All-In with Chamath, Jason, Sacks & Friedberg - E55: Valuing crypto projects, Rivian worth $100B+, inflation: causes and corrections and more

Zsaks is old do do do.

Zsaks is old do do do.

Zsks is old do do do do.

Zsaks is old.

Zsaks is almost dead.

Jkals fat do do do do do.

Jkals fat do do do do do dae.

Jkals is fat, oh my god.

He’s not fat anymore he’s getting the canons back.

Do do do do do.

Friedbergs not human, do do do do.

He’s a robot, do do do do do.

He’s a robot, do do do do do.

He’s a robot.

Don’t quit your day job Jamal, that’s all I can say.

Bro, you don’t remember Baby Shark?

I mean how many, no he doesn’t know his kids

first names or birthdays.

How does he know Baby Shark?

Baby Shark.

Don’t let your winners hide.

Rain Man, David Saks.

I’m going all in.

And it said.

We open sourced it to the fans

and they’ve just gone crazy with it.

Love you guys.

I’m the queen of Kinwam.

I’m going all in.

Hey everybody, welcome to episode 55

of the All In Podcast with us again this week.

The dictator himself, Jamal Palihapitiya.

The queen of Kinwam, David Friedberg.

And coming back from Portugal

and the Solana Conference, riding his.

Where heroin and prostitution are legal, David Saks.

We were gonna double click on that

but you jumped the gun here on the docket.

So David, how was the heroin in Portugal?


Great, okay.

You’re having fun.

I was fully drinking the Kool-Aid

at the Solana Conference.

It wasn’t heroin, it was Kool-Aid.

It was literally Kool-Aid.

How many people were at the Solana Conference in Portugal?

Why is it in Portugal?

What happens at a Solana Crypto Conference?

I think there were thousands of people there

and it was, I mean, easily.

And I mean, it was kind of a madhouse

and people were trying to get in last minute

and nobody could get in

because the conference was like totally sold out.

It was a lot of crypto developers,

a lot of people with projects.

And why Portugal?

I think because there’s a lot of conferences

happening in Portugal right now

because they are easier on the COVID restrictions

than a lot of other countries.

So you can actually get in there and host a conference.

What was it, indoors with no masks?

Or masks optional?

I can’t remember if like masks were required or not.

I did see people wearing masks indoors, so.

Were you required to be vaccinated?

Did they do tests on the way in?

I think I did show a vaccine pass

at one point when I checked in.

I just did my booster.

I’m gonna do my booster shortly.

It kind of, it was a little, I would say

the same kind of shitty feeling as the second one.

Which kind though?

I just got Pfizer, I mean, the first two were Pfizer,

so I took Pfizer.

She was, the nurse actually gave me a choice.

She’s like, you can do whatever you want,

Pfizer, Moderna, or J&J.

I just, I didn’t know any better.

I texted my doctor.

So I just took Pfizer.

Although the interesting thing is

Moderna is the only one that’s dose regulated

for the third dose.

So there’s a, they actually give you less specifically,

but Pfizer is the same for all three.

I think we talked about this on the pod.

There’s one theory, which they told you

get whatever one you can get, was the instructions,

because it’s more important to just get one

than which one you get.

But they said there’s a Swiss cheese theory,

which is if you took two slices of Swiss cheese

from two different bricks of it,

the holes would not be the same,

and therefore you overlap them.

So whichever deficiencies each one had,

maybe the other one doesn’t.

So I should have gotten Moderna is what you’re saying.

That would be, if you believe in the Swiss cheese theory,

I don’t know, Friedberg, you’re a science guy.

I should ask Aaron Rogers what he thinks.

I mean, he just straight up lied

about being vaccinated, huh?

I think so.

And I think the NFL’s not doing anything about it, yeah.

That’s not cool.

Why would you lie about it?

I mean, he’s not, he would have still been allowed to play.

So there was no reason to lie about it.

I’m not totally up on that story.

The rumor is that Kyrie is gonna be playing basketball soon.

Because New York-

Because Eric Adams is gonna lift the vaccine restrictions.

You will not need to show a vaccine card or wear a mask.

Bro, I don’t think it’s gonna-

Or maybe you’ll just get a PCR test every day.

I don’t think it’s gonna matter

because the Warriors are shooting the lights out

and Klay hasn’t even come back yet.

And so-

That Gary Payton, the second kid is-

Did you see Gary Payton Jr., these clips?

I mean, he’s like living above the rim

and just destroying his Wiseman back.

And then Wiggins is playing great basketball.

I mean, the Warriors are gonna win this year.

I don’t know.

Steph is otherworldly right now.

Yeah, I think Steph’s got something to prove,

even though he doesn’t,

but he’s playing like he’s got something to prove.

Okay, so do we wanna just cover the elephant in the room?

The last episode, I think we should just get out of the way

because it relates to Solana.

There was, we took something out of the last podcast

so people understand we have an agreement

between the four of us.

If there’s something that somebody doesn’t want on the pod

after we record it, we’ll take it out

because we don’t want anybody.

I mean, I think the philosophy,

we haven’t said this out loud,

is we don’t want anybody to say something they regret

that could cause damage to other people or to themselves.

So if they wanna take something out that they said,

that’s fine with all of us.

And basically each of us has veto right on something.

So last week, two people took their veto right on something

and we took something out.

You wanna explain our thinking on that, Sax,

and why we’re reversing it?

Yeah, okay, so a few weeks ago on the pod,

there was an oblique reference

between me and Chamath regarding Solana.

And so some internet theorists claimed

that we were trying to engineer a pump and dump in Solana,

which if you actually listen to what we said,

it certainly is not a pump.

Let me explain what it was.

So Kraft is the beneficiary because we invest,

we’re the first investors in multi-coin.

We were kind of like their seed investor,

investor in there who put in something like 40%

of the money for their special opportunity fund.

They were one of the first investors in Solana.

So we are the beneficiary of about a billion dollars

of Solana, so thank you, multi-coin.

At some point, well,

so they have started doing distributions,

but at the time I texted Chamath,

they hadn’t really started doing distributions.

I didn’t know how deep and liquid the market for Solana was.

I just asked Chamath, like I’d heard,

that Chamath may have said something

that he was long Solana and wanted to accumulate.

So I sent him a text saying, hey, are you interested?

I thought maybe we could do an OTC transaction

at some point when we get our Solana.

He basically, we had a brief exchange about that.

And then he mentioned on the pod, that was the extent of it.

What I didn’t know at the time, but learned subsequently

is that the market for Solana is very deep,

about three and a half billion notional

is traded every day.

So there’s no need, even if we wanted to fully get out

of our Solana position, which by the way,

we don’t even have, multi-coin still has most of it.

It’s not necessary to do an OTC transaction.

We could just sell it.

Explain what OTC transaction is.

It just means over the counter.

It just means that instead of going to like an exchange,

you would deal with like a trading desk

or it could just be direct, like for me to Chamath.

So that was basically the exchange.

Chamath and I talked about it for maybe two minutes

and then it came up on the pod for 20 seconds.

So then some internet theorist basically clipped it

and tried to accuse us of organizing a pump and dump.

Well, obviously if you’re talking about selling something,

it’s not a pump.

It’s also not a dump either.

So anyway, the reason why we said cut it out last week

is because we didn’t want to give oxygen

to this stupid like conspiracy theory

that somebody had invented on the internet

with like no basis whatsoever

because you could spend all day

trying to like shoot this stuff down.

But then at the Solana conference,

enough people told me that this was becoming a meme

that I thought was worth addressing.

And look, the way you have to understand with crypto

is that for every cryptocurrency like Solana,

there are haters because they’re invested in Ethereum.

It’s very tribal.

Or Cardano or whatever.

Everybody’s talking up their books.

There are pump and dumps.

And there are armies of anonymous Twitter accounts

that will coordinate attacks and or memes, et cetera.


So they’re trying to spread the rumor

that like VCs are big holders in Solana

and are gonna dump it.

The reality is that Multicoin has a large position,

but they have LPs.

They are slowly distributing their positions to LPs.

We will then-

In the forms of the tokens.

They’re not selling them and giving you cash.

They’re giving you the tokens.

You get to decide what you do.


And by the way, that’s what we’d like to do as well.

We’re currently working through those mechanics

because it’s actually complicated for a VC firm

to distribute in kind through tokens, but-

If you had to give them to your LPs subsequently-

That’s what I would like to do.


People are doing that with Coinbase.

So Coinbase is providing that as a service now,

from what I understand.


So we have to work through with our LPs,

but that’s what we’re gonna try to do

is distribute it in kind

so everyone can make their own decision.

I have a couple of things to say.

So I’ve only been a buyer.

I’ve never, I haven’t sold a single Solana token.

And so we are net buyers and we’re buying a bunch of stuff.

But I hate acknowledging that.

And this is why my tone was more non-committal

when we did the pod,

is that I really don’t like this culture

that’s emerged via Twitter mostly,

where you all of a sudden have to be this maximalist

that basically falls on their sword and never sells,

in order to be legitimate.

And I think that that’s a really dangerous place to be.

So, look, if I take a-

Why is that dangerous?

Well, if I take a much, much bigger step back,

let me put Solana in the context of crypto

and let me put crypto in the context of the markets

and where we are today at the end of the week

after Q3 earnings in November of 2021.

We have the stock market at absolute all time highs.


We have crypto at absolute all time highs.


We have the art markets,

I don’t know if you guys saw Phillips and Christie’s

and Sotheby’s this past week,

at absolute all time highs.

Sold another vehicle for 25 million.

We have inflation at a 30-year high.

We have 10-year break-evens at a 25-year high.

We have 1 point some odd trillion dollars

that we just approved last week

and we’re still horse trading on another three,

1.8 trillion dollars of stimulus that we’re going to put in.

And so when you, and then you have,

and I think the most important thing,

which is the two most important founders of our generation,

the two smartest people who have really consistently won,

Elon Musk and Jeff Bezos,

have collectively sold more than $11 billion

of their holdings this year alone.

And if you can’t take all of that and decide for yourself

what’s right for you and your family,

you’re doing yourself a disservice.

I think it’s important for me to never sort of like,

be forced to tell folks whether I’m buying or selling,

although I’m willing to do it in moments

where I think it’s important.

But I think it’s really important to understand the context.

And so I think like these folks that like think derisively

about individuals who are managing risk,

I think it’s really naive.

And I think it creates a lot of missed opportunity

for them as well.

If the smartest people in the world

are now selling their core holdings

that they told you they would never sell,

and you are not reconsidering your position on things,

you’re either much smarter than them,

or you’re being really, really reckless.

All right, there you have it.

Yeah, we, just so people also know inside baseball,

we have a docket of stories that we talk about

on our group chat that make up the docket for the show,

but I’ll bring stuff up.

And I didn’t bring that up in some way

to cause trouble or anything.

I thought you guys would want to clear the air about it.

And I understand Chamath’s position of,

hey, you don’t want to give these things oxygen or whatever,

but I think Sachs also-

I didn’t even know that we needed to clear the air

until I went to the conference

and enough people mentioned it.

But what’s so funny is half the people on Twitter

spend all their time in crypto land saying things like,

never going to make it, have fun staying poor.

They’re extremely, Jason, as you said, tribal.

I’m not sure that they’re doing first principles analysis

of these things.

They’re toxic.

They’ve gotten exceptionally lucky.

Some of them are exceptionally good,

but many people broadly speaking

have gotten exceptionally lucky.

And I think a little bit of it is getting to their head

where they become very virulent against people

that they think whose perspectives may actually be

negatively affecting their position

without actually understanding what David said,

which is these are incredibly deep liquid markets

and one person’s opinion can’t do much of anything.

Right, I mean, that’s a really good point.

I mean, I’d like to give my opinion on Solana,

or just crypto in general.

The thing that’s like hard about it

is that it’s hard to talk about the benefits

of say the Solana blockchain without being seen

as a pumper of soul or a dumper of ether or whatever,

because all these things are so intrinsically connected.

I mean, I learned a lot of really bullish things

about Solana at this conference.

I mean, the biggest thing is,

I mean, there’s basically a battle

for the hearts and minds of developers going on right now

between Solana and Ethereum.

That’s why Solana has raced up

to over 200, I don’t know what, like 7,000% increase

or something incredible like that.

The reason is because Solana as a blockchain

gives confirmations back in something like 400 milliseconds,

whereas Ethereum takes minutes

and a transaction that might cost tens of dollars,

10, 20, 30, $50 of gas on Ethereum cost pennies on Solana.

And so that’s revenge.

Yeah, exactly.

It’s also, a lot of developers feel like the tools,

the developer tools that they’ve created

are easier than building on Solidity.

The thing that Solana gives up,

the trade-off that it makes is decentralization.

There’s basically that transactions

are processed by 20 validators

and they’re a top 20 based on holdings of soul.

So it’s kind of like this proof of stake model.

So anyway, there’s some trade-offs there.

I can tell you that, you know,

it’s the view of, you know, our friends at Multicoin.

And, you know, I heard a lot of this views at the conference,

although obviously you have to take it with a grain of salt

because these are the biggest believers,

but their view is that Solana over the next year

will flip Ethereum based on developer activity,

that there’s real companies being created.

We spend a lot of time actually before we do anything

is that’s the only thing we’ve been looking at, you know,

and Syndica, Fractal,

a lot of the stuff that we’ve done,

DSO is purely driven by developer interest.

When we see developers in the open source ecosystem,

building things on top of this stuff,

making stuff that’s composable and usable by other people

and building infrastructure,

you know, we don’t really second guess that

because they are spending the most important currency,

which is not monetary capital, but human capital.

Yeah, their time, their skill.

Their time and their skill and their reputation.

They can apply it to another project, yeah.

And so when enough developers,

so I’ve always thought you just follow the developers

and as more and more projects get started,

you just have to unemotionally support that.

I think the writing is on the wall,

which is Bitcoin is gold.

Ethereum looks like it’s trending to be silver

and Solana could be the first,

but there will be others that come after it

of real developer ecosystems

that can be built on top of it.

The other thing that I would offer up to people

for them to think about is

before you blindly go and rush into crypto,

one way in which I try to think about these things

is in the following way.

You see these projects get started all the time

and I would view each of these projects

as a mini economy and really try to think

what is the economic value

of what’s happening under the hood.

So simple example, Helium is an interesting project

that’s trying to build a completely decentralized

5G infrastructure, right?

Render is a really interesting project

that’s trying to build a completely decentralized

graphical processing infrastructure, right?

GPUs essentially.

In both of those things,

you can quantifiably economically measure

what the value is that people get, right?

In the case of Render,

you’re basically displacing an AWS instance.

And so that has a price and a value.

And so for Render to be valuable,

there’s an economic value that it replaces.

If you’re joining a hotspot that has an economic value

where you hadn’t necessarily have to pay

to get internet connectivity,

if you all of a sudden are on the Helium network,

that displaces a measurable economic quantum.

Understanding that is probably

and taking the absolute value of that

is the best way of really understanding

which projects have potential.

So if you take those two ideas and marry them together,

where is their developer interest

and where is their measurable economic activity?

At the intersection of those,

I think are the really compelling projects I can win.

Well, and the thing that complicates all of this

is that the developers are not just picking

based on which language or technology or stack

they think has the most potential.

They also have acquired economic stakes in it.

So a developer who might be objective and say,

hey, this new platform is better than Ethereum,

might be sitting on millions of dollars in Ethereum.

And they’re like, I want to keep my bet going here.

And I’m going to keep talking my book.

Possibly, but I do think that developers in general

will choose the platform that’s easiest

and cheapest and fastest for them to develop on.

Which would mean the list on CoinMarketCap

of market cap ones that has been static

for a decade of crypto almost,

or largely the top 10 doesn’t change that much.

It’s XRP, it’s Stellar, Ethereum, Bitcoin, Tether.

That could be up for grabs.

That whole thing could change

now that people are actually building projects

and the projects are getting competitive with each other.

And that’s that flippity we’re talking about, correct Sax?

Yeah, I think that what’s tricky here again

is I never want to give anyone investment advice.

I mean, that’s just not my job.

And if there’s anyone out there listening to the show

because they’re trying to get like tips or tricks

or whatever for investment,

like I’m not really comfortable telling people what to do.

So, you know, everyone just has to understand that.

I do feel like what I saw at this conference

over the past week in terms of developer enthusiasm

and activity was very bullish.

Actually, it was a lot like I went to the Ethereum conference

I think it was back in 2017, several years ago.

And it felt a little bit like that.

Although I would say that this time it felt less academic.

Like several years ago, it felt more like white papers.

Now it actually feels like real projects and businesses

that people are trying to create.

Still infrastructure and less applications

or more applications and infrastructure.

Chamath mentioned a couple of them.

So there’s Helium,

which is creating a decentralized network for Wi-Fi.

There’s Render,

which is creating a decentralized network for GPU.

There’s one called HiveMapper, I met the founder.

It’s a decentralized network for people to map the world.

You can think of, you know,

the concept of a miner that Bitcoin invented.

Think of them more as like a resource provider to a network.

So with Bitcoin, you know, we call them miners,

but they’re the validators of transactions.

And we’re trying to incentivize them

through block rewards,

basically through small bits of Bitcoin that get released

to provide these valuable computing resources

to the network.

And so people are figuring out now

how to create massively decentralized networks

where you have, you know,

thousands or millions of resource providers

provide a little bit of something

to the network for everyone’s benefit

in exchange they get some coin.

That’s like a really interesting model

that couldn’t exist before crypto.

And so, yeah, I mean, I think it’s very interesting,

but you know, in order for that to work,

you have to have like very,

you need fast, efficient, scalable blockchains.

And the feeling as, I mean, I’ll give credit here

to Tushar, who’s one of the GPs at Multicoin.

His view is that this was the iPhone moment for blockchain,

that what Solana has built,

because it’s massively scalable and also very cheap.

I mean, again,

you can run a lot of transactions for pennies.

Now, all of that is obviously very bullish for Solana.

The thing I wrestle with is,

and Chamath kind of alluded to this,

is I think everything’s kind of in a bubble right now

because of monetary and fiscal policy.

And so, you know, I guess you could say

that I’m long Solana versus ETH,

but I do kind of worry that the whole world right now

is very bubbly.

And so as a GP, like, what do you do about that?

I can tell you right now, like this second,

we are sitting on Solana that we have not sold.

So, you know, I am long in that sense.

However, sometime over the next, whatever number of years,

we will distribute out our position of Solana

to LPs.

And then the LPs will make their decisions.

And then they’ll make their decisions.

Some LPs might specialize in crypto and want to keep it.

Other ones might not want to hold assets

and need that money to fund their endowment

to give scholarships to students

or whatever your LPs particularly do.

Well, yeah, I mean, and so I guess to the issue of,

hey, we’re not giving investment advice here.

We are all capital allocators and startup creators.

So we’re talking about our day-to-day lives here.

Nobody should interpret this as investment advice

and especially not in a world now,

I don’t know if you guys saw what happened

with Rivian this week.

I don’t know how we don’t talk about a company

with essentially no public sales.

They’ve sold 148 cars to their employees.

It’s worth $120 billion.

Any, Freeberg, did you see this IPO, any thoughts on it?

Seems like a high-

Do you have investment advice for the audience

that you’d like to give?

Tell me what Rivian does.

Can you play that video that you found

that you shared with everyone?

You have that video, you know?

Okay, well, we do have it.

I can, we can cue it up.

Did you see this yet, Sax?

Who is this guy?

No, I haven’t.

Oh, that, yeah, yeah, yeah.

Well, but just, so I don’t want to beat this point

to death, but I just think it’s so important

for the audience that what they should be getting

out of the show, if they’re fans,

is maybe like advice on how to think.

Yeah, critical thinking.

Critical thinking and how we think about investments.

First principles.


So look, if you want to invest in crypto,

first of all, like go understand

what all these different projects or blockchains do

and figure out what is the purpose of the token

in that system?

What are the token economics?

What’s the utility?

Yeah, does it even make sense or is it just a scam?

Then if it’s something like a blockchain,

go research how many projects have developers on them

and how much code is being checked in.

And maybe open a wallet and buy some NFTs

and buy some ETH and transfer it

and learn just how to set up your internet connection.

Right, right.

If this was 1995.

Right, exactly.

And then on top of all that,

you got to consider macro forces because,

I mean, and I think, you know,

my friends at MultiCoin would fully concede this,

that, you know, it could be the case

that if there’s a crypto bust over the next year

and this thing, you know, crypto has gone

through boom and bust cycles for many, many years.

That is the standard.

It’s the standard.

So you could have a situation in which, for example,

Solana flips ETH and yet still goes down in value

because there’s an overall bust cycle.

So, you know, you have to consider

the macroeconomic factors as well.

So there’s a lot of things to consider here.

And then you also have to consider your own risk tolerance

and, you know, what is appropriate for your portfolio.

And it may be different than us.

And when do you need your money?

Are you a 25 year old?

Everything is at all time highs

and the two smartest men in the world are selling.

Not just them, by the way.

Not just them.

There are other guys that are heavily on the other side

waiting for this whole thing to go.

Like Druckenmiller has been very vocal about this.

And he’s been the best macro trader in the last 30 years.


And his position is what exactly?

That we’re printing too much money

and we’re in a lot of trouble.

So, you know, look, I mean, generally there is,

I think a good point of view being shared here,

which is, you know, understanding how to think

about what you’re investing in

and what your expectations are

versus relying on someone’s advice

or opinion on what to do.

If you have to rely on someone else’s advice

or opinion on what to do,

you’re gonna eventually lose money.

You should not be in that investment category.

You should not be in the market.

Cause guess what?

Anyone that’s giving you advice or opinions

is gonna make money if you do what they tell you to do.

End of story.

So at some point, they’re gonna all make money

and you’re gonna end up losing money.

And it’s a better game to play

to learn how to kind of be thoughtful about

where’s your money going?

What are you investing in?

And it takes a lot of time and a lot of money.

I’ve been sitting here silently

as you guys have been talking deeply

about Solana and Ethereum and Bitcoin

and the crypto markets,

because I realized so much of, you know,

what’s needed to be successful in entering this market

is a depth of understanding and a depth of knowledge.

My time is highly limited.

I have spent no time understanding crypto markets

because it’s so deep and it’s so fluid.

It’s changing every day.

It’s changing every week.

So if I can’t get smart enough to feel confident

about the opinions and decisions

that I would be making as an investor,

I decide not to invest and I stay out.

And so I’m not an active crypto investor.

You’re a specialist and you’re on the razor’s edge

on synthetic biology and so many other categories.

There are other areas where it’s better for me

to spend my time and my energy.

And I’ve chosen to do that

versus being drawn into what feels like a very exciting

kind of, you know, turbulent time.

There are other areas that I kind of spend my time on

and I just kind of try to recognize

that maybe I don’t know what I’m doing

if I were to try and get involved here.

And so I’d rather stay out.

And I think that’s counsel for anyone.

You know, if you’re gonna make an investment,

it’s important to feel confident about the knowledge

and the depth needed to kind of be different

than the rest of the market.

I’ll build on your point.

Like when I started doing my SPACs,

I started to write these one-pagers

and those one-pagers were artifacts

for me to hold myself accountable

for how I saw something in a moment in time

and then to be able to see whether it was

tracking to that.

And then also to share it to other people, a starting point,

as David said, a journey where they should then,

if they’re curious, go and do their own work.

It turned out not enough people were doing the work.

So then I had to start adding disclaimers to these things,

saying, hey guys, I’m not telling you to buy this.

Please be abundantly clear.

These next SPACs that I will eventually launch,

you’re gonna see an entire like in bread block letters,

like please don’t buy this.

Right, because to your point,

it doesn’t matter what you say.

People want a lazy, easy way out.

And so I just want to reiterate what all of you guys said.

None of us are dispensing advice.

We are not telling you to do anything.

Please do your own work

and please come to your own conclusion.

It is your responsibility.

And if you’re not sure,

go and look at your children in the face

or your significant other in the face.

You are responsible to them.

And so do your own work.

I’ll say one more point on where I sit as an investor.

I choose to only participate in investing

in what I call productive assets.

That is you put some money into something

and whatever that thing is,

it’s generating money in some way

or it’s trying to generate value

through a set of activities like a business

or owning an apartment building where you’re making rent,

you know, anything that,

or, you know, a group of people

that are trying to have some breakthrough

or some discovery.

Those are productive assets.

There’s a lot of what’s going on now

that is what I would call speculative assets,

which is the only way you make money

is if someone else pays more in the future

versus what you’re paying.

And there isn’t an underlying productive asset

to what you’re putting money into.


You’re describing every ICO or-

Every ICO, every NFT and the art market, right?

These are examples of unproductive assets.

They’re speculative assets in the sense

that you’re speculating that at some point

the price of them are gonna go up and someone-

Somebody wants that NFT more than you.

Someone down the road will pay more for that asset

than what you paid.

But that underlying asset,

that capital that you just put in

didn’t go in to build something.

It basically-

There’s no revenue generation.

There’s no IP.

It went into someone else’s pocket

that sold that asset to you

and you’re eventually gonna try and sell it to someone else.

And so, you know, there’s a real attraction here

because what we just talked about is really hard to do.

Having fundamental analysis and understanding of businesses

and a fundamental understanding of what’s working

and what’s not and when to shift and, oh my gosh,

are things different or are they not?

To do that is really hard.

So people end up relying on opinions of others

or they end up running into speculative markets.

And the speculative markets are easy to understand.

Someone just paid more for X than the other person did.

Therefore, there’s a trend line.

It’s going up.

It’s like playing roulette and black keeps coming up

and you’re like, okay, it’s gonna be black again.

It has to be black.

There were seven, correct?

There were seven blacks.

And so I think that that’s a really important

kind of takeaway for folks that might be new as investors.

We’re all susceptible.

We’re all susceptible to this.

Like I was just looking, you know,

at my own performance coming into the end of this year.

And, you know, I did a lot of SPACs this year,

but I also did these pipes,

which are these third party deals.

Private investment in public entities.


Other people’s deals that they were bringing to the market

where they said, Chamath, do you want to be a part of it?

And, you know, and I did.

And part of it was I was looking at these things

and, you know, Freeberg doing my work.

But in the end, it turned out I didn’t do nearly as much

as I probably should have,

because I ended up sitting on top of other people’s work

versus the original or underwriting that I would do

if it was my own deal itself, right?

Anyways, the net of it all, it’s like, you know,

that was very inefficient capital deployment.

And as I look at it now, it’s like, you know,

I’m down, well, I’m technically up 19%,

but that’s really because of one deal.

If I take that one deal out, which was a total outlier,

I’m down 17% on about $200 million of investment.

When you were a fast follower, not the originator,

it wasn’t your idea.

This is critically important.

There are many different ways to make money,

but you have to specialize

and you have to have first principles and your knowledge.

I trusted other people.

I did the same thing that I’m saying

to other people not to do.

Do not just copy other people.

You have to do your own principle work.

And even when you do your own principle work,

it may not be enough.

And you have to be willing to basically

see the forest from the trees and walk away.

And so all these pipes,

I’m in the midst of sort of cleaning up and selling down.

And they’ve been just a kind of a disaster for me.

You know?

Hold on, I want to build on this for a second,

because I think it’s critically important

what you said as well, Friedberg.

You have to be comfortable

with the investments you’re making.

I look at these companies

and I look at the underlying customer, the product,

you know, and what kind of revenue it’s going to generate.

And people thought I was dunking on Rivian yesterday.

And I said, listen, you know, when Tesla went public,

people forget their valuation was 1.5 billion.



Okay, so 1.7 billion when they went public.

Now they already had thousands of roadsters

and they had already had the-

No, they had 93 million of revenue in year one.

So this was dramatically different than what Rivian had.

Rivian is being valued at, you know, whatever that is,

120 billion, I think yesterday.

Rivian has 17 billion in cash.

Somebody asked me at the poker game last night

what I value Rivian at.

I said, 17 plus three,

17 million in cash plus 3 billion,

double roughly what Tesla’s was,

the market’s hotter right now, whatever.

But I put them at 20 billion

and people were giving a hard time about it.

I said, I think that’s actually

the realistic valuation for this company.

And we are in a very dangerous moment in time right now

where I think people are,

whether it’s meme stocks or crypto or NFTs,

suspending disbelief, in some cases SPACs,

because they’re not all created equal.

And certainly in private companies, we’re seeing this,

where people are giving people an amount of credit,

which makes no logical sense

and is getting further and further disconnected

from reality.

So as an investor, you have a choice.

Either you take, you have your fundamentals,

which I’m not going to change my fundamentals.

I’m going to focus on the fundamentals

that got me where I am.

And I’m not going to be involved

in $100 billion market cap company

that hasn’t launched a product yet,

let alone $120 billion one.

I’ll stay focused on startups.

But what you’re saying is also important

because you’re highlighting how you value that company.

You individually said,

I think that company’s worth some multiple

of how many cars have been sold in the past.

Elon sold thousands of cars.

He was worth 1.7 billion.

These guys have sold.

And other people are coming in and looking at this company

and saying they’ve built facilities,

they’ve built assembly lines,

and they’ve got pre-orders and bookings

for lots and lots of cars in the future.

And clearly they’ve gone in and some people have gone in

and seen these plants and seen these cars actually working.

So it’s really important to take note

that your point of view is one point of view

in a very diverse market with many points of view.

And everyone’s going to come into this market.

And that’s why unless you individually as an investor

have a strong point of view

and can show that you can apply your unique insights

to consistently beat the market making decisions,

investment decisions like that,

you’re eventually going to lose

because those other points of view

will be a bigger view of the truth and you’ll lose money.

And that’s why, by the way,

that’s why picking stocks is ultimately a loser’s game

unless you have some unique ability and insight.

For most people historically and in an upmarket,

everyone looks like a genius.

You need to have an edge, right?

You need to have an edge.

And the public markets are hard to say that

because people think it means insider trading.

Yeah, there’s some unique competency

that you need to bring to the table.

I mean, if we double click on what you just said

as the things that would be reasons to embed on Rivian,

number one, they have 48,000 orders of pickup trucks

against the F-150, which is now electric from Ford

and a million Tesla Cybertrucks.

I don’t know why you’re arguing this, right?

Like you’re just making a point

that we don’t have someone on the panel right now,

but someone else could come in

and argue the other side.

Okay, go ahead, Chamath.

And I would just say, this is the part of the conversation,

to be honest, Jason, to give you feedback I don’t like

because Rivian, just in defense of Rivian for a second,

what I have heard is that it’s a well-engineered car

or truck rather.

They’ve done a very smart path to market,

which is essentially to build these delivery trucks

for Amazon that allowed them to even frankly,

be default alive.

To use the Paul Graham term, instead of default dead.

I think the point that’s more important here

is that it doesn’t affect you.

So let Rivian do well, you know?

And this is part of the cycle-

Oh, you’re saying we shouldn’t have an opinion publicly?

No, no, no.

I’m just saying this is the part of the cycle

that I don’t understand

where people legitimately have these zero-sum points of view

about companies.

And this is where I think Friberg is more right

than anybody else, which is the market is the sum

of all these collective points of view.


Longs and shorts.

I think it’s fine to have one.

I think it’s a little superficial, your point of view,

because it’s not really-

How so?

Sitting on top of a model or anything else.

And I think it’s the same kind of superficiality

that the Tesla Q guys had about Tesla for many years as well.

It takes a long time.

As somebody that does this every day,

and I just want to point this out,

it takes an enormous amount of time

and enormous amount of work to be 55% right.

Listen, I’ve invested in 350 companies.

I meet with 2,000 companies a year.

No, in the public markets, Jason,

it’s different in the public markets.

Listen, and my companies are going public now,

so I take exception to what you’re saying.

I know a fraud when I see it.

I’ve seen them before.

Oh, that’s a really big statement.

I’m not saying Rubin’s at fraud level yet.

That’s not a fraud.

No, but the distance between the valuation and reality

is in the 50 to 100 billion dollar range,

and that is very dangerous.

I know, but that’s not in control of Rubin.

That’s not in their control.

Okay, that’s in a bunch

of external market participants’ control,

so you can’t pin that on them.

My point is-

What I would pin it on is,

the market right now seems dysfunctional

and is not properly measuring things.

I know, but throwing shade,

then you should throw shade at T. Rowe, Fidelity,

all these people that are bidding up your companies,

by the way, because they are the ones

that are taking Rubin to 120 billion.

It’s not Rubin’s fault.

And Jason, what’s really going on in the market-

I thought that was the thing.

It was public speculators.

No, what’s really going on, it’s not.

You can’t sell $16 billion in an IPO to speculators.

Well, that’s at a much lower price than the IPO price.

These are institutionally placed trade orders,

but regardless, the market is clearly right now,

in productive assets, businesses,

the market is looking at a time horizon

that it has never looked at before,

which is making bets that are at 10, 15,

20 years in the future,

and that’s because of the condition

that we’re in right now

from a monetary policy point of view.

Interest rates are so low,

there’s nowhere to get yield in other assets.

So you have to look further and further out to find value.

Okay, I accept that, I accept that.

So the market is betting, is making 10-year bets,

which is like a VC type bet.

It’s more than a 10-year bet, but okay, yeah.

And Jason, sorry, can I just finish my last point?

Because before you interrupt me,

my issue, Jason, is I think you are

an exceptional angel investor,

but just the same way you derided

a bunch of late-stage guys,

remember last night at poker,

when we were talking about late-stage folks

entering into the angel market and the Series A,

you were extremely dismissive

because you know what the job is to be done,

to do that job well,

and they have a different skillset.

Similarly, what I would just offer for you to think about is

the people that really underwrite public market stocks well

do things and have a skillset that is extremely specific,

and it is well-trained as well.

And I think that-

Okay, no, I accept that people were good at that.

I’ll defend me.

Let me jump into the Jake Alston facts.

But go ahead, since you want to defend me,

that’s, the people are in shock right now,

so I’m gonna let you speak.

Way to get yourself back in the game.

The sky is purple, the sky is purple,

the moon is set.

Breaking news.

Hell is freezing over right now.

Hell is freezing over.

Okay, so here’s where I think Jake Alston,

I don’t know anything about this Rivian company,

but where I think Jake Alston’s right is

we’ve seen over and over again

that when a company gets,

when a startup gets a billion dollar plus valuation

without a product, invariably,

it ends up somewhere between a disappointment

and an outright fraud.

Jason’s law.

It was Theranos, or Magic Leap, or Quibi, or whatever.

I’m not saying they’re all frauds.

I mean, I think just Theranos was, but-

Trainwrecks, frauds.

Trainwrecks, frauds, whatever.

So I think it’s reasonable for any,

let’s say seed or early venture investor

to develop the heuristic

that I’m not gonna invest in anything

with a billion dollar, with basically a unicorn valuation

without seeing the product first.

Because we’ve learned, we’ve got our hands burnt

so many times from these overhyped companies.

And here’s where I agree.

If I can’t see and use the product, I’m not investing.

I’ll invest in a seed stage,

but I will not invest in a unicorn stage, no way.

I agree with that.

But what I’m saying is

when a company is going public like that,

there is demonstrable proof of concept there, okay?

The only market in which that’s not true

is in biotechnology.

Well, I would say for Fisker and Nikola,

two related companies,

those ones seem very, very shaky.

You can debate about the scalability of these things,

and you can debate that people didn’t do the diligence,

but they had to at least put a proof of concept out there

for you to judge.

If people don’t do the work, I agree with you.

Like if you’re rolling a truck down a hill, sure.

Outright fraud.

No, but my point is if you were there and you did your work,

you would have seen what you needed to see.

What I have heard from people who were investors

in both Lucid and Rivian

is that they have sat in the cars, they’ve driven the cars,

they’ve spent time with them, they’ve seen the factories,

and it’s very much real.

Now what they’re debating is ramp and velocity and scale.

I don’t know, I don’t have a position in either.

I have the bigger macro point of view,

which is important to me,

which is just because these things are in the public markets

I think people think it’s easy to judge.

And I think actually modeling them and making good decisions

is just as hard as it is for private companies.

Okay, we need to roll this clip

because there is somebody who is giving exceptional advice

on CNBC.

Let’s roll the clip.

Yeah, so well, Upstart’s up about 25% just in four days

since we bought it.

We bought it on about four days ago.

So that’s actually made a nice little move

in the short term, probably a little extended right now,

but longer term, that’s a good looking name.

Very powerful, very strong earnings.

These stocks are-

What do they do? I don’t even know.

What do they do?

Excuse me?

What does Upstart do?

Well, I’m sorry.

What kind of company is it?

Yeah, I’m not, you’re breaking up.

Oh, well, I guess we’ve got an audio problem, Mark,

I’m sorry.

Oh my fucking God.


Who is this guy?

Who is he?

I have no idea.

J. Cal, is that like your uncle or something?

Who is that guy?



I mean, just to the point-

Do you want to go on CNBC?

Well, you know, the guy’s been on many times.

But doesn’t this prove what we were saying,

which is that you’ve got to do your own principal work here?

That is why we wanted to play it.

Here’s a talking head who’s probably getting paid

for selling some books and giving advice,

who knows nothing about what he’s telling you.

You can join his membership club for 1,000 a month.

Yeah, I’m sure he’s publishing lots of papers

that show that he’s a highly successful,

profitable investor, and look how smart he is.

He doesn’t even know the company he just promoted on CNBC.

It’s incredible.

On a mechanical basis here, Chamath,

you and I have been on CNBC many times.

In that moment, what is going on?

What do you think is going on in the host’s mind

and the producer who has to dump this call?

Let’s move on.

Because they’re watching this.

Let’s move on.

I just, the breakdown when he says, I’m sorry.

I have no idea.

What do they do?

I think the point’s been made.

I think the point’s been made.

Oh my Lord, everybody should do their own work.


Do your work.

All right, let’s keep going.

Zach, you look like you want to say something.

I mean, it just shows the agenda.

Yeah, look, I mean, there is a massive agenda

in corporate journalism.

There’s an agenda by the people on these shows

to promote positions.

There’s an agenda by the reporters themselves

and on and on and on it goes.

So to Chamath’s point,

if you just take face value and you don’t do your own work,

then you’re buying into someone else’s agenda.

Trust yourself.


One thing that we are trying to all understand is inflation.

The CPI has gone up 6.2% in October,

highest jump in 31 years since 1990,

according to the Wall Street Journal,

fifth largest straight month.

Fifth straight month of inflation above 5%.

Somebody tweeted out, we’ll pull it up here,

Denver Bitcoin put out a year over year commodity chart.

We can throw up on the screen.

And then I think Friedberg, you shared in the chat

the average weekly retail prices around fertilizer.

What are our thoughts on the nature of inflation

and how that affects our investment?

I think it’s persistent.

And the reason I think it’s persistent is that

all of these things are intertwined.

And so, Gina, if you want to just bear with me for a second,

like when this, let’s just go to the entry level

economic job, right?

So you’re a barista at Starbucks or you work at McDonald’s

and you’re making 17 to $20 an hour.

What that does is it shifts labor.

And eventually there are other people

that are entering the workforce or may shift jobs.

And essentially it just causes this leaky bucket effect

where everybody else has to then accommodate itself.

So you have a guy like, you have a company like Amazon,

which is now gonna pay 25 or $30 to keep folks, right?

Because otherwise they may say,

oh, if I make 15 or $16 an hour,

I’d rather work at McDonald’s, it’s simpler.

And free college.

It’s not backbreaking work, blah, blah, blah.

So then they start to increase the amount that they pay.

They increase their benefits and the like.

I saw this thing this week.

There’s a crazy thing that’s happening though,

which is it’s now pulling people

from non-traditional job classes into those jobs.

There are teachers that are leaving teaching

to go work at an Amazon warehouse.

There are firefighters that are quitting

being a firefighter to go work at an Amazon warehouse

because you make the same or more,

plus you have all of these other benefits

and the job is structurally a lot easier.

And so people are making different optimizations.

And to that point, I think we talked about this

and Nick, you can put it in the group chat.

In Reddit, as an example, there is more engagement

in the subreddit around having a simple work life

than there is now in Wall Street bets, right?

So there’s been a structural cultural change

where people need to get paid more

to do the same amount of work.

And then at the same time,

you have all of the supply side getting more expensive.

Fertilizer makes corn more expensive.

Lumber makes house prices more expensive.

Chip prices makes the iPhone and cars more expensive

or completely backlogged.

You know, yesterday at poker,

Sonny was showing us he bought a Tesla

and the delivery period is October of 2022.

Yeah, it’s crazy.

It’s freaking crazy.

So I think that this is the beginning of a persistence.

I think those are all like really valid points.

The thing I’m seeing now is I think we’ve moved

into what I’ll call a contagion phase of inflation,

which is people are hearing about inflation.

They’re seeing it in some places.

My gas went up a little bit.

My milk went up a little bit, whatever.

And they’re saying, well,

I guess if everybody’s raising prices,

I need to raise the prices as well

of whatever I provide in the world

so I can just keep up with everybody else.

And they’re not looking at their inputs necessarily

and saying, I need to charge more

or that’s the best business decision.

They’re just saying everything’s going up around me.

And so they raise prices.

I’ve literally had this happen three or four times

and I went to buy a car and they wanted 15K over sticker

and I didn’t buy it based on principle,

but I’m sitting here going like, maybe I’m an idiot.

Maybe I should just pay the 15K over sticker.

What are your thoughts, Saxon inflation?

And the contagion, if you have any thoughts.

My thoughts are I told you guys

like six months ago about this.


Can we just replay what I said on episode 32?

It’s got his researchers in the background giving.

You’ve written down what you said on per episode basis?

No, this guy’s in the fucking debate club,

Stanford debate club over here.

Some of us, when we make predictions, take them seriously.

So, you know.

Oh, was that a dig at professor ice cold takes?

I’ll give you guys a link to a prediction that was made.

Here’s, I mean, I just want to replay the 20 seconds

I said about this back in May.

Here we go.

The two Davids dueling again, just like in the group chat.

Yeah, I’m not dueling.

All right, here’s Friedberg, January 1st, 2021.

If you don’t think inflation is already here,

you missed what happened to the stock market.

Companies aren’t performing better.

We’re just inflating everything.

Financial assets first.

Everything else will follow.

That was a good one.

So just make your point.

Just make your point.

Just add the clip.

I’m beginning to wonder

if Biden’s going to be a Jimmy Carter here

because frankly, all he had to do

was leave things well enough alone.

COVID was winding down.

We had a vaccine.

All they had to do was distribute it

to as many people as possible.

End COVID, let the recovery take shape.

And instead, they push this insane $10 trillion agenda.

It’s going to backfire massively.

Look, if the economy turns,

we were set for a post-COVID boom.

And right now that is all at risk

because Jamal, like you’re saying,

they’re keeping the economy closed

or parts of it way too long.

They then overcompensate for that

by printing a ton of money.

And then they overcompensate for that

by raising taxes too much.

Just to build on that.

So that second step of their overcompensating

their inability to open with money is so true

because then what happens is your labor force

stays impaired because people make enough money

by not working.

It was true when I said in May,

it’s even more true now.

He said it was, there was inflation.

Okay, so there’s inflation.

So now, great, good job.

Somebody’s prediction was proven true.

Yeah, I made one in January that said the same thing.

Now look, you can do three things to,

you can do three things to curb inflation,

raise rates, right?

When you raise interest rates, you slow spending.

Prices come down, inflation slows.

But the issue when you raise rates

is obviously you see things like job loss

and economic growth declines,

and it can very quickly spiral the other way.

This is the big challenge of Fed tapering.

The other option is we’ve seen a significant attempt

at lately is to raise revenue, right?

So increase tax rates,

tax a broader swath of people at a higher rate

or a broader swath of business at a higher rate.

So it’s very likely that tax revenue

could kind of present itself again as a driver

if inflation continues to spiral up.

And the third, which is the least likely is cut spending,


The federal government spending the way it does right now

makes a very inefficient way of kind of putting capital

into the system and inflating.

We’ve seen historically that anything

the federal government spends money on

like healthcare and education,

the costs very quickly spiral out of control.

Super inefficient.

Why not just give that money to the free market

to make decisions on how to spend it?

It would be more efficient, et cetera.

And the market would effectively find balance

where buyers and sellers are equivalent

as opposed to having the federal government

driving the price of everything up.

The fourth option that people don’t talk about,

which I think may end up becoming an important option,

not kind of a bleak option,

but more kind of backdrop is to start a war.

And when you start a war-

Wag the dog, wag the dog.

Yeah, when you start a war,

you stimulate the economy

without needing to pump additional capital in

so you can increase growth

and avoid the risk of stagflation.

And you can source resources

that otherwise wouldn’t be kind of flowing into trade

or basically in a land grab type situation.

But it doesn’t necessarily mean that policymakers would say,

hey, let’s go start a war to decrease inflation.


But the premise that conflict can improve the economy

is a important backdrop

that starts to play into policy decisions

that might get made

over the next couple of months and quarters.

And that’s really important.

Whether or not the posturing is one of partnership

and reducing the tension with foreign nations

or one of increasing the tension,

it’s more likely that we would want to increase the tension

when we’re in an inflationary environment.


That’s quite a conspiracy there.

So what do you think, Sax?

Okay, we got to go back to first principles on this thing.

We’re not going to start a war to tame inflation, okay?

But let me just explain what inflation is,

because I’m not sure people fully understand

how this works.

Inflation is very simple.

It’s too much money chasing too few goods, okay?

And we have both sides of the equation going on right now.

On the supply side, on the good side, we’ve got shortages.

We’ve got the ports backed up.

We’ve got paying people not to work.

We still have the 2 trillion of COVID relief

passed earlier this year,

which was responding to a problem

that was largely winding down.

So we have these labor shortages.

People dropping out of the workforce in record numbers.

The number that just came out showed

we had more people quitting their jobs than ever before.

So we have a shortage in terms of the production

of goods and services that people want.

At the same time,

we have this monetary and fiscal expansion

coming out of Washington.

You’ve got, and again,

they did the 1.9 trillion of COVID relief.

They did 1.2 trillion of infrastructure.

Biden’s still talking about another 2 trillion

of social welfare.

You have the Fed still printing money with QE.

So you’ve got this massive expansion

in the amount of money.

So look, too much money chasing too few goods

creates this problem.

And it was very predictable.

And so what I said back in May,

this is what I was warning about,

and it goes back to the Druckenmiller clip

that we were talking about all the way back in May.

He said the same thing,

that we had a reckless fiscal and monetary

expansionary policy coming out of Washington

at a time we didn’t need it.

Because if you looked at retail spending back in May,

it was back to above trend.

So, you know, in other words,

like there was no demand problem.

The economy was back.

And they’ve just been pumping

and pumping out of Washington.

We made a, we had a, we had good intent.

We wanted to make people not suffer.

We wanted to get the economy on tap.

We may have just made a bigger bet than we needed to.

We overdid it.

We overdid it, clearly.

But look, who wants to be the politician, quite frankly?

Yeah, it’s not going to get you re-elected.

Who ends the eviction moratorium, right?

The gravy train, yeah.

Well, nobody wants to be the politician who says,

okay, now you suddenly have to pay your rent.

But obviously people have to pay their rent.

And we’re taking away your bonus unemployment.

People have to go back to work at some point

when there’s 10 million jobs open.

Just as a, I’ve been watching the Taiwan situation

like a hawk.

And I don’t know if you saw this this week

to go off on another tangent,

but the US is testing Israeli’s Iron Dome in Guam

as a defense against Chinese cruise missiles.

Obviously for possible deployment in Taiwan.

And I don’t know if you’re watching

Ennis Cantor in the NBA,

but he has been going on CNN and stuff like that now

talking about China.

Pretty amazing.

I predict escalating global conflict.

That’ll be my prediction to mark the Q4.

Well, I think that’s a,

I think actually that’s a pretty valid prediction,

but I just think it’s a little bit separate than inflation.

Like I said, it’s not an explicit decision,

but I do think that in the backdrop

of an inflationary environment

where you have something

that can temper the condition at home,

that at the same time, you know, might sell politically.

But we don’t need,

but it’s not gonna solve anything politically.


I mean, World War II, you know,

famously got us out of the Great Depression

because that did stimulate demand.

But in the situation we’re in today,

we have too much demand.

We have retail is trending way above curve.

What we have is a supply shortage

and devoting resources,

taking them away from the productive economy

to go to war would only exacerbate the problem,

make it even worse.

What we need right now actually is for Washington

to back off, to stop pumping demand with this,

with, you know, now they’re still talking

about this $2 trillion.

Sell the money printing machine.

Sell the money printing.

That’s what we need.

We need them to get out of the way.

And to stop these disincentives for production and work.

So you have, I mean,

Manchin was exactly right about this.


Do you remember when Manchin,

when he was resisting this $2 trillion social welfare bill?

I mean, the things he said are already coming true.

I mean, he said this months ago.

He said that we should take a strategic pause

because he said, this is a quote,

by all accounts, the threat posed by record inflation

to the American people is not transitory

and is instead getting worse.

From the grocery store to the gas pump,

Americans know that the inflation tax is real

and DC can no longer ignore the economic pain

Americans feel every day.

That’s what he was saying this past summer,

several months ago.

And they rolled right over him.

The psychology of this could be self-fulfilling as well

because what’s going to happen is

you’re going to have everybody raise prices

because it’s now become an escalation.

You know, your hairdresser, your, you know,

whatever, you know, services you’re using,

whatever product you’re buying,

whatever restaurant you’re going to is going to put $2

on every appetizer and five bucks on every entree.

Everything is just going to keep going up.

And then what happens is people who are in the middle class

or, you know, who are consumers of products in a large way

will say, you know what?

I’m going to put off buying a car.

Then we’re going to be driving all this supply up.

And then people are going to say, you know what?

Fuck it.

I’ll just drive this one for two more years.

That’s going to cause stagnation.

And it’s called stagnation.

It’s what we had in the 1970s.

And you’re right.

It’s called an inflationary spiral,

which is the future expectations of increasing prices

means that people start increasing them now.

And that feeds on itself.


And that’s what we had in the late 1970s.

And the thing that broke that was Paul Volcker,

jacking up interest rates.

It was very painful.

It caused a very severe recession in the early 1980s.

But then the economy came roaring out of that by 83.

It got Reagan elected in 84.

And you had 30 straight years of declining interest rates.

And that led to a stock market boom.

So the problem we have now, okay,

here’s the problem we have is

there’s going to be no Paul Volcker.


We can’t afford to jack up rates

because the federal government’s debt

is so much bigger than it used to be.

And we are not on a fixed rate.

We’re on a variable rate.

All of the debt we take.

The average maturity of government debt

right now is five years.


So, I mean, that means the whole debt

rolls over within five years.

So if they jack up interest rates,

we have almost 30 trillion of US federal debt right now.

So every 1% that they increase interest rates,

that means another 300 billion a year

of debt service payments.



So there’s going to be enormous pressure

on the Fed not to raise rates.

You already are hearing Biden

rattling the saber saying that Powell

may not be his choice for a second term.

By the way, Powell is very dovish.

He’s basically saying we can’t raise rates right now

because of this and that.

So, and the Biden administration,

nobody in Washington ever wants rates to go up, right?

They want to keep these low rates forever.

This is the problem is, look,

at the end of the day,

I don’t know what the inflation picture

is going to look like next year.

But what concerns me is we don’t have effective tools

to fight it anymore

because we’ve given up our ability to raise rates

because it would increase the cost of the debt so much.

And I mean, so just one article

just to share with you guys is this, again,

one of my favorite sources of economic information

is the Fred blog, which is from the St. Louis Fed.


We wrote a blog talking about two tails of federal debt.


And the article is about,

here’s why there’s so much disagreement

on whether the federal government debt is too high.

So the first chart shows debt to GDP.

This was always the way of looking at government debt

was simply looking at the ratio of debt to GDP.

It’s now something like 125% in peacetime.

I don’t think we’ve had a higher peacetime ratio

that would tell you things were out of control.

But for the last decade,

while this has been going on,

you had this whole school of thought,

the MMT, modern monetary theory,

all these economists and experts

and politicians and the media were eager to buy in

because they want to spend the money.


And what they said is, no, it’s not debt to GDP.

You should look at debt service to GDP.

This is the second chart on that blog.

And so debt service to GDP was staying constant

or even going down as the debt to GDP was going up.


Because interest rates were so low.

The problem is what was so foolish

about this point of view is,

it is assumed that interest rates were going to last forever.

Well, if that was your point of view,

why didn’t you do what Trump actually suggested

several years ago when he suggested

having a hundred year T-bills?

They should have locked in much, much longer duration,

maturities on the federal debt.

And instead, and Yellen rejected this, okay?

And so you’ve got a five-year average duration,

which means that if interest rates go back up,

the debt service cost is going to explode.


In 1980, we changed the goalposts for CPI.

So even as a measurement to know what we look at,

and I think Jack Dorsey tweeted this out.

So Nick, you may be able to find this tweet,

but we changed the measurement of how CPI measures.

And so if you go back to the original measurement,

it looks like inflation and CPI is much more pernicious

than we would otherwise think it

if we just look at the new CPI

that we started to look at as of 1980.

So that’s another sort of like point.

We did the same thing with unemployment.

I just go back to what I said early on.

We took out people who had given up looking for jobs.

The two smartest people that we both know are net sellers.

Well, they’re selling some, yeah.

I mean, they’re not selling everything.

I’m just saying the two smartest people we know.

We don’t want to get financial advice here,

but should everybody be moving to cash?


Where do you put your money?

I’m just saying, I’m totally confused.

This is, I think, the admission.

Just buy productive assets,

great businesses that have durability,

and let them ride for 20 years.

I like your answer.

The fact is we’re all confounded

as to what to do at this moment in time.

We’re all trying to figure this out,

and we do this for a living.

But then you’re trading the market

like everyone else all the time.

Like, you know, why trade the market

when you can just buy great businesses,

own stakes in them, and let it rest?

No, I’m just talking holistically

where to put money.

I mean, my practical issue

is that I don’t have infinite money.

And so in order to put my money into productive assets,

I have to sell other productive assets.

Well, if you’ve got other productive assets,

leave them in.

Why sell?

Well, then it’s like, then I’m basically,

you know, doubling down on a worldview

that may be old and dated, right?

So if I’m long a bunch of software companies,

and I really want to do something

in climate science or biotech,

what am I supposed to do?

Don’t try and time the market.

Shift your assets, right?

No, no, no, I’m not trying to time the market.

I’m just saying, if my worldview shifts

to really want to double down on climate science

or alternative finance or biotech,

I have to raise capital to do that.

You have to raise capital, is what you’re saying.

Right, but for me,

I’m not raising it from other people.

I’m raising it for myself.

So I have to sell things I already own.

It seems like, to me,

the best place to be right now

is in the company formation space,

because when you create a company,

like Friedberg does every three months,

there is so much value being created

at that moment in time,

and so much further capital getting poured into it,

that if you are the originator of the company,

and you get some big slice of the cap table

for doing that, which is completely valid,

you originated the company,

whether it’s Munique or Call-In or whatever it is,

man, that is a great moment of wealth creation.

And when you’re the person putting the money in

at the billion dollar valuation

before the company, whatever, Call-In,

I’m sorry, Clubhouse,

went from 100 million to 4 billion with no revenue.

I don’t know what’s happening in the world,

but pretty crazy.

Do you want to go on to Xi Jinping

and his, he’s gonna be speaking with Biden on Monday.

It’s done.

He got it done before his video, his Zoom with Biden.

Oh yeah, so they’re doing that.

He’s now the supreme leader.

Xi Jinping hasn’t left China in 18 months.

Explain what this means, Chamath, from the story.

I mean, I think the basic takeaway

is that they’ve been working inside the body politic

inside of China to basically reflect Xi

on the same level as Mao.

And effectively what this means is that it allows him

to remain the leader of China indefinitely.

And so there is no transition of power.

Typically what had happened was

there were these 10-year windows

and you go Jiang Zemin, Hu Jintao, 10-year cycles

and then they pass the baton.

But it now looks like we’ll be living with Xi Jinping

until he joins the afterworld.

So he’s ruler for life of China, basically, crazy.

I don’t know.

I think that’s exactly right.

What an incredible feat of political maneuvering

without judging it, just to say

how what a complicated Byzantine political infrastructure

he must’ve had to navigate.

I don’t know how he played the three-dimensional chess

with all these people,

the slow systematic dismantling of the old guard,

placing all of his people in

then slowly moving towards this kind of recognition for him.

He sounded a bit admiring, Shamath.

Yeah, no, the dictator got his name for a reason.

Somewhere Donald Trump and Steve Bannon are like,

what did we do wrong?

We were so close January 6th.

We almost, if Pence would have just played ball,

Sachs, you’d still be in power, huh?

Your guys dropped the ball.

And we wouldn’t have inflationary.

Just think, if Trump was leader for life.

Yeah, Jason, given how accurate my predictions have been,

you should have a little bit more respect

for my political positions.

What do you guys think happens now

that Xi basically is ruler for life?

I think the Chinese term for it is historic figure,

which is the parlance of saying, you’re basically.

You’re a made man, basically.

You can’t get whacked.

Nobody can touch you.

You’re good for life, the end.

Nobody can question you.

Can you imagine Mao Zedong, Deng Xiaoping,

and now Xi Jinping?

Incredible, he is at that level.

Well, it means if you start a war

and a serious military conflict

that nobody can question you.

You’re the supreme leader.

It’s sort of like Putin and MBS.

MBS can go kill a journalist

and he’s got nobody to answer to.

It means he has nobody to answer to.

Mao Zedong initiated the revolution.

And Deng Xiaoping was really the architect

of free markets that has made China

the economic powerhouse that it is today.

Their internal reflection of Xi Jinping

is on the same scale of that.

Now, I mean, I can’t claim to know enough Chinese.

But what is his vision for the future of China?

Yeah, what is the accomplishment

that’s gonna really put him in that league?

And you’d have to say it’s the annexation of Taiwan.

I mean, that’s the thing that he must be looking to do

before his time runs out.

To reunify China.

That’s the thing that could put him in that league.

And so that is the tripwire that, to Freeberg’s point,

that could lead to a conflict.

I think they, you know, I hate to say that Freeberg is wrong

because I don’t think in this case I can.

I do think that there is some left tail risk

for like a crazy wag the dog moment in Taiwan.

It would be really scary, really scary.

Right now, if I was looking at the sizes of the names,

people don’t know this.

Japan actually has a very large defensive Navy.

The UK and the United States obviously have very large ones.

China’s is large, but not on a tonnage basis.

They have a lot of ships.

But together, I don’t know if you saw

the military exercises going on,

but New Zealand, Australia, the United States,

UK and Japan were basically, I think South Korea

were basically driving their ships

around the South China Sea.

This is gonna be, I think.

Yeah, so you know, I did a really interesting interview

with the historian and commentator, Neil Ferguson,

who is also a pretty avid China watcher.

And I did an interview with him actually on my app.

You don’t want me to say the name.

The app shall not be named.

But anyway, so he had a really great line,

which is he said that the issue of Taiwan,

it’s basically like the issue of Cuba and Berlin

and the Persian Gulf all rolled into one.

It’s like Cuba and the Cuban Missile Crisis

because it’s right there off the shore of China.

It’s like Berlin, you know,

because that was basically the dividing line

between freedom and totalitarianism,

you know, where the Berlin Wall got built.

And it’s like the Persian Gulf

because the new oil are these semiconductors,

the chips that are fabbed in Taiwan at TSMC.

And so all the resources that we’re dependent on

for the new economy are all right there.

Super smart framing.

Yeah, I thought it was a clever line.

The thing we have to remember about Xi

is that his father was a commander for Mao

and was in a vice premier.

And so, you know, his historical,

he is the original princeling, right?

Remember, you know,

there’s this context of these Chinese princelings,

but he is one of these originalists.

And so his motivation will be, it seems at least,

to bring China back into that spectrum of power,

which is really about a consolidated country

and a single nation state.

And that has to include Taiwan.

It can’t not.

So to your point, David,

it’s almost more motivation for him to go off

on some crazy adventure and try to reclaim it.

That’s gonna be crazy.

It’s really interesting to look at the tonnage of ships

and the number of ships.

The United States has over 6,000 tons of ships,

949 according to

China has only 2,000 tons and 1,000 ships.

They have a lot of smaller ships.

And then Russia, UK, India, Japan, France,

Indonesia, Turkey, Germany, Italy.

These are warships, Jason, or?

Yeah, this is their Navy warships.

And so they’re fighting.

But Japan has a very large one.

I wasn’t aware of this

because I thought they were not doing military buildup,

but they have what’s called a defensive Navy,

which can do offensive stuff.

So this is, I think this is really problematic for China.

How many of these ships are smaller than Sax’s yacht

that he rented this summer?

Yeah, Sax’s tonnage would kind of put the United States

over the top, I think, in this conflict.

The gross tonnage of Sax’s yacht this summer.

Bezos is gonna be donating his new yacht to the-

No, for sure, it’s bigger than Indonesia.

I see Indonesia on this list.

Turkey, I mean, how big could their yachts be?

In my defense, it was a starter yacht.

It was a starter, right?

In my indefensible stuff.

Next one will be bigger.

Yeah, Solana’s gonna make sure of that, right?

Yeah, you can buy yachts with Solana.

All right, I think we covered enough.

GE and Toshiba can’t run their businesses,

so they’re each separating into three separate companies.

Oh, let’s talk about that.

That’s interesting, actually.

And Johnson & Johnson.

Yeah, we should talk about it.

All right, so on Tuesday, GE announced

they were splitting into three separate companies,

Aviation, Healthcare, and Energy.

Toshiba reported a similar plan.

Johnson & Johnson today?

Johnson & Johnson was today.

This is in direct conflict with the consolidation

and the creation of conglomerates and-

But not conglomerates, I think this is an important point,

Jake, you know, in the 80s and 90s,

it was cool to create conglomerates,

meaning you would kind of stick businesses together

that were- RJR, yeah.

Somewhat disparate because you could

financially engineer a way to do it

that would juice shareholder returns, right?

You could borrow money, add lots of scale,

the cost of debt goes down,

you could increase your debt load, et cetera.

And the challenge is when you’re scaling a business,

you either need to grow your revenue organically

or you need to acquire.

And when you’re acquiring,

you’re either acquiring horizontally

or you’re acquiring vertically,

meaning you’re kind of integrating your supply chain

or you’re integrating,

or you’re adding ancillary businesses

that you can cross sell.

So you’re either reducing your costs

or increasing your cross-selling ability.

So there’s some inherent synergy in the acquisition.

The problem with conglomerates

is there is very little synergy,

meaning like when you acquire a new business,

like an aviation business,

it doesn’t create synergy for your healthcare business.

And, you know, there was always a rationalization

that these managers of these big conglomerates had,

which was like, oh, well, we could do this

and we could do that.

But at the end of the day, it was financial engineering

where they simply kind of used debt

to reduce, you know, the cost of capital

and increase the shareholder returns.

And now everyone’s kind of waking up to the fact

that you’re actually decreasing value

because an investor that wants to own an aviation company

doesn’t also want to own a healthcare company.

So the investor doesn’t buy those shares.

And the investor that wants to own the healthcare company

doesn’t want to own the aviation company

so they don’t buy those shares.

So the way to increase shareholder value

is to actually split those businesses up.

And then the investors

that want to own the aviation business

will pay more and the investors

that want to own the healthcare business will pay more.

And the overall value of those two businesses goes up

by having them be separate.

And that’s what the market’s kind of waking up to.

And this is kind of a trend

that’s been going on for years now.

You know, going back to kind of 2013, 14,

where the market started to kind of rationalize

some of these silly conglomerate business ideas

and break them apart into more kind of, you know,

targeted businesses that can actually spin out

or yeah, or break off.

Breakups, yeah.

That can basically attract shareholders

to bid on each one of those businesses individually

and drive value up.

You know, one business I was close to

that I saw this with was Dow DuPont,

where they, you know, Dow merged with DuPont

and then they split into several businesses

that each were focused on a particular vertical

and it made a lot of sense to drive value

for the overall shareholders.

So at the end of the day, you know,

these conglomerates are about

kind of driving economic outcomes.

And the only folks that you see doing this well

are folks like Warren Buffett,

where the job is really about capital allocation,

where, you know, you can allocate capital

to the best business

and that business on its own will grow organically

versus taking a bunch of crappy low growth,

no growth businesses,

levering them up to kind of juice the returns on each other.

And we’re seeing this slow unwinding happening.

So I think it’ll continue to,

and you could probably go

and pick a bunch of these conglomerates

and you’ll see the activist shareholders doing this.

They’ll buy a bunch of shares,

they’ll instigate and say,

hey, you guys should break up.

The share price will go up by 20, 30%.

So if you want a stock tip of the day,

you know, go find a set of conglomerates

that are gonna get attacked and broken up.

It’s interesting Chamath and, you know,

with public markets, Dell is spinning out VMware

and that’s gonna create a massive amount of cash

and shareholder value.

They’re doing a huge dividend.

So I guess my question to you Chamath is,

when do we start to see this hit,

not from a point of weakness,

but from companies that are strong and see this as,

hey, this is a way to just unlock shareholder value.

Will we see an Amazon spin out AWS,

a YouTube or an Instagram

come out of their parent companies?

I think it’s very rare that these things happen

on the offensive foot.

I think it’s typically a defensive maneuver

that’s driven by really poor returns

over long periods of time,

or activist investors who wanna push for a value unlock.


Yeah, like eBay, PayPal.

Totally, I was about to bring that up.

I mean, do you remember how hard that eBay,

I remember like John Donahoe was the CEO.

He like fought that so hard.

I remember getting a phone call from him

asking if I would support them.

He had rounded up Reid Hoffman

and other people support eBay.

I’m like, no, I can’t support.

No, wait, wait, wait, no.

Do you remember this?

We were in Vegas and Donahoe called

and we were working on a plan

and then you went and walked Donahoe through the plan.

Do you remember this thing?

We were-

No, what happened?

We were in Vegas.

You were gonna try to do a hostile spin out of PayPal.

No, Donahoe either called you or called me

and I said, you should talk to Sachs.


And we sketched out a plan for what PayPal should do.

I remember that.

Oh yeah, yeah, I do remember that.

And like on Saturday afternoon,

we sketched out this plan.

Yeah, yeah, yeah.

So I told John, no, I’m sorry, I can’t support you

because I believe it should be spun out.

And so the only two people from the original PayPal team

who said that publicly were me and Elon.

And we said that if you could get PayPal out from under,

this sort of eBay bureaucracy,

it could be $100 billion plus company.

The bar for acquisitions is extremely high.

Like I think the last really two acquisitions

that were really done well was Sachs acquisition

of WhatsApp and Instagram.

But since then, the bar is extremely high

for these conglomerates.

So as an example, PayPal was rumored to be buying Pinterest

and there was such an incredible shareholder revolt

that they had to put out a press release saying,

we have absolutely no interest in acquiring Pinterest.

But all that did was just accelerate the bleeding

because then people were saying, wait a minute,

how strategically lost must you be

that you would want to buy Pinterest?

And so then as a result,

the PayPal stock price has gotten absolutely.

Yeah, it was over a $300 billion company

and it lost the entire value of Pinterest basically.

Here’s the big issue that I think we have

in American economics and company building.

We’ve gone through 20 or 30 years

of really under investing in R&D

at the sake of share buybacks,

at the sake of market consolidation.


Private equity, driven take privates.

And so all of this capital misallocation

has really put us on the wrong foot.

And the pandemic basically showed

that we were really ill positioned.

So a lot of these conglomerates,

it doesn’t make sense today because we’ve proven

that the compensation schemes for CEOs,

the incentives for executive management

are way too perverted.

And they just create horrible outcomes.

A different example I saw in the last,

I think 15 or 20 years, IBM’s market cap

has gone down to 113 billion.

In the meantime, they’ve bought back

$132 billion of stock.


Could you imagine the kind of R&D

that IBM could have affected with that 132 billion

and where they could be?

So we have-

But they’re not good capital allocators.

Well, we have horrible capital misallocation.


Well, look at Apple.

I mean-

I don’t think they know how to spend the money on R&D.

Yeah, they’re not good at it.

That’s the point.

They’re not good at it.

They’re better off taking those massive-

It’s not clear.

They’re better off taking those massive R&D budgets

and putting it into M&A budgets.

Not for like a $50 billion Pinterest acquisition

that doesn’t make any sense, has no synergies,

but on smaller acquisitions of teams

that have built really interesting technology.

I mean, look, IBM could have bought

a lot of different things with $130 billion.

They don’t seem to know how to innovate or operate.

Those guys don’t seem to know how to do anything.


So like-

My point is now we’re in this cycle

where these conglomerates will get ripped apart

so that a brighter, fresher,

and probably younger group of executive management

can take a different spin on these companies

and actually do some.

So for example, the J&J spin out is really exciting

because you take med devices and pharma

and you separate it from a really struggling,

complicated consumer goods package business.

You know, the shampoo, the Q-tips, the Listerine.

Get all that off balance sheet.

Now you can actually make drugs and med devices,

and that’s a really interesting business

that the right CEO can really do

a lot of interesting things with.

I heard an interview with the CEO of GE,

I think, Culp, who was putting forward this plan.

The line that I remember that kind of resonated with me,

he said,

the benefits of focus are immediate.

The benefits of synergy are hypothetical.

And I think that’s really the key point here.

And that’s what’s going to fuel

all this sort of deconglomeration

is that the benefits of focus to a company are so huge

that, you know, but the reason why it doesn’t happen

is because of this instinct

that all these managers have for empire building, right?

So when times are good,

they can keep building their empires

and then something bad ass to happen

to force them to focus.

And by the way, the motivation, they’re not owners.

They’re typically not founders.

And so what you end up seeing

is their comp goes up linearly with market cap.

So the bigger the business, the more money.

Right, and this is just to close the thought out

on that whole eBay PayPal thing.

I mean, it was so obvious

that eBay should spin out PayPal,

but the management resisted it

and it took an activist shareholder.

I think Icon came in there.

It was Icon, yeah.

It was Icon who came in there.

Yeah, when Carl Icon is in the lobby, you’re fucked.

Well, but Icon shouldn’t have to come in there.

The reason why there’s opportunities for Icon

is the managers want to do the right thing.

He unlocked a quarter trillion dollars of value.

He was incredible.

No, I mean, he spun that out for 40 or 50 billion.

Now it’s worth five times that amount.

It’s a quarter trillion dollars.

Yeah, it’s crazy.

And just to put this all in perspective,

the stock buybacks that are going on right now,

Apple did almost $20 billion less quarter.

They’ve done 77 billion last year.

And you want to talk about the impact

of tax policy on innovation.

Well, you’ve got on one hand here,

Apple is looking at,

well, I’m going to have to pay all these taxes.

I might as well just increase the amount

I’m buying back and be neutral.

Why would I want to show any kind of a profit here?

I’ll just buy back as many shares as possible.

The company will eventually be private.

I mean, this is,

you got to be really careful with how you do this

because there’s no incentive for people now

to put money into R and D or other stuff.

So just buy back the stock

might be the most efficient thing to do, correct?

In terms of like the share.

If you don’t know how to spend the money.

It’s the dumbest thing to do.

It basically shows you’re an idiot.

Well, it shows you got nothing better

to spend the money on.

So maybe buying back the stock

is better than throwing it away.

But yeah, it means you’re out of ideas.

It means you’re out of ideas.

Or a combination of,

my God, this core business is throwing off so much money

that we can’t come up with enough ideas at that time.

I think that’s also part of it.

No, it just means you’re not ambitious enough.

I mean, what would you spend 20 billion on?

I mean, Zuck is having a hard time spending 10 billion

on creating the metaverse a year.

I mean, you’re talking about 80 billion a year.

What would you put that towards?

What should Apple put it towards?

No, Apple could even more aggressively double down

to enter the car market.

They could have done it much sooner than they have.

They could spend 20 a year on that, sure.

You’re right.

You know, easily.

They could actually enter, I don’t know, power.

They could.

Yeah, I mean, but they’re, you know, Apple,

their culture is to have very few products as a company.

They’re always very proud of that.

It’s the Steve Jobs focused thing.

I mean, I think it’s worked pretty well for them.

I know you’re second guessing it.

The thing that I hear-

I just don’t like buybacks

because I think it comes at the sake of R&D

for most companies.

I think obviously- It’s not an easy choice

of crazy shareholder values.

No, the big tech companies are different,

but everybody else, what you see is R&D

is like one or 2% of their, you know, it’s a shame.

Look, Apple could definitely be more aggressive,

but I wouldn’t judge the Tim Cook era

until we see what happens with glasses

because this is the product that I hear is coming

is going to be their, you know, their AR glasses,

and that’s going to be a new computing platform

that they open up to developers.

And I guess Cook’s been there for, what, a decade?

But I think he doesn’t want to retire

until this comes out and he can see

this is going to be his signature product, I think.

But I’ll tell you, just the other thought

that just went through my head

as I saw this news about GE,

it really was kind of the end of an era.

You got to remember that back in the 80s, 90s,

I think even as late as 2000,

GE was the number one company in America by market cap.

It was the top of the S&P 500.

It later subsequently got kicked out of the Dow Jones.

But the thing that went through my head is,

you know, when I was a kid growing up,

the only two business names that I even knew

were Jack Welch and then Lee Iacocca.

You know, that was it.

That was it.

They had their posters on their wall.

Do you remember that?

GE and Chrysler.

Farrah Fawcett in between the two of them.

It was big Jack Welch and Iacocca.

And now you don’t even know the name of the GE guy.

I mean, like I know it because I watched some interview

and I saw him up there, but I mean,

you can’t think of a business leader today

who’s not in tech and really a tech founder

or somebody who’s handed the ball by the tech founder.

So we know Tim Cook because Steve Jobs handed him the ball,

but otherwise it’s all tech, all tech founders.

You don’t hear about any of these old,

like Dow Jones type companies anymore.

It’s just the business environment,

the economy has changed so much since the 80s and 90s.

It’s all totally dominated by tech now.

But tax, I would argue that the disruptive business

and the disruptive business leader are always the icons.

Back in the day, the chemical companies were the icons

and everyone knew the chemical companies

and the guys running them.

Then it was the industrial companies,

then it was kind of the financial,

then it were these guys in the 80s and 90s

that did all the LBOs.

Yeah, but Walsh and Iacocca weren’t founders.

But they were in different ways.

Tell me the top two companies on R&D spending.

Top two companies without looking on R&D spending.

In the world?

Yeah, global.

In the world.

Number one, number two.

Give me number one, number two.

I’d say Microsoft is up there.

No, it depends on classification,

but I would say Saudi Aramco.

Freebird, what do you got?

Yeah, I would probably put Exxon up there.

You guys need to think about who has been

some of the most innovative leaders.

Amazon, 42 billion in 2020.

No, but Jason, that’s an accounting thing.

If you’re saying in the world, Saudi Aramco,

their exploration, their E&P budget

is probably $200 billion a year.

Okay, I guess maybe because that’s not,

is that a corporate entity technically

wouldn’t be on the list?

Yeah, it’s a public company.

Yeah, so it could be.

Google’s got to be spending 25 billion a year.

Alphabet is second with 27 billion.

Oh, off by two.

Huawei is third, 22.

Microsoft is fourth, 19.

Apple is fifth, 18.

So tech companies, you’re saying tech companies.

No, this is all companies.

Samsung, Facebook.

Some of this is just accounting categorization.

It’s accounting categorization too.

Because the engineering budget

is basically what goes into R&D.

So the more engineers you have on staff,

the bigger your R&D budget.

Doesn’t mean you’re producing anything, by the way.

Bigger industrial companies,

traditional companies that list things as R&D.

You know, most of those dollars flow out

to third party companies like enterprise software companies,

services businesses.

So it doesn’t end up, it gets accounted for,

it’s quote unquote R&D because they get to capitalize it.

But that spend is typically

not paying in-house salaries to engineers.

And that’s the distinction between true tech companies

and other companies that are quote unquote

going through a digital transformation

or have a quote unquote R&D budget.

They’re outsourcing R&D

and typically paying three times as much

and typically getting one 10th in the return.

And I think that’s maybe a good heuristic

for how you might kind of want to look at

what differentiates a true tech company.

Depending on accounting,

Saudi Aramco spends 37 and a half billion to 50 billion,

depending on how you’re accounting.

All right, so that puts them at,

probably tied with Amazon for all intents and purposes.

That just means I was right, Jason.

That’s what I care about.

Well, I mean, I’m wondering,

the reason I think that they might not be listed

is because they’re-

I’m just kidding, I’m just kidding.

No, no, it’s a really good insight.

Yeah, Cal was reading a BuzzFeed article and he had-

No, it was Barron’s, it was Barron’s.

But anyway, putting it aside,

I think the issue might be

that they are recently public, right?

So maybe they’ve only been filing public

for two years or something.

All right, I think that’s everything.

How’s everybody doing otherwise?

How’s everybody’s personal life?

Are people losing their mind?

What’s people’s plans for the end of COVID?

I’m gonna go have beer and pizza on the beach.

Nicely done.

So I’m ready to get out of here.

Nice, yeah.

I mean, I’m exhausted.

Are you guys exhausted?

This has been a fucking crazy run.

I don’t know what day it is anymore.

I’m like-

I’m ready to wind the year down.

I am so exhausted.

I mean, this has been the craziest pace

I’ve ever experienced in my life.

The number of deals going on, the amount of inbound-

Oh my God, I tell you at that conference,

every single-

So I have all these founders come up to me

and pitch me what they’re doing

and a couple of them are like,

that sounds really interesting.

Can we participate in that?

It’s like, no, no, the rounds are subscribed.

I’m like, why’d you come up to me and pitch me this then?

How dare you?


Rule number one.

I tweeted a new terms of service.

This is only if I’m at a conference, okay?

If you set up an appointment in my office, it’s fine.

That’s like an opt-in.

But like, if you come up to me

to pitch me your idea at a conference,

then, and I say, okay, I want to invest,

like give me an allocation.

Like, don’t come to me and pitch me

if you’re not gonna give me an allocation.

Yeah, no, that’s not cool.

That’s like being like, oh my God,

I know the best restaurant in the world.

It’s open tonight.

They’ve got the greatest steak.

And you’re like, okay, I’ll go.

No reservations.

Guys, tell Sax about the white truffles from yesterday.

Oh my God.

We had dinner at Chamath’s house last night.

It was incredible.

He got these white truffles from Alba.

Best meal I’ve had in a year or two.

I mean, it was really incredible.

I really appreciated it.

It was amazing.

And 2000, like it was 1996, white burgundy, Leroy.

The white burgundy 2009.


And I’m not a wine drinker.

I’m not saying that your guy,

your chef beat Sax’s from two weeks ago.

Sax’s, wasn’t Sax’s chef, your old chef, Chamath?

I think one of his chefs.

I think he lives in a stratosphere of Bern.

He lives in a stratosphere of Bern.

That’s just at a different, he’s next level.

Chamath, are you eating my sloppy seconds?

What’s going on over there?

No, no, no, I think.

I think I gotta beat that one out.

I don’t know what that term means

when you think it means anymore, Sax.

But by the way, there was a dinner conversation

last night, Sax, to your point.

Chamath, it’s up to you to decide

if you want to disclose the dinner conversation, guess.

But this guy said that there was a guy

that applied to Y Combinator

that had $750 million in crypto.

And so he’s like applying to Y Combinator with his 750K.

For 150K to give up some percent of his company.

And they’re like, all these stories of these guys

they’re like, I will pre-fund my own Series A

with $15 million to create this business

inside of the YC machine.

That was incredible.

There’s such an incredible, like inexplicable,

undescribed, I think in the mainstream media

story of crypto wealth creation that’s been going on.

And these crypto 100 millionaires, billionaires

are emerging and doing their own kind of innovation

completely under the radar right now.

The smartest people that we know are selling right now.

Yeah, and I think they changed their conversions

for the YC safe.

They’re now getting preferred shares

they used to do common.

And they now, I think it happens post-conversion.

So they want their 7% fixed, you know,

after your next round of funding is my understanding.

I don’t know if that’s, but yeah,

so they got a more aggressive, but.

That’s brutal.

It’s, you know, what’s happening is like

the accelerators have to move earlier back to incubators.

So the idea of somebody, you know,

grand or some of the other companies we funded

coming to the accelerator with 20,000

or 50,000 in revenue, in some cases,

they may be able to raise money without,

and certainly the crypto companies

are raising $25 million.

They’re outpacing regular companies,

regular startups, non-crypto startups.

And they raise it in 10 seconds from a bunch of ETH

for buying tokens.

They’ve created a whole shadow economy

that doesn’t have to play by any of the rules.

Yeah, do you really need venture anymore?


Well, if you want to obey the law, I guess you do.

But in a lot of these cases, like.

I did this, I did this to understand.

This whole new economy

could emerge completely offline, right?

Completely off the, the current.

I mean, the SEC and Gensler

do want to get this thing tightened up.

They don’t want people doing this.

I’m not surprised.

20, I think it was 2015, I presented Amazon at Irisone.

And one of the things that I did

was we calculated what Bezos'

investment track record was, right?

Because he basically took all his free cash flow

and reinvested it in the business.

And you could measure

what his return on invested capital was.

And it was like 42%.

And on a really big number, on tens of billions of dollars.

You’re saying his IRR

on the money Amazon deployed in R&D projects

like the Kindle or AWS.

Yeah, it was about 40, 42%,

over like a multi-decade period.


Double what a venture firm would do,

or top debt venture firm would do.

I mean, he’s in a class by itself.

But my takeaway in that moment was,

wow, this is the smartest investor of our generation.

That’s what I said to Bezos at the time.

And Bezos had a track record of selling

roughly a billion dollars of Amazon stock every year.

And this year he snap sold 6.6 billion.

Which, when we talk about the percentage you’re selling,

we’re talking about selling 5%, 10%.

So, they’re not diluting their whole positions,

but these are big numbers, you’re right.

I think it’s a signal.

Jake, are you gonna close this out?

All right, everybody.

It’s been another amazing episode.

Episode 55 of the All-In Podcast from,

yeah, whatever.

You know where people are coming from.

The All-In Summit will be in the spring at some point.

I’m gonna go to Miami and look at the locations.

March 11th through 15th, I can’t,

because I’m playing poker.

Yes, okay.

You got your poker chip.

In an undisclosed location, big time poker.

I can go, listen, is there any way I can deal?

Can I deal the game?

Big boy poker.

You need to have a funny guy there.

I mean, I’m not a great dealer,

but can I be a waiter or something?

I think the game starts at 2,000, 4,000,

but it could get a little spicier.


Zach, you’ve had a good year.

Maybe you should go.

Yeah, maybe you should.

A Solana play?

Get the Solana chips and play?

Oh, he can play.

David can play.

David’s invited.

Solana plays!

A lot of bequeting this year.

Here’s what you do.

You chip off 10 milli in Solana,

you put it in an LLC,

and then you buy into the game,

and then we’re in for a breeze.

That may not be enough.

That may not be enough.

All right, 20, whatever.

20’s enough.

For the queen of quinoa, the dictator,

and rain man, David Sacks.

I’m Jay Cowell.

We’ll see you next time on the All-In Podcast.

Subscribe to the channel.

We’ll let your winners ride.

Rain man, David Sacks.

I’m going all in.

And instead, we open-sourced it to the fans,

and they’ve just gone crazy with it.

Love you, Wesley.

The queen of quinoa.

I’m going all in.

Let your winners ride.

Let your winners ride.

Besties are gone.


That’s my dog taking a piss in your driveway.


Wait, no, no.

Oh, man.

Oh, man.

My avatar will meet me at Queens.

We should all just get a room

and just have one big huge orgy,

because they’re all just useless.

It’s like this sexual tension,

but they just need to release somehow.


You’re the B.


You’re the B.

You’re a B.



We need to get merch.

Besties are gone.

I’m going all in.

I’m going all in.

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