All-In with Chamath, Jason, Sacks & Friedberg - E54 Spread trading big tech, capital allocation, Zillow's misfire, Progressives suffer losses

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my body is a wonderland if that wonderland is white soft and mushy sure and hairy too

you know the worst thing about skin on skin sleeping with the newborn is that

you know sometimes she roots and she goes after the man the male nip

i know problem is my nipples covered in hair it’s really awkward for everybody

did you start gagging i’ll tell telly that story when she’s 18 we’re at her wedding it’ll be even


hey everybody welcome to another episode of the all in podcast i am wearing a blue shirt

i am a pasty white old greek man uh who’s balding and obnoxious and uh with me today

is uh no no no you have to you have to say your pronoun bro am i oh and my pronouns are

uh oh wait what are my pronouns my pronouns are beep beep and most people just call me a jerk

with me today of course is my sri lankan urkel looking wearing a furry sweater

hello everybody my name is chamath i have uh salt and pepper black hair

brown eyes uh i am tall uh six foot two i go by the pronouns we king and stud muffin

and uh i’m here to talk to you about internet security protocols

what i look like urkel i think people should just come up and say

well i don’t look like the closest i don’t look like urkel i look like a bollywood when you put

your glass you’re kind of like the sri lankan urkel to us welcome to the all in podcast two

out of the four of us are canceled next up for cancellation sax yes i’m coming to you here from

the floor of the new york stock exchange which was once land that belonged to the mohegan the montauk

the oneida the erie and the arokoi tribes

since time immemorial

you forgot the irish we own the seven points oh my god you really did it you went for it sax i love

you i’m isn’t it important that we at any moment that we’re successful we have to flagellate

ourselves or remind ourselves that at one time all this land was owned by somebody else we stole

it also the greeks conquered the romans and so i’d like to apologize for that but you forgot

to mention you’re also wearing a brooks brothers shirt that is four sizes too large this is my slim

fit so that slim fit oh no here we go again sax has been upgrading the wardrobe he’s changing

wait before free bird does the intro jk you want to tell them why we’re doing these intros like

this yeah i gotta pause before okay yesterday on the internet emerged a series of videos

that were clipped of microsoft presenting their new suite of developer tools yada yada

and corporate people got up and without any explanation started describing their physical

appearance their pronouns their ethnicity their skin tone and their hairstyles and the entire

internet was like oh my god this is crazy woke ism like what what is happening here this no i thought

it was a skit i thought it was a saturday night live skit and so right and so then as soon as they

got called out by the entire internet they claimed that they were doing this for visually impaired

people which kind of begs the question of why visually impaired people need to know what race

you are like it’s still playing into this like crazy weight race consciousness but then on top

of it it wasn’t just that we know it’s not that because then they start doing but hold on also if

you if you’re blind and technically can’t see you may not even know what blue means because you will

have never seen the color blue or blonde okay right right but they were also identifying their races

which kind of begs the question of why that’s important but if you were born blind you would

not know what that means either you’re literally colorblind putting you on the same footing as

people who are not visually impaired i’m saying i’m saying if you’re if you’re visually impaired

you’re using the wrong language that language is for the sighted people okay but i i’m just

calling bullshit on their stated explanation that it has anything to do with visually impaired

because then they went on to basically recite the names of 10 tribes native american tribes

on on which the microsoft campus it used to belong to so which is why i was kind of making

fun of that in my initial statement but so look this is just woke capitalism this is

woke ism out of control obviously they didn’t see the election results earlier in the week it’s

clearly there was some level of virtue signaling i think in their defense they were trying to do it

i think for the visually impaired the problem was they didn’t explain the context and they didn’t

give instructions to the people on what to do so the people came out but jk that video that was a

clip pulled out of a broader context to you right so like apparently this is common on campus or

common there that this is happening all over so we just know it isn’t common because i asked people

online well it was optional it was optional it’s optional apparently to the common point i think

the reason the internet reacted the way it was was i asked every single person who came at me

because the woke left came at me i just said can you show me another clip of this on youtube of

any event where this occurred and nobody could so i think this was kind of a first when did you

stop being a member of that woke left jk what was the moment like the hysterical side i’ve never

been for bernie i’ve never been for elizabeth ward i’ve always been moderate always wait can

i hear freeberg’s intro yeah freeberg can we hear yours my identity is an illusion it’s an illusion

created by the viewer and you can call me whatever you want i sit on the ground where during the

haitian period there was lava and magma and nothing but co2 and methane and i represent those

gases that are now lost to the oxygenation and the cyanobacteria that swarmed over this earth

and took everything over and led to the formation of eukaryotic life and here we all sit today in

our privileged existence thank you are you saying that you want to freeberg is just electrons hitting

neurons in interesting ways yeah no he’s like he’s like it it his pronouns are his pronouns are

proton and dark matter biochemical quantum bath fuzz quantum foam is my pronoun so would you like

to formally apologize for colonizing the dark matter during the big bang now or would you like

it wasn’t fair when the cyanobacteria took over the the face of the earth

and sucked up all the co2 and created all the oxygen and and for that we all apologize

for the genocide of for the genocide of co2 and methane i mean those molecules were really happy

and they had a you know they had a very kind of like peaceful existence on this earth

and you know cyanobacteria just came in and ripped it away cyanobacteria just took it all

away from there and you know and then the offspring ended up being us and here we are so apologies

all right all right welcome to episode 54 everybody’s cancelled the final episode

i don’t think that the microsoft thing was bad when you hear the broader context it was like

you know that’s just you know i think it’s a reasonable thing that visually impaired people

i’m still long microsoft and google and short the rest of big tech so i’m fine with it there you go

back to the stock price did i actually i jamaat do you think that the google long netflix short

play is the right play i think the best i think the best trade on the best trade on the internet

the most obvious simple money-making trade is long microsoft google short big tech short the

rest of big tech short ibm short netflix no no no short no no meaning you can you can very

comfortably short apple facebook amazon netflix and be long microsoft google so as a spread trade

right right it’s the most it’s the best risk parity trade on the internet right now i mean

period in the markets can you explain explain the spread trade so look look i i tweeted this a while

ago but it’s like and and again the i i think like well let me be constructive and say the

people on twitter that respond to these threads are not totally stupid although i think they’re

kind of idiotic um i said you know here’s how you can effectively you know i i said something about

you know big tech and i said oh i can comfortably put my short on and i’m kind of trolling people

when i do that because i’m not telling them the full trade and the real trade whenever you put

anything on in my opinion is all about managing risk and the best thing about the internet and

the stock market is that you know when you’re betting on internet stocks you don’t necessarily

have to be naked long or naked short which comes with a lot more risk than if you were long one

security and short another against it so for example over the last 10 years you would have

made a lot of money by being long amazon and short a basket of traditional commerce companies

offline commerce i’m going to make up a basket but macy’s jc penny you know kmart sears right

so if you’re short those and long amazon that’s what’s called a spread trade you’re you’re basically

playing the gap between your longs and your shorts it’s independent of where the market

generally trades it’s one of the irrelevant of the market you’re basically saying those

stocks could go up but just not everything could go near amazon yeah when you put that trade on

for example it’s i’m going to bet that if everything goes up amazon will go up more

than kmart walmart sears and if the stock market goes down amazon won’t go down that much but these

ones will go down a lot and you you’re playing the spread so just to just to be very explicit

you know there was a very and i talked about this last week but i that this idea wasn’t

mine it’s a borrowed trade from somebody who’s a very well-known hedge fund manager

who put it on in massive size and you know to be honest not knowing much of anything i just

copied it but he’s his initial trade was long google short facebook and that trade basically

was at parity which meant that the long and the short cancelled each other out for about the last

four years until the last year it completely blew out and it returned about 80 85 so if you had put

a hundred dollars in you would have made about 85 uh 85 bucks on this trade by being long google

short facebook the the bigger trade at scale is actually long google and microsoft and short the

rest of big tech and there’s a lot of vagaries why that this idea makes a lot of sense but what

you’re saying is they’ll outperform the other basket of tech on a relative basis on a relative

basis so so it’s not like you’re saying airbnb can’t go up or facebook can’t go up it could it’s

not going to go as well he’s saying he’s saying that the the trillion dollar market cap companies

yeah not the airbnb oh okay and the reason and the reason why focusing there makes sense is

they’re hyper liquid markets they have tremendous ways in which you can have massive size on so you

could put a trade of 10 billion long versus 10 billion short i mean you can put mega size on on

these things if you if you have real conviction and then the third thing is when the banks look

at that kind of position they actually from a risk management perspective treated differently

than if you were just naked long any one of these things or make it long would be just making one

bet yeah or you know or naked short which is even more dangerous so because if the market collapses

by 30 both stocks might go down 30 roughly but one will go down 32 and the other one will go

down 28 and so you’re really only down two percent two percent as opposed to the 30 if

so all the market risk is taken out when you make trades like that

yeah the reason it’s possible also today to do so at such a scale right chamath is

interest rates are so low so when you borrow on margin to go long the rate is very low and

when you short the stock if it’s a highly liquid stock it doesn’t cost a lot to borrow to short

that’s so your actual you know uh carrying cost on that trade ends up being pretty low

relative to the upside you expect so just to just to give you a sense of it my um you know

when i tweeted that tweet out to complete the picture i was actually long something against

my proposed short and i put it on in pretty meaningful leverage and it’s worked out really

well because i was playing the spread i was basically betting that you know the the safest

company on the internet today is google because they’re both a platform company and to the extent

that they’re at risk at being an app company the risk is to apple but because they pay apple so

much for search they’re inoculated and so in many ways google is the safest and it’s also as we’ve

said before the purest money-making machine on the internet you’re referring of course to google

paying apple 10 billion dollars to be the default search in they own android so one platform and on

the other platform they they pay them so much that they’re going to be always protected and

the second best company is microsoft and you we even saw it by the way this past week i don’t know

if you guys saw but but microsoft decided to take a broadside attack against notion yeah that is a

productivity app that’s been growing very well i felt this when i was on the board of slack when

microsoft put its gun sights on us we always thought that they could not out compete with

us and what it turns out is when you have a massive distribution advantage feature parity

is enough and you can actually be slightly less than good enough on the features because

distribution and bundling and packaging overpower a customer’s desire to adopt a product so in the

case of slack it was very difficult i think for us to compete against microsoft’s bundling

of teams with all this other software that they were selling and all the discounting that they

could do made it very difficult for us to compete because we had a single product and lo and behold

18 months later the only real long-term protective solution for slack shareholders was to basically

get bought by salesforce so that you could be part of a bigger hole this past week microsoft

decided to go after notion and it’s going to be i think a very similar story where you know once

they decide to sort of go after this a product experience they only need to be 80 as good and

then the distribution and bundling and packaging will take care of the other 20 it doesn’t kill

the other company but it creates headwinds that massive headwinds because because a company like

notion cannot be fully valued over long periods of time simply being an smb company you at a

minimum you’ll have to move into the mid-market you may necessarily never have to go to the

enterprise but you probably have to go to the mid-market and in that is a very troublesome

path because microsoft has so much you know uh tent so many tentacles inside of those businesses

so anyways basically the long microsoft long google is a pretty obvious kind of like monopolistic

you know pair trade the question is what do you short against it so that you can take up the

market volatility and you can play spread again apple has severe you know headwinds with respect

to inflation pressures and margins and supply chain issues amazon has pretty meaningful

headwinds now relative to pricing power and competition facebook has pressure with respect

to regulatory oversight i just came up with one what about airbnb versus the airline you’re

you’re talking about smaller rinky dink ideas listen i’m not playing the same chip stack issue

i wasn’t there on tuesday night i’m on a thursday night so no no that’d be a good spread for me

no that’s a stupid idea and i’ll tell you why okay if you’re gonna put these things on go to

where the deepest liquid markets are because those are the safest okay right like like don’t try to

be different being the same here tell me why airbnb which is a incredible margin business

that’s incredibly well run and growing versus airlines which are horribly run and low margin

why wouldn’t that be a good spread trade i’m just thinking i think it’s a very very two you’re

picking two random companies out of a hat well no they’re both in uh transportation and vacation

and they’re completely different businesses with completely different motivations with different

capital pools with different people that own the stock there’s no point trying to get cute on these

things my point is if you really want to be hedged against market risk got it go to where it’s safest

find the simplest most obvious thing don’t overthink it or don’t put it on

so another obvious one here’s it here’s it so obvious is within big tech figure out which ones

you want to be long which ones you want to be short that’s a spread trade that over the next

four or five years where if you expect a lot of market volatility it makes sense to maybe put some

of this kind of stuff on right a different version of this idea which makes sense is in autos again

trillions of dollars of market cap and you can make a decision do i want to be long tesla lucid and

rivian and short the traditional autos that could be a trade you know but trying to like trying to

go after like let me pick airbnb versus united airlines is too random for me and i don’t think

they’re correlated enough for it to make any sense all right speaking of the stock market sax

you’ve got the background of the new york stock exchange as your zoom background today

what’s that about yeah so bird listed on the new york stock exchange today this is a company that

i’ve been involved in pretty much since the beginning we led the series a round back in

2017 it was actually the first check i wrote as a vc to lead around at craft and four years later

public company on the new york stock exchange pretty amazing and so you’re literally at the

new york stock exchange as we speak first remote bestie yes and you can see behind me um that is

the floor of the new york stock exchange it’s not like you know if you’ve seen the movie trading

places it’s not like that anymore there are no stock brokers there’s no like paper flying around

got it i’m not really sure what the purpose of all those monitors are down there i feels to me a

little bit like a movie set it is like a movie set yes yeah and so people like us come here to

record things but um as we all know the all the trades are really happening inside giant machines

can you turn around and just start yelling booyah booyah and let’s see if security comes in

no i’m in i’m i’m elevated above the floor no one can really hear me i’m in like this uh sort

of broadcast booth uh so take us behind the decision to go public as a four-year-old company

we were expecting you know uh airbnb ubers and lyfts took over 10 years to go public now here

we are sitting on a four-year-old public company is that a good thing a bad thing something in

between and how does the the board and the management team make that decision to go public

i think it’s a good thing um because the company well the company wanted to i think it had the

opportunity to it um it grew very very quickly before covid then you had covid was like sort of

a huge setback they i mean basically the scooter industry just stopped for at least six months

because of lockdowns but then coming out of covid they bounced back really strongly they kind of

pivoted their model to what’s called a fleet manager model where basically they’re putting

a business in a box for a local operator a local entrepreneur to buy the scooters with financing

and manage the fleet themselves so it’s a much more highly virtualized model uh and so as a

result of that in q2 they just did 60 million in revenue in the last quarter and i think um

it was gross profit of something like 27 percent and uh it was had a loss of like 12 million so

they’re very very close to getting to profitability and uh you know the company’s only four years old

you know it took uber 12 years or whatever to get to be public so it’s been pretty it’s been a

pretty amazing ride there’s been a lot of big ups and downs but uh so it’s kind of a pretty sweet

event what is it trading under now i know it was switchback was like the spack name right so it’s

today was the first day i started trading under the ticker symbol brds i guess all birds took

bird so we took brds and um you know there’s a total number of shares outstanding of i want

to say roughly 300 million so it’s about a 2.4 billion dollar market cap you know as it stands

right now which you know for a series a investor is pretty great really happy for you sexy yeah

yeah congratulations it’s great congrats dude we heard last week sequoia is going to do the

sequoia fund this evergreen fund keep owning shares now as a vc um do you distribute after

four years of this investment and you made multiple investments or do you make the decision

hey we think it’s undervalued we have you know conviction in the company we were going to be in

it for 10 years or do you just take the quick win and give everybody their shares well i’ve i’m gonna

i’ve agreed to be on the board for the next year so you know i’m planning to do that and or we have

a traditional six month lockup and so at that point we’d have to make a decision about when

or how much to distribute the shares and this is the first time we’ve been confronted with

the decision i mean craft ventures is only a four-year-old firm and like i said this is

actually the first round that i led as a vc so it’s the first time we’ve been confronted with

a distribution of this magnitude we’ve had some smaller distributions so yeah we still have to

make those decisions we haven’t decided yet what we’re going to do if you if the stock is up let’s

say meaningfully in the next six months and you get to that you know six months and a day and you

have the ability to distribute and it’s up 25 and you’re looking at it business is thriving

you’re on the board do you consider holding for a year or two so that you can distribute at $16

$25 or whatever your price target is maybe i mean we haven’t got we haven’t gotten to that point yet

so yeah i mean i guess what i would say is that our bias would be to distribute shares to our lps

so that they can make their own decisions about whether they’re told or not as long as we think

the stock is you know price fairly if for some reason we thought it wasn’t then there’d be an

additional reason to hold on to it and make the distribution later chamath what are your thoughts

on this given it’s come up before and a number of us are going to be faced with this decision

and then we see sequoia has got lp buy-in for an evergreen fund well i think an evergreen fund is

different from having to figure out how to do distributions so they’re solving for two different

ideas the evergreen fund is really good because you don’t have to do this continual fundraising

process and you can basically roll gains back into the next tranche of invested companies

in an easier way i like that idea it was pretty rare at the time i remember when i was starting

social capital the only fund that did it really well was sutter hill and for a whole host of

reasons i decided to not do an evergreen fund in hindsight i think for me that turned out to be

better because then it was easier for me to wind down and have a clear demarcation of when it was

just myself and other lps versus when it was just my capital but there were some really good reasons

to do it the hardest thing i think that sequoia is going to find in this new iteration is at some

point somebody’s reputation will be on the line for judging public equities and it’s still not

clear to me that people who live and breathe venture can context switch well enough to then

live and breathe public equity so just the best example i would say is like tiger global when you

look inside that organization which is incredibly well run there are two superb investors that carve

the universe up right you have chase goldman that runs a public book and you have scott schleifer

that runs a private book what does it prove to me it proves that it’s just very hard to find a

person that can do both and the context switching is very complicated so maybe sequoia finds

an incredible public market strategist that can then manage these positions

otherwise but they’ve done this for a few years right they’ve um sequoia i don’t know people

realize this they set up the heritage fund and they set it up with only gps money it’s got

billions under management and it’s been making late stage private but mostly public equity

investing i know but that’s a fund of funds what i’m saying is i’ll be very honest with you if i

was an lp of sequoia i would want the money back and the reason is i’m not sure that sequoia can

compound money in the public markets anywhere near what i could so do you buy the point that

they make that like exiting some of these left most of the you know kind of value creation on

the table i think what they’re saying something much more subtle which is they exited and they

have regrets for selling you have to remember when sequoia distributed google every single

partner got google shares now had they held those shares they wouldn’t be saying any of this and

famously i’ll tell you when they held their shares well i know that well i actually do

fair enough but maybe they did maybe they didn’t but let’s just let’s just put it out there that

for example i know explicitly when i almost merged social capital with cliner perkins like

six years ago i spent so much time with john door the most incredible thing that i was so

impressed with door was he was he told me he had never sold a single share of amazon that was

distributed to him and he had only sold a handful of shares of google only to fund future capital

requirements of at cliner at the time so i just think that ultimately i think probably what

sequoia was saying is man i wish i had not sold my google shares when they were distributed to me

because otherwise they wouldn’t make that claim no i think what they’re saying is more subtle i

think they’re saying us our lps should have held them we are on the board of these companies from

day one we have better insights in the second decade than in the first production board founder

david friedberg how do you think about early exits distributing capital because you do have

also with a startup studio structure which you should explain to the audience how a startup

studio works because you create companies which is you know was a terrible place to be maybe five

or ten years ago but it turns out you’re in the best place because zero to one is where all the

values created explain the two things what a startup studio is for people who don’t know

and then what’s your view of selling early if a company of yours goes uh public i think there’s a

big um there’s a bigger kind of framing here which is a lot of um investors uh you know

professional money managers have tried to find ways to create what is called permanent capital

which is a vehicle whereby they can continuously make investments decide when to sell those

investments and recycle the capital into new investments with the idea being that over time

they’re not at risk of capital outflows meaning investors pull their money out and they’re not

at risk of uh you know needing to kind of go out and raise more money and they can they can share

in the value creation as they grow their book value over time years ago a bunch of hedge funds set up

public reinsurance companies dan lobe did this um uh what’s his name einhorn did this

and basically bill ackman did it what they did is they set up a public company a new public company

a reinsurer and then they use that that reinsurer to underwrite reinsurance and when you underwrite

reinsurance you get all this capital that you can then go invest and then the hedge fund manage that

investment and because it’s actually a public company it’s got a balance sheet the um the

shareholders can’t pull their money out right it’s just got a balance sheet and the hedge fund

was managing that balance sheet and you know generating good returns and this is effectively

what warren buffett does and everyone looks to berkshire hathaway and warren buffett it’s kind of

the you know the the the key kind of long term here um which is uh hey look if you can keep

investing and keep compounding value this thing can grow you know exponentially over time so you

know the way we set up the production board i had the option of raising a fund and being a fund

manager i chose to set up the production board because i was much more interested in i think the

similar sort of vein of what sequoia is saying which is like how do you become a longer term

uh builder and a longer term holder and where you don’t have these incentives to return capital

because you only get paid if and when you return capital and um you know and then you’re kind of

making these decisions to you know because your shareholders are saying well you had a good return

quickly give me the shares back and let me and mark your profit and take your share and i was

also more interested in look the fact is over time there’s always going to be opportunities to

chase with the capital so if we have a great gain if something works out really well we can take the

the gain and we can reinvest that capital and building new things there’s no shortage of

opportunities to pursue for the rest of my life so that’s why i set up the production board

initially in partnership with alphabet and then later on we brought in you know bill gates and

other allen and co and other kind of investors that have a similar sort of mindset which is

like let’s just if we have an exit recycle that capital and continuously because they’re not

looking for a quick win they don’t have pension payments to make right they don’t have a reason

to distribute cash and so same with me like i don’t have a reason to take cash out so the objective

was just build this thing over time and grow value over time and that’s why i set it up the way i did

and i think it allows us to make you know really long-term bets that are super risky

most of what we’re doing is super technical and difficult and maybe very hard to pull off

many of which are still after many years in a very early stage very patient capital

patient capital and also the you know the preference for not trying to find exits but

i have found this i’ll tell you one thing i have been through a number of circumstances where i

have seen businesses i’ve been an investor in or involved in that have traded long-term value for

short-term opportunity meaning there’s an opportunity to make a business that you can

then go raise capital against you change your strategy to do that then you go raise vc funding

and now the business looks like it’s working but the 10x or 100x opportunity was taken off the

table because you ended up going down this different path that was a sure thing that

was more likely to work that created value in the short term that allowed you to mark up your

investment or raise capital against that but you gave up the big long-term thing and i think that’s

something i’ve been trying to avoid with the structure and it certainly makes sense with

some of these other folks and what they’re trying to do so what we’re getting at here sax is

decision making by capital allocators and on behalf of their lps or letting the lps make

those decisions inevitably the crypto world says well why aren’t you just doing this in a dow

and you know having some decentralized authority make the decisions i had vinny ling i’ve had a

conversation with our friend vinny lingham uh after the solana stuff and and and uh multi-coin capital

and we were talking about dows for early stage investing or syndicates and

just brainstorming hey is there a way to do this and the problem i came to every time was

should a bunch of folks be making decisions who are not meeting with the companies or meeting with

2 000 companies a year what are your thoughts on a dow um representing sort of what we collectively

do but we all do it obviously in different flavors does this actually exist yep well

there have been dows that have existed to vote on buying nfts so yes for collectibles i mean i

kind of feel like i’ll let you know when it actually gets here so open-minded to it but

who knows yeah but i mean we talk about these things as if they already are here and they’re

not quite here i mean technically i know they they exist but people haven’t really figured out how to

use them to you know to be a fund manager for example i think david’s right i think the look i

there are these three immutable features of web 3.0 that we’re going to have to figure out over

the next few years so the obvious ones are decentralization right that makes sense the

second obvious one is the level of composability which means that you’re plug and play with

everything but the third one is this idea of democratization and governance right and that’s

where dows come in and david’s right we don’t really know what the boundaries of that feature

is i think it exists in some small level scale but we need to have many iterations of companies

get built to figure out what it’ll mean so i don’t know i’m taking a pretty traditional approach

jason which is that you know it’s kind of like a crawl walk run strategy right now i’m in the

crawling phase and i’m kind of saying how did web 1.0 and web 2.0 develop and i’m trying just copying

it so you know in web 1.0 and 2.0 you needed companies like sun microsystems and cisco and

you know all of the plumbers foundational stuff to build plumbing for the internet to allow the

thousand flowers to bloom at the application level and you know we had a very good reference

model by the way for web 1.0 for most people if you want to look at it it’s called the osi

reference stack and if you actually look at that osi stack you can translate that

to all kinds of value creation over the first you know two arcs of the internet over 20 years

trillions of dollars was created by just following each of those substrates and in those transitional

layers was where these great beautiful companies were built and i think similarly we’re going to

do that again but we need a different stack to represent what web 3 is so yeah you know this

week we did something which was pretty straightforward which was this idea that

if you’re going to build all these apps you’re going to need a distributed compute infrastructure

which means you’re going to need very simple building blocks like remote procedure calls rpc

that exists in web 2.0 it’s kind of a not something you don’t really think about but in web 3 doesn’t

exist and so it’s all this aws you know gcp like infrastructure that has to get built and

that’s what syndicate does and i think that’s a really very interesting observation there because

everybody is trying to go to the application level and talk about the consumer experience

but before you even have the ability you know we’re talking about cars before we’ve even made

a transmission or you know that’s exactly right that’s exactly right this is why crypto comes

across as so delusional and strange sometimes they wrote 3 000 ico papers none of them were

about infrastructure they’re all about some sort of end game the thing is it’s a very delicate

balancing act right you need a handful of companies that capture consumer imagination

right that then incentivize all of the plumbing companies to come in and build underneath it

right so it’s a very it’s a very delicate balancing act right so you needed compu serve

in order to enable a bunch of companies then you needed aol in order to enable another set

then you needed yahoo then you needed google and in all of that what happened was people

were pulled through right you needed amazon commerce to justify aws so we’re in that world

where it’s going to be a little back and forth where the pendulum will swing back and forth

between consumer experiences that capture imagination get to some level of scale that

then create incentives for the developer ecosystem and the technology infrastructure to catch up

zillow which we talked about previously became an ibuyer what’s an ibuyer that means you buy

a bunch of single family homes in all likelihood like open door and redfin have been doing and

then you hope to flip them uh maybe improve them and uh maybe lower costs to the consumers by

taking out real estate brokers this has created a lot of bad feelings amongst real estate brokers

a tick tock video trended a couple of months ago where a broker said or accused zillow

of buying up these homes in order to do price fixing and to corner the market on homes well

it turns out that zillow which has an incredible ceo in rich barton and has done tremendously over

the decades according ahead of their earnings call this week bloomberg reported zillow is trying

to offload 7 000 7 000 homes for 2.8 billion that’s about a 400k average per home and zillow shares

dropped 37 this week alone from 100 to 66 their market cap has dropped 9 billion throughout the

week and they’re down 70 percent from a peak valuation of 48 billion just in february about

six months ago zillow is going to reduce its workforce by 25 over the next few months i’m

assuming that’s all those i buyers anecdotally a lot of what i’m hearing is they bought homes

indiscriminately the anecdotal stories that are breaking on twitter and other forums with real

estate brokers are they would look at a home they didn’t know that it had a noisy neighbor or it was

near power lines or whatever the people who came in bought them indiscriminately maybe too fast

whereas some other companies maybe open door or redfin were more considered i actually had glenn

from redfin on the pod not long ago and he said it’s a very hard operational business you have

to be very careful on what you buy in your entry price that seems to have turned out to be true

what do you think freeberg rich barton who runs zillow is considered a legend in silicon valley

you know he has been involved in some of the most successful internet companies and you know when

he stepped back in as the founder of zillow stepped back in to run the business a few years

ago it was viewed as kind of a second you know resurrection of this business and he was going

to take it into new areas and then three and a half years ago he announced the side buyer program

which everyone thought was such a you know incredibly strong move and obviously chased

open door which chamath is involved in and i’m sure we’ll share more on but it was such an obvious

opportunity that if you could add liquidity to the real estate market the residential real estate

market there’s an incredible amount of value to be had now the way that they wrote about it when

they talked about it initially and then the way that they’ve kind of talked about in their earnings

report this week was that they were trying to be a quote market maker in the business and it turned

out that what they were really doing was being more of a speculator right a market maker looks

at bids and asks in the spread and then tries to create a gap in that spread and make and take some

share of it and by adding that liquidity the idea is the spreads can narrow and they can make money

in this case they were looking at the historical velocity of selling prices of homes and using that

as a way to kind of project what was going to happen which makes them much more of a speculator

than a market maker and they clearly got this wrong and they’re kind of quote unquote models on

you know where a price is headed ended up getting them in trouble there’s also the inherent conflict

where they are now competing in a way with the brokers that generate a lot of revenue for them

and are a big part of their core business and they were clearly you know cannibalizing their

own business where the zestimate and some of the other scoring that they provide as a data and

analytics platform to both sides of the existing market starts to get blown up because they’re

coming in and saying we’re going to put our you know our foot down and say this is what the value

is and it inevitably kind of cannibalizes the core product that they provide to both sides of the

market so you know one could argue this was flawed from the beginning the execution clearly was way

off and it begs the question you know where was leadership and kind of tracking what was going on

here as these guys were buying homes at market prices that are well above what they were actually

selling for in the market no one was actually doing on the ground work they were all doing

kind of speculative models and saying this is what we think will happen and then they woke up way too

late and lost way too much money i think they lost 300 million dollars in the quarter so um you know

really a lot of questions and a lot of challenges on this um i’m sure chamath has a point of view on

you know what makes open door distinct from from zillow um but there’s a really important kind of

you know um underlying here you know the maturity of a silicon valley uh entrepreneur who’s crushed

it so many times uh doesn’t mean that they’re perfect and you know this was a big mess you can

go really too fast into a turn here and clearly they flip the car chamath i i don’t know how

comfortably you are talking about this i’m very comfortable okay well then here we go

number one you know i’m not on the board um of open door of open door maybe tell us about your

history with open door chamath would be super look i look i i am one of the largest individual

shareholders of that company i think somewhere between three and four percent of the business i

owned we you know i came to own those shares with a large investment uh as well as through

through the transaction uh where we merged

one of our SPACs into it and took is that ipob yes a couple things to say the first is about

the ceo and founder of open door eric woo is special special special so let me just leave it

at that uh on that topic the second is i think that rich barton is very special but it speaks to

two big mistakes that zillow made the first is that catching a wave of disruption

is very difficult when you have an old line business that is fundamentally competitive

with the new line of business and zillow as david said had this thing called zestimate

whose entire job was to directionally drive top top of funnel traffic into the rest of their media

business now imagine you go to a website to look up your house value or somebody else’s house value

accuracy is a bug the feature that makes this estimate work is an highly inflated house price

right like if you go and you see a crazy house price number that’s interesting that’s more um

click worthy than if you go in there and it shows some depressed value you think the site

sucks that’s the unfortunate psychological reaction so i think whether we believe it or

not or whether zillow knew it or not zestimate over time basically calcified this idea of price

inflation so the accuracy was never a goal so then if you take that business and then you try

to orient it towards home buying and you use probably zestimate or some version of it to

underpin how you buy and take risk it creates a lot of risk and i think this is essentially what

played out where they were over buying homes and they didn’t know how to price this stuff accurately

so you know my partner ravi tweeted this out but you know the open door margin on average is about

10 the zillow margin on average was three percent so they had a much more razor thin margin of safety

here which again speaks to pricing and then it speaks to this third thing which is that

if you start doing one thing and do it really well with software

the gains over years really compound and so when somebody else shows up and tries to pivot their

business to try to copy it it’s very very difficult the classic example is google versus

yahoo yahoo had a beautiful directory driven business but when larry and sergey really larry

invented page rank and then invented that first version of a google search index

as we saw it play out over the next 10 or 15 years it was impossible for yahoo

to really invest the technical capital necessary to catch up with google

and every day and every week and every year as freeberg talked about last week those technical

gains compound and compound and now google is completely unassailable with respect to search

i suspect we will look back and the ability to accurately forecast price and volatility

and the ability to sell these assets at a defined margin of safety in a predictable way

is something software can solve and it seems that open door is the first it doesn’t necessarily

mean it’ll be the only one but it has an enormous head start now and as long as they can keep

iterating those gains will compound um so that’s what i think i just think this is a wonderful

business run by an incredible ceo to wrap up this zillow story sacks uh any thoughts on

you know chamat’s point here you know you’re the rating agency and you had this business

and the business might be orthogonal to the existing money printing machine

on a strategic basis what do you think any lessons or mistakes here uh in terms of when

you handicap zillow or do you want to just move on and talk politics i mean look i’m a i was a

seed investor in open door because ravoy invited me into the seed round so you know i’m a little

biased here but i think it’s pretty obvious what happened uh zillow tried to copy them the business

is much more operationally complicated than they realized it’s a low business low margin business

with the time which requires a ton of capital so if you’re off a little bit the losses can be huge

and zillow couldn’t figure it out they underestimate the difficulty that’s what

frequently happens in a big company tries to copy a smaller sort of upstart company

so i mean that to me is what happened in a nutshell quite frankly we’re an hour into this

pod we haven’t discussed issues any issue that i think is broadly relevant to most americans

i think this is one of our worst episodes we’re going to bore everyone to tears i frankly don’t

understand what the f you’re doing i don’t even know why we have a topic list when you start

pulling it out of your ass like dow’s and i don’t know what the f else all right all right fine we’ll

talk about politics yeah i thought the doubt question sucked all right i’m just giving you

the opportunity that we shouldn’t even be talking about cut it out of the show cut it this whole

episode should be cut jesus christ i think this is like one of the stupidest episodes you’ve ever

done yeah i agree i think we should cut all that it’s going great no jason i about jason i agree

that that part where we cut it that’s all right fine you got some loser i’m trying to give you

guys the benefit of the doubt to just because it was like no one cares all right fine calm down

everybody you want to talk about politics we talk about politics it’s okay sax go ahead tell us

about the election okay i’ll just rattle off some of the key results here from blue states we have

a woke lash going on all across the country that’s the important thing in virginia a state that biden

won by 10 he’s cranky huge upset republican glenn young can beat terry mccall if a former governor

there he was this was a huge upset mccall was supposed to win youngkin won 51 48 so that’s a

13 point swing uh versus where biden was uh just a year ago in new jersey a state that biden won

by 16 points the democrat held on to it but only by 1.5 points and i bet you anything the rnc is

kicking itself they didn’t give any money to chattarelli who’s the challenger who i think

almost who came very very close and there were down ticket seats that went republican so that the

um this is really interesting in south jersey which is a blue-collar bastion for democrats

versus burr that’s right the democratic state senate leader steve sweeney lost to a truck driver

named ed durr who spent a grand total of 153 dollars on his campaign okay so those were some

and then we had some other write in like he was printing out to say write me in i think i don’t

think there’s a writing but but in any event so so implications for 2022 dave wasserman of cook

political report calculates somewhere between a 44 and 51 c game from the gop they only need

five seats to win the majority so it’s looking very bleak for the democrats in 2022 and then

i think you also had some very interesting local elections in minneapolis voters rejected a

proposal to defund the police with 56 of the vote uh they there was a ballot proposition to

change the police department into some sort of larger public safety group voters were having

none of it in seattle which is a very liberal city they voted for a literal republican as city

attorney which is the office that prosecutes misdemeanors so against a police abolitionist

who said she would stop prosecuting misdemeanors you’re forgetting that in virginia it wasn’t just

glenn young can that one but basically it was terry mccullough and then a lieutenant governor

who was some milk toast individual and an attorney general candidate who was caught in blackface

which by the way there is no more racist thing you can do just to put get let you guys

let everybody know all the non-colors okay that guys please don’t do blackface or brownface it’s

such a bad it’s it’s not it’s not you’re right it was a sweep so so the lieutenant and and yunkin

and it was a it was a black female lieutenant governor and a latino attorney general that’s

right and they swept right that’s right that’s right so the lieutenant governor was winston sears

uh she’s a a black woman republican if you’ve seen the photo of her she’s frequently photographed

with a giant assault rifle in her hands uh that’s her and then uh a hispanic attorney general jason

miyari’s uh one as well so yeah it was a huge sweep and then you know in long island and

staten island which again are blue counties you had two republican prosecutors beat the local

sort of uh incumbent democrat decarceration da’s red just i think i think this is very clear which

is um trump was behaviorally extreme and after four years people were sick of it nobody wanted

that behavioral extremism because it was unpredictable and people felt frankly in

danger and i think that that was legitimate he also turned out to be extremely lazy and

probably pretty dumb now what we’re realizing is the different form of extremism which is policy

extremism will also be met with the same response which is that you you can’t sustain election

results and wins right so people care consistently about three things they care about the economy

they care about the education of their children and they care about safety

and the thing that glenn youngkin did which i thought was

at least a playbook for centrists and the right and it’s also a playbook for the democrats if

they choose to embrace it is to understand that these things are reaching a tipping point where

you know again we’ve said this before it is possible to live in a state of mind where you

believe in black lives matter and you believe in law and order right and and when you try to

pit those two things against each other for example like you would have thought the one place

where they would have basically defunded the police in its entirety would have been minneapolis

after george floyd but instead even they drew the line and said no or new york or new york

there was a there was a really compelling quote actually by this woman i think it was in the new

york times and what she said was i didn’t elect joe biden to be fdr i elected him to tack to the

middle and just calm things down so that everybody could exhale so that we could reset same with me

and what’s that was abigail spanberger actually she’s a virginia democrat yeah she’s a virginia

democrat who won a seat in one of those blue counties that just flipped red to vote for

youngkin and since she got elected i guess she got elected last year she’s been telling the

democratic she’s the one who called out pelosi in that you know caucus meeting saying i don’t ever

want to hear the words defund the police again that is electoral poison and then she said yes

nobody elected biden to be fdr they elected to be normal and stop the chaos and so yeah certainly my

vote yeah there’s a big backlash going on because biden has decided to start governing like bernie

sanders no one elected him to do that so sax is the lesson dems learned this time around is it’s

very easy to beat trump but it’s very hard to beat a moderate republican no no it’s not that

it’s that you just have to be a rational normal person that’s what i mean by a moderate republican

well you just have to be moderate i don’t think it matters but this is but this is the key

dems it was so easy for them to use trump trump you know but these three topics are not a republican

tentpole nor are they a democratic temple they are the tentpole of reasonable people yes meaning

which most people are reasonable hey guys get out of the way so that we can you know have a

reasonable life in an economy hey folks please make sure my kids when i send them to school

for eight hours a day come back reasonably educated and please keep my street safe and i’m

not really willing to decarcerate ad hoc to such a degree that all of a sudden crime gets out of

control those are not democratic or republican tentpoles those are just moderate centrist

rational things to believe in yeah being and also behave normally like i i think whatever

happened with these progressives where they couldn’t pass you know the stimulus bills and

things that almost everybody agreed on glenn yunkin was not behaviorally extremist yes and

and from a policy perspective was pretty much down the middle eric adams eric adams is not

behaviorally extreme and he is politically down the middle the mayor of buffalo who got reelected

is not behaviorally extreme and he’s politically down the middle do you start to see a pattern

here yeah nobody wants aoc bernie elizabeth warren or trump i think it’s not it’s not a

question of aoc or bernie or trump it’s just that right now the temperature of america is

let’s just all exhale and just recenter ourselves as a country yeah and so moderation and centrism

is actually what calls for today i don’t know how to predict what happens in 15 or 20 years and

maybe aoc is the canary in the coal mine for where the country goes by a plurality of people

in 15 or 20 years but what’s clear is it’s not where it goes today and i think that we it all

behooves us to just take a real step back and exhale and just read the tea leaves because

every single thing that the democrats tried to do to sort of like make this extreme really didn’t

work the race baiting all of that stuff really kind of failed and i think that that’s important

to listen to you know because you had a lot of black indian chinese families that just showed

up hispanics you know that again reliable democratic voters and voted for glenn youngkin

in a way that was surprising to me right and then so if you compare new jersey and and virginia

biden won virginia by 10. he the the democratic nominee lost biden won new jersey by 16

and phil murphy barely squeaked by it was like 10 000 votes jersey’s always had a a republican

kind of leaning group they’re very tuned biden won by 16 this should have been a cake walk but

i think that’s 16 how much of that is get trump out of office is what we i think the democrats

need to parse and they blew it by going too radical we’re repudiating behavioral extremism

and policy extremism so i think we just need to realize rational normal chill people

who can do reasonable things get our kids educated so for example on the education front

i don’t know if you guys saw this because i tweeted and you can put this nick in the group chat

but in california right now there’s a battle over math class ridiculous right where the title i’m

just going to read the title because it sets it off california tries to close the gap in math

but sets off a backlash proposed guidelines in the state would de-emphasize calculus

reject the idea that some children are naturally gifted and build a connection to social justice

critics say math shouldn’t be political well of course the way that those articles are always

written it’s always about the backlash you know they don’t talk about what what the people in

charge are trying to do to basically degrade the curriculum of course there’s a backlash because

parents don’t like put the people on these school boards are doing this was the sleeper issue in

virginia was the school board issue you had um you know parents were already angry that the

teachers unions had kept the schools closed for a year and a half during covet and while their

kids were at home you know work doing classes over zoom parents got a good look at what some

of their kids were learning and didn’t like what they saw i mean we’re talking about lessons plans

that incorporated crt and you know the 1619 project view of america singling out kids by

their race making them focus on difference and then there were some you know rather explicit

materials at young grade levels about you know lgbt issues and so this led to a whole bunch

of confrontations at school board meetings where parents of all races objected to you know the

least lesson plans for their kids and the school boards and administrators just dismissed their

complaints without a hand and you know their message was well we’re not teaching crt to your

kids but if we were it’s a good thing and only white supremacists would object so you know that

was sort of what was happening in the background and then mccall comes along and makes this gigantic

gaffe in the last debates about two weeks before the election where he says i don’t think parents

should be telling the schools what to teach and what yes this was the customer no he said that

he said that on a debate and he said that in a debate about two weeks before the election

mccall was leading through this whole thing until that debate where and this was sort of a kinsley

gaffe in the sense that you know michael kinsley said a gaffe is when a candidate inadvertently

says something true you know this is mccall’s view is that the teachers union should be

controlling the schools not the parents well um yes so this is what young can uh jumped all over

all of his ads in the last two weeks of campaign really focused on this issue you know poured

gasoline on a fire and then the most tone-deaf thing mccall did is he had randy weingarten

who is the head of the uh the big teachers union come in and campaign for him at the 11th hour

well of course that’s not going to save him because people are sick and tired of the teachers unions

so you know this was basically the big sleeper issue crt and the schools in virginia

and you know this is this i think specifically is what the democratic party has to wake up to

is that these progressive ideologies are not popular the other thing i’ll say about glenn

youngkin is that this is another thing that the that the republicans should hopefully pay

attention to which is you can look normal act normal be normal you know this is not an extremist

in any way this guy was the co-ceo of carlisle which is a huge and very successful private equity

firm so this is a very rational reasonable person who um you know didn’t embrace anything

that was really that pro-trump and that should be a real wake-up call to the republicans which is

hey let’s just run a fleet of normal people i think what you saw i think chamath is right that

what you saw in virginia is that the playbook that gavin newsom just used to defeat the recall

in california did not work in virginia which is he tried to uh paint youngkin as a trump proxy

and youngkin very deftly you know avoided that he got trump’s yes he got trump’s endorsement

but very early in the process he did not have trump come to the state um and you’d have to

say it also helped youngkin a lot that social media that trump wasn’t all over social media

because he’s been banned so you know in a weird way facebook and twitter deserve an assist here

um because they help keep trump out of the virginia race so you know this playbook that

that newsom defined that worked very effectively from california which is simply to keep running

against trump i think democrats thought they’d be able to win elections for years based on that

that playbook didn’t even last two months so you know so i think democrats are gonna have

to find a new playbook here okay so friedberg uh on this california issue around education

one of the key or most controversial um concepts is detracking in other words instead of having

high-performing students go to a high-performing track and then everybody else stay behind maybe

keep in not all cases but keep some of the students together because there is some research that shows

if done right if you track people together the higher performing students will pull up the ones

who are slightly behind other people say we’re basically uh throttling people who could be the

next einstein or the next world-class leader in science math etc uh any thoughts on the concept

of detracking since i’m assuming you were in the high-speed track in science and math

maybe we should get rid of like jv and varsity sports teams as well and you know triple a

baseball and major league baseball as well and you know any distinction of performance um

or exceptionalism goes away you know and and that is kind of the the key social question

is are we going to give up exceptionalism um to minimize uh the distance uh between

the exceptional and the average and that seems to be what’s happening makes people

makes people feel bad but i’ve said this point before you know we’re doing it when we try and

think about you know the billionaire tax or what have you as soon as you start to limit progress

um you reduce inequality but you limit progress and the same will be true not just in science

not just in business uh but also in sports and athletics and um and any other kind of system

where you will have exceptionalism you will have an average you will have a distribution

amongst human performance and as soon as we try and uh limit the difference in that distribution

um we move the entire curve to the left here’s the uh counter friedbert um what some studies

have shown is yes you will uh throttle the high performers but we’re seeing uh along race lines

certain demographics being left behind other ones excelling and that you can get yeah it’s an ethics

and values question right like do you think that individual freedom and the opportunity to pursue

your opportunity your your exceptionalism um should be taken away from you such that others

who aren’t as exceptional as you are given um you know greater progress than they would have had on

their own um and that’s the the key crux of what all of these social systems are grappling with

whether it’s in sports or business or finance or or um or education is what’s the right thing to do

and that ethics question is going to be defined by the social agenda of the moment and you know

the means of the moment and what we all think is is the right thing to do and it’s different all

over the world and it’s different within political systems but it’s a very divisive point that i

think folks who find themselves on one end of that exceptional spectrum and different aspects

are going to have one point of view and folks on the other end of that exceptional spectrum are

going to have other points of view and everyone’s going to be sensitively tuned to where they fall

in that spectrum i will say one thing though on that spectrum exceptionalism is rarer than the

average therefore it is likely the case that over the next years and decades we will see

the um the idea that we should remove exceptionalism in business and exceptionalism

in education and exceptionalism in sports because it benefits the majority and um and and no one

kind of recognizes and a lot of folks don’t recognize the progress that is made by exceptionalism

and um and that’s and then we’re going to wake up one day and be like oh wait a second we don’t have

the the best sports teams winning all the gold medals we don’t have the smartest kids we don’t

have the best businesses china and europe and brazil and whomever else the emerging markets

india are going to start to have such a good point i think this is a very old debate it’s

the debate between equality of opportunity and equality of results yeah and the progressive left

is absolutely obsessed with equality of results or outcomes which they now call equity which is

we’re going to take people at the finish line and we’re going to move them around we’re going to

redistribute the outcomes to achieve a more proportional representation or something more

fair as opposed to giving everybody as much opportunity at the outset as possible that is

the fixation right now that is why they’re taking out advanced math in the schools they’re trying to

level people it’s not going to work it doesn’t lead to a more we want to have an exceptional

society where i think we should be focusing is creating as much opportunity for everybody

the way to do that would be to let every child go to the school of their choosing so that we

would stop trapping kids in bad schools but back to kind of bring this back to the election for a

second because i think it was a very clear repudiation of this progressive mindset and i

think there’s essentially two sets of reactions to it if you look at sort of all the left-wing

commentators the the one who i thought seemed to get it the most was cnn’s van jones actually

had i thought you know a rare moment of introspection where he said it was this was

the the results were a five alarm fire he says a big big wake up call for the democrats to stop

annoying voters with woke hectoring he actually advised biden to start triangulating against the

woke left in the way that bill clinton did i mean which is something that i’ve been suggesting on

this this pod so you’re saying something super important the game theory now is for biden to put

to the test the progressive left because now he can go firmly to the center and he can put

all of the pressure on the progressive left in the house and warren and bernie sanders in the

senate well he’s right that’s the first thing he should do is he should pull a sister he should

pull a sister soldier on bernie sanders he can’t keep delegating the domestic agenda to bernie

sanders he if he wants to save his presidency he’ll start triangulating in the way that bill

clinton did i’m not sure he’s going to i think there’s already a misperception that the reason

why they lost this election is because they didn’t deliver the goodies in this house reconciliation

bill that in other words i don’t think the public cares about the goodies i mean they care about this

normalcy and centrism yeah there’s a part of the democratic base that does want the what’s in that

house reconciliation bill but but here’s the thing democratic turnout in this election was

extremely high the democratic turnout for mccullough was higher than the democratic turnout

four years ago for the democrat who won the the turnout that uh in new jersey was higher than what

murphy got four years ago when he won the problem the democrats have is that republican turnout was

extremely high even without trump showing that trump doesn’t matter that much to turn out and

the independence came out in a big way for republicans so this idea that democrats can just

win elections by delivering you know programs for their base that’s not going to work so i think

that’s a misperception i think van jones has the right idea they need to triangulate but you turn

the channel to msnbc and they were just blaming the whole thing on white supremacy basically

hysterical um just on the detracking thing this shows to me a severe lack of creativity you if

you look at what happened in the nba they had this developmental league which they didn’t kind of run

then became the g league they now have the ability to bring players fluidly from the

warriors g league team up to the warriors or the next team up to the next what this means is

you don’t have to say there’s two different tracks and the two never shall meet in the

season they can move up and down in math a very easy solution to this would be to have the high

track for high performers have the regular track and then spend with all this money we have say

hey every school is going to be open from three to five o’clock four days a week if anybody wants

to attempt to get into a higher track of math just stay after school for two hours anybody can

go and get one on one tutoring and just double the number of teachers the whole country wants

excellence they don’t want leveling they don’t want equity they don’t want a quality of results

they want to have a quality of opportunity the whole country wants people to move up they do

want to see that’s true and brown students and immigrants do better at math that’s what you’re

missing yes and that’s about a quality of opportunity absolutely no it’s not just about

a quality of opportunity they’re so far behind statistically that you need to do something new

what we’re doing is not working david that’s why people are picking this bad decision they’re

they are eliminating advanced math because they don’t want to actually look at the the problem

what do you see the problem as well if there’s an underperformance in certain groups then you

should work hard to raise them up not how would you do that give me a suggestion

charters and school choice okay look i mean if you’re if you’re going to define

structural racism as conditions that that trap people of color in poverty across generations

seems like a pretty fair definition then you have to say the number one cause of structural racism

is the school system education yeah it’s the school system because we know poor kids are

trapped in schools that aren’t very good why because they’re controlled by the education

unions they don’t have a choice they don’t have money so who is making that argument uh on the on

the side of the left no one why because everyone knows the unions especially the education unions

are the number one donor to the democratic party so the democrats won’t even look at this problem

all they’ll do is blame white supremacy could build their base is by saying we want to fix

education that would be if you they are education what do you think young industry in virginia by

the way 55 of hispanics in virginia voted for youngkin so minorities are shifting on this issue

these are the new quality of life issues if youngkin has a good four years in virginia he

can run for president and crush this thing can i show you just one chart and then we can get off

the politics thing which is it was this chart from this guy patrick uh ruffini who’s a pollster

and i think it really illustrates the problem that progresses the democratic party for the

listeners okay so what this chart shows is it basically shows where the democratic the democratic

party is in the center republican party is in relation to the center of the country okay and

basically as you’d expect in a democracy whichever party is closer to five wins okay so in 1994 when

bill clinton was president the democratic party the center of it was smack dab as five the

republicans weren’t that far away they were six so the party even though there is a lot of partisan

warfare the the political differences actually weren’t that great and clinton i think more

accurately found that dead center okay fast forward to 2004 so george w bush is president

now the democrats are at four republicans are at five that’s why republicans won okay now go to

2017 these poll numbers he did and this is a few years ago the democrats are all the way at two

okay and the republicans are at six and a half so it’s true that both parties have moved away

from the center but republicans are one and a half points away from the center whereas democrats are

three points away so the democrats have actually moved further away from the center if you look at

who are the activists in the democratic party who is the base who is the energy who does all the

work who does the contributions it is the progressives right this is why mccullough ran as

mccullough is not a progressive he was a clinton democrat you know going way back to the 90s okay

he was bill clinton’s you know uh right hand man in the party back in the 90s but he nevertheless

ran as a progressive in virginia who supported the teachers unions why because he was appealing to the

base of the party gavin newsom did the same thing in california gavin was never a bernie bro i mean

he’s always been liberal but he he has moved very far left and biden has moved very far left as

president why is that because the base of the party has moved very far left so unless that gets

fixed i see so you’re appealing to the party’s base but not the country’s exactly so you’re

going to need a strong democrat who can basically give the heisman to that part of the base or

they’re going to keep losing elections i think this could be a republican decade i know it doesn’t

seem like it right now because you had trump and the republicans lost but look how quickly

the republicans turned around their electoral fortunes so with trump on the sidelines then

that’s just a huge detriment yes if trump is the nominee in 2024 all bets are off but in 2022 he’s

not the nominee he’s still censored from social networks he’s really nowhere in sight and people

have a very short memory it turns out they’ve moved on very quickly young can check the box

because he felt he had to to get the nomination and to run on the republican platform but then

you think youngkins going to talk to trump once no not one and i and i think and i honestly think

this election is going to help republicans move past trump because what republican believes in

in like that the electoral system is rigged now right i mean all these blue cities and states

just delivered big results for republicans so where exactly is the ballot stuffing where exactly

is the stall where are the stolen elections that’s going to that’s going to stop now too

they’re going to stop overnight right because i mean by the way kristin cinema probably knows

this like you know the the the funny thing about all of this is when peter teal put in 10 million

dollars into this pack for blake masters who used to work for him and said you know in arizona i’m

going to run this guy against you cinema tacked hard to the center instantly so she she knew too

yeah well so just just a small point of course so blake is running against the other guy the

astronaut guy i’m just basing on his name but but yeah but but cinema is up so to speak in the next

election cycle so she got a little bit more time but you’re right like cinema is attuned and mansion

is attuned there are some of the few democrats that are attuned to where the center of the country is

you heard mansion in the wake of this election said this is a center-right country these guys

better wake up um you know they should really now look i think i think what’s going to happen in the

wake of this election is that this infrastructure bill is going to sail through because one of the

crazier things that the progressives were doing was holding that bill hostage it might have helped

mccullough i don’t think would i don’t think mccullough would have won but it might have

helped him by a point or two if they had gotten that infrastructure bill done because a lot of

those programs are going to be popular in a state like virginia okay but i mean but but i think that

you know this house reconciliation bill they just seemed hell-bent on jamming it through with all

these tax increases i don’t i don’t think that’s not popular you know what the big issue in new

jersey was for them yeah one of the big issues in new jersey where you almost had this upset

within one point was taxes you know um there was a a gaffe by murphy who said something like you

know he said he said that if if taxes are someone’s chief concern he said quote maybe we’re

not your state can you imagine that wow and he almost lost the election because of that so i

don’t think all these big tax increases are what the country wants and you know if biden insists

on allowing bernie to dominate the agenda and warren i think it’s good you’re going to see

40 to 50 seat losses by the democrats in 2022 okay moving on to our final topic crazy update

out of china a research team has developed a method of converting carbon dioxide into starch

science magazine published this paper from a research team 100 grams of catalyst converting

5 grams of co2 per hour into starch and freeberg i saw you tweeted that this is 10 times more

efficient than corn plants what’s the impact of something like this could it hit scale

would it have an impact on food security carbon global warming yeah so i tweeted this paper out

because it’s just it’s a fantastic demonstration of what’s possible in this new emerging not

emerging it’s been around for a long time but kind of you know in the state of art in um in

biomanufacturing you know photosynthesis is the system by which most starch is produced on planet

earth today that is plants convert sunlight and use water and carbon dioxide to make starches and

starches um and and sugars which are what carbohydrates are account for 60 of human

calories and we get all those calories from rice wheat potatoes which you know are grown on about

60 of our acres uh that we farm on planet earth so you know in in plants there’s a series of these

chemical reactions and what these guys did is they isolated and created a couple of specific

proteins which are a class of proteins called enzymes and what an enzyme is is it’s a protein

that can take different molecules and combine them and reinforce them to react and make something new

and they identified a couple of enzymes and engineered a few enzymes and put them together

in a cell-free system meaning there’s no cells involved it’s just a tank with a bunch of fluids

in it and um and they stick in some carbon dioxide that they can suck in from the atmosphere and they

they can and they have to drive it with some hydrogen gas which we can just get from water

and the system basically converts that carbon dioxide into starch which is being done at a rate

that’s almost 10 times higher than what we see with with corn plants so it’s it’s an incredible

demonstration there’s there’s several steps to the system like six steps and i did some back

of the envelope math and my back of the envelope math on what they’ve demonstrated and and by the

way everything they did is publicly available for reproducibility so people are going to try

open source so people are going to try and copy this now but my back of the envelope math is um

you know uh this system can produce about 10 grams of starch per liter per day which would

mean it would take about 2.7 trillion liters to suck up all of the carbon dioxide that all of

humans are putting in the atmosphere every year from all of industry that would require um about

27 million tanks that are about 40 feet tall and about eight feet wide that whole all of those

tanks could fit in an area about 25 by 25 miles you could attach one nuclear reactor to it to

suck up the uh the water and convert into hydrogen gas and feed this system and those tanks 25 miles

by 25 miles would take out all of the carbon dioxide on planet earth and convert it into usable

starch and that starch by the way that system could be tuned not just to make starch for consumption

it could be used to make biofuels it could be used to make bioplastics it could be used to make

anything that’s hydrocarbon based um and so you can kind of think about this being the entry point

to a series of production systems that we could use to make stuff freeberg why did they open source

so they’re a research team of scientists from china and they’ve been iterating on this this

process this isn’t the only process right and so what they’re showing is that this is possible

and what i think we will see is a lot of people rattling their brains now saying

not only do we use proteins and enzymes that we find in nature but we’re going to start to

engineer our own proteins and our own enzymes that are even more efficient than what we see

in nature and that’s what’s starting to happen this system alone what i just described this 25

mile by 25 mile system which is tiny is the equivalent of starch production from 42 us

corn belt if you took all the corn growing in the united states it’s 42 times that um is what it

would produce that’s my back of the envelope math of kind of what these guys did um and so i think

what they’re showing is this is what’s incredibly yeah yeah and and the implications we could go in

100 directions and we could talk for an hour about what this means and what you could do with it

but i think it really catalyzes this this point that that that we’re kind of everyone’s always

like how are we gonna get all this carbon out of the atmosphere what are we gonna do with this

where there’s a will there’s a way the science is here today 27 million tanks made out of plastic

you could probably get that stuff produced you know a couple billion dollars find a piece of

land that’s 25 by 25 miles it’s near some water and put a nuclear power plant there and you could

suck up all the co2 in the atmosphere anybody want to take anybody want to take a guess of how

many people on the team were in advanced math courses the funny thing about this that i think

is really interesting is that it came at the same week where we were ending you know what was this

political theater of cop 26 you know greta thunberg uh who’s you know how dare you how dare you

she had this she well she had this very funny comment which is like ah you know it was a bunch

of corporate nonsense and the same old blah blah blah was your description of cop 26 you know we

had this great trickle of like you know agreements there was like on monday there was an agreement to

stop deforestation uh and then you realize it’s a non-binding agreement and you’re like oh okay

well i guess we’re not going to stop deforesting we’re just going to keep you know doing that

and all of this stuff just kind of like took a lot of my enthusiasm um and i was a little despondent

about what was going on and then when i saw this thing i was i was really quite impressed i will

say that there’s a very tricky thing happening right now which is that developing countries

basically said listen if you want us to go after climate change um we want 1.3 trillion dollars a

year to support us and so you know the western world will have to figure out whether we’re willing

to pay you know what is the equivalent of you know six or seven percent of us gdp to a whole

bunch of other countries every year for them to slow down and if we don’t make these payments to

india and china and a bunch of other developing nations they they have said we’re just going to

continue to do what we’re going to here’s an idea take half of that money and put it towards science

yeah take half that money and go build a plant that uses this system that was just demonstrated

and put it in south texas and suck up ocean water and convert that ocean water into hydrogen gas

by the way ocean water can be turned into hydrogen gas by running electricity through

it so you’re putting a nuclear power plant to make the electricity you run it through ocean

water you create hydrogen gas you pump it into these friggin tanks and it sucks up all the co2

and it makes stuff that humans can consume and that we can use and suddenly you have this abundance

of material you have this abundance of food and you can turn this in jobs and you can turn this

into a lot of different things and you know this kind of goes to the point i’ve been making for a

while if we want to invest in infrastructure this is the sort of thing that both solves climate change

creates jobs and has extraordinary economic return potential built into it so how does it

get politicians re-elected you know i think the private market may come after this stuff i’ll be

honest i’m you know i’m like i’m talking to people looking at this being like why don’t we make a

plant that we can make biofuels and bioplastics and food and other stuff out of this uh this

technique and there’s going to be other iterations of this technique um but it’s such a no-brainer

cost like a functional prototype of this like a small prototype nothing right i mean a couple

million bucks yeah like nothing so um you know the other thing that happened this week beyond

this request for 1.3 trillion dollars is that you know we’re now seriously considering carbon

tariffs and we talked about this on a pod before but you know i’ve said i think this is the most

disruptive thing in the capital markets and and geopolitics that can happen in the next 10 or 20

years it’s an effective carbon tariff which is to say that when a good or service enters the borders

of a country they will levy some tax that they think represents its drag on the environment

and so you know the simple example would be a car you know you make a car you make a tesla

in texas but the minute it crosses the border to canada canada says well here’s the true carbon

intensity of this car all of the energy that you put into the aluminum to the batteries

you know to the to the buildings where the engineers sat that were that were building fsd

and uh you know i’m going to charge an eight thousand dollar tax on this car

or iphone’s coming out of china yeah that’s happening i think that’s coming so i think that

you know the combination of tariffs and these transfer payments is going to create a real

economic incentive for folks to make these kinds of big technological leaps so i’m pretty bullish

on all of that i’m less bullish on politicians ability to organize because unfortunately again

this is the first time i really paid attention to cop and it just looked like a bunch of really

you know you’re just a lot of political theater sax does this science conversation about saving

the planet do anything for you would you like to get back i mean i think it’s the way to solve the

problem is you have to figure out new technologies to actually take carbon out of the atmosphere

because you’re not going to do it through you know these political programs i mean you know

china india paying them and another developing nations 1.3 trillion a year i mean foreign aid

already is one of the least popular parts of of the government’s budget you’re going to now pay

1.3 trillion to these countries so that they it’s nonsense and you’re going to pay put that money

into our education system nobody’s going to science and technology that solves the problem

nobody’s going to stand for that yeah and you know the taxes or education system right pour it

in yeah i don’t think there’s a political solution to this problem that’s going to be palatable to

people i think it’s going to have to be solved through new technology now let me ask you a

question freeberg you said there’s a six step process given your experience building science

and technology products is it possible for each of those six steps to get but 20% more efficient

a year yeah look i mean um i just say that to describe that there’s a series of steps in the

system it you know um but uh at the end of the day this is a demonstration of science that has been

you know probably funded to some small amount but you know if you start to iterate on this approach

and think big picture and think infrastructure solution here uh there’s a lot of room for

improvement i’m sure so in other words you’re back of the envelope 25 by 25 mile if this is getting

50% more efficient 25% more efficient year over year we could see it becoming you know twice as

efficient every two to three years and your 25 mile might be a five mile radius city i mean think

about going to mars right what are we going to do in mars we’re not going to grow friggin fields of

corn and grow cows and stuff right you’re going to need a system that literally takes the molecules

that are in the atmosphere there uses some electricity that’s probably going to be produced

by a nuclear power plant and convert those molecules into what you want to make and consume

and that’s what we can do on earth today the systems are going to get better they’re going

to get cheaper they’re going to get faster and that’s why i’m highly optimistic about solutions

to climate change in the century it’s not about an if it’s about a when and you know the when is

going to be defined by the willpower of how we are going to allocate our people and our capital

resources to solve these problems in the near term we have the tools to do it i love the fact

that we’re sort of hitting this fork in the road where it’s like do we just want to give the money

to a bunch of governments to pretend they’re going to solve this and grifters or do we want

to put it into science technology innovation and entrepreneur hands that execute execute

what’d you say i picked the former we should yeah let’s give it to politicians who don’t

know what the fuck they’re doing i mean it really is like when you know i don’t know if

you saw ilan say like yeah if you want to solve world hunger can you make us can you

oh my god let’s talk about that that’s just so beautiful i thought that was like the greatest

that’s dunk of the week nothing nothing gets me up in the morning like funding shenanigans

right go ahead jake i’ll tell the story i mean just somebody was like oh ilan you know made

more money it’s tesla stocks no no an article it was an article that was rude sure and then

he’s like well if you want to solve world hunger i’m willing to sell shares jason can you describe

it you’re doing such a shitty job today as a moderator what are you talking about i’ll play

your role all i did was put a cyst in your hands you guys dunked everything but to the audience

there was an article voice dude in his voice yeah hey guys and there was an article stop

there was an article that was written that basically said you know um you know 6.8 billion

dollars uh which is you know what ilan made like in a day or something could cure world hunger

and uh then the head of the you know uh un world food program retweeted that

again trying to further dunk on ilan and then um ilan responded well if you can just show me

a plan and just please reply in line here on twitter and it’s credible and detailed i’ll

just sell you know this talk and i’ll give it to you and uh everybody was like oh my god there

was this oh my god moment like wow can this really happen ending world hunger sounds like a beautiful

idea it can only does only cost you know 6.8 billion dollars and obviously it went nowhere

because the guy didn’t have a plan and it was just a complete joke but that’s what happened

yeah and he’s like yeah just put all of your uh put all of your expenses out there show us your

plan and it was like oh crickets nothing all right everybody on behalf of the dictator chamath

palihapitiya the queen of quinoa the sultan of science david friedberg and for the rain man

himself reporting from definitely reporting from yeah he’s reporting from the new york stock

exchange congratulations again my bestie david sacks on the triumphant ipo of bird we’ll see

you all next time on the all-in podcast bye-bye we’ll let your winners ride rain man david sacks

and instead we open source it to the fans and they’ve just gone crazy with it

love you

we should all just get a room and just have one big huge orgy because they’re all just useless

it’s like this like sexual tension that they just need to release somehow

what you’re about to be

you’re a bee

we need to get merch

i’m doing all in

i’m doing all in