Our daughter’s head is dropped because our doctor,
she felt the head and she was like, yeah, it’s…
Hey Chamath, whose head has gotten bigger?
Yours or your daughter’s?
What do you mean?
Don’t quit your day job, Sax.
That didn’t quite land.
That didn’t land.
He’s trying out material, total flow.
We are not in rhythm.
You know why?
It’s mercury retrograde.
Our 50th episode is gonna suck because of this.
Here we go.
♪ I’m going all in to let your winners ride ♪
Rain Man David Saxon.
♪ I’m going all in and I said we open sources to the fans ♪
♪ And they’ve just gone crazy with it, love you guys. ♪
♪ I’m the queen of Quinoa, I’m going all in. ♪
All right, the Facebook whistleblower hearings occurred
and Facebook gave our-
No, but wait, where’s your, hey, everybody.
Welcome to another episode of the All In Podcast.
We made it to 50.
Nobody expected us to make it.
Here we are.
We’ve made it.
And everybody is thrilled to be here with you.
And thank you for the support over the first 50 episodes.
One episode closer to getting canceled.
One episode closer.
Man, how great would it be to be canceled
and never have to work again?
Oh, that’d be wonderful.
Okay, so Frances Haugen revealed herself
on Sunday night on 60 Minutes
and then appeared before the Senate on Tuesday.
Wait, don’t we get our own personal intros,
or no, we’re done with that?
I mean, you’re unbelievable.
Doesn’t the audience know us?
Mercury retrograde, Mercury retrograde.
It’s Mercury retrograde, I’m all fucked up.
Doesn’t the audience know us by now after 50 episodes?
Do we really have to put them?
Everybody loves the intro.
Three, two, all right, with us again this week
is the Rain Man himself, David Sacks,
and the Queen of Quinoa, David Friedberg.
I love the intro.
Of course, the dictator, Chamath Palihapitiya,
and I’m your boy, J. Cal.
Sacks, I gotta say, I think your AUM
is positively correlated with the bags under your eyes.
If you mean it’s getting bigger, you’re correct.
I mean, they’re heavy.
They’re heavy, dragging you down.
That’s where you’re hiding all that Solana
in your fucking, under your eyes.
You better clear that Solana position.
What’s your lockup, 24 months?
Fuck, no, he’s trying to sell it to me on text message.
Yeah, of course he is.
We’re negotiating discounts.
I just had the fact of the fact.
Hey, you’re fucking the whole thing up.
Bro, you don’t think just-
I’m hodling, I’m hodling.
You think I buy hundreds of millions of dollars
of anything without a discount?
Everything is a discount.
You want to clear that position in an LLC?
Are you saying I got a billion dollars of Solana?
No, bro, I’m saying I have one,
but you know, I brought it at a discount.
But you’re holding, correct?
Yeah, me too.
Well, I mean, if something appreciates,
at what point is the appreciation in an asset
that you’ve invested in early,
something you need to, you know,
at least clear a position of and lock in a win?
I mean, what’s enough, 100X, 500X?
You got to, at some point, bank a win, right?
Well, I think you have to put things in a bucket of like,
is it an investment or is it something
that represents an idea that you love so much?
If it’s the latter, you should never sell.
If it’s the former, yeah, you got to manage risk.
Or rather, you know, is it a trade
or is it something you want to own?
By the way, let me just clean this up
because Solana was not a direct investment for us.
What we did is we invested in a crypto venture firm
called MultiCoin Capital.
This is back in 2017.
We realized like crypto was becoming
like a full-time job for us.
It was a total rabbit hole.
And we were like, we don’t have time
to figure out this like 24-7 trading stuff.
But we met Kyle and Tushar who were these two young guys.
We met them through Vinny Lingham, actually.
And they were creating MultiCoin Capital.
And we actually invested, we gave them a million bucks
at a 20 cap to help set up their firm.
And then we invested in their,
they had both a venture fund and a hedge fund.
And they were like the first money into Solana.
So that fund, I mean, it’s like a 100X fund.
It’s just like bonkers.
And so as a result of that,
we are indirect beneficiaries
of this huge increase in Solana.
It will end up being about a billion dollars of,
I think, Solana for us in terms of returns.
But the MultiCoin guys
determined the trading decisions on that.
Yeah, and so people who don’t know,
Solana is a programmable Ethereum competitor, I guess.
And it’s at $50 billion or so market cap.
It was trading at a dollar not long ago,
and now it’s at 164.
It’s an Ethereum competitor, basically,
for a smart contract platform.
And there’s a lot of people,
I’d say smart money in Silicon Valley,
who are betting on a flippening
where Solana could ultimately overtake Ethereum
as the preferred platform.
But even if it doesn’t overtake Ethereum,
it’s the number eight cryptocurrency right now.
It could go, there’s a lot of people betting
it’ll go to number three or what have you.
Additionally, it is a fraction of a penny
for a transaction,
and it can do many more transactions than Ethereum.
So it’s technically should be much cheaper.
If you’re buying NFTs right now,
you’re probably spending tens of dollars
in fees on Ethereum.
Whereas if you did those same NFTs,
which some people are starting to do on Solana,
they would cost a fraction of a penny.
Correct, David or Chamath?
Yeah, I think the platform is known
for being a faster, cheaper blockchain.
Really, really congratulations.
And if Vinny Lingam’s Instagram is any indication,
he did pretty well because his Instagram
suddenly turned into a world tour on private jets.
He’s like, which island should I buy?
Well, Vinny was sort of like a,
I don’t think he’s full-time in multi-coin,
but he was sort of a venture partner to Kyle and Tushar.
And he helped set them up.
This is back in 2017.
He helped bring us in as the first investors.
And I mean, for us, it was sort of a founder bet
combined with a team, like sort of a space bet.
Like we knew the cryptocurrencies
were starting to be traded 24-7.
We knew it required more of like a hedge fund skillset
than what we had.
And so we made a bet on those guys
and man, has that ever paid off.
It’s one of the nice strategies, right, Sax,
is if you are LPing in new fund managers,
which I’ve done a couple of times now,
you get to learn from them
and basically dive into a data set of a new market, right?
I mean, it’s like one of the nice things
about being an LP in a fund is you can place a small bet,
whether it’s 50K or 500K or 5 million, whatever it is,
you get like this meta-education of an entire sector,
Yeah, but I think we didn’t do it to learn from them,
although we have, it’s more that we realized
that crypto was, like I said, becoming such a rabbit hole.
Like we realized we would either need
to do crypto full-time as a fund
or we would need to like partner
with people who actually did.
And you see that with like a lot of VC firms now,
is they’re creating like specialized crypto funds
or at least they have specialized crypto partners.
There’s so much to know about the crypto world.
It’s a hard thing to invest in
unless you’re like totally focused on it.
I’ve struggled with that.
Like I’ve tried to go deep on a couple topics
and like I realized, holy shit,
I’ve been in this for like four to six hours
just trying to learn this stuff and I’m not like there.
And then I feel uncertain about making any decisions.
I totally get it.
I mean, you gotta have folks like working on this.
And the pace is changing so rapidly.
You really need to kind of be up to date on what’s next.
It’s really challenging.
When you look at crypto, people use the word crypto
as if it’s like, that’s all there is.
Crypto is like distributed computing,
e-cash, cryptography, financial modeling
or building new economic systems, Chamath.
There’s business model innovation.
There’s technology innovation.
There’s economic innovation.
Distributed computing innovation.
I mean, there’s quite a lot of layers of activity.
Chamath, are you spending time in crypto yourself
or do you have people doing it for you
or how are you kind of-
Look, we have a lot of it.
A lot of a lot of everything.
So yeah, we have things-
But do you go deep yourself, Chamath?
Like how do you spend enough time
to really get up to speed on all the goings on?
I cherry pick and I snipe
and opportunities where I get intellectually curious
and jump in.
But a lot of the credit goes to my team.
There’s a couple of folks
that spend a lot of their time in it.
And we’ve had a couple people do extremely well for us.
Similar to David’s story, back in the day,
I invested in Barry Silbert and DCG-
Second market, Barry Silbert.
And DCG is now, I don’t know,
I’m guessing a $20 billion company, maybe more.
I don’t know.
So how does it mechanically work with your team?
They are investigating opportunities
and then they come to you and bring you,
hey, we’ll do a meeting
and I’m gonna share four with you.
And then you say,
hey, let me get on the phone with that guy.
Do you basically go deep when something shows up, Chamath?
No, so basically what happens is
they have carte blanche to do whatever they want.
And what they’re typically doing
is they’re working with entrepreneurs to seed projects
and to get projects off the ground.
And then at some point
when those projects become large enough,
then they’ll issue tokens
and we’ll get a certain allocation of those tokens.
And so we’ve done that for, call it, I don’t know,
some number of projects that we think are valuable.
Then along the way,
they’ll have certain views on Bitcoin,
they’ll have certain views on Ethereum,
they’ll have certain views on Solana
and we’ll make capital allocation decisions.
They tend to have the ability to do whatever they want.
And then what I tend to do is just think about
when it gets above,
to me, I need to see the chance to make at least
in the rough justice around 500 to a billion dollars
and then I’ll get involved.
But otherwise they just kind of run the whole thing.
Let me ask you guys a question here.
When you look at the market caps of these projects,
it seems like things are changing.
Cardona or Cardona is number three now
and Tether still remains number five,
XRP still number six, but Solana-
I would encourage people to not look at it like that.
I think looking at it as a rank list betrays what it is.
So, you know, I’ll give you a simple example.
Let’s like compare the fate of two projects
or actually right now there’s a distributed form
of Discord that’s being built.
Discord the chat app, very popular amongst gamers.
In a completely distributed way
with an integrated crypto wallet.
Because if you look at Discord,
it’s really two cohorts of people.
There’s gaming and there’s crypto, right?
Those are the two big ones, yeah.
That’s an example of a really interesting product
that has some real potential.
Then if you look at something like Deeso,
Deeso is a decentralized social programming framework.
Then if you look at something like Helium,
that’s completely about building a large distributed,
you know, connection of on-ramps to the internet.
So internet connectivity.
So those are three completely different ideas
with three completely different paths to success.
If to invest in those tokens,
you have to believe in three totally different
sets of things.
So to look at it on a rank list and just buy something
because it’s cheap is-
Yeah, no, no.
No, no, no.
I’m just going to be blunt, it’s stupid.
Don’t do that.
Well, no, no.
That wasn’t really my question.
My question was, you know,
we have an extraordinary number of the public
who’ve invested in Bitcoin and Ethereum
as number one and number two.
And those projects feel maybe stagnant
when compared to the dynamism of what I’ll call,
you know, the projects launched
in the last three or four years.
Because they’re the different, no, no.
But you’re talking about confusing.
Again, that’s what I mean.
Those are layer one protocols, right?
Meaning they are at the core substrate
of how all of crypto is going to work.
Then you have these other projects
that build on top of these things in different ways
or build around them.
So my point is, if you don’t have,
if you don’t want to take the time to understand
which layer twos you want to own
and which layer ones you want to own and why,
I think you’re much better off.
I understand your point.
My point is-
Buying an ETF or something else
because there are ways to own these things.
So for example-
David, Solana does not need Ethereum to exist.
So my point is, do we see a day when this, you know,
the past decade has been about Bitcoin and Ethereum.
Do we see a day when maybe people stop buying those
and start buying these new ones?
but here’s the evolution in our thinking.
I mean, the first step was realizing,
okay, we need to own Bitcoin.
Because, you know, there’s now enough evidence
where what, like a decade,
we’re more than a decade into this,
nobody has been able to essentially counterfeit a Bitcoin.
It is, you know, new money.
It is better money.
So if you, so I’m not gonna convince people right now
of the argument for Bitcoin,
but if you believe in it,
that’s sort of the first step
is you realize you really need to have
one to 2% of your portfolio in Bitcoin
in the event that fiat money sort of becomes debased
and eventually you move to crypto.
Then you realize, well, wait a second,
Bitcoin is just one application of blockchains.
There’s a bunch of applications of blockchains.
So maybe we need to own not just sort of, you know,
but we also need to own the underlying blockchain platform
and that leads you to Ethereum.
Then you realize that there’s a bunch of competitors
to Ethereum and it’s still very early days.
And one of those guys might ultimately
displace Ethereum as a blockchain platform.
Then you realize that there’s all these applications
on top of all these blockchains.
And so, you know,
the conclusion I come to after all of that
is I can’t figure all this out.
And well, maybe I could,
if I was willing to go back to school
and like make this a full-time job,
which I just don’t want to do.
I mean, I’m lazy and that’s why I focus on SaaS.
Like that’s what I know as an investor.
Yeah, like I’m not gonna reinvent myself.
It’s like you playing Hold’em versus PLO.
Right, right, right, exactly.
So, but this is why we partner with MultiCoin Capital.
So what I would just say is like
the idea that you as an individual investor
are gonna like, you know,
pick off the one cryptocurrency here or there to invest in.
I mean, that’s gonna be a lottery.
I would find a manager basically who is really good,
who has a track record, who understands this stuff.
Our approach is to hire very young,
extremely technical computer scientists and mathematicians
to basically do the work.
Yeah, and you know,
one of the things that I think these guys do
and the reason why it is very helpful
for them to be computer scientists
is these are all open-source projects.
So they go look at the repos.
Just go look at what-
You can actually see the changes being made.
And this is like,
do you realize there’s only 12 people
who are actively working on Solana in the-
But you need to look at all the code check-ins.
Seven of them work for Solana.
You need to look at all the code check-ins.
You need to look at the velocity of the code check-ins
so you can see like how many projects
are being created on these platforms.
The white papers are also really exceptional.
Like if you read these white papers,
they’re really incredibly thoughtful and well-written
and you can really understand what their goals are
and you can make some informed decisions there.
But again, if you’re not gonna be in the business
of being in this ecosystem,
because I think David’s right,
everything is moving so fast.
What’s successful today could be just a dog tomorrow
and vice versa.
That I think speculating in this market will,
not only will it be super volatile,
but more than likely you’re gonna lose all your money.
So I would encourage people to not speculate in crypto.
I would encourage you to figure out an elegant way
of having an abstracted bet
if to the extent you care about it.
And by the way, in the UK, for example,
there are ways where you can own
publicly traded mutual funds
that give you exposure to this.
It’s just simpler. Like ETFs.
Yeah, but there are mutual funds of crypto.
Do the work, find these mutual funds,
just own those things and let somebody else do the hard work
because it’s too hard.
Some of the other investments we made
back in 2017, 2018 timeframe,
one was a company called Bitwise,
which was creating an ETF for crypto.
So it’s a monthly rebalanced portfolio
of I think the top 10 cryptocurrencies.
And you could buy it.
They finally got approved by the SEC
and you can buy it like with a ticker symbol
from your E-Trade account.
You can buy it in Robinhood or E-Trade.
So that was pretty incredible
to see the progress they’ve made.
And then the other big bet we made
was just institutional custody.
Back in 2017, we invested in BitGo.
Actually, Bill Lee helped found that company many years ago.
And then that became last year,
Galaxy announced a deal to acquire them
for I think 1.2 billion largest crypto acquisition to date.
The thesis there was just that
crypto would go more institutional.
And I think we’re starting to see that now
where endowments and so on are realizing
they need to have some portion,
maybe 1% or 2% of their portfolio in crypto.
Look, we have almost $3 trillion of market cap in crypto.
It’s unrealistic for folks to expect people
to be able to be living in Discord channels
and doing all of this work.
I think what that means is that the SEC
is going to be asked increasingly more often
to approve simpler on-ramps for this stuff.
And now in the last week, by the way,
we had a pretty important two things happen.
Both Jerome Powell and Gary Gensler basically said,
crypto is here to stay
and we’re not going to ban this stuff.
And so hopefully what it means
is that you get some ETFs passed in the United States.
Grayscale is one, there could be more.
And I think that stuff makes it much easier
for folks to own this stuff.
Well, clear regulation would be a great thing
for the industry, for people to buy into it
and removing some of the, let’s call them,
I don’t want to say bad actors,
but people who are maybe questionable like Tether.
I don’t know if you saw the Bloomberg story yesterday,
but a Bloomberg reporter basically found out that Tether,
he got the list of what Tether owns with their stable coin.
And it looks like they’re giving a lot of loans
to other crypto projects and own a lot of Chinese paper
in that they are basically making the float
on $69 billion sweeping it,
which then incentivizes them to take risky bets
because they get paid on them.
And it’s anything but a stable coin
if you think about it from that regard.
It’s, I don’t know the details on Tether.
I won’t speak to that, but I’ll say that any stable coin,
if it’s not 100% backed by dollars,
if that’s a currency that’s going in and out
or other hard currency, that’s not a stable coin.
A stable coin is supposed to be a service.
It’s not supposed to be a speculator’s currency.
It’s basically just supposed to be a mechanism
at the on-ramps and off-ramps of the crypto ecosystem,
you can convert your dollars into a temporary,
like a stable coin that will hold its value.
A poker chip.
A poker chip that you can use
to then buy Bitcoin or Ethereum or whatever.
Yeah, USDC, Jeremy Allaire’s-
Competitor from Circle just said
that he would switch to 100%
to what you’re saying, cash, cash equivalents.
Guys, this has always been a money market fund.
It should be treated like a money market fund
and it should be regulated and managed like a money market.
Which was Tether’s original vision
and then they flipped the script
because I think they got greedy
and now they own, I think, 3% or 4% cash.
And because they want regulated.
By the way, it speaks to the role of regulation.
Like, you know, a lot of people have trust and faith
because they make some claim,
but there’s no regulator actually checking on their claims.
The only people that want regulation
are two ends of the spectrum.
So young and so disruptive
where they want Rails to operate legally
and so big and so over the top
that they want to basically entrench themselves
for the rest of their lives.
Everybody in the middle doesn’t really want regulation.
Well, what’s a way to create-
But if you’re a crypto company
or if you’re a big tech, you both want regulation.
Well, but there are some narrow cases.
Like again, you know, if a stable coin is going to say
that we are just a money market fund,
we’re 100% dollar reserve,
it is really nice to have a regulator,
somebody we trust to go in there
and put the stamp of approval on it
so we can trust it.
Or an SRO.
That is a valid role, I think, for a regulator.
In traditional financial markets,
you have these self-regulating bodies.
I think FINRA is a self-regulating body, right?
And so some of these self-regulating bodies
should be formed in the crypto community.
I don’t know if they’re doing this.
I’m so naive in this space,
but certainly would make sense to have an SRO form
that does self-policing effectively within the community
rather than try and bring in a government regulator.
Well, here’s the thing.
If you police yourself,
you can really define the execution
and the ramifications of that policing.
If you have 30, call it, competitors and cooperators
in the market space doing this together,
it can be a highly effective model
for creating a system of trust and reliability
and not having to, you know, bring in,
you know, call it outside incompetence
to overseeing the rules and rights.
Yeah, another area we need standards
is around the token cap tables for these projects, right?
So how much of the token cap table goes to the founders?
What are the rules around them selling?
What are those investing periods?
And what are the disclosures around them selling?
In public markets, we have 10b5.
So if you’re an insider who runs these companies,
you have to disclose when you’re selling.
There’s no similar rule for crypto.
I think there probably should be, right?
Like if you own the token and you run this project
as publicly traded and the public can buy it,
you should really probably have to disclose your sales.
And maybe, you know, it’s very strange
because they’re running foundations
and I had a crypto person on from a music crypto project.
And he said they had like three or 400 million
in this project in Panama.
I was like, who’s on the board of that?
And he’s like, I can’t say, why can’t you say?
And he said, security reasons.
I was like, well, anybody who’s on a public board
has to be public.
And of course they have, you know,
people who are on the board of GE or IBM or Amazon,
they have security issues.
Like they deal with their security issues.
That doesn’t mean they don’t disclose who they are.
He’s like, yeah, I’m not comfortable saying who they are.
And it’s like, okay, well they sold three or 400 million.
I was like, how do they give that money out?
I’m like, he’s like, I’m not sure I’m not on it.
I’m like, what?
Like there’s some organization in Panama that’s,
it was really weird.
And I think you’re right.
The one thing that I’ll say positively
about these crypto founders is that they will never allow
a single venture investor to clog up their cap table,
They do a great job of creating these large broad syndicates
of participation when they seed their projects.
And then, you know, a lot of it goes into treasury
where then they issue coins as needed.
And I think that that strategy actually
is very pro-employee and pro-ecosystem.
So, you know, when we see these projects,
all these companies tend to raise, you know,
three, four, 5 million bucks.
It all tends to be at like 30 million pre
and it all tends to be distributed.
So like, you know, it’s us Andreessen Sequoia
and it’s like, you know, we put in 200 grand each
or 400 grand each.
You know, that’s why you’re forced to then go
into the market if you believe in a project
and then spend hundreds of millions of dollars
to buy into it after the fact.
And I think that that’s very, very powerful.
It’s a really important dynamic that if it comes back
to a traditional venture, it could be really disruptive.
Well, could you imagine a SaaS founder that basically
all of a sudden says, all right, you know what?
I’m raising a $6 million Series A, you know,
Kraft can take 500K, Sequoia, you can have 500K,
you know, blah, blah, blah folks.
And then you raise 6 million bucks that way
and you never allow anybody to have more than call it,
you know, a few percent of a company.
So the fact that it’s like a mini IPO,
it’s like a private IPO on Sand Hill Road.
Yeah, and then your board construction looks
And then as a result, you know, founder protections
probably go way up.
Employee protections probably go way up.
And governance goes way down.
I actually think what will happen is you’re less likely
in a round like that to be okay with some dork,
Dingleberry joining your fucking board.
You’re going to actually point to some industry expert
and say, this person is joining my board.
She does XYZ job at such and such a startup.
And then the investors say, wow,
well, that’s a pretty great advocate for the business.
Go ahead and do that.
Another thing I learned about this whole token space
was when I talked to Anatoly from Solana,
when they sold their three or 400 million tokens
to fund the company,
because they consider them utility tokens, not shares,
they paid taxes on it.
So the IRS is getting massive amounts of tax revenue.
Well, think about it.
They’re selling the token.
It’s supposed to be for utility.
Well, therefore it’s a taxable event.
That actually was really smart.
That is showing, I think, some wisdom
because there’s a lot of founders
who want to have their cake and eat it too,
which is to say, they want to say
that these are utility tokens and they don’t pay tax.
And then when they later get traded,
they want to say that they’re not, you know,
they’re not securities.
But so when does the tax get paid?
I think it’s really smart to pay the tax up front
to establish that this is a corporate sale.
They’re basically paying the corporate tax, right?
That is what is, because this is the problem is
if you wait until they’re traded publicly
and then say, no, no, no, no,
they’re utility tokens, not security tokens,
the government’s going to ask you,
well, why didn’t you pay corporate income tax
when you sold them, right?
So that is actually showing some perspicacity, I think.
Uh, could somebody look that word up for me?
Do you know that word?
Foresightedness, J Cal.
It’s so great that you have the two producers
on either side of you right now
feeding you vocabulary words.
So here’s, here’s, you know, another question with this.
If the majority of people sacks,
just put your legal hat on for a second.
If the majority of people who bought a token in a project,
we’ll call it the, you know, Acme crypto project,
they buy Acme coins.
If they’re buying them and they have absolutely no interest
in using them for the utility,
and they say, I bought these as a speculative device
and the founder says they’re utility tokens,
but let’s say 70% of the people who bought them
said, I didn’t buy them for that reason.
They just came out, right?
And said, I bought this to speculate on the price.
What should the government do?
Should they deem them a security
or should they deem them a utility token?
I think that’s a complicated question,
but I think that there should be an opportunity
for these cryptocurrencies to establish themselves
as utility tokens, because they are,
they do serve a purpose.
They are designed to be part of a system, right?
They’re not just objects of speculation.
And by the way, even if they were,
we don’t treat baseball cards as, you know,
as sort of a security.
So it wouldn’t necessarily make them a security
just because they’re speculated on.
They actually do serve a function
in a designed computer system.
So I think what’s important here
is that there’s a safe harbor
where these crypto companies know what the rules are.
And if they can basically meet the criteria,
such as by paying corporate income tax
when they sell the tokens and other things like that,
that they won’t later be deemed to be engaged
in an unlawful sale of securities.
I think the important thing is just that
entrepreneurs, founders know what the rules are
so they can abide by them and not be surprised.
And they don’t right now.
Well, so they don’t get surprised later.
They don’t get whammied, but with basically, you know,
because they are building something legitimate here.
But it would seem to the sniff test
if the people buying the tokens have no idea,
have never written a line of code, have no use for them.
I don’t see why that’s relevant.
I don’t see why that’s relevant.
Well, because they’re profiting off of them
as if they’re shares and unlike baseball cards,
which you can’t sell a thousand baseball cards for
and increasingly, you know, in a very instantaneous way,
you would have to put them in an auction.
You kind of can.
There’d be a lot of friction.
There’d be a lot of friction.
You can’t trade it. You could sell physical coins.
It’s certainly like, yeah.
Freeberg, what do you think?
If the majority of people buying a token
are doing it to speculate,
can the founder say it’s a utility token?
And then those people who are trading it
like either baseball cards, minted coins,
whatever analogy shares you want to use
are in it for the increase in the value,
should it be a security
and should they have to play by the rules we play at
in the traditional venture startup game?
I mean, the question is, what’s the utility?
So, I mean, if you can demonstrate some utility,
then maybe that’s the,
and this will probably be litigated at some point, right?
I’m sure there’ll be enough capital sloshing around here
that someone will say, you know what, we believe strong.
I mean, we’re seeing this happen with Ripple already,
but someone will litigate this
and we’ll get some clear definition
on what statutes are going to be referenced
and what those statutes might say
with respect to how this ties to the definition of utility.
And then that’ll become hopefully a standard
that people can kind of look to to guide them in the future.
But it’s definitely the Wild West right now.
And everyone’s going to try it.
The reason I bring it up
is because Gensler was sort of floating this argument.
Chamath, what do you think?
I think that you can’t wipe $3 trillion of value
out of the world.
So pragmatically hard to do, got it.
So it’s here to stay.
And it’s too institutionalized now.
So, you know, there’s just way too many
organized pools of capital that are now speculating
inside of this entire ecosystem.
You know, I saw a tweet today,
there’s a firm I think like called Jump Trading
High-speed frequency trading organization.
And they tweeted out some pictures where, you know,
they hired a bunch of folks to start at Jump
and they did a coding bootcamp on Solana.
That was their onboarding as an example.
So when you have people in high finance, you know,
really vested in this thing
and you have $3 trillion of value
that’ll go to 6 trillion and then go to 10 trillion,
this can’t go away.
So that’s why I think Powell and Gensler
had to say some version of that on the record,
which is, you know, we’re not gonna ban this stuff
because they know it’s not possible.
So I think David’s right.
You have to create some rules,
make folks and let folks pay their taxes.
You know, I remember, for example,
like I did this Bitcoin transaction in 2014 or something.
I bought some land, I used BitPay,
I transferred some Bitcoin, bought the land, blah, blah, blah.
I was like, you know, whatever.
I mean, I left, I mean,
I owned a lot at the time, so it wasn’t that big of a deal.
But my point is, finding a way for me to pay my taxes
was a huge deal, I remember.
And, you know, we filed the tax return
and we tried to make sure that we paid our taxes.
These are very complicated.
Even if you wanna be conformant to the government,
it’s impossible right now.
So they just need to create some rules
where folks can say, here’s what I own,
here’s what it’s worth, tell me how much I owe you,
and we’re all willing to pay,
or not, maybe we’re all not, I am.
Because I just think it’s like,
make sure that we can trade around it,
hedge it, structure it,
do the things that we would normally do
with any other risk assets.
Right now, that’s very hard.
And when you own lots of this stuff,
it sits in your balance sheet
and you just take these enormous swings
and you’re just like, God,
you can’t do anything around this stuff.
And that’s not a viable financial market.
To be specific about what Gensler said,
I just looked it up here.
You know, he compared utility tokens
with, you know, laundromat tokens
or tickets to the opera.
And he said, entrepreneurs are choosing
to perceive their tokens as utility
to sidestep regulation.
And that, here’s the quote,
they are highly speculative investment tokens
for people who are trying to save
or speculate for their future.
And that’s why I think it’s appropriate
to bring them inside the investor protection perimeter.
I agree with him.
I also agree with you, Chamath,
that this is a can of worms
that I don’t know how you put the genie back in the bottle.
No, but he’s partially right.
I mean, he is partially right on some tokens,
but he’s not completely accurate on some other tokens.
I think it’s on a case-by-case basis and it depends.
Listen, I think anybody who is buying these tokens right now
knows that they’re engaged in financial speculation.
This idea that people in middle America
are gonna blow their retirement savings on crypto,
I just don’t really buy it.
No, but if they know, if they’re doing speculation,
then it should be a security.
No, no, no, David, I think you’re totally wrong.
I totally buy it.
Look at the quarterly returns,
the filings of earnings from companies like Robinhood
and how much, and Square,
and how much money they make from crypto
and look at their audience.
That’s totally not true.
But don’t you think that audience skews really young
and they’re getting their COVID stimulus check
and they’re yellowing it into meme stocks or crypto?
What does that have to do with-
Well, because you’re making it sound
like they’re gonna blow their retirement savings.
Okay, well, if you’re talking about a 25-year-old
who’s got $5,000 of retirement savings, maybe,
but they still got 40 years of work ahead of them.
Hold on a second.
Wait, no, they don’t.
This is gonna be the least hardworking generation
of our lifetime.
No, no, no, not because they’re not hardworking.
There’s $70 trillion that boomers have
that they are about to pass down to these folks
on average between two and three trillion a year
for the next 30 years.
Also, they know how to do gig work.
Like, they’re so smart, this generation.
They know how to do projects for five grand
and float themselves.
You’re gonna take one entire turn of the world’s GDP
and give it to 100 million people in America
over the next 20 to 30 years.
That is what is actually going to happen.
Look, I think-
Of course they’re gonna keep YOLOing this stuff.
Yeah, look, I think we’re getting off
on like a little bit of a tangent here.
A good one.
My point is not that there shouldn’t be
investor protections, but rather that I think we also
need to balance another important objective,
which is to create a hospitable environment for innovation.
And the fact of the matter is that you’ve got
a lot of brilliant young entrepreneurs,
computer scientists building this financial infrastructure
of the future with crypto.
It’s not just speculation.
There is a lot of code being written.
It has functionality.
There’s a purpose to it.
We don’t necessarily want to interfere with that
to the point where we break it.
Well, every startup has to do their securities though,
All the other startups that are not in crypto
are playing by the rules.
So it’s crypto, people get a pass.
I agree with J-Kel.
People make this claim and I just think it’s so specious.
Do you think that you would have made
a single professional decision in your life
based on tax rate?
Have you ever made a single like,
I’m going to start this company.
I’m going to make this product.
You know, I’m going to change this job.
I just think that most people-
No, I’m not talking about paying taxes.
I think it was smart for, for example,
Solana to pay corporate taxes on their token sale.
I think everyone should pay their taxes.
That’s not what we’re talking about here.
And I’m not saying that Gensler
shouldn’t prescribe regulations.
I think that part of the purpose of those regulations
should be to give entrepreneurs predictability
to be able to give them a safe harbor
so they can build what they want to build.
Let me make one final point.
I’m just saying from my perspective,
I just think that if you have clear, sensible taxation,
that’s 90% of what this industry needs.
And I don’t think it will change anybody’s real motivation
to work inside this ecosystem.
I agree with that.
Just like entrepreneurship doesn’t change
when capital rates, capital gains rates-
Look, I’ve paid taxes at, you know,
on all my crypto sales,
like it was any other investments since the beginning.
That’s not the issue.
The issue is when you’re a company and you’re raising money,
should you be allowed to not follow securities law
because you say it’s a token?
Friedberg, when you look at this,
an NFT company came out this past week
that was selling shadow shares in startups.
And anyone in the world could buy a shadow share
in a private company like Stripe, et cetera,
in this fantasy football league.
They wound up shutting it down or changing it
because they didn’t want to trade
on other people’s intellectual property.
They were concerned about that.
But just looking at it, the public in America,
96% of them who are not accredited
cannot buy shares of Stripe in the secondary market,
but you can buy NFTs in it and speculate on the NFTs,
which are accelerating from, you know,
$1,000 to $500,000 in these different clubs.
How is it fair that crypto companies
get to not obey basic securities laws?
Well, it’s not a security, there’s no underlying asset.
It’s a collectible.
An NFT is clearly a collectible, J.Cow.
Okay, and when you produce 10,000 of them
and have a marketplace for people to sell them
and they’re appreciating,
I mean, I do agree it’s something different.
Sounds like art to me.
Yeah, you could go draw a picture of Stripe
and put it on a piece of paper and go down to downtown
wherever and stand in front of the burrito shop
and try and sell it to people.
It’s qualitatively different than a security,
but they’re acting as securities
in relation to the fundraising of these projects.
So I think that’s the challenge.
Not everything is a security.
Yeah, there’s no secured interest.
You don’t have any secured interest.
It’s literally just like an image, a figure.
I was just offered a Giacometti sculpture,
but I turned it down.
How much, 60 million?
I’m not gonna comment on the price.
I have to say no.
Was Stephen Cohen selling it?
Not commenting on the seller.
I bet Stephen Cohen was selling it.
That was the record deal.
Stephen Cohen bought that Giacometti sculpture
a few years ago.
It’s like the highest price ever paid at auction
for a piece of art in the US.
Can I just tell you my problem with it?
I took the price and I divided it
by the height in centimeters, and it just tilted me.
Is price per square inch a metric in art?
It is in my head.
In 2015, Stephen Cohen paid $141 million
for the Giacometti sculpture.
L’homme aux deux, pretty incredible.
And I think you’re right.
It’s about 12 inches tall or something.
I just wanna let you know that that sculpture
looks like it was done by a 12 year old.
Oh my God, stop.
Oh, J. Cal, J. Cal, you’re getting it.
Yeah, J. Cal.
This is the billionaire equivalent
of crypto and NFTs, right?
I don’t know what scam this guy’s running,
but that looks like-
I don’t know how anyone can raise their hand
and say, I have an independent objective assessment
of the value of anything in the world.
And you can look at it from high to low,
and this is all effectively a subjective business.
This sculpture looks like it was a beautiful sculpture
that was in a giant fire
and that somebody pulled out of the ashes.
It’s a beautiful piece.
If you wanna read a little bit of art history,
yeah, you can understand a little bit
about Giacometti’s work,
but it’s a 70 inch piece, not 12 inches, sorry.
And yeah, his work is all about kind of like,
how do you capture the essence of the form?
Anyway, this is a super ridiculous tangent.
It looks like somebody made something out of mud
and put it into a clay oven.
I have a very funny Stevie Cohen story.
So this was like 10 years ago at Art Basel in Miami.
And the day before the art fair opens,
it’s called the Furnissage.
And so, it’s like a day where you can go
and see the stuff the day in advance
and you can kind of buy stuff or whatever.
And it’s very funny.
It’s kind of like when Walmart does like a Black Friday
thing, like everybody lines up
and then they open the doors and we all run in.
And I was standing side by side.
We were right at the front of the line.
And I noticed that he had these,
and this was my first time there.
He had New Balance running shoes on.
And I thought, what is he doing?
But then when the doors went open,
they just took off and started running.
And I was walking wearing normal loafers.
And then I realized I should have been wearing running shoes.
You don’t own normal loafers.
You were wearing Italian loafers.
I miss that on everything.
I like the balloon dog guy.
It’s like the running of the bulls.
I miss that.
It was, it was the running of the bulls.
I miss that on everything.
Running of the billionaires.
I got to the things after, and I was like,
oh, sorry, I sold it to Stevie Cohen.
I sold it to Stevie Cohen.
I had blisters on my feet.
It was brutal.
Do you guys know we haven’t even started our agenda?
Episode 50 of our great show.
Episode 50’s a dream.
Who’s the moderator?
Fucking moderating this.
Three, two, all right,
put whistleblower earrings to Kurt, yada, yada.
Hey, everybody, everybody.
Welcome to the All In podcast.
All right, listen.
Welcome to the All In podcast.
Let’s start our show.
I’m sure everybody by now has seen Frances Haugen
on 60 Minutes and testifying.
She seemed incredibly credible, well-spoken,
and had very common sense,
non-extreme views about what should be happen,
what should happen with the research
that Facebook has been funding.
That shows, like other media forms,
Instagram and Facebook have a really terrible effect
on young people, specifically young girls
and body dysmorphia, which seems to be the one thing
that is landing pretty well.
Her suggestions were not to break up Facebook.
Hers was to have a regulatory body
and to do soft interventions.
If you don’t know soft interventions.
Her suggestions were worse than breaking up Facebook.
Well, soft interventions, let’s get to that,
include things like, hey,
in order to retweet the story on Twitter,
you probably should read it first.
She thinks she wants to reform,
or she’s an advocate for reforming Section 230
in relation, I think, to the algorithms.
And the idea here would be that the algorithms
are making an actual editorial decision,
which is something that I remember
in the YouTube early days, they said,
we will not feature your videos that you’re making,
but we will have the algorithm pick them
because that keeps our safe harbor.
Zuckerberg came back and wrote a spirited defense,
basically saying, why would we do this research
if we didn’t care?
The people at this company care a ton.
Sachs and the entire Peter Thiel cobble
of, you know, acolytes and friends
are coming on strong as pro-Facebook.
I’ll have him talk about that.
He thinks it’s Facebook, it’s laughable
that people are addicted to Facebook, yada, yada.
So who wants to go first, you, Chamath or Sachs?
Well, look, let me say a couple of things.
I think that, I think Zuck’s,
the title of Zuck’s internal company post
could have been titled, nah-ah,
which basically is his way of saying,
this is ridiculous and I don’t believe it.
The thing that she asked for in substance
is a little different than what the DOJ
did with Microsoft in 2000,
but in form is actually quite similar,
which basically is like gumming up
how the internal product development
would work inside the company.
And, you know, the most damaging thing you already saw,
which is that they had a bunch of planned product releases
and then they put them on ice.
And I think this is really where unfortunately
the most damage gets done
because engineers won’t really tolerate that
for some amount of time, right?
They’ll put up with it initially,
but you know, you’ve had, I don’t know,
I think like a 20% reduction in stock price.
So you had, you know,
you lost $200 billion of market cap.
There’s probably going to be more turbulence in the company.
You can sustain and get through all of it
as long as the engineers hold the line.
But if you basically slow down
and put a pin in their ability to generate code
and to put out features, on the margins enough people
I think will get frustrated and leave.
And I think the way that she, you know,
what she is asking for was tantamount to that.
And I think that’s the really destructive part
of what could go on here.
So they need to get this pin down quickly,
get in front of regulators, get some laws passed,
whether it’s section 230 or whatever,
that’s the path to salvation for Facebook.
Saks, what do you think?
I see you’re basically saying this is like ridiculous
and silly on Twitter.
Mike Salon is saying that,
obviously Peter Thiel is on the board of Facebook
and a major influence.
You’re going to have to give me time to unpack this,
Jake, how I’m not getting hysterical
because there’s a lot to go over here.
No hysterical, I’m literally throwing it to you
in a non-hysterical way.
You think that this is, there’s nothing to this
and you think it’s ridiculous.
Let’s understand what this really was, okay?
You have this so-called whistleblower
who is working with the staff
of the Senate Judiciary Committee,
giving documents to the Wall Street Journal
and then appears on 60 Minutes in this great unveiling.
36 hours later, she’s testifying on Capitol Hill.
That does not happen.
The Senate committees do not operate that fast.
This was coordinated.
She’s got a well-known Democratic operative
named Bill Burton working for her.
She’s got a team of lawyers.
She’s got a PR team.
This whole thing- Coordinated by who?
This is a coordinated hit, okay, by anti-Facebook forces,
starting with the Senate Judiciary Committee
who want to regulate- Who?
She’s working with the staff, Jake.
Hold on, Jason, Jason, stop.
You’re already interrupting.
No, I’m asking you who.
You said she’s working with somebody.
I want to know who it is.
Just let him make this argument and then just stop.
I want to hear what he has to say.
Okay, what is the purpose of this testimony?
First of all, we can go over the details of what she said.
I don’t think there was anything new here.
This was all the same arguments we’ve been hearing
from these same sort of forces
who want to regulate Facebook,
whether it’s the senators on the committee
who’ve hauled up Zuckerberg no fewer than four times
to lecture him about the need for more censorship,
or it’s these forces of the media
who basically want Facebook.
It’s all about having more censorship.
But in any event, there was nothing really new there.
What this really was was corroboration
and of the same talking points
we’ve been hearing for years.
And what it’s all leading up to
is there’s a very important part of her testimony,
which is, this is really the crux of it,
is that she proposed, and what Blumenthal wants,
he’s the chairman of the Senate Judiciary Committee,
is a dedicated oversight body.
This is in this clip, okay?
With a power to oversee social media platforms.
So what we have here is the government
is now gonna have a new agency.
They’re saying, like the FTC.
Then she said, a regulatory home
where somebody like me could do a tour of duty
after working at a place like this.
And Haugen said, right now,
the only people in the world
who are trained to analyze these experiments
to understand what’s happening inside of Facebook
are people who grew up inside of Facebook
or Pinterest or another social media company.
Basically, people with her experience.
I mean, I have to admire the chutzpah.
I mean, she’s basically proposing
that she be made Zuckerberg’s boss, okay?
That a new oversight board be created by the government,
which she would be appointed to,
which she presumably would run.
And this board is now gonna prescribe regulations and rules
for social networks
in terms of how their newsfeed is gonna run.
That is what was proposed on Capitol Hill.
That is what this operation is all about.
So it’s about her getting a job
and being lording over Facebook is your claim?
No, I think the purpose of all of this
is to create new regulatory oversight of social networks.
I simply would note that she has proposed herself
as somebody who would be on this board,
which is pretty amazing.
But what this is really about is that new oversight power.
And is that a Republican or a Democrat?
Are you insinuating it’s Democrats
who want to regulate this
or all politicians want to regulate this
because they’re scared of Facebook having too much power,
which I think we all agree Facebook has too much power
in the public square.
You’ve had the leaders on the Senate Judiciary Committee
now for months calling up Zuckerberg and Dorsey
and other social media leaders
and basically lecturing them on the need to censor more,
to take down more material.
That is their objective.
This is not a conspiracy theory on my part.
This is expressly what they’ve said, okay?
Now, until now-
Is it left or right or both?
Let me come to that.
I know Republicans are a little bit confused on this issue,
but let me get to that.
So what you’ve heard until now
is attacks on the supply side of the platform.
So what they’ve advocated is de-platforming people
with heterodox views, dissenting voices,
and they have been de-platformed in large numbers.
Obviously it started even before Trump,
but certainly the sitting president
of the United States was de-platformed.
YouTube just took down a million COVID videos
because they disagree with the official position on COVID.
So until now,
the censorship has been on the supply side of the platform.
What they’re advocating for now
is censorship on the demand side of the platform,
which is we’re going to rewrite these newsfeed rules, okay?
We’re going to rewrite them
because we can’t give people what they want.
They’re making these algorithms sound
like they’re these incredibly evil, sinister things.
All the algorithms do at the end of the day
is give the user more of what they’re looking for, okay?
Well, hold on a second.
That is not good enough for these politicians.
They want to rewrite those rules.
That’s not actually what they said.
They want to rewrite these rules
to determine what people see.
No, no, what they said about the algorithms
was that the algorithm had a multiplier on it
and that this multiplier of people resharing it,
re-engaging the content would lead people,
and this was statistically proven in Facebook’s own research
that things that were either misinformation
or that were supercharged, you know, polarizing issues,
they would rise quicker,
which then gave people not what they wanted in their feed.
They gave people what would increase the length of a stay
on Facebook or on YouTube or on Twitter for that matter.
And they think the antidote for this
is to maybe not allow things in the algorithm to go viral
because what you’re doing is saying
things that are either misinformation or polarizing
or will make things go to the top of the list
and maybe we don’t want that as a society.
Let me intervene with a point of view on this
because I think you’re headed down a path that,
to me, I don’t think actually speaks
to what’s really going on.
It sounds like there’s some sinister architecture here
that’s driving this outcome.
If you ask someone-
I never said that, yeah.
Well, I mean, it’s implied because it’s like,
oh, well, they’re multiplying sinister stuff.
What makes it-
No, no, I’m saying they just care about
length of stay on the site.
My belief is they just want it to grow.
They care about revenue.
Yes, that’s my, exactly my point, Shamar.
They care about that.
They care about what consumers want to consume
and consumers demand what they want to consume.
Think about media in the old days, right?
We used to have books that an author
would put out every year.
And so the author would get feedback on the book
and so it would be one year on that feedback cycle.
Then magazines would come out.
Magazines would come out every month.
And so every month, the magazine would get feedback
on what sales were and they would make decisions,
editorial decisions, and they would iterate.
TV shows came out every week.
Newspapers came out every day.
Cable TV came out every hour
and they could adjust their content accordingly.
In the internet age,
the media is getting a much more kind of
instantaneous feedback cycle.
And the, call it publisher or editor or curator
of that media ultimately ends up putting
in front of the consumer more and more of what they want
as a function of what they’re choosing to watch.
And what we’re calling kind of these algorithms,
quote unquote, are really just the same thing
that editors and publishers and others have done
in the past, which is looking at what the consumer votes
by what they choose, making decisions to put more
of the things that they want in front of them.
The consumer consumes more of that.
And here’s what’s messed up.
We’re getting a very ugly look in the mirror
and what humanity and what citizens
and what individuals actually want to consume
and choose to consume and get turned on by.
And that is what’s making this all so ugly.
And when we see that, we don’t like to accept the fact
that maybe that is just what humans are attracted to
and what humans want to consume at scale.
And we end up wanting to blame someone.
And I could argue, and I think others could argue
that these algorithms that are effectively
just recursive optimization functions,
they’re recursively trying to figure out
what do people want to consume
and then giving them more of what they want.
You keep saying what?
Or simply solving for those very specific needs
and use cases.
And I don’t think that those algorithms are necessary.
Go ahead, Chamath.
Why is it not want?
I’m interested in that, unpacking it.
No, everything Freeberg says is absolutely right,
but it’s not the word want.
It’s not what they want.
It’s what they will react to the most.
And sometimes what they react to the most is-
I don’t know, but my point is that there’s a,
I guess I don’t use Facebook,
but they went from thumbs up and thumbs down
when I was there to like this nuance,
like there’s likes, there’s tears,
there’s angry- Reshares.
But there’s also analytics data on engagement, right?
Like on how long someone’s watching a video or-
What I saw in there was that there was an amplification
of things that were more extreme emotional reactions.
Now, and the point is that
I think everything you said is absolutely right.
The algorithms are amplifying.
I think all I would say is I would restate
what you’re saying is these algorithms tend to amplify
the things that are the most extreme and elicit a reaction.
Those reactions aren’t necessarily
the things that you want.
Those are the things that you will react to the most.
And by the way- That’s what the algorithm
wants to serve you.
That’s why you see that the top 10 things
that are reshared the most often
tends to be very extreme, right?
Fundamental emotional responses are typically associated
with things that I think we call hedonism.
And the things that you can ignore your emotional responses
and take another course of action,
we typically call altruism or what have you.
This is a kind of a common reason
why people would want to watch a comedy
or watch a horror film
because there’s some emotional response.
It’s not a universal response.
And people aren’t rushing to the theater
to watch documentaries.
They’re not rushing to the movie theater to be like,
oh, I want to be informed and educated
on something that’s factual and interesting.
They want to go and have emotional experiences.
And that’s how humans are biologically wired.
And the same is happening in these short forms of media,
these little tweets or these posts on Facebook.
David, you do understand that they won’t show murders
and porn on Facebook.
So they’re making an editorial decision to say,
hey, we’re not going to-
They will every night on the local news.
If it bleeds, it leads.
How long has that been the motto in media?
So I’m listening- 100%.
I’m listening to Hagen on 60 Minutes.
I’m hearing her describe a corporate profit-making machine
that tries to get more reach, more ratings
by fueling polarization and division.
And I’m thinking, is she talking about cable news?
That’s what she’s talking about, isn’t she?
Is she talking about the New York Times?
Is she talking about the traditional media?
Because every single thing she said
about how social media fuels polarization and division
applies to the media.
And yet those same voices in the traditional media
are the first ones howling about Facebook
and calling for its regulation.
It is completely hypocritical
because the real purpose here
is not to reduce divisiveness or polarization
in our society.
The regulations on Facebook will not do that.
It is to seize control and influence
over the machinery of social networking.
Because the newsfeed now controls the flow
of information in our society.
Don’t you think the damage has been done though?
Meaning in the sense that if you cripple
Facebook’s product velocity
and you shrink the surface area
of the areas in which they can operate,
isn’t that more damaging than any regulation?
No, people will just stop using it
and then they will find another place
to get that same emotional behavior.
I’ve already stopped using Facebook, okay?
I don’t find it compelling at all
and I’m not really on Instagram either.
I do find Twitter rather compelling
and I’m probably more addicted to that than other things.
Addicted, off the rails.
Probably not very good for me, okay?
But here’s the thing.
I think all of us on this show right now,
none of us find Facebook particularly addictive
in our own behavior, okay?
I think we understand in our own behavior
that Facebook is sort of like a mildly diverting amusement
that occasionally yields information.
Sometimes it’s useful, okay?
We understand that it’s sort of like a newsfeed
with a lot of noise, okay?
In our own usage.
But somehow we’ve bought into this larger narrative
that in everybody else’s usage
that somehow this is a brainwashing machine
that is pumping people full of disinformation
and warping their thinking.
In other words, there’s a sharp dichotomy
between how we perceive our own usage
and other people’s usage.
And what I would submit is our own usage
is what we know and what we know to be true.
And what we believe about other people’s usage
is simply a narrative that’s been fed to us
over and over again by the traditional media
who hate Facebook because it’s disremediating them.
That is what’s really going on here.
You may be right.
I’m saying something different,
which is getting apart from all of that stuff,
what’s happening practically on the ground right now
that is a company who has to now slow way down.
And what I’m saying is that’s not dissimilar
to what Microsoft had to do,
which was there was this 10 year period at Microsoft
where they really couldn’t innovate.
And that’s really how the government
solved the Microsoft problem.
Yeah, they made them less aggressive, right?
They gummed up the internal machinery
so that Microsoft couldn’t really be there
for the next few major.
So for example, we just spent 40 minutes
talking about crypto.
What do you think the chances are
that Facebook now can land
a really compelling crypto project?
Right, they got totally shut down with Libra, right?
I mean, they went after it
and the regulators stepped in.
It’s too bold for them to launch that after what happened.
With their behavior in other arenas.
I think that like Microsoft back in the late 90s,
I think there are real and legitimate concerns
about the power of these big tech companies
about how big and powerful they’ve become
about their ability to crush competitors.
I think those are all legitimate.
And in a weird way,
if this government scrutiny slows those companies down,
that’s not an altogether bad thing.
But I am concerned about that.
I’d say separately,
just because these companies do deserve
to be scrutinized more.
I do think that we have to see
that the people who are engaged
in this really coordinated hit campaign against Facebook,
they have another agenda.
And that is to control the flow of information online.
It is to control online discourse.
It’s already been happening over the past year
with censorship on the supply side of the newsfeed.
And now they’re trying to control the demand side.
I think we have to be extremely wary about this.
Well, David, you’ve been on the other side of this
because on previous podcasts,
you’ve talked about Facebook being too influential,
having too many users.
And now you’re saying,
well, these tiny little news networks
that get a couple of low millions.
He has an issue, Jason,
with the way in which they’re going after Facebook.
Okay, I get that.
He thinks it’s a coordinated hit, fine.
But you also have had an issue
with Facebook having too much power
to take somebody off the platform
or to promote certain ideas.
So which is it?
It seems like you’re a little bit-
Both can be true.
No, it’s perfectly consistent.
I’ve expressed concerns about the way
in which Facebook is deplatforming people.
It’s summarily silencing them and ghosting them.
It’s engaged in censorship.
I’ve expressed concern about that.
But we should understand
that the people on the Senate Judiciary Committee
who hauled up, who had this hearing,
who featured and spotlighted Hagen
and turned her into this great hero,
their agenda is even more censorship.
They are complaining about the fact
that Facebook is not censoring enough.
And that is what their real agenda is.
I do think it should have been disclosed
that Hagen does stand to gain financially
from whatever happens here.
I don’t know that that’s been confirmed
that there is a whistleblower reward here.
So we’ll have to wait and see about that.
I haven’t heard-
There’s no reward until there’s a fine.
But Chamath is right that she qualifies,
if she’s a whistleblower,
she qualifies for, what, a 30% portion
or some very large percentage of any fines?
What would the fine be here, though?
What would the fine be?
How would that be framed, Chamath?
This whole thing is just getting started.
There are gonna be government actions
and there will be settlements
from those government actions.
And Facebook, as you all know,
will pay any kind of fine to put this behind them.
Even billions of dollars.
You’re the one that said, Jason,
they spent $5 billion just so that
they wouldn’t subpoena Zuck and Sherrill, right?
That’s what you said last week?
We talked about that last week, yeah.
So, I mean, I think there’s a fine coming.
Let’s be honest.
I do not think Lena Khan or Gary Gensler
or any of these other folks
are going to be in the business
of making a quick decision,
nor the DOJ, nor any of these other folks.
They’re gonna wanna really take their time
to figure this out.
But what I’m saying is,
it’s not the ultimate result of it.
Because, again, I go back to like,
if you look at what happened in 2000 in Microsoft,
the substance of what Microsoft had to agree to
was ultimately not as bad
as the way in which it was implemented.
Which is that, my understanding was like,
Microsoft had to submit feature reviews
to lawyers at the DOJ,
who would then approve updates and upgrades
to their code base for things like Windows.
That’s what caused them to miss an entire wave of compute.
And so this is the point,
which is, I think, practically speaking,
the beginning of what Microsoft went through,
Facebook is gonna have to navigate.
And so the faster they can try
to say, all right, folks, you’re right, you caught us.
Let us tell us what to do.
Maybe actually the better path,
because it allows them to get past it.
Because the longer this period of like gray stretches out,
I think is actually the worst outcome.
Well, let’s go through what we each think
would be a possible solution here
to allowing free speech to occur on Facebook,
but maybe not having the things that,
fake news, misinformation,
maybe lowering down the rhetoric
and the charge nature of the algorithm.
Freeberg, do you have any common sense solution here
that might address both sides of the issue,
freedom of speech,
and maybe things being amplified
to 100 million people that are fake
and just simply not true?
We’ve talked a lot about this notion
of like decentralized social networks.
I mean, we haven’t talked a lot.
We’ve talked a little bit about it,
but if you end up putting a regulatory hammer down
on Facebook and Twitter and telling them what consumers,
and remember, these guys aren’t media creators.
They’re platforms effectively
for search discovery and access.
So you, as an individual,
can discover third-party content on their platform.
If they start putting the regulatory hammer down
on these quote-unquote platforms,
telling them what they can and cannot make available
to their users,
there will be another platform that will emerge.
And that platform may end up being
in this kind of decentralized model.
And in that decentralized model,
you’re not gonna have the same degree
of regulatory oversight.
And that system will end up solving the same use case.
Eventually, consumers will get what they want,
which is what Chamath calls kind of this emotional response,
eliciting this emotional reaction.
They will consume it until they achieve
one of their kind of seven deadly sins objective,
which is what’s driving the emotion,
underscoring their decisions on what to watch,
what to consume.
And there will be an alternative.
So go ahead and play whack-a-mole.
You’ll play whack-a-mole for a few years,
maybe a few decades.
But at the end of the day,
digital technology in a connected world
will drive consumers to exactly
where they will naturally find themselves,
which is consuming ever more of the things
that create this emotional response in them.
The consequences are unfortunate.
You know, I don’t know what the right solution is.
You know, we’ve, to some degree,
put a regulatory hammer down on things like smoking
and in some places, things like sugar,
things that have kind of an obvious effect
on our physical health.
These other things that we’re seeing now
are having an effect on our mental health.
And I think that there may be kind of an emerging
regulatory regime around mental health standards
and how much of things can be consumed.
And I think what we’re seeing is the leading indicator
of this is what’s gone on in China.
Because China is the nation that I would say
is probably at the forefront of research
and understanding of what the consequences are
of consuming more and more of media and content
that causes an emotional response to you
and what happens down the road,
isolation, loneliness, suicide rates go up,
unhappiness, et cetera.
It certainly is the consequence,
but it’s not a function of any individual company’s
misconveyance of content to consumers.
It’s just a function of where these systems end up going
because of the way humans are biologically wired.
And so I guess my first concern is maybe we end up
in a decentralized system that ends up replacing
all of these tools and this just doesn’t end,
or you end up having-
It could be worse.
And it could be worse,
or you end up having these kind of regulatory regimes
No, that would be better.
A decentralized solution is actually better in one,
no, it’s better in one key way,
which is that it’s fundamentally harder
to create the exact same network effect and density
that you can have with one monolithic closed system.
So you’re much more likely to actually
have a very fragmented ecosystem
of hundreds of different solutions,
depending on what of the sins you want to feed
or what of the feelings you want to feel at any one time.
I think it’s a big assumption
that it would be a fragmented network.
If you did replicate Facebook on a decentralized platform
and then some piece of misinformation came out
and it trended all the way to number one,
like say the January 6th insurrection-
No, no, no.
People brought guns to that.
There’s not one network.
There’s not one network.
I understand that, but if one-
Hold on, hold on.
Let me finish my point.
If one network became so large
and there was nobody who could turn off something,
what if people said,
hey, there’s a riot going on at the Capitol
and more people showed up with more guns, right?
You have nobody to sit there and say,
hey, don’t go to the Capitol,
turn those trending posts off.
Go ahead, Sax.
Let’s talk about this problem of misinformation.
I think there’s an old Mark Twain quote saying
that a lie can travel around the world faster
than the truth can put on its shoes.
There is a problem of falsehoods spreading online.
I agree with you there.
The question is what you do about it.
And the problem we have right now
is that truth is in the eye of the beholder.
There is no truth API.
And so at the end of the day,
it’s the people in power who get to decide
what is true and what is false
if you give them the power to censor misinformation.
Example, we just saw, we talked about in this program,
the Rolling Stone Ivermectin hoax,
provably false story.
And yet Rachel Maddow still had it up on her posts.
She was not sanctioned by MSNBC.
Twitter never told her to take it down
and she was not fact-checked.
However, the Hunter Biden laptop scandal or story,
which came out in the New York Post
a couple weeks before the election,
turned out to be a provably true story.
And yet it was taken down by Facebook and Twitter.
At the end of the day, this term of misinformation
is just another vector for partisan attack
and it will be used by whoever we give the power to
to decide what misinformation is.
So what is the answer then
to this point of falsehood spreading online?
Well, at the end of the day,
the answer to bad speech is more speech.
You try to create a free marketplace of ideas
to let the good speech
ultimately drive out the bad speech
or prove that it’s wrong.
That’s the best you can do.
That’s the best you can do in a free society.
Yes, but this is the first time a free society
has had social networks
that can reach a billion people instantly in an hour.
So I think there’s one differentiator there
that we must think of.
If somebody defames you on a social network,
they are absolutely liable.
I mean, you can sue them, okay?
But I think, and you should.
And I think we can-
We’ve talked about cancel culture.
People are destroyed
before they even get their day in court.
I think that’s being destroyed for something different.
I think if somebody-
But it’s because it trends.
If it couldn’t trend to so many people,
it wouldn’t lead to the cancellation
and destruction of somebody’s life.
You’ve talked about that many times yourself.
If somebody libels you, I think they should be,
you should be able to sue them.
And I think we could actually,
we could have a libel regime more like the UK,
where it’s easier to prove these cases in court
and people are much more careful
about defaming other people.
I would be very much in favor of that, okay?
Because defamation is not free speech.
But the question really is about,
really, we’re talking about non-defamatory statements
that somebody in a position of power
has decided is not true.
Many of these statements are subjective.
Dave Portnoy got labeled for his subjective opinion
about AOC’s dress.
Why did that happen?
And why is that kind of labeling only used
to protect one side of the political spectrum?
So, I mean, that’s what’s really going on here.
Let’s end with this.
Has anybody watched Chappelle’s The Closer?
I watched it.
I mean, fearless.
Fearless is a word.
I was really,
I think that he slightly missed it
because I think he could have really actually called out
cancel culture and woke as a more,
I think he kind of left it a little bit to me
where I was like a little,
I don’t know.
I just didn’t think they were as good as his other ones.
And I felt like he didn’t really
make the point he wanted to make.
It was a little convoluted.
We need somebody who can actually stand up
and actually be more satirical
and tell the story of why all this cancel culture
and defamatory statements and judging people
doesn’t make sense.
But then he didn’t get the job done, I felt like.
Well, let me ask you this about the performance.
Did he seem qualitatively different than you in that
the other times he seemed very light on his feet,
having a good time, being a comedian,
and this time it felt like he was personally hurt
or he was-
It wasn’t comedy.
It felt less comedic, I agree.
It felt like he had an agenda.
He was hurt.
He wanted to get some stuff off his chest
and there were some jokes in between,
which is very different.
Like the percentage of jokes in this is like 20%
and the like heavy on-
Max, and then the other ones were 80% jokes,
20% social commentary.
This felt like he was actually really hurt
and like, I don’t wanna say bitter,
but just fed up maybe, frustrated.
He had a chip, which made it interesting to me.
You know, in the early 2000s,
Chappelle for me was really important
because he was an advocate for minorities
and I felt seen and protected by Chappelle.
And I thought that was really important.
And then his comedy was just so sharp.
And I said, I just think that it was a little bit
of an opportunity lost.
I think if he had really actually taken it to its conclusion
he would have actually,
there was just too many uncomfortable moments in that thing.
It was super uncomfortable at times.
And I really would like to see it again
because if you just think about his career,
him talking about police brutality,
him talking about race in a very fearless,
entertaining, but also informative way
and just being a truth teller.
This was so uncomfortable at times.
I agree with that.
I need to watch it again and I need to let it sit
because I was taking-
It’s on Netflix?
It’s on Netflix.
It’s the last in his contract.
Yeah, I mean, this could be,
I almost felt like he was trying to break Netflix
because he does seem to have a streak in him
where he’s like, okay, I’m walking away from Comedy Central
and he does seem to burn the boats.
This felt like he was burning the boats with Netflix to me.
I don’t know if you got that vibe where he was like,
this is the last one, I’m being canceled after this.
Fuck y’all, I’m out.
And he has that, I mean, he torched it, Sax.
I mean, you’re going to watch this thing-
Well, now I’m definitely watching it.
I have not seen it yet, but I’m definitely watching it.
I’ll watch it tonight.
I give it a 50% chance that Netflix takes it down.
Well, let’s watch it quickly then.
Well, there were, everybody was screaming
for him to be deplatformed.
Everybody was screaming.
Well, then I like it even more.
You know, one of the ironic things
about these warning labels,
I’ve noticed they’ve started to become a badge of honor
where, you know, if the hall monitors at Twitter
are trying to label your tweet as, you know,
being incendiary, maybe it’s just interesting, right?
Buy, it’s a buy signal.
So, you know, I was listening
to Antonio Garcia Martinez interview Camille on Call-In
and they labeled that, I mean, just the post
about they were going to have a conversation.
You’re saying the link to it was even flagged
as like, oh my Lord.
I think there needs to be a Netflix for a comedy
where it’s only subscription and it’s owned
by the comedians.
Like if Dave Chappelle were to create his own Netflix,
I think it gets 10 million paid subscribers
in the first two years.
Overnight, now overnight.
Okay, so wait a second.
How do we wet our beaks on this?
If we go to Chappelle and we say, hey, listen,
here’s $25 million.
We’ll set up the tech team.
I’ll set up the comedians.
I’ll ask K Hart.
I’ll ask him this weekend.
I think that, yeah, you get K Hart,
you get Chappelle, you get Seinfeld,
you get, now, do you get Louis CK in there?
Or CK, what’s his name?
I never found that guy funny.
That guy never did it for me.
Well, I mean, anyway.
You know who’s funny?
You know who’s funny?
Have you had this Asian guy, Ronnie Chang?
He’s on, there’s a great Netflix special on him.
He is fucking funny.
And then Joe Koi.
Joe Koi is very funny.
Yeah, I think Ronnie Chang taped his own special.
Hassan Minhaj, that guy’s very funny.
Yeah, he’s great.
But I mean, this would be a great way
for them to just control their destiny
and not have to worry about cancel culture.
Because I think a lot of the folks who are on.
Well, they are probably the last line of people
that actually will be the defenders of free speech.
Yeah, it’s pretty scary.
As much as I think Facebook should be more thoughtful
about their algorithm, you know,
back to, you know, circling Netflix
and censorship back to the Facebook issues.
I just think Facebook should say,
hey, listen, we’ve throttled the algorithm
so that any one piece of content
can only reach this many people over this period of time.
And yeah, sure.
That’s gonna lower our time on site or whatever.
But we want things to have a little bit of time
to spread and get fact-checked.
Does anybody think that that’s a good idea to say,
just, you know, if you’re trying to cancel somebody
instead of it going to number one on trending topics
before the person has a trial,
that the algorithm would just take a little bit of time
to propagate content?
Here’s what I can tell you conclusively.
If Facebook wanted to solve these issues
in the ways that the government expects in their head
for these problems to be solved,
Facebook market cap would be $250 billion
and they’d have a million people
working there at the company.
So this is not an issue of whether it’s possible.
The question is, is it right?
And does it actually get at the solution
or does it just, as Friedberg said,
create whack-a-mole someplace else?
And so, you know, I don’t know what obliterating
three quarters of a trillion dollars of market cap will do,
but I suspect that the government is gonna want to find out.
Sachs, do you think that throttling
the velocity of the algorithm
so that news doesn’t spread as fast and violently,
which could be misinformation, could be valid information,
do you think that’s a possible solution?
Look, I think that at the end of the day,
Or disclosing the algorithm maybe?
With both Facebook and Twitter,
you only see stuff from people who you’re following
or you’re friends with.
What do you mean?
If things, they will insert stuff
into your Twitter algorithm now that’s adjacent to you
and Facebook will do that as well.
Well, maybe if people respond
to someone who you’re following,
but I’ve never seen anything in my Twitter feed
other than an ad that’s not from somebody I follow, so-
You never went to trending topics?
No, I mean, not in my feed.
You don’t hit the Explorer feed?
Oh, okay, no, but the Explorer feed’s right there
and they are surfacing things in your feed now
that are not people you follow, but anyway, keep going.
What they’re really doing, okay,
is there’s a universe of people who you’re following
or you’re friends with,
and you could just see all of that content
in a reverse chronological feed,
but that would be too much.
It’d be overwhelming.
That’s how it originally worked, yeah.
Yeah, exactly, and I get it, and that was fine.
I didn’t, I liked it, okay,
but as you’re following thousands of people now,
there’s too much content,
and so they will simply surface the tweets
that you’re most likely to want to interact with.
I don’t believe, by the way,
that those tweets are necessarily the ones
that make you angry.
I think for some people it is, clearly,
but it’s not, certainly not the case in my case.
What I would say is it’s more refined than that.
It’s the tweets that you think are interesting.
It’s the tweets that perhaps express a sense of outrage
that agrees with your sense of outrage.
It’s a little different than anger,
but it’s basically the subset of content
that you, through your reveal preferences,
have shown Facebook or Twitter
that you care about the most,
and that’s basically what they’re doing.
They’re giving the consumer more of what they want,
and I think that we’ve blown this thing
so far out of proportion.
I mean, yeah, there’s an analogy that it’s addictive,
but I think that it’s been blown so far out of proportion,
we’ve exaggerated the fear beyond any reasonable recognition.
By the way, I think the reason that that tweet was flagged,
I’m guessing, is that in the tweet,
Kemele says he’s gonna talk about critical race theory,
and that may be why Twitter said,
well, Twitter just said that conversations like this
can be intense, that’s all it said.
I think because he says the gloves are coming off,
it looks like two people fighting or whatever.
I just think it’s sort of ridiculous.
Like, this is where the warning label stuff-
It’s a little patriarchal, yes.
It’s a little condescending.
Like, you can’t handle this content.
Patronizing, I think is the word you would use.
I’m not circling that.
I got the thesaurus up here, I’m not dumb.
Hey, I got a thesaurus here.
I’m smart, I’m smart.
It’s very palindromic.
You should have looked out for me.
You was my brother, Sax.
I find it a little like, could have been a contender,
instead of what I am.
I’m smart, not like they say.
Not dumb, smart.
How’d you get your fucking sunshine, boss?
Boys, I love you.
Happy 50th episode.
And what’s going on with you, Friedberg and Sax,
that you won’t make the journey down to the poker game?
Is this like some sort of David protest here, you guys?
We’re playing No Limit.
The robots are protesting.
I will come back, I will start playing again,
if we get the game going on like a regular time.
What the fuck is on your schedule?
What are you talking about?
You have nothing going on.
Come the fuck on.
Yeah, you have nothing going on, Sax.
All right, I’ll start, you know, I’ll start making,
I’ll start coming down.
Stop evading your family, stay in the city, come the fuck on.
See your fucking friends, buy some cars,
lose some money.
We’re not playing PLL.
Yeah, no PLL.
I mean, we did at the end, just to get Skye’s money,
but just to keep Skye there for another 30 minutes,
since he was flushing cash.
Beat him up real good, Saxie Poo, we beat him up real good.
Ooh, it was Skyfall.
When you crumble.
Actually, the new, I’m really excited to see
the new Daniel Craig 007.
I can’t believe that.
Can you still rent a mid-tower movie theater
for like 50 bucks?
300 bucks, so yeah.
It used to be not, it was 99 during the pandemic.
It was awesome, I did it a few times.
It’s 300 now, and I haven’t done it the last two times
I went with the girls,
because it was first run movies
and the theaters were pretty empty.
But it’s like 300.
If you get like 10 of your friends to come,
it’s like basically the same price as a ticket.
If you get five of your friends to come, it’s worth it.
I mean, that’s 60 bucks each, and yeah, I mean, it’s.
Or we just go to Sax’s theater, he’s got.
The Sax’s theater is better because you have a chef there
who will make your food, but yeah.
And for those of you asking about the all-in summit,
Sax and I are leading the charge for a February or April.
We got a couple of locations.
Thank you to everybody who sent us location ideas.
Two days, 250 people, 200 paid tickets, 50 by scholarship.
And you can go to the all-in website.
When we have information, we will post it there,
but we’re just in the planning phase right now.
But we’re thinking two days, right boys?
Two days for all-in summit and then five hours of content,
something like that a day.
We each interview people.
And then we’re done.
And Miami is the host city and we’ll draw a high card
for who picks the next city.
Chamath, you said you’re picking something in Italy.
I’m going to probably pick my.
Rome or Venice.
I’m going to probably pick New York for mine or Austin.
And then Freeburg, where would you pick?
Napa or something?
Where everybody wants to go.
Go to anti-vaxxer town.
Fuck you, Freeburg.
What a destination.
Freeburg, where would you pick?
Where would you pick?
So we’re doing Miami first, is that right?
Miami’s first and we draw a high card for the next city.
Who gets to pick next city?
Each bestie picks for four years.
Each buddy picks one.
If we go twice a year, even better.
I mean, I’d probably split it between London and.
London and somewhere in Hawaii.
Hawaii’s an inspired choice.
Can you imagine 250 degenerate?
Iconic classic, but London would be,
we would take over.
We would take over.
Miami is freaking out.
Run over Annabelle’s boys.
I bring you all to Annabelle.
That members club is, I think,
the most over the top thing I’ve ever seen.
You’re referencing something
that no one knows what you’re talking about.
Nobody knows what you’re talking about.
Is that a nightclub?
Yeah, it’s a nightclub.
No, it’s a private.
It’s a lady I know.
She’s down in the West End.
No, you have to have members clubs in London
because you can’t drink alcohol after like 9 p.m.
unless it’s a private club.
All right, we’ll see you all next time
on the All In podcast.
Here’s to another 50, everybody.
First 50 done.
Love you guys.
Let’s get another 50 in the book.
We’ll let your winners ride.
Rain Man, David Saks.
I’m going All In.
And it said we open sourced it to the fans
and they’ve just gone crazy with it.
Love you, West End.
The queen of quinoa.
I’m going All In.
Let your winners ride.
Let your winners ride.
Let your winners ride.
Besties are gone.
I hope they’re dead.
That’s my dog taking a notice in your driveway.
My avatar will meet me at Wednesday.
We should all just get a room
and just have one big huge orgy
because they’re all just useless.
It’s like sexual tension
that they just need to release somehow.
Wet your feet.
Wet your feet.
Wet your feet.
That’s gonna be good.
We need to get merch.
Besties are back.
I’m going All In.
I’m going All In.