dude sax i love that look look at that shirt look at that man is it too noisy for a podcast you look very relatable you're like you're like a an american man like just like at home doing stuff is he
dude sax i love that look look at that shirt look at that man is it too noisy for a podcast you look very relatable you're like you're like a an american man like just like at home doing stuff is he trying to go full tucker on us it is a really really horrendous shirt that you're that is a i mean i that was the same shirt tucker was wearing last week oh my god sax is going to be so appealing to middle america right now he's like absolutely look he's going for the every man he doesn't have a blazer on he's trying to get the purple pills are you going to go chop wood with tucker yeah i may not be a man of the people but i do try to be a man for the people [Music] [Music] hey everybody welcome to another episode of the all-in podcast it's obviously been an intense week and there is a topic there's really only one topic to talk about this week and that's the russian invasion of the ukraine with me to break all this down i'm going to take it from a couple of different angles the rain man david sacks with his power flannel on today he's going to go chop some wood after this trying to appeal to the everyman power flannel it's a power flannel it's a power flannel i think that was gifted by tucker and the sultan of science hot off the you know how do you know it's uh flannel instead of uh cashmere how do you know it didn't come from one of tomas little um if you sent that shirt to chamathi burn it that would go right in his pizza i'm gonna burn it but i would wipe my butt with it geez here we go folks uh and hot off the launch of the hannah beveridge printer replicator the sultan of science himself david freeburg and back from a little holiday the dictator himself jamal palihapita with a a jedi robe tell us about the jedi robe that you elected for this week darth palpita well this is darth palpatine hapatia well i i mean this is look this is yes it is cashmere we're running out of time i have to wear through the rest of my few garments my new garments before it's springtime and then i have to go to the you know the linen and the cotton got it so you're enjoying the final days of cashmere well i do i did find some baby cashmere light thin you know you can wear them probably until april maybe even may so we have that going for us all right well there you go and is there a specific date that you uh shift over from to the linens and to to be honest with you i have a i have a team i consult with the team's working on that right they're working on that they're working on a recommendation all right so we can still laugh uh it's kind of hard to talk about other topics when a war has broken out uh i don't know if i have to go too deep into recapping what's happening because it is a static situation but there's been massive uh fallout from the war both economically lives lost and it's escalated pretty dramatically we had a pretty crazy moment last night we're taping this on friday march 4th last night a nuclear facility the largest one in europe uh was involved in a firefight it seems to have been secured and the russians have taken control of it but there were people bombing it where to begin here i think maybe saks we can start us off with a little bit of your assessment of the situation as it stands in week two yeah i mean when we broke up last week this war was just breaking out and we were still talking about ways that we might defuse it obviously that was too late and i think everybody probably putin first and foremost thought this would be a cakewalk and it has turned out not to be the resistance by the ukrainians has been fierce and it's been sort of uh galvanized by their leader zielinski you know at the very beginning of the hostilities he made the decision to stay and fight he had that video that came out with his cabinet standing behind him that galvanized all the people of ukraine stand behind them and then the west now wants to stand behind the whole country of ukraine so it's really been you know amazing leadership by zilinski and um you know it's too bad in a way we didn't have that kind of leadership among our allies and say afghanistan you know we had this guy ghani who got in the first helicopter out of there when when the trouble started um so uh you know his leadership has been strong and admirable and it's basically galvanized the west and i think that putin i think must have underestimated the level of resistance he would face and also the unity of the west in terms of sanctioning him uh and providing support for the ukrainians all that being said i think we're now at a very dangerous sort of crossroads because the situation is is very volatile uh and you've got so much variance in the outcomes that can occur now um i think you're seeing people prognosticate everything from you know uh kiev gets turned to rubble in the next week and the russians basically power through and win two this turns into a long-term insurgency to you know there's gonna be some sort of uprising in moscow and and you know regime change there and i think because the variance is so high because all the sort you know because the two sides are playing for all the marbles so to speak and you've even got i think intemperate and insane remarks by lindsey graham basically calling for uh you know calling for putin's ouster you know which i think is going to give i mean yeah it's going to give the kremlin i think a propaganda tool but for for rallying people internally but the the the point is just where it seems like we're playing for all the marbles right now and um i think that's a very dangerous place to be and i'm seeing you know insane rhetoric and commentary by people trying to push us into war and so just the other day you know one of the one of the things i tweeted about is one of the craziest things you hear is we're already in war three well and you know kasparov said this i mean he's kind of a known to be a little bit of a hothead but you also had fiona hill who's supposed to be a russia expert from the state department who frequently is the go-to source for cnn and other publications also saying we're already in world war three well no we're not i mean if we were in war three you'd see the mushroom clouds assuming you were still alive and not vaporized so it is incredibly reckless for people to be saying things like this and there is just you know this drumbeat of war that is being pushed by cable news and by the twitter sphere and just today uh thankfully this morning nato announced that it would not be uh imposing a no-fly zone over ukraine that was why is that important explain well because because there's all these people who are saying well we shouldn't send boots on the ground to ukraine we don't need to get militarily involved but let's let's do a no-fly zone to basically help the ukrainians how do you enforce that what a no-fly zone means is that you're going to shoot down russian planes yes that's what it means you are going to war it may not be boots on the ground it's boots in the sky so had we done that had we given in to the emotional appeals and i think we all feel the tug on our heartstrings but had we given into that we would be potentially in a shooting war with russia and that would be the most serious we're already in i think the most serious foreign policy situation in my lifetime and you know i'm almost half a century old so you know it's um it's very dangerous and um you know i've been saying for the last month on this podcast i've been actually advocating for the cause of not getting militarily involved and a month ago it seemed like an argument i didn't need to make but now it really does because uh both sides are are sort of and this is there's almost a unanimity in washington that we need to continue escalating the situation sex my concern is less about the washington um intent to put boots on the ground or boots in the sky and i'm much more concerned about nato allies there's 30 member nations in nato and um if any one of them does something stupid if there's any action by any even rogue element within the military or um some statement even by some politician at some nato member um you know you could see a reaction potentially from putin and then article five kicks in which is this collective defense article in nato and then the united states has an obligation to enter the conflict uh and and that's the one scenario you didn't mention which is the scenario i am most concerned about most frightened by is we don't know when the when or if a franz ferdinand moment could occur here that someone does something stupid some polish tank rolls across the border and shoots down some shoots at some russian you know tank and then the russian tank crosses over and then all of a sudden we've got to go to the rescue and we've got to go defend that that nato member and then all of a sudden this whole thing sparks into a wildfire it felt like last night could have been that when you look at the fog of war you know it was basically this nuclear reactor if it explodes if it has uh you know an episode would do just tremendous damage to the whole continent i mean if you're living in a nato country or in moscow if that thing had gone up which i know is a very um uh would be a rare occurrence and they were shutting it down et cetera so but there was that last night it felt like there could be a tipping point nuclear material is like a whole nother level it's like um it has nothing to do with war at that point it has to do with uh extinction you know a nuclear reactor is almost like a temple on earth to god it's like this holiest of holies no one can should or ever could consider that to be a point in conflict ever it's nothing should be touched let the wars of humans continue on the rest of the earth surface but nuclear weapons nuclear reactors that's unleashing the fury of the gods on olympus and when they come down they scorch the earth and nuclear material you know is an extinction kind of or is you know kind of a cataclysmic event for this planet and so you know that that goes well beyond this idea of like is it nato or did someone shoot at someone let's all go fight it becomes like almost existential to the to the condition of humans well so what does that say about putin then i mean putin targeted that facility no hold on a second hold on i think that's fake news at this point you see the tweet by michael shellenberger so hold on a second you said this is false nice tweet i did see last night's tweet okay so i don't necessarily think this is fog of war i think this might be disinformation so here's what happened is it and it wasn't just misreporting zielinski tweeted out a video where he basically was saying this plant has been attacked it's on fire it's going to be chernobyl times 10 for all of europe and then the foreign minister of ukraine came out with another statement just like that simultaneously so this was coordinated and then i saw on all the cable news networks all of them there's no difference between fox and cnn msnbc same reporting they were all in a panic about this and then you know and that now then we find out very quickly the truth which was confirmed by the white house which is no radiation no explosion um the fire was sort of tangential it wasn't core to the plant so i think we have to be very careful now to guard ourselves against disinformation that is designed frankly to escalate the situation and pull us to draw us into a war simultaneous with this there was a new york times op-ed by zielinski and and one of his aides who was standing next to him sort of transcribing and the headline was something like i'm fighting to the last breath look that that is heroic i mean i think we can all recognize zilunsky's bravery and courage in in in doing that however the point of that article was to tug on our heartstrings to get us to involved in the war and what he said in that that article was you don't need to send boots on the ground but impose the no-fly zone which we just talked about is a declaration of war yeah but no what i was talking about with the nuclear power plant is not that it wasn't being hyped up by the media certainly like this was becoming like their ratings bonanza and they were definitely hyping it up and maybe zolinsky was giving a warning hey this could escalate but the russians did target that they were bombing around it they were firefighting sort of freeberg's point like this is i think crazy behavior by russian troops by putin to actually you know try to seize a nuclear power plant it seems pretty crazy chamath you've been silent thus far let's get your moth involved here there's a 17th century phrase that says adversity makes for strange bedfellows and i think what happens when you are in the middle of enormous adversity um you know you need to do whatever it takes to win right that's i think why silence is so patriotic and viewed so heroically around the world now um he's trying to defend his country and his people um i want to take the counter of david what you said i actually think we are at war but it's the most positive form of it in the sense that we are learning a different kind of warfare now if you think about how we used to fight up until basically the persian gulf war it was armaments and tanks and then that evolved in the middle east because we had to fight insurgents and you know urban terrorism in many ways right i think this is a way in which we are learning that there's a different kind of warfare as well which is fundamentally economic and so you know it may not take the same shape as drones and missiles and fire and guns and bullets but i think you would be foolish to make the mistake that we are now not at economic war with russia and at the end of the day the outcome is the same which is either they survive or they don't survive and everything we've done points to that we are willing to fight um and we are willing to put a lot of economic collateral um and chips on the field in order to win this battle so i think in that respect we are kind of at a war did we are we on it is this a nuclear level economic uh decoupling everybody has a historical framework where they want to go back to how the natural path of escalation works and i think this is a very different form of escalation that we need to consider and i think that this is the kind of warfare that may actually um you know be the the way in which wars are fought in the future you seize assets you shut off access to supply routes you make it impossible for anything to work so you know i'll give you a simple example form of warfare is what's happening right now in the sense that you know for example the russian skies are completely clear not just because that you know no uh external airlines will necessarily fly there but because boeing and rolls-royce and ge and airbus basically pulled all of their support all of their parts right um we've gone to war with respect to their petroleum and lng supplies how not necessarily because we won't still stop payments which we are still enabling but because the actual refiners won't take the oil on the lng because they then would be subject to sanctions the people who would ship that are no longer taking those uh payments or those those barrels of oil into the marketplace because they can't get insured by international banks so in all of these various ways we are actually at war and i think you know maybe this is the way war should be fought in the future because it'll save thousands of lives in in the more classic way of describing how lives are sacrificed for i want to make a counterpoint my concern to mock is that we've rushed into a reactive response with respect to sanctions and seizing assets in a way that maybe not be calculated over the long run meaning like are we setting ourselves up for another iraq afghanistan situation where we rush into a war and we don't have an exit strategy and the issue is that a lot of the assets that we've effectively wiped the value down to zero have a repercussive effect on global businesses and the global economy as a as an example you know this company that we were texting about called luke oil they were worth 60 billion dollars a few days ago we effectively wiped them out to zero and um 65 to 70 percent of the shares in that company were held and owned by public uh um retirement funds pension funds mutual funds that are used for retirees in europe and the united states and um and so you know a significant amount this is a complete red herring i i've told you this in the private chat i think this is a complete complete red herring and the reason it's a red herring is that the global total market cap of all of these businesses is meaningfully different than the amount of total capex that these guys represent and inasmuch as you are gonna take the equity values of certain of these companies to zero it's in the grand scheme of things not that much equity value we can absorb it we're not talking trillions of dollars forget about the equity value just think about the economic repercussions where there is leveraged uh positions and swaps and derivatives in place counterparty swaps in place with a lot of these companies that are now going to default and we're not going to know that till the end of this month when everything has to settle and no one's going to be able to make their payments a small price to pay freedberg if well hold on one sec this applies both to russian companies that are suppliers and buyers of assets um products and services from international businesses and all of a sudden that line item just zeros out i don't believe the economic value of all of that oil exceeds the market cap of luke oil i don't believe it and i don't believe further that the economic value that's held by uh non-russian actors is meaningfully more than a few tens of billions of dollars we're going to find out pretty quick for sanctions by the way russia and the ukraine combined account for roughly 25 of global wheat exports let me let me say differently that wheat goes to egypt and from egypt it goes throughout africa and there's a lot of nations and a lot of people that depend on that food supply and that food supply is now cut off okay i understand but now we were talking about something different you want to talk about wheat we can talk about wheat generally i'm talking about zeroing all this stuff out and cutting them off completely hold on a second one of the things you have to realize freeburg is that the purpose of sanctions is to create massive pain that stops a madman dictator 100 from invading other countries and causing a world war so while it is tragic that's some pension hold on let me finish while it is tragic that people will suffer and people maybe can't get their netflix or can't get their facebook or some wheat will get disrupted all of this is the the is the better choice than going to war with putin and it's meant to create pain and suffering it does not create pain and suffering then russia will not change i understand the point of sanctions jkl i totally get it i totally understand the intent and i totally understand the point my point is have we really done the calculus because when you make this much of an impact this fast when you rush into what we might call an economic war with such significant abrasion in such a significantly short period of time i don't know do we really have a sense of where the calculus is because i don't know where the wheat imports are going to come from for egypt now and i don't know where the millions of people that depend on that wheat supply are now going to get fed from and i don't think we have an answer if we had a strategy that said here's the solution here's the solution from an energy perspective from a food perspective from a capital perspective to fill all these holes otherwise we may all end up sharing that cost over the long run and it's going to be a big cost to bear i think you're wrong and the reason why i think you're wrong is we've already seen how this has played out before so in the last two years we learned what governments are willing to do when you have supply shots in demand shocks and what they do is they turn on the money printer and they create enormous amounts of stimulus okay and what we have now is a point where if these shocks are really really really meaningful globally i think you're going to see the federal reserve and the ecb and the bank of canada and the bank of japan step in in a very coordinated way to provide liquidity to these markets and i think what that has the byproduct of doing is blunting the economic consequences to everybody but the person who is sanctioned do you think that's inflationary as well no and the other thing in fact it's the opposite i look david and i have been the ones that said the risk is to a recession we are now teetering towards a recession nick you should throw this thing that i sent to you guys before if you look back over the last 30 or 40 or 50 years and you look at every single period of when there has been a recession what's interesting to note is that it's not always been the case that the price of energy has risen by 50 percent in a recession but it is always the case that when energy prices spike by 50 we enter a recession we will contract as an economy the government will have to become more accommodating that is the price of this economic war that we have started and i think it's a just price because what's happening is not supportable so tamath you are sure that we're or you you feel strongly that we're not entering into a condition of significant stagflation where we're not able to restimulate the economy and we inflate everything with all this money printing i don't even know what stagflation is to be completely honest with you i don't think i've ever seen it i know how it's classically described i think it's like pseudo-intellectual kind of gobbledygook speak what i can tell you is i think that prices are too high in certain core commodities and goods i think what's going to happen is we are going to find a way to subsidize those prices coming down and i think the simplest way to do it is for the government to step in and become a buffer and it will drive massive deficits it'll drive increasing amounts of debt but i think that is a simple way for us to make sure we put and ratchet the pressure and just to speak on this other point we have only just begun meaning just today as we started the pod uh biden came out with an incremental new set of sanctions on russian crude so we're not at the even in the beginning we're at the beginning of the beginning i'm just worried this is a new kind of nuclear war i mean it's just well it's right now if this is if this is the new nuclear war then it's a blessing because we're not going to have millions of people die sacks is are the sanctions just right too strong too little i think like versus going to war i think what free we're saying is that we're on an escalatory path here that starts with sanctions then leads to more and more sanctions that includes arming the ukrainians and i don't know that's not that's a big that's a big leap and i think i think already the germans gave the gave the ukrainians javelin missiles last week yeah i mean i know absolutely right and there's there's a lot more coming so you know what i would say is back to something said which is we're already at war i you know call me a call me non-binary call me a non-binary thinker but i don't i don't like dividing our options in that simply into war and peace i think there's like a spectrum here and there and and you could call that spectrum an escalatory path so there's sanctions there's arming them and and so on down the line and i don't like characterizing what we're in or what we're doing is war because once you're in war then it justifies anything and for the other side too so you're such a pacifist sacks it's awesome keep going look we have to remember wait no let me just clarify what i'm saying yeah let me just wait i didn't say we're at war i said we're at a form of a war it's an economic war it's just a difference i hope it stays economic then you know i don't i don't like using that metaphor but let's not debate semantics but to jason's point am i pacifist what i would say is you know during the cold war we have to remember that this philosophy of containment that we had the goal was to prevent the spread of communism while conceding that the countries that were already communist that were behind the iron curtain we would not challenge we would not seek to roll that back why because we did not want hot war with the soviet union and everything was calibrated to make sure that we did not blunder ourselves into nuclear wars mutually assured destruction and yet it almost happened anyway most notably with the cuban missile crisis but rules of the game evolved right and so we did things like arm the mujahideen you know rebels in afghanistan with stinger missiles so that would be sort of the equivalent of the javelins but we sure as hell didn't put the american flag or a nato flag on the boxes and on the trucks delivering those weapons we delivered them through pakistan through intermediaries there are rules of the game that we all understood now i hope we are following some of the rules but it feels to me like we are and i think one good thing is that both biden and certainly putin remember the cold war they were very involved in the cold war they're old enough to remember it and hopefully we remember those rules the most encouraging thing i've heard bin say this entire time was when he reiterated at the state of the union that we would not get militarily involved it's very important that he keeps saying that because you know the russians are looking at these statements so we just have to remember that again we're on this escalatory path and and one of the things that's going on here is is is a purity spiral so there's a social media version of this and there's like a partisan version of this so the social media version of this is that the way that you show that you're on the the side of the good of ukraine is you advocate for the no-fly zone you advocate for the escalation but if you advocate for slowing down or de-escalating or just taking a breath you're called a putin bootlicker you're called neville chamberlain i've already gotten about a thousand reply tweets coming at me saying that so the purity spiral on twitter that we've seen in so many other contexts now pushes everybody into the into world war three similarly there's a partisan dynamic where no matter what biden says or does no matter what new sanctions he imposes the republicans will always announce him for weakness and the media and fox news will always announce him for weakness it's a one-way ratchet how much more do you want him to do is the question and i think freeburg asks you know a great question which is what is the end game here what are we trying to accomplish and what i'm worried about is that the dynamic this this um frenzy that you know what what biology is called the chimp frenzy of social media right with cable news and now social media and partisan rhetoric it all pushes us towards continual escalation and war three and who are going to be the grown-ups who say listen this is foolish stand down take a breath by the way we might want to keep some of these cards in reserve we don't have to play every single thing right to your point um i saw lady g trending i guess this is his nickname but lindsey graham literally explicitly said somebody in russia needs to assassinate putin i mean this is a crazy escalation and then on the other side inside the you have people saying you know putin's a genius and so we are going to continue to ratchet up these economic sanctions guys we are this is the beginning of the beginning of the economic sanctions we're not even in the middle of them what do you think he's going to do like what is the exit ramp for putin if we keep doing this and he's in a corner i have no idea but i think that it's clear it's pretty it's pretty plain as day if you're going to be unemotional and just look at this from our from the american and european perspective which is the only end game now uh is regime change right and one step before regime change is a complete sort of detent and somehow you know um [Music] surrender by putin in the sense that he pulls back from ukraine not if seventy percent of his people support him which is what a poll pulling figure showed this morning right and and you're careful with those polls i mean people in russia are not exactly gonna say i'm anti-putin in a survey well j cal i mean look you can say that to to kind of defend what you believe about i know i'm not saying it to defend whatever i'm saying like i'm saying just just suspend it and assume for a moment that maybe that is the position of those people maybe they do believe in pride of nation like the united states would believe in pride of nation if we were attacked if everyone took economic sanctions against our country would we not stand up and defend our president and our nation and say that our country is the prime country and our way of living and our life and we should be left alone you know this is um this is not an issue for the world to get involved in okay let's play this out and so how do you end up assume that is the case how do you end up having a regime change where you don't have a country that's actually in revolt but you have a country yeah but let's play this out like look people are rallying for what this guy is doing if that is the case right let's move our conversation to exit ramps from where we are there's there's two options right there's two options option one is ukraine successfully defends itself right and option two is russia quote-unquote wins okay let's just go down that branch for one second or they settle there's a third one jamaa they come to a peace treaty which is what's happened previously oh there's a third and then there's like i guess what you're saying jason is like everybody just kind of stops where they're they are in place yes they do a peace treaty they give them the east of the ukraine of ukraine got it well let's let's play so then what happens to all of these economic sanctions are they undone that would be part of the negotiation right yeah maybe undone based on conditions the question is are their reparations paid one way or the other and how do those get funded well those should be imf get involved and say hey we're going to fund your 300 billion dollar war damage bill to the ukraine and you know there's a big confiscate the 650 billion dollars sitting in foreign bank accounts that's owned by the central bank of russia again like how do you go back and lead a nation and how does a nation accept that how do they accept that um their sovereignty has now been challenged when a few months ago so they were the aggressor right they don't already look at what happened to japan by the way you know i mean you know it's it's a very similar kind of um psychological shock that that may not be as easy to swallow with modern russians don't all roads then lead to this is going to take a really long time to figure out a long it's either going to take a long time or it's going to catch on fire i thought georgia took like 11 days so i mean i there's a sun tzu quote uh which i don't want to butcher but uh it was build your opponent a golden bridge to recruit retreat across there needs to be a golden bridge here that's what we talked about we we did talk about it two episodes ago where we said well we're not what if we're people running the country i'm talking about like where's biden and where's the rest of the state department and saying here's an exit path for putin and clearly stated over and over again and give him something to win right like i think we gave a suggestion david correct but i'm wrong if you suggested or i did two weeks ago when we started talking about this which was hey why don't we just say hey we're not going to allow the to allow ukraine to join nato for a decade if you leave now you know we're so past that we're so passionate are we that has nothing to do with i think what's going on now you had countries you had countries like that came off the sidelines and have done things they've they haven't done 30 40 50 years and in some cases ever i mean their industry just got gutted this week house so like we should understand that there's there's a there's a hundred million people worried about there's a hundred million people worried about food if we had done it preemptively i think i think it made a huge difference like look at germany as an example germany under 40 years of policy you know they had consistently been under investing relative to their gdp in the military and they made an explicit commitment to basically just ramp that up back above two percent you know they've also made commitments around their energy independence you know switzerland is freezing bank accounts something that they've really never done and they've always stayed neutral sweden sending uh uh military support so there's a lot of countries in europe in continental europe that have found a voice well it's terrifying right chamoth i mean to live with this threat just east of you this would be like us living with this threat in you know central america or something this is like two steps away and i think that's what people forget is the geography here of you know france germany uh paul and ukraine i think this nato commitment doesn't necessarily get it done at this point yeah i agree with that i mean i didn't have to be part of anything what's the actual ramp in my opinion is that you ratchet these economic sanctions up so severely that then you know look the thing is hopefully in the aperture of war memories are short in the sense that you know if you ratchet these things up very aggressively now all of a sudden something from even two weeks ago seems like a much much better place to be right and so that could be an off-ramp which is like you basically find a way to take a lot of pressure off these economic sanctions in return for it to taunt i mean i don't know but i'm making this up i have no idea i mean it feels like there's no exit here because putin has a lot of pride and nuclear weapons is this an a no exit situation saks i think there's always an exit we have to be willing to to contemplate what that is i think to your question let's go back for a second up to your question would it make a difference if we had taken nato expansion off the table say last year i think this year was probably already too late but i think the answer is yes regardless of whether you believe that nato expansion is a real issue for the russians or whether you think that's a pretext because you know people are in one of those two camps putin has been saying since 2008 in 2008 there was a nato summit in bucharest in which they basically declared they proposed that ukraine and georgia could eventually be eligible for membership that basically started this whole thing the russians at the time said this is an absolute non-starter for us it's a red line no way will we allow this to happen and in fact later that year they rolled the tanks into georgia to put a stop to that idea in georgia in ukraine the conversation was deferred they had this basically pro-russian democratically elected prime minister president yukanovic who was deposed in a coup in 2014 a coup that was supported by our state department and probably the cia okay in reaction to that putin sees crimea not a year later not months later days later the reason why he was able to seize it so quickly is the russians actually have a naval base there at sevastopol okay it's it's at least the area is leased from ukraine but they have a naval base there it allows them to control the black sea so the the russian thinking on this if you believe it goes that listen we're about to have a pro-western ruler come into ukraine installed by what an american-backed coup and now we're going to lose our main naval base in the black sea and it could be replaced with a nato base there's no way that's happening so they moved to seize crimea and then after that they started backing russian separatists in the donbass and the civil war began okay so that basically is what's been leading up to this and then last year they started getting very exercise about the possibility of this nato proposal which again goes all the way back 2008 becoming formally recognized and ukraine joining nato and for again this is from the russian perspective okay and we could talk about whether there's a pretext in a second but from the russian perspective they said that listen and putin gave a speech like this if ukraine joins nato because of article 5 the next time we have a border dispute which is all the time right we could end up getting drawn into a war three with you guys and so there is no way we're going to allow ukraine to be part of nato and so they propose they basically by december had given an ultimatum to the state department now what was the response to that lincoln came out at the critical moment and said nato's door is open and will remain open basically said you guys can you know take a hike um now obviously that was an extremely provocative thing and the russians invaded ukraine days later now i think it's pretty obvious that if you take the russians at their word that they believe forget about whether you think it's true or not but if you believe take them at the word that the same word they've been saying since 2008 that this is a red line for them and they have a serious vital national interest there then you should have diplomatically tried to resolve this issue but even if you believe it was a pretext and putin is making up this whole red line thing and his real goal is the expansion of mother russia and all that reunification or reunification let's say that's his real goal it still would have been a good idea for blinken to basically declare that we were going to take nato expansion off the table which is simply an affirmation the status quo it's not appeasement you're not giving anything up you're reaffirming the status quo why would they blocking something from happening in the future right why why would that have been a good idea because the polling on this showed that the russian people by two to one were in favor of basically taking this kind of military action against ukraine to prevent nato expansion but they were not in favor of doing it purely for reunification so you would have if this was a pretext by putin for his expansions dreams you could have taken away that card and it would have changed his calculus would have prevented the war we can't say but in his calculus he's got to think well wait a second maybe the people won't be behind here's the good news too if you had given him that chip and said we're not going to let them in tornado and then he does invade now you've proven that this person is in reunification mode and he's deranged and he's a warmonger and that this could go to other places and finland and poland and other people have no real reason yes you would have so it would have been a much better chess move right so there was a failure to listen and um and this is what concerns me so i want to you know uh george herbert walker bush who i think was a great foreign policy president only wasn't so good on domestic only got re-elected didn't get reelected but everyone recognized him as a great foreign policy president and um he has a quote about this style of foreign diplomacy that we that his son practiced dick cheney and rumsfeld and the same people now in the binding administration it's all the sort of neocon foreign policy he said though he he called this iron ass foreign diplomacy he called cheney and iron ass and he called sold arrogant and um you know what he basically said is that these guys he's talking about cheney and rumsfeld they don't listen they just want to kick ass and take names they never want to listen to the other guy's point of view and um you know he thought this was tragic he thought it ruined bush 43's presidency and i gotta wonder i mean are we practicing the same style of iron ass diplomacy here you know um well now it's too late we're already at war i mean i think if we had practiced i i i think if herbert walker bush and james baker had been president last year and and james baker was secretary of state do you think we'd be in this mess i don't think so i think james baker would have figured out a way to defuse it who is the political who's the political scientist that you shared that uh link from in the group chat uh from the university of chicago who have yeah this guy john mearsheimer who's sort of king i watched the video from him it's quite convincing that we should have an approach that was hey we we don't need to incite ukraine to break off we could let them make their own decisions and that we're kind of taunting the russians that i don't think you know he makes a pretty convincing argument there and i don't think you need to be a putin apologist you can keep in your head this person's a dictator this is a communist country he's a murdering sociopath and at the same time we should not provoke him and let the ukraine make their own decisions but not encourage them to come into nato and we should have taken nato off the table it's pretty clear that that would have been a better uh decision here but we we still can't think of an exit ramp here which and i don't hear what's talking about putin has never said i want x well no i think you know there there have been times where he well i mean look i think his demands have been a non-starter with us i think at this point he wants crimea he wants the don bass to be independent maybe uh under the suzerainty of russia some protectorate basically uh and he's talked about this uh denosification demilitarization of ukraine i mean so now i think the demands are escalated because they're at war and he's lost too much he needs to get more right i mean part of the the problem is you're saying he's stuck he needs to no i think once you've you know once you've invested 100 you've got to make 150 back whereas before he had invested 10 he would have been happy taking 50 out you know and i think at this point he's put too much in to walk out with the same sort of deal you know he was like what are the chances he's overplayed his hand like the economic cost at this point to him the loss of jobs the loss of customers the loss of the value of his currency i mean you add all this stuff up uh so much has been taken away it's very hard to see him coming feeling like he can come out of this thing ahead and so he's only going to keep plowing forward does he face the risk of ruin chamoth i mean is this like at this point here in 2020 russian gdp was 1.483 trillion dollars now what percentage of that do you think is actually exports versus a domestic economy let's say half let's be just take a guess right so you're talking about 750 billion dollars of exports so let's just say that you know between the boj bank of canada ecb and the federal reserve we all just collectively printed five trillion dollars you can absorb many many years of russia's export loss now it does have some gnarly implications you know you probably have to work more closely for example with iran you have to get an iran nuclear deal done why so that we can get access to their oil right so it blunts the loss of the of the russian reserves as an example you know we'd have to do um some clever things on sustainability and farming my point is though that i think the economic calculus of this decision is not as grandiose as it once may have seemed post a covet scenario where we were printing you know hundreds of billions of dollars a month i think there's a the only good news i can take from this acts is you know the the free world has now learned about what a dependency like we've literally woken up from the delusion that we can intertwine hold on let me just finish this once a minute i want to get your feedback on it we have woken up from a delusion that we can intertwine our economies with rich nuclear-powered dictators in communist countries both china and russia and now i think the great decoupling and the great independence is upon us with us moving semiconductors back on shore going nuclear maybe fracking seems i think even any environmentalist will take fracking in europe fracking in the united states over a dependency over a dictator so is that a silver lining here yeah i mean look i think it's so obvious now to everybody that we need to be energy independent that it was insane for us to throw away that energy independence we've restricted it i think that if there was a bill introduced i think it's being talked about to uh repeal all the restrictions on fracking it would pass the senate 75 25 meaning all the republicans would vote for it half the democrats would vote for it so i think everybody's on board now and there was some remarkable uh you see the tweets from michael shellenberger about it it has come out that you know who is backing all these anti-fracking environmental movement in russia in europe exactly and they fell for exactly the germans fell for it and turned off nuclear and now all of a sudden they're dependent on russia and he has the pretext to now invade right these environmental groups in in europe have been useful idiots for putin and the kremlin yeah that's that's what's so sad i think i saw a tweet it was something uh to the effect that 25 years ago or 30 years ago europe actually produced more liquefied natural gas for europe than russia did and the whole thing flipped because all these environmentalists forced the outsourcing they outsourced their guilt but it turned out that all a lot of those organizations may have been funded by russia to basically affect that change i wanted to say something jason before you know there's a common thing that you hear right now which is oh economic sanctions don't work and i just wanted to talk about that for one second which is i think i think there's a lot of people there's a lot of chatter that historically economic sanctions aren't enough which is why you can't draw a very clear bright line between that and military intervention as well and i thought and i as i thought about it this is why i think you can actually fight an economic battle and an economic conflict without it pulling you into a military one and the reason is actually because of what's happened in the last 40 or 50 years you know you have like the the most critical infrastructure in the world i think is the financial infrastructure whether we like it or not right because you know energy infrastructure tends to be more localized other forms of infrastructure are localized but the one real asset that is absolutely global and universal is the financial payments infrastructure and you know what has really happened is that you can really [ __ ] a country or an entity when you blacklist them from these organizations and these networks and so this is why i actually think people underestimate the severity of um [Music] of economic sanctions if done correctly and i think before you've never really other than you know venezuela and a couple of other you know north korea north korea cuba venezuela cuba you've never really explored the totality and the impact of this kind of sanctions on a large global actor which this is almost greater than sanctions you're being you're not allowed to participate it's not even like you're saying you can't export this you can't import this it's you're now not allowed you have no seat at the table i think the crude oil example and the airline industry example are two incredible examples of the ripple effects of these sanctions right so again just to reiterate like if you're a european-based refiner in order for you to go and buy that oil you may have you know a working capital line from a german bank well that would violate the terms of that bank now and so you can't go and get that right if you actually have that oil on hand and you refine it into gasoline and you want to put it into the open market and you call flexport as an example and say help me get this stuff to xyz location or mersk or somebody else they won't do it i mean you look at the tech sanctions that have started it sounds minor but you have netflix is pulled out of the country apple is not selling products in the country google is starting to restrict services in the company and this is going to have a massive impact on their ability to just participate in society they just turned off proactively this morning if you saw that it was right as we were getting on air facebook's been bad instagram is still on twitter still on but the russians now are are turning off information into the country while every other country every other company is turning off their services there i think the global economy or not even the global economy i think japan europe canada america can collectively support five six seven trillion dollars of subsidies to blunt the economic impact of these sanctions that's effectively shutting russian exports off for eight nine ten years think about the the so you know this this is that is the damage any thoughts here as we kind of come to no way out here and just well i think economy so so i i think that if we're going to figure out a way out we need to assess what our objectives you know what our objectives are and we talked earlier on on on the show about this idea of regime change and that there wouldn't be an answer without regime change i disagree with that um i you know just those two words regime change to make everybody cringe because regime change was the justification for the iraq war for afghanistan for libya for syria and every single one of those things been a disaster when has the united states of america successfully achieved regime change in the last 20 years without creating enormous blowback there's an assumption that somehow if putin gets toppled by an internal coup that we end up with gorbachev 2.0 well maybe we do maybe we end up with a hardliner who's even worse i don't you know i don't know so what should the goal be uh obviously regime change would be wonderful if the russian people chose that but what is this ceasefire right yeah i agree ceasefire um so i think putin miscalculated the resolve of zelensky and the west you know zolensky was like this tv actor became president he was very before this he was like 25 popularity now he's at 90 something percent i think putin underestimated his resolve would you say information more i mean that that's pretty staggering i mean it's pretty clear that putin thought he could win this information warren this is the first night i don't even see the first meme yeah i agree it isn't me more i think we're being heavily propagandized but the west is winning the propaganda war but it's not just the west yeah but i mean look at where you're sitting right ukraine is engaged in that effort too right i mean you had you had the whole snake island thing where basically the um you know that wind up being confirmed as fake news that was fake okay you had snake island where the 13 ukrainian soldiers said we're going to bring us death rather than surrender it turns out they actually surrendered you had the old woman walking up to the russian soldiers with time to get the hell out of it yeah exactly that was a fake um what else i mean i think this everything's fake this chernobyl 2.0 was fake oh the um well that was the fighter pilot the fighter pilot was the the ghost of kiev yeah exactly that turned out to be a fake so look we are being heavily propagandized now i don't blame zielinski or the ukrainians for trying to propagandize us because they're a small country fighting for their lives and if they can pull us into the war it would help them it might also cause world war three or just win hearts and minds and you know flip russian sentiments there's something else that's really interesting i just went to uh the world bank site just to check um whether the gdp number that i just gave you was right and it is right but what's even more interesting is that russian gdp has actually decayed 35 in the last decade it what it peaked in 2013 at 2.292 trillion dollars and so and all the way down to now 1.483 so i think the point is with you know all of these other things that they've been having to deal with because of their foreign adventurism um you've seen a contraction of their economy already freeburg did we over did the west and everybody overestimate uh russia's capabilities here i mean is that a possibility because they seem like they're getting beaten pretty uh or they're they're being fought back at a way people didn't think they would be able to first of all i have no freaking clue second of all i don't know like what people think that they thought they knew or do or don't know but i think importantly we don't really know what's going on over there you know we are hearing stories every day that we feel is conclusive and factual and on the ground reporting and then a few hours later we find out may or may not actually be true you know this is the fog of war and i wouldn't take anything that i'm reading on twitter or seeing on cnn or hearing some commentator from the united states making some comment about nor would i feel the same about any commentator in the ukraine or russia or anywhere else for that matter facts are going to be facts i'm not sure facts are necessarily going to get to us and so i don't know what's going on the ground with russia there's a convoy supposedly that we know we can see from satellite imagery that's moving towards kiev it's stopped we don't know why it stopped there's claims by one group of people that says they're out of food and they're defecting there's claims by another group of people that say they're waiting to encircle the city and then command pressure and use this as leverage effectively to try and get a good negotiated deal to exit we don't know and so you know for us to be like you know four guys commentating at starbucks i think is a bit of a mistake because there's very few facts that we can't actually say is objectively true at this point now um what we do know is russia has a lot of nukes and so regardless of what's going on the ground with tactical stuff you know any sort of assumption that leads to our belief that an alternative intervention or or some other force can ultimately win against russia uh is is completely false because russia has thousands of nuclear warheads and um you know if russia wanted to exert its military authority over anyone in the world they can and um and so i wouldn't kind of take any of this stuff um that russia is going to lose a war uh you know a a war on the ground in the ukraine i mean at the end of the day they've got the ultimate trump card well and also they haven't brought out the heavy the heavy argument they have earth i mean yes rubble okay bunker buster bombs they've got stuff that yeah what is the strategy here to just listen they can pull a grozny they can pull a fallujah i mean look you know we they we can a dresden let's not pretend like we haven't done it too they can bomb these cities into rubble from the sky and they're not they're because it would be too bad you know their back would be too bad from the west we don't know we don't know but there's certainly there's certainly a strategy these guys aren't a bunch of idiots scrambling around trying to figure out what to do they've got the second most powerful military on planet earth that can literally destroy every human on planet earth they are they are pretty smart and they are going to figure something out to get themselves some sort of an advantage ultimately what that is we don't know you know we're sitting here trying to figure out how to play chess when we've never played it before i mean sax that might be something worth discussing there is a contingent that say listen putin isn't thinking about this strictly logically yeah i understand that point of view uh you hear it a lot on on the press what do you think here's why well here's what i think is i think putin underestimated uh zielinski's resolve ukrainian resolve and i'd say the west resolve i think it would be a mistake however for us to underestimate his resolve yeah and uh that's what i'm afraid of next is that he doesn't want to give up um and listen to go back to you know the mirsheimer point so there's a school of realism and what mirzheimer says and he predicted a lot of this so you have that's amazing yeah he gave a great talk in 2015 and i watched it um right before we got on air right one of the ways yeah one of the ways i i assess who i want to listen to and learn more from is when i see someone making far sighted predictions that come true i'm like okay one yeah yeah exactly you're like okay this guy has a mental model that seems to predict the world right i mean like carl popper said famously that the difference between science religion is that science makes predictions that are falsifiable if you make predictions one prediction after another that ends up becoming true maybe you have a way of thinking about the world that is predictive so this guy i would just say i can't summarize all this thinking here but i would just say i mean i went down kind of a rabbit hole on youtube just watching his stuff obviously not all of it is right okay but and but you know the media has been demonizing this guy because for the few things he's gotten wrong about the situation instead of all the things he's gotten right and you know if you were to do the washington establishment by the same standard they've gotten far more wrong than he has especially over you know since the iraq war over the last 20 years but anyway the point he makes is simply this or one of the points is listen this situation in ukraine is to the russians what the cuban missile crisis was to us meaning it is not a pretext for putin to go in and expand his empire what is really going on here is they have defined this as a red line they see as a vital national security interest and so we should be thinking about them and their resolve the way that we thought about the cuban missile crisis so in other words the russians are acting like the americans did in the cuban missile crisis remember fidel castro thought he had the sovereignty he thought he had the the right to go make a treaty and a deal with whoever he wanted and he went to the freely went to the to the soviet union to try and make a deal and the americans said no way and you know not in our backyard and we imposed a blockade and we were flying the bombers and kennedy had advisors and generals who were willing to go to nuclear war to win that standoff in that confrontation and ultimately the way that they solve the problem is jfk sent bobby kennedy to go secretly cut a deal with the russians to pull the jupiter missiles the warheads out of turkey so there's a quid pro quo they kept it secret for six months kennedy got to declare a victory but the the russians the soviets got something out of it too they were able to defuse the situation so if there's any way to make a deal like that i think it would be a good idea yeah i mean the reason don't you think the reason he's don't you think the reason facts that he is misunderstood is because we are propagating democracy and when we do something well it has the shine of hey we want people to be free we want individual freedom we want individual human rights we want individual expression these things are the height of human existence and when communist countries do it well they're trying to spread communism and authoritarianism and reduce humans uh individualism and freedoms and and that is a valid argument but he says in his talks like listen you can put that aside and just say you know missiles in your backyard not good yeah exactly so this is the the fundamental dichotomy and sort of the in foreign policy thinking or international relations between idealism and realism idealism says it's all about values and so we're going around the world we're promoting democracy we're supporting allies who we think will spread democracy there's good guys and bad guys we're on the sides of the good guys and that's who we support and we change the regimes that are the bad guys but the realists just think of this as great power rivalry and we have to understand the way that great powers have always reacted and behaved and great powers whether it's russia or the soviet union or us will behave viciously and ruthlessly towards anything they perceive as a threat to their national security their vital now security interests what are your thoughts on this being the moment we we make the next big transition we were in a bipolar world order we've been in unipolar for the majority of our lifetimes where we only experienced the united states and now is this the moment we move to multipolar sacs where we're gonna or have we moved there already it's uh it's it's it's a transition that's happening mainly because of china so we're and i you know it seems like what we're doing is pushing russia irrevocably into into g's arms because he's a huge mistake he's part of that well i'm i'm surprised to hear you say that jacob well i said it two weeks ago i mean i said this sounds crazy but if we could get putin to be you know in talks with us then he's not in talks with xi jinping and when you saw him with you know taking pictures with xi jinping that should have been a red alarm bell to everybody that our foreign policy is not working because if he's talking to xi jinping supposedly and who knows if this is true again fog of war to freeburg's point you know maybe xi jinping told him can you wait till after the olympics to do this invasion if they're coordinating at that level that's really problematic for the us we need him on our side we need to get pakistan on our side india south korea we need to build an alliance to deal with the eventuality of china going into the south china sea and taking over taiwan so chamath what are your thoughts on does this give xi jinping a window or not and is there any path to getting russia back in uh talks with the west maybe he can help get them uh restarted in a way that could normalize relations is this uh well the real question is like if you're g do you look at this and say uh it emboldens me or i have to be even more strategic and crafty what do you think i say the latter yeah yeah it's the latter right if russia had rolled right he'd be this is one good this is one good thing i'll sort of contradict what i said a little bit before look i i i don't i'm not passionately attached to either the realist or the idealist school of thinking i think they're interesting we need to consider both perspectives what i would say is that the resilience the ferocity of the ukrainians the resistance defending themselves giving putin a punch in the nose we can all support that because we know that she is watching and if he sees wow the russians really got a tough time with ukrainians what you know am i going to be facing a similar situation with taiwan and what's interesting is that the way the ukrainians they basically were willing to arm every man woman and i don't know child but every man and woman there they were handing out the ak-47s basically they israelized right you wonder how israel has survived in a neighborhood where everyone wants to kill them every single adult serves in the army and they get guns it's like you know they're in the second amendment over there yeah exactly so yeah so i think that the ukrainians have shown a model that's really based on the israel model which is listen if taiwan really wants to be independent every adult there needs to learn how to fight and they need to have weapons and that's gonna be the best guarantee we can be their ally but that's gonna be the best guarantor is creating a credible deterrent to she moving on them i mean do we transition to another story here i mean this is this is one of the problems when we're living in these kind of times is that if you talk about anything other than when the decision trees can i saw a tweet when all the decision trees can go to zero meaning that like there's a one percent chance of or 0.1 or 0.01 chance of of war 3 the nuclear war then yeah it's hard to talk about anything else hard to think about anything else so yeah um i watched ozarks this week amazing ozark is that good oh great jason bateman amazing great perfect is so freaking good on it breaking bad 2. that series twice and i've fallen asleep in episode one both times no no no you you got to keep going it rolls it's it's it's basically breaking bad 2.0 yeah phenomenal yeah i started season two of euphoria oh my lord don't ever let your kids watch it oh my god it's either that or it's like the best deterrent so like you make them sit and watch it and they'll not only will they never not do drugs but like they'll they just won't do anything they'll just like stay in the house it's scarring it's basically requiem for a dream meets like disney plus afternoons like these are disney stars living in requiem for a dream i need to decompress after i watch it if you have kids it's terrorizing it's terrifying it's terrifying it's absolutely terrible it's scarring it's very artistic too i have to say i give them a lot can we talk about markets i mean you know i i feel like there's let's go to markets important discussion because the markets are so volatile during these kind of volatile information times times with you know information that's changing day to day intraday you know where do you guys think about kind of spending your time right now are you kind of just putting your head in the sand and saying we'll pull it out afterwards i mean how do you i mean guys what's funny is like sax is curled up in a ball you know in times of in times of uncertainty you actually want to be deploying so you know uh i announced what was it last week i think it was a solar deal the solar deal you know i put 228 million dollars into this thing and then i did another deal i put 45 million bucks into this thing you guys know about which we haven't announced yet yep so um but other than that i've been literally uh white-knuckled uh i don't like to open the stock app there's no point take some dramamine before you open your morgan stanley stock up the stock and what's so funny is like my bloomberg terminal which is right beside me here at my desk i have not logged into it okay put it in a drawer unplug it yeah there's just no point like at the end of every week i get a report right kind of like our p l and i just look at the top line like connor always sends me the top line is like you know and and the last like eight weeks in a row we've lost one percent we've lost two percent we've lost three percent the time that this wishes he lost one percent i celebrated i got so drunk that night i was like this is where it really does help right sacks to think in decades like if you think in decades and you're a venture investor you can kind of just put the stuff out of your mind which is what i'm doing and the great thing is i'm seeing amazing companies great founders deals are taking longer to close people are starting to do diligence again and people are discussing what the right valuation for this early stage startup is which is good that's healthy i think we're getting like i don't know what you're seeing in the in the early to mid stage market privately but i'm seeing really healthy discussions and late stage madness is gone it's over yeah i mean i think 100 times ar is over but we no one really knows where it's landing so i've seen some deals get done at 60 to 80 times but um no one really knows where it should be you know i sent you guys his tweet from morgan housel who is a great guy and he has this fabulous tweet he says this he he it says this the shock cycle and it's this beautiful cycle assume good news is permanent oblivious to bad news then you ignore the bad news then you deny the bad news then you panic at the bad news but then you accept the bad news and then you ignore the good news you deny the good news you accept the good news and then you assume the good news is permanent that starts the cycle if i if i could just put it out there i don't know today if you guys saw non-farm payrolls but we had a huge print in um unemployment like really great print meaning like a lot of employers were able to find people to take jobs it was a big number but the interesting thing about it was we didn't see wage inflation tick up with it and if i had to look at that and if you actually look at a bunch of the earnings reports that have come out in the last three or four weeks i actually think we're in the part of the cycle here where we're starting to ignore the good news and we're so negative and we're so emotionally wrapped up in everything that people forget that actually the world tends to um keep moving forward right we are not in world war iii by any measure are we not we are not anywhere near that okay and so i just think it's important for people to take a step back and take a really deep breath but i think that there's a lot of good news out there there's a ton of good news and for people who don't know the term we're ignoring some people don't know the term print when we say there's a print that is just a colloquialism in the financial markets that something was formatted for printing previously and you got good news so an official report is sometimes called we got a price i agree with i think what's going on is there is some underlying good news right but there's this overhead of a small chance of something catastrophic happening so how do you price that in right it's it's it's uh it's like a one outer right yeah yeah exactly but it's this guy's quads were set over set yeah it's a one hour to one hour to the apocalypse basically if this tiny probability thing happens the game is over so you know so it doesn't matter it doesn't right like it doesn't matter if it's the cost of your house does it matter if there's a nuclear war that's right this is this is the thing that people underestimate is like that's not a that's not a risk that one should be hedging in any way financially right at that point the only thing that matters is the health and safety of your family and your friends but really your immediate family like can you take care of them and make sure they're safe and so you know if you're if you're an investor in the financial markets or you're building a company managing for that externality in my opinion i'm not sure makes a ton of sense because i don't think you can manage to that externality you have no impact on it it's something it's a controversial scenario yeah so i think you have to manage to the 99.999 of normalized outcomes and i think right now there are some what's called green shoots meaning like some positive news in the world and some positive data by the way the other thing that we saw today was or this week was jerome powell and you know the jerome powell testimony was also in the middle of massive amounts of bad news some actually pretty decent good news which was he said he's going to raise by 25 basis points in march everybody knew that right so we took the 50 basis pointer off the table but then he was very clear that they were going to be data driven and in the language of the federal reserve what that essentially means is like we're going to be patient and wait and see and if you couple it with what i said before which is the economic cost of these economic sanctions towards russia can be calculated and i think that we have proven a willingness to print capital and money and so if you put those two things together i think there could be a real possibility that powell becomes very accommodative and you know he and biden and the entire administration come together with europe and everybody else and say get the money printer back going because we are we're going to stand the line on these economic sanctions and we're going to you know sort of soft land the economy here because we think there's recessionary risks afoot let me just provide a little bit of a counterpoint which is where i'm most concerned we don't know what the repercussions are fully in a dynamical system of global capital of pulling out this much capital and devaluing assets at this scale so quickly the shock to the system i don't think has yet been realized and i think we'll know at the end of this month when books close what things actually do to businesses to swap agreements to trades you know trade balances that are outstanding and you could talk about economic stimulus as being the way to solve that but we don't yet know what's broken and they're like let me just give you guys another example today corn i think is trading at 760 a bushel that hasn't happened guys i can't tell you in how long this was a commodity that was trading at 350 a few months ago and so we're now talking about that the trickle-down effect of that price into the beef the trickle-down effect as we're already seeing in california where the or san francisco and the average price per gallon of gas at over five dollars the trickle-down effect on um on purchasing behavior on businesses defaulting because uh suddenly their their counterparties dry up we don't know and we won't know and it's not actually we know some of those we know some of them but we don't know what we don't know and the thing i'm concerned about is this is a imagine when i say dynamical system from a physics perspective it's like take 100 slinkies and tie them together into a giant graph of slinkys and you start punching one of the slinkies like this if you punch one or two of the slinkys hard enough you don't know how the repercussions will cause a slinky all the way over there to suddenly shoot up or shoot down but you're also denying your ability to change a difference linkey that's the whole point of a dynamic you could put energy back into it but we don't know what's broken and there could be something that's irreparable through these we've gone through these things before and i think you're not learning from history or you're at least not willing to admit it but no i i think we're seeing hold on a second we've seen it in tarp okay we did not know the total extent of what happened in the gfc and we had to invent a financial framework to soft land the global economy we figured it out when we went through ltcm and john merriweather blew up explain what dennis there was a huge hedge fund in the late 90s that basically had a massively levered exposure to the financial markets to the tune of like tens or tens or hundreds of billions of dollars go read the book when genius failed if you want to read the story it's a it does a good job summarizing it but it's a great story yeah go ahead and again we had to step in uh with a governmental framework and a broad infrastructure of actors across the world to soft land the financial economy in a way not knowing what the actual uh what what part was broken so i i just fundamentally disagree with this idea that we're running blind yeah look we're talking about i'm talking about capital and energy and food and some combination of those things are going to cause some serious deleterious effects on okay well i think and on markets and look i i get it jamaat i know that there's solutions for repair and i know that we're going to act swiftly and aggressively and every time by the way i just want to point out in each of those scenarios you've talked about we've acted more swiftly and more aggressively than we did in the scenario prior and it's getting to the point that you know what is the value how much debt how much deficit are we really willing to take on everyone obviously has these kind of you know intrinsic existential questions about how much we really can act long term without the dollar collapsing but certainly in the context of a global economy collapsing the dollar will always be the safe haven but there are other things that play here like you know the cost of gas for the average american you know the the the amount of wheat and the amount of food that people in africa are going to have what you're saying here freeberg is that some of these things we have been through and if you look at gas as one example i think you're bringing up the important ones here food and energy gas we actually know what happens when gas prices go up we saw that not long ago people bought more hybrids and the miles per gallon per car uh you know when you raise prices consumption goes down and people get created adjustments i'm talking about the short-term acute effects the thing that america has the ability to do is they have the ability to change the financial incentives for actors all around the world in a split second and behavior can change and and so i actually think freeberg the nuance thing that you're saying which i completely agree with but maybe we should say more explicitly is it probably is a reasonable way to manage risk in america europe canada japan but what's going to be very very difficult is the impact that this has on emerging markets in southeast asia asia africa could be really really deleterious for some amount of time and sad and it's a human it's going to cause a humanitarian problem it's really friggin sad and it's you know whatever progress has been made could be unwound i think you're right by the way i think i think that that is actually really the risk that i think um holding the line on these sanctions really does it pushes the risk towards em countries and then i think we're gonna have to figure out what our moral resolve is to go and fix those that's my point earlier which is we're gonna bear the cost ultimately the united states is gonna have to step up in a really outsized way to solve this problem and while we might not be sending troops on the ground we're going to end up paying several i don't know that it's going to be just the united states free burger the united states seems to be working in coordination with whatever it is in this situation unilaterally anymore that's a good news we're going to have an economic cost right there's gonna be something there's there's there's no amount of money that you can actually put on human life and so if we can avoid a military war i just think that there's just there's there's no red line on cost there and so if we end up running massive deficits and now we're at you know 150 250 300 percent of gdp uh i think that you know morally that's that is the right thing to do sax is is is the world becoming more idealistic and realistic let me bring saxon here sex is the world becoming more anti-fragile slash resilient pick one of the two i guess to these kind of upending events because of covid because of china pulling out of financial markets we just went through this freeberg was like hey this is unprecedented actually i think we have a little bit of precedent here we have the complete shutdown of the economy from covet in recent memory and we have china deciding that all these companies are no longer public we've seen they did their own economic sanctions they sanctioned themselves and pulled out of markets so what do you think sex i mean i think the current crisis is a reminder that it's not uh too anti-fragile i think we are in a transition we've the cold war ended about 30 years ago and since then we've been engaging in this sort of unipolar foreign policy where america calls all the shots now the world is becoming more multi-polar i'm not sure it's all the way there yet and you have countries like russia and china reasserting themselves and that's making the world a more dangerous place well you also have the eu working together in unison and they seem to be maybe they're going to become a bigger actor here because of this right we're seeing them take that that was sort of a positive surprise as long as they don't pull uh franz ferdinand like freeberg said and inadvertently blunder us into the into a war okay folks this is this week in dystopian outcomes let's talk about something good come on another good news is some good news here let's talk about the big carte breakthrough this week there is good news guys good news is that we just the good news is that we're managing um crises after crisis china crisis do you want to tell people about this revolutionary breakthrough i mean look there's just there was another car t therapy uh approved two of them approved in the last week for um myeloma car t just i think we've talked about it in the past you know every human body has um t cells they're a core part of your immune system t cells are programmed so they have a sensor you know that that tells them where to go and what to destroy and so as t-cells learn what to destroy you know they can be really effective at clearing bad things out of your body clearing pathogens and invasive things out of your body and so a few years ago uh you know humans gained the ability to engineer t cells by adding the genetic code to a t cell effectively engineering it to go after a very specific thing and so the big revolution in carte therapies has been in oncology and cancer so uh you know programmed t cells to destroy specific cancer cells in the body that you know you would historically have had to use really difficult systemically challenging drugs like chemotherapies and so on to wipe out lots of cells and in many cases it doesn't eradicate all the cancer and car t turns out it can be extremely effective at finding very specific cancer cells in your body and in many cases causing complete remission and cancer and so you know there was one car that was approved that showed i believe it was an 88 or 90 complete remission in multiple myeloma which is a form of blood cancer so they they take your t cells out of your body uh you just get a little blood draw basically uh they go in a lab they're zapped with electricity which causes them to open up slightly and an engineered a little crisper edit happens and those those cells are now edited the dna in those cells is edited and now those cells know to go after the cancer target you put them back in your body after they grow up for a few days and they filter them and test them make sure they're safe and after they go back in your body the t cells go to work and they clear all the cancer cells out of your body it's an incredible technology incredible salvage therapies are unbelievable is the name of the company involved in this a2 bio is that the no 82 did something else no so that breakthrough was even even more important i think in the long term what he's talking about is jansen and legend uh are the two companies that basically got approval from the fda now the thing with carte is like you know cartier has been incredibly um believed in blood-based cancers right but that's an entire category that excludes solid tumor cancers what you're talking about jason this week as well what happened was a2 bio basically figured out how to modify these t cells in a way where you can actually attack and target a very specific solid tumor so there's a lot more work for those guys but if you play that out now you have this incredible ability for your own body to be trained to fight and kill cancer whether it's in your blood or whether it's the solid tumors ah now the the pride the pr the price of these therapies today they're charging call it 400 to 450 000 per treatment and by the way the treatment it's a one-time shot i mean it's like what yeah they pull the blood out of your body they and then the the expensive challenging part is how do you take the cells isolate them engineer them test them screen and make sure they're safe the way that is done today is very expensive and time consuming because the volume is low and there haven't been as many kind of engineering breakdowns how long does it take you know it takes a month it can take a week to four weeks so before you get one person 10 people is it the equipment that's expensive like i actually um i invited champ to come with me we went and visited one of these labs a few weeks ago but i i won't get into it um but it is it's unnecessarily inefficient in the sense that you can charge so much because when you spend half a million dollars to treat a cancer patient you just save yourself millions of dollars in long-term care for that cancer patient so the price is determined by the alternative cause they're priced it's like how do you uh save money over the long run for the payer you know the insurance company and so if the if the insurance company knows over the long run they're gonna pay three million dollars in care for this cancer they're just staying in 2.5 they're totally willing to spend half a million dollars to you know to to end the cancer is that the right financial calculus for this thing so if you look at the actual cost of doing this there is a university in the bay area that is doing um car key therapies and their cost is about 40 grand they built their own lab to do this that by the way is also extremely inefficient we i think that over the long run we can get the cost of cell therapies below 5000 bucks and when you can do that by the way car t can be used not just to go after cancer but you can get it to go after autoimmunity so people with lupus and rheumatoid arthritis there are known b cells in your body that are making antibodies that are causing the inflammation in your body destroying your own body and so down the road we could use car t to destroy lupus to destroy antibodies uh b cells that are producing antibodies that are um you know fundamentally causing autoimmune conditions including what we talked about a few weeks ago multiple sclerosis given that we now have a strong belief that if you can get rid of the ebv the uh ft bar virus uh from your body uh you can wipe that out so so car t can in the long run be harnessed not just for cancer but autoimmunity and potentially other pathogens in the body in a really targeted way and this this is kind of the beginning of what will likely be a multi-decade kind of new therapeutic modality that's that's you know accelerating i had a question for you on the on the pricing model here of hey the way we price this is how much are we saving the insurer is that too much price optimization is there a better model here i have no idea okay i would like to talk about something else uh related to this jason there's this massive patent battle going on for crispr yeah uh and i think it's worth jcal if you can give just a two second primer because i think we should talk about patents just for a second and you know there are there's the extreme version which is what elon has done and then there's the other extreme version which is these two folks fighting over so obviously elon has gone with putting the patents out making his patents open source and putting them out there and using them as a deterrent like nuclear weapons have been but the u.s patent trademark office published a ruling on monday in favor of mit and harvard over berkeley the ruling cancels certain patent applications made by the university of california its partners regarding a crispr system known as crispr cas casino has nine the ruling states that they failed to provide persuasive evidence that they got the gene editing technology to work before the broad group did the central question and dispute is which group got to the crispr cast nine two basically the whole thing here jason is like there was a group led by these two incredible uh scientists who they won uh the nobel prize jennifer dudna and emmanuel charpentier there berkeley and uh and she uh emanuel i think is she's at a university in germany i think but then there was a different team trying to develop a system for crispr cas9 from mit uh harvard at the broad and they all filed patents on top of each other and this whole thing was a thing and you know the the big implication of all this is what are companies supposed to do right because if you are a company that wants to build a crispr cas9 gene editing thing look there's a lot of situations where uh a single point edit or a broad edit can have a meaningful change in your health so these are businesses that should exist you didn't know what to do because if you licensed the ip from the wrong person you get sued right and many companies now are like trying to license both sets of patents and i just think to me it frustrated me when i read this article and you know this is the conversation i had with you guys in the group chat is i think we need to think of and imagine a new way for patents to work because it it shouldn't be the case that you know folks are competing for what is really effectively credit and then what stops behind them are all the commercial companies and investors and all of them and just the normal individual day-to-day people who want solutions to solvable problems but the reason it doesn't get to the starting line is because of patent credit and having to deal with patent trolls and i just think that that's a terrible situation for us to be especially if it's something that could change the course of humanity almost feels like an arbitrator has to come in here and force a settlement what do you think freeberg is the right thing to do obviously we have a tradition of people getting to you know monetize uh dare i say their innovations for some period of time with a patent i have multiple businesses i'm involved in where we uh leverage crispr and uh i will tell you that the um you know the group at harvard so so the history is the group of harvard and the group at berkeley argue each argue that they discovered crispr cast 9 around the same time each or each argument that they have a right to crispr technology based on their discoveries that were made around the same time and so for years each of them have been starting companies and licensing crispr technologies to different companies and all of those companies now including several that are public uh it turns out that if this uh this ruling you know is to be believed they actually have a license to a technology that they may not actually have a license to so um there is a company that emerged a few years ago and actually made an open sourced version of this uh this system and so i have uh at least one company in gene editing implanted plant gene editing where we leverage this open source version of this system and many more companies many more businesses are embracing that open source alternative i don't think that we see this turning out to be any different than what we saw with the proliferation of linux in computer software where uh you know microsoft or whomever was trying to you know make everyone pay a licensing fee to use their operating system and guess what markets discovered they discovered that hey if someone is able to make something free and open source and everyone will embrace it and here we are where most of the internet is run on open source software so you know i i i don't know what the right thing to do with respect to patents are because you know the truth is a lot of very difficult very expensive technology r d dollars go into developing a technology that is theoretically someone could look at it make a copy of it and so i do think that there are rights to defend with respect to patents i think that there is if there is something that is a critical resource that an entire industry really needs to access an open source solution will emerge you know the markets take care of it and i think we've already seen that with crispr so um you know it's hard to say at the end of the day you want to license some you know patent a molecule and be the only person that can make that molecule make money from it go ahead but if everyone's going to need that molecule to run their business and to change the world someone's going to make a cheaper alternative or a free alternative that's just the way markets work so saks would like to recite a poem for peace at the end of the podcast he's gone totally soft the pacifist david sacks no i'd like to i'd like to address what you said when you called me a pacifist um because i think oh my god here we go after hours this is all in after dark here we go he's an existential pacifist go ahead sax read your power when i become a pastor well i'm not really pat look i still believe in the idea of peace through strength like reagan said okay but i remember when we what is the only clean win that we've had in a war since world war ii america has it was the win straight shot the first iraq war when we drove saddam out of out of kuwait that was george herbert walker bush our last conventional war well it was also the last war that we actually won every other war that we've done has been turned into a fiasco winning was pretty easy to define get out of kuwait the other ones we were trying to do revolutions but remember everybody wanted him to go all the way and march into baghdad and change the regime replace saddam and he said no and he had the wisdom to stop and everybody called him a wimp but he still had the determination and the the wisdom to stop and then what happened his son comes in ten years later and they finish the job yeah they get they take out saddam and they destabilize the entire middle east that's what the iron ass has got us so what has turned me against these regime change wars it's look when i was in college i thought herbert walker bush was a wimp you know and and george w bush was doing the right thing going into iraq 20 years ago but we've seen the results and anybody today who doesn't modify their point of view on these regime change wars is a fool i mean they're not paying attention and so for lindsey graham and you know these other guys out there to be a lot of republicans to be talking about regime change that's something we should be seriously promoting they've totally lost the script and they should be denounced as reckless dangerous fools and look i've seen it on both sides of the aisle but what we need to do now listen if it ends up being the case that the russian people want to make a change that's that's their call yes obviously i'm not opposing something that they might want to do but for the idea that that should be our goal that's our end game that's our objective that is a recipe for disaster yeah we'll just wind up getting in a perpetual war then when we leave it will revert and that's what we saw it reverts back to communist or authoritarianism the people have to really want it revolutions are hard fought and bloody and if you think you can just go in there with a couple of drones and get everybody to decide oh we embrace democracy from this point forward because you've drowned the hell out of the country is farcical and it's proven to be wrong 100 agreement with you no ceasefire is going to be possible i mean it's going to be hard enough as it is to get anything remotely like a deal but it's not going to be possible if you're you've defined regime change yeah as your objective it's way to dig putin in like that's literally what he wants to you know that that you're giving him all the pretext he needs to keep this thing going if it's self preservation all right everybody there's your overtime sex is uh sax's writers were freaking out in the writers room and i had to get his last point in because before i pinned him as a pacifist there are no writers for this stuff jacob because look everybody on cable news is singing from the same hymnal and following the same script they're all being the drums of war there's only one cheek right now which is we're not doing enough and we're being weak and biden needs to do more not being weak i agree having patience is nothing we are doing a lot we're doing a lot and we should be careful de-escalation is the opposite of weak these economic sanctions are real we have to work through and i think we have to make sure that the economy is supported while we do it on that note uh let's pray for peace and we'll see you all uh next week on the podcast the all in summit is may 15 to the 17th 16th and 17th are the two days of the conference poker on the 15th tournament for charity events every night of the week and you can apply for a scholarship at the website summit dot all in podcast.com or just type in the all in summit into google it'll be the first link and 400 of 600 tickets have been allocated either sold or for scholarships we're going to do the best we can to have as great of an audience there as possible and for the dictator chamoth paulie hoppatia the rain man david sachs and the sultan sultan of science hot off the launch of canna congratulations turning literally water into wine david friedberg i'm jake out and we'll see you next time [Applause] [Music] and they've just gone crazy with it [Music] besties [Music] we need to get back [Music] i now have a chief of staff he's pretty great he's worked for me for a while and he's he's doing a great job but it's actually really helped i will say that and then i uh started a family office wow congrats what does that mean you have a place in your home that you call an office yeah you don't like to break by your refrigerator there's an office is that the family office yes the family goes in there to talk about all this stuff where does jade put the stickies that say we're out of granola bars [Music] [Music] hey everybody welcome to another episode of the all-in podcast episode 72 part du with us today again the prince of panic attacks the sultan of science david friedberg ah yes and also the zephyr of zoloft and also as you're hearing cackling the duke of degeneracy uh the dictator himself holly hoppity and of course everybody's uh favorite the rain man himself the drunk history channel uncle david sachs i mean david i i follow you on twitter you're tweeting 50 times a day oh i was thinking the same thing when do you work what has happened to you you you won't meet with startups anymore i i bring you startups she said you know what i'm no longer you're like stuck in your room tweeting i just i don't do first meetings that is the end of your career huge mistake no it preserves it preserves my energy there's nothing more draining than endlessly spending your day in first meetings no why don't you just have a short first meeting like a 15-minute first meeting well that's what you know we have a team for is there they don't because we know exactly what we're looking for sas investing is very metrics driven and so the first meeting yeah exactly so it's like the first meeting we just find out do they meet our basic threshold for love it for growth yeah exactly fantastic yeah so we run the numbers and i i will meet with them if they look good i love this i would like all vcs to take the same approach and i will let everybody know my dm's are open jason at cal academy i will take the first meeting saks i need to call you after this one of our businesses which is not in sas has started to sell sas software and we've already booked 40 million dollars of acv by complete accident from zero wow you stepped in it uh and i need some advice okay yeah let's talk all right everybody uh it's been a bit uh of a crazy couple of weeks here and i we have to start with the war in ukraine and and do a bit of an update it's been over 20 days the death toll continues to climb we don't know exact numbers here it's very hard to get information we're not experts we don't have boots on the ground uh but according to uh the new york times seven thousand russian troops have been killed and zolensky said on march 12 1300 ukrainian troops have been killed i think we've got three or four angles we need to talk about here one i want to talk about food supply with freedberg since you ran climate.com and have a lot of expertise in that and of course ukraine and russia are the breadbasket of the world trabot i want to talk about markets of course but let's go to our history channel uncle first uh sacks you have been going down the rabbit hole looking at the history of this let me just ask you just a pointed question is russia losing the war and if they are losing the war if that is a pos is that even a possibility that they're losing the war are they losing the war and then what is the exit ramp here and what does it mean on a go forward basis right i think great question so here's where i think we stand three weeks into the war is that putin clearly miscalculated he thought this would be a cakewalk obviously has turned out not to be the ukrainians have put up very fierce resistance the russians have taken very serious casualties and losses um and so the war is very much you know up in the air the the outcome is very much in doubt so i think you know putin was overconfident uh made a political economic and you know obviously humanitarian mistake but i think three weeks in here is where i would characterize things is it feels to me like the west might be making a similar mistake of sort of excessive overconfidence and triumphalism meaning that we think the rest of this war is going to be a cakewalk and the reason i say that let me just give you some examples and then tell you why it may not be a cakewalk so you've got francis fukuyama had a piece this week basically he's back with the end of history he predicts that you know imminent russian defeat and that there's gonna be a new birth of freedom uh for the west it's going to be like the bush doctrine and 20 years of failed policy in the middle east never happened you got david from you know all but predicting mission uh accomplished just like the iraq war he said the springtime's gonna be bad for anyone who bet on putin his words which in his view is anyone who isn't a basically a neocon who favors regime change you had a piece get a lot of circulation over the last week in the u.s china perception monitor by um by i think a former chinese observer named hugh way and he basically predicted that china would be under so much pressure by what the the russians have done you know in terms of humanitarian uh losses that they would come out basically denouncing russia and support the west and then of course i think the final example of what you might call western triumphalism right now is that absolutely no one in washington seems to be pushing for a ceasefire they're all you know they're all paying lip service at least to snow flows fl no-fly zone idea biden and the squad seem to be the last holdouts uh for the idea of not imposing no fly zone so i would say right now the west seems to be very confident about the way this war is going and not inclined to make any compromises or concessions i just want to flag quickly why that you know why there might be some clouds on this silver lining so you had a washington post article first of all warning it was very interesting that ukrainian military progress may not be as great as there's quote stratcom the strategic communications you know aka propaganda so in other words the ukrainians are very effective at fighting the information war but the the russians are still making progress on the ground you also had this um washington post story about neo-nazis flocking from all over europe to ukraine to fight for the cause again that story got it's it's very troubling and it got no likes or retweets because it just doesn't fit the great narrative here you've got the slow motion humanitarian is that true like this yeah but let's come back to let me lay out all the issues that we can come back to you've got the slow motion humanitarian disaster of you know a billion people across the world potentially starving if the spring planting doesn't happen which we should let freeburg speak to more you've got the fact that russia can still escalate this war i mean they could still rubble cities uh by elorus could enter the war and you know god forbid they could even use wmd and then we you have this idea this dream of toppling putin probably look it could happen but probably a fantasy you had 200 000 protesters pro-war protesters turn out in moscow today nationalism is still strong in russia yes there's anti-war protesters there but the russian people at the moment seem to be still behind putin and then i think you had today um the foreign minister of china came out with a statement really throwing cold water on the idea that they support the west they basically denounced the west for nato expansion so this whole idea of of the chinese bowing to western media pressure which they in other contexts called the baizou influence i think that's a fantasy that is not going to happen so look i think that you know you know we all support the ukrainian cause uh we all support their desire for freedom to their freedom from domination from this um this russian war of aggression but what i wonder about is whether this would be the opportune time to for washington to try and push for a ceasefire instead of a no-fly zone and we should talk more about what that might look like can i give you a psychological assessment of i think what's happening right now yes great just as somebody who as as you know you guys and i were just joking but six days just being mostly off the grid with my notifications off i was really like honestly like you you kind of like go through this dopamine fast and what it actually helps you do is pick out better signal and you know with all respect sex i think like a lot of what you said is not really a as meaningful signal as the following which is the most important thing that happened was both sides basically said the surface area of a deal was very much in sight and that they were down to three or four points and i think that that didn't get reported nearly as much as it probably should have and what i thought was psychologically interesting was that as soon as that was said the next few days was when the rhetoric got ratcheted up extremely aggressively on both sides and the way that i interpret that typically is having done deals that's typically when you're closest to a deal and you're trying to get the last few t's in c's and in that same construct as applied to ukraine and russia i suspect what's happening is they both put out the trial balloon it was well received on both sides the surface area is now down to a few points i'm not saying that those are justifiable in the end but i think that if both of these two folk parties want to come to a ceasefire which i think it does we're probably much much closer than anybody thinks and right now all of this rhetoric is meant to basically try to get the other side to budge a little bit more and so i suspect and you know i could be completely wrong um is that we're much closer to a ceasefire than anybody thinks and i suspect that you could see something in the next two to three weeks and i think that that's really hopeful because you want this thing to come to an end the thing i'm trying to parse here uh and i don't know if anybody here can even answer this is how did how did we either underestimate or over estimate depending on the time russia's ability to invade another country i think i think the thing is we we have we can't even estimate correctly so for example there was something that said there was a hundred out of a hundred russia has 170 battalions apparently i don't know if that's true or not right of which 100 were sent in we don't know if that's true or not of which you crane apparently destroyed 50 of which we don't know if that's true or not so we're left to guess and unfortunately what that does is that people psychologically then fit as david is used in the past your priors what are your biases right what narrative fallacy do you want to believe and then you're going to fit so the pro-russian factions will say that's entirely not true the pro-ukrainian factions will say actually it's even greater than that huge sustained military losses the truth is somewhere in the middle that will only get accounted for after a ceasefire is in place so i think we almost need to again we can get caught in this fog of war and and talk about this stuff in ways which we don't accurately know or we can level up and say the thing that we both know is there was on the record statements by the foreign minister of russia and the president of ukraine that a cease-fire and the surface area of that ceasefire is within sight and unless something is materially changed and then in the last three days which it hasn't it means we are really really close to this being done so i agree with a lot of what jamal said i don't think it contracts anything i said before i agree that there was a big piece of news this week that caused markets to rally for three days which is the announcement of a proposed 15-point peace deal and the we do know sort of the key features of that deal it means that the three big features are you uh ukrainian neutrality so they don't become members of nato you had zilinski saying that nader membership was off the table ukraine can't host foreign troop spaces or weaponry there'd be limits on ukraine's military but they would get security guarantees from the allies uh so it wouldn't be a complete demilitarization and then the the other pieces of it were ukraine recognizing russia's control of crimea recognizing that's not coming back and then some sort of independence recognized for the disputed territories in the dawn bass so i think you're right chamath that everybody now knows the broad contours of what a peace deal would look like and the markets are starting to price in them getting to that peace deal but i'm worried that if you look at it from the point of view of what people in washington say that there's no pressure here coming from washington for zielinski are who's basically our client he's an american client to make a deal you know if you compare this to say the 1973 yom kippur war where the us was on the side of israel but still acted as a peacemaker and got a ceasefire done you know kissinger got that deal done even though we were on the israeli side you don't really hear anyone in washington saying let's get a deal done so i hope you're right but it's because you're not we're not talking about the elephant in the room which is that in the yom kippur war the unitary resolve and the military dominance of america was undisputed and so as a result its ability to be the mediator was also undisputed we've already talked about this when biden called the uae in saudi they wouldn't even pick up the phone the people that are negotiating this priest peace treaty right now are naftali bennett and emmanuel macron so we're not at the table so i think a lot of what we're hearing as well is just a lot of the rejection and the psychological you know kind of anger that we have to not being even part of the process maybe the world doesn't want us to have such an outsider the point is it's we've moved past that whether you wanted us to be involved in it or not we're not involved and we are not the principal mediators in this and we i hope to god that israel and france and whoever else is at the table gets this done yeah i agree with that but here's my concern is i think everyone knows the broad contours of the deal but if you're russia or you're ukraine you're getting daily reports of what's happening on the battlefield and if you think you're winning you have an incentive to stall the peace process to cement greater gains and get more leverage for those remaining details and negotiating points and so if zolinski thinks that the ukrainians are making progress on the battlefield he's going to wait and so neither one of them i think left to their own devices can be fully trusted to make it deal i think you need the us applying some pressure or acting in a pot in a constructive way towards the process and i think it's a huge problem that the us is not viewed as a peacemaker uh we're basically viewed as so partisan and on the side of ukraine that no one wants us involved david we've talked on this pod about us not being the global police officer of the world and that other people need to stand up so maybe the lesson here is you know maybe strategically jason it's not like we were called on and we didn't stand up we weren't called on well okay that's we assume that i mean we don't have perfect information either but let's let's get to friedrich here i think the other wrinkle in all of this and i think it's quite positive is sanctions uh are seeming to have a profound impact here and people are looking at them as potentially maybe cyber warfare and just you know actual tactical warfare on battlefields is less important than economic warfare and russia has been essentially cancelled from the global economy from visa to mcdonald's uh to exports and these sanctions are not just uh government sanctions these are people opting into them whether it's corporations uh and other entities saying we're just not going to do commerce with russia unfortunately and this is something you have great expertise on and so we're lucky to have you here to talk about it people may or may not know this i'm happy to be here this is the bread basket of the world they export more wheat than anybody and they also export fertilizer soybeans and some other inputs uh which we've talked about previously that uh provide meat uh for the world uh so what can you tell us about the downstream effects of there not being potentially uh or half as much crops coming out next year and what would happen in places that are the beneficiaries or dependent on wheat and fertilizer from russia so there's a number of um first order and then second order effects that are not just about sanctions but also about export controls by russia that are creating swings in food markets like we've never seen and will almost certainly lead to widespread famine by the end of this year at this point so the first important point to note is about 15 of the world's calories come from wheat about a third of that wheat comes from russia ukraine russia has banned export of wheat and um the the wheat spring planting season is like now this week and there's not a lot of planting going on you know a lot of commodity folks are in the field trying to figure out who's actually going to go to field and plant but um no one's making you know the concerted effort that they normally would under normal circumstances so not only is the current wheat supply in russia ukraine blocked up and cannot make its way to countries like africa or countries in africa and elsewhere but the future planting season um is now significantly at risk and again that's 15 of global calories and i just to take a step back the whole planet earth operates on a 90-day food supply so once we stop making food humans run out of food in 90 days so another way to think about that is our food supply excess our capacity in excess is about 25 of our global production so if our global production goes down by 12 we've lost half of our global food supply and that's not just linearly across all nations what happens is the most vulnerable nations lose their food supply first and the richer nations buy that food supply to secure their population calories and so you very quickly see a bifurcation happen when you have a shortage in a food supply like this of just a few points where suddenly famine is a real risk and we already have about 800 million people on earth that are subsisting on below 1200 calories a day so this very quickly tips the bucket in a significant way in a number of countries that's going to be really awful and that's just on the wheat supply and wheat planting problem the bigger problem is the energy price problem and the phosphorus and potassium problem all fertilizer is made up of nitrogen phosphorus or potassium those are the three major types of fertilizer that farmers around the world have to use every year in order to grow that crop without fertilizer plants don't grow nitrogen is made from natural gas 98 of the world's ammonia is made from natural gas natural gas prices as you guys know have doubled and the futures market looks like in some places natural gas prices going up like 4x as a result the price of ammonia fertilizer nitrogen-based fertilizer has gone from 200 a ton to a thousand dollars a ton so it's five times as expensive to buy basic ammonia fertilizer today than it was a few weeks ago or a few months ago and so this is now leading a lot of farmers around and then the other big problem is phosphorus so phosphorus you know by some estimates i mean you know there's a little variation around here but about 10 of the world's phosphate comes out of russia and um about you know call it um 25 of the world's potassium comes out of russia but potash both of those markets are blocked up they they are they are sanctioned and they have banned exports russia has through the rest of 2022. so around the world the cost to make nitrogen fertilizer has skyrocketed because of natural gas prices because of the russia problem and russia is not exporting potassium and phosphorus and as a result the price of nitrogen has gone from 200 to a thousand the price of potassium has gone from 200 to 700 and the price of phosphorus has gone from 250 to 700. so now it's so expensive to grow a crop that a lot of farmers around the world are pulling acres out of production and they're actually going to grow less this year than they would have otherwise because it is so expensive and they cannot access fertilizer locally to plant crops so not only do we have the wheat problem we now also have the fertilizer problem and the acres coming out of production problem and so food supplies are going to go down even further and this is going to become even more catastrophic and so there's a scrambling going on right now you know food prices around the world as a result everyone starts buying up all the commodities they buy up all the corn they buy the soybeans they buy up the wheat and the price for corn has nearly doubled whereas you know from where it was in july of 2020 uh the price of soybeans the price of wheat are all skyrocketing and in a lot of countries they cannot afford to um acquire and individuals cannot afford to uh to buy food with the skyrocketing commodity prices can ask you a question uh i think it's estimated that the u.s food supply if you could x out the waste would actually feed most of the developing world because i think 30 to 40 of all of our food is wasted can you do something with that yeah that that is actually true um a lot of that happens at the point of consumption so it's in people's homes so it's a reverse supply chain problem um where you know we throw away a lot of like stale bread and cereal that goes bad or whatever there's some in the fresh vegetables market but generally the core calorie producing commodities are rice wheat potatoes and corn those commodities don't go bad in the supply chain they end up getting tossed out at the end of the supply chain which is at the point of consumption at home so you know i'm not sure there's a real solution there right now the the bigger issue is like how do you get bulk commodities to the places that are going to need them over the next 12 months so look right now we're reducing food supplies stocks around the world there are strategic reserves that are getting opened up and being released as that starts to get the plenish um diminished and as the production kind of numbers start to come out it looks like less acres are in production you know and god willing we have a good weather year everywhere this year because you know a bad weather year in some markets could completely decimate the remaining supply that's coming out this year regardless it is going to be a humanitarian disaster within a year and we will see hundreds of millions of people go starving and there will be potentially i think you said hundreds of millions of people hundreds of millions of people never happened in the history of 100 million people already live on below 1200 calories a year right now so you're predicting that 100 over 100 million people will die because of this i don't know about death salmon like famine is this like you know short of calories you know within within a market it's not like hey there's no food like you know there will be strategic reserves released there will be stuff but it won't be enough we just don't have enough in the way supply chains are set up there just isn't enough and so so once again we found another supply chain weakness uh like we did in covet over and over again and so the free surprise will be released but then hoarding is starting so david you take it after this but the one question i had was maybe talk to me about this concept of hoarding because there seems to be a cascading effect and you you kind of well yeah it's not just a little bit as with any market guys as you know when there's scarcity people come in and buy at a faster pace you know everyone and so this is a market dynamic it's not like people are physically hoarding loaves of bread but commodity traders countries strategic reserves they start buying up what they can get to prepare for the famine that's coming then prices go even higher and then it kicks other people out of the market that couldn't afford to buy it and the whole thing gets really ugly really and there's no off ramp here there's no way to solve this well what freeberg yeah the thing i want to ask you is if we had a peace deal right now a ceasefire would we avoid this outcome i mean like how long how long do we have to avoid we need russia to reopen fertilizer export markets now we need natural gas prices to come down now and we need them to plant the spring wheat those are three things that need to happen to solve this problem if those three things don't happen we're going into spring right now so around the world in the northern hemisphere farmers are making plans they're planting they're deciding how much fertilizer to use and so as this market starts to kind of work itself out over the next few months a lot of the commodity traders and the the ag departments they publish these planting reports and they talk about how many acres of what were planted and then everyone forecast how much the supply will be and we're going to start to see these uglier numbers come out over the next few weeks and months meanwhile we're seeing supplies dwindle and russia is holding all this stuff so you know they're holding hostage uh phosphorus potassium and the natural gas pricing is just what it is remember there are ammonia plants everywhere the ammonia plants and i and all ammonia plants use natural gas to create you know to create this nitrogen-based ammonia let me make a statement and i'd love your reaction we're finding out all of these externalities that was made with underlying poor scientific ra reasoning that has caused these issues to be exacerbated so we know for example that our over-reliance on russian hydrocarbons could have been mitigated with nuclear but we fell for shoddy science and we fell for uh a bunch of uninformed people who ran this banner of like environmental protection right so they screwed us okay and those people now have meaningfully less credibility let me give you another cohort freebergen you tell me all the people that pushed back on gmo and said gmo was unacceptable it could never happen it has to be x y and z way and there are ways where we could have been working on plants that had different mechanisms of action in order to actually absorb and retain nutrients from the soil in different ways that would have made us less reliant in exactly the way in which fertilizer works true or false yeah gmo technology as a former monsanto executive so you can call me a monsanto chill here but yeah gmo technology has been hindered globally by a challenge to adopt it and there are techniques and technologies that have not been aggressively developed because of the concern on approvals just to get a single gmo trait approved in the united states today and get it to market can take seven to 13 years and um even then you have to still go get china to approve it because they're the biggest importer and you have to you know get all these other market participants to approve it and there are multiple agencies to get to approve it europe is finally the eu is finally coming back to the gmo problem and saying you know what precision gene editing can actually be beneficial to growing better more stuff now would it have solved this particular crisis can i just say what's so ridiculous about this the fact that we have a modern agrarian economy is because we actually did figure out a way to do gmo except we use the punnett square and we use successive iterations but the minute that you try to scientifically scale it in a lab all of a sudden that same process is not uh does not make any sense to me that's it's just intellectually so inconsistent yeah the thing that really scares people about gmo look i mean i've spent a lot of time on gmos and and the reason people are upset i have a broader philosophical do you believe in that do you believe in that in consisting that intellectual inconsistencies like how do you think somebody from you know pre-bc to today i think that agriculture iterated on our roots no i think agriculture itself is technology think about it humans humans used to go out and just eat whatever was lying around what nature gave us then we started making rose in the ground and putting seeds in the ground and putting water on the ground we engineered the earth to make sure we started to breathe and then we used plant breeding and traditional plant breeding through enormous normal energy save the world modifying things it is and then what we did with gmos which is the distinction just to be really clear about the definitional distinction between gmo and traditional plant breeding gmo is when you take dna from another organism and you put it in the plant's dna to get that plant to do something very specific and jason you came with me to monsanto i mean you're sure cautious we should be cautious about any time we're doing stuff like that right but and then there's generally like a very visceral reaction when i make that statement and people are like wait you're taking the dna from bacteria and putting it in plants and how do i know that's going to work and so there's these layers of concern which you know are deeply psychological layers but we can you know scientifically resolve this over time but look at the end of the day humans today you guys remember last year how much i was talking about that stark synthesis paper and how important it was we don't need to grow plants to make the stuff we need to consume if every city around the world had a starch synthesizer and it took co2 from the atmosphere and water from the ocean and had this technique developed out it could synthesize its own calories in a physical device without needing to rely on the ammonia supply chain and the phosphate supply chain and all of the systems that we rely on that are super outdated that are all a scaled up industrialized version of old-school agrarian techniques humans today i think have the ability to synthesize and print food and over the next couple of decades particularly catalyzed by what's going on in russia ukraine today we're going to see these technologies accelerate it's obviously where i spend a lot of my time but i'm super excited about it yeah i think we suffer from a very insidious kind of plague in the world which is the plague of over-educated dumb people and it's it's almost as if you know because of their degree in the school you give them inordinate power to make value judgments that really put the world in a very difficult position and so when you have something like a war in ukraine it just lays everything bare you find all these things like you know another another version of this example how did an entire continent and specifically i mean europe abdicate their entire energy security to the group of it to a group of environmentalists and to you know to a 16 year old girl without even thinking about what the right answer was for themselves from first principles that's really crazy that that happened and you need a war you know where tens of thousands of people have to die to realize that that was a really bad set of decisions that have been compounding for decades here's another example where food security is yet another one where you know we weren't able to think cleanly from first principles and so depending on who had more money or who was able to create more psychological guilt or fear was able to get an outcome that fundamentally puts the world at a hundred million person plus famine so somehow we need to rethink how our institutions work because we are giving folks who haven't proved that they can handle power the ability to influence outcomes for the wrong sets of reasons what's even worse tomorrow these people you talk about who are smart dumb people they're so privileged that they're living in some bubble making decisions for people who have food insecurity or energy and security and it's only when kovid showed hey oh semiconductors i can't get my car that i want because it doesn't have the chip in it or i can't get drugs or i can't get ppe then all of a sudden they see the value in redundancy and supply chain but when they were living high on the hog and had nothing to worry about in 20 different flavors of captain crunch that you know they can't even think about people in africa jacob i think it's really important to speak to the capitalist incentive and how you get there so okay we've globalized supply chains because as a business it doesn't make sense for me to do every step of the thing that i want to do because you can get better utilization out of capex if a system is running all the time to make stuff so if one step of the system doesn't need the other system running 24 7 it's going to outsource that and that's kind of think about like semiconductors think about food manufacturing right doesn't make sense for a farmer today to make his own ammonia so there's a pneumonia plant that centrally makes that stuff 24 7 distributes it out to a bunch of farmers that brings the cost down per unit of production and so these systems have existed because we've had less capital with a higher roi on capital invested at every point in the system by you know distributing and having a kind of you know centralized supply chain system like this now what we're looking at today is what happens when one part of that system fails and now i think the big trend for the next decade or two everyone's going to have like an institutional memory of this and you're going to see companies that are going to start to vertically integrate supply chains they're going to vertically integrate their their manufacturing we're going to see a lot of businesses make what traditionally would have been really quote unquote bad capex decisions and bad investment decisions and they're going to say you know what we need to have redundancy because we cannot face the cataclysmic kind of circumstance that we faced in the past i also think those are by the way the easy decisions i also think that there are some more complicated ones of morality that we may have also misappropriated i'll give you one example so if you think about energy independence of america i think there's there's not going to be there's not going to be many who think that it's not critically important well then you go and say we have a short-term bridge with hydrocarbons and the long-term solution is renewables but underneath renewables is the idea that you have to store these things right you have to store the energy you make whether it's from wind or solar even if it's from nuclear okay and all of that results in us needing batteries while batteries need lithium there's enormous lithium deposits in the united states that today can never get accessed because we've decided that the you know the upper land grouse of the state is more important than america's energy independence right so when push comes to shove a small rat like creature is prioritized more importantly than america's energy independence the downstream implications of that are now obvious rising costs inflation unemployment potential recession war death famine is the upper land growth that fundamentally more important than all of these systemic risks to humankind and the thing is for a long time we would never even think about the trade-offs to actually think about why that decision should be made that way and now we actually have the ability to remake these decisions so it's going to be really interesting to see whether we upend all of these existing frameworks you know and there's enormous environmental lobbies that have been created that have raised hundreds of millions billions of dollars to fight these battles systematically wherever they come up and in some ways now what people will say well you've really prevented progress and you've actually done more damage that's going to be a really interesting point good intent save the environment and then downstream impacts let's go to sax about the sanctions we saw a level of sanctions we didn't expect they were ferocious they were unilateral they they're you know undeniably having an impact do you think putin would be at the table do you think these sanctions are having a dramatic impact and do you think that there will be a tool that we should use in the future or do you think maybe we need to be more thoughtful about them in other words cancer culture comes up as a an analogy here people are saying oh it's like cancer culture for a country i think it's pretty great that a country that is murdering their neighbors doesn't get to participate but obviously you could have some serious concerns if fertilizer and supply chain issues as we just discussed are going to cause famine so what's the balance here yeah i think i think it's a great another great example of um you know we're not thinking through the second and third order consequences of what we're doing we're just reacting and so to to freeberg's point um so you know first of all we have to realize this was more than just sanctions this was a complete severing of economic ties i mean basically every western country pulled up stakes out of they russia mean they did it on their own too i mean they did it because for the reasons you said because they wanted to make a statement that what putin did was wrong so every russian who was working for one of these companies basically got fired and all the stores closed and and so on so i think i think it is the repercussions of it are going to be severe however these things the economics of it take time to play out and so do i think it creates pressure on putin to make a deal yes but you know if the if this is going to be determined on the battlefield one way or another in the next month do i think it has time to operate in that time frame probably not and i think what's likely to happen here is that in the same way that the real repercussions of this war are going to be felt in grain production in six months you know there is an economic tsunami headed for our own economy as a result of the blowback from basically severing you know 144 million russians from the global economy um there's also going to be geopolitical uh blowback i mean you know i think it's very likely that the way this is going to play out geopolitically is that russia will become a chinese client and you know all of those natural resources that china produces the the gas you know all the the mineral wealth that those resources are going to flow on a conveyor belt on a belt and road conveyor belt from moscow to beijing and they're going to fuel the chinese economy yeah yes and no because the reality is the the the thing we have to remember is china is still a fundamentally export-driven economy of which 35 percent just alone goes to the united states when you add in europe and other oecd countries it's almost 60 so i think the idea that all of a sudden you russia will be able to back door all of these things through china into the rest of the world i think is not really realistic and this is actually why i think the rhetoric is so high because those two countries specifically are put in a very difficult situation like what do you think the china calculus on taiwan is looking what's happening to russia hasn't completely exported because it's completely off the table completely off the table they would never consider invading taiwan knowing that it would put apple in a position or other companies that are entwined in the chinese economy i think they would have to again i've said this before everybody has was always you know sort of like land-basing economic sanctions you know even on this pod people it's never going to work it doesn't do anything and it turns out it's just not true to be clear i think sanctions are an appropriate way to create economic pressure so that we can get a ceasefire and a peace deal made okay so i do believe in the same way that i believe we should arm the ukrainians so they can defend themselves while i'm against the no-fly zone the the issue is just are we actually using the leverage that we're creating to drive this process to a success i'm trying the ceasefire process to a successful resolution because if we just make this the new normal which is you know a basically an insurrection in ukraine that drags on forever and uh the china and russia cut off from the global economy and becomes a client of china i think there's a parade of horribles that flow from that and freeburg just outlined one of them which is hundreds of millions of people across the world potentially starving so my point about sanctions is not that we shouldn't have done them but there are going to be big repercussions for our economy if we don't resolve the situation in ukraine let's do best case worst case with these new this new economic order here in economic sanction ability that the west has now demonstrated um you know quite effectively for me the best case scenario here is if you want to participate in the global economy and globalism globally globalization 2.0 means you're going to have to be hit some base uh behavior level of being a good actor in the world if you want to participate in the wider economy therefore as chamath just pointed out i think quite correctly taiwan's off the table i mean china does already is having massive economic downturn and headwinds the the idea that they would face what russia is facing right now in terms of sanctions globally would be cataclysmic for them so do we think what's that what's the best case in your mind friedberg the worst case of this new economic sanctions that we've just outlined best case worst case much of this is driven by um russian decision making not just our decision making and so you know there's a lot of question marks around what they're gonna they've said definitively we are banning all fertilizer exports through 2022 okay so like does changing a sanctioned model at this point get enough resolve for them to kind of come back to the table do we need to kind of weave that into some discussion peace discussion that they're having with ukraine i think there's going to need to be this multilateral like global either support or partnership model that's going to have to kind of emerge for this to all get resolved positively i don't think that it's just about russia and ukraine agreeing to a bunch of terms we're all going to be affected by what's going on and what russia has chosen to do back to us and we all think we're in the power and we've blocked them and destroyed the ruble and you know knocked them back to the stone age yada yada but like we're hurting ourselves far more than we realize and we have to go get something back from russia in order to resolve this so nuanced i'm not sure i totally agree with that i actually think that you know necessity what is it necessity is the mother of invention um i think that this has the ability just circling back to what we said before for us to rewrite all of these other decisions that were frankly not necessarily rooted in either first principles or long strategic thought in a way that can actually improve the state of play for everybody not just including us for the next 50 or 100 years so i'm not completely convinced that it's as catastrophically bad as you think well what about this uh friedberg if if we were thinking about food stability you mentioned your slurry and you know being able to make these calories without actually planting any food if we it's not going anywhere if you call it a slurry but yeah okay let's call it a protein bar you know like ultimately jason we can actually create pasta bread rice i mean that's where this all goes perfect by the way just so you guys know i want to frame this up it's super important 60 of the world's calories come from carbohydrates which are basically two molecules amylose and amylopectin okay that's what makes up starch so if we can synthesize amylose and amylopectin we can make it how long would it take how long would it take what would it cost to build your pasta making machine and rice making machine you know uh to have more decades-long scale-up problems right this is not like this is like hey we got a solar it's similar to nuclear or solar exactly yeah yeah okay but there are solutions to this i look i mean this is why i keep coming back to saying like we're evolving the global economy and planet earth away from this model of centralized industrial manufacturing into a production system that looks more distributed more decentralized with better technology and that that's really a big trend for this century for for our global economy and that's why right now i think the near-term trend is in de-globalization people making less capital-efficient decisions that create redundancy in supply chains and there's a lot of ways as investors to play that by the way sax were your thoughts on maybe the the high order bit for the west being a race to resiliency or a race to redundancy in energy in semiconductors this race to resiliency in food supply yeah i mean look trade creates economic wealth but it also creates dependency and we're realizing the downsides of having that dependency if we're dependent and or europe is dependent on russian gas or you know you saw during covid we've become dependent on chinese pharmaceuticals all the pharma companies have moved their manufacturing over there and then you know that got when china was rattling the saber uh because we were blaming them for covet this is back in in 2020 they all of a sudden started implying we might not get access to pharmaceuticals so look we are going to have to rethink all those trade relationships you can't have trade without trust because again if you if you you are empowering the producer to cut you off when you make yourself dependent on that yeah so so look i think we're going to rethink all of that but can i go back to your best case worst case question yes i was trying to get somebody in there on this i think that's a good question and you know i hear here let me lay out the best case and then the worst so the best case look the best case is this sort of the fukiyama argument the sort of the from argument is this western triumphalism which is luck sanctions are going to drive the russians into submission they're going to topple putin the people are going to rise up they're going to lose this war we are going to strike a great blow against autocracy and liberal democracy is going to win okay i understand that argument okay now what's the the worst case scenario worst case scenario is freeberg's right we end up with hundreds of millions of people starving the war drags on because the russians aren't gonna give up so the sanctions you know while be while hurting the russians don't end the war and in fact drive them into the arms of the chinese you know the russia has been called a big gas station with nukes that gas station will now fill up the chinese economy henceforth worsening the balance of power in cold war ii and then there's a big you know tsunami or boomerang headed for the u.s economy we we have a recession later this year as gas prices go to seven dollars and ten dollars a gallon and so it ends up hurting us and so i don't i i certainly see the case for sanctions um but um but i wonder if people are really thinking through the downside scenarios and what i what i do think is that if that that the removal of sanctions should be certainly something we're affirmatively putting on the table in these ceasefire negotiations and and that sounds obvious but i saw a tweet from ian bremmer who's sort of part of the foreign policy establishment think tank guy who has been pretty good on like smart he's smart and he's been good on no-fly zone he's been saying the same things i've been saying like guys this is tantamount to a declaration of war we're not going there uh also basically saying that listen no matter what the russians do we are not gonna get into war three here he's been cool-headed about that but he also tweeted that listen as long as putin's in control of russia we can't ever do business with them again sanctions are sticking around basically forever and i just wonder if that is an overreaction if if we're gonna make that policy i'd rather see us as america be willing to put economic relations back on the table as you know in this peace process as opposed to saying that the russians are cut off forever because otherwise they're just going to become a chinese client state i don't see how that benefits us long term well again i did but again david what do you think they do with china china what are they going to do take 60 percent of their goods and still export them to us even though it just contains russian materials that are now considered contraband so they can't absorb it economically is my point there's not enough demand outside these oecd countries to absorb all of that well here's what i think it's just mathematically not possible i think so look i think you make a point but i think if you're going to look at this from like a 50 000 foot level i think there's like two grand narratives about what is happening in the world one narrative sort of the neocon sort of liberal hegemony narrative is that we're in a great battle between democracy and autocracy the other narrative is that we're in cold war ii is that it's more of a great power rivalry between the us and china i tend to think that the latter is where we're really at in the world and the reason why i say that is you look at there's a lot of autocracies who frankly we support because we want them on our side for example you know turkey is run by an autocrat um you know erdogan is becoming more autocratic in egypt we had sort of democracy there for a brief moment when mubarak got overthrown guess what they elected the um the muslim brotherhood and we didn't like that too much and now we got general al-sisi in charge we like that a lot better you know we are still allies with the the saudis and they're they're a more autocratic government so i tend to think that you know the better way to describe what's happening in the world is a balance of power rivalry between the us and china which is only going to pick up momentum in the current in the coming decades and we have to think about who's on our side of the ledger and who's on their side of the ledger and you know i think at this point it's we've pretty much driven russia completely onto the chinese side of the ledger and um i think it's gonna have like very bad consequences for us all right let's segue from here into uh the economy inflation and markets in a previous episode chamath you talked about the the psychological cycle of you know ignoring good news then accepting it being outraged by it and then maybe not taking the good news in the bad news column obviously inflation continues uh last six months of cpi numbers year over year obviously uh september 5.4 i'll fast forward to november 6.8 january 7.5 february 7.9 excluding food and energy core inflation still rose 6.4 that being said um we have 11.x million jobs uh available for americans five or six million people unemployed who are looking for work obviously there will be some uh mismatch in terms of geography and skills there uh and then corporate earnings great but a recession possibly looming where are you on this uh and obviously the market's bottomed out so where are you at with the economy hope fear and otherwise um well i think that we're in the midst of what i would call a melt up so you know probably the next month month and a half there really isn't much quote-unquote bad news that hasn't been priced in the the thing that i've learned over the last few years is that markets don't actually care what the news is they they can process good news and bad news equally well what they despise is the uncertainty of what the news could be and so this week was really important because we had two um huge buckets of uncertainty taken out of the market so the one we've already talked about which is when when the market saw that there was a surface area of a deal between ukraine and russia that was really constructive because neither side would have signaled something if both parties were very far apart so that that meant to the markets were a few weeks out from something getting done and then the second thing was jerome powell and the federal reserve they finally had their meeting they raised rates 25 basis points but even more importantly they gave you a very prescriptive forecast of what the next year will look like at a minimum and possibly even two years and once you could have that you were able to then go and redo all of your expectations and what people realized was okay you know inflation may actually start to get tamed in the back half of the year the economy is still quite strong uh and we could actually support two two and a half percent interest rates and still actually grow really well and so what you've seen in the last three or four days is a reaction to the loss of uncertainty and so there really isn't you know uh the only thing defying the ointment could be if the war all of a sudden escalates not that it gets dragged on because at that point that's also i think been priced in but if something very meaningfully different and some and and russia in this case ratchets up the intensity by going you know nuclear something else although i think that's a very long tail chemical weapon seems a possibility or carpet bombing i think these are all very very low probability events um but in the absence of these things you basically have really constructive dynamics right now for at least the next month and a half maybe even two months how much of this has to do with retail investors who were yolo huddlers speculators stemi chats super active for two years and then maybe getting super spooked right now and maybe needing the money to deploy in their lives look the the thing to remember and and and i hate to be this blunt but it's true retail is not a very good signal of anything in fact um if you actually look at retail flows typically you will make money by doing the exact opposite of what retail does and i posted this in the group chat to you guys you know every single day of since the beginning of this year retail was a net buyer in all of those days the market got punched in the face finally at the beginning of march retail capitulated right and i posted that same day and i said guys this is the moment to buy and it lo and behold what happened the markets rallied meaningfully from that point and the reason is because they were going into the end of q1 you have a huge tax bill due in april 15th people were starting to just finally give up they were buying every single day and they finally gave up but that capitulation was the moment that you buy so if anything retail is is is the you know you know i've said before you fade your faith list you know retail flows are something you typically will make money by fading by doing the exact opposite of whatever retail is doing um and you just need to have access to that information if you have access to it you can kind of um you know profit from it so where are we going from here probably up david you've been pessimistic uh we're seeing a lot of changes in the private market funding rounds taking longer a lot of funds getting closed uh you know venture funds that is but seems like a lot more diligence is being done the time mean time to closing a deal has definitely extended massively what's your batting strategy now as a venture capitalist i think that there's going to be a trickle-down effect of what's happened in the market to privates and the valuations are going to go back to their pre-coveted levels i mean ar multiples pre-covered we're like 20 not 100. so we're seeing a massive repricing of deals and that's going to continue and i don't think it's just going to be this like transient effect everything's going to bounce back in a few weeks on the public markets the defining characteristic of these markets is volatility i mean the vix which is the measure of volatility is at one of its all-time highs and so it's true that over the past week we saw a nice sort of melt-up or a rally because there was speculation about this peace deal the financial times had that article on the 15-point plan chamath is right that if that peace deal gets signed i think the market rallies strongly because you know it went up considerably just on hopes that it might be signed but on the other hand if this peace process falls apart i think the market will give back all those gains and then some i think we are nowhere near out of the woods on all the risky scenarios that could develop from this war i think that if there is no peace deal i think you can almost expect russia to escalate in the war they have said this is an existential issue for them i think that would mean at a minimum you know heavy bombing of ukrainian cities and then that will step up the pressure even more on biden and washington to get militarily involved this situation could still spend out of control so you know i think in the absence of peace deal and then finally we have all the risks of recession we we definitely are seeing a slowdown in the economy right now and i think if this war continues and we don't get the spring planning and things keep you know deteriorating i think we're headed for a very serious um recession in this country i think we'll go from slow down to recession so if i were advising biden of course no one's listening to me but if i were advising biden i would be telling biden listen mr president we are going to have a horrible midterms in november and you know we are going to have a really hard time in 2024 if this war continues and you know we head down into a recession or any of the other catastrophes that could happen we need to push for a peace deal right now and the u.s should be playing a constructive role and we should be applying pressure wherever we can to make a deal because the broad contours of this deal to jamaa's point have been set i don't think any of the details now that we know look it's about crimea it's about dawn bass about neutrality none of the details that we're still fighting over are more important than getting a piece right now and if i were in the white house i'd be singly pushing for that yeah it's uh it's complicated there the the counter to that obviously is this could be you know the beginning of the end for putin and you know even if that's a 10 chance or 20 chance the possibility that in our lifetime you know russia could have a leadership change could be tremendous obviously it's a coin toss which way it goes uh but change could be i think so look that's certainly in the cards and um and look if somehow magically putin got toppled and replaced with a democrat that would be a wonderful thing um however before it's rare but it happens yeah well tell me when does it happen uh east germany right on the wall yeah i mean that was a reunification here's the basic problem we understand the russians in the russian system you've got all these oligarchs are basically like bosses or mob bosses and then putin's like the boss of bosses right so what are the odds if you take out the boss of bosses that he's replaced with someone who's a democrat versus the next biggest baddest boss um i think you know look that that's certainly a possibility but my concern is that when you play for maximalist upside like that you're also taking maximalist downside and a lot of people have made this point that look if putin's life is on the line he's going to be more willing to do anything and i think that the better approach and you've heard people mention this idea of the golden bridge from sun tzu which is give your enemy a golden bridge to retrieve i mentioned it so that he's not fighting for his life that was a really clever um framework jacob i think yeah i think i mean if you guys went and created a tally and i'm not trying to be debbie down here but you know since the advent of the cia the number of times that we have tried to incite regime change and then the number of times it's been successful what is that percentage i mean we don't know because we don't know how many times we've tried well we know we know of many attempts yeah i mean we've chased a lot of two outers which every time we try it we either get the same or worse so for example syria we tried to get rid of assad he's still there and now it's worse uh afghanistan we tried it the taliban are back in power well no but hold on we finished to take it to the calculation is what if it does change hold on iraq we got rid of saddam and now we've handed that country to uh iran on a silver platter the ayatollahs control it gaddafi in libya we got rid of him because he was so horrible and now that country is in chaos you've got to try open air markets we tried in um in ukraine we tried in ukraine in 2014. so our track record is not super good yeah no i mean i i think regime change is like chasing someone out or something you know if we're a company at some point we would have been pipped for our ability to do regime change i don't i don't think it's a great strategy i'm not necessarily advocating for it but i'm not saying that i'm saying whether or not it's a good strategy i think that we are particularly not good at it yeah we need a performance improvement plan on that front well we should just i think we should just stop trying that we shouldn't be going for a regime change we should be this is a good question you and i had this thing where i said you and i are in sync that we both want to contain dictators and maybe isolation and you're like i'm not into isolation so i think a definition of like what is the strategy for containment going forward post a peace deal with russia and isolationism you know i guess is a bit of a trigger word and it's loaded but well yeah i'm not an isolationist next person i would describe my strategy as selective engagement meaning that we still engage internationally on behalf of vital american interests in our core interests but we don't stick our fingers in the pie of the internal affairs of all these countries all over the world to try and foment regime change so for example like what's an example of a vital american interest i would say standing up to to china in the sense that we do not want them dominating asia and becoming a pure competitor to the united states that can then challenge us all over the world so some more pragmatists on it and that would be more productive we can be isolationist with north korea because there's literally nothing they can do for us and and look i would not be throwing countries like turkey and egypt and saudi arabia out of our coalition in cold war ii because we don't like the the nature of their governments and i'm not saying i support autocracy i don't know but the reality is dialogue is reasonable because if you don't then the other side will the foreign policy playbook is going to get fundamentally rewritten after this russia ukraine war in large part because of the effectiveness of government sanctions plus corporate social responsibility whatever you want to call that csr public sentiment or whatever you want to call it yes i agree but the combination of these two things has proved to be incredibly effective at setting the stage for some sort of compromise or regime change the spectrum of outcomes is there but the point is that's an incredibly unique set of circumstances where before we never would have thought an economy that large or a country that important on the world stage would ever have compromised in the absence of military intervention and i think that that's important to think about as we think about what our forward going china policy looks like i think really like the the importance of like the oecd right the importance of all these organized nations that consume from china uh becoming more organized now probably makes more sense i said this before in a tweet but the importance of the us dollar has become completely primary which has been an incredible benefit you know benefit of what has happened because of this war you know very small silver linings in the grand scheme of all this humanitarian crisis but those are going to be really important things that the united states can seize on so you know we may in some ways have have had some diminished power in order to facilitate peace in this truck in this conflict but the downstream capital that we could accumulate by organizing these countries more effectively i think could be really important and then separately we have to have a moral conversation in the united states about all these things like environmental laws like our approach to agriculture that may have been underrated absolutely yes with faulty logic a little more pragmatism would go a long way yes it would i'm a little more pessimistic about our foreign policy establishment and part of the reason i say this is because i'm very disappointed in the republicans the republicans used to be the party a vital national interest meaning america did not get involved all over the world unless we had a vital national interest you just never hear them making that case anymore it's all the way back to sort of bush doctrine and you know as an example they're all pushing for the no-fly zone they're all pushing for the delivery of the migs despite they want war just say the words they're weird i mean those right wingers are crazy why are they so not war i've been very critical i mean i've been the war on this i don't understand well anxiety i think i think there's two possibilities i think is it free what is it anxiety yeah and this is why i predicted war at the end of last year but you know i think that trying to be a great prediction right look i've been i've been very disappointed in the republicans and i think i think here's what i think is going on i think if any of those republicans like say uh mitt romney or something and look i think lindsey graham is just a crazy sort of warmonger but but you take someone like mitt romney who's basically saying all these um sort of more uh bellicose and escalatory things if he was actually in biden's shoes i bet he'd be making the same decisions as biden because he would not want to risk war three but it's such a cheap easy partisan political attack to say that biden is being weak and he's not doing everything at all i think history will look back and think two things about about this whole thing with it with the american lens the first thing was for whatever set of reasons we lost it and we diminished some stature in the world as a perceived arbitrator and mediator in these kinds of conflicts but separately i do think biden has done a very good job in seeing the forest from the trees he held the line on military intervention and he has really ratcheted up the ability for others to impose economic sanctions beside and behind the united states and i think that will turn out to be a master stroke i give him credit and i think that that he deserves to be acknowledged for that i'm going to agree with you because i i think the uh biden has done an amazing job of just saying outright we're not going to war we are not starting to i mean and sacks you've lauded them i think that shows some intellectual honesty on your part and to your point there's a reason why we lost our credibility these misadventures of saxophonism in the middle east have been disastrous we made huge mistakes and we need to take a different approach i'll give a trump a compliment he didn't start any wars and if you look at every president who came before him in our lifetime every time they start two or three conflicts and he was like we're going to have a no war policy and now he got by and say we're not going to go to war either this could be a tipping point and our focus i think the ultimate checkmate should be biden coming out and the eu coming on saying we are going to start a race to resiliency and here's how it's going to look jason it's an incredible point that you just made i just want to reiterate it since reagan i can i can explicitly point out incremental conflicts that the president of the united states has approved and greenlit to get us into since reagan so we've been we've been in seven wars we've been in seven wars since the end of the cold war it's amazing the american people trump was the only one that did not start a new war right before biden you want to know why because he was a populist and the people of the united states of america don't want these crazy wars they are sick of all these wars it is the foreign policy establishment that is pushing for all of these wars and listen why and obama the same way obama let's just go back obama beat hillary clinton for the democratic nomination because he was against the iraq war and she was for it yeah obama had the right instincts on ukraine he did not want to escalate the situation remember in 2014 when they took crimea he said america does not have a vital national interest that justifies us going to war he was right the president that tried to incite regime change it's it's right you know why you want to know why because because the state department lifers you know who institut who incited that are under secretary of state for russian affairs was victoria newland who was a foreign policy advisor for dick cheney and these people bull weevil their way into the foreign policy establishment they're in the think tanks they're in the state department what did you just use bull evil they they like it's like they are the permanent hold on a second they are the permanent establishment of washington the president's come and go they stay forever yeah she was there she was caught on a phone call basically picking the new leader of ukraine after a coup in 2014. she is she the one that had that famous quote that said uh putin putin was that he said no he said he said yeah she said yas is our guide basically picking yatsenyuk to be the new leader and she said the eu when the eu wanted to take a more temperate approach okay okay look at william f buckley here you going saks i think the mistake biden made listen i think biden has good instincts on this i think he had good instincts last year in june when he called for basically an emergency summit with putin to dial down the tensions and i think that summit was successful so what happened okay the intercept just had a great article talking about how tensions ratcheted down after that june summit but they picked back up in october november what happened between june and october i'll tell you what on september 1st zielinski met with biden in the white house and the state department issued a joint statement basically reaffirming that ukraine would be part of nato they would reaffirm military ties economic ties and then on november 10th they published a giant charter agreement between the united states and ukraine that was signed by blinken now look did i know about this yes but this is the state department agenda and it was on the heels of this charter agreement that the russians basically said they had reached the boiling point they basically delivered the ultimatum to the us in december and precipitated the crisis that preceded this war so my point is just listen we have a state department with its own agenda it loves regime change it loves having clients all over the world and inserting its fingers in the pie and unless biden hold on if unless biden stands up to his own state department we will not get a ceasefire and we will not get a peace deal and that will be disastrous for his presidency what i will say is um i think biden has done a very good job and uh i i know tony really well and i think tony's trying to do the best job he can i think he's done a pretty good job all things considered as well that's awesome final thoughts here on uh you know a very difficult time period we're living through the global order is being restructured it's predictable i think again if you read ray dalio's book which i recommended heavily last year um it's surprising how much of that simple um rubric uh is playing out uh today exactly as that rubric kind of estimated it would um and you know the look i mean by the way one way to think about the china russia us dynamic you know you got a one two and three player game theory number one wants two and three to be at it because then they'll you know end up diminishing value number two wants one and three to be at it number three wants one and two to be at it and so we're seeing that um that multi-party game theory play out right now um and you know again based on that rubric you could probably predict where this is all gonna end up brilliant point listen if you were to look at this from the chinese standpoint they must be loving what's going on loving it old saying i think napoleon said it never interrupt your enemy when he's making a mistake why is china so quiet right now well yeah because they love their dreams their dream is the us and russia attacking each other yeah we have to implement energy independence writ large and we have to make sure that it is very clear we have influence amongst all these oecd countries because if china takes one foot over the line we have to have the ability to do to them what we've done to russia economically it's the only way in which we can ratchet down all this tension and find peace yes the new war is the war on our dependency on dictators we must must must have a race to resiliency we're going to talk about this and more at the all-in summit no more may 15 16 and 17 all in summit miami uh 500 of the 700 tickets are gone if you want to apply for a scholarship you can apply tell us how much you love the show at the website just do a google search for all in summit really excited to announce keith reboy will be joining us uh one of sax's besties a very iconoclastic person we're going for iconoclasts next up brian peterson friend of the pod from flexport talking about all these supply chain issues the number of speakers we're going to have is going to be extraordinary brad gerstner friend of the pod is going to come talking about markets education joe lonsdale is uh halfway in again another iconoclastic controversial person and then we'll keep announcing more every week uh apply for a scholarship if you like and uh we'll see you all there for love you guys sultan of science the rain man and the dictator i'm jake al love you besties bye bye bye best love you sacks love your socks love you free bird back at you those are good feelings for you to have let your winners ride rain man david sacks and it said we open source it to the fans and they've just gone crazy with it [Music] we should all just get a room and just have one big huge orgy because they're all just useless it's like this like sexual tension that they just need to release [Music] your feet we need to get back [Music] hey everybody hey everybody welcome to another episode of the all in podcast we have a new bestie yesterday filling in for the prince of panic attacks [Music] the queen of quinoa the sultan of science can't make it this week i think after his incredible performance last week and him trending on tick tock with his incredible insights over uh sadly the the potential famine that could come after this ukraine war he decided he would take a week off i think it's just a little too much attention for him so we have a bestie guestie today yes the shaman of stocks is with us he brings the equanimity to equities you know him he'll bring that namaste to your payday his predictions are the anti-galloway brad gerstner welcome back to the program thanks for having me namaste uh and also with us of course the rain man himself he's bitter on twitter he's brawling on colin he's the bill of rights from pack heights david sacks boy you've really outdone yourself today wow and the prince of palo alto the overlord of the overton window paulie hupateo are you the stinker of stonks oh god relax you don't leave the comedy to me all right [Music] let your winners ride [Music] rain man david [Music] it's been a pretty pretty crazy couple of weeks here we are not a political show here but obviously when world affairs become acute as they have we cannot ignore uh the war that is occurring in ukraine uh we're going to talk a little bit about markets i think we'll start with those with brad gerstner here the sas market and the index uh why don't you walk us through this chart here because everybody's wondering what's happening with the markets given the war given interest rate hikes and the repricing of stocks i don't know how you would look at what happened in november december january brad how do you contextualize well certainly a repricing is certainly repricing but i i think of it more as normalization okay right chamath was saying it november i was i was on cnbc talking about the fact that when when we got to a post covered world rates were going to normalize go back to where they were in january 2020 that was around 2 percent and the growth multiples would have to come off of this historic red bull high that we were on during most of 2020 and 2021 so we were 30 to 50 depending upon the index above the five-year average growth multiple pre-covet so that just needed to happen like we should be celebrating in one sense that that happened because that means that we overcame a global pandemic the downside is we couldn't play with artificial money zero percent rates trillions of dollars you know of of congressional and fed injection in order to prop up valuations and when it happened in and of itself that was going to be extraordinarily painful what i didn't anticipate and what most people didn't anticipate is that on top of that we're going to have increasing fears of hyperinflation not just getting back to normal rates and that we were going to find ourselves in the middle of an incredibly devastating war in ukraine those two things added to the uncertainty the risk premiums added to uncertainty around future inflation the dot plot exploded higher and expectations of forward rates went higher now why the hell does this matter it matters because when you take you know if you're looking at that chart the five year average the ten year was two and a half percent like we all got comfortable investing in this period of time the markets hate uncertainty we had a predictable way for us to estimate where we thought our wax should be in our discounted cash flow models all of a sudden that was thrown into uh thrown into the air oh my god look what we got going on i can't believe it look at this oh yeah never compete with babies or animals yeah no chance no chance this is talita talita look at this little look at this little butter ball oh my goodness lord look at that so so good sex that's called a child it's uh you have three of them those are babies and what you're seeing there is affection from a father and a child look at how cute this little baby is going to eat sax is like this is taken from my time get that baby out of here ah so cute so brad i guess what everybody wants to know now that we see this repricing occur is what do you think's gonna happen in 2022 uh and then into 2023 so we're now multiples are now below the five year average for for software we're about at the five year average for internet we're well below the five year average i said on twitter that the rate path last week became a lot more certain the fed said something last week that i think is still not well reported well understood the fed said at the end of the year we're going to have two percent negative real rates they said we expect inflation exiting the year to be 4.3 and we expect the tenure to be around 2.3 the reason the market exploded higher is because under the fed's prior protocol a four percent uh a four percent inflationary rate would mean that rates would have to go to four and a half and if you take rates to four and a half then growth multiples need to be about 30 below the five year average okay so as investors whether we're investing in mid-stage venture late stage venture whether we're investing in the public markets like we need to know what exit multiples are and it was bad enough that we had to bear the drawdown coming off of you know this this red bull high of 2020 and 21. but if you think we're durably going to an inflation rate of three percent or four percent and an interest rate environment of three percent or four percent then you simply have to adjust what you're willing to pay for growth assets and so as i look ahead right we don't we don't know with certainty the question is what's the distribution of probabilities and you know just this morning city goldman sachs raised their exit year their their exit tenure for 2022 to 2.7 percent and took it as high as three and a half percent for 2023. i think it's going to this period is going to be marked by a lot of uncertainty around inflation and rates till we have more clarity and what that means is allocators of capital are going to allocate less to risk assets and they're going to pay less for risk assets um but you know listen if i look out over the the 5-10 year horizon i don't believe in global stagflation i don't believe that we're in this new hyperinflation environment um but we're going to have to get through this next uh six 12 18 months and it's going to be filled with a lot of volatility and a lot of uncertainty jamath what rings most true about what brad just said and then what can you add to the prediction for this coming year i mean i don't know what the prediction for this year is um i i think the markets are mostly moving upwards for the short term and then i think volatility is going to come back i'm just trying to find good long-term businesses and just kind of close my eyes and not have to look at these stock prices every day and as long as i can manage my own psychology i think i'll be fine i think that's probably the thing that most of us need to be doing the interesting thing about brad said is that the implication of that is that it means that late stage venture is pretty badly mispriced and i think you're going to have to knock these things back by 50 60 percent i think you saw the first real big movement there yesterday which was the instacart print right we went from a 40 billion valuation uh to i think it was 24. if you look at from february of last year which was really the high for all of us right that's when we all thought we could do no wrong you know the comps to uh instacart are off anywhere between 50 and 70 you know takeaway is off 70 uber's down 60 doordash was down 55 so these are some big moves and so you know it made sense that instacart had to get kind of like reset the problem that it has is that it's now the nth player trying to get public into a space with many players who've guzzled up a lot of capital in a low rate environment and so if you think about company building this is why entrepreneurs have to pay attention to this stuff you want to get money when money is cheap but the problem is you can't control that timing and so if you can't control your operating margins and your profitability then you're gonna have to go and basically pay somebody an enormously high price to get their money and i think that's what's setting itself up to happen in a bunch of these markets i think enterprise sas has always claimed long-term profitability um the thing is when you look at sort of like the real long-term companies they've built some enormous moats right like if you look at a service now or a sales force at the high end and then there's a crop of a couple of companies like palo alto networks who are the next ones coming after who seemed like behemoths in the making but everybody else i think people have to really question like where the long-term profitability going to come from and so if that's true then the late stage private sas companies are in trouble similarly in places like delivery where again you've had a bunch of comps come out they've been curing in the public markets for years you know uber doordash there's a couple of these behemoths getting built doordash being the most obvious and then there's a bunch of more kind of question mark business models including uber which is not really hanging together in the public markets so i think the real question for entrepreneurs is if you have the nth business nth being not the first not the second but you're the seventh or eighth or tenth trying to go public and all the seven or eight before you are gas guzzling machines you're going to pay a very heavy price to get public and i think that that's the reckoning that we're starting to see so i'm really interested to see how that plays out you know the instacart valuation could easily be cheap at 24. but it could just as easily be overpriced by another 10 billion dollars depending on how people think about who the last buyer of resort is in the public markets saks did uh instacart miss their window to go public and then what does this say about the backlog of hundreds of unicorns that the venture community is investing heavily in some of them are probably gonna have to ipo at down rounds um i think that's sort of the takeaway explain what that is to uh to neophytes well it just means that they're gonna have to go public at evaluation lower than what the last private round was so all of these late stage private investors who assumed that they would always make money investing in a company in the last private round before it went public they they thought that was sort of an automatic gain in arbitrage and it's not and there's going to be some disappointment there brad's been sharing these charts with me since i guess what december brad um where the charts basically show uh public sas valuations as a multiple of arr and then he's got a similar chart for it sort of the internet companies the sort of nonsense internet companies as a function of revenue and we've been looking at these charts you know once brad showed these to me again four months ago it became so obvious what was going on which is that valuations were reverting back to the historical mean if you look at you know during the two-year period during covet the they the multiples had risen to some insane level right and because of all the liquidity that had been pumped into the system so as soon as you saw that the charts that way you could just see where things were headed which is back to historical averages now we're below those averages um partly because no no no not really the multiples are can i summarize brad's chart because it is extremely elegant and simple for the layman to understand so here's the layman's understanding of of brad's uh uh analysis technical analysis and and and balance sheet and p l analysis which is accurate when rates are zero typically people are willing to pay eight times revenue for a company okay so if you're generating 100 revenue top line revenue you're generating 100 million revenue in your reasonably high margin reasonably high growth software business that's worth 800 million dollars in the public markets for every 100 basis point increase in rates you decrease the valuation between 15 and 20 so if you think rates are 2.75 the price is somewhere between 30 to 40 percent cheaper than what it was when rates were at zero so if you go back and you look at every techcrunch article and every bloomberg article and every information article and you look at all those headline valuations when rates were at zero we all just said rates are going to be somewhere between you know 2.5 to 3 percent at the end of this year at a minimum you have to haircut those things by 30 to 40 percent steady state meaning the company is continuing to execute on all on all cylinders if they have a downtick in their performance then it it increases that discount if rates go higher it increases the discount but the basic way to think about this is for every 100 basis point increase in rates you got to downtake that valuation by 15 to 20 percent and i think you know just to be fair i think i don't think there's any daylight between you and saks on this what what's actually saying is the 40 percent just giving the numerical rule that that's something i think you're right that is the that is the the correlation and so this idea listen we all get paid to find good companies and avoid bad companies that's generally what we get paid to do we're decent at it all of a sudden in fact most fundamental investors say hey i'm not a macro expert i don't know where inflation's going i don't know where interest rates going i just find good companies we've had a decade or longer where that was okay to do that was easy to do because guess what inflation was at two and we had two and a half percent tenure when all the sudden you have massive volatility in that it's not acceptable as an investor just to say well none of this matters because it does matter right price matters because what you can exit for is essential to the game and there were a lot of people invested in 2013 14 and 15 when when the cost of entry was low and exited when the cost of entry was high multiple expansion hides many sins right and now just the opposite is happening in a dramatic and historic way and that multiples were higher than they've ever been caused by a global pandemic and the exit rate for a lot of those companies right is going to be very painful i think that saks's point about down around ipos i don't think this is the exception david no reddit i think i think the vast majority of companies that come public in the next 12 months are going out below their last round of valuation yeah the reddit rumor was that goldman put a 10 billion dollar price on the cover and that you know it effectively been cut in half again these are all rumors so these could completely not be true i don't i don't have any knowledge one way or the other uh to 5 billion and that may actually end up being too expensive it just depends on where the market is well just so people are clear when investors sophisticated investors make these late stage valuations at very high multiples like they have they do have some downside protections in other words they cannot lose more than the money that was put in when this thing ipos or they may get kickers of additional shares so maybe these ipo no no in fairness you're talking about something very important but they're very rarely in these high priced rounds because most of these high priced rounds are in go-go companies where all of those rights get stripped away this is why i do think jason what you're actually bringing up is in in the last innings of a bull market you have incredibly irresponsible behavior by a bunch of these investors and that's also going to get exposed as well so jason what you're talking about is what's called an ipo ratchet yeah which means i'm giving you this money at this price but if you can't ipo at this price then you're going to give me an equivalent number of shares that makes me whole right right so it's as if i am i am indifferent to what price you ipo at that's extremely dilutive to really one really important class of individual which is the employees of the company it's also really dilutive to other investors who've come in before them but jason you're probably right to the extent that there were ipo ratchets they'll get triggered but i think in many of these go-go companies and you know brad and sachs can confirm but i see it all those rights get stripped away it's like come in at this crazy price get out get get our logo on your fundraising deck for the next round and so this is the price of the capital it's been a little bit of sloppy behavior just so people understand this if the reddit valuation was 10 billion somebody put in you know 100 million in this late stage round if it came out at 5 billion they would get twice as many shares to make up for that difference that doesn't exist in the case of reddit j cal you know it was fidelity who led that last round so they're going to be price takers at whatever price the company comes public what does that mean explain that price takes you so you know if they come public at five billion dollars and you put in a hundred million dollars your stake is now worth 50 million right right so why didn't they have the discipline to put in these protective provisions ratchets etc what happened in the market to chamas point they haven't really existed in most deals for the last five years right uh i go back to 2000 and i think 2007 2008 kayak raised money with a ratchet in their last pre-ipo round it prevented them from getting public for three or four years that dilution overhang um was a significant impediment to getting public so you know listen we all know that groupon raised at 20 billion dollars went public in a year later is worth two billion i mean it's not as though this hasn't happened before uh but yes uh people people got a little laxative i just wanted to i just want to say one other thing though because multiples coming down is a problem what this really reveals is the importance of stock and company selection right because if you were a shitty company with an unproven business model way out on the risk curve okay and you had a super high valuation last year and you don't you know there's a good chance you never grow in it grow into it you never get back to that valuation example your example your growth will do you sell well give us an example company okay discord ripple companies in the 15 minute delivery space in europe you know i i i would say go puff is one of the best of them there are a lot of startups that got funded with billions of dollars in europe unproven business models burning tremendous amount of cash right like i don't know why they need to exist i don't think they're going to get funded right maybe one or two of them do but when you have doordash and uber that are free cash flow positive that have strong brands and that can redeploy those profits back into compete in those markets i think it's very tough neobanks are another example neobanks you know the number of neobanks that have been funded at exorbitant valuations where um you know the problem is all of these financial services companies are essentially an arbitrage on rates right when rates are zero they take that money at zero percent and then they can go and execute a business model you know and sell that money at one percent and take the difference but when their cost of capital is two or two and a half or three percent the whole business implodes on them so you're going to see a bunch of these financial services companies get under pressure another example jason is like all the low end you know bottoms up sas companies and the reason is because they spend their time inside of google and facebook doing customer acquisition and managing this very intricate dance of ltv to cac and when all of those input costs go up their business implodes because you can't raise rates faster or you can't raise prices i would say then faster than the input costs are and then all of a sudden your unit economics blow up and in all of this what is the salvation in a moment like this it's being healthy gross margins healthy contribution margins and in a realistic path to profitability which means being ebitda positive this year or within the next two years said another way if you're profitable you're not going to go away if you can't if you can't show that you're you know to use the famous paul graham adage default alive in a moment like this then you are a price taker which means that you will have to pay probably a very high cost of capital to raise incremental capital to support a fundamentally fragile and non-resilient business model is the issue here saks that when you see the getter gorilla zap all these instant delivery companies get funded at exorbitant prices and they're the seventh eighth ninth as chamath is pointing out no no instacart was the seventh those are like the tenth eleventh okay so now here we are this to me seems like the fault of poor judgment by capital allocator sacks are there too many venture funds chasing too few deals and not thinking through what investing in the 10th 11th or 12th player in a market is going to be able to do is it too i think part of what's going on with the companies you mentioned is that they're physical world companies they are very capital intensive they burn a lot of money they're operationally intensive i have sort of i soured on those businesses years ago and that's why i just focus on sas because they're basically perfect gross margin businesses they're very they can be very capital efficient if the founders want to run them that way so what we're doing now is telling founders lengthen your runway be more capital efficient you need to understand that you know multiples if you raised last year at 100 times arr you need to understand that the next time you raise it may be at 20 times ar so now you can grow into that right if you're tripling and then triple again the next year you'll be able to grow into that valuation but you know make your money last two three four years instead of you know burning it in 12 to 18 months unless you want a down round i think this is this is the point that now allocators venture capitals are going to spend the next six months thinking about what's in bucket one low quality companies burning a lot of cash that may very well not make it across the chasm no path to profitability what are the high quality companies that yeah the multiple's down because public market multiples are down risk premiums have changed inflation change but they have plenty of cash on the balance sheet and think about it this way snowflake became a poster child in the public markets of a high priced uh sas business snowflake this year will grow its free cash flow at over 100 a year next year probably you know 80 or 90 free cash flow not just revenue free cash flow in q4 i think they booked 1.4 billion of revenue q4 on a business that entirely in last year did 1.2 billion in revenue right you think about that the incremental was more than what they had generated in the prior many years that business so let's say we reduce the multiple by 50 percent but the company's growing top line and free cash flow by 100 doesn't take you very long to grow through the multiple compressions so snowflakes multiple is plummeting for two reasons one because the stock price came down number two because right their growth rate and free cash flow growth is so high and so now if you look at the multiple it's similar to what we would expect of a regression of the five-year analysis unless these companies unless these private companies are want to go dark for the next three to five years meaning you know no sophisticated late stage investor doing around or going public they'll be okay but otherwise they're going to have to reckon with a version of what brad just said which is the high the flight to quality problem you know when in moments of uncertainty and high volatility it's just more straightforward to go to the things that are reliable and so you know when you think in the public tech markets what is a reliable must-own company well i would put snowflake in the list of these must-own high-growth software businesses right you know the fangs tend to be in the must-own category but then there are all these other businesses that then get orphaned because they're kind of nice to own would love to own would be great in any other circumstance and that gets even more exacerbated in the in the private markets you have to remember right now like the private markets cannot really exist without an incremental buyer of equity right holder somebody has somebody needs to be the better you somebody needs to be the bag holder after you and the problem right now is that those folks have a lot more credible safe durable assets that they can own and not have to deal with all the crazy anxiety that comes with owning something that's that's high volatility like or chamath correct me if i'm wrong or brad if they don't want to even be involved in this meshuggana they could just be in cash and the interest rates are going up so maybe they can say you know what i'll just sit this out for a year is that also happening with those folks well is that too hard to do because of impressions she knows a bunch of these folks but like take for example d1 you know it's uh dan sondheim's great investor i mean my understanding is that they are sort of off privates completely because why invest in a private company at x times ar when you can invest in a public sas company for six times so they've substituted i think tiger is still in market with a gigantic fund for privates but the valuations have come down so they're essentially re-pricing everything i think those are probably the two broad reactions you could have right brad certainly i i would say this broadly speaking the late stage private financing market inventure is closed um because there hasn't been right we're in this this buyer seller standoff sellers aren't to the point where they're willing to accept that a new rate a new regime of multiples exists right it's painful we saw you know the instacart news here recently but i think you know like listen we're not even 10 or 20 of the way into the psychic reset that needs to occur in order for us to see real price discovery that's not going to occur until these companies need money or want to go public that's right this fall is when we'll start to see real price discovery you couldn't pry a late-stage dollar out of my hand right now because i don't think we have real price discovery going on early stage venture if we're investing in an incredible you know software business at 300 million 400 million 500 billion we think could be worth tens of billions you can withstand a little inflation but the later you get in the life cycle of a business it's about irrs and irrs in late stage at last year's valuations relative to today's public market valuations that is a negative arbitrage explain irr why that matters yeah just for the latest you know we expect uh our herder rate in the public markets is a 20 risk adjusted rate of return so if i'm you know like you know you look at these late stage private valuations from last year i mean uh you know saks just talked about companies repricing down 40 or 50 or 60 percent so if they haven't done that now just didn't just up level this what brad is saying is the following jason any person can wake up tomorrow and buy the s p index right what buffett would tell you to do just by the s p 500 index that historically has compounded at around eight percent a year if you reinvest the dividends so you can do nothing right get a basket of the 500 best companies in the world that are automatically selected for you based on revenue and profitability you don't have to do anything and that'll compound at eight percent that is effectively the risk-free rate if you want to own an equity so if you're going to step into the late stage private markets and you know buy some shares in you know dingdong.com you got to be rewarded for that which typically means that there is a premium above the eight percent and what brad is saying like you know it's it's actually more than double in his case what he's saying is it's two and a half times you know you've got to clear 20 percent to you otherwise you're better off on a risk-adjusted basis it is what's likely to happen i'm looking here at a list go puff at 40 billion canva at 40 billion florina at 45 billion discord at 15 billion ripple at 15 billion these grammarly at 13 billion these don't make sense given that if they were public they would be trading at well you can 60 of that here's what you can say if if everything is held equal just with the rise of rates you have to reset those valuations between probably 15 and 40 percent okay at a minimum minimum but what brad said is also true which is if they then keep growing at a superior rate they can get back to even so meaning 18 months they could also show up again at 40 and be net net awash they could get unstuck but a lot of hard work will need to happen underneath the covers of these businesses in the next two years okay for that to happen and that's what's going to happen with a lot of these early stage private companies right is let's say the error multiple has gone from 100 times to 20 or 30 times they have to grow their arr 5x to get the same valuation so the question is can they grow their ar-5x before having to return to market that's just to get a flat round now if they are tripling this year and then doubling next year then that's 6x growth in arr so even if you know the multiples gone down 5x they could still get a slight upround so that's the game i think all these companies are going to be playing is lengthen your runway so that you can grow into your valuation and not take it down round because the problem is if you're ever in a situation where you take a down round it's way worse than just the dilution because now the psychology of everyone in the company changes everyone has to worry that you're gone sideways it's hard to experience but here's the here's the difficulty of what saks is saying though in order to grow revenue you have to invest right you have to invest in sales people and account management functions in engineers and product managers right and all of those people uh need to exist which actually increases opex right it increases burn it doesn't maintain burn and so this is the death spiral jason you're talking about which is in order to actually grow by those multiples you actually don't have more fuel you gotta increase your speed you burn more fuel you don't actually have the money to to withstand two or three or the altitude you're now so it's going to be a very precarious balancing act of trying to figure out how these companies actually get to the other side because again i think the the buyers in this case will be will drive a hard bargain you know i mean like look organizations like you know durable d1 tiger altimeter these guys are the smartest of the smart they're not dumb yeah and so you know the price of capital is going up in that case and so you know they're going to strike really good opportunities for their investors right for their lps if we were going to do an analogy here 20 the analogy here is these founders were on autopilot they were asleep at the wheel and now all of a sudden they're in the soup and they got to be really perfect no that's not fair i don't think they were asleep at the wheel at all i just think that they you know when the music is on you got to dance they did it they raised money at the highest valuation possible god bless them now you're going to see who uh is really good at what they do um and who is benefiting from a lot of just natural uh you know you know but people were only there for the first time that's what i'm talking about you're gonna have to make real changes look in an um well in an up market or a boom market the three things that matter are growth growth and growth in a down market the three things that matter are growth burn and margins it's not that growth stops mattering it's just that burn and margins also matter and now there's going to be real trade-offs before it was just how much money can we spend how quickly to get growth now let's wait a second is this growth efficient you know and will we have enough runway to get to the next round without having to take a down round brad when we saw at the peak of the pandemic some leadership i'd say you know seasoned or well-informed leadership airbnb and uber come to mind cut their staffs massively they use that crisis to reset their cost structure and get to profitability quicker those were money losing businesses for a long time maybe you know taking advantage of these hot markets is that what needs to happen here are we going to see a cascade of companies lowering their evaluation lowering their costs sharpening their pencils cutting staff and then becoming more efficient and more ruthless at you know the sixth seventh eighth product they're launching saying hey let's go to the core product and make it sing make it profitable you know frank slootman has said that silicon valley is full of companies that are walking dead and they don't even know it right zombie starting you know frank is you know he says in tape sucks he says listen i'm a wartime ceo not a peacetime ceo right he came into he came into snowflake when it was growing over 300 percent and he you know he he reconstituted what what that culture was about to prepare for wartime right because he says when wartime comes right and it gets challenging i want to run the field right i don't want to be laying off employees i want to be that's the time to hire that's the time to press the advantage that's the time to invest in product that's the time to win the new customers over the course of the last 12 to 18 months a lot of people without that experience right took a negative signal and the signal was money will always be available and it will be available at ever increasing valuations and of course anybody who's been at this for 20 years like the four of us we know that isn't true but it's amazing i mean the behavioral psychology our ability to gaslight ourselves totally in these moments and move out on the risk curve and ignore these lessons right and so i really actually hurt and i've spent a lot of time on zooms lately with founders and with their teams talking them through this because like we talk about it in the abstract and in through the lens of a spreadsheet but there are a lot of people's lives at stake if you're an employee and you went to this company and you took everything in stock at 15 billion that's now worth 5 billion you're totally underwater at the same time the cost of buying a home and mortgage rates and everything else is going up against you i mean this is a massive morale problem right uh you know for for companies that frankly we want to invest in these are the innovators but this is what happens when you have government intrusion right that we can all debate whether or not is worthwhile but it was hugely distortive what we know to be true is that we had more distortion in markets the last two years than probably any time since post world war ii and the consequence of that is dramatic and you know we all kind of saw it but we all kind of gaslighted ourselves as well because you were like well maybe there is a new normal maybe we have accelerated digitization the truth of the matter is the law of economic gravity is interest rates and inflation and it remains yeah and and this time turns out is not really that much different i think jason if you take your list of these high-priced startups yup i think it would be a good useful exercise for somebody to do somebody in the press should probably do it but if you take that list and just rank companies based on valuation the last announce date yup and then if they are not announcing layoffs of any kind you can probably forecast when they're going to burn through the money especially if they're hiring and the reason that you can probably forecast that accurately is you can pretty much predict what opaques will be especially knowing the fact that their input costs are actually going up so for example most of these businesses that rely on facebook and google and instagram for customer acquisition those input costs are going up and the reason you know that is that's two trillion dollars of market cap that doesn't give a flying [ __ ] what's happening in startup land they're gonna make their numbers right okay those are the most important companies in the world they will ratchet up the prices and so your input costs are going up it's not just the physical supply of materials that i think is going up it's just the cost of customer acquisition is going to probably go up by 20 30 40 right and you know this because facebook and google guide to where they need to perform and so if you pass that through the venture ecosystem that all of a sudden now upticks your burn yeah if you're adding more people it upticks your burn yep and now back to david's math you then also have to grow five or six x that none of this hangs together so we are at the beginning of probably a very complicated process of unwinding yeah the distortion that we've lived through in the last couple years at this point i mean you have to blame the capital allocators in this instance they bought these logos they suspended disbelief we've had this ridiculous culture of no governance uncapped notes just pushing i see it on the boards i'm on you guys probably too some people just pushing top line growth never discussing uni economics never discussing the bottom line and they created these crazy fugazi markups they raised bigger funds based on it and they just were never the adults in the room the stories of capital it's infuriating i'll tell you an incredible conversation i had yesterday with one of my partners so he's been you know with me for 10 years he was really the one that pushed us very early on to go into deep deep deep tech when nobody else is doing it 3d printing of rockets satellites all that stuff and it's been so i really trust and respect his perspective and he was telling me a story he uh called um a recruiter um you know because we've been toying with you know helping get some folks to help us manage some of our early stage deal flow and he asked her essentially something to the point of like uh who are the types of gps that are getting hired today in early stage and he said you know this is how we approach our business right we have a permanent capital balance sheet you know we do you know at most one deal a year per partner and she said well you're never going to get anybody because a mid-level executive at one of these high-flying startups that then goes and joins a venture firm she said the consistent single thing that they make their decision on are you ready for this is how many deals will i be allowed to do per year what and so you know these people are make work construction workers right that's dig a ditch fill a ditch that is not what investing is that's not about having a discerning philosophy on what a business should be or a market so if you have a bunch of capital allocators jason to your point who are unsophisticated about investing probably very sophisticated operationally but fundamentally don't know what they're doing and they're coming and transforming in an organization that should be a disciplined discerning allocator of capital and turning them into a velocity deal machine this is what you're going to get i mean sometimes the best money sacks is money you put into a bet you've already made continuing to build the pot with a startup that's already proven themselves correct so i think what we're going to see we have a follow-on fund yeah i mean i got to say the the things you guys are saying are making me feel great about our portfolio explain um not not because we won't get hit with the same valuation corrections that everybody else is going to suffer but because you know a few years ago we decided we were going to invest in a certain kind of company i mean high margin sas and marketplace businesses that were not capital intensive we defined a new metric that didn't exist called burn multiple which is the amount of money you burn for every dollar of incremental ar that you generate incremental uh subscription revenue and you know we turned down investments that were growing fast but they had a horrible burn multiple and um so and and i do think most of our companies raised last year when you know they made hay while the sunshine so there's going to be they need to manage their cash flow so they don't have to raise too quickly but um as long as they do that and they keep growing they're going to weather the storm what's the right number spend three dollars to make one spend two dollars to add one what's what's your ratio so what i've said is that if you can spend a dollar or less to generate an incremental dollar of ar you're doing amazing and uh between one and two is good so in other words if you're burning 20 million in a year to add an incremental 10 million of ar you're doing quite well in startup land and then when you start getting it to two and a half three that's a problem and then above three is just bad spending 30 million to add 10 million an ar it means it takes three years or probably four or five because you'll have turn to get that money back yeah and that's just a lack of discipline and how many vcs are we on the boards uh or you know other investors are we on the board and having that nuance of a discussion it's always just top line top line top line who's going to be the next holder i think it's very difficult because i think the number of qualified investors have gone way down as the surface area of investing has gone way up so again just going back to this conversation this woman is staffing most of these venture firms with their junior and mid-level partners and again the qualification to become a venture capitalist at this point is not that you have an ability to pick or you know in david's case have operated and actually run a business and then actually have developed a methodical framework or brad's business which is brad had to start from literally zero in the public markets and work his way backwards to end up with 15 or 20 billion of assets it's it's none of that it's are you a vp at an xyz unicorn that may also be poorly run and all of a sudden that you know gives you the qualification to go into a job where and it's not their fault where what they are told is uh what you want is what we're going to give you which is the ability to write you know x number of checks per year that is insanity that's not what makes a good investor and then your ability to then give advice i don't know it's probably zero or less than zero your ability to give advice is uh i think we have to qualify bad advice is being given so the ability to give quality advice is what's missing in this formula i just think these people are really naive like you know and it's not their fault but you know they're given way too much rope to hang themselves with and they're and and the the the unfortunate byproduct is going to be the uh the companies who gets bad advice or the bad businesses that get funded um and that's not what you know an efficient capital market should do so one of the things i'm seeing our portfolio companies do is use burn multiple as a governor for how fast they're going to grow so for example they will say that the burn multiple should not exceed two in the next quarter so you know we want to so that the old way of doing it would be that the company would just have a forecast and say we're going to grow 3x this year we're going to grow er from 10 million to 30 million and whatever that cost it costs right that was basically how companies did it now what i'm seeing from some of our portfolio companies is they are saying yeah our goal is to grow from 10 to 30 but we will not spend so much money that our burn multiple exceeds two so you know if if it turns out that there's a trade-off here between growth and burn burn is going to win we're not going to exceed that level of that ratio of spending and that's actually a good i mean i've seen a few companies implement that already and it's probably something they should all be doing i mean if these are pilots they basically created a rule to not stall the plane right you got to keep a certain altitude a certain speed so what is the opportunity here then if we're going to have too many companies two high evaluations if we're going to hang around the rim and try to get some rebounds here and try to find opportunities what are the opportunities what are the layups here for capital allocators and for founders if we have there are no great advice for them there's nothing there's there have never been layups and the problem is um you know in in up markets whenever we think that there are um it ends up being what causes our downfall later because we we just take the wrong signal away i i i don't think that there are i don't want to be investing incremental capital into a late stage startup that's poorly run that doesn't have their margins in line and then having to work it out why do that again i can just go in the s p 500 and get eight percent and yeah it's not thirty percent but it's eight percent and i don't have to deal with all this nonsense like wow a bunch of people think because you're a crossover investor right i mean you have the ability to choose between public privates or wherever you want to play i actually think what i am is an investor right you you don't have lps for a vc fund like saks and i do but but this but this is my point like i think investing irrespective of whatever stage you do it still fundamentally comes down to the following which is do you have the judgment to understand whether these decisions are marginally good marginally average or marginally destructive for the short medium and long term of a business and i just don't think that enough people steep themselves in the practice that it takes to get good at that kind of a game and i think what these moments expose is that the status games that come around investing because it just seems like it's easy it just seems like you don't do much work that's what ruins these periods and the implications i think is brad said is really right it affects the employees it affects the entrepreneurs it affects the startup culture it affects the incremental desire for people to take a shot at things you can overcome all of it we have and we will again but i really think like to the entrepreneur the message is if you're you know taking a term sheet i think you have to have better judgment to really look at that on that investor and say is this person really qualified to help me because in these moments in the absence of help you're probably going to basically have a valuation reset at the minimum case and the worst case is you go out of business what's insightful about you said chamoth then i'll hand it to you brad is that a lot of the founders picked based on the highest valuation who their next investor should be and now we see what a trap that is brad you know the takeaway for me is we return to a place we've always been which is about selection right look at the mean returns for ventures for 20 years they're lousy lousy right ninety percent of the of the spoils they've apparently barely mapped to the public five to ten percent of the investments and that's the way it's always been look at look at buffett right by superior companies at good prices what are the two technology companies buffett bought in the public markets right apple and snowflake snowflake apple and snowflake he doesn't own a broad basket of long tail internet or long tail software and so i think what you're going to see and and to sax's point i think even running a recipe on software as though all arr is created equal i mean i can show you five companies each with a hundred million of are each growing at 30 percent and there's massive dispersion in future outcomes yeah right and so like i i just think that this at the end of the day is a craft business it's an essentialist business it's about finding and identifying those very very very few companies that ever durably are worth more than 10 billion dollars you know on my screen today chamath was just talking there are four internet companies that are green today amazon google apple and facebook everything else on my screen is bleeding mustang mustang versus versus everything else is red and my growth internet stocks are down 400 basis points right the market is voting with its wallet where it wants to sit on the risk curve right and i think we're just gonna go there's no new normal here this is just back to the future right is what we've always done and you know the reset is always painful uh the only surprising thing is how often we have to go through it if if opportunities do arise where will they where would they be brad i mean i was watching peloton i always loved that company i see the change in management i see the management you know thinking about profitability thinking about creating it into a marketplace maybe having uh more hardware available disconnected from the software etc do you think there's opportunities there or there will be opportunities over the next year to buy some of the names that aren't the fangs um what we do in the first instance jason and listen we we outperformed last year because we owned quality and we're short lower quality stuff unfortunately this year the market said guess what it's all overvalued quality low quality doesn't matter we're taking it all lower and so for us in moments like this and i've lived probably through five of them in the public markets we always do the same thing d gross take risks down first thing is like have less chits on the board number two reduce the number of outliers pull in the risk curve right for me i want to own five or six things because remember i'm the biggest lp in the fund this is my money i want to sleep well at night and i want to protect the foundations the the endowments the good causes we represent i can't do that with a company that has an unproven business model i may think that it's going to be great in the future but i don't know so the problem with for the pelotons of the world right they may be incredible returners but what every portfolio manager on the planet is doing today is compressing the number of names of their portfolio saying what are the companies i know with absolute certainty whether rates are two and a half three and a half four and a half five and a half is going to be worth more over the course of the next two to three years that's what i want to own right right but what i was just going to start not even interrupt but jason what you're talking about is what a lot of people do you see a lot on twitter and i call it clapping as a strategy what about this and what about that and what about if they do this and what about clapping is not a strategy clapping is something people do at the blackjack table it turns out it doesn't actually influence the cards sure um and so i think you have to stop with the clapping as a strategy because to be clear that's not my strategy i was asking that as the moderator is there just i think you're representing a psychological reaction that a lot of people have and i think what brad is trying to tell you is clapping is not a strategy i know i'm asking that on behalf of the audience it is not my belief just to be clear my commentary to the audience is clapping is not a strategy yes correct yes if enough people though do what you're saying brad and they just retreat to quality at some point that qual those quality companies would then become fully valued maybe even overvalued and thus the cycle begins again or not so long does that take no you nailed it what happened last year 2021 dispersion collapsed go check out jamin ball who does incredible software analysis on our team dispersion collapsed between the best cohort and the worst cohort of software companies last year the first thing that happened is dispersion returns we pay a higher price for the best [ __ ] and we pay a lower price for the low quality stuff right then when we start to recover when there's more predictability in the world when we resolve the war when we understand the path of inflation right the stuff close in on the risk curve that'll start being fully valued so then we will be brave enough to walk a little further out on the ice on the lake testing it is it safe to walk here and then you walk out a little further and sadly right eventually we're in the exact same pattern we've been before which is we'll know we're at a market top five or six or seven years from now when we repeat the same asinine behavior that we just went through when everybody becomes complacent again and over bidding this stuff way out on the risk curve i'm just suggesting to you the number one question i get from gps venture capitalists and others right now is when are we going to bounce back let me be absolutely clear there is no bouncing back to where we were the last 18 months that was the outlier that was the make-believe what i hope and expect is that we can ba bounce back to the five-year average but even to durably trade at the five-year average we have to have a lot more clarity on the war in ukraine on inflation and rates so that's a perfect place to pivot sacks uh we are now here and i think this is the fourth or fifth episode where we've been discussing the war and we flipped it today just to do markets first uh for a little change of pace and since we had brad here where are we at with the war and what are your what is your expectation of it wrapping up or it escalating well actually there's a tweet storm this morning um that schmoth you sent to the group that from a russian official and it seemed to indicate well it indicated what we've kind of known for a few weeks now which is what the broad contours of what a peace deal would look like which is there's three main pieces uh neutrality for ukraine the russians insist that it not be part of nato they get to keep crimea which they annex in 2014 that's been a fade accompli and then some version of independence for these sort of breakaway territories in eastern ukraine the in the donbass region everyone kind of knows that's the the broad strokes of the deal then there's you know a lot of details are going to matter a lot to the people who live there like is there this land bridge from crimea to don bass but frankly don't matter as much to all of us the united states of america so the question is you know what what is the administration going to do about it biden just went to europe and you know my concern is that no one in washington and i talked about this last week seems to be pushing for a ceasefire it seems like their preferred position is for russia to bleed out as as long as possible in ukraine for the us to fund an insurgency a la afghanistan where you know these fighters in eastern ukraine are sort of like the mushrooms urgency is that the right word well sure because you know if they're defending their own land and so we're the mujahideen i mean i know but why would you call it an insurgency or defending their land if if the government of ukraine falls then it becomes an insurgency so the point is that the administration the question is what's the administration's end game here do they want to lead the world to a ceasefire or do they want to protract the conflict to impose on the russian state a afghan-style uh you know debilitating defeat to destabilize the russian regime neil ferguson had a column this week in um it says bloomberg he's from the brooking institute at stanford no he's from he's from hoover uh i'll move around the start yeah so i'll read i'll read this part where is that can you just explain to people what the hoover institute is and how that leans whoever institution for war and peace i would say it sort of leans um i idealistic in foreign policy i would describe neil as sort of the most realistic idealist got it um but he's quite well sourced i think uh with you know in with you know various people in washington and europe and what he wrote is the us intends to keep this war going the administration will continue to supply the ukrainians with anti-aircraft stingers anti-tank javelins explosive switchblade drones it will uh keep trying to persuade other nato governments supply heavier defensive weaponry and so on uh he says washington will revert to the afghanistan after 1979 playbook of supplying an insurgency only if the ukrainian government loses the conventional war so the concern here is that the u.s government has an incentive actually that right they don't want a quick end to this war is basically the theory is they want the russian state to bleed out and be destabilized in a way it's the one chance we have for like regime change there without us actually starting a war is that they have this self-inflicted wound that is the theory yeah and i think a lot of people are saying that that is what a lot of people want in washington i don't you know this is not like conspiracy theory people are saying this is our chance to topple the russian state to destabilize it there was a rand corporation how do you survey a few years ago hold on there's a rand corporation study done a few years ago that was commissioned by somebody probably in our state department or someone like that where they talked about this that if we want to destabilize the russian regime ukraine is the way to do it right they would fall for it right they would actually fight that fight that is an unwinnable fight we would basically be putting an f we'd be supporting an afghanistan-like path for them to go down like we did and they did previously to that right and the problem the problem that i see is just this which is we've discussed on on this program the downsides of this war first it's a humanitarian disaster second we've talked about the risk of recession later in the year third freberg talked about famine the risk of famine later this year if the spring planning doesn't happen and then fourth we have this always have this risk that the war spins out of control and goes nuclear right and leads into war three those are some vital american interests to avoid all of those scenarios i don't see an equivalent vital american interest in determining the exact nuances of who rules the donbass in other words the broad strokes of this agreement are there you know what the u.s should be doing is leading they should be pushing for lead not bleed lead the way to a ceasefire not to inflict maximum damage on the russian regime which we don't know exactly what their intent is because they're doing this behind closed doors brad what's your take on this i think that dave and i talked about this at dinner the other night i think there's something bigger playing out here i mean clearly he's the expert on real politic and you know but it seems to me that we have had decades of military diplomacy right and and most recently the pal doctrine of overwhelming force we don't want to make the same mistake we made in vietnam so like we're going to go in with full force and you know basically the public doesn't support you know military adventure ism anymore right and so now we have maybe we'll call it the blinkin doctrine which is the pal doctrine equivalent but for economic force it's the nuclear economic weapon that is on full display by the west right now that i think has really significant implications right it's reunited the west um and i don't think this is just about putin and i think the reason that the us and western europe is slow playing this a bit as they're sending a message to the chinese as well which is that we we are unified and we will use an economic weapon of mass destruction if right you don't play by global norms and so the box i think we're in from a negotiating perspective right uh in ukraine right now is not a box around neutrality i mean neutrality is already clear i mean we had zielinski didn't even ask for a no-fly zone he's not even asking for nato membership they've already seated neutrality i think the real question is sanctions i don't think the west wants to roll back sanctions and i think putin's saying i can't hightail it out of here unless you roll back all the sanctions and give me a little bit of the donbass and so watch the next week or two like in any good negotiation unfortunately i think both sides are going to amp up their current strategies we may see missiles coming out of russia and we may see european uh complete european embargo of russian oil three million barrels a day those will be the final straws right before we enter negotiations because then they can see the last things that they took as part of the negotiation but this i think is going to be all about economic sanctions um and uh and and i think the west is playing a a really strong game what i worry about and saks has talked about this at length is that we overreach we over play our hand here in an effort to send a signal to other parties around the world right and that has fat tail risk associated with it that you're representing in taiwan let me ask a question how many of us woke up or this at the beginning of this year or making our new year's resolutions and said that we need to risk recession famine and war in order to destabilize and topple the russian regime when did this become a vital american interest no one at the beginning of the year thought this was an important goal of america what's more important is is basically getting our economy back on track getting back on track after this long day this long this this plague we've had i mean nobody needed this problem and what the administration should have done was use diplomacy and all their resources to try and prevent the conflict and now the conflict has occurred we should be pushing for a negotiated peace and ceasefire we do not have a vital national interest in the details of who roles rules the dawn pass yeah the problem with your setting up of that question is that we did not start the war putin did shamafi you've been silenced so far what are your thoughts on this war that jason saying we started the war well you're saying did we wake up and say that we should do this we did not listen to you a lot of other people in the media woke up on february 24th and you think putin went mad and there's no prehistory to this conflict now here's the deal hold on a second this is a war of russian aggression it's true that putin started it he's the invader however there were things we could have done to prevent or to avoid this war and american diplomacy completely failed and we even discussed it the month before this war started we talked about how the u.s could have given a written guarantee to russia that ukraine would not be part of nato just this week zielinski in an interview with fried zakaria admitted he was told by blinken you will not be part of nato but we don't admit that publicly what games were they playing what is the point of playing that kind of game with the grave issue of war and peace why didn't lincoln say publicly what he said to zielinski this administration did not do everything he could do to prevent war and now we are faced with all of these existential risks why for what reason the reason is that it gave the united states an opportunity to topple russia i mean exactly who who of us thought we needed that at the beginning of this year well i think that you know the thing to keep in mind and i'm again i don't i'm not saying that this is right but i'm just game theorizing uh that these are like you know um grudges that these guys have held for a very long time and i think it started when they were in the obama white house and it carried over to now and i think they saw an opportunity to basically execute a strategy that essentially now i think we're moving into the second phase of this war which is effectively trying to bait russia into doing something really egregiously bad and that is terrible david to your point i think we're willing to you know sacrifice a lot i think we've decided that uh implicitly by based on the actions of of the american government and and it's weird it's like we're trying to get russia to react and so the rhetoric in fact the rhetoric since that do you guys remember i think it was only 10 days ago that both russia and ukraine said the surface area of a deal is pretty much in sight um oh friedberg from the top rope coming in look at you freedberg i mean like you you look like an everyman i mean i'm so proud of you are you actually driving your own car gas guzzling car suv in the mountains you you should be you should put your skates in that tank is in that tank is that putin's gas i only use it i only use ethanol i make in vats in my backyard when i don't solar panels that are handcrafted in my bag out of my way to find a luke oil gas station filled up um what i was saying guys was that uh you know from the 10 days from when you know both sides russia and ukraine were like hey you know we think we're basically there we have a deal the rhetoric has gotten really insane uh you know yesterday i think it was like the united states said you know we we think that russia should be kicked out of the g20 then russia responded and said i'm only going to sell in that gas and settle it in rubles you know all of a sudden uh other actors china and saudi arabia are in the game now you know china and saudi arabia are negotiating settling a huge oil trade in yuan why in the last 10 days have all these things happened when we were so close to getting something done i think the best explanation is that um we are willing to i guess we've decided i mean none of us have decided but american government decided that some amount of sacrifice is okay uh if it could trigger a russian escalation which could then further destabilize that country and i think they believe that that's more important than anything else and i think we you know from where i said i think we can take putin at his word that he actually cares about reunification and that's not to say he's crazy david um and i don't think we can control his behavior i think you're wouldn't you use word reunification uh i've never said that jason and also just today the russian military the tweet that i sent you guys was from the russian military and that was an official statement and i don't think he they would be allowed without putin's explicit sign off they no longer talked about denatificating ukraine or demilitarizing ukraine they simply focused it on the donbass and to use your sun tzu argument it's almost like they're trying to construct their own golden bridge to exit in a way where they can claim victory to the russian people to explain the tens of thousands of you know russian military people that have been killed in this whole conflict right because they have an explanation that they have to give but in in all of this i think that we're we're uh probably exposing a very high risk game of poker that we're playing which is it seems that the us government is focused more on the destabilization of of russia than they are in getting this conflict behind us i mean he did he did say in his speech since time immemorial the people living in the southwest of what has historically been russian land have called themselves russians and orthodox christians that's don bass yeah i know but he is there's been a jason there's been a civil war going on since 2014 in this donbass region between ukrainians and these sort of these russian speakers and now that civil war is this a balkan style civil war that has now escalated with you know ukraine and russia getting in and now the whole west potentially could get in this is a very dangerous situation that we should not let spin out of control i'm agreeing with that you guys asked me did he ever talk about reunification he did he did in his speech that was not one of his stated war objectives now you could keep accusing him of being a liar but look what his objective is i'm just talking about his word that he believes these areas are russian and they should be considered where they are predominantly russian speakers i'm not taking a side and who should rule the donbass okay yeah i think it's a complicated ethnic strife sort of issue like we saw in the balkans all the time between the russians who live there and the ukrainians who live there what i do know is it's not worth risking war three over an agreement 100 agreement 100 agreement sacks let me can i ask you a question um so how is putin gonna withdraw without a hundred percent lifting of the sanctions and how is the west possibly going to trust him to withdraw right while taking all the sanctions off that seems to me like when when i try to construct the golden bridge in my mind it comes down to you know like how do we how do we whack up the sanctions do we take some of them off say prove to us be out for x period of time and then we'll roll the other ones off because these sanctions are not going to be rolled back in the next three months based on some ceasefire i i agree with that i i don't know that putin can expect the sanctions to be lifted or that he can effectively negotiate for that i think again where i think the the peace deal is is that we've known all along what it's going to be ukraine will agree to neutrality in exchange for some security guarantees from the west uh russia will get to keep crimea because that's been a fetacon police since the annexation 2014 and there will be some sort of regional autonomy for these sort of russian-speaking areas in the dawn bass which by the way we could have had that too there was a a deal called mints2 since 2015 that simply hasn't been implemented so you know i think that those are the broad strokes of the deal and then there's questions about well is there a land bridge from crimea to the donbass and you know what weapons exactly does ukraine get to get from the united states or get to keep i mean so look those details matter a lot to the people who live there but the broad strokes of this i think are pretty well understood i'm not betting this way with with our book but if i had to guess we are going to have a period of significant escalation on both sides before they both get to the table macron said this week that we still have the europeans have not made a decision about the embargo of russian oil that will collapse the russian economy and oil will go to 180 or 200 a barrel i think that's a real likelihood and the second one is i think the russians will amp up military aggression um uh in some phase saving measure and to have more to negotiate with um so maybe to answer my own question is if there is an oil embargo then you take the oil embargo off right as part of the economic sanction whacking up of the sanctions um because that's really the nuclear option uh against the russians economically but it's a you know unfortunately i think we have to be prepared for this to get worse before it gets better because it makes sense from just a game theory for both sides to grab as much as they can right before they sit down at the table so they have more [ __ ] to give to each other right but the problem is if both sides keep asking i agree with that fundamental analysis is that neither putin nor zelinski can be trusted on their own uh to basically make peace because they want to push their advantage if either one believes that they're winning on the battlefield they're going to push their advantage to grab as much they can to then negotiate from a position of greater strength the problem is that they're in an escalatory spiral where if you know one or both of them miscalculate we never get that deal and i think the longer the war drags on the harder it is to make a deal not easier one one of the i'd i have to say one of the disturbing things that came out over the past week was in that interview that i mentioned uh where fried zakaria interviewed zielinski zielinski said he said that it's we're either gonna get a peace deal or war three and i'm listening to this thinking wait a second um you know that that is a pretty scary posture for him to be taking and furthermore who appointed him leader of the free world you know the decision to have war three is not his decision he is not the president united states we did not vote for him we may think he's heroic we may think he deserves our support but he does not get to turn this into war three for us the american people did not choose that and this is where i go back to buying in the administration and their leadership what are they pushing for are they pushing for a protracted never-ending afghan-style war in ukraine or are they going to lead the situation to some sort of negotiation or cease-fire and i just think if we're considering the interests the united states we would not let this decision purely be zielinski's this guy is willing to entertain war three that can't be acceptable to us but what what what what is his worst alternative i mean like he's losing his country so of course he wants to say the thing that would scare us into action potentially right so he has nothing to lose so he's right for us he's not he's using he's he's using rhetoric to get us to talk about it which he just won like he you can see that what he's saying is working yeah uh because you're talking about it so uh i think the i think the bigger question in all of this is when uh is the united states willing to draw a really hard line so there was a another thing that happened which is that you know biden essentially said like you know if they use chemical weapons we will react sort of in kind right there was some some version of that it's a red line basically he said yes and and then he also said you know depending on uh you know how they use nuclear weapons we could theoretically respond so just the the rhetoric is ratcheting way way up and that is surprising to me because i would have thought we had a deal in sight just get it done be pregnant you're assuming that we have the influence you assume david that we have the influence to actually cut a deal you were saying yourself for the last couple of months that the u.s power has waned and that we don't have influence so which is it i think you're just blaming it i believe we have the influence to get facilitated we lost our influence listen let me give you an example we are giving zielinski and the ukrainians all these incredible weapons what are the conditions on that if zielinski is unwilling to make a reasonable peace deal do we do we have any conditions and are giving him these weapons why wouldn't we insist zelinski listen we support you we basically are against this russian aggression you should have the right to defend your homeland and drive them out but we also want you to take a reasonable peace deal if one is available and we need you to specify what that is you're we exercising that kind of discretion i don't think so i think you're assuming that biden is blocking this when in fact it might be that putin is and i believe you're taking putin's sort of position here over our own presidents i think you need to know for a second that we don't want to have this continue or escalate you actually think there's a world in which biden wants to see this escalate i don't think that that's the case david we do not have the influence today that we did it is no longer first united states you know gets to dictate to the world what's going on here we no longer have to thought about this who wants to talk to israel putin wants to talk to macron in france not us because we're not seen as an honest broker but but look we don't have the influence we once had okay let me explain i'm not saying we can dictate the outcome okay but we can push for a negotiated settlement instead of a protracted we can lead not bleed okay chamoth laid it out neil ferguson laid it out the rand corporation laid it out these there is a significant chance that there are definitely actors in the state department who want to see an afghan-style situation insurgency play out in eastern europe that's their goal okay now i don't know what biden is thinking but he has made no statement to the contrary what have we done to help lead the situation to a negotiated settlement name one thing well i don't think we're in the room david but biden is in europe in the room i i read all their public statements i don't see anything i don't think they want to negotiate through the press with putin i don't think they want to go up right now i think that says enough about him what his intent is he's in poland right he's going to pause he's in poland we're scaling up our military presence listen yeah i mean i don't all i'm saying is look i don't know exactly what biden is saying or doing behind closed doors what i'm saying is that the u.s should be playing a constructive role to get to a negotiated cease-fire not indulging this sort of fantastical thinking that we can basically perpetrate a regime change operation i agree with you on that i agree with you on that i i'm worried that there may be a small strain of that probability in the range of outcomes here and i didn't think that before i really thought that okay maybe we were a little bit on the outside looking in but it looks like you know we're pretty close to a deal these guys will get in a room they'll you know chop it up and uh it'll be done and uh instead honestly if you just look at the headlines and the rhetoric and the words from all these three leaders in the last uh ten days it's been it's been in the other direction and so you have to wonder what is the point of all of this right now otherwise it could be crescendoing like brad said you know i i i i listened to blinken over the weekend and he talked about what i think he defined what is this new doctrine of economic statecraft he said our objective is we have the power to impose overwhelming costs on our target okay economic costs and he said our cause putin's actions are remembered as a strategic failure not regime change that's what's within our control that is very different bush wanted regime change in iraq and we executed it through the pal doctrine of overwhelming military force i think that this is a doctrine of overwhelming economic force that is meant to not only signal to the russians but every other rogue dictator in the world if you go rolling into your neighbor uninvited you can count on the fact that there's going to be massive economic sanctions because our our military deterrence is no longer a deterrent everybody knows we're not going to go defend taiwan everybody knows we're not going to send our military into ukraine so we have to demonstrate that we actually have economic resolve not these poo-poo sanctions we've been having around the world for the last 20 years and if that is the lasting impact on this i think you're right you know that that we turned this into an economic nuclear weapon yeah better than sending our kids around the world to get killed i think you're absolutely right and i think tony is very smart to say what he said the um the one thing that i would want though on top of that tell me if you agree is just to ratchet down our rhetoric which we can control and maybe to to i mean why not say that listen we're willing to put these sanctions on the table we're willing to basically reinstitute economic ties with russia if we can get to a satisfactory outcome well you don't want a reward i would say is we're making a big assumption to say that there's not back channel diplomacy going on from the israelis the turks the the french you know having those conversations on our behalf right like i i don't i honestly i i don't know that there that's a high probability that we're not sending those signals but to your point i i just don't know i don't know i don't know i but here's what i would say is look i can only judge from the public statements and i think there is signal in these public statements and this the statements are all one way there is no olive branch it's all it's all basically about escalation just like in january before the war what were the state department's statements about the situation they said that nato's door is open and will remain open even though they told zielinski in private that he would not be joining nato okay that was an astounding revelation that came out this week on the fried zakaria show number two lincoln was saying that there there was no change in the american position and there would be no change they said these are all public statements that the u.s would never recognize the russian annexation of crimea never you know he said that we went into these peace talks to represent our core values there's no change on that so in other words it's been the position of the united states to be hard line with russia to basically engage in no compromise whatsoever and uh it's basically double down it's a double you assume you assume david you don't know those are the public statements i know but you're assuming that there's no back channels going on and just to just i wanted to make one quick point which was you know what if we offer to take the sanctions off and then we are training putin that these kind of misadventures get him something don bass etc and that the sanctions roll off so the isn't there a possibility chamath that if we don't keep the sanctions up we're actually rewarding his behavior i'm a huge guy look i've been the first person in the front of the line on sanctions i thought this was the most brilliant approach to this whole thing and i still believe that sanctions work and i think that this will [ __ ] that country what i'm saying though is that there are these moments where instead of then sticking to the rhetoric that tony talked about what he said i don't know brad where tony said this uh this weekend but like sticking to that there are these added flourishes that i think are unnecessary so what i mean by that is the talk about you know us reacting uh or retaliating for the use of chemical weapons biden made a campaign vow i don't know if you guys remember this about nuclear weapons where you know he was very clear that you know it is a mechanism to demonstrate that this deterrence exists and instead he actually caved and instead he put out this carefully worded statement which kind of walked back the campaign valve earlier this week and i'll just read it to you i'll just read what the wall street journal said it said by president biden stepping back from a campaign vow has embraced the long-standing u.s approach of using the threat of a potential nuclear response to deter conventional and other nuclear dangers in addition to nuclear ones during the 2020 campaign biden promised to work towards a policy in which the sole purpose of u.s nuclear the nuclear arsenal would be to deter or respond to an enemy nuclear attack instead now it holds that the fundamental role of the nuclear arsenal will be to deter but that it leaves the opening to respond and use it in extreme circumstances so these are big changes and if if our whole goal is to just focus the surface area to an economic set of sanctions these are somewhat unnecessary would we all agree we don't need to talk about changing our nuclear policy yeah biden was right on the campaign trail the united states of america should never use nukes except if nukes are used on us come on we know that yeah and we're talking about changing that now that's insane look it shows that there there's an influence in our government our state department of certain hardline elements who want this very tough policy that includes destabilizing the russian regime and maybe toppling putin i'm just saying that objective is not worth all the existential risks that we're now facing all right do we want to touch on the ccp tax cuts we want to wrap we're at 80 minutes i mean the the ccp tax cuts harkens me back brad you can react to this because you lived it with me 2018 2018-19 i'll say it again we were in this unique moment where you know we were not sure whether there was runaway rampant inflation and in q4 of 2018 the fed basically said okay you got us you know the boogeyman exists we're going to go tame inflation and they ran forward and raised rates and lo and behold the chinese economy turned over in q1 of 2019 we had like a you know kind of a blippy little recession um and we had to overcome it because china became stimulative now here we are again we're worried about this inflationary boogeyman and the chinese government basically extended these tax cuts increased the tax cuts and essentially said we're going to be very stimulative in the economy especially through the back half of the year now china again is a massively export driven economy right so the reality is that as goes china so goes the rest of our economies and so i think that it's a setup where how can the united states be under so much inflationary pressure where china is effectively telling you that we are in a um in a contraction and a recessionary period and so if that's where china is there's a risk that we may already be there or entering that and so i think it's a little um you know uh contributing to you hit two really important points jamal number one which we didn't get to earlier i tweeted a few weeks ago the fed's probably behind the curve on recession not inflation right we have massive demand destruction going on right now on the u.s economy massive the producer define what that means brad define what that means so i mean if you just think about what does six dollar gas mean what does no stemi checks mean what is the fact that you actually have to go and get a job again mean you know we're we're rolling back trillions of dollars off the fed balance sheet i'll tell you what it means is that people can't spend as much money just the increase in the 30-year mortgage means you're buying power in december four months ago to buy a house and you if you could afford 1200 bucks a month that buying power bought you a 350 000 house today it buys you a 295 000 house people's ability right to have money to spend money is getting crushed so i think we are going to face an economic slowdown if you look at the pmi so this was the inflation read in january little people didn't really notice it pmi in january came in at 0.2 versus the consensus estimate of 0.6 that means the producer level of inflation was meaningfully less than we expected if you look at consumer confidence it's plummeted one of the four biggest drawdowns over the last 20 years retail sales in uk this morning crashing consumer confidence in the uk crashing the chinese government sees this we're we're not surprising look at the what's going on in the world with energy prices we've never had oil over 120 bucks and not gone into a recession we're facing a global slowdown that will have big implications for inflation big implications for rates but china sees this coming and says we're going to get ahead of this we've got a people's congress in november we've promised him five and a half percent gdp growth three trillion of that is export driven that means if europe and the united states catches a cold they catch the flu okay so they have to do everything in their power this is why they're not going to supply the russians with weapons right because it's economically assassin assassinating themselves right so we have this interconnected world this idea that we're de-globalizing what we do doesn't impact anybody else like that ship has sailed a long time ago and the chinese see this that's why i think there's also a probability by the middle east this summer the fed in the united states is saying we now see a balanced risk between growth and inflation saks let's get you in on this just as we wrap here the chinese communist party premier talked about tax costs and this is a quote fertilizer applied directly to the roots of the economy tax rebates look like reductions but actually are in addition today you get back tomorrow you get more in returns does this mean the united states uh people will go back and get jobs because they need to have more money and that maybe we should be looking at you know tax cuts at some point listen jkl i think we got big problems here at home in the united states brad and chamoth they've laid out these gigantic economic risks that are facing the country you know i tweeted at the beginning of the year january 24th the president's main job is to ensure peace and prosperity and bind's popularity was already plummeting i think this is when his poll numbers were at 38 but if he gets us into war and recession he ain't seen nothing yet this war the longer it drags on the longer it basically can spin out of control and become something worse that sucks us in the longer it creates the risk of basically causing a recession in the united states we need the american we need the the blind administration to help try and lead to a better outcome here instead of ratcheting up the rhetoric all right folks there you have it that's your all in podcast for this week thanks so much to brad kirstner for joining us and filling in for the sultan of science bg thanks bro and a lot of great announcements here brad will also be joining us for the all in summit we're about to wrap up tickets uh we've announced a bunch of great speakers uh for the event may 15 16 and 17 in miami uh you can just do a search for the all in summit we have uh given out uh we've sent 200 emails to people who asked for scholarships and 100 of them have taken the tickets 500 of the 650 tickets or so are accounted for we'll be wrapping up registration in the next week or two and we look forward to seeing you all at the new world symphony in south beach do you have any announcements of people who else is appearing oh my lord we have great announcements keiser boy is coming joe lonsdale is coming nate silver is coming nate silver i love nate silver well we decided chamoth we would have people do 15 uh to 20-minute ted-style talks like position papers and so who else do we have doing that uh tim urban of weight but why who's a brilliant tech speaker and writer nate silver's gonna do that and then uh antonio is coming he was just on uh uh and uh he was just on a rogan show and so we're gonna have these like 20-minute uh kind of hits then the besties will sit with them we'll do those back to back kimball musk is going to come and talk about his uh dao that he's doing for non-profits brad we're going to talk about what topic so we're collecting all this talent and then we'll figure out what positions they're going to play in the show and what the themes will be but the themes will match what we've been talking about here and we don't want to pre uh set the themes six or seven weeks seven weeks out from the event because we don't know what the world will look like then uh and then free burke said he wanted to do a position paper and actually give a 20-minute talk so bessie's will have that ability and besties will start the event and end the event tons of different speakers rotating in and out talking about the most important topics of our time but i would like to have peter there can you get peter thiel to come he's maybe the most iconoclastic please please i'm just not i have to get over my uncertainty that this whole conference thing is really a grift it's not a great we're putting all the money is going back into the event and we gave 200 scholarships there would be no profit from the other there needs to be a really nice swag bag and i i think it was already at 600 dollars a person i just spent three or four hundred letters what is the material of the hoodie all right if it's gotta be a cashmere hoodie if that'll be on the ground hundred dollars for people need to be able to buy up to the to the special hoodie brad i just spent six hundred thousand dollars per gift bag for 600 gift bags okay it's like 400 grand in gift bags and chamath wants to put a six thousand dollar so that i just wanted to know what the material was of the hoodie in the bag that's all i'm just asking a question this is my life brad i am busting my ass to put this event on and complaining about the gift bag saks is complaining on me making a dollar from it and free berks having a panic attack that we don't have enough great speakers and i'm doing all the work that's my whole [ __ ] life i appreciate you j kell i know you did say some nice stuff to me you did say some nice stuff right appreciate that i'm bored with you getting a fee for your hard work yeah i don't need to give you like an hourly wage you know 15 an hour no i'm not your weight slave david sucks i'm working hard here but i'm working hard but i i just wanted to be appreciated i don't think you should have like a cotton blend is my i think by the way brad do you have any thoughts on the sushi is there should we be using brown rice and not the two line cloth tuna no just make sure there's golden brown gold leaf on the sushi no literally we're spending i think for 300 or 400 000 per party it's over a million dollars in parties and i'm talking to talent bookers about serious talent coming to perform drake can you get drink how about dueling that's three million dollars do a lipo two million dollars in two million dollars that's what the dungeon i got what does that mean how much is dojika she's great i think those are all seven figures i would like to anyway what i'm trying to do worthwhile i mean that would make it an incredible party oh god i mean i really would like to get started how much is drake again two million dollars i heard two to three million and get drake yeah good idea yeah yeah yeah cancel the bags give it all the drink so you guys are saying and all the work i do i should take two million dollars and hand it to [ __ ] drake yes yes drake is more valuable than you 25 years of working on events and media brad and these these are my friends who are like take the 2 million drinks you can put in your pocket and finally make a profit on your work and just hand 2 million in a bag to drink we don't need the bags forget about this one guys can i get a plane i'm do we get to work with drake on which songs he's he would sing i think he does like a medley of like three what i would like to do is have three songs for two more come on i think it's basically like a hundred thousand a minute i think that's what you're in for a hundred thousand per minute just 20 minutes that seems egregious no i mean these guys get paid when when i hired snoop he did like 20 songs for me i mean it was unbelievable two or three hours three hundred that's because he forgot he was there yeah he had a great time oh my god man he was blowing this joint that was so powerful that i was 10 feet away and i got stoned i mean it was like he walked in it was like i remember it was like 20 super bowl shows good stuff all right everybody love you besties love you brother we'll let your winners ride rain man david sacks [Music] we should all just get a room and just have one big huge orgy because they're all just useless it's like this like sexual tension but they just need to release [Music] your feet [Music] oh [Music]
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