All-In with Chamath, Jason, Sacks & Friedberg - E29: Coinbase goes public, direct listings vs. IPOs, portfolio management, unions & more with Bestie Guestie Brad Gerstner

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Any word from the dictator or should we just do a I don’t know man. I got it

I I cannot spend my whole day sitting on zoom waiting for chamath

Or I could have brad gerson or come on and sitting for isn’t he richer than chamath?

He is now the largest spack in the world. Should we do that? Should I just have brad come on the pod?

Oh my god. Yes

Started now get him on started

Come on comes in later. He’s like what the fuck we’re like we replaced you with the new spack king

Oh my god, oh my god, get him on is this like, uh a kidnapping and you guys are gonna take me out and drop me

out behind uh

Behind the railroad cars what’s going on here? Okay, good. Here we go. I’m good. Is it how’s the game?

Gain is great. Good


Has gone crazy

Hey everybody, hey everybody, it’s another episode of the all-in podcast

We took last week off because it was spring break and we all needed a break

Hope you had a great one too with us today. Of course

The queen of quinoa from an undisclosed sunny location david friedberg. It looks like redwood city

Is it redwood city a rain man himself?

David sax ready for governor And of course the king of all spax brad gerstner is with us again the new dictator

Uh filling in for chamath. Polly hapatea the dictator. Oh wait chamath

The dictator is here as well

and special bestie jason

jason jason

It’s not when you

I don’t know what that means, but we’re editing that out of the show

That’s a bunch of beeps, uh, but welcome brad sitting in uh, just for a moment here because chamath was gonna

Blow it off. Yeah

He was a no-show. We needed a spat king. Sorry guys backing. I apologize

Emergency, it’s just it’s just a little flattery for chamath. The truth of the matter is chamath. Uh chamath is pioneering here

and uh, you know, I think um,


It’s been incredible to watch the competition and choice and as chamath knows I participated in a couple of the deals that he’s done

um, and I think we all share the same feeling which is, you know, there’s been a

uh, a system that is pretty byzantine

That wasn’t serving the founders who we all

Uh, you know care deeply about and so i’m just i’m thrilled whether it’s direct list

like roblox did a few weeks ago that we we helped do and

You know or whether it’s chamath and the incredible innovation that he’s helping to do or you know, we’re lucky

We’ve been we’ve invested in you know, building a capital markets business on top of this

uh this back and and and then

You know worked with uh grab to bring a great public company out this week

So let’s get to the direct listing. Uh good segue

Clearly the biggest news of the week is coinbase the largest direct listing ever

Uh bill gurley somewhere is smiling

And that’s on top of roblox, which I think was the second biggest

Uh 2020 revenue 1.2 billion. Sorry brad did did snowflake direct list or that was a traditional?

No, that was traditional idea traditional idea. I don’t know who got their bet week. They’re

Wet their beaks on this one sax. Did you have a little bit?

I had a little tasty poo little tasty poo. I had uh, I had a lot

showered upon me

Uh explain boys because you’re because you’re in ribbit, right?

I am I was mickey’s one of mickey’s largest lps. Yeah

Who’s making for the audience who doesn’t know mickey malka who runs a ribbit capital who owns seven percent?

Or ten percent or seven or eight percent of coinbase and what was incredible was I got distributed all of it yesterday

Which by the way, I think for a direct listing the strategy to me makes a lot of sense

I made a mistake in hindsight if I think about my distribution strategy because myself excel and andreason

When we did the slack direct listing we distributed probably five ten percent and then we waited and then we trickled it out over time

But by definition, I think the price action on direct listings shows you that you top tick the top price

At and the moment on the open print and so, you know if you’re going to sell

You’re probably better off selling absolutely right away

And if you look at the price action on direct listings, it’s basically been one way direction down from the point of the direct listing

Spotify did that for two years. It kind of languished, you know slack did that until the salesforce acquisition?

Um, so in general, I think if if a direct listing happens when you get distributed the stock you should probably sell it right away

and that

Uh means it was priced correctly as opposed to underpriced. Is that what we should take from that?

Well, no because there’s no price. That’s what’s well

What’s tbd is what is the morale hit to the company to see a one-way?

Direction down in you know a stairway down on the stock price. So maybe it was good for selling shareholders

It’s not necessarily good for the morale of employees which then could impact

The long-term enterprise value that’s being built at a company. So I think there’s a bunch of tbds

I do think that direct listings are administratively clean in some ways

But company building may not necessarily win but you had a point of view

I think it was last year or two years ago about how

You know and I read some papers that one of the analysts at wall street put out showing that um

There isn’t much of a benefit to lockups with respect to short or long-term price volatility

Do you still hold that point of view?

like I think lockups are I think lockups are really unfair because they

They’re they’re attacks on the people that have been there the longest which are the employees

So, you know the idea that somebody that comes in at the absolute last minute

You know brad and I have done a bunch of ipos recently where he’d like you get allocations in a book

He and I had nothing to do with companies, but we get it shares and we sell it day one

Then there are people that have been in that company for six seven eight nine ten years who sit around

You know twiddling their thumbs watching all these other people

Generate one one day returns. There was a tweet that bill gurley had yesterday that says

There’s a well-known crossover fund that over the last year has printed a billion dollars of one day share gains

Well, that’s crazy

So I think that lockups are kind of a regressive tax on the people that do the work and they

They are just rewarding people that have nothing to do with companies brad

What what do you do in grab because you lock yourself up right for a couple years and

Is there a lockup for the existing shareholders and grab? Yeah, so first I totally agree with chamath

Lockups are one of the most insidious things I think about the traditional ipo process

You know the fact that doordash employees are sitting there watching the stock go from 100 to 200 and then

You know all these other folks are selling while they’ll watch the stock go from 200 back to 100

I would think it’s incredibly demoralizing and it doesn’t here’s the thing. It doesn’t need to exist

In roblox, there was no lockup

The employees were free to sell but guess what a lot of them chose not to sell

Right, it’s fair and and quicker price discovery when you actually allow it to happen

When you actually allow the supply and demand to exist in balance. So what we what we did at

At grab was we fought hard for the most open unlocked

Right day one we could possibly get

In that case, there are a lot of big shareholders who are on the board

So they’re deemed affiliates under section 16 of securities law, so they can’t sell right they’re deemed to be insiders, right? And

But we at the end of the day all employees can sell there is a group of senior management that said hey

We want to voluntarily lock it’s a signal to the market, but all other employees in the company can sell

So there are over 5 000 employees in the company

And all of the early shareholders can sell on day one and I think this was

The first time i’ve seen this in in, you know, this alternative ipo so we have almost a third

Uh of the entire share base of the company that is available for sale on day one incredible

Hey, brad, can I ask one more question? The um the the economics for grab

Are they are they better?

Under your structure than they would have been for traditional ipo to get the same amount of capital and they’re paying seven percent to

The underwriting banks, you know as you as we all know, you know, bill

girly has

Has laboriously pointed out and documented that there are two expenses to a traditional ipo, right?

There’s the upfront fee five and a half six percent, whatever they’re paying on the amount of capital raised

But he would argue the much bigger expense

Right is the indirect cost of the structural underpricing, right?

Right. So in a traditional ipo, let’s say you have a 10 billion dollar enterprise value raising a billion dollars

If it’s being underpriced he would argue structurally by 40. We can all debate that but that’s 400 million dollars of dilution

To employees and to existing shareholders

I I think everybody in the grab process


the buy-side portfolio managers from fidelity janice tiro, etc as well as the company believe that we got a

20 to 30 percent higher price than a bank would have got because of the conviction the portfolios managers had

As a result of the significant investment

We were making in the company as a result of the fact that we were locking up our promote shares our sponsor shares for three


Um, and so if you say it’s 30 on a four billion dollar raise, that’s over a billion dollars of savings

Right over a billion dollars of indirect cost savings to the employees

And the shareholders and like for me

Our north star is founders. And so we literally have deconstructed the ipo at every step of the value chain

And to say, you know like rich barton my my thought partner in this he’s taken

It’s on the board of netflix when it went public took zillow public took expedia public

And he said like we can make this better at every step of the value chain

And so we’ve thought about it like a product and we build in a capital markets business. It says part of it

Right is eliminating the commission part of it is getting a fairer price, but part of it is curating that day one cap table

Right because these companies are stepping into the public markets

And you know as rich has said and others have said think about all the curation that goes into a private cap table

Now when you go public

Rich calls it a cap table randomization event

Right, you lose total control over your cap table, right?

Whereas in the case of grab we hand selected

What we think are the world’s best public market shareholders to be their day one cap table

So it’s a very different outcome and it’s not just about cost savings. It’s not just about

Trying to get a fairer price. It’s actually making the process better at each step of the value chain

All right

So we were talking about coinbase last year when they had a big brouhaha and brian armstrong said

We are not going to talk about politics inside the company

Um, you can have political views but not inside the company sacks. You did some tweets about this. What are your thoughts?

Yeah, I mean


the coinbase’s ban


Politics in the workplace and their refusal to submit to new york times interviews did not prevent them from creating an 85 billion dollar company

You know, i’m i’m shocked shocked that they were able to to do that. Uh, that’s basically what I tweeted

and um

You know, it just shows that founders can do things their own way. They don’t have to submit

To you know the woke mob and that’s basically what I tweeted and then you know, of course

Well the first it’s been interesting to see the reactions the first day

I got like 10 000 likes and then the second day. It seemed like some sort of sos went out

And uh now i’ve been sort of surrounded

There’s been this like outcry and my takeaway is that the woke mob really doesn’t like to be called out as a woke mob

and um

They’re sort of they’re sort of surrounding me with pitchforks now saying how dare you call us a mob. Um,


Are you running for governor because it looks like you’ve taken?


Did you take botox he’s in miami, so it’s probably what’s going on with your

Lace on the botox

Your lips are incredibly swollen. I mean, they look very succulent. It’s unbelievable

I’ve got a new lens. I’ve got five different technologies. Uh making me slimming me here

But you do have your pin on today and you do look very governorial and I noticed that you bought i’m wearing my miami pin

This is my city of miami pin francis gave you that francis gave me the pin that’s fantastic. Did he tell you never call me francis

What is the big announcement today for you guys we’re really excited to hear it. Yeah, tell us governor

What do you got on deck there? There’s nothing this is a this is a jason construction. I don’t want to get to me

Do we have a do we have an exploratory committee set up yet?

Let’s get sax out of the game. I need that deal. I mean guys guys

Obviously if this comes to pass we’re going to rewrite history as david sax was our venturian candidate, you know

I floated the trial balloon

There was a layup

For david sax to come and alley-oop and dunk on gavin newsom. No, look. Oh, no, look

the world

I tell you newsom is doing everything in his power to to blow this recall because I mean

Timing is working in his favor. I mean he’s done a horrible job on everything vaccine related

But the reality is covet is winding down. It’s going to be over

So even though he delayed, um, everyone getting the vaccine by by weeks if not months months

Probably yeah by months

We’ve got seven million unused doses sitting on the shelf in california because all of his crazy eligibility requirements

Despite all of that by the time we actually get around to the recall which will be in about five or six months

uh the recall election

You know, the economy’s going to be booming again and we’re going to be over people will probably forget

But but for the fact that he is now saying that he cannot guarantee that schools will reopen in the fall

So we now have we now have schools reopen

In you know every public schools reopen basically in every other state

You now have private schools are all reopened in california and he still cannot guarantee that schools will be reopened

Not not now but in the fall

David throw down the gauntlet

Yeah, make the guarantee you made enough money you will open all the public schools when they open in fall day one

Yeah, and uh, i’m not this is the window david now or never i’m not i’m not i’m not saying that that i’m running

But one thing I would say is that whoever what what about if you ran?

If I ran I would 100 absolutely guarantee that school was opened in the fall

What we need what we need is a governor who will go to the teachers unions and say

Listen you will either report for your duty the first day of school five days a week no exceptions or you will look for another career

That is what we need

More more more

I’m not running. Let’s go. Let’s go. Let’s go. Can you make all the vending machines free?

Yeah, sure. We can do that, too. Okay, can you can you get rid of all my debt?

Yeah, why not? Okay

Can we go back to the to the markets just for one second because I just want to I want to ask a couple questions

Brad, uh q1

Was nuts. Let’s get some color commentary from a big player in the capital markets you talk us through us. Uh, talk to us through

what uh factor rotation

Was talk to us about your reactions to?

This archegos capital thing about inflation

Also gut check like what is that?

What is what is the rest of the year look like like talk just how what’s your sentiment how you’re feeling?

Just give us a reaction on just the economy and the gut check brad on

Weren’t you like the biggest shareholder in united at some point?

And oh, yeah, that was a bad way to start off 2020. Yeah, I want to hear about the bad way to start

However, I would say that it ended up being the best year in the history of the firm

And so, you know like we like everybody else had to reinvent a lot of things about our business last year and and um,

Uh, we learned a lot from that moment and and the courage that a lot of people at united showed through through that period of


Without a lot of help. Uh, a lot of people think the government was helpful

There’s a lot of unhelpful things that were being done, but notwithstanding that fact to chamas point

Um chamath, I think I went on cnbc in november and just said like when we normalize

There’s no reason that the 10-year shouldn’t be uh back at the level it was in january 20

Right and for every one percent move in the 10-year

You’ve got a 10 to a 20

Draw down in growth multiples and the reason for that is very simple

They’re long duration assets you discounted back at a higher rate and so you have multiple compression

And so we were starting at an all-time high in terms of growth equity multiples for both software and internet

When you look at october november of last year, we’ve seen about

30 to 40 percent retracement

Or you know give back in terms of those multiples

Right in some names. It’s bigger and sometimes some names. It’s less. I suspect that there’s another 10 to 20 to go

Right, uh for a 10-year that’s going to be sitting here at 1-8

Um it I just got done talking as part of this road show as you know to all the biggest growth equity

Portfolio managers on the on the public buy side. I can tell you they’re all deleveraging growth

They are not adding they’re not looking to add dollars to growth and these are the biggest

Managers in the world and so we’re not through that process

There are some people who’ve anchored themselves to the fact that zoom was just at 500

They’re like, oh my god, it’s going straight back to 500. You’re like no 500 was the outlier event

That was the all-time high multiple event. It will get there in the fullness of time

But it’s going to have to get there through earnings. So so what do you think then happens in the privates and you know?

There’s a lot of talk about

Certain firms some of your competitors in the growth stage side ripping capital into companies every 24 hours or 48 hours

where where does that then normalize because aren’t we setting up a dynamic where

If you have a bunch of growth firms pricing crazy rounds whose valuations can then will not be able to be

Held up in the public markets. Aren’t we creating a different kind of problem?

well, um

You know you and i’ve watched this dynamic play out probably four or five times over the course of the last 15 years

Where there’s this inversion?

Private capital markets private markets are actually overvalued relative to public markets

I just look at a few ipos this week over the last couple weeks deliveroo hot private company down 30% in the ipo

App lovin came out this week 20% down in the ipo, right at the end of the day

The great that you know as munger likes to say, you know

The markets are a voting machine and the public markets are a brutal voting machine

um, and so

You know, it just is going to take remember when groupon got done that last private round at 20 billion

And then about nine months later is trading at 5 billion or zynga. I mean you and I go through this we’ve watched this

You know, so it just takes the smack down and people losing actual money

um, and and however

So that’s the one side right? This is a temporary dynamic markets will clear

I think it is possible you referenced, you know, uh, a good friend of of mine, you know

Who’s supposedly writing a term sheet every two days?

Um, you know, uh at tiger the truth of the matter is you can hop you can hold simultaneous troops

You can believe the next three months that we’re likely to have more multiple compression in the public markets, right?

You could hedge your public book in a variety of ways against that like like we did and and announced last last december

And at the same time you can believe that the secular trend in technology has never been more potent

Right, and I believe that if you own an index of the top 30 percent of technology companies in the world today

And you’re willing to hold them for five to ten years. You will be

Incredibly well rewarded the the the most asymmetric bet maybe in the history of all of investing

Is having a golden ticket to have access to the best technology companies in the world today

It’s it’s like unfair play and everybody on this call is playing in what is a highly asymmetric and unfair game

Stacked in our favor now

We can screw that up by trying to think we’re good at short-term trading or doing a bunch of other stuff

We can get individual things wrong

But if you bet on the top

The top quartile of technology companies on a global basis like tiger and others are doing

Um, and and you have time on your side. You’re going to be well rewarded

we talked about

the mid-market late stage

Venture space being a no-man’s land a vortex

The value being created in the late stage and value being created in the early stage

But the money in the middle becoming a commodity

Because of tiger co2 and others coming in and just coming over the top. Do you uh subscribe to that broad?

Do you think that’s just a financial transaction in the middle and not a lot of value to be made there or do you think?

No, I mean, I you know, listen

It doesn’t matter in snowflake whether you invested in the 100 million dollar round the 200 million dollar round the 500 million dollar round

The billion dollar round where sequoia came in

You know if the company’s going to two three four hundred billion dollars, right? All of those are extraordinary returns

So altimeter has described itself

Often as a life cycle investor, right? I represent the biggest portion of the capital in the firm

Some long-term endowments are number two and number three

And we have a multi-decade view on the world and our view is the one that I just articulated

I want to have maximum dollars

I don’t care that it’s all in the b or the c or the d or the ipo or you know

I want to have maximum dollars behind our best ideas and I want to be an incredible partner to these companies

As they move through the life cycle and part of the reason we build a capital markets business

To help founders in a better way step into the public markets is it’s part of our mission, right?

Like I want to you know

How frustrating it was to me jason to be pre-mar or pre-ipo and mongo or twilio or octa

And then when it came to the ipo I have to go to the banks and grovel

Right and grovel for an allocation and they dribble five or ten million and I see them handing big

You know big allocations to people who I know are going to flip it and I actually want to own this stuff

It’s very frustrating. And so we think there’s a better way and when those companies come public in the future

You said something which I want to use as a question to

Friedberg and sax and jason because these guys are involved very since in one way in what i’m going to say

Which is you said gross tonnage of dollars one of the most incredible things that I thought about the



Was the amount of unbelievably smart buying that andreessen did and I thought to myself

Andreessen just out sequoia sequoia

And what do you guys think about sort of how they’ve been able to

To actually execute it just seems like andreessen is done an incredible incredible job

I don’t want to I mean jason you’re close to sequoia. So are you friedberg? I just want you to react to that

No, you gotta get you gotta give them credit on coinbase because I think they made the they made the most money I guess

Ribbit and gary tannin initialized may have made the highest roi because they invested a smaller amount of dollars earlier

my return my return in ribbit, uh

The maya from iconic told me was 506 times, right? Exactly. So so so ribbit made the 500x and I guess

Andreessen but andreessen made like 20 billion of returns of which you know, they’re probably getting 25 30

So they they made the most money

May not have been the highest irr, but it was the most money and you’re right

They doubled down in this like 2018 2019 period. It sounded like they were doing a bunch of secondary buying

They were buying the stock at 25 bucks. Yeah, they bought it all from fred wilson in union square

So as much as from other investors, yeah, they were just they did what soccer did with twitter right and with uber and started buying

But they did it but they did it at a time where people were losing faith in crypto

There was like, you know, remember there’s like this big

Winter. Yeah, there was a big crypto boom and like i’d say december of 2017 january 2018

Then it kind of collapsed and the you know mirrors the price of bitcoin

You had bitcoin reached a peak of about 20 000 that crashed all the way down to four to three or four thousand

Obviously that was a great time to buy bitcoin

But it sounds like these guys were also buying coinbase at that time

So that was a pretty that was a remarkable doubling. By the way, it’s a good it’s a it’s a good validation of brad’s point

About you know market perturbations being fairly independent of value creation over the long run

And you know if you have faith that this is where value will be created over a period of 10 plus years

um, you know, you’re you’re when you have an opportunity to buy in buy in and don’t let the market perturbations drive your

Decision-making or else you end up in this market trading trap

Um, yeah, I think I think we’ve we’ve talked about this a lot warren buffett talks about it a lot

I think chamath you’ve made the point about


Not timing the markets but your time in the markets and this notion that when you have conviction in a business or an idea

or a thesis

uh, you know, you can continue to double down on that conviction regardless of whether you think relative valuations are appropriate or

Or kind of just join it at the time. It’s even more acute

Because what happens is we make short-term decisions

And then those short-term decisions oftentimes to prove to be right in the short term and let me give you an example

And then it leads to behavioral lock-in right so at the end of 2014 bitcoin’s at 1100 a share

We get I get very interested in crypto. I think this is one of the most asymmetric bets I see in the world

Right. I have I think it’s a low probability event. But if you win the size of the prize is absolutely gigantic, right?

So we’re looking at a deal with um andreason

Because I thought balaji was one of the smartest people in the space

The company was called idea of mining for bitcoin on a chip

on the eve of the deal

My partner and I I said, you know what?

I believe that we should place our bet in bitcoin

Because i’m not sure whether or not this mining company is actually going to work out. Okay, so we pass on the deal

crypto bitcoin goes from 1200 to 300 in like a straight line down

And what was my takeaway?

My takeaway was like man. I’m so smart. I’m so smart. We passed on that deal

Okay, rather than being curious rather than learning more rather than developing it

And what andreason did during that period of time is they stuck to their belief that this could be a highly asymmetric outcome

Ultimately, I ran into katie hawn a board member at coinbase the night of the ipo

And she said brad, you know, um, do you remember you know

I was like, yeah, she goes those were some of our original shares in coinbase. We sold that company to coinbase. Wow


and and

You know, it’s just for me

I sent this note to our team because I said, you know what guys in the face of having some good wins

I want to remind you

of some really potent

near near wins and misses

And my mistake at that point in time was I lacked mental flexibility

I got locked in to this idea that I was really smart by having missed

Rather than learning from that moment and saying listen when I started to see it move and then it moved pretty quickly

And I was like, oh I missed it

It’s just like a stock we do the same thing

The reality is you should allocate to things that you think are thematically highly

Asymmetric and great ideas and and this was one of them and one we missed

Can I just can I just add something to that I was in 21, it was 21.e6. I don’t remember getting any coinbase shares

All right, so somebody somebody you did not own the preferred

I did own preferred I invested you did not clear the pref stack. You’re the wrong series

One thing i’ll add to that is you have to look at the mandate of these funds

If you’re an early stage fund and you have the ability to sell at 500 x or 1000 x or 2000 x

Sometimes you’ve got to lock that in

And give something to your lps and I think this is where

You know thinking full life cycle. You said chamath like what did you learn from all this?

Well, if you’re if you’re building a business, right?

Well, I mean one of the things I learned is I didn’t even know what prorata really was when I started my career

I didn’t do prorata in uber or anything

and now my position is I am

Going super prorata in our winners. So not only holding winners

I’m trying to get to 10 15 ownership in these companies and it’s starting to happen

You know with companies that are worth 500 or 700 million

and so that that is the economic that’s the change in behavior i’m doing which is

You know to your point if you bought snowflake at any time, you feel great about it

But then you have to have buy-in from your lps that they agree with that

And that they’re okay with you taking a longer strategy and then at some point you want to return capital

And that becomes super problematic, you know, you’re in seven eight nine ten of your fund

You want to take some chips off the table?

and so what i’m going to do now is

I think i’m going to try to do both where I have a group of lps who want to buy shares

And I don’t know how to figure this out

And maybe somebody could advise me here

Because I have had other venture firms who had this challenge


The I don’t I don’t want anything you own

Well, no, no, I know that

Bro, be careful

Why do you say yourself like that? No, yeah, i’m looking for advice here

The whole point of this podcast is for me to draft off people who are smarter than me

Mission accomplished. So here we go. Yeah, we still have to teach you how to set up an llc to buy your house

Sorry, i’m an idiot nouveau riche, but here’s the issue can I be an angel investor in

Uber and then be selling shares in uber to my other lps

And creating that sock a secondary market or is that conflicted? You know, i’ll tell you, you know, um,

Uh, I think this is public

I don’t know if it’s public. I will say it anyway because I think it’s well known but um

Founders fund had early spacex shares that they thought it was prudent to sell in the early funds

Those spacex shares the later fund was buying spacex shares in that round

Um, and so they were in a circumstance where they had such a big markup on the early round the early fund

um that they had to kind of distribute and liquidate those spacex shares meanwhile, they’re

Some of with a good overlap of lps were buying in the other fund at that at that higher price

You are speaking to something I lived out in the early venture funds of social capital because when it was not

Entirely my own capital base

I felt that pressure and I did similar things because I was like, oh wow, we’re in year seven eight nine

You know that I had and I had great lps. It’s like wait

How can I not give capital back to the brode or mayo? These are phenomenal institutions

They weren’t pressuring me at all, but I felt internal pressure and I started to make suboptimal decisions for myself. I couldn’t make

really, you know

Clearly the best optimized decision which would have been to hold everything as long as possible, you know to your point

Like if you’re in the top quartile of things

The best thing is to never sell and it’s an incredibly

Special place where you can actually have that freedom to do it

The it’s what’s interesting is I actually think the the folks that are in the best position to do are actually employees and you I

Actually think that they’re they’re randomly doing this when you look at the churn rates of employees today

Like I saw this crazy stat the average tenure at uber is 1.8 years. That’s crazy

The average tenure at tesla is 2.1 years. The average tenure at google is 3.2 years

so if you think about a traditional tenure career in the valley, you have somewhere between

You know three five three and five different baskets of shares

That you’re getting and you know, those are those are costless options effectively

That’s actually an incredible form of portfolio construction for these people because if you never

Have to sell those things you can wait till they go public and you can underwrite them forever

That’s probably what a lot of employees in silicon valley have figured out implicitly

I have a question I want to ask you guys as well

Which is um, I just want to go back to the public markets for a second

I tweeted out some of these amazing things I learned from the bezos. Oh my god. This is demented

Did you guys see what I what I tweeted? I saw your tweet and I and i’ve been reading it. It’s unbelievably

It’s been do you have it in front of you? Jason? I do i’ll just give you the chamat’s tweet here high level

28 percent of purchases on amazon are completed in less than three minutes. I think we’ve all done that

50 percent of purchase is on amazon are completed in less than 15

And if you actually look at that, and I think this is a really I don’t know if you made this calculation

No, this is bezos wrote it in the letter all of these things

So if you value your time at ten dollars an hour a very low one

um, that’s 750 a year, um,

And that means your prime is free of 120 a year still

630 in profit. Let me say differently. Uh

The average trip to the store driving buying coming back is an hour

So what bezos said is that typically we will save you 75 hours because we can make all of that more efficient for you

At 10 bucks an hour. That’s worth 750 dollars. We only charge you 120 for prime, which means you’re you get

630 dollars of savings, but then he goes on to say and we have 200 million customers on prime. So we’re saving them

126 billion dollars my instant reaction was two things. And so the last two points in that tweet are mine

One is holy fuck that’s more in one year than what most companies are worth in their entire lifetime

And the second is that you can buy amazon for 13 times one year’s worth of savings for a customer

It’s just if you look at prime

Yeah, which which makes amazon seem exceptionally cheap

but I reason I brought up amazon is he also wrote in there about his

Responsibility to his employees and we were just talking about employees and churn

And this was incredible to me that 70 percent of their employees voted down the unionization effort in alabama

And I just wanted to get saxy poo. Yeah, red red pill it crush it snort it. What do you what do you got to say?

Yeah, well, I mean what what happened is you had in alabama? There’s a amazon plant there

that uh where they there basically was an election to decide whether they would go union or not and there were

2,536 workers who voted in this union election

about 1,800 voted against unionization


738 who voted to unionize

And then ballots from another 505 workers were either were challenged by either amazon or the union

So we don’t know yet what they mean, but those votes won’t change the outcomes

The election is over now. This was a heavily lobbied

Election. I mean amazon was lobbying

um employees

but so were the unions and it looks like the unions at the end of the day or lost and

The employees voted to you know, remain unionless

Brad what do you think?

I thought it was a beautiful defense of capitalism. That’s very much needed right now. Yeah, you know, um

It reminded me a lot frankly of the gates foundation annual letter

You know where bill gates is saying, you know capitalism is far from perfect

But it’s resulted in the most important era of prosperity and health and wellness in the history of the planet

And you know as I said on cnbc this week, you know, we live at a moment where capitalism is absolutely under attack

um, and

I truly believe it’s the greatest force

The greatest potential force for good in the world

It brought us a vaccine

right, it brings us innovation that pulls people out of poverty that makes people healthier that

Gives an opportunity for people in rural areas that are impoverished to be educated

But I do think it’s incumbent upon

Bezos, I think this was very much a robber baron sort of defense of building railroads

And I thought it was brilliant in its execution

But I think it’s important in it for all of us to stand up not defensively

But to say what are our obligations to make capitalism the greatest force for good?

You know chamath whether it’s you and I talking about invest america on cnbc and giving every child in this country


participation in the ownership society, right right or all the other initiatives that we need to work on to

You know to to make the case we need to make it better

And I think one of the issues here is you know, what we see on twitter being part of the twitterati

Is you know people who are super woke socialist, whatever

Talking about this, but in reality the workers don’t want it and I was talking to somebody in the media space

No, hold on. Can I just say something slightly different jason?

I think what workers don’t want

Is the version 1.0 of unions? Okay, because I think what they see that as

is attacks

That then goes and fills the coffers of certain people

I think you’ve seen like, you know a bunch of waste a bunch of graft a bunch of corruption people have been arrested

Unions are not effective anymore in collective bargaining. They are not they don’t have any data. They don’t have any facts

They’re not they don’t have any power

They’re but they’re not set up to win. So I think

In my opinion, I think unions have an important role

But you need a version 2.0. You need some young smart bright people

To reframe what unions are and then I think you would see everybody collectively organized which is it’s not about dues. You don’t need

hundreds of millions of dollars to

To all of a sudden like use to then elect certain people and that old model is breaking

It’s breaking every day instead. I think what people need to do is like if you come together and like you understand

What are the products we make what are the margins we have?

How is my contribution measured, you know, and then you’re able to use data and fact to really collectively bargain

That hasn’t happened yet

So I think what it was or it could be a free market and people could go work at starbucks or for postmates

They’re good. I get paid more but capitalism allows both to exist. Yeah, if you if you think about what a union is

You could almost make an argument that it is the ultimate

Manifestation of a free market system because it is basically like a bunch of people spitting out to have their own startup

And so, you know that group of people are saying we’re not charging enough for our product or service today

The value that we are creating is worth more

Therefore we should go create a you know

A different business and charge more and effectively compete in the marketplace

With a higher quality product at a higher at a higher price point

and I think that that may be kind of you know, the

Distinction between what people kind of view to be regulatory capture around unions where there have has been government involvement in the past

Versus what may be possible. I think i’ve heard some people talk about how

You know at some point in the world

We end up with at some point the evolution of capitalism you end up in a place where there are no employees

There’s just a ton of independent contractors doing independent work

And maybe there is an organization of people around doing the same work over and over together as a group

Where you charge one kind of you know, uh aggregated fixed rate for that service

The other the other thing to me was like all of a sudden it brought into such a stark contrast

This wasn’t like 55 45

This was 70 30 and probably it could have been 80 20 or 90 10

And so it said to me wait a minute

There’s a very small vocal group of people who are screaming for the mountaintops about this level of unionization and organization

And then the people that are actually the the participants of that system are like no. Thank you. Yeah

Well, I mean it shows that amazon does a great job managing right?

I mean they they create enough value and they’ve bid enough for the service that people don’t feel like they’re being underbid

Media companies have been going through a unionization process from gawker to vox

The new york times has already had one and you’re starting to see a bunch of folks voting on that

I was speaking to somebody who runs one of these companies and

they said

the in the short term, it’s fabulous because

They set the prices of employees

So when somebody comes to you and says I want to raise they say well

We can’t because here’s the pay scale that you negotiated

so we have to stick to that and I can’t give you more than other people because

One of the things you fought for as a union was pay parity. And so you’ve got five years

Here’s what it says on the chart five years. So it made everything predictable

And they said they like that. They said the problem is

Over the long term when you get to year 10 of a union in order to fire somebody

Who’s not doing a great job you have negotiated with the union that they have to get all these

Warnings and it’s uncomfortable. So then the managers don’t do the performance plans

They don’t do that and then eventually who’s left in the organization

The lower performers and then who leaves the higher performers who can command more money

So once you get this union thing going inside of a media company

In the short term it controls costs in the long term. It kills excellence

This was what somebody told me have you guys seen the movie?

American factory I think this was on netflix. It was actually created by am I uh, it was the first film produced by

Barack and michelle obama’s production company

But it’s it’s a very interesting film

about there’s a chinese billionaire who goes to

Kind of the rust belt to also a little um city outside dayton, ohio

And there’s and basically opens a a factory producing glass windshields for cars

And this this factory had been shut down. The whole town was kind of out of work

They were kind of down and down in the dumps

And so this this crazy chinese billionaire comes in there and reopens the factory

And all he and and it creates like 2 000 jobs for for people in this town

And everything starts off great

there’s these really interesting sort of culture clashes between the american workers and the chinese executives and

Some of it’s kind of comical and they show it in the movie

but then about halfway through the movie and and by the way, like these are people who are out of work and

You know this chinese company comes in and they do things kind of their way

But they pay people pretty well and creating a lot of jobs and initially

Everybody is very happy with it and the politicians are all encouraging it and then about halfway through the movie the unions come in

And the unions start agitating and they start telling all the workers that you’re underpaid. You’re mistreated

They start, you know, there’s there’s sort of intimidation

Tactics being used and then the politicians come in and you know, these politicians are sort of, you know

This is ohio, right?

And so the politicians start telling the the workers at this plant that they should get unionized

and it turns into this giant battle because and and the chinese company basically threatens to leave because

They came into this town and made a something like a 500 million dollar investment

In this plant based on an understanding

Of a certain cost structure and now all of a sudden the union wants to change that

And you know turns into this giant conflict and you realize that look that workers in this town had a good deal

And then the unions are about to like blow the whole thing

And and wreck it and they’re about to drive this chinese company out of the town

And then they do this election kind of like what amazon did and ultimately

The chinese company wins and the voters choose not to go with the union, but you just feel like you can it’s just so frustrating

to see this, um

Because it’s it’s not like the the this particular union is benefiting the workers. It’s about benefiting these union representatives

Or then paying off the politicians which gets back to our discussion in your little speech for your governor

Run that you’re going to fire all the teachers come september 1st if they don’t show up for work

no, but look, it’s really it’s a really interesting movie because

I think what it does is it highlights that what’s in the interest of these?

Labor union leaders is not necessarily what’s in the interest of the employees anybody watch no no

This guys look that this is like the simplest form of incentives to understand you pay dues as a union member

Those revenues get allocated and controlled by a handful of people in union leadership

so this is this shouldn’t be a surprise that their incentives get misaligned, especially when

You go from a small effective union to a broad, you know union that represents all kinds of different workers

It’s an impossible infrastructure to manage and it becomes unwieldy

Unions can be effective

There is a value and a place for them. They need to get reinvented by the way

I look this up, you know

The average wage, uh, the average fee is to be in a union across all unions in the united states as a percent of labor

Anyone got a guess it wanted it’s one and a half percent. Yeah, I said two. Yeah

So the argument is if they can increase wages net to those employees by more than one and a half percent it pays for itself

Right that that’s the argument about their incentive

I totally get it. They are startup in and of themselves. They are an asset manager, right? Their goal is to grow assets

Yeah, and so their goal is to grow assets. So so the more assets they grow, um

You know the uh, the bigger their business the the way in which you know relating this back to bezos’s annual letter, right?

Um, we’ve been presented this false choice for two decades

between some form of ann randy and capitalism

And a nanny state right, right, right that either everything’s unionized

Or we have no intervention at all

What I love about this moment in time

What I love about the leadership of benioff or bezos or gates or even anthony tan this incredible mission

Values driven leader who’s using the power of capitalism to uplift tens of millions of people in southeast. Asia

is that

I see a totally new generation of leaders that understand the responsibility like they’re charting the middle way

Right and we can equally reject lorena gonzalez

Right and at the same time we’re want to have 15 minimum wage in the state of california like those two things are mutually

compatible and so

Um, that’s why sax has to run

He’s got a chart the third way

Let me ask you this brad. Would you put up 250k for an exploratory fund brad sax?

Do you put do you do you believe in a 15 minimum wage?


I’d be fine. I’d be fine with that. It’s not that that’s not that’s

Oh, it’s on he took a blue pill

He took a blue pill give everyone everything certainly in the state of california. I think that makes sense

You know, I think look there might be some parts of the country where the standard of living is much cheaper

I mean, I think probably the the minimum wage should be a state issue because there’s such a disparity and different

Uh costs of living in different states, so i’m not sure i’d federalize it but i’m but certainly in california

I think 15 bucks. I mean, what about 20 bucks david? Yeah, david. 20 bucks in california. Why not? Why not a thousand? Yeah

I love that

Can everyone get a free tesla

No, but look, can I make can we make the point about unions in california?

I think there’s a huge difference between private sector unions and public sector unions

So look i’m not against collective bargaining when it comes to these private sector unions

Okay, because the the workers do have you know, these these uh plants

Involve can involve very tough working conditions. It’s physically dangerous

Um, you know there before there were labor reforms they were working really long insane hours or safety issues

okay, I think it makes sense to have some sort of collective bargaining and there’s somebody to

Negotiate with there’s the management of the company has an incentive

And so you have some give and take and you have a negotiation it produces an outcome

Public sector unions are completely different right because when the teachers union goes to negotiate who are they negotiating with?

They’re negotiating with gavin newsom

And the teachers union is his biggest contributor

So who has an incentive to oppose their demands? There’s no market. There’s no market and so

at a minimum takes a politician who

Has a lot of integrity to stand up to the teachers unions because

He did it in new york

Bloomberg did do it by the way, by the way

This is this is a true market dynamic for everything as it relates to government spending

If you think about when when the government says it’s going to spend something on someone on something

Legislation passes and it mandates that something needs to be bought

When that happens, there is no negotiating power because there is no marketplace to achieve that objective

They have to spend the money on the thing that they said they were going to spend it on

And at that point there is a seller who sells that thing who says oh shit. These guys have to buy it

I’ll double the price. Okay, great. That’s just the natural law of government inflation that happens

It’s happened with everything that we’ve seen inflate in this country education

Healthcare is all because it’s a government mandated service

And so then the service providers to the government have a single captive customer who has to spend the money

And so the same is true of education the government has to educate

Therefore I can show up as an education union and say i’m going to double my price

To educate your people because you have to do it by law

And you’ve passed all these laws that say you have to do it and there is nothing the government can do about it

And so, you know, I think it is worth highlighting that they’re the lack of a marketplace meaning

If you were to negotiate with a company, let’s say a company had to buy productivity software for its employees

It could decide whether or not buying that productivity software generated a positive return at the price point

That the sellers are negotiating against them and they could say no, you know what i’m not going to buy it

Everything’s too expensive. I’m going to go find another way

The problem is governments are mandated to spend that money on that particular service

And therefore there is no room and so unions are a manifestation

Of this fundamental problem with giving governments large budgets and relying on the government to provide the service to us

Outside of a market driven context

So I think the question really is can health care can education can these things that have been inflated?

With the government having such an active role be provided in a way that the government facilitates their provisioning

Without the government being the customer. This is a good jumping off point to one very uh to the next then topic

There’s a bunch of things happening in government that I just want to get your guys’s reaction to one

which was uh

The crazy summary that somebody did about the reaction to biden pulling out of afghanistan. Okay, the second is

Unfortunately biden reiterated trump’s decision on uh refugee numbers just today

Um, so he’s not he had a pledge that he would

You know go back to the the original numbers, uh

The obama level numbers and he said he’s not going to he’s going to keep it at the trump level

which basically says, you know, very nominal refugees and then the third is

the growing

Frustration and perceived incompetence of the cdc and now you have the entire business community

Starting to push back. Those are three completely different things, but they just speak about some government things

I’m curious about your reactions to anybody

I mean the thing that that highlights for me is the media double standard

and I think this is why a lot of people are going to centrism and why this podcast has become a purple podcast and a

rational podcast because

Aoc was going down to the border hysterical crying. You remember the photos they were all dressed in white

And is there any difference between what trump did at the border and what’s happening now?

Doesn’t feel like it feels like it’s a problem that they’re both trying to solve and it’s 90 the same outcome

And then you look at afghanistan

You know trump’s like we got to get out of here and then the press dunks on him

Like how could you do that?

And now biden’s doing and he’s getting high fives

And so I would just like to see some consistency from the press and the reaction

and americans on these issues which seem to be

non-winnable or

you know, how much do you lose in these instances like

Afghanistan’s a lose lose and the border is a lose lose like there’s there’s no winning

I don’t think in these in some in some situations that a president has to face. I’m interested what sax has to say

Well, yeah, I saw that I saw that tweet storm on the media double standard around afghanistan

We should show that and link to it in the show notes because the whoever it was incredible. It’s incredible. I mean

This is like definitive proof of the media double standard where he goes literally

He does a side by side of every single major prestige media outlet their coverage on trump versus biden’s drawdown in afghanistan

You know trump trump did the major drawdown and I think got us down to maybe like 1500 troops there

I think he missed a political opportunity not to just go all the way down to zero

Then he could have taken credit for ending the war which I think he

Wanted to do for whatever reason he didn’t get it done

And he basically handed biden a beautiful opportunity just to kind of end the war once and for all I think it’s very popular

People are we’ve been there for 20 years. I think people want to get out. So I think biden’s decision was

Politically correct and I think it was the the the right decision as well

I think we’ve it’s it’s time to be

Out of there, but yeah, the coverage in the press was just completely hysterical about trump doing it

It was predicting all sorts of negative consequences

um, and then when biden did it like like jason saying it was um, nothing but kudos, so well

Not only is a press not objective and not impartial

But they change their mind about a particular issue based on which team is doing it

Yeah, I mean if you look at the two quotes

They have a cnn tweet that they he just screen grabbed cnn on the same issue

He says this is reckless and it’s really risky of trump’s plan to withdraw troops and then

the next cnn tweet from this administration president obama praised president biden’s bold leadership to withdraw from

Afghanistan by september 11th, and there’s dozens of these npr cnn new york times

And over again, and then I think this is why americans hate the media. Absolutely

I mean, this is the you know, what the what the conservatives I would call the mainstream media, you know msn

I mean, but they are proving their bias right here. I mean and they’re increasing irrelevance

This is why the american public don’t trust them. Don’t listen to them and don’t care what they have to say

Brad, what do you think? Well, I I wanted to

You know at a federal level. We really can’t opt out of any of this, right?

We’re not going to leave the country. We got an election every four years

But we’re just talking about market failures in the state of california

And one of the most beautiful designs of our system of federalism

back to this idea of markets

Right is the fact that you get to choose what state you want to live in

And in a post-covid world, we have the greatest

ab testing

in the history of federalism

Because now you can live and work from anywhere

And the differences between state policies have never been greater

And so we’ve never had this incubation that we can all watch and live tweet about on twitter

And so now texas and florida they get to make choices california gets to make its choices and then we get to see

And political scientists are going to have a field day in five to ten years

And people are voting with their wallet today the ab test in real time

We have the largest economic migration in the history of this country

Occurring right now

And gavin newsom and lorena gonzalez. They’re going to have to

Be held accountable

For the conditions in san francisco for the decisions with respect to companies leaving the state people leaving the state and frankly

It’s not about lower taxes

I would contend the even bigger issue

Is the contempt for capitalism?

The contempt for entrepreneurialism and innovation that exists in california, and I have no intention to leave

But I will tell you this like i’m going to fight like hell

for a third way

Right that actually says capitalism can be a force for good in california

Um, and that’s why sax needs to run


I love I love this idea of a state-by-state ab test. I mean, what was the old line?

I get it was it was fdr’s line that uh, or federalism is the laboratory the states of the laboratory of democracy

Yeah, so I want to show this I just posted um a link in the chat of covid death rates, uh in the us by state

And it’s really remarkable because every state has very has we’ve seen a lot of very different covid policies. Um by state

What we see is that california and florida have almost the same death rate. I think california is like

154 per 10 000 and florida is like 159. It’s a very very small gap


Despite the fact that california has had the longest and most severe lockdowns in the country and calif and florida

Has been the most open and then meanwhile you look at states like um, like michigan

Which has also had very severe lockdowns and has had a much higher death rate

And so you see that there’s there’s really no correlation

Between uh death rates for covid per capita and the the severity of of lockdowns

Basically, the data shows that lockdowns don’t have an impact on a state’s success in battling

Covid and you know, it’s just remarkable that we still are despite this data

Despite the fact that you know, science is now showing us

We still have

Lockdowns in the state of california. We’ve loosened up a little bit, but we’re still talking about orange tiers

And it’s just and i’m here in florida right now. They’re they’re it’s open

It’s open and you know florida has a lot more old people than california

And the death rate is just about the same as california

So it’s just remarkable to me that we are stuck in in this mentality

of lockdown and I think it’s because

Newsom has bought into this savior myth that he has I think he’s remembering

All this press that he and cuomo got at the beginning of covid about what great

Saviors they were and how they protected the population from from covid, but it’s also been compounded by federal failure because the cdc

basically said

Or not said they revealed themselves to be incompetent, you know, the same person that we all thought was an incredible genius fauci

Increasingly looks like somewhat of a an idiot

And you know not completely informed on the topics that he should be informed about and then you know

You have these federal agencies. So for example when you put the cdc and the fda together

Some of their decisions are just complete head scratchers. Like for example this past week, you know the fda

Stopped the use of the johnson and johnson vaccine because seven women

Between the ages of 18 and 48 got a blood clot and one passed away

And if you think of over 7 million doses

Right and so a million what it’s it’s literally one in seven million


Actually here’s the crazy thing about that more people died in car accidents on the way to getting those

Vaccinations and actually died from a blood clot and so more than lightning strikes

or lightning

So it’s it’s bad risk assessment, but it’s also been very bad pr for for the vaccine

So in the wake of that the with the polling on vaccines went down by like 15 points

And so they’re scaring people away from getting vaccines

I don’t know if that polling was just on j and j or whether it applies to other vaccines as well

But the most important thing that the health officials could do is just convince people to get vaccinated

And the decision they made on rolling back j and j has really hurt that and then also this

You know that the falchi comments that even if you’re vaccinated

You can’t go to movies. You can’t go to sporting events. You still have to wear a mask

You still can’t you know get together in groups or indoor spaces. Well, then why would you get vaccinated?

Why would you take that chance that is so critical friedberg?

Do you think if you get a vaccine you should be allowed to take the mask off like that could be a reward look?

I mean

It’s a it’s a bigger question than the science question, right?

But um, I certainly don’t think that there’s any risk to you or people around you

Once you’ve been vaccinated with respect to you’re wearing a mask

and so

You know this the the mask mandate

I think as you guys pointed out is a little bit more kind of political and social posturing

Uh than it is kind of you know, scientifically reducing the the the spread of the of the virus once you’ve been vaccinated

Once you’ve been vaccinated you’re in the clear

Theoretically can do what you want to do

Of course, so I mean let’s just be really clear once you get vaccinated. There’s no reason to wear a mask

Remember the reason for the mask mandates was source control, right? That’s right. That’s right to prevent other people from getting the virus

Well, if you’re not carrying the virus and you’re not emitting the virus

There’s no need for you to wear a mask and to and to and to insist

That people wear a mask after they’ve been vaccinated is performatively

Anti-vax because you’re sending the message that the vaccines can’t be trusted

You agree with that freeberg, yeah, it’s a fair point. I totally I mean, I think it’s a it’s a really fair point and um,

Uh, and you know the the the whole counter argument to that which is counterfactual

Is you know, hey, you know, you can still transmit the virus

We don’t know that you can’t transmit the virus, but you know, you could theoretically say that about anything. We know

Deterministically, uh, we don’t have empirical evidence that we can say statistically. Here’s how likely you are to transmit the virus

But we know deterministically this is the process by which a vaccine works

You’re not going to be having replicating virus viral loads in your body

Therefore you’re not going to have a high viral load coming out of your nasal passage of your mouth


You know, and this is the case with all these kind of vaccines like the flu

we you know, you shouldn’t be or be needing to wear a mask so like

Um, you know totally make sense

And what’s the upper bound friedberg of the number of people that are that are going to get vaccinated in the u.s

Are we going to get to 60 percent? I think 60 percent probably

Yeah, I would guess 60 60 65 percent. I mean because remember what percent of uh, people are under 60 and 20 percent

I think is that right? Yeah. Yeah, I think we’ve really we’ve really we’ve really botched this

I think we’ve totally botched this vaccine rollout

I will tell you because of the the upper bound being where it is

I I still think we’ll end up at a point where we’re going to have a lot of people. Um,

That are going to be immune because they already had covid coupled with the vaccine

We’re going to have extremely low numbers

But the reality is the numbers are not going to get to zero and we talked about zeroism a couple podcasts ago

Because we’re not going to get to zero. I think this is a really important thing to remember

The way that we’ve tuned ourselves to react to covid

It was initially remember it was initially about you know, minimize the surge

And by minimizing the surge we will keep the health care system from being overwhelmed

now we’ve transitioned into the

We can’t let covid spread but as we’ve seen the reality is cannot stop covid from spreading no matter how many lockdowns you put in

Place societally people still get together in their homes and they’ll give each other covid

And because some number of people will continue to have covid we are going to have covid in the united states for years to come

It is not going to go to zero

And the question we have to ask ourselves is how are we going to allow ourselves to operate?

How are we going to live our lives?

If the covid risk is non-zero and it will always be non-zero

And by the way, the measles risk is non-zero. The chickenpox risk is non-zero. There are already non-zero

Um, you know transmissible, um infectious diseases out there that have some degree of fatality rate to them

But um, I think the biggest thing we should all be concerned about is this notion that we are like shifting into a new normal

That will last for many years because we will never be at zero

So can I i’m moving out of california if that’s the case i’m literally going to texas there will be mutinies

There will be mutinies. I’m done. I got my vaccine. I’m people people that nobody’s gonna stand for that

Um, we already see it, you know chesky went on cnbc this morning and you know, basically said

You know, they are battening down all the hatches because there’s no like the demand for travel

Is literally going to blow the roof off the building totally right like people people are over it

Too smart people make risk reward decisions in their personal lives every day

And if the government tries to lock them down, they’re going to tear down the gates like it’s not going to happen

but what what you’re saying though is that what the implicit thing about what you’re saying, which is scary is unlike times before about

measles or chickenpox

You we now are basically debasing

The credibility that these government institutions have about anything they say that’s the real enemy in the room when this is all said and done

So now you have people that are acting on their own

So the cdc says you can’t fill the middle seat the airlines say no go fuck yourself

We’re going to fill whatever seat we want and nobody’s going to complain back to what brad said because they’re risk underwriting for themselves

And saying yeah, wait, you don’t know what you’re talking about anymore. And so where does it leave us?

Is that a good thing or a bad thing? You know, one of the ways states

Even democracies maintain power was information control

Right, right and there is no information control today anywhere

In fact, we have frictionless information, which means that by definition, I think there’s greater chance for decentralization

I mean remember, you know the arab spring governments were overthrown on the basis of twitter, right?

I don’t believe we live in a hobbesian state

You know of suffering in in the natural order of things, right?

but I certainly believe that government has a role to play to help organize us and

Uh, you know because there are big issues that we face in the future and you know, I just hope we can find a balance

uh, you know, uh

in the path forward, but this I I think chamat, this is a um an inoculation I think to bad institutions if you look at

People who spent two hundred fifty thousand dollars going into debt at some big expensive college

These young folks are saying i’m not going to do that anymore

Now those colleges have to react and change and now we’re seeing it with the teachers

This but I think jason it’s actually more extreme than that like

We’re learning that institutions aren’t reliable number one

And then the second is that we’re learning that those institutions are static. So meaning like today

There is I think that there’s a lot there’s a big case to be made

That the cdc doesn’t really know what they were doing

And that in some cases the fda

Has been a little overreactive. Okay


What can we do about these things?

It’s not like we can have a new cdc that we all create and believe in or a new fda

These are the laws of the government those laws won’t change because there’s a bunch of incentives

For folks who are currently in power that oversee those things to remain that way. So now

You know exactly as sacks said on the whim of frankly, like, you know, maybe an overreaction

We pull vaccines off then we pull them back on then we pull them off

You know the reaction to the astrazeneca vaccine was kind of a little uh awe-inspiring, you know, oh, it’s bad. No, it’s okay

Oh, it’s good. No, it’s bad. Take it off. Take it on put it on

And that’s a that’s been a global reaction

So you add all of these things up. I think the takeaway is what freeberg said institutions are broken

Because the incentives of the people that run them are not aligned to the people that actually expect output from them

I’ll say two things to this

That’s an important point one is institutions to me are like like like any living organism they want to grow

And so, you know every government wants to add laws spend more money grow its budget

Every company wants to have more power grow its top line

Even every university harvard’s endowment wants to grow over time. It wants to do more research

It wants to have more classes. It wants to have the bigger campus every institution as a result is then

Trying to aggregate um more resources and more power and more authority

And so, you know then when you have these moments where the institution doesn’t serve

The stakeholders that it is meant to serve you have this breakdown of trust in the institution and institutional fallout begins

Whether that’s the financial system and the and the evolution towards decentralized finance and bitcoin and so on

Or the failure of government and the ignorance against laws and what the government is telling us to do and so on

or in companies

And so the big question for this century is going to be are we going to allow that to happen now?

I mentioned this a few pods ago. What i’m most concerned about is the absolute

Alternative to an institution is a mob rule and a mob rule as we’ve seen where you get cancel culture

and you get um, you know game stop going through the roof and and you get um,

trial before um before without a jury

Uh and and trial without a judge

Can be really ugly and can be really nasty

And so the original intention of many of these institutions

Was to create a system by which there are rules and values that we all ascribe to and those values go out the window

When those institutions fail, so the big the big challenge, you know, we as as a as a as humanity are going to face this century

Is this this this dichotomy between the failure of institutions and the need for institutions to constantly grow?

Versus the challenge of not having institutions with respect to how do we operate societally with mob rule?

Uh and distributed rule, um, and and it’s going to be interesting to kind of see

There’s going to be a lot of back and forths over the next couple of decades. I would imagine with respect to how do we make?

uh economic government and business, uh,

Decisions and how they play and whether institutions or kind of distributed decision making plays a role

Good segue here to your pal. Josh. Holly. Holly. Uh sacks. I never thought I would see the day that a republican

wanted to bust

All the big companies

But he says no acquisitions by companies with a market cap over 100 billion

Putting aside the fact that this wasn’t elizabeth warren or bernie sanders proposing this this was your your bestie

You’re josh. Holly sacks. Have you met him or donated to him? I haven’t met him. I haven’t met him

Um, I think the second question you make a little donation there to holly

Uh, maybe maybe one day we’ll see, you know, we’ll say okay. What do you think about this concept?

Uh two points. Okay. Number one. You’re right that this is showing, you know, there’s there’s a big political realignment underway

This legislation could have come from elizabeth warren or bernie sanders. I think they would have justified it in different ways

I think what holly’s concerned about is a concentration

Of power by big tech companies who are then using that power to censor people

So that’s kind of the impetus there

I think sanders and warren their impetus would be around more of a concentration of wealth and money

And the power that that creates so slightly different motivations, but I think they’re probably on the same page here

It’s kind of this populist wildfire. That’s uh, that’s kind of burning in both parties

So I think that’s sort of the first observation is is

It’s kind of this new populist realignment of our politics

The second point i’d make about this is that this legislation is is what I would call sort of performative

Legislating. I mean, I don’t think this bill is a serious proposal to become law

Um, it’s too much of a sledgehammer. I think that you know, if the goal here is to try and rein in big tech

I think just banning, you know any acquisition by firms over 100 billion dollar market cap. It is way too much of a

It’s just not you know, it’s just not uh crafted enough. I mean, is there any merit to it?

And how would you change it sax? It would have tons of unintended consequences for you know, what we do

I mean, we’ve talked about this. Is it good for what we do though?

I mean if companies stop selling early if instagram and youtube stayed independent wouldn’t this have been much better?

It was a blanket

It was a blanket statement that said any company can’t do it if they were over 100 billion, right?

So brookshire hathaway’s business boop done gone to zero, right?

I mean, it’s too much of a blunt instrument and and look even for us, right?

There’s only you know, three, I guess two or three good outcomes, right? There’s ipos direct listings or spats

Let’s put them in a category of a company going secondary sales. Yeah, then there’s m&a

Okay, and then the third outcome is basically the company goes under it goes bankrupt, right?

So if you take m&a off the table

you are basically denying a lot of attractive exits for

Risk capital and that’s going to ultimately hurt the returns risk capital and lead to less of it

There are a lot of there are a lot of companies where you know founders create a technology that’s valuable and interesting

But it can’t monetize and it needs to be part of something larger

And if you deprive every I guess big company of being able to buy of r&d acquisitions

It’s sort of crippling the economy for no reason

I don’t think it really addresses the issue that holly really wants to address which is censorship

So my point is I would find a different way to address it

I think that at the end of the day this legislation is not meant to become law. It’s meant to

Make a statement

To be a warning to big tech and to get you know

And and holly’s trying to appeal to a constituency on his side of the aisle and I think it’s sort of it’s disgusting

It’s performative in that regard. I mean holly like he votes against the election

He comes out with this asinine solution to his censorship beef, you know

Like this is the problem the grand standing of these politicians on both sides

That aren’t focused on like how do we make sure that everybody’s participating in the ownership society?

How do we deal with you know, you know issues of diversity?

You know, it’s so far removed

from actual pragmatic solutions to the real problems facing us that it just drives me insane and so

um, he will most certainly not be getting a donation from

From our household

And um, you know like but what I am going to invest aggressively in

Uh, you know and what I think we ought to be doing and I I hope chamath will take me up on this

Right. I don’t want to go spend 10 million in washington to lobby them to create the invest america account

Let’s you and I put up the money. Let’s incubate this. Let’s hire a ceo

Let’s you know, let’s let’s put up 10 10 15 million bucks

Let’s distribute it to families 2 000 bucks at a pop. Let’s build a proof of concept hire a great ceo

That’s what we do and prove that it works

Yeah, that’s better. That’s actually a more practical giving pledge than the giving pledge

Oh my god, what a great idea chamath

We should if we should just do that right now and basically name and shame everybody that doesn’t want to contribute who’s made money

Because the reality is

We all have been extraordinarily lucky. Yes, we’ve worked hard, but frankly, you know, none of us deserve any of this

We’ve been lucky and so whatever representative share that you could contribute and what it does it gives

You know a low-income person of color minority person in america

Somebody who’s you know disadvantaged a two thousand dollar head start when they’re born is a fucking amazing

We could raise a hundred million dollars in the next three months

because do you know the reason people people are like

I don’t want to pay taxes because they don’t believe government is going to use the money wisely

If we went out and told all these folks that we’re going to use it to give two thousand dollars directly

Right to create a sense of ownership and participation in the american dream their little slice of tesla of walmart of amazon of google

Like the money will come in from all the folks that you mentioned and I would love to see this crew get on board

With that. Yeah, I think we could do it over the course of the next six months

I’m in let’s do it the audience who doesn’t understand what we’re talking about. Imagine we put

A thousand dollars into a 401k or 2000 401k for an american

Every american born what would that look like when they’re 65 years old?

And what if 500 of the 2000 was in a 529?

What would that look like when they’re 18 years old and go to college?

So that was my little punch-up jamath is you know put half of it in retirement half

Education it turns out if you put your stimulus check on each of the last three stimulus checks into dogecoin

You would have three hundred thousand dollars. Okay

So there there may be there may be alternative investment accounts

All right. Listen, there’s been another amazing. Sorry, just so you know the two thousand dollars by the time you’re 65

At at eight percent, which is you know, if you just buy the s and ptf would be about three hundred thousand two hundred ninety

Seven thousand so more than enough to comfortably retire in style and if you were to put 500 of it into

An account for college, maybe you get 25k or something

I’m, not sure what it equals in 18 years

As buffett has talked about in snowball the behavioral economics are if you have savings you save more

Right. Well, this is about education. Yeah, people feel part of the system feel like they’re part of the game

All right. Listen another amazing episode. Uh, thanks, man. Thanks for coming on. Thanks for coming on

We don’t have a nickname for brad

We never nickname king of spax. Oh, just kidding

I’m happy to hand the crown. Oh

I just want to be called king

Somebody pick me up and let’s go have a guy’s trip

What are we doing here guys?

Where are we going? I just want to say well since david is in miami

Since david’s in miami. I’m going to tell you guys that my favorite prime number has always been

I don’t know what it means. What’s the joke?

That’s in miami


All right, we’re going to miami let’s go

Let me see you all next. I love you besties. Love you, brad. Love you, brad

Brad say love you to sax. See what happens. Good. Keep it up. Brad. Say love you to sax. See what happens

Love you sax back at you

Brain man david

And it said we open source it to the fans and they’ve just gone crazy with it love you queen of

Besties are gone

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 somehow

I’m going