably where the state is no intelligent person doesn't believe that the planet's not heating up come on and that it's not better to go to Renewables that's just how do you know if you looked at the science Jacob of course I have yes it's a massive consensus on the science you know as deep as a person needs to go free bird you just treat it look it's just something you're supposed to believe in no I'm I'm not saying that I just don't have the statistics of how the plan that's it I will say sax is right that it has become a thing that it's like we're all supposed to take as given no one is going to go up and say Here's the science that validates here's the data that validates here's there's there's some empirical evidence and then people use counter empirical evidence to try and counter it and that's what makes it a little bit of a a movement now which is the institutions the elites however they're framed have been wrong so many times on the things that they told us were given that we're supposed to assume that this is a given to F that I'm not going to be told what to believe anymore and I don't want to be told what to believe anymore is exactly what people let me let me State my position that's what they heard from that song last week and that's what they heard you know in physics let me State my position I totally agree yeah here's the thing you know after covid without me even making a comment on climate change 100 we've told so much [ __ ] in the name of science during covet yeah they told us the vaccines were safe and effective I just want to clarify my position before you respond to it it's undeniable that temperatures have risen I think it's a crazy experiment to run to not try to lower it it's just a crazy experiment the planet is precious I don't think we should run it I am not dogmatic about it it's not a religious thing I'm not genuine experiment we're running Jacob it's called human development and growth yes and the temperature goes up so why wouldn't we use Renewables when not pollute because not polluting is is good too when you have self-proclaimed scientific experts and or 16 year old girls shaming everybody with pretty flimsy data there was a while where we where everybody just said Mom they must be right and covet exposed the hoax and so now we're a lot less prone to believe these self-proclaimed intellectuals and their jargon and their nonsense so ask me how much money have I invested in climate change with all that data zero ask me how much money I've invested in technologies that will benefit climate change as a byproduct of National Security hundreds of millions of dollars yes and the reason I give you that example is that for me that framing was just such a turn off because I couldn't buy into it yeah there are multiple reasons the more pragmatic realistic framing which allowed us to actually say maybe you're right but maybe you're wrong but let's not even debate the issue let's just go and make sure we're not dependent on another country and fighting endless Wars that got me off my ass to do stuff and I think there's a lot of people in America that are in that second category they don't want absolutely emotionally riddled Dogma to drive their life and how they're forced to make decisions you can come up with three or four really good reasons to not keep burning fossil fuels they're dirty they're pollutants there are better options that are more sustainable that are more cost effective it's more cost effective to put solar in than to burn coal or build a new coal plant so there's economic reasons we're automatically going to trust I'm not blindly trusting anybody I'm taking the body of evidence and saying that entire body of evidence geopolitical really looked at the evidence I don't believe in gunship on this issue okay anyway I haven't gone deep on this issue that's all I'm saying listen to what I'm saying if you listen as opposed to telling me what I think and you listen to what I'm telling you there are many reasons to pursue sustainable energy clean energy and geopolitics is one of them and you know uh polluting the environment is one of them and temperatures Rising if that indeed results in Damages to the oceans and you know weather patterns there are five or six great reasons to stop burning coal and stop burning oil look at these two climate whitewashers we're living in In This Moment people were so convinced they just needed to Royal the country around the hurricane hitting California then by the time it landed it was a storm there was rain in Los Angeles I asked people here when I got here I said how is Hurricane they're like it wasn't a hurricane and in fact the news were so tilted about it they had to call it it could have been a hurricane ratings second is this thing in Maui it turns out Michael schellenberger has done some pretty good work on this is exposing that a lot of the reason these fires may have started was because of this radical climate agenda that caused the utility to not invest in the protective measures they should have around power lines that is crazy Jason oh yeah I'm not defending what happened in Maui it's obviously incompetence we should be bearing we have the same issue in California which is dogmatic belief there's a consequence I'm not saying you are I'm trying to make this point when people dogmatically believe Bodies of Evidence that they themselves don't interrogate fully they may it may lead them to conclusions and then actions that you are now seeing have measurable human consequences if you look at PG e in California it's riddled with these issues yeah they shut our power off because they're afraid that wind is going to blow down power lines and start fires yeah I mean and we just need to bury them so so I think that it would be great to like not debate the climate issue put a pin in it and instead just say we all want our kids to be able to have clean air around us we want clean water to drink and we want to make sure that we have the resources to be productive as human beings without having to send our kids to war or without putting the country in danger 100 which is exactly my point there are so many reasons to take this serious especially and move to Renewables and nuclear all right listen this has been an insanely great episode hey uh let me just get one person's comments so here's your here's your uh red meat for uh Saks here it sounds like there was uh the the the coup um 60 days later the guy who was running the coup in Russia had a little accident it's so Random uh maybe your thoughts sex you're talking about burgosian yeah I mean he had some mechanical difficulties on his PJ I don't know what happened is he not sending that citation in for maintenance what happened they had a bad engine or something it's so Random poor guy the latest reporting from The New York Times this morning is that Ferguson's plane was not shot shot down but rather they believe there was an explosive device on it oh okay so we don't know you know we don't know exactly but it was a bird strike something random like a bird strike no no somebody took him out somebody took him off the board really oh it must have been it must have been Ukraine right that's who you're putting it on it's Ukraine no I mean I think it's probably pretty obvious who did it although we won't know for sure listen I think allegedly yeah allegedly that's what you always say whenever Hunter Biden's accused of doing something you always have to answer it allegedly there was a little cocaine and maybe some bribes I think this resolves the question of who came out on top during that Mutiny there were a lot of people speculating that somehow progosian at the upper hand or he was paid off right remember there was a line of thinking oh this wasn't a coup if it wasn't a coup then why did Putin Whack Him backpack and it was exactly 60 days later is that correct that was the other thing is that gonna ask a question how funny is it then it's like Putin's like paper goes and come come and see me we're good nothing to worry about it and then it's like listen where are you going to the blocks yeah you can take my pj and he's like see you later oh thanks for the ride free bird I told you it's like Michael Corleone apparently there's a meeting about a month ago I remember it being reported where pregosian and the other heads of Wagner came to meet with Putin and the deal that Putin supposedly offered was that Wagner could stay together but they had to report to the Russian military and the Wagner commanders were on board with it but one person objected and that was pregosian oh so it's a little bit like remember that the meeting between Michael Corleone and mo Green in Vegas you know Michael's like think of a price and mo Green's like you don't buy me out I buy you one yeah that kind of reaction yep and the guy had some sort of Death Wish I guess you know what they say beware the dog that doesn't bark Putin said nothing for the last two months he was like yeah it's all good nothing out of the Putin camp and then boom Putin is a murderous lunatic who must be stopped and contained well I think that's the opposite of being a lunatic I think this is somebody who is very cold and calculating okay yeah murderous calculated sociopath he figured out how to defuse a mutiny I don't think it was a fullanku but a mutiny that would have been very disruptive to his front line if he had basically tried to violently suppress it so he cuts a deal where basically he offers banishment to Belarus pregosian was supposed to go to Belarus by the way we don't know exactly why pagosian returned to Moscow or St Petersburg he was supposed to be staying in Belarus or Africa so maybe he violated the terms of his probation we don't know there were all these people on social media who were pinning their hopes for regime change and liberal reform within Russia on pregosian which was always absurd because he was this warlord whose behavior and conduct was even more erratic and violent than Putin so he was never going to be a great vessel for Liberal reform in Russia nonetheless they're all these people who pinned their hopes for regime change in Russia on pregosian we can see now what a stupid idea that was the Russian regime whether you like it or not is stable is not unstable Russia is winning the war and you may hate Putin but he is still a master of Russia and eventually we're gonna have to deal with him these fantasies that we're gonna be able to regime change him I think are absurd and they've led us to this horrible Point okay for the dictator for the Sultan of Science and it's focused SAS sex with the slick back hair I am the world's greatest we'll let your winners ride Rain Man David said we open source it to the fans and they've just gone crazy [Music] besties [Music] it's like this like sexual tension that they just need to release somehow [Music] foreign [Music]