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Friberg Friberg, what’s up? It seems like you have a piece of shit on the side of your mouth, or is that a birthmark?
It’s oh, no, that’s birth. I got you
Did you record that
Look at this guy
He takes his shirt off for one fucking selfie and now everybody who’s fat and pale on the show
The other three of us is gonna be ridiculed. I’m having steak tonight as te aka tonight
Lifting twice a week now. Oh, come on sacks. Come get some let’s fucking go three two
Hey everybody, hey everybody welcome to another episode of the all-in podcast with me again the dictator himself
Show off Polly hop a tia
Rainman David Sachs definitely with us. Definitely a great driver. His dad lets him drive in the driveway and of course
Everybody’s favorite the queen of quinoa the science conductor himself
David free bird queen the Queen
Lot of activity online. It’s been a little bit of chaos since we all got together here. I
Guess we should talk about this Apple story with
Antonio Garcia Martinez
You may have heard that he was hired by Apple to I guess run
Their ad efforts and I have a little bit of information on kind of what he was gonna do there in terms of ads
Which is really interesting
But tell us tell us tell us tell us. Okay. Well, anyway, you know how we’re basically
Start at the beginning and assume people don’t know who Antonio Garcia Martinez Antonio Garcia Martinez was a Facebook developer
He is some really smart guy. He uses a lot of big words and wrote a book called chaos monkeys
which is a great book where he takes a
very
Jack Kerouac kind of you know, a lot of prose and
He wrote this book about his time at Facebook
The problem is he said some things in the book that would be five years later
problematic at the time they were actually considered problematic by some folks and
In the full quote maybe
Less problematic, but he was essentially ousted because of the following problematic quote
The quote is most women in the Bay Area are soft and weak
Cosseted and naive despite their claims of worldliness and generally full of shit. They have their self regarding
entitlement feminism and
ceaselessly vaunt their independence, but the reality is come the
Epidemic plague or foreign invasion they become precisely the sort of useless baggage you trade for a box of shotgun shells or a jerrycan of
diesel
and they shorten that quote to be that most women are soft and weak and
Full of shit. So in contact in context in this book
He was contrasting the Bay Area women he had dated with the mother of his kids
Who he describes as strong and tall and tough and amazing
but still the quotes a little gnarly and the quote out, you know when it’s out of context becomes particularly gnarly and of course
This led to a petition at Apple which then led to him being fired
Which now is going to lead to him probably getting a 10 million dollar settlement
of course, there’s a lot of hypocrisy being brought up here because Apple has allegedly been using or
Apple supply chain has slave labor in it from the Uyghurs and other ethnic minorities
and obviously
Apple gave dr. Dre
billions of dollars for beats by Dre and
He
Has a even more misogynistic
series of lyrics and was also accused of physically assaulting I
Believe his wife and other people he dated who dr. Dre dr. Dre. Yeah
So anyway
What do you think?
Okay, there you go next story no, I’m happy to jump into this
I think in Jason, I think you’re you’re you focus a little bit too much and I saw your your pod with Zach Colius on this
A lot of good takes but I think you’re a little too focused on what AGM as I think it’s easier
just call him by his initials what he did as opposed to what the employees at Apple did and
There’s at least four things that Apple did or five things that Apple did wrong
I mean number one, I think there was a really good reason not to hire this guy
Which is that he wrote a best-selling tell-all book about the last big tech company he worked at
So why if you’re a big tech company, why in the world would you hire him?
So that was stupid decision number one, but they did decide to hire him and once they hire him
They got a team like any other employee and give him a chance to show what he can do
And so that leads to mistake number two, which is these 2,000 employees who signed this petition
Really distorted and took out of context that passage and I know the passage is cringe. Okay, but I think it’s true
Passage is cringe. Okay
And gnarly and and it could you know, certainly appear sexist
But you have to put it in its context and the the larger con this is a work of literature. This is a best-selling
Book, it’s what 150,000 words. They’re taking 150 words out of context and the context was like you said
he’s describing the mother of his children the love of his life and as this sort of Linda Hamilton esque in Terminator type figure or
Charlize Theron in Mad Max and
This passage is not in there to describe all women. It’s just basically a literary flourish to contrast
the this woman that he loves
Being such a badass compared to every other woman and and you know when Kara Swisher interviewed AGM five years ago
She brought this passage. She explained it and she said yeah, okay, I get it
So, you know
It’s certainly the case that people can understand the context if they choose to and they simply are not
Choosing to understand the context which brings me to mistake number three, which is these 2,000 employees
Lied in their petition by claiming that their safety is threatened by Apple hiring AGM
That is simply untrue. It’s physically impossible in the era of zoom when everyone’s working from home
But this guy is not a threat to anyone’s safety
But they you but they use that claim
They make that claim because they know that if you accuse someone of threatening your safety
It will trigger the machinery of HR to remove that person from the workplace. This is the language of safety ism and it’s a
Specific tactic to basically get somebody canceled and removed from the workplace
Okay, and then that leads to the the the next mistake
Mistake number four, which is the bosses of the Apple caved into this pressure. They were total cowards
They never even gave AGM the chance to explain himself. They never asked him. What did you intend by this passage?
What were you trying to do? And by the way, they knew about this book when they say it’s even worse
They knew about the book
They had read it and they talked to many people as when a big time when a big tech company
Hires somebody for a major position like this. They call all the records
Uncovered and dealt with of course, they knew about it
And then when the mob complains they fire him summarily without subjecting the decision to proper HR processes
This is HR by mob rule. It’s totally unacceptable
No company should be run this way
And then finally that brings us number five is that in explaining?
Their decision and trying to justify their cowardice and giving it to the mob
They said that they fired him because of his behavior
AGM never had a chance to engage in any behavior. He barely started at the job
This wasn’t because of his behavior. This is because of the book that he wrote five years ago
So what they’re saying is that if you ever publish a written work at any time in your life
Years and years ago that that can somehow constitute present-day behavior and that other people in the workplace
Can have a problem with that be that this is not behavior and this is why he’s gonna have a giant
Defamation suit and settlement because they are making him unemployable in the tech industry
Yeah by claiming that he was fired for some some sexist behavior. He was not what do you think?
He’ll get paid in a settlement. I put it at 10
10 million. Well, I was just thinking he’s a half million dollar a year employee to a million and with his RSU
So let’s just put it at a million unemployed for 10 to 20 years because of this or the damages to his reputation
And present value that back. Yeah, so and yeah, so I think 10 million is the number
my curiosity in this was just
Did those 2,000 employees feel the same way about dr. Dre?
Of course, or did they do they feel the same way about some of the movies that they sell in the iTunes Store?
Or do they feel the same way about some of the games that they enable?
In the app store or some of the subscriptions that are sold
Right, do they care do they care that much about what’s happening in their Chinese supply chain?
I mean, I think it seems at least on the outside
The answer is no, but it would be interesting to get an explanation of that from the same HR people
I don’t know whether the guy should have been fired or not
but I do think that you should have a predictable standard and every company is allowed to do what they want if
The standard at Apple is that we are going to hold you accountable
For everything you’ve done in the past irrespective of whether you’ve disavowed it or not
So be it that’s their right and I think that the employees of that company have a right to do that
I think they said if you start to arbitrarily enforce it
you go down this weird place, which is like
Basically, I think what they’re saying is if it’s good for business
We’re going to ignore it if it’s not obvious that it’s good for business will act because it’s a low-cost way
of keeping the masses
You know that the medicated
And I think that’s what’s even scarier to the 2000 people
It’s not that you know, maybe they should feel proud that they got their pound of flesh
but they really should figure out how they want to stand on all these other points because to cherry pick puts
Puts the whole company in just a weird posture. That’s that’s not scalable freeberg
Uh, i’m less interested in the hypocrisy and the values debate, which is obvious
That’s kind of the first order
Point with all this stuff. It’s like do the employees have the right values?
Is there hypocrisy by management? Is there hypocrisy by the employees?
What what strikes me though is um a failure of leadership at these organizations
You know you guys think back to brian armstrong’s kind of purging of the woke mob and the political discourse
That was happening at coinbase a few months ago
He took a point of strong leadership
To a new level and I think it highlighted when the leader steps up and says this is how we’re going to operate
These are how we’re going to make decisions and puts his foot down
Uh people will leave and you evolve the culture
And I think it indicates to me that certain companies as they’ve gotten really big and really successful
like apple and even alphabet
and various other kind of large tech companies
The leader is no longer lead the employees lead the narrative on culture and the narrative on values
And um, you know, it speaks to two things one is that there perhaps aren’t founder
Leaders running those organizations anymore that there are managers
Whose job is critically important whose job is to keep the wheels on and keep the wheels from falling off
So they have more to lose
And they are constantly trying to protect the downside than they are trying to be aggressive about growing to the upside
um, and then I think it’s just uh, you know, secondly this kind of um,
You know failure, uh to kind of define
What your values are from a leadership perspective and the void gets filled by the employees the void gets filled by the mob
And so while it’s this one kind of, you know, debatable point today and this one kind of hypocritical point today
It’s really interesting to see that this isn’t happening at other companies that are founder-led and if it is
The you know, the culture gets jobs would have handled this completely different
Steve jobs would not have let his employees tell him who or he would have stopped
Let’s have a discussion about a really clear point of view about who we hire why we hire them
and how we make decisions and not let the
Democratic kind of rule or the you know, um, it’s not even democratic
It’s not like all employees took a vote
How much of this chamath has to do with the coddling of silicon valley employees for two decades vis-a-vis?
You know you get driven to school on your school bus you sit on you know, you get your lunch prepared for you
We do your dry cleaning every friday you get to come and ask challenging questions to the leaders and this concept of like
You know
Everybody has a voice at work as opposed to this is a company controlled by shareholders and or a founder and you work for it
And there is a trade of services here vis-a-vis what toby had to say at shopify
Which is this is not a family. This is a sports team. You are here to perform
We are here to perform for our customers the end
So the in fact if you if you had a chance and maybe nick we can post it in the show notes
but
The email that toby luteke wrote to shopify employees was unbelievable that to me is like that’s a tour de force
that should be basically like
That should be minted and sold as an nft
What’s an nft we forgot about those and it was it was it was just an incredible email adjacent to your point and the way
That that started if I I may be getting these facts wrong, but there was an emoji of a noose
inside of a slack channel
Um, and then and then folks got quite upset with it
And so I think toby’s response was to basically shut down the whole channel
And say hey guys
You know, we’re losing the script about why we’re here
And
You know, I think brian armstrong’s essay was a version of that
The question is why are we here if I had to guess I think it’s because we’ve pumped so much money into silicon valley companies
They didn’t know where to spend it
And so I actually think that what we’ve really done is overhired far too many people into many of these companies
And so they kind of are very smart people
Sitting around twiddling their thumbs. And so obviously they’re just going to get distracted meaning
I remember like, you know
At facebook there was barely enough people to keep the lights on for a while
Then I remember by the time I was leaving I was like wow
There’s way too many people here a lot of them and most of them are all really really smart
But it wasn’t obvious to me what many of them did
And you know people would look at me and then say oh, you know
That’s a really arrogant thing to say and that’s not true and everybody’s valuable
I don’t know. Um, you know if you look at google
I’ve always thought like that company could probably run by 2 000 people
But you know, there’s 200 000 people. So the 198 other thousand of them need to find something to do
It’s probably the same at apple
It’s probably the same at all these big tech companies and that’s the leverage that you get from technology. It’s naturally
massively deflationary
So but if you keep pumping billions and billions and billions of dollars into these companies
Where the app experience is written by 50 or 100 critical people or managed by 500 or a thousand critical people
um
This is the natural byproduct
I think which by the way freeberg said organizations want to grow right like
How many organizations say, you know, we should be smaller. We don’t need this many people, you know, you’re saying something really important
Not enough founders and boards understand the difference between growing a business and growing an org
Those are two totally different things and the reason is because we’ve lost sight of very simple financial metrics in silicon valley
Meaning if you go to any other industry where there is a cost of capital
People understand what return on invested capital means they know how to measure it
Yeah, they know what operating leverage means. They know what margin expansion means. We only have valuation and they seek that out here
We think about exactly as you said valuation and so this idea that
Having a hundred people do the work and see margins lift is antithetical to the silicon valley culture
It’s oh as margins go up. Let’s just keep running the same profitable business, but instead have a 500 people a thousand
What do you think you’re an operations machine people would say on a coo basis
You’re one of the top three to five in the history of the valley. What do you say coo man?
Um, yeah, I mean look chamath is right that in a company that’s well-run and well-led where uh people
People don’t have time on their hands to engage in these shenanigans
um
So yeah, I mean, I think I think that’s absolutely right
I think companies and startups are increasingly have to choose whether they want to be apple or whether they want to be
um coinbase or shop5 for that matter and just this this week at apple
There’s a new petition circling now. There’s a petition called by thousands of employees calling for tim cook
To denounce the israelis and endorse the palestinian side of the conflict. Yeah, how’s that gonna work?
Well, of course you have a position on abortion. Is there an abortion position at well
But but now that they’ve given into the the woke mob, there’s no reason for the mob to stop
They’re going to be circulating a petition every week and that’s kind of the point is
So and actually agm himself had a really good quote about this. He did a great interview with
matt taibbi
And um, he laid out the choice that companies face like this. He said it’s interject. This is um,
Antonio martinez saying is interjecting the whole fucking twitter cesspool
With all the dog piles and all the performative signaling and all that crap into a corporate setting
And replicating those dynamics and calling it work. That’s basically what happened is what’s happening is you you’re these employees are performing twitter
at work
And they’re on on slack and they’re pretending like it’s really work and it’s not
And I think you know founders are going to have to make a decision
Do you stand up and take a uh, brian armstrong like position or a toby position or do you eventually degenerate?
Into some sort of or a base camp, by the way
Even base camp the most woke virtual signaling founders on twitter
decided to take that’s right the most libertarian or
Spartan approach, you know stoic approach of toby to give you uh, toby’s
Well base camp just to finish the base camp thought so to base camp try to accommodate
This sort of like woke mentality and what they found is that they got pushed so far
It became so distracting. They eventually had to move to the armstrong position and that’s kind of my point is once you yeah
Everybody’s going to move to that. Yeah, that’s my point
I mean and if you don’t believe what I what I said was like listen if you believe that a organization
That allows political speech and this kind of stuff as a primary function inside the company
Will then go build a competitor to base camp and show that that system works better. Here’s toby’s quote
To help you make this more clear to team members. Here are some pointers about what shopify is not
Shopify like any for-profit company is not a family. The very idea is preposterous
You are born into a family you never choose it and they can’t unfamily you
It should be massively obvious that shopify is not a family
But I see people even leaders casually use the term like shopifam
Which will cause the members of our teams especially junior ones that have never worked anywhere else
To get the wrong impression the dangers of family thinking in quotes are that it becomes incredibly hard to let poor performers
Go shopify is a team italicized not a family
We literally only want the best people in the world
The reason why you join shopify is because I hope all other people you met during the interview process
Were really smart caring and committed. This is magic and it creates a virtuous
Magnetism on talented people because very few people in the world have this in themselves people who don’t should not be part of this team
I mean when I was um, when I was that strong
when I was at facebook, we used to convene the senior team and
You know, I was like I want I really want to fire the bottom five or ten percent of the company of you
And we would force stack rank and we did it for about three or four years and then the excuse was it’s too big
And there are too many people and the roles are too diverse and you can’t rank
I actually don’t believe that even to this day. I think it’s pretty obvious who the real
Thousand x kind of employee contributors are and by the way, they exist in every function. There’s thousand x salespeople
There’s thousand x, you know product managers. There’s there’s the thousand x people that work in facilities
They exist in every job function
And companies I don’t think do a good enough job of figuring out who they are
And so instead what happens is people that are not even 100x or not even a 10x are really more like a 1 or 1.1 x
Can basically hide in all of that noise
And I think that if you could separate hr into two things
But there’s really three things one is like benefits, which is critical
The second is actually like safety and the ability to whistleblow if there’s something really nefarious or bad that’s happened
And then the third that’s really valuable I think is organizational design, right?
How do you put people in good jobs?
And how do you allow them to have a huge amount of autonomy to run and build a career?
but all of this other policing stuff to me just seems like
um
It coddles to the lowest 25. I don’t know if and this is my intuition to the lowest 25
Performers of every course, of course it does and just to uh, close this story up and wrap to our next
Uh, and tony agm announced that he is going to take a year wait for it to write for sub stack
So he is going to get paid
10 million dollars. I I would guesstimate in a settlement by apple. He’s going to get a half million dollar. I’ll take the over
I’ll take the over
Only we can bet on this
I set such a good line. We can bet on it. We can bet on it. I’ll take the over
Okay, I set the line at 10. Anybody want the under?
I’ll take you’ll take the uh
Well, go go give it a give a different bet and i’ll think you got a different line
You could set a different line set a different line. I think 10 is a good line
Because you gotta think like if they offer him seven or eight million
I mean, it’s gonna be something like that. I don’t know what the big what the number is, but we’ll never know i’ll i’ll make a line
15.6. I’ll take the under i’ll take the under wow
We’ll take the under. Yeah, 15 is way too much way too much david’s quiet. I’d say under 15. Yeah, that’s not a good line
Good thing
Is a good line
Okay, let me do 11.5. What do you take tamar can afford the book against all three of us?
11.5
Tramont takes the over 11.5
Freeberg sacks. Yeah, I don’t know under
Let’s just tell you why if you look at the last four-year compounding of apple stock
Right, and so if you think about reasonable number of grants as his level of seniority plus the imputed compounding
Plus whatever he would have gone. You should be part of his team
somebody said in this clip because
That’s the argument is I I do think you end up getting to probably 20 million
And then you got to include you get a buyout. Yeah, you get a buyout now price at 15 in color
And they’ve also also you could make the argument. They’ve rendered him unemployable in the industry. So and then there’s four gone
Incomparable in the future then it could be 20 mental suffering. What about suffering? He is going to suffer
He’s going to need to be on meds. My client is suffering. He’s in therapy twice a week. He can’t get out of bed
He’s not going to be able to be in functional relationships
And he’s too scared to leave the house. He should wait on the substack because he’s going to make so much money on substack
It’s going to mitigate his damages
Yeah, don’t take the
Do you guys know what apple’s market cap divided by employees is
Apple is apple’s market probably seven million an employee
Anyone else?
Wait a second. There’s a hundred thousand employees and it’s worth two trillion
Okay, there’s 150 000 employees 2.1 trillion. So it’s 14 million an employee
So the other way to think about it is if apple’s like going to lose one or two good employees over this
Um, you know, they’d uh, they’d happily pay up to get uh to get the guy to be quiet
So it’s worth one employee to pay 14 million dollars
Well, no, I mean, well, you’re you’re not dividing by all the slave labor in china
and
I’ll recalc i’ll recalc
They actually cause zero
That was bad, sorry
I mean, this is the hypocrisy of apple
They’ve literally got slave labor in their supply chain. Not that they wanted in their supply chain
How do you know that? How do you know that?
Let’s just go through this because like this is a common narrative
But has anyone actually like gotten to the bottom of well, that’s why I said reported. I mean, yeah
Yeah, it is it is known again. Like I don’t like
I don’t like pushing narratives
Actually, I tweeted something that i’m well, I retweeted something that came from I think a pretty valid source
Um that author from the atlantic who I think is pretty legit
Also, I just think just in terms of his quote if he had taken the word woman out of the quote
Uh, most people in the bay area are soft and weak
In a zombie apocalypse. I don’t think you’re recruiting from the bay area. Uh, but related to this story, uh in terms of chamat’s point about
you know, uh
1000x performers
America is uh, really doing a bad job at math and gary tan
The venture capitalist retweeted and participated in a tweet thread about immigrants
Um who know that standardized test is probably your best shot at getting somewhere
Uh, your money social science can’t take you the rules are well standardized and he tells this story about this
But there was a persuasion article
Um about us failing math and that they’re going to be in california
Getting rid of the gifted programs for math because it’s unfair
to the kids who are not gifted as a kid who is
was not gifted
uh, and to the
Three kids on the program who weren’t gifted programs or at least two of you were
I have no problem with there being a gifted program, but any thoughts on this?
I think it’s shameful. Yeah, it really is. I mean like we are we are really doing our level best to just completely
Fuck our population. Why I mean, why is this even how could this even be possible? It’s like
Like just like it’s it’s kind of like the equivalent
It’s the moral equivalent of actually saying you know what we’re going to eliminate welfare for the bottom
five percent
Like our job as a society is to kind of like find
The broadest set of solutions for the most number of people and solve for both extremes
So when you’re dealing with education you both need to understand that there are folks that need
Some kind of structural support look when I came to canada
I had esl right english as a second language you take that so that you can learn the native language of a country
It didn’t mean that I was stupid. It just meant that I was behind, you know
If I had dyslexia or something else, I would need some kind of support
One of my children had a speech impediment. We had a speech therapist
This is what you do
But on the other side if you have a kid who’s an incredibly high performer who has the potential to just completely crush
Hey, like you should be able to give that kid a pathway to achieve and give back
So the idea that you would eliminate anything at the extremes is kind of completely uncompassionate and stupid just totally fucking stupid
Well, it’s in the name of having a more equitable math class again. I hate that word. Please don’t use that
Please don’t use that word that is that is the least by the way this this I mean this goes back to the point
I made a few episodes ago that you know, you can have progress or you can have equality
But it’s very difficult to have both and you know
If you want to try and make everyone equal and give no one
The opportunity to have more or get more than anyone else because of whatever the circumstance may be whether it’s earned. No
No, but this is my point like you know
You limit the ability for everyone to to progress as a group because we’re now limiting the ability for folks to take calculus
I know equality look i’ll use a video game example equality means we all get to play grand theft auto not that we have
Somebody who actually plays for us and gets to the same answer and just gives you a ticket that says
The same score yeah, so so the so the that’s that is what equality means is that we all get to play
And we all get a chance versus equity which is leveling everyone
Equity is leveling everybody and saying here’s your result, right?
By the way, it’s the same as this other person’s whatever the misnomer is
But the notion of leveling everyone where no one can be ahead of anyone else by too far
Uh, obviously limits as a group our ability for the top decile to to increment or the top quartile to increment
I gotta think look. Let’s let’s again use. Yeah, let’s again use our friends because instead of ours, but you know
We know a lot of really smart people
Um who have really really smart kids
We also know people in general that are in tough circumstances who also probably have really smart kids
Just purely selfishly for me. I want those kids
Doing the best they can to figure out what the hell they can invent for us in the future
Why would you slow those kids down?
You know, it’s kind of like saying you know, what like how about a black athlete would you would it be preposterous to say?
You know what? You don’t have a right to go to the nba and make money for your family
I’m going to slow you down
Because there’s another white kid that’s going to go through four years of college
So, you know what you’re going to have to go through four years of college and you’re going to have to pay for it
Well, actually what I would propose, uh is when I go up to dunk that we just the rim automatically lowers two feet
Yeah, yeah, so I can dunk and then when you go for a layup, we’ll just raise it six inches
It’d be more equitable for me. That’s more equitable. Yes more equity. Let me let me let me add another layer to this
So I I agree with you with you guys that what we should be thinking about is opportunity
We should always be asking what increases opportunity for the most people and that’s how we should measure
Political programs and we’re not doing that here
We are sort of leveling down but I would say it’s even more nefarious than that
Which is I think what’s happening is that the education establishment is completely failing
Our kids and our schools and what they’re trying to do is destroy the evidence of that failure
Wow, and and so they’re hiding they’re hiding the results now this persuasion piece
Yes, this persuasion piece lays out the statistics which are pretty grim
Okay, so according to these like global measurements by OECD
Okay math proficiency in the u.s. We rank 37 in the world
Okay, and there’s only 37 developed nations in the world according to the developed. So we’re last among developed countries
China, which is our main global competitor is number one
Okay, and we achieve these horrible results despite ranking fifth in the world in per pupil spending
So it’s not a spending problem. Okay
and as we know
To the extent we do have high performing math students in the u.s. A huge majority of them are actually foreign born
And so we’re actually kind of cheating our numbers a little bit. It’s even worse than it appears now
What is the education establishment doing about this? How are they hiding the failure? Well
When school comes back in the fall, they’re planning to eliminate accelerated math
Okay, that means that there’s no more algebra for eighth graders who are ready to take it on
There’s no more calculus for high schoolers who want to you know
Do like the ap classes and get a jump on stem, you know for college
The entire idea of gifted students is now under attack like we talked about in the name of equity
It’s become a catch-all for every bad idea
And the university california system has now abandoned the sat and act
So they temporarily got rid of those requirements during the pandemic, but now
You’ve used it as an excuse let’s never waste a crisis and now they say they’re not bringing back the requirements until at least
2025 and you can bet it’s never going to return at all. And so here’s the thing
They’re trying to get rid of measuring how bad we are at math. So we won’t have to think about it
they just want to give everyone a gold star and a pat on the back and
Say how you know, this reminds me of sax is when you threw away the um
The digital scale I got you
Ha ha ha right. Yeah, i’m not i’m not fat because i’m not measuring it. Great
Oh my god, it’s like we really it’s it’s the movie idiocracy
It literally we are doing the movie. Have you guys seen it?
Why don’t we just uh, why don’t we just eliminate all admissions programs at every university and just have one global admissions board?
Where every campus is the same what is the difference between mit?
Um and stanford and caltech and the university of arkansas in my opinion there shouldn’t be it’s more equitable
To just have somebody go close to home because you can save money, you know carbon emissions are lower, right?
You can just take the bus to the local school competition. You can have one centralized place teach you why have anybody basic course?
I mean
If I said this you you’d think that I was a crazy person
except that’s basically what we’re now telling all of our high school i’m also getting rid of michelin stars and i’d like yelp to take
off their
Review system because it’s not equitable like we should not have michelin stars anymore
Every show every restaurant’s the same every restaurant you get three quarters of a star
We should not the health department should not give ranks of letters and they should not be forced to post it because that’s inequitable. Absolutely
You know, yeah, also you can game you can game the health test you could literally just follow the rules
let me just ask the um the counterpoint question, which is uh,
Uh standardized testing for example
Benefits people that can afford tutors and special
You know classes to get ahead
And there are more tutors
Yeah, therefore
Well, therefore it’s higher income people that can always well
The point is they can always layer on additional tutoring. They can always layer on additional classes
And they’re therefore there’s a finite number of math. It’s a finite score friedberg. You can only get 800 on the math
I’ll i’ll be somewhat. Um
Flip-floppy here. I don’t believe in standardized tests that much. I never did well particularly in standardized tests
I do think that they can be gamed but that’s different from what we’re talking about
What we’re saying is if kids show aptitude
We are explicitly choosing to not give them a chance to develop at their potential
And the problem is we do this in other areas. We do it in athletics
We do it in music. We do it in the arts, but we’re not going to do it in stem
That’s what we’re choosing to do. That is what’s crazy
So choose to get rid of the sat or act whatever you want. I don’t care
But if you are the lebron james of physics, jesus christ, like let that kid become the lebron james of physics
I’ll tell you like I I am I got into uc berkeley because I had great standardized test scores because I had
An aptitude. What was your sat freeberg? Let’s do this. Um, I got a
Uh, let’s do this an 800 math and I think it was a 720 verbal
Okay, so you got a 15 20 out of 1600 at the time. I got
And I got an 800 on the math
I was obviously sax. Go ahead. I was uh, 750 math. Um 720 verbal
14
70 are you writing this down? This is free. This is pre the inflation. There was a big uh,
I was a I was 15 10 on the sat. Oh, we were
Okay, so I woke up 400 points 500 points behind each of you in in canada
I was just kind of like we didn’t even write it but I went and I wrote it just for shits and giggles and I didn’t
Do well, I didn’t do well like you just said you weren’t good at standardized tests. So what are you talking about?
You’re in the top three percent. Yeah
Yeah, I know but generally like I wasn’t a good test taker. I was in probation in college academic
Yeah, i’m not a good testing. But look the the reason why these tests got invented was actually to prevent discrimination
Um, I think it was back in like the 50s, right?
You know, I think it was like and at that time it was jews being kept out of the ivy league and
One of the ways that they corrected for that was they made everyone take the same test
And so you could see the scores and it would shine some light
on, you know making sure that people didn’t just get in because they were legacies that they got in because
Um, you know, they had good good scores
And there’s been decades of work since then to try and eliminate bias in the test
And so the the claims of bias now in the test really aren’t supported now, right to freeberg’s point
Obviously that if you take some rich kid who lives in the suburbs who gets a 1400 and you compare that
To a kid in the inner city who doesn’t have who grew up poor doesn’t have the advantages and that kid gets a 1300
Well, which score is better probably the 1300
And so you can take that into account in my view in the admissions process, but eliminating the scores all together
Why would you want to have less information to make a decision?
There’s no reason not to get rid of these I would just think more holistically about how you accept students and I mean
Is it more competition?
And having better teachers what we should be focusing on here as opposed to even standardized testing or god forbid canceling programs
Let’s just invest in more competition for schools
well, so in canada, we had this thing where when I was graduating we had
specific different kinds of math contests and computer science contests and other
Things that you could write the putnam
Etc. And uh
Those things were actually really instructive because they were purely verticalized things that could test your aptitude
And the school that I went to university of waterloo would look at a lot of those things and adjust for it because my grades
Were decent
But my some of those one this one specific math test I took was pretty good
I remember and then they would adjust it exactly as david said to what is this kid’s background and his circumstances and they called it
a french factor they would just adjust my marks and
That’s how I got into waterloo and I didn’t think I was going to so
Um, there’s all kinds of ways where you can be smart about it
But again, we’re talking about guys don’t lose sight of what you’re saying
We are actually going to cut all these kids off at the knees starting in grade eight
So forget about all of this stuff by the time that these kids graduate. They’re going to be I honestly they’re going to be like
Really dumb the problem. The problem ultimately isn’t just measurement. It’s the denial of opportunity to learn
It’s about it’s about getting rid of the learning and the classes
That’s the biggest problem. You have to move to a state with a gifted program
Now if your kid is really smart or opt out of public education, um, which doesn’t help anybody
I mean literally schools don’t have to teach we we put it we’ve now designed a system to summarize
Schools don’t have to compete for students
Teachers don’t have to compete for jobs or for their employment. And now we’re saying students don’t have to compete
So if you remove competition
From the human condition, uh, you’re just not going to have any performance
There’s going to be no progress and as a species. We need progress. We need to solve global warming
we need to solve a lot of issues and don’t we want to live longer and better lives like where is the
optimistic nature of the human species competition is at the core of excellence
And to just take it out of everything the whole stack jake out
That’s the smartest thing you’ve ever said way smarter than 1120 sat score. Thank you
Thank you. Are you sure it’s only 1120?
How lame is it that we’re still talking about our sat score?
It’s like 30 years was the average so in brooklyn when you’re 320 points above average david. It’s a bfd
What’s lame is the four of us all remember down to the number what our score is. That’s what’s lame
I think I was 11 20 11 50. I gotta I gotta look it up. Um
all right, uh
Do we want to go to the crypto meltdown or talk about inflation or do we should we dovetail those together?
Or do you just want to go straight to ufos?
well, brian biden just uh, they they just uh, a press release just hit the wire and they just cut the
Infrastructure bill from 2.3 trillion to 1.7 trillion. Oh, so we’re doing our job
Here at the all-in podcast and uh, I I I had heard from somebody that there just is not the broad-based support
um for
Uh, the capital gains tax, so that’s not going to happen
um
And it looks like the corporate tax will probably go to 25
Not even up to 28
and interestingly
I didn’t realize this but one of the biggest features of the bill that has the most popularity is that they’re closing this loophole around
IP that sits outside the united states
and
That more than the corporate taxes will raise almost a trillion dollars of revenue. I agree with that one
Why should you put your why is apple? I mean you want to talk about hypocrisy putting their ip in ireland
So they don’t pay taxes. Google does the same. It was everybody’s doing that. Why does that exist? It’s so un-american
well, it’s a subsidiary that has different taxation on it and you know to kind of
that capital and that uh
And that earnings sits outside the us that ip was made in california. It was not made in dublin
No offense to
You know my home country. I remember facebook. We did that. We did this exact thing
We signed over all the ip and then the irs sued facebook and I remember like I was called either to
I was subpoenaed and we went through like a whole multi-year trial
It may still be going on and it was around this issue, which was the irs said hey facebook
How come you you know, you ported this over there?
And I think facebook’s answer was yeah, we paid the tax and I think they did
They don’t think they did anything wrong because the laws allowed it
But it effectively helped shield then tens of billions of dollars of future taxes
I I mean, I remember reading about this and i’m like, how does this?
Pass the sniff test. Well, it’s where the revenue is recognized jk
So you basically can produce the ip here and then transfer it to your subsidiary
When you transfer it to your subsidiary, you can recognize the earnings in that subsidiary and that subsidiary pays taxes in its local jurisdiction
um, the I think the issue facebook had was that they
Transferred the ip and they undervalued what the future value would be from that ip transfer
And that’s why the irs sued them
Is this accounting snafu in terms of like what did you value it out at the moment you transferred it?
Here’s another idea. Why doesn’t why don’t they look at as part of this ip licensing?
Where does the consumption of that ip occur?
And where do the employees who maintain that ip live jk? It’s a very smart idea
The problem is that’s the slippery slope that then gets to local taxation
You know, the thing is we have all these global tax treaties where these large corporate entities can basically play this game
And they’re not subject to local tax
But that’s the thing that’s going to really start the undoing of the big monopolies because if you start to abandon
These global tax treaties and you’re starting to see it
France is trying to do some stuff. The uk is trying to do some stuff states
Individually in the united states are trying to sue these companies or tax them more
That’s the that’s the first way to chip away at these monopolies is to basically say fuck your global tax treaty
You need to pay x amount of dollars to be here and it already exists because of these, you know
Realist, uh, sorry the retail tax nexuses and how e-commerce companies have to pay local tax in the areas
But once it sort of touches a whole bunch of other
industries
and countries
Uh, I think that you’re going to have that that’s why I think yellen
Janet yelling yesterday said that you know
She’s in support of trying to have a global minimum tax of 12
Basically trying to get to the end state and tell every country
Let’s all circle the wagons and agree that we’ll all just charge everybody 12% and then we won’t go all our separate ways
The the problem is that if you have a lot of usage in a country, you know
That country doesn’t care what the taxation is in zimbabwe, right or canada
They’re like if i’m the uk or france
I’m, like I look at the top 20 apps in my country and i’m like wait a minute
These guys would be paying me 50 billion dollars a year in tax
It’s hard to get away from the incentive to to not want to tax these companies right now sax
Any thoughts? Yeah, I don’t have a huge thought on the ip issue
Um, it it seems like I know they’re the republican proposal on the infrastructure was six to eight hundred billion
Um biden’s proposal initially was 2.3. Chamath is right now. They’re down to 1.7
I think the the markets have been choking
on the size of all of this tax and spend
And the there’s been all these reports of inflation spiking
And so the gross stocks have just been hammered
Because we’re all expecting big interest rate increases to control this future inflation. So
um biden’s been horrible for gross stocks so far and it really I guess that what it shows is that you know,
What are gross stocks gross stocks are future investment and it shows the way that the government can crowd out when you have
Excess government spending I guess you can call it an investment if you want
But when you have excess government spending it starts to crowd out
private investment
Because it raises interest rates and that you know decreases the the value of gross stocks and there’s less money that flows into that
Yeah, it does seem like the market reaction to the infrastructure bill
and to inflation has
Made biden reconsider his approach and maybe he just came out too hot
I don’t think biden’s reconsidering. I think it’s people like joe manchin. Um, remember it’s a mark warner mark warner
Kristen sinema the the moderate there’s a three or four moderate democrats in the senate
Who I think are receiving the message chamath put it really well the last pod
Receiving the message chamath put it really well the last pod that the markets are sending a message to washington
I think some of those centrist democrats read the message. I don’t think biden’s
Aware of and I don’t know what he’s aware of he doesn’t seem too aware of anything to me
But I think the moderate democrats are getting a message
And they’re telling they’re telling the white house the package is too big and they they’re um, and I think that’s why it’s coming
The other thing that I think people um may be getting their heads around here’s what’s changed since last week
There’s a growing body if I had to say like, you know, the beautiful thing about the
The markets is that it is an extremely elegant voting mechanism in the short term, right?
I mean buffet says it’s it’s a voting machine in the short term and a weighing machine in the long term
But if you look at sentiment and how things are voted on in the public markets in real time
It’s incredibly illustrative. So, um
There’s a body of people now that are voting a very different scenario than inflation
What they’re voting for now is this idea that by the fall
A lot of this short-term pent-up demand will have worked its way through the system
And instead we’ll be back to this realization that we’ve had for the last 20 years, which is hey, wait a minute
People don’t actually want to buy more of these physical goods. They’re going to go back to consuming the way they did before
It’s going to reflexively push towards technology companies again, and we’re going to have this rebirth of growth
and
You would say well, how would you know that that vote is likely and this one incredible thing happened this last week
Which I just want to throw out here
one thing that I look at is this thing called 10-year break-evens, which is basically a thing that the
federal reserve of st. Louis publishes
And what it basically shows is like what people think collectively trillions of dollars
What the 10-year break-even interest rate is going to be and it peaked last week at two
2.54
And it’s fallen 13 basis points
Just in the last week down to 241
And I don’t know whether it’s sustained or whatever
But there is a growing idea that the worst may be behind us and if you layer on top of this now
biden pulling back
right on
Stimulus because he can’t get it done
pulling back on cap gains pulling back on corporate taxation
Um and a more measured policy of investment
We we could all be back. So we’re basically taking the medicine and getting back to where we were
But we still have massive asset inflation. We’re seeing in houses cars and other things
Well, we may have just pulled forward demand meaning, you know, people are like, okay
I’m flush with money the savings rate in the united states has been you know
Going at an incredible clip people may pull forward all that spending and say I was going to buy a car
18 months from now or I was going to buy a house two years from now
Fuck it. I’m going to do it now because prices are going up too fast
I don’t want to miss out
but then they’re out of the market now for the next many number of years and this is what i’m saying where you see this
Short-term spike of demand and then things get back to normal if that’s what we see
Good times are back in growth stocks
All in podcast sentiment levels go high again
I’ve literally I did like two or three early stage deals recently and I had members of my syndicate say like
How does this valuation make sense and I said to them, you know, it actually doesn’t make sense
If you’re looking at it with the traditional metrics, but all valuations are higher at all stages
So i’m going to selectively, you know overpay
Compared to what we were paying a year or two ago
you know if I really love a company but I will sit out a lot of i’m sitting out a lot of rounds right now that
I just can’t get my head around the valuation. So
Hopefully some well, there’s always a trickle down
there’s always a trickle down from growth stocks in the public markets to venture right because
The the last private investors like the big funds who do the super late stage stuff
They’re just doing an arbitrage on what they pay versus what the company’s going to list for publicly
So when they see those valuations go down they adjust and then it works its way all the way down the stack
So, you know growth stocks have just been hammered and especially all the recent listings the ipos and
SPACs and everything and and that’s going to trickle its way down I think
To venture it’s just a matter of time. We have the yeah
And I think we have the lead indicator on that as clubhouse right which will be the canary in the coal mine
I don’t know how you guys reconcile explain explain what’s going on with clubhouse just for those explain what it is
Okay, so clubhouse is a casual audio space you go into a room
And you’re immediately taken to a live conversation
With people speaking on stage and an audience audience members can be promoted to the stage and start talking
Wait, hold on. It’s in an app and it’s all audio. So there’s an app audio. There’s an app you go in and it’s all audio
Yes, so it’s like amateur night at a strip club, but for words, uh, or more comedy club, whatever you just bring public on stage
Yeah, it’s kind of like champagne room, but a little different
so anyway
And there we go
Apple 2000 signatures from apple to remove all in from the podcast
We just lost three ranks in the apple podcasting app
so what’s very interesting about this app is that it had a massive number of downloads during the
pandemic because people were home and people were not doing anything at night because they were sheltering in place and
They had in you know
2 million downloads in january 9.5 million in february of this year and then
Came crashing down 2.7 million in march and 922 in april
But at the same time their valuation over 18 months
Went from 100 million in their seed when they had like three or four thousand users
To a billion to four billion in the last round of financing for a company with zero revenue
And let’s call it a couple of million people using the app
And what’s really interesting is the same venture firm led all three rounds a la
Sequoia’s investment in whatsapp where they did all the private funding
So you have no outside capital marking this valuation a four billion dollar valuation four billion dollars
Well, they got a they got an acquisition offer from twitter for four billion and they they turned was that ever confirmed?
I’ve heard it was real
so
So but so basically the reason why the four billion private round happened was so that we keep going as an independent company
They could basically take some chips off the table through secondary and kind of go for the bigger outcome
But yeah, they could have just sold to twitter for four billion
So they may end up regretting that
But like is this really a function of a broader?
um
Inflation valuation inflation or is this just a function of there was a company that was a social network with hyper growth
And then it turns out that the product had no stickiness and the hyper growth went away
The souffle collapsed the souffle collapse
Can I can I just point out like and and forgive me if any?
Any of you guys are investors in this company or anyone that’s listening cares
But like if this thing came out before youtube
People would say you know, this is interesting, but it needs an asynchronous killer
It needs a thing where you can like record a conversation post it online and people can come and watch it and listen to it
When they want it was always so crazy to me that you had to be logged into the app to listen to what was going
on and if you didn’t you missed the conversation and there was no way to like
Go watch the recording of the conversation like am I crazy to think that this was just like I think you
I think you I think you nailed it that they don’t have async in there and actually i’ve got a little bit of disclosure
to make here
What what the beat got wet
Breaking news story. Okay, so I think I understand what clubhouse did wrong async is a huge part of it
But rather than tell you exactly i’m going to show you because i’ve been incubating a new app what yes
that we’re
We’re we’re on test flight right now
And you guys after this pod I can I can demo it for you
And if you guys if you guys want to invest i’m going to close around uh this week for it’s getting wet
And so if you guys want to what’s our valuation? What’s the value? What’s our insider all in? What’s the bestie vow?
Yeah, what’s the best?
I’ll talk to you guys about it offline. How much how much money do you want to raise?
We already we’re raising 10 million bucks and we already have commitments and but i’m creating room for you guys. Yeah
500k each
I’ll take sounds like 500k each
Where is it? Let’s talk about it offline. But um, but the apps on test flight
I think we’ll be ready to launch in a few weeks. Can I can I say wait, what’s it called?
Can you tell me? Yeah, no, i’ll say it. It’s called call in
Call in call in. I thought it was I thought it was going to be called club mouse
Does this have a uh, it’s called
Like are we going to do the podcast on it?
We absolutely could do the podcast on it and it would be awesome. Nick would be out of a job
So I don’t think he would like that too much
Quality level, but I think it’s good for call-ins if we wanted to do a call-in show it would be good for that
Yes, it’d be great. It’d be great to do exactly
And that’s why it’s called call-in is because the ability for you to take callers is obviously
A huge feature but also like we could host after parties for our fans
To like, you know chop up the latest episode and talk about it. Yeah, these fans are getting crazy
Do you guys see the all in stats twitter handle? I don’t know the twitter handle off the top of my head
but somebody’s these kids are doing um
uh, they’re using
machine learning or something to
Know what percentage of time we each speak on the pod and how many monologues and they’re doing all these statistics. It’s crazy
That’s really cool. Um, I was gonna say, uh
In defense of clubhouse for a second
I don’t I don’t know the app per se but I think like why andreason did all of that in my opinion
Is because they’re pressing a hot hand which makes a ton of sense from their perspective
It’s like, you know, I think that they’re going for the kill shot because I think they’re basically set up
they’re basically set up to become sequoia if if they really I mean, I think if you think about like which two firms are really
Crushing on all cylinders right now, obviously sequoia has always been the perennial number one
But if you think about the the heater that andreason is on it’s incredible and so from their perspective
The four billion dollar valuation is less important than what is their real capital at risk?
and that’s probably 100 or 150 million which
In the grand scheme of having 40 or 50 billion dollars of aum if you consider the value of all their public positions as well
That’s a really reasonable risk to take so I think if you read it that way
it’s kind of like
They’re taking a shot to try to just you know, go if it does become worth 10 billion or 50 billion
Also, if it only gets sold for 500 million they get their money out first. So what does it matter?
What does it matter they’re going for the 100 billion dollar outcome?
I mean they’ve seen that instagram sold too soon
They saw that snap turned down a three billion dollar offer from facebook and now it’s worth 80 billion
So they’re going for the 100 billion dollar youtube 1.6 billion. Yeah, and now it’s worth hundreds of billions
So they’re hoping it’s going to be like that
Um, but chamath chamath is right
Look, if they had taken what say 20 percent of a four billion dollar outcome 800 million
That doesn’t even pay back their fund, right?
But if it ends up being a hundred billion dollar outcome, they make 20 billion
Now it’s like a coinbase for them. What do you think they gave to the founders?
Well, who knows keep them in the game because four billion if they owned 80 percent
Yeah, they took out they took chips off the table
But here’s the thing all those decisions were made before the recent collapse and engagement at clubhouse
I’m, not sure anybody would be paying four billion for it now
Given everything that’s gone wrong, but you know, who knows it’s still pretty early
just for people who are curious, there is a twitter handle all in underscore stats and
Yeah, it’s all in stats.com. I don’t know. We’re not affiliated with these maniacs, but um
We we love the stands and we’re going to do something in person in september
Congratulations to the stands for losing their minds. I think it’s a pretty good
Uh way for them to capture a bunch of attention on the twitter. All right
crypto is getting absolutely hammered, uh, and I it’s
the chinese have once again said
That they’re basically saber rattling about cryptocurrency. They’re obviously going to do their own. Um,
uh
I think you have to talk about china in a
in a slightly broader lens than just what’s happening in crypto because like this is the same week where
They basically they’ve they forced, you know, zhang yiming to resign from
Byte dance. I mean, you know last last week it was or last month
It was the ceo pin duo duo and jack ma’s mia. They’re going for the jugular
I mean, it’s like we’re what why are they taking out all their top ceos?
This would be like putting ilan and jeff bezos on the bench. What is it? They just don’t want any heroes
I don’t know. I mean, I guess maybe the speculative part in me would say
They’re showing them who’s really in charge of these companies
I mean it would be crazy to your point if the government of the united states
Forced sundar pichai and tim cook and mark zuckerberg and elon musk to resign. It’s like hey, sorry
I’m, sorry, you need to leave right now and put somebody else in and deactivate their badges
Yeah, we just we just relentlessly criticize them, right? But but yeah, we just demonize them
We just try to cancel them
but look
But they deserve that level of scrutiny because the amount of power they have but but yeah that we don’t we don’t
Put them in jail or house arrest or drive them out of their companies and that is a big advantage for the us economy
The treasury department here in the united states is doing a little saber rattling. They want to know
Anytime there is a ten thousand dollar transaction in any kind of digital token
And uh, they’re talking about a cbdc
To do their own cryptocurrency. So they’re putting out a white paper for feedback this summer
um, and uh
We are now seeing a pullback on bitcoin from you know, uh, mid 60s to uh, you know now into the 36 37
Thousand per bitcoin. Do you think this is the end of the beginning beginning of the end?
It’s the beginning of the beginning david rubinstein was on cnbc
Today and david rubinstein for those you guys don’t know is um was a co-founder of carlisle group
You know more blue chip and blue blooded you cannot get
And very connected in washington and you know, he said it best where he said, you know effectively
People want this and the government will
Uh have no choice except to support it because you can’t take something like this with this much institutional
and retail demand away
so we have to go to the place where
Now crypto needs to be like everything else and maybe the crypto stands get upset with that because they don’t like it that
You know a bunch of their parents are all of a sudden going to be buying tokens and stuff
But they got to get over it. Um, then this stuff should be, you know transacted in the same way
You transact anything else you buy it you sell it you get a tax return you pay your taxes and you move on
this reminds me of the transition that we all went through with I don’t know if you remember kazaa and napster and
Bit torrent like everybody all the we a lot of our contemporaries in their 30s, you know, whatever 10 20 years ago
We’re like you can’t stop it. You can’t stop it and it got stopped
you know like you made it illegal and you prosecuted people and then you came up with solutions that were regulated like spotify or
You know netflix and you gave the consumers what they wanted. So
David, do you think this is a similar path right now that we’re going through which is
The crypto zealots and the and the and the stands are gonna
basically have to
Get used to as chamat saying their parents buying it and crypto not being this underground thing
But being regulated in in a major way in the united states and is that a good or bad thing?
I I think the thing that that’s happening quietly behind the scenes is that major wall street players
institutions endowments and so forth
Over the past year have decided that bitcoin and crypto is a legitimate asset class and they’ve been allocating to it
Huge huge pools of capital balance sheet capital have been allocating into it
I don’t think that’s gonna change. This is probably a pretty good buying opportunity. We’ve seen these
crashes and bitcoin many many times over the years
It plummets down and then it goes back up and it eventually goes back up reaches a new peak
So this is probably a pretty good entry point for the next rally
we don’t know when that’s going to be but the whole point of bitcoin is that
It’s censorship resistant
And china can do its best to try and stamp it out, but I don’t think they’ll be successful at that
You don’t you’re so wrong about that
That is the most naive take worst take you’ve ever had. How’s china going to stop bitcoin?
Uh, how do they stop vpns? They put people in jail. How do they stop religion?
They put people in jail
They may make it incredibly hard for chinese citizens to get a hold of bitcoin
I agree with that, but they’re not going to be able to stop bitcoin
They’re not going to stop bitcoin in the west, but they will stop it in china
They 100 will stop and you know how many servers are in china
I mean go talk to the people who were in tiananmen square about what miners will have to move out the miners
Miners are done. And then if it’ll be an underground thing, it’ll be like having a vpn
Which is five years in jail for selling vpns
What do you think about the irs requirement that you have to report any bitcoin transaction over ten thousand dollars?
Do you think that that and americans can be prosecuted for not reporting, right? So I don’t know how much that’s
Fine, so what do it? So let’s get over it
20 of the transactions that might have been this is this is the silk road fallacy that you know that the only
Legitimate use for crypto or I said 20. I didn’t say okay fine
But so maybe that makes that that small fraction of illegitimate or illicit use cases
What do you think
No, sex. I think the point is um that they’re trying to chase down. It’s not about illegal use cases
It’s about not reporting a taxable gain on your bitcoin before you use that money to buy something
So sure, of course about tax evasion, but look
But that’s not that’s not going to stop bitcoin usage. Um, you know
Smart people who’ve been trading bitcoin been paying taxes on it for years
That’s not I don’t think that’s really an issue
If you were in china and you had created your wealth in china or many many other countries all over the world and there were
currency restrictions and controls and the government was asserting more and more power and were putting
Business leaders under house arrest and and seeking to put them under their thumb
You’d be trying to convert as much of your net worth into bitcoin as possible
So that all you have to do is if you ever had to flee the country
You wouldn’t have to have dollars in your suitcase or gold bricks or diamonds
You’d simply have to have a password in your brain
That you could access at any computer terminal when you got out of the country
And so that I think that sort of digital gold
Is a phenomenal use case of bitcoin and the more oppressive
All these countries become the more they increase the value of that use case
What do you think is the black swan event in crypto in bitcoin in particular?
Taxation in the united states a 10
There’s an additional taxation like you do on
Cigarettes, that would be for me the united states putting a tax on it. That makes it less competitive with our our national
Coming cryptocurrency the cbdc that the united states will launch in the next two or three years
They’re going to say if you want to use any of these other currencies
There’s a 10 tax on them. We want you using ours the legitimate one
There’s there’s a very negative black swan
That obviously has never occurred. Um, but if anyone ever manages to counterfeit a bitcoin
Or this is the double spend problem, right?
If you could ever if you could ever double spend or or figure out a way to create bitcoins
Or counterfeit them whatever that weren’t in the blockchain if the number of bitcoins ever grew beyond the 21 million
That’s just built into the way that the whole thing works if that ever happened bitcoin is instantly worthless
That would be the black swan on the negative side
If it didn’t happen in the first 11 years, what do you think the like on a percentage basis that it happens in the 20th?
Exactly. It’s too expensive now and it’s too it’s too visible like the the way that it would have happened
It would have happened in the first two or three years or the argument could be maybe opposite that now it’s so valuable
That it’s worth investing to figure out a target. Yeah. Yeah, and and and it’s and and rather than have it be about a diminishing probability
It could be an increasing probability over time
Which is that the pathways to get there start to get resolved whereas in the past you didn’t have enough time to resolve those pathways
And i’m speaking highly theoretical here. But like certainly
Doesn’t take into account that it’s open source and that everybody can see it. So
You would think that everybody would discover the vulnerability at the same time right in an open source project
Well, no, I think the I think the issue practically speaking in this would be
Is that there’s a there’s a lot of potential for a lot of potential for a lot of potential
Well, no, I think the I think the issue practically speaking in this would be that you would see there’s resources getting organized meaning
You’d see silicon being bought in volume by some centralized player
And then you’d have to see water and power come together as well
and this is where I think it’s just not realistic where
Today that I think the horse has left the barn because if you try to basically capture
Enough hash rate to kind of like overpower this network
It’s it’s it’s like the scene in austin powers where he’s screaming in front of a
A steamroller, but the steamroller is moving at like one foot a minute, right?
You see it coming. It’s just like you just see it coming
Well, would you have a black swan friedberg? You asked a lot of questions. So do you have one?
I think about it a lot. I don’t really I mean, it’s a black swan. It’s because it’s a black swan
so you don’t really see it coming but like
You know the the thing about bitcoin
Bitcoin
Which has always given me pause
Is the fact that
The only way it works is if everyone believes that more people are going to believe in it tomorrow than believe in it today
Well, that’s the only way it appreciates
yeah, but the
for for a variety of reasons, it’s also the only way that it works because
Um, if it starts to depreciate it becomes almost like this unwinding
Circumstance and there are moments where it unwinds, but then people kind of say well, you know what more people are going to get on this
There’s the chinese argument. There’s the argentinian argument. There’s all the reasons why people will try and store wealth in this system
And that becomes a rationale for continuing to bet on it
And my observation is so many people that are active in bitcoin
Compare bitcoin to the price of the dollar which to me seems like it doesn’t make sense relative to the intention of bitcoin
Which is to not be part of the monetary system that uses the dollar as kind of a de facto, you know
system of value
And so why have the comparison to the dollar as the objective for bitcoin?
Why is the objective not transactions use cases number of people that are active on the network, etc, etc
And nobody buying it is buying it as a substitute for dollars. They’re buying it as a lottery ticket
So yeah, that’s that’s right
And so then it becomes this rationale that it’s like it’s an investment that you put money in
in the form of dollars or your local currency
With the intention that you will be able to get more of your local currency out at some point in the future
And the only way that works is if you expect someone else will buy it from you at a higher price in the future
Therefore it’s all about propagating the uh, you know the marketing around the bitcoin
Whereas if your objective was really about making this become a replacement currency system or replacement monetary
system you would ultimately
Care less about you know, what’s the dollar value per coin and you would care more about how many people are using it
You know how active let me build on that question
so sax or chamath if
the cbdc
And american’s currency, you know starts to move towards a bitcoin blockchain like experience
What would america start to look like if 10 or 20 percent of your dollars?
Instead of being held in a bank. We’re on a blockchain with an american a government a government-backed blockchain
Doesn’t accomplish anything. It’s still that people are it’s centralized and not only is it centralized but also
It’s still prone to debasement, right?
Yeah, and so look human beings have used everything from gold coins to seashells as money
We can make anything money that’s easy to transact if we all agree on it
That’s the sense in which bitcoin is the bubble that becomes true if everyone believes in it provided
Provided the number of bitcoins stay at 21 million and that the technology
Enforces the scarcity the problem we have with the u.s
Dollar is the government can just print as many of them as they want. Yeah, you change the denominator problem. Yeah, and
So I think there’s a positive black swan as well for positive for bitcoin
Which is stanley druckenmiller thinks in the next 15 years the u.s dollar would no longer be the world’s reserve currency
Well, what’s going to replace it the positive black swan would be that bitcoin becomes
If not the a world reserve currency an unofficial world reserve currency
Why because people trust it?
They trust the decentralization more than they trust any government
And that would that would be a big is that in?
Is the united states and china are they going to let bitcoin become the world’s reserve currency?
Well, it’s not a choice that they have you sure so yeah
There’s nothing they can do
What about the law and guns and jail and tax?
I don’t I don’t know what that means
There’s there’s nothing that they could there was nothing that they could do to stop it before there’s nothing that they can do to
Stop it now
Well, you can’t get the new york times in china and you can’t practice religion there
So they have a pretty easy system. They put you in jail. They want to stop bitcoin. They could just put you in jail
how
by
Finding out that you have bitcoin and just well because they have a hundred percent
Uh view into the internet there they have how on because they have routers
That’s how they capture all the uyghurs is they know their location?
Because they have mobile phones and when they use signal or any other encrypted technology they catch them
No, I don’t I don’t think that’s how it works
But that’s how they catch all the dissidents there is they they have them and they also have apple’s entire
Data center is controlled by the chinese government
There’s no ledger somewhere that says this specific wallet address equals david sacks and there’s not going to be one anytime
soon
um
And so you’ll have these centralized wallet authorities that actually, you know have a lot of account information
But the reality is the sophisticated actors, you know
Use tumblers they they they wash sort of like their
Their paths in a way where it’s very difficult to figure out who these people are now
If you if you don’t if you use a site that doesn’t have kyc that’s always going to be the case and you know
People with huge amounts of bitcoin are sophisticated enough to know how to stay anonymous if they want to
For everybody else who doesn’t care because for them it’s sort of an investment asset class and an you know a hedge
Then they’re not going to care either and the point is when enough people own it
Governments aren’t in a position to track record of them. Just waking up one day and pulling the plug on anything is zero
That’s not how people do things
You have to have like centralized policy and support
And I don’t see it one way or the other of all the things that china and the united states will face over the next
30 or 40 years
This is like 50th on the list
Saks, what do you think?
Any closing thoughts?
I mean, I think we’ve said it. Um
So yeah, I mean look I think I think if you’re going to stay in a place like the united states
You need to comply with tax law. You’re absolutely going to report your bitcoin holdings if it’s required
But if the reason you’re buying bitcoin is because you’re fleeing a country
Or you’re worried about fleeing a country. You’re obviously not going to report it and that’s the that’s the advantage of it
Is that it’s a portable?
money supply
That again, you can just um, you don’t have to carry anything with you
You just put a password in your brain wallet. Tell me about ufos before we leave
I mean, can you believe this thing? This is the craziest thing. I I so there was a yeah
There’s a 60 minutes episode that just happened deputy assistant
Secretary of defense for intelligence literally said the crafts we’re seeing are and then in quotes far beyond
Anything that we’re capable of there’s nothing we could build
That would be strong enough to endure the amount of force and acceleration imagine a technology that can do 700 g-forces flight 13 miles
per hour evade radar
And has every no obvious signs of propulsion and yet can clearly defy the effects of earth’s gravity
That’s precisely what we’re seeing from the director of advanced aerospace threat identification program
I mean, is this real like how is what what do we do? What?
Our government says there are crafts that outstrip our arsenal by at least 100 years to 1000 years at the moment and we’re like
Meh, what do you think friedberg? You’re the scientist here. There’s a if you read the original
uh treatment written by arthur clark for the movie 2001 a space odyssey
Which was written before the movie and then the book was written after the movie
He makes a really compelling point
and the point he makes is that
when
civilizations achieve
a sophisticated enough level of technology
There’s no longer a need to physically transport yourself from star to star and transport yourself around the universe think about this for a second
Take what we have from virtual reality today and fast forward 200 years
And then take what we have in terms of you know
The ability to print and create anything we want on demand and fast forward two or three hundred years
Those two conditions alone
Might give us the ability to strap on something to our brain
And literally and remember our brain is simply sensing what our body is given
And if you can control what your brain is sensing through some strap-on device or whatever
You don’t actually need to physically be in the place where that happens
So if we can remotely sense what’s going on somewhere else in the universe or some other part of our planet
And we can remotely pick up those signals and view them or experience them
You don’t need to physically be there and then secondly all this sorry all this via strap-on, okay
Yeah, and then secondly, I shouldn’t use it. I shouldn’t use the term and then secondly if you could print it
Yeah, but think about if you guys ever watch the tv show star trek next generation
Which I would guess maybe one of the replicator
Or the replicator or the holodeck and you could walk in number three on my list of star trek
Yeah, seriously if you walk in and you could literally recreate the physical space that you want to be in to accomplish anything
The holodeck and then you could print anything
Why would you use all the energy and all of this work to transport physical matter?
From one part of the universe to the other when all matter is transmutable
And the only thing that differentiates things is the photons coming off that matter, which is just to sense it
So if you can sense things remotely
While you’re physically here, why go through the trouble why go through the trouble?
And so the argument the same reason that we go to hawaii and not just watch a movie
No, because we don’t have enough of the sensing capabilities today to truly recreate being in hawaii
But imagine if we did and and we are very much on the path to doing that and in two 300 years
We have the ability to physically recreate what it’s like for our body to be in hawaii in every form smell taste color
Everything about being there physically and our body experiences it. Why the hell would you fly to hawaii?
You could meet people you could socialize
So in a world short in a world where that technology exists, which could by the way be neural link, right?
Where you can, you know, put these signals directly into the brain, etc
Moving physical matter from one part of the universe to the other makes zero sense
All matter is transmutable. You can convert one atom to another using a technology locally
So you wouldn’t do that
And so that’s the premise of 2001 is that you’ve got these local communication pods that just transmit information from different parts of the universe
You don’t need to physically transport yourself
So that’s the that’s the the macro kind of argument against this notion that ufos or aliens are in a physical spacecraft visiting
It’s so old school technology that it makes no sense
It’s like saying, you know, oh my gosh
All these people are coming over to the united states on horses from europe, you know
Like it just like why would they do that? Why would they use a horse?
Uh, so so I think that’s the argument against
Ufos being aliens and spacecraft now, is there a really cool technology that has this advanced capability and they’re these crafts
That are in our sky and someone has that technology maybe
Um, but i’m not sure about this
General pieces, I mean you blew my mind with that. So yeah sax, uh, I you obviously don’t care so
I have no way for this to increase the irr of my fund or to get me another home
On planet earth. Why would I want to go?
I just somehow feel like if they’re really ufos it’d be like an even bigger story like we’d all know it
You know, it’s not going to be some like weird fringe conspiracy thing. Here’s the here’s the thing
I do not care about emotions of humans. I can tell you why I care about the emotions of others every single
Photograph that’s been taken in the last year is
Absolutely recognizably better than the one taken 10 years ago
And every single photo or video of these aliens looks like it was shot in a on a camera from 1950
On film that was left in somebody’s basement
And meanwhile pick meanwhile pixar movies can recreate literally the ocean
We’re recording this on zoom. Why can’t a jet get me a clear shot?
There’s not one clear shot of this show me the alien in 4k high def and then i’ll believe it
You ever see a spacex launch where it has a camera by the engine and we can see the engine like why can’t we get?
a shot of the
Until then I will be traveling between my homes living my best life. I am living my best life not in san francisco
We will get chesa budin recalled I will tell you sax
I don’t think you need to harp on the chesa point anymore because I don’t hear anyone making the case on the other side anymore
Dustin moskowitz
Yes, what from asana, yes, nick pull up the tweet so, you know, I’ve been basically because look there we fired him up
Here we go. No, let me get this
Insert corner here
Run
Run rage function now
No, look we’re taking all this heat from these stupid reporters are talking about our donations
You know like asking what are we up to look?
We’re very public about what we’re up to but this is a terrible tweet from dustin there
There have been these tech billionaires dustin moskowitz reed hastings and mike krieger
And they’ve been donating money
To what to chesa budin and gascona. That’s disappointing
Yeah, horrible. So I asked I just said why are you donating money this insanity and dustin’s still defending it?
I
Said i’m gonna mute you now because you know, you didn’t want to you didn’t want to wait just in fairness
Let me pull this up
Dustin’s quote is I live in the city and i’m not going anywhere crime happens to me, too
Trust me. We write extensively about why are of our grants here? You know, here’s the thing. I think dustin reed hastings
um and
Their spouses are very involved in criminal justice reform
and what we have to do is give somebody like dustin or reed hastings the benefit of the doubt here and say
We understand your donations
were meaningful to you and you wanted to
um, maybe lower the incarceration of black people in jail for
Crimes that were not violent and we agree
Let’s no this conversation
I’m not giving them the benefit of the doubt. Let me explain why okay
So reed so this is a good example. This reed hastings thing is a good example
By the way, just today it was announced that he donated three million to gavin newsom
um in any event, so
You know, he keep he look he’s on that side of the spectrum, by the way
There’s a little backstory there. I don’t know if you guys remember when there was pressure
Uh on the facebook board to kick peter teal off back in 2016
It was reed. That was from reed. That was from reed hastings. Okay, so the guy is very close-minded
I think it’s his wife is actually handling this
He was the board member who pushed to get peter off because he couldn’t handle the fact
That there might be another board member who had disagree with him politically
So it’s a very close-minded point of view, but let’s take let’s take this example of crime in la. Okay, so we had this
election
Where george gascon who was a failure as da in san francisco?
He goes down to la and runs against the the veteran da down there. Jackie. Lacey who
It happens to be a black woman a veteran season da
Competent nobody had a problem with her. I think she’s a democrat. Okay. It’s not like this is a right-wing person
And so george gascon basically fails his way out of san francisco goes down to la and he basically
Um dislodges her from that seat with 15 million dollars an unprecedented amount spent a da election
Where did that money come from 5 million came from source 5 million came for reed hastings
5 million came from blm now
You know in any other context the idea that you’re going to fire
a talented competent seasoned veteran black woman and replace her with
An incompetent white male that would be seen as institutional racism, but nobody complained about it at all
But it’s outrageous. Yeah, what is there? What is the most charitable was behind that? What is the most charitable?
View of why they’re supporting
Gascogne and chesa well, there’s this decarcerationist agenda. And so yes, you’re you’re right that they see
Mass incarceration is a problem, but the problem is it is but the solution is not mass decarceration
That we need something in between and the problem with gascogne and chesa boudin
They just want to let everybody out. They don’t want to they also don’t want to add anybody
So I think if their agenda is to lower the number adding people is against that
There are people who need to go to jail murderers need to go to jail people dying every day
in san francisco
uh by at the hands of repeat offenders
Who chesa boudin has made the decision to let them out of jail, even though they should be in jail
These are dangerous violent felons
the problem with this is I think chamath I would like to get your feedback on it is you know you
When a person gives these kind of donations and they make it their public persona
And it doesn’t go well
How does one?
You know, I don’t know disentangle or
Reconcile they made a bet
That had a bad outcome because this is obviously a bad outcome. You don’t want the city to
devolve into chaos
I don’t particularly care about san francisco and I think I think the two
The two of you guys can talk about it on. No, i’m done
I’m gonna get rid of my place in the city on colin, but I I could I couldn’t care less about how that’s
well
I got nothing to say
Okay, I want to add this one thing. Look I so I care because I live there
But but this trend this is not just san francisco this whole idea of these radical
Decarcerationists, they are running for da in every major city. This is going to be a national trend
and they’re going to cause a lot of
Carnage a lot of death and destruction until the people realize
And there will inevitably be a backlash to this and hopefully just not too many people
Fair enough. I I don’t want to be too flippant. My point is it’s a really important debate
It’s going to happen in every city
But folks need to get engaged in those cities and do something about it
If you want to hear the argument of why this is happening
You can go watch the ted talk on youtube of adam foss f-o-s-s. He was the original like
Proponent of the da’s coming in to drive the decarceration
decarceration movements
Um, and you know, I just think it’s important to be informed of the other perspective
Uh in evaluating where folks are coming from that are that are proponents for this movement
Yeah, i’m trying to be charitable towards their position dustin and reed if you want to come on the pod and be a bestie guestie
I guess maybe doesn’t doesn’t respond to me and said listen
We don’t know what the counterfactual is if we had a more aggressive da that was his arguments
We don’t know the counterfactual. So I of course so I posted a list of people of innocent victims who’ve died
Okay, because directly because
Of a decision that chase abudin made that’s your counterfactual
Yeah, that’s your counterfactual
All right. Listen, it’s been an amazing episode and uh,
No plugs, no ads. No nothing if you like the show great
And if you don’t like it, how the hell did you make it to the minute 75?
for the queen of quinoa
The dictator himself chamalee papatia. I’m having steak tonight
If you’re vegan david friedberg, you’re not invited to steak dinner, you’re having beers tonight i’m having beers tonight
You’re having beers and roasted eggplant tonight. You’ve never eaten fish in your life. Never had sushi and sax
By the way, that’s true. I don’t know
Sax you’re gonna talk about sax’s help. Where’s your first second and third dinner tonight? I’m on a seafood diet
I eat I see the food and I eat it
Sax if we take out your postmates
How long is it gonna be eat it out
The fat guy on this pod
I just bought my third machine. This can’t be happening. It’s happening. This is your twilight zone episode
I just bought i’m going I decided i’m going twice a week with the trainer and I just bought the hydro
So now I have tonal
Peloton tread and I got the hydro i’m going from smart machine to smart machine. Hey, are you spack? Oh, I got it
Oh good question
No, no, no comment comment. Okay. Sorry
Tweet people have other things to do guys. I gotta go. I gotta go. I gotta go. All right, everybody
Yeah, get a salad, okay
And of course the dictator here
I write a minimum of 100 million dollars
Coincide when you see the other warriors, it’s hard to make good investments. It’s hard to build a company
I am a complete byproduct of a social safety net
Uh, and at some point you have to figure out whether you actually want your kids to have asthma or not
Or you care more about the land grass
I’m king of the spam impotent money is free and it’s not I pick up the slack
Impotent money is free, but it’s not
I get thousands of billions confused. I get thousands of millions confused. I get thousands of billions firing on also
You just want to be called king
Run over I just can’t stand
It’s hard to make it it’s hard to make good investments it’s hard to build a company
Because if it was easy, everybody would be doing it all the time
This one man for yourself, it’s all about you you can figure it out
with the rugged individualism, that’s just not realistic like
If anybody who want who’s listening to this who wants to go to the french laundry stay at home
Pour a bunch of salt on whatever you’re gonna eat
Okay, melt a stick of butter in the microwave stick of butter in the microwave drink it and then basically take it
1500 light it on fire
It’s hard to make it it’s hard to make good investments it’s hard to build a company
Because if it was easy, everybody would be doing it all the time
This one man for yourself, it’s all about you you can figure it out
with the rugged individualism, that’s just not realistic like