All-In with Chamath, Jason, Sacks & Friedberg - E30: Ramifications of Biden's proposed capital gains tax hike, federal budget, India's COVID surge, founder psychology & more

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Rain man David

Hey everybody, welcome to the all-in podcast, I’m Jason Calacanis with us today

The rain man himself calling in from an undisclosed location the queen of quinoa and of course the dictator himself Chamath

Pali apatia

All right, boys, how are we doing? Feel flow energy today? What’s going on? Great. How are you? What’s going on? Let’s go

Let’s do this. I love it. Let’s go

All right, you’re hot. You’re coming in hot. Wow. Yeah, breaking news breaking news

Biden has announced

His capital gains tax hike. I don’t think this impacts any of us, but

Biden will proposed almost doubling the capital gains tax rate for wealthy individuals from 20% to

Not 25 not 28

39.6% to help pay for the social spending

and in

Equality for those earning 1 million or more

Earning 1 million or more so nobody on this call federal tax rates could be as high as 43.4

The capital gains increase would raise 370 billion over a decade

yada, yada for new yorkers the combined state and federal capital gains rate could be as high as

52.22 percent and californians

56.7 percent biden has previously warned that those earning over 400 000 can expect to pay more in taxes

This was just breaking news a couple of hours before we started the pod

and the stock market is uh


And people are freaking out. We should do it. Jake. I want to hear your take on this actually

I want to start with your take. Why did you tell me body was gonna do this? I would have voted for trump

You didn’t tell me this is gonna hit me so hard. No jake jake. I was ranting on this topic 15 minutes ago

We were talking and i’m like dummy. What did you think was gonna happen? You know?

He’s sitting there going off. He’s sitting there going off

It’s like what did you expect just before we get into it?

We should do a quick primer on what this means, right?

So capital gains taxes are the taxes you pay when you make an investment and you sell that investment at a profit

The you pay a tax on the profit you make and there’s a difference between capital gains on the short term

Which means less than one year and long term, which means you’ve had the investment for more than a year

So economic policy historically has dictated that having a low capital gains tax rate relative to what you know

An income tax rate might make it might be

Incentivizes people to make long-term investments and it you know gets more money moving in the economy and as a result

You know the economy will grow and so the idea of increasing the long-term capital gains tax from 20%

Which it currently is to 40%

Is a real striking, you know economic policy shift

Rationalized as you know, we’re going to save, you know, we’re going to use this money for social spending

But I think the historical context and what this is is really important as we get into the conversation

And just speaking historically, you know, the the maximum tax rate on long-term capital gains

got up to


Zach, you probably have the history on this in 1978 for a year, right? Or like 76 to 78

And then it’s been largely, you know, 15 to 20% for the last 20 years or so

And so to jump up and prior to that in the early part of the 20th century

It’s like 25% pretty consistently for a long time. So to jump up to 40% is a really big shift and

There’s a lot of debate around the economic implications of doing this. I thought that was important

yeah, let’s take a step back and actually see the forest from the trees and the forest from the trees is that

I don’t think biden

Thinks that it’s a credible plan in as much as I probably think


He needs, you know, this is like it’s performative

Because it was a lot larger the number the headline number was a lot larger


What people were whispering was going to be the number right?

It was supposed to be like in the low 30s or maybe kind of like, you know, 33 34


and then all of a sudden like to come out of 39.6, I think it’s almost like

Okay, he’s he’s giving the pound of flesh to


the the left

Kind of like woke mob of the democratic party

Who probably doesn’t understand how capitalism works in the first place and doesn’t care because they’re not they’re not participants in it now

My reaction is I don’t think it’s going to pass. I think it’s going to be really tough to get done

and I think it probably

You know, maybe maybe there’s a watered down version, but this version I and i’m not super

Worried about and then it just comes back to the same thing over and over

the the fewer the number of people that get to participate in the growth and see the upside the more there are that just

wants to just kind of

You know tear it all down and so I don’t know

It’s just yet another signal that we have these structural issues to fix

It’s not reasonable that a few people get super rich and everybody else gets left on the sidelines

Sax where your thoughts it’s not going to pass but it’s not going to pass

It’s not going to tax. Is it going to pass? Is it an opening salvo where he wants to get to 32?

So he’s starting at 39

I think I think it could pass because I think they’re they’re planning to do this tax increase as part of the the second

Infrastructure bill. It’s not really an infrastructure bill. They’re calling it human infrastructure

We’ve talked about this infrastructure is one of the last categories of federal spending that’s still popular

So they’re rebranding a bunch of social programs as human infrastructure

Um, I think that bill will pass. I don’t know if the the rate will stay at 39.6

But I think there will be a big increase clearly

In the the cap gains rate, I mean, I think it’s worth

Remembering how it got to 20. It got to 20

because bill clinton lowered it from 28 to 20 as part of an overall package of um,

of of tax reforms that he did in the in the sort of the the mid 90s

And you know that led to some of the best years of economic performance gdp growth in the u.s productivity growth

uh deficit reduction

um, you know, and so

You know, I think we’re we’re we are experimenting with breaking something that’s been working. I think pretty well

since the the reagan clinton years

Uh, which is to have you know, reasonably low

Taxes on capital formation and investment

I think it’s a category error to treat capital gains or to think about it just as income

You have to remember that all this money has already been taxed once right? So you make the money the first time

As income you earn it you pay tax on it

Then you decide to save some of it and invest it and then you get taxed again on that amount and um,

So so capital gains is a form of double taxation

Uh, that was the original reason one of the reasons to to have a different tax rate for it

and um

You know, I think that this risk kind of

Messing up the economic recovery that’s really underway already, by the way

Think about um, what just happens to

Any organization that has to pay cap gains, right? It’s not just individuals like

Um last time I checked organizations aren’t exempt from cap gains, um for-profit organizations


And I don’t exactly know


What they will do as well. So, you know you you you’re putting a lot of people under a huge strain when you double

the the effective rate of return so, you know, if you’re for example, like

Um a pension fund right and you have an enormous investment in a private equity fund or a hedge fund

Um part of these things is that you know, they’re these complete pass-through vehicles

Um, and so as long as like you’ve structured yourself in a way where you don’t have to pay that tax

I think I guess you’re indifferent, but if you’re any organization or institution or a person or a collection of people

That bears that tax all of a sudden

You know your returns have been basically cut in half

That’s pretty nuts. Let’s talk about the average Joe for a second

Or Jane as it were


Would take a hit here and then when you go to your retirement and you have to liquidate them

You don’t pay tax on the you don’t pay tax on that. Yeah, you don’t pay tax on the 401k gains during

Otherwise your portfolio because 401k is going to be a small amount you can contribute to you every year

So retirees who happen to have stock market gains or cryptocurrency people trading that yeah

You’ll basically pay the same as income tax as opposed to paying

a lower tax

So would a it’ll diminish investment jason?

It’s exactly what david says which is that on the on a marginal basis

What will happen is inflation probably goes up because people just decide to consume

Rather than invest because they think well, what’s the point?

You know, there’s already risk that I bear and so, you know

The the earliest risk assets right the riskiest ones that we all participate in which is early stage venture and company formation

There’s you you may not be thinking about the capital gains rate

But it’s implicit in the returns that you’re expecting for the risk and the time you’re going to take

And you know, we’ve been trained to feel that rate

And if you double that rate from 20 to 40, I suspect that there’s a lot of people

Whose risk tolerance changes and they’re going to feel their after-tax gains differently and they’ll wonder to themselves

Is this worth it? And then I think what happens as a result is

Entrepreneurship drags. I don’t know if anybody’s done

uh an analysis, but I suspect part of the reason why america is such a

You know an amazing like sink for capital, right? It absorbs capital all around the world

Is that you’ve created incentives that get people very excited because they think they can get rewarded

If you take those rewards away

I think the implications are much bigger than just the cap gains rates here because as the people change their behavior

Then the capital formation pools outside of the united states change their behavior

And the whole thing has a knock-on effect and it was more muted in clinton

It was less muted in 78. It basically didn’t exist in the 40s and 50s, but it is

A huge force today. I mean like we are an indebted nation that owes money

To all kinds of countries around the world including china. We’re supposed to generate growth and sort of pay it back

And where will the growth come from if lps don’t want to back venture funds or venture funds?

But let’s be honest, you know, maybe i’ll check out let’s be honest and direct. I mean are any of you guys going to change your

Investment behavior if the cap gains tax goes to 40

No, but there’ll be less of it

You know, so look anything my behavior has changed. I think my behavior will change. Yeah, how will it change?

Because it’s exactly what david said. So I just put in a hundred million dollars into a climate change company two weeks ago

Uh under this promise, uh, I could only put in 50

So there’s 50 million less progress that’s going to happen on that business

I’m, not sure that that was that’s the right answer for

What that company is trying to do in the world?

And the way you’re saying you’re saying that you’re saying the profits you would have had from before are diminished in half

Therefore you would only have half as much money to invest as an investor

right, so so however way you want to cut it whether it’s like the

10 companies gets cut down into five or the five 10 companies that I invest in get half my money

The point is at some point

The money starts to run out not just for me, but for everybody else

Yeah, basically at the end of the day the money goes into the hands of you know

Government legislators and administrators to decide how that money gets spent

and it’s not in the hands of uh

Capitalist investors to decide where to invest that that’s the fundamental kind of

Shift that that’s going to happen, right capital capital’s been taken out of the economy risk

Capital’s been taken out of the economy and it’s now going to be you know spent by by government look anything that you

Tax you punish and disincentivize and anything you subsidize you you create an incentive for there to be more of

and you know, so this is just

We always talk about these things in terms of who they’re going to hurt. Is it the you know?

This only falls on the backs of rich people

Um, so we shouldn’t care

But the real question is what is this going to do to the economy?

And you know, I think we’ve talked in previous podcasts the last part that we have with brad gerstner

It feels like everything in the american system is kind of broken except for one thing

Which is this sort of opportunity economy that’s that’s being created by

Risk capital right and and people creating new companies, you know, like these big

Stultifying political corporations the sp500 are completely broken government’s completely broken. The federal debt is out of control

Everything’s the media is broken

Everything in america is either broken or needs to be revitalized or reformed except one thing is working really well, which is

Risk capital and its allocation to founders who have nothing but a good idea, right?

And when all of a sudden you double the cap gains rate that is an attack on that opportunity society now

I think there is

A legitimate conversation to be had about how do we spread?

This sort of system of opportunity to more and more people

I think like brad framed it really well in the last episode

Like how do we get more people involved in that?

I would submit the answer has a lot to do with school choice and charter schools giving people everyone in this country

Deserves to have a first-rate education

Um, and so that is a very legitimate conversation to have but I think to have punitive taxation on it

Is I think it risk breaking

That last thing that is working so well in in the american system. I think it’s really well said and uh, I think this is going to

Take re-domiciling to another level. I mean if you’re in new york or california right now and you were thinking

about wyoming or utah or

texas or florida, I mean this kind of makes the decision for you if it does go to 40 and

because that’s

But you could actually meet would you get to neutral if you left?

And so I remember I remember when I moved to the united states in 2000

The marginal tax bracket that I was in and I was making maybe, you know 100

No, I was probably making

80 or 90 thousand dollars a year was 55

And I remember coming to the united states and seeing my after my take-home pay my first paycheck and I was shocked because I was

Like, you know, I was paying maybe 36 all blended in federal and local at the time or state at the time in california

And slowly slowly it’s creeping up with with if you play it out today where we are plus new york state just passed laws

You’re going to be sort of in the 50 to 55 percent almost upwards of 56 percent for certain folks

And maybe the answer is that’s the right thing

Um, but I think we have to acknowledge that there’s going to be a bunch of unintended consequences

So maybe the intended consequence is to actually create more

um equality between the richest few and

you know

uh, not even the poorest frankly because but it’ll just be the richest few and

The the next richest few quite honestly because like, you know, the investing class is still a small number of people

um, but the unintended consequences of that decision I think is what exactly what david said which is that

Over the next five or ten year period you will at a practical level


less investment

And the the only way to make that hole is if the government then takes all that money

And all of a sudden allocates it from their own coffers back into the economy and we know that that’s not going to happen

Well, right that’s just going to be riddled with waste and graft and corruption

So unfortunately the setup is that you know, you’re going to really impact entrepreneurship

and then and then I wonder to myself by the way guys like

What was the actual goal of this meaning there was 20 or 30 guys that were just making so much money on their equity

But then that’s then then we need to blame like the

these lists like the forbes billionaires list because those are inaccurate because a lot of these stuff is like


Realized paper gains. Yeah, right

And so they’re not they’re not paying any capital gains because they haven’t sold anything and most of these guys that are uber uber rich

You know have no desire to sell because it’s for them. It’s a control issue to sell

I’m, not sure. I’m not sure the consequence of taxing uber rich people is the true motivation

I think for some people maybe it is

but um

If we just take a step back, I mean a year ago

The u.s. Debt level was significantly lower than it is today

We’ve taken on a tremendous amount of of federal debt to fund a series of programs that we believe we’re going to kind of keep

Um, you know the american population employed and keep our economy moving

Um, that was a massive burden we accrued and in the past year so ultimately over time

The only way to kind of support this this new federal budget

And um, you know the this new servicing costs that we’ve taken on at the government level

You really only have kind of like three options option

One is you’re going to continue to raise more debt and massively kind of inflate everything and the dollar declines in value

Option two is to reduce spending

Which means starting to cut these programs and option three is to raise taxes

And it’s pretty clear that option one is one where we’re kind of already at the economic limit

Option two is going to be very hard to swallow at a time like this. So you can’t just cut spending right now

Across the board so many aspects of the u.s

Economy and so many individuals in the united states are dependent on the federal government for support

And so option three is the only real one that’s left on the table

And so then the question is who are you taxing?

You’re not going to go tax the people that are struggling

You’re going to tax the corporations and the wealthy and the capital gains tax is the one place where you can kind of say look

The tax rate that you’re paying today is half of what an income tax rate would be if you were earning that as income

Let’s get it to be fair and even and I think just just to argue this other side

Like there’s a motivation. There’s a there’s a point of view where this is coming from

It’s not just let’s go tax the rich screw the economy

It’s that we find ourselves in a circumstance where we need to do one of those three things the most rational to do is to

Or the most kind of sensible politically

To do is to is to increase taxation and this is the the first place to go the most obvious place to go

It’s not because so when you think about like, so for example, like, you know, you would say okay

Who are the folks that we’re talking about there can be entrepreneurs that are building companies again

They’re never selling so they’re never going to pay these taxes

like it’s not the case that elon musk or mark zuckerberg is all of a sudden going to write a 40 billion dollar check because

That’s that’s not how much they make that may be how much they’re worth

But they will never sell a single share unless they have to to fund some other project in which case

So which of those three things would you do tomorrow?

So so what I was going to say is so and then and then you look at somebody else like maybe you say

Oh, well, you know the people that manage money like let’s go after those guys because like those guys shouldn’t be

You know rich but then the problem is those guys are already paying w-2 income. They’re already paying nominal income tax rates

That’s how the entire hedge fund industry works right now, you know, um, you get paid in current income


And so okay, so you’re not getting their money because they’re already paying at the prevailing rate

So again, this goes back to if you actually trace the problem and see who it affects. It’s exactly what david said

It’s these folks that are in the middle

That are actually putting the money to work that are trying to invest in things that now have a very different return profile

And you’re right the core business that they do they may still keep doing

But then all of the incremental things in the future that they want to do they won’t do for example

Look at all of the talk right now about how everybody needs to stand up

You know more angel investing more minority investing more women gps all of this stuff

Well all of the folks let’s just be honest all the folks that were in a position

To put money into those folks

Are now 50 on a dollar rated basis poorer if this thing passes

And I bet you what they’re going to do is they’re not going to cut their allocations in sequoia

They’re going to cut their allocations to all these other folks. Yeah, that’s exactly what I was thinking

Chamath is I who’s it going to hurt? It’s again

It’s going to hurt all the people that you want to get into the game

It’s going to hurt all the people that are here

But the richest richest rich folks that is not unless you impact but unless you x appropriate the money from them

That’s not you’re not going to get a single cent and then that was the that was the concept of the wealth tax

Wasn’t it that you would take the total value what you have and just take away one percent a year

From bezos’s, you know or zuckerberg’s hundred billion dollars

So would that not have been a better solution than this if you had to pick one a one percent?

Well, that’s just that’s people over whatever jason

Then then we’re no better than a banana republic that could also then

expropriate a mine because we don’t like the way that the mining is happening or you know

Another critical asset because the government decides that it’s important

I mean, what’s the difference between a stock and any other asset that either a person or or a corporation owns?

It’s it’s it’s very uh, I think that the definitions are thin. They’re all the same things at the end of the day

Let’s go back. Let’s go back to the federal budget problem. Like how do you address it sax?

I mean, what’s the right course here?

What I think is amazing is we’re we’re about to spend we’re raising this

Hundreds of billions of taxes in order to fund, you know trillions of new spending

I don’t really hear the administration selling

These new programs selling the spending all we’re really talking about is that there’s too many rich people

We have these millionaires and billionaires. We gotta tax them more

And so all all we’re really talking about is whether it’s appropriate to be punishing

The rich and super rich. We’re not really talking about where’s this money going? Are these programs justified?

What do we get out of it exactly and my point is forget about like who it’s gonna hurt

I think it’s eventually gonna hurt the economy

And the question is what do we get out of it?

And I think what’s amazing is this isn’t even paying for the big ticket items on the progressive wish list. We’re not getting to


Health care with this. We’re not getting to universal higher education

We’re not getting to any of the we’re not getting to like forgiveness of student loans or anything like that

We’re not getting to any of the really big ticket items on the progressive wish list

And yet we’re maxing out the taxes relative to anything. We’ve done historically

And so where do you go from here?

You know because my thinking is this is just the tip of the iceberg in terms of the progressive agenda

Doesn’t that speak to the problem like the fact that we have such an extraordinarily


Debt burden and federal budget that we’re kind of scrambling to figure out a way to kind of make ends meet effectively, right?

I mean because our alternative again is to just let massive inflation run

You know issue a ton of a ton of new debt or to cut spending. No, no, but david

Either of those seem to be on the table. No, no, you’re going to exacerbate this issue

I’m i’m telling you I know it doesn’t seem likely but I think on a marginal basis. This will be an incentive to spend

And the reason is that it’s a very frustrating idea for somebody to think about putting money in the ground

especially a sophisticated investor

Um at a rate of return that just changed in half

And so from my perspective, I would be more likely to spend because I would rather just yolo the money

Then I would rather put it into the ground because I would be worried

That that could then get taken away from me. It could also change even further and further and I think that’s a very

Frustrating idea i’d rather take a vacation again. Let’s go back to the example

I’d rather take a vacation with that ten thousand dollars

then go on to jason syndicate and put it into the hands of folks because

I’m, just like you know what it’s going to turn into even if even if jason hits it and I get back

You know, i’d rather just go on vacation

Enough of those decisions and I think I think you have a very different kind of economy

You have you know what you have you have what everybody else has so do we reduce spending?

I think you have to reduce expenses

I think that we have an infrastructure that is not well accounted for meaning if you’re a company

You can go to a company like tableau

You can go to a company like, you know, pick your pick your metrics company and within you know

A few weeks and months of work you can literally understand where all the dollars are, right?

You can understand your business and you can figure out where money is being wasted and where it’s not

In a government that’s impossible to do, right?

Because you have these laws and these laws are artificial constructs that we construct and those artificial constructs are influenced

By money in and of itself and so these dollar flows are impossible to map

So you don’t know where it goes. So for example

The 700 billion dollar budget in the pentagon

Does anybody have any idea what the roi is on that or even a way to measure it like even to actually make it simple?

Well, like if you were if you had 700 billion dollars of investment capital

The the market has a really simple way of saying. Okay, david

What’s your roik? What’s your return on invested capital and you can say all kinds of fancy things

You can have all kinds of fancy projects or simple projects

But at the end of the day

What is measurable is a dollar in and what that dollar grew into and that’s a return on invested capital

It is impossible to know that

And so, you know, we could say for example, you could define it and say well

I’m going to basically get every single person to graduate high school

And now i’m going to spend 500 billion dollars a year to make sure that the graduation rate is 100

That would be an incredible goal. You know what that is absolutely measurable, right?

And and you’d be able to back into all of these programs and the one that’s ones that didn’t work you’d cut

You know, and you’d end up with what david said, which is school vouchers

I mean just I think I think the absence of that accountability

Chamath has led us to a scary dilemma and the dilemma is

Over 10 million americans are directly employed by federal government

And a large swath of the remainder of the economy is supported by federal government spending which is basically your point, right?

So large amounts defense and military construction healthcare and pharma

I mean the list goes on but like the direct employees of the federal government plus the amount of revenue that depends on federal spending

Is so significant now as a percent of the total income generated by americans

That it is very hard to say like let’s create accountability in a system

When so much of the economy is functionally dependent on it. Am I missing something sacks?

Like I mean, isn’t that the circumstance we’re in right now?

Yeah, I mean the thing that like is amazing to me is you know

I lived through the 1980s and 1990s like like you guys did from 1982 to 2000 that 18-year period we had

Sort of an unrivaled economic performance. It was roughly around we had two bad years under george herbert walker bush

That’s why he lost re-election, but we had close to 40

growth in gdp

Every year we had great productivity

Um, and we had massive deficit reduction. It’s the last four percent a year

Yeah, and we and we had we we actually had government

Surpluses budget surpluses the last few years. So it seems to me that we had the winning formula

As a country and look this is not partisan. I think it’s bipartisan. I think it’s the the right solution is somewhere

between what what reagan and and bill clinton did

and you know clinton

Uh, he rose he increased the individual tax rate to 39.6. So he did do that

From 36 percent, but he cut it from he cut the investment to the cap gains rate from 28 to 20

It was in that ballpark, you know, we know that works, you know, we know that works I and and and you know

somehow we’ve moved away from what we learned in that time period because you know, I think the

The left in this country has has become

Kind of you know has embraced this we’re saying the same thing you set up the incentives for people to invest

They do if you set up the incentives for people to spend they will do that as well

I see this I think chamath is exactly right

There are a lot of people and you use the example of the

When I do my syndicate deals, there are people who are recreationally saying, you know what?

I love the idea of putting five or 10k into a flyer

They’re gonna you know, half of them will go away a third of them all these people who are you know involved in

Day trading or crypto or real estate investing they’re going to look at and say is this worth the time?

Or is it worth this amount of time?

Maybe i’ll cut back from doing 40 hours a week of this to 20

And if you look at what happened crypto people, they went to puerto rico

You look what happened to venture capitalists and ceos. They went to florida. Miami austin

This is going to

If it does pass you could be pushing people to singapore

Well, we have another very complicated problem and this is what freeberg brought up which is and I don’t know the answer david

So i’m trying to i’m actually talking around your question because I think it’s a it’s it’s the right absolute question

But think about this what happens in a world where now let’s just say that the revenue of the government goes up, right?

But outcomes stay the same or get worse

And at the same time and you could claim that that’s effectively what’s been happening over the last 20 or 30 years, right?

Government revenues have gone up impact has stayed the same or probably been net negative

But then at the same time you have this, you know program of quantitative easing where then you can essentially print money on demand


When you think about that, it’s like wait a minute. I am giving you money

But then then you are also going to the photocopy machine with my money to make more money

And all of that total money does less than what it did when it was half that or a quarter or a third of it

That’s a very scary realization. I think that people, you know will eventually come to

And I don’t know what the answer to that is I you know

I I I think David

Saksipu said it was just like, you know

The states are this incredible a b test right because you get to test like theories

Right, and you have you have now every complexion of theory you have like, you know

The low-tax states the no-tax states the mid-tax states you have high real estate taxes low real estate taxes highest state tax, whatever

You get every grab bag of incentives

And you’re going to see but the problem is that was assuming that the federal government kind of mostly stayed out of the way

Right when you have this massive overlay

Yeah, I just posted a chart in the the chat that nick can put up which is federal spending federal outlays a percentage of gdp

and it’s really interesting because

Federal outlays of percent of gdp have generally been

Around the 20 percent line plus or minus a couple of percent

Since you know the 1980s

And last year in 2019, it was 20.7

It jumped to 31

0.3 percent under covid and it now feels like we’re trying to make this new level

Of you know going from 20 to 30 permanent. It’s like mask mask wearing

Well, the the problem is the only time we did that in history was in world war ii

Now we were trying to fight the nazis which was worth spending the money on yeah

I would say that was a good use of capital, but it’s very hard to step back, right?

I mean what’s the ruin what what starts out as temporary becomes permanent? Is that kind of the concern?

Well, that’s what that’s what milton freeman said is there’s nothing quite so permanent as a temporary government program

right, uh

but but but what they’re threatening to make permanent is this new permanently higher level of federal spending in the economy and

I think it’s a very dangerous experiment because it either takes

Tremendous money printing to support it or a tremendous tax burden and neither one of them is good for the economy

By the way, you know again when bill clinton left office

I remember, you know, you can go to the the time machine for

When he left in 2000 and he bragged about how

Under his terms under his eight years as president. They reduced federal spending from 22

What happened to that to 18 of the economy?

Can you imagine a democrat today boasting of that or even a republican? I mean

What who was the guy who was your guy who was like, uh, the tea party people?

There was somebody who was like in charge of the senate. Well, I don’t know who it was, but it was just like we got to cut spending

Radically cutting. Oh, yeah, ryan. Yeah speaker the the speaker of the house paul ryan. Yeah

You’re right. You’re right on this. Yes

Spending restraints kind of gone out the window and in both parties and the republic and it did it did happen under trump

The republicans don’t seem to find their principles on spending unless and until there’s a democrat in the white house

So they definitely deserve their share of the blame on this

But but we do seem to be entering a new territory here of you know this again


Levels of spending we’ve never seen before. It’s incredible

It’s absolutely the problem. The problem is it would be so much better

If we just said we’re going to do this one very specific thing

With a huge number attached to it. Like I would rather say we’re going to mars. Here’s

a trillion dollars

We’re cutting student debt. Here’s a trillion dollars. We’re going to double down on cyber and we’re going to get you know

Completely pivot the military or something and here’s 500 billion

Whatever something aspirational that is not just anti-rich people. Let’s tax right now

We have we have labels

We have a label and then we have a spaghetti mess of spending that just isn’t really attached to what the label means

And none of it is accountable. And so you don’t really get anything for it

I know this is a silly question, but why wouldn’t we test this and say hey 20 40

There are numbers between these two

Maybe we’ll increase it two percent a year for eight years

And we’ll see what happens. This is the this is the other problem with like this idea of american exceptionalism

We believe that we can’t learn anything from anybody else and that’s also not true

We actually know what it looks like when you have government as a massive portion of the economy

And we also know examples where government basically enables human capital outcomes, but remains relatively, you know, small and fixed

Singapore right there’s this there’s this incredible. Yeah, you know, there’s this incredible example where I think uh, right when liquan you became


The head of singapore the gdp of singapore was the same as the gdp of jamaica

Right, and what you saw was this complete just just complete divergence in in these two countries and think about this country

Which is basically this like, you know this little spot of land

Surrounded, you know, and you know a political a religious surrounded by these muslim countries and they still thrived and they kicked ass

You know, they were never invaded etc, etc

And underneath that was this belief that it’s what you said freeberg where you focus on an outcome

You spend against the outcome and you try to measure in a reasonable way

And you double down on the things that work and then on the other hand if you look at europe europe is a good example

When you know spending sometimes for the greater good in the best interest can run amok

And really what happens is you start to stagnate?

Yeah, and singapore is only what six million people. I mean, it’s like ireland or norway or denmark

I mean, it’s this is not a huge place. Sounds like we didn’t solve any problems in that last piece

Yeah, we didn’t solve it. I mean, I mean, what do we think is going to happen in four years?

Does donald does this give donald trump a clear path into office if he said hey, we’re

Again, you know the worst case scenario is you see what happened in france when they had that 75

Super tax and then they introduced the wealth tax and they had massive emigration of

Of uh invested dollars out of the country and people out of the country. They did get rid of george

That was a bonus


At what point how many red pills do you guys have to take?


You’re willing to reassess your political party because it seems obvious to me now. Look we can talk about our political party

Hold on. Hold on. We can talk about we can talk about how bad the republican party is, but there’s no

Question on my mind that the democratic party all the energy the base the activists and the politicians who have the microphone

They are woke socialists. Okay, that is the dominant ideology in the democratic party and what biden is doing right now

Is catering to that he’s compromising. He wasn’t catering to that until this point

He he didn’t put bernie or elizabeth warren into any cabinet positions. He kind of marginalized them and now

He’s like, okay, let’s do something. I mean would warren and this is this is why I think yeah

No, but jason, I think you’re right

This is why I think this is like a sacrificial lamb and I don’t think anything’s going to happen

I don’t I think biden is a fundamental centrist. That’s why I like him. I think he’s a boring

He’s a stable. He’s a stable predictable figure and that’s I think what you want in the in the presidency

I I think that this is sort of like okay, you guys want a pound of flesh here you go

But I think he’s so politically

Smart that he probably does have a bunch of millennial woke socialists whispering and chattering like hey do this do that to the other

But he’s probably the only one there who’s smart enough to realize none of this won’t get passed

You know, it’s not going to muster enough support. I don’t know. I think biden is not governing like a centrist right now

He’s he’s proposing, you know, what four trillion of new spending, you know new tax increases and he’s just getting started

But look and I would challenge this idea just slightly of him being a centrist

What I would say is he’s always tacked to the center of the democratic party

so I I do I I do think he’s he’s a triangulate triangulator and

A calibrator. He’s not like a conviction politician the way that a bernie sanders is or an elizabeth warren

But what he’s tacked to is the center of the democratic party and the center of the democratic party

Has moved very far left because all the activists have moved to the left and so he’s been dragged left remember

Biden was clinton’s floor manager in the senate when he passed all this


And so now biden is very far to the left of where biden was

In the 1990s and the reason for that is because the democratic party has moved

So once again, I guess, you know, my question to all of you guys is what does it take?

How far does the democratic party have to go to the left of trump?


I wouldn’t I wouldn’t call this the problem is don’t call this as much of a radical policy shift as I think it’s being framed

I honestly think this is a natural and inevitable consequence of the circumstances

We find ourselves in right now with respect to the spending level

The dependence we have on federal spending across the board with respect to individual employment and the economy

The need for a variety of social services to get us through this covid economic collapse. I just don’t see another way

Out and I feel like it’s the natural course to do exactly what’s going on right now

I I think it’s going to pass. I think something like it’s going to pass

And I think something like it’s going to pass but I don’t think it’s going to pass. Yeah

Where do you put it at? You think it’s going to be equidistant? I’m not saying it’s good or bad

I think obviously we just find ourselves in this circumstance in this country in this moment in time

That this is the only path. I’m, just not sure you can go in and go slash a ton of spending right now

And and you know, and anyone would win re-election or any, you know, or most americans would be anything but unhappy

Uh, it’s just it’s just the consequence of where we are. Let’s play the glass half full. Here’s a crazy idea


You know, for example somebody like me what I would think about which I think is is a little it’s crazy, but I would do it

Is okay. I’m just going to move literally every single thing every dollar that isn’t nailed down

Into a charitable vehicle and I will invest through my charity

Because I still have to donate five percent a year, but then I can compound tax-free

Now I care more about the businesses that i’m a part of and the progress that I can create

So that may be okay and i’ll just pay myself a salary to like fund my lifestyle

But that could be a way around this to me. The biggest issue isn’t how much money I have

Personally, the biggest issue is how much money I will have to put back into the world

And the idea that then it goes to a place where it’s profligately spent in a way that isn’t accountable really bothers me

That idea bothers me a lot

David that would cause me to attack

you know more even more to the right if I could find somebody who understood that principle because what I don’t want to have is

You know in the absence of social programs like the problem that the republicans leave is this no man’s land where then you’re forced to believe

That this one man for yourself. It’s all about you. You can figure it out. You know the rugged individualism

That’s just not realistic like I I

Am a complete byproduct of a social safety net and that should exist

And the problem is that republicans don’t give you that option to have then accountability on spending and just somebody please just say that

I don’t care what you call yourself

Yeah, well, look, I think you know that I think republicans have gotten a lot more comfortable with the idea of entitlements and the the social safety net

I don’t really hear anyone opposing that anymore

Um, I mean, it’s the same things happened with like the tories in

In england, you know, no one’s really trying to roll back the social safety net

We need a republican messenger to come forward and say listen, we don’t care

You know who you love what you smoke where you’re from what you look like

You know, we believe in an opportunity society

We want to spread that opportunity to everybody but ultimately opportunity comes from the private sector

We’re going to have a strong social safety net and we’re going to basically give everybody

The the most opportunity to participate by giving them a great education. That’s basically what the agenda should be. Yeah, i’m in i’m in I mean

I I to your starting line. Hallelujah. I like it. I mean I I would

Problem is your boy tried to dismantle obamacare, you know

The problem is trump like trump i’m a never trumper obviously, but i’m kind of purple

I would you know

i’m considering austin or miami as a as a place to locate myself and

A decision like this makes it easier. I would never do that

I’m, actually very I I love texas. I love austin. Austin’s the kind of purple I like

Like I like personal freedom and I like what you’re saying like love who you love smoke what you want

What year did you move to the bay area?

five six years ago

I was in la for 10 new york for 30. I feel like it’s a last in first out thing

That’s going on right now with respect to immigration out of california. I’ve been here since 2000. I’m not leaving

Yeah, i’ve been here my since I was six years old in california and i’m not leaving and I and i’ve been in the bay

Area since college so i’m not you know, I feel like it’s a lot harder

To leave when you’ve been here longer and it’s a lot easier to leave when you’ve been here less time

That certainly seems to be the pattern i’ve seen amongst friends and colleagues with respect to leaving the state

Uh, all right, uh, the chauvin trial, uh came back

guilty all three charges

What is there to even talk about here? What is there to talk about? I don’t I don’t even know

Can I get can I give it can I give a shout out to um

A really good friend of mine. His name is neil kachal. He was the former solicitor general under obama


he uh, he was uh, one of the

Prosecutors that that worked on that case. Um, he’s a he’s a partner at hogan’s

Um runs a supreme court practice there, but basically went and did this pro bono trial

uh on behalf of the state of minnesota working with the the

The district attorney and i’m just I just want to say neil proud of you. It’s an incredible thing

Um, thank you for keeping

america sane


I mean, uh, you know, it’s crazy

But then, you know the same day there was there was a shooting of this

This unfortunate shooting of this. I think I think she was 16 year old 16 years old this black girl in

Ohio and then you know lebron tweeted something out and then lebron had to basically delete the tweet because it was causing people to go

Absolutely crazy

Well, I mean each of these situations is unique

and in that situation somebody was going to stab another person the cop didn’t know what was going to happen and

You know in in another time period like maybe that would have been

saving somebody’s life who had potentially been stabbed and

You know the george floyd, I think you got to reserve judgment on each of these

until you get all the information, but the information here was just super conclusive like

The the gymnastics ben shapiro and some of these far right people had to go through

To say what you saw in george floyd being murdered was not what happened

Well, that’s that’s performative theater trying to get people to watch something and it was I mean

It was just gross to watch you might as well call it what it is like that’s acting

I feel like probably if anybody if any one of us found ben shapiro in a bar and just hung out and had a beer

You’d find out that he was like he was like the meryl streep of our generation, you know, like this incredible actor

Like an incredible actor

Scott adams and his podcast all these guys are just trying to figure out how to say

That this was a travesty of justice and i’m like, I don’t know what you saw. But yeah, let me explain where they went wrong

Okay, so so look I I agree with you guys fundamentally. This was an easy

Look, this this was uh, you know finding a fact by the jury guilty on all charges

Obvious right the tape shows it his uh, the chauvinist, uh record as a cop numerous complaints

You know, this was a bad apple. This was a bad cop. He deserved to be convicted end of story

That’s where the analysis should end

But of course the people on cable news would have nothing to say if that was the end of it and

So look, I think both the right and the left kind of went off the rails on this where

You know, the right kind of went off the rails is you had well

What happened is you had maxine waters, you know come out and while the the jury was still deliberating

She was basically calling for activists to get more confrontation on the streets if the verdict went the wrong way

And so then the defense helpful not helpful, right and so that so then the the defense made a motion

Saying that uh, this this was affecting the deliberations

There was no proof of that the jewel the the judge ruled against that motion

But he did the judge reiterated his desire for the politicians to stop talking about the case, right?

and so then what happened is the the right-wing commentators

Were criticizing maxine waters and implying that that there was an effort to try and coerce the jury

And there’s no proof of that right and and and and I think there’s the mistake is in somehow framing

Derek chauvin as like a sacrificial lamb to the mob. He was not he was guilty

he deserved it that being said I do think that the judge had a point that it would be

Helpful if these politicians would just stay out of it stop commenting on it while the jury is deliberating

I think there was a legit point there. Um

But you know the the the left made some some weird comments as well. You had nancy pelosi made this really

Bizarre that was very strange. I think that was like a slip up of like

Just trying to say something. I mean being charitable. She was trying to say something nice

That george floyd is going to create a wave of justice and that’s a great idea

She said yeah, she said thank you george floyd for sacrificing your life for for justice

Yeah, that didn’t come out exactly as she no

No, I mean because look george floyd did not go out that day intending to be a martyr

No, you know and um, and so it it it sort of

It expressed kind of what she’s thinking which is how am I going to use this politically?


You know

Train it came out pretty gross. I think you’re right. It came out gross for sure

I think that’s how they’re trained. It’s kind of like, you know

If you if you take a finely tuned athlete in a sport and give them, you know

They’re they’re just they’re reactive because they’re so instinctual. I think it’s kind of like this. She’s an incredibly finely trained

Athlete in her domain is politics. And so, you know, what is that phrase? Uh,

Uh, every crisis is an opportunity kind of thing

So, yeah, I mean they all flew there to be there for the for the trial etc

And that couldn’t have helped the judge with you know, the impartial jury and maybe that causes a mistrial

I mean, I don’t know david. You’re an attorney

Is there any chance on appeal that a maxi?

water quote like that could

result in

Well, the judge actually said that that the defense could reserve that issue and use it on appeal

So, yeah, they could use it but but I don’t think it’s good

I don’t think it’s going to work unless they can prove

That somehow the jury was contaminated

by what they were hearing on tv or

judges instructions were pretty clear like I watched a couple of the ending days and

He’s very clear like he’s like guys. I don’t want you to watch the news, you know, there’s stuff like that

He was very directive in making sure that they tried to be as uncontaminated as possible

So I think the the surface area for an appeal is pretty thin here

the fact that the police chief and everybody who worked with him said like

This is not standard this and they just threw him right under the bus

They didn’t want to be associated with this in any way, by the way

Well, you know, they’re they’re not going to be able to hide much longer though

Because the doj said they’re opening an investigation at the minnesota police force

So I think they’re just trying to crack open the police reform in that state and just get those guys on the right side

it’s going to be

You know again, here’s this other issue where it’s like, okay

This is where like there it’s very difficult for the federal government to do anything

But you know

so whatever they try to do won’t really result in what what you want to have because

Every state again jason to your point has completely different political ideologies

Nobody wants to behave the same everybody wants to be independent

Everybody wants to get re-elected as not kowtowing to somebody else

And so you just don’t get these consistent outcomes and then people are forced to vote with their feet and move across the country

You know to get a bunch of simple things that I think should be pretty consistent across the entire country

The thing that I found just not particularly deranged was these people who are like listen, he’s a fentanyl addict

He’s an opioid addict, which by the way, there are tons of affluent people. Everybody in this country is addicted to opioids

Fentanyls are everywhere fentanyl is everywhere and then you’re trying to say like because he had that addiction

But in some way that negates the person kneeling on his back while he’s in handcuffs

Like you’re you have a duty as a police officer to take care of somebody when he’s in handcuffs

how is he any threat in any way and then to

Listen to scott adams and ben shapiro on these


Pieces of garbage try to say oh, you know, there was the fentanyl that killed him. It’s like

Uh, yeah, no the person on his back kneeling on him for nine minutes because it’s about it’s about ratings now

Switching topics and to talk about ratings something a little lighter


The most interesting popcorn thing that I watched, uh was the hulu documentary

You did watch the hulu documentary on we work. I uh, we work. Yeah

Watch it. I gotta watch it. I haven’t seen it yet. Yeah, it is it is in a word

I think I think the good I think the right word is like

Outrageous, I think the guy who stole it. Jason was the lawyer who they interviewed. Yep

He he had some incredible kind of like one-liners. Yeah

I think it’s yeah the

I had a g i’ll be honest and this may sound crazy, but I actually had

um a fair amount of sympathy

For adam newman and watching it. I think that he

At least in the documentary it came out that he you know

Not not that he didn’t create this issue

But that I think it was a little overly scapegoated because it’s very hard for you to incinerate

45 billion dollars without the complicity at a minimum of your board of directors

Right and and a bunch of like extremely well-heeled thoughtful investors

And so there was just there was just this so much complicity in this thing

So if anything my takeaway was that he he shares

He shares the blame with a lot of other people and it’s not it wasn’t

You know him and him only but my gosh that documentary

Some of the things guys are just uh, they’re fabulous. This is this is always true in these businesses that end up with um,

You know bad actors that are enabled, right? I mean it’s been the case

In public and public success stories and failures, right? I mean there’s a a cult of personality

The personality provides the the high beta personality provides the alpha

And it can also it also could provide like a theranos outcome and

You know the thing that when you’ll see when you watch this is I don’t know if you guys watch the vow about that nexium cult

which is just

equally loathsome horrible people behaving badly

But he really targeted young people to work there and indoctrinated him into this. We’re changing the world

And then there were no adults there and you see him behind the scenes when he’s talking

At the ipo road show and he’s having basically a panic attack and he’s psychotic

I mean he was really deranged and they have this video of him trying to get through the ipo road show

What show is what movie is this?

It’s the we work documentary documentary. Just get hulu. It’s on hulu. Yeah, it is so deranged

It’s awesome. I mean it’s fire festival lever deranged is a big word

I don’t i’m not sure that it’s deranged but I think it’s like it’s juicy

It’s uh, it’s gossip about his wife and like that whole thing like we school they’re like we have to democratize

Education for 60 000 a year. Have you guys have you guys ever have you guys ever regretted enabling?

Um, you know quirky personality entrepreneurs that you’ve backed and then you’ve regretted it later

yeah, so um

The problem is it’s hard. It’s hard to know in the midst of it

You know, I guess it’s like kind of like that line like the line between genius and insanity is very thin

Um, but yeah, I mean the the one thing I will say is i’ve only ever had one issue of outright fraud


And so, you know

Well, no, I mean in hundreds of in hundreds of companies that i’ve that i’ve invested in luckily. I i’ve i’ve only

uh, i’ve only seen one issue where

You know, the ceo was extremely

I don’t know aggressive in how they accounted for and booked revenue and you know

This is where one thing that we don’t have at the early stage companies

We don’t have the check and balance of a reporting infrastructure and a third-party watchdog and all these other people and so

You know, you guys all know this when we go in and we sit in a meeting

In a board meeting and you know, the entrepreneur puts slides up. There is an inherent

100% categorical belief that they’re that they aren’t lying right? Like you don’t you don’t even have to check that assumption

It’s just assumed that nobody’s lying, you know good or bad

We’re just presenting the data and I had one case where the guy lied and it wasn’t one was it was and our

Cfo and you know, our team figured it out and

um, you know, there were other investors and it was uh, we all were just really shocked and we had to kind of

Clean it up as best we could and

I have literally

a dozen, uh, and they we didn’t wind up investing in I think 10 of the 12 and the reason is

We took diligence to your point chamath. Like do you how do you even know in a board meeting?

I just said screw it

i’m going to build a diligence team and we ask people for all their bank statements and for their itunes account and for their

Google analytics and if a company doesn’t give those to us

We just know that something’s up

And we figure it out before we invest because the two times we did get dinged on this

We had one where somebody was giving themselves a loan. So you did diligence we did

We just basically have a diligence list that says give us the incorporation docs and all these bank statements now somebody could

Fraudulently change a bank statement that is possible. So there it depends on how deep you want to go in the fraud

but did you guys ever like enable a

Personality that was just like so over the top and then you’re like, oh shit

This is actually gonna this is actually an explosion. Like it’s a total disaster my top three investments

That’s a good point there, that’s a good point, right?

like yeah, so because okay, so I wrote about this in my blog post blitz fail about the the sort of how yeah

How founder psychology can actually cause a company to go off the rails

The the thing the thing is that

Founder founders do need to be much more aggressive than the average person

You know, we like to think that a quality that a personality trait like aggressiveness

There’s like some sort of normal distribution of it and you kind of want to be you know

Somewhere in the middle of the curve and it’s actually not true

You want founders to be much more aggressive than the average person because if they’re not they’re just not going to persevere

And push hard enough right and j i mean we saw this with with uber right?

I mean tk was a super aggressive personality. The company would not have been as successful. How do you not push that hard? And so

The curve in the real world. It’s not a normal distribution

It looks more like a curve where there are returns to aggressiveness and they’re keeping increasing returns to it

Until suddenly the person goes too far and then they jump the shark and the whole thing craters

Can I say something like, you know having been in the engine room with zuck in a critical moment zuck was an aggressive guy

but he wasn’t

Over the top and he wasn’t just this like crazy weirdo personality. He wasn’t enabling sexual harassment

He wasn’t doing any of that stuff. Would you say?

Yeah, he was he was he was he was an intellectually incisive. He was an aggressive thinker

So this is why my reaction to david’s question is I haven’t backed assholes because I just think that that archetype doesn’t work

It’s not a very cool analytical personality. There are these founders that you know, we

I’ve heard the term wild stallion

To uh to describe them where they are, you know, they’re like these these wild stallions

They have tremendous upside, but they’re also a little bit, you know, um wild and unless they sort of learn the hoof

Yeah, I mean

They’re they’re they’re they’ve got a lot of talent, right?

Uh the the talent is

The amount of talent you have is like the horse you’re riding on and some people are riding on a bronco

They got a lot of talent, but it might I just think I I just think the real the real edge in investing is figuring out

What is bluster and window dressing and show and what is actually aggressive thinking like john and patrick collison?

There’s zero bluster with those guys

That company’s gonna be zero that’s gonna be the most valuable valuable company that’s private right now besides

These guys are these guys are incredible intellectually thoughtful killers, right? That’s what they are. That’s true

They outthink everybody, but there’s also a maturation process that a lot of founders go through, right?

I mean the collison’s and zuck I think got very mature very young

I think there’s other founders that it takes them a while to

Get more polished get more disciplined

Reign in that, you know

Those emotions i’m not saying they’re fraudulent. We don’t want to bet on fraudulent founders

But some founders need to learn how to harness the talent they have. Yeah, I agree with that. I agree with that

And those are the ones where it’s very hard to know earlier in their career whether to bet on them or not, right?

Because they may get it under control or they may not it’s you can’t tell at the beginning

Here’s the analogy we use internally

It’s like being professor x and the x-men you could have a jean gray or a wolverine and like everybody’s got a different superpower

But you need to teach them how to use that superpower so they don’t self-destruct or cause chaos

Bifurcate the other way, right? They could be magneto, right? You could you could go the other way

I’m, not sure I get all the references, but I hear you

Well, I mean i’m kind of shocked given how much of a huge nerd you are that you don’t understand the x-men

Jason, I love that movie. I love that movie with the guy who’s made of all the rocks and the little tree guy

Who’s his buddy?

That’s guardians of the galaxy. Yes, I think I think jason’s favorite character is the blob

Is that the one that’s coming to you?

What are you talking about, how many how many you’re right cubano sandwiches are you having look at your face, dude

How many cro no croquettes sacks?

Bad idea shouldn’t have gotten there. You’re right. Yeah

That’s what what is your training? Well, what’s that? What is your health plan?

Are you uh now that we’re coming out of covet? Are you running or like we got an intervention right now?

You look terrible

You do look a little bloated you look like a you look like a puffed fish. Oh, geez, I need to lose like 20 pounds

I’m down 12 for my peak of the covet peak. I’m feeling good

Just get a personal trainer speaking of covet. What the hell is going on in india? Oh my lord. It’s scary

I thought the whole thing was we they were taking hydroxychloroquine for totally different reasons

And this is why it’s all fine had some immunity or that it was hot

I mean there was a million reasons of why they were not going to get hit and then now they’re surging

And we have 60 million shots on the shelf and the number of people getting shots is going down

This is america’s chance to use

Instead of battleships and nuclear weapons. We can use this covet to shape global policy. We should be getting

Vaccines to other countries and be once again the shining light of the entire

Planet and humanity. Well, why are we not bringing shots to india now?

We have so many extra i’m not sure i’m just trying to pull up the india vax data per day. I’m not sure that there’s a


That’s as much the issue, right?

I mean it is scary to watch their their I mean you’re you’re our go-to science guy freeberg

Tell us what we’re looking at here on this chart. I mean the daily covey cases are now hitting

250 000

300 000 a day jason right now. It broke 300. Oh my lord in the united states. It’s gotten down to like 50 60

800 india has now passed the peak of the u.s

You know india is now seeing more cases per day than any country has seen worldwide during the whole pandemic

At over um, you know 300 000 a day right now

And it’s um, you know, it doesn’t seem to be letting up and we’re now questioning whether it’s testing

That’s the limiting factor in terms of reporting on these cases

so it’s uh, it’s pretty nasty now, there’s a um, a famous indian politician who uh,

uh who had been double vaxxed, uh who claims that he is covet positive as is his um,

mother and sister and so it’s also creating a little bit of a

concern in the market about um

You know getting covet now. He doesn’t seem to be having a severe case

um, which is you know, one of the kind of important things to take note of in vaccination is uh, it’s not

necessarily binary

Um, but it’s certainly making a lot of creating a lot of fear

As a result of his kind of public statement about this. This isn’t just about cases either. Um,

30 days ago they were at

200 deaths a day and uh, I mean tragically they’re at 2100

So it’s 10x in 30 days if it 10x is again

That’s 20 000 people a day dying. This is a different level than any other country has experienced

Tragic and they don’t look at the end at the end of the day

I don’t have the hospitals hospitals to handle this do they this could become a crisis of epic proportions

At the end of the day a country’s success in battling covet’s going to be about how fast they can get their population vaccinated

It’s very simple, right? I mean

Israel was first they got everyone vaccinated now their cases are

Down to almost nothing the u.s is doing pretty well. Although there’s some room for concern we were doing

You know close to four million vaccinations a day now, we’re at like three three and a half

They’re starting to slip a little bit

Um, and that doesn’t have to do with johnson and johnson, right that has to do with people not showing up for appointments

Yeah, and I think you got to blame the media a little bit because they keep running all these vaccine scare stories about you

Know how this person or that person the vaccine punched through and they got sick despite getting the vaccine

They keep selling they keep selling all this like, you know, covid

Um scary and porn, you know the the you’re so right. Do you know what I noticed the other day on cnn?

this is how insincere and


Ratings desperate they are when they put up their covet stats. They put up cumulative cases and cumulative deaths

That’s what they obsess on and it’s like hey dummies. We know what you’re doing here

You’re trying to scare people

You should show the graph of the debts going down

And then why can’t you take your mask off if you’re vaccinated and you’re outside?

Let’s give a reward you were talking about this last week. Yeah, nate silver had a really good tweet about this

He said that wearing a mask after you’re vaccinated is now it’s like the the blue equivalent of the red maga hat

Where it’s completely performative to say hey i’m on team blue

You know, even though like scientifically it’s meaningless. I it’s like the press they keep talking about this possibility

That even after you’re vaccinated and you could somehow, you know, keep transmitting the virus to other people look

Viruses, I mean freeberg can explain this better than me, but viruses do not

Have in themselves the machinery for replication, right? They have to take over your cells hijack your cells machinery to replicate themselves

So first they have to infect somebody then that person gets you know

Gets the virus starts producing a lot of it

Then they start shedding it if you don’t get really sick

You’re not gonna be shedding a lot of the virus. You’re not gonna be transmitting it to a lot of other people

And you know they talk about this this possibility

As if it’s like a real possibility that people could still be transmitting the virus after they’re vaccinated

I mean, it’s not a statistically relevant possibility, right?

It comes down to this interpretation of everything being binary. And the reality is that all of this is on

You know a a statistical curve or on a kind of a gray scale

And you know the sax’s point is 100 correct that the probability of someone who’s been double vaccinated

Getting infectious getting infected and then being infectious in a meaningful way is so remote

Um that it is not even worth kind of considering, uh in a way and and being double vaccinated

Gives you such a significant typically right not for everyone, right?

All immune systems are different and some of what we we might be seeing is the difference in kind of how people develop immunity

Um, but it is such a rare case that one could have a severe infection

After getting a uh, you know a vaccination

Um is such that it it shouldn’t even be considered and kind of you know

Mentioned as being a reason for continuing to wear masks and not gather and not do things

And so, you know, we started out as sax pointed out. I think this is such a true and important point

We started out with this like immediate politis

politicization of what’s the right thing to do to reduce the spread of the virus and then that became the mainstay for that political affiliation

And now the transition of the new world that we live in where most people are vaccinated

We have a better understanding of the science and the statistics and the mechanisms of transmission

We hold on and we grasp on

To that initiating kind of belief system that was correct at the time

But isn’t correct anymore

And it seems so difficult to get people to shift their mind this kind of um, this behavior is an ignorant behavior

And you see it in so many manifestations

Um right now in particular with respect to masks and behavior after vaccination and so on

And it’s uh, it’s really brutal to watch. Um, but we obviously digress a bit from the indian, uh circuit the indian circumstance, which is

A really nasty one. So it looks like why why now and not a year ago, you know, it’s it’s not clear, right?

so there’s um someone uh

provided a uh

Indication today that there may be as many as uh somewhere between 100 and 200 unique variants

That that we’re seeing emerge in india. So there may be a

a lot of interesting very interesting

Technically, but not obviously for human life, but a lot of dramatic. Um variants or significant variants

That might be increasing the the infectiousness right now

um, and uh, and in particular

Uh, you know behavior has shifted in a way that’s enabling, you know

Some of these transmissions to occur, you know

A lot of people let their guard down and so on in a way that maybe they weren’t six months ago

um, and uh

You know, there may be some forced evolution associated with partial vaccination

Totally a theory right now where you know, 110 million doses have been given in india so far

So, you know in order for a virus to succeed the viral variants that are going to infect more likely

Um, you know through a partially transmit a partially vaccinated population are the ones that are winning out

So there’s a lot of you know, confounding factors here. We’re not really sure

Um, but it is it is pretty brutal

Um, what is uh, what is going on?

Um, I will say like this notion that vaccination does not prevent

Uh protection against variants is not a binary statement either. This is really really important

I’ve been wanting to say this for a couple of our shows

When you get this vaccine

What you’re doing is you’re training yourselves. You’re giving yourselves the RNA to print the spike protein and that protein is now in your body

Everyone’s immune system then reacts differently to create antibodies to that protein

The antibodies that chamath makes and jason makes and sax makes and I make are all going to be different

But if you had to pick whose would be better

I can tell you sax is probably going to be the worst off but yeah, jason’s are the most sluggish for sure

They’re the slowest. Yeah, but but there there are likely tens of thousands of novel variants that our b cells will make that will

That will bind to that spike protein and get rid of it and we will each have many hundreds or potentially thousands of novel

Antibodies that our immune system will make so keep that in mind

You now have a portfolio of antibodies that your body is producing to that spike protein

So now when when a when a covid when a sars-cov-2 virus shows up in your body

Some of those proteins some of those antibodies are going to be really effective at getting rid of it

Some of them are not

Now the protein in the sars-cov-2 virus changes slightly

Some of the other antibodies you have are going to be effective and some of the other ones are not

And it is that portfolio that is um

That is going to change

Sorry that that portfolio that is going to define

Your success at fighting off a specific variant of sars-cov-2

Where the spike protein is changing slightly with each variant, right?

So these variants change the composition of the protein the antibodies that you have are going to be

You know more or less successful depending on how that variant changes and that’s um where there may be cases

Where the number of antibodies that you are producing or the success of the antibodies that you particularly have

Are a little bit lower for a particularly new variant

It doesn’t mean that you’re going to have an infection that’s going to be a runaway infection in your body

It means that it might take you longer

Or it might be a little bit harder for you to clear that particular variant given the repertoire of antibodies that you’ve produced

And that’s why this isn’t that’s why this isn’t binary, right?

It could be that it’s like hey this variant shows up boom instantly. I got rid of it

I don’t have any infection, but someone else might have like, you know, maybe a slight bit of um, uh,

You know, there might be a couple days where they’ll feel a cold as your body’s clearing it out

And the measure of this is this um this neutralizing titer

Which is the where they take people’s blood with all of their antibodies in it

And they put these different variants in and they can measure how effective your antibodies are getting rid of that new variant

and the less effective your antibodies are

The higher this this this titer needs to be

And as a result it could be a little bit longer a little bit harder for you to get rid of that that virus

And so so again like when viral variants start to emerge in the population and as they kind of take off

And become more dominant. It doesn’t mean that we don’t have immunity. It means that immunity might be slightly affected

But not not it’s not one or zero, right?

Because you’ve got hundreds or thousands of antibodies to fight against covid

In your body, and I think that’s really important

So we should you know, while there may be some variants that might be what we call variants of concern

Meaning they can kind of slip away a little bit from most of the antibodies you have

It doesn’t mean you’re not going to be able to fight them off with the antibodies

And so I don’t know if that was too technical or too difficult to understand, but I think it’s really it makes total sense


yeah, and and and one thing just to add to that is is that most of the variants that the press keeps

Reporting with alarm that are somehow that that basically are going to be vaccine proof. They turn out not to be

you know that we they’re

very shortly, uh

There there comes out a new article basically saying that the vaccines work

And so the press keeps reporting these isolated cases as proof of something. That’s not actually true

Yeah, I mean this is I just want to give the press

Um a kind of I just want to again accounting for the press in the last 30 days one

obsessing about every single shooting

And then inspiring more shootings when you obsess about these mass shootings you inspire more of them

It is a proven fact. It is inducing people to do this more. It’s not


Correlated but there is proof about this same thing with suicides

That’s why we don’t cover any young people killing themselves in the bay area in a certain

Town that we all know had a rash of them or we don’t cover

Suicides on the golden gate bridge anymore because when they used to cover them and put it on the cover of the chronicle

Two more people would jump off the next week number two. They were obsessing about riots

I mean, I don’t know if you turned on the tv during the deliberations. They were

absolutely gleeful

about the potential

of trouble happening and that of course incense more people to go out and see what’s going on because you’re going to get on tv

And because other people are doing it and humans model other humans and then finally with the goddamn johnson and johnson

Eight people have blood cuts. Nobody died. Am I correct in that?

And the one person died one person died, okay, so we don’t even know and then they obsess about that for days like

You can’t cover these things wall to wall and not

Think that they you don’t have culpability the cnn’s the foxes, etc

You’re obsessing over these things and it’s scaring people to not take vaccines

It’s incenting people who are crazy

you’re dog whistling crazy people to go get a gun and to use that as a way to get famous and

You’re doing the same thing, you know with the with these. Um

You know riots in the streets. We’re all in the opinion business. Um,

That’s but but the problem is when they just when they don’t just hype things

but they actually give you factually incorrect information because

You know, it’s they’re trying to scare people into getting higher ratings, you know, fear porn

It’s also framing david which is a different thing than lying about statistics. They would say we’re not lying about the statistics

That’s how many people died of covet

But what they’re doing is they’re framing the cumulative number to make you scared today

400 000 people have died from covet. It’s like

No over 14 months 400 people died of covet 700 people died today

And that’s the lowest number since november, but that wouldn’t get more people to tune in boys

I want to tell you guys something. It’s frustrating. Yeah


i’m vaccinated

Um, I want to I want to see you

I want to hug you keep your shirt on and it’s uh, it’s 5 30 p.m

And i’ve been uh working since 5 00 a.m. This morning. Oh, is that what that look is exhaustion exhausted?

I came back from easter vacation guys, and I had been up between either at 5 00 a.m. Or 6 00 a.m

Every fucking you’re working hard. You’re working hard. I am grinding but I am tired

All right, let’s wrap here when we as we wrap what what’s going on just because people have been asking


what’s going on with the scc and spax and and just some more reporting or something because I was watching cnbc and they said

Hey, you’re doing everything right, but there’s a lot of other people who are doing things wrong explain to us what’s going on

It’s I mean, it’s a it’s a very specific. Um accounting issue, which is that

Some spax many spax and in fact many companies let’s just put it that way not just spax, but many companies use warrants

and the prevailing guidance on certain warrants was that they were equity and

Basically that gets put into a balance sheet statement where you have equities assets and liabilities and you know, it’s it’s on one side

And uh, basically what they said was they issued some refined guidance that said actually in these specific cases

these should be really listed as liabilities, so then it needs to move from this column to that column, but

when that when you do that you go through, you know, a bunch of cascading implications and effects and

you know revisions and restatements and so that’s what the that’s what the entire securities industry is dealing with right now, which was

Um, you know this guidance by the scc and the implication so that was on the 12th

I mean just so you know today we just filed the updated

All of our updated docs plus the updated s4 for sofi

so we were able to work around the clock and just kind of get it done and hopefully what we’ve

also done is create a

a bit of a way forward and a path that other folks can use to kind of like accelerate their their progress, but

It’s definitely created. Um

a ton of work, um

But uh, but we’re I think we’re I think we found the right answer

Ultimately good for you because you want to see it be buttoned up, right?

Yeah, and and also I think like the simpler path forward

so, I mean if you just think about capital market stability for a moment like

Warrant coverage should probably go away number one, right? So take all the warrants to zero

second thing that should happen is that uh, you know

I think this is an opportunity to take a step back and figure out how to really

Make sure that the SPAC sponsors are of the highest quality. Somebody told me this incredible thing today

I am one of five groups that put up any money when we do a pipe in our deals

Meaning he said to me 95 of sponsors put up literally a zero in the game

Zero, and so of course you’re going to have you know, extremely loose underwriting requirements if that’s the case

And so, you know the idea that i’m thinking about

Uh, which someone proposed to me which I think is very clever is this idea that you know, you earn more of the promote

Uh more money you put up, right? So for example, like, you know, um, you know in so far

I think we put in 275 million dollars

um, so I mean we really you know, um, that’s a meaningful commitment and

It closes the gap between you know

What your equity is issued at and what investors are buying at and that’s very healthy, right?

and so I think there’s all these mechanisms that will

Clean up the SPAC market. We need to have a much

More refined

Criteria to allow people to be sponsors

And we need to make sponsors in a position where they must put in money

So that they actually do the work if you get something for free

Let’s be honest. You won’t do the work if you’re forced to write a check

It’s a hundred percent about it show me an incentive. I’ll show you the outcome and this happened on angel list

Where in the beginning days of angel list you had some angels quote-unquote who didn’t have any money

So they put a thousand or two thousand into a deal

Then they would have five hundred thousand come behind them

And so you had this five hundred to one ratio of dollars to skin in the game and it was like well, why wouldn’t?

A syndicate lead put every company out there and not even put it, you know, they have no skin

Which is why when you have a venture fund, I don’t know what they expect us to put in typically

Well, the problem is venture funds are one to two percent. I was 25

Well one to two percent is it could be pretty significant if you’re doing a fund every three years

I’m doing this and it’s it winds up being millions of dollars for me

But i’m happy to do it because I believe in my own ability

All right, as we wrap anybody have a plug or anything?

They want to let people know about oh, I I want to talk about this one little thing

I just uh not to talk about it, but I would like to tell you guys to read it because it is so interesting

Basically like european soccer tried to incite a revolt where like the top teams across all the different leagues

Came together to try to create a super league

but it ended up like they were like a band of evil villains and like

Fans erupted everybody erupted and then you know, it existed for 24 hours

But in that 24 hours, it looked like a complete rewriting of sports and sports

Like uh laws and you know, um, it was an incredible thing. There’s an article in the new york times i’ll post it in here and

Folks want to read it. It’s really really fucking funny and that will be on season two of ted lasso

I don’t know if you guys watched tim cook’s

Um keynote this week with the new imax, which are really beautiful. Um

He was so excited about ted lasso and ted lasso is a great show

But I mean it literally is the the apple, uh show did anybody you guys see ted lasso yet?

What is it this television show you guys haven’t seen ted lasso the tv show yet?

Is it on mbc or cbs?

What channel is it on tv plus whatever that is channel six?

Is it on channel six tv plus you gotta go on your apple tv and then find an apple tv plus on your tv

And you’ll find it eventually. It’s it’s one of their paid, you know, they have their own netflix competitor called apple tv plus

So on your phone if you type apple tv, you’ll have apple tv

I have apple tvs. I have apple tvs behind my tv. No, no, but there’s apple tv plus which is their netflix

So there’s a better. Is it a better apple tv? No, no, no, it’s content. It’s a content subscription you could have

They just they screwed that part up. Um, hey shout out. Um, I just wanted to get uh, sorry

So who’s who’s ted lasso ted lasso is a jason sudeikis

Comedy that is incredibly heartwarming


A really heartwarming joyful kind person who goes from america to the uk

To become a soccer coach

Yeah, that’s really great. Yeah, I hate that’s boring. That sounds really kind you would hate it david. It’s not cynical. I do. I hate it

You should watch you should watch you should watch gamora on hbo. I started it. Yeah, woof

On italian. Yeah, I got to the first episode. I was like, whoa, here we go

It is so super and also you should watch it in the original language because it’s not really italian

it’s like neapolitan and so like

You know, I can catch and understand maybe 20 of the words and I said to nat I said

What language is she’s like? I had no idea. I watched it in italian subtitles. So it was it was beautiful. It’s beautiful

Beautiful. It’s so intense. It’s like the wire but like I mean, you know set in italy. It’s incredible

Uh afterlife is also good ricky gervais if you want something cynical and heartwarming that’s for you sax

Love you guys. Love you sax. I’ll see you

Can you please come back to the bay area so we can play poker? Yeah

When he just why don’t you just why don’t we go to um, miami? Are we going to miami? I’m going. Oh, yeah

I’m going on a trip. I’ll just leave it at that. I’ll talk to you guys

Recognizance trip

Recognizance yeah recognizance

Understand what’s going on. Do you understand that that term is more associated with bail and in jail than it is what you think it means

Jason you are released on your own recognizance. That’s what i’m talking about. You want to do reconnaissance reconnaissance? That’s what I said


Yeah, I think you’ll be wearing an ankle bracelet on your recognizance

Actually, no, they don’t they don’t fit on his ankles

One word to make it a good episode for jason, it’ll be a cankle bracelet

Mr. Doughboy, what are you talking about? My god? What do you is it called a bracelet if your calf and your ankle are the same?

Put this way if sax sax is wearing two of them right now, you’d never know

Sax is wearing one on his neck. What happened to your neck sax?

Sax is wearing one on his neck. What happened to your neck sax? We’re out. We’re out. Where’s your neck joppa?

Love you besties. Bye. Bye. We’ll see you all next time

We’ll let your winners ride

Rain man david sax

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

What what your winners ride

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 somehow

What you’re about to be what you’re your feet

That’s gonna be what we need to get mercies are

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