All-In with Chamath, Jason, Sacks & Friedberg - E65: VC markup dynamics, Russia/US tensions over Ukraine, Altos Labs raises $3B, Stripe mafia & more

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We don’t want to talk about Andrew. I think that guy Palmer

lucky is super fascinating. The Oculus. Why do you want to talk

about that company? Because I think he’s launching a syndicate

soon. No, why are you an investor? Lucky hates me. He

won’t come on this week and startups. He literally what did

you call him Parma lucky. Palmer lucky cosplay Palmer. He’s a

cosplayer. I like the fact that he does. What is that? That’s

when you dress up as comic book or like superhero characters and

go to conventions. You dress up in the clothes of old Italian

women. He dresses up like a superhero. He’s a cold open

folks. I do dress like a Matrona sometimes. Yeah, right.

Oh, I’m a I’m making you a. You know in in in in Italy,

there’s like a culture like in the in the olden days like it’s

like you used to have these things called which basically

meant like all the decisions of the country were made by these

people in the living rooms after dinner and you know the

the most powerful people in the were uh these women who are

married to these men and they would be the architects of all

these decisions. I don’t like him. He never finished the

pasta. He always leave us so much on the plate and people

and people would call them Matronas. Uh so I I’d probably

be a Matrona. I’ve always felt you were like the old Italian

lady in our group.

Rain man David Sacks.

And I said we open sources to the fans and they’ve just gone

crazy with it. Love you guys. Queen of Kinwam. Hey, everybody.

Welcome to another episode of the All In Podcast. Yes, we’re

still publishing. Yes, we haven’t been canceled but it’s

early in the show so you never know. Uh with me again, the

dictator himself, the sultan of science, David Friedberg,

whatever beverage you like, he’ll make it for you right now

and his replicator and of course, yeah, the rain man

himself. Yeah, definitely gonna win the midterms. Yeah, David

Sacks. Everybody have a great week getting their **** kicked

in the market. I’m pretty good. You’re okay? Everybody okay?

Nobody. I can’t look at my portfolio anymore. I just

stopped checking it. I uh not a fan of the color red. I

actually um I I’ve been using this period to kind of

desensitize myself. Um I went back and I started to think

about like all of the sort of errors of commission that I’ve

done in like the last decade and I I was able to look at

like four or five specific trading moments where I was

like, wow, what did I do that for? And I came away with two

things. One was if I confuse an investment with a trade, I’m

done for meaning like there are things that you invest in that

you just want to own forever and then there are things that

are trades that are just speculative and you know, at

the end of the day, you have a sense that it could be up in

the short term. If I confuse those two, I’ve made huge

mistakes and then the other one is I would always get really

emotional and panic at the lows and so I was like, you know, in

early December or November when I wrote that letter on Twitter

and we talked about it and I sold a bunch of stuff after

Jeff and and Elon were selling, raise some cash and I was like,

okay, now, I have enough buffer here. The whole point from here

on out is to basically like insulate myself from my own

emotional turmoil as stocks go down and so far so good and my

litmus test if when I go home uh at the end of every day, you

know, I check in with Nat and I’m like, am I an **** because

if I, when I can, yes, what does that have to do with

when I get crushed in the market, I tend to, I tend to

take it out on my friends and my loved ones. Honestly, because

I’m just, we know, we come to your poker game when your socks

are down and you’re just like, oh my god, at once, that’s it.

I’m popping the blinds up. I can’t take it anymore. Do you

remember last year, Tim off during the uh the market

collapse uh when at the start of COVID and you decided you

didn’t care about having nice jeans anymore and then you fast

forward to December and you’re proclaiming the virtue of a

$5000 fresh alpaca sweater or whatever. I think I think

another another indicator of sentiment in the market for you

is your clothing. Oh my god. Uh choice but this is a this is a

really nice cashmere ribbed sweater from Loro Piana. Okay.

Well, we’re back in the games. It’s good to see we’re back to

normal now. Yeah, let me ask you then. I’m gonna put a couple

of uh items out there. Is Bitcoin a trade for you or an

investment for you? Or was it and is it now? Well, I invested

in 2011 at $80. Yeah. Yum yum. I wrote an op-ed in that same

year in Bloomberg which I hope at some point they take off the

paywall. Yeah. And the whole thing was you should have 1% of

your net worth in this thing. Yeah. It’s remained an

investment ever since. So, still an investment. Yeah, I’ve

structured it so that I don’t hold any Bitcoin personally

myself cuz I don’t want to have the pressure and the risk of

keys and coins and wallets and this and that. But uh I still

really believe in Bitcoin in the long term. Got it. Sax, how

do you how how do you deal with the emotional turmoil of

opening up your stocks, crypto, whatever wallet and seeing red

and then going to work every day or you just curled up in a

ball playing chess with Peter Thiel at this point? Yeah, I

mean, you just gotta try and ignore it. Okay. Try try was a

key word in that sentence. It doesn’t really affect me that

much. I mean, so. I run the avoidance acceptance function.

I have removed my emotions. No, look, there are there are

countervailing benefits. So, when exit prices are great,

entry prices are lousy and when when entry prices are great,

exit prices are lousy. So, there’s an inverse relationship.

So, in other words, all the the companies that, I mean, the

the public markets have massively corrected and though

and and now finally, you know, we talked about this few few

months ago. Those new price levels have trickled their way

down into venture markets and so finally, you know, venture

deals are starting to price at more reasonable prices. So, in

terms of harvesting gains from old investments, obviously,

it’s not as attractive as it was 3 months ago but in terms of

making new investments is much more attractive and for a

relatively young venture firm, which is what we are, you know,

we yes, we do have some investments that are kind of in

the harvesting stage but you know, we’re only a four or five

year old firm. We’re still, the bulk of our activity is making

new investments. So, you know, it’s not, it’s it’s all just

kind of part of the game and I’m not really that worried

about it. Said another way, fortunes are made in the down

market. They’re collected in the up market is the way I always

phrase it but it’s true. Things are going to be on sale right

now. We saw Bill Ackman, I think, who I think is a friend

of the pod. I think he listens. Yeah. Super, super, super smart,

brilliant guy. Yeah and I just, I just want to emphasize

because I don’t want founders to get the wrong idea. It’s not

like we’re trying to pull one over on founders and get some

sort of sweetheart deal or something like that. My view of

like our role as VCs is just to be a price taker of whatever

price is the market sets. We don’t try and negotiate

something better than market really. We just take the market

price and we pick the companies we want to be in. So, that’s

our job is really just to pick, not really to negotiate that

much. You’re not, you’re not able to haggle. It’s not like

you can go. Yeah, exactly. The market is super competitive.

Like, oh, bananas are a dollar a pound. I’ll take them for 50

cents. They’re like, sir, this is a Whole Foods. We don’t

negotiate. Right. So, we’re, we’re, we’re a price taker in,

in good markets or bad markets and it’s just that I think that

the prices now are coming down because what I’ve heard is that

the crossover investors like Tiger, like KOTU who are

deploying all this money, they’ve really slowed down now.

I think they’re all kind of licking their wounds and so

like all of this money that was flooding into the venture

space is kind of on pause right now and that’s caused the price

levels to drop. The end of last year in Q4, my public

portfolio really started to turn over. Took a huge amount

of losses going into the end of the year and then I took an

accounting obviously of like the entire book and the public

portfolio. Every single thing that I owned ultimately

basically broke even last year. Some were up. I made some early

sales. Some were way down by the end of the year. Net, net, I

kind of broke even. But my private book was up a billion

dollars and I told the team, I’m like, no, this is not real. So,

we have to take those marks because you know, you have other

venture firms that are pricing these deals and we get audited

K1s and so we have to take the up billion but I told them, you

should consider this that we had basically a down, you know,

so net, net, our returns were like, you know, we were up like

15% and I said, this is not real. We were at best break

even and probably we lost money. But you can’t, you can’t

not take these marks because like, you know, you have an

entire fund complex that lives on these marks. Yeah and by the

way, it doesn’t affect my compensation at all but I have

to take it. Freeberg, then Sachs. Go ahead, Freeberg. No,

that’s a, it’s a really important point because I think

we talked about this one or two episodes ago but there’s a

significant disincentive for venture firms to take

markdowns, to raise capital into a private business at a

price that’s lower than the prior round because when they

do that, the marked value of their portfolio goes down and

then it makes it harder for that venture firm to go out and

raise the next fund that they’re going to try and raise

from their LPs because it looks like they’re not good

investors. And the reality is, and so in every round, as

everyone on this pod knows, there’s always an incentive and

a push to see can you get the valuation higher, even if the

business performance didn’t meet the objectives of the

prior round, and things have gone sideways a bit doesn’t

necessarily mean that it’s a bad business, but it doesn’t

necessarily mean that it should always be getting an up round

just because it’s being kept alive. And there’s this

artificial pressure in private equity in venture to always

drive the value up or to run away from the company, because

otherwise you’re going to have this markdown and you don’t

want to be putting money in a markdown that looks like a

loser, and so on. And if you look at the public markets,

every successful company has had significant downturns in

their stock for significant periods of time, from Apple to

Facebook, to Amazon, to Netflix, and all of those

businesses were sound businesses. It’s just that for

whatever reason, there were perturbations in markets

perturbations in the business, but the long term value

creation was still there. And so I think we need to kind of,

you know, be really thoughtful. You know, and entrepreneurs

should be very thoughtful not to give in to the venture

mandate to always drive value up, but to be really thoughtful

about getting the right valuation for your business and

getting the capital you need with the right partners.

Can I say something about this? It’s so important what you said

one of the tactics that I started three years ago was I

run my own shadow portfolio, where I don’t take the marks,

and I just keep them at my cost basis. And I’m not allowed to

use that for anything. I don’t, you know, I can’t use that.

Obviously, I would never use that for compensation with my

team or anything else. But I use it in my own head to say,

okay, if I invested $1, let’s not think about what somebody

else may think about what that dollar is worth. Let’s just keep

it at $1 unless it’s impaired, but I don’t take the markups.

And I look at my portfolio that way. But it’s a very difficult

thing to do. And the reason I do that is because I don’t have

the pressure to raise incremental funds. But if I did,

I wouldn’t be able to play that game. And I’d be very focused on

making sure other VCs marked up my deals, because to your

point, it takes 1012 years to drive liquidity, literally,

that’s the key here. And so what are you supposed to do if

you’re a venture business in year three or four, except raise

money on markups, paper markups are the they’re the they’re the

that’s the lifeblood of what this industry going? Yeah,

totally. Well, I mean, the interesting thing for me is I

LP a couple of these small like emerging fund managers, you know,

micro funds, 10 million or so 3 million, and they were sending

like a lot of updates. And so I’m in some top tier venture

firms that some of you are in. And they send you an audit every

year. And they send you a distribution cash on cash,

here’s where you’re at. And then I was getting like quarterly

emails, as everything was going up, these new fund managers are

like, we’re at 100 IRR, we’re at 200% IRR, because this crypto

investment we did got marked up. And I was just thinking about

what Bill Gurley would always say, which I think is a Howard

Marx quote, you can’t eat IRR. Like, what are we doing here?

Like, why is there such a focus on this is because you want to

raise your next fund. And then the other game people were

playing was, and I got into this, because people were like,

Oh, you know, you’re grossly undervaluing your funds, because

Robin Hood is trading at $30 a share on the private markets

calm is trading at this in the private markets. And the second

people were using secondary market transactions as their

mark. So I’m curious, Saks, how do you think about if you

invested in a company, the series B was $100 a share, but

then somebody bought it at 150 a share in the private markets?

Where do you like to mark that in your funds? Or how do you

think about that? And getting ahead of your skis in terms of

valuing your private funds?

Well, to most points, we have accounting rules around this. So

we can’t like subjectively decide like what mark to set for

each company for, you know, obvious reasons, our LP is one

like, predictable accounting. So the way it generally works is

that you the mark is set by the most recent private, you know,

financing. This is the way it works. And if people want to

discount it from there, they certainly can, you know,

what about a secondary transaction? Is there any

more complicated rules around that, because it’s a different

class of stock. So it’s some combination of sometimes we use

a foreign a sometimes it’s the latest preferred round, it’s,

you know, it just, there’s like complicated rules around it.

By the way, I’ll just to rehash what was already said. And just

to say one more time to mark pointed out that it typically

takes 12 years to liquidity from the time a startup is initially

funded to the time that you sell it or go public. Show me one

public company that has had 12 years of consistent, consistent

gain in its stock price. It doesn’t exist. And so again,

like this, this notion that, you know, every startup is seeing

some perpetual persistent increase in value is an

artifice that doesn’t really represent it doesn’t it doesn’t

exist in tech. And that’s that that’s a feature, not a bug.

Right? Meaning the things that can go up predictably for 10 to

12 years are not necessarily business. They don’t take risk.

They’re not dynamic. No, they don’t take risk. Yeah. Saks,

can you define perturbation for the audience? I heard freeberg

say that a couple of times.

perturbation would be perturbation changes what like

volatility, basically, yeah, rapid change anxiety, mental

uneasiness. Okay, a cause of anxiety or uneasiness. Okay, I

got it. I thought you were saying another word. You don’t

use the word perturbation. I thought you said another word.

What word was in your brain? I thought I heard masturbation. I

was like, master. What exactly did he say about the markets?

Speaking of markets, we were on a text on our text thread

talking about if we’re about to have the start of World War

Three. And then maybe this is not in the news. Now. How do we

look at the UK, Russia situation in the Ukraine, obviously,

100,000 troops are amassing on a border. And what is the goal

here? Because Biden is saying, Hey, listen, if anything

happens, we’re gonna go to war. And there’s a lot of saber

rattling here. I don’t exactly understand what Putin’s goal

or motivation is. And that’s, I think, what I’m not hearing in

the news is exactly what is his goal? What are your thoughts on

what’s happening in the Ukraine and Russia? sex?

Okay, well, I think first of all, we have to kind of level

set in historical terms about how unusual and unprecedented

it would be for us to send troops to fight, you know,

potentially Russia in a border conflict with Ukraine. With and

by the way, the Biden put 8500 troops on alert for deployment

this week. It’s really without historical precedent. During the

Cold War. You know, in 1956, Soviet tanks rolled into

Hungary to crush rebels there. Eisenhower did nothing. 1968

Soviet tanks rolled into Czechoslovakia to crush the

Prague Spring. LBJ did nothing. 1981. The Soviets crushed the

solidarity movement in Poland. Ronald Reagan did nothing even

though he had campaigned on getting tough with the Soviets.

And then more recently in 2008. When Russia invaded Georgia,

George W. Bush did not intervene militarily. And then

2014, when Putin occupied Crimea, Obama did nothing. And

so this idea and the reason for that in all those cases is

because America has a vital national interest in avoiding

war with a nuclear armed Russia. And we did not have a vital

national interest in defending the territorial sovereignty of

those nations. That’s the bottom line. And so for us to be now

beating the drums of war and talking about sending troops

into a war zone with Russia, is just it’s unbelievably


Friedberg, one might speculate, if they were cynical, some sort

of wag the dog situation here, Biden’s not doing well, he’s

lowest popularity ever. midterms are coming up. Is there

any political motivation here? Do you think in what Biden’s

actions are, you know, given the context of what Sachs just


I think that there’s, this is like showing up to the, you

know, the last 20 minutes of a two hour movie, and then saying,

Oh, my gosh, what’s this guy doing? He’s so crazy. There’s a

long narrative that precedes the current news cycle on what’s

happening with Putin and the Ukraine. You know, in large

part, the United States helped to start the fuel, the expansion

of NATO in the 90s. And the intention was to make NATO as a

Western allied kind of organization contain Russia step

up right to their borders, get very close and, and ultimately

make these kind of, you know, areas, free liberal democracies

that are aligned with the West, and put them right on Russia’s

border. And that is obviously antagonistic. If anyone tried to

do that to the United States, like Russia did with the Cuban

missile crisis, we would view that as a hostile act, and we

would react accordingly. And for years, the pressure has been

building and has been mounting, as Putin has started to kind of

solidify his political power at home and his allies abroad, in

trying to figure out ways to push back on this wall that has

been built around him and his nation. And, you know, to some

degree, I think we look at this as like, his aggressive

behavior, but to some extent, it is a defensive behavior over a

very longer cycle when when when viewed that way. And again,

like, remember, the US had this Monroe Doctrine, which President

Monroe put in place in, I don’t know, 18, something, 1800

something that said, you know, anyone that comes into our

territory, and tries to influence nations around us to

be hostile towards us is it’s a hostile act in and of itself.

Anytime someone tries to influence our politics, it’s

hostile. And I think Russia views our behavior and NATO’s

behavior this way. And so his primary demand is and has always

been that the Ukraine cannot and will not and should not join

NATO. And the US response has and continues to be and and the

EU and the EU. And we’re saying, look, we we believe in the

sovereignty of the Ukraine. And we want the Ukraine to make

their own decision about where they go and what they do. But

the reality is, for us, this is a key part of a very long term

strategy to keep Russia contained. Now, meanwhile,

there’s this beautiful backdrop of what’s going on with China.

And if I’m China, I would love to see the US and Russia in

conflict, because it will weaken the US. And if I’m Russia, I

would love to see the US and China in conflict, because it

will weaken the US, the US is in a very precarious situation

right now. And for us to actually end up in conflict is

going to weaken our position with one of these other two

emerging, you know, challenging, you know,

superpowers. And this is a really precarious time, I think

to sacks his point, it’s highly unlikely we’re gonna end up

sending military, but the posturing is such that we need

to kind of hold our line until the very last minute, we’ll see

what happens. I did say, you know, at the end of the year, I

do think that we’re in this kind of economic status right now

that if there were an opportunity for conflict, we’re

probably more likely to want to engage in conflict than not,

because it does create something that we all get

behind to create, you know, kind of political unity, it

creates economic unity, it creates driving forces, that

maybe might help us through what is clearly a very volatile

and difficult time at home. So let’s see what happens.

I think Obama’s already given us the endgame. I just think we

have to go through the machinations to get there. He

said to the Atlantic, I think it was in 2016, or 17. He said,

the fact is that Ukraine, which is a non NATO country is going

to be vulnerable to military domination by Russia, no matter

what we do. And you know, every time there was this brinksmanship,

we effectively blinked and rightfully so because it didn’t

necessarily make sense to, to all of a sudden engage the war

machine to go to war in Eastern Europe. The thing that’s

interesting about what happened here, though, was that this was

a slow moving train wreck that was really visible years and

years ago. Why is that? Well, if you look at what was really

happening, this is really a European issue. And you got to

think, well, why is America being the leading actor here

when you know, where’s Europe and all of this? Well, it turns

out that, you know, the strongest power in Europe,

Germany, is in a really difficult situation, because

they rely on Russian energy. 50% of the nat gas that comes in,

or 50% of the energy, I think that comes into Germany is from

Russia. And they’ve, in fact, been building an entire pipeline

system from Russia that bypasses the Ukraine and goes

straight to Germany. And so when all of this saber rattling was

happening, Germany basically had to blink because they need

Russia’s energy. And why did they need Russia’s energy? Well,

they needed Russia’s energy, because 20 years ago, the

environmentalists in Germany one, and they started

decommissioned all their nuclear reactors. So ridiculous.

So at somewhere along the way, nobody took a science class in

Germany and figured out that nuclear was both safer and

cleaner. Instead, burning fossil fuels is the answer

wiser to not have a dependency. And after Fukushima, they went

turned them all off, they accelerated it,

it made more sense to burn fossil fuels, number one, and

then to get those fossil fuels from Russia. So unfortunately,

we are in the state of affairs where, you know, Germany has

said, I at least it’s been reported that they would shut

down this pipeline Nord Stream two, if if Russia did

something. But the reality is, I think Obama basically told us

that, you know, it’s going to be very difficult for us to

justify an act like this, especially against somebody who

is fortified and clever and smart. This is not like

invading the Middle East. And so this is a massive, if this

happens, the, the stock markets will just go absolutely to zero.

I mean, if you could have negative stock prices, this may

be a good catalyst to take these Netflix shares, please.

It’s unbelievable. It’s really, really crazy.

This is seems like a situation where we’re assured not to get

into, to mix it up with him. Like, I, I don’t understand

Putin. I don’t understand Biden saying that he’s absolutely

going to react to this. Because we’re not we can’t afford to get

into a war right now. And if that is true, then, you know, us

dominance, the US ability to hold the line starts to decline.

And I don’t know if I agree with that. Because I think we

could diffuse this crisis very easily. Yeah, which is the exit

ramp? Yeah, tell us.

Well, the the exit ramp here is what is Putin demanding? Putin

is demanding that we affirm that Ukraine will not be part of

NATO. In my view, that in my view, that’s giving him the

sleeves off our vest, because we should not want to add Ukraine

or Georgia to NATO. That would do nothing to enhance the

security of the United States, we wouldn’t get anything out of

it. But we would be obligated under Article five of exactly to

defend them. So admitting Ukraine or Georgia or Moldova

could ultimately bring us into a war with Russia, too. Exactly.

So to free to freebirds point earlier, we have been poking the

bear for two decades with our expansion of NATO, right up to

Russia’s front porch. And if you go all the way back to 1990,

when George Herbert Walker Bush was president and James Baker

was Secretary of State, there was an assurance made by James

Baker that that, you know, basically, they had gone to

Gorbachev and said, we want to, you know, we for help in

reunifying Germany. And the promise made that famously that

James Baker said is that what Gorbachev said is we don’t want

NATO expansion. And Baker apparently said not one inch

eastward was the line. And, and we think back to how well

Herbert Walker Bush and James Baker managed the end of the

Cold War. How do they do that? They, they did that by making

assurances to Russia that we would not bring NATO up to the

front porch as well, which is what we did in 2000. We’ve now

added something like 14 countries in Eastern Europe to,

you know, to NATO, including in 2004, the the Baltic countries,

and that decision by George W. Bush really is the thing that

pretty much severed our relationship with Putin. You

have to remember that Putin is, he is fairly popular in Russia

because he stokes Russian nationalism. And what is the

source of that nationalism? It is because a single tree

organization, NATO now has this huge contiguous border with

Russia, they now feel encircled. And if we were to add Ukraine to

that organization, there’d be a 1200 mile, again, border, which

that Russia would have with with just this one, this one

alliance, it would be akin to imagine if we were still in the

Cold War, and Canada were added to the Warsaw Pact, right?

I mean, we would be incredibly threatened by that. So and so

but but you know, you never hear it, Jake, you never hear any of

this on the news. All you hear is the beating of the war drums.

And Putin is portrayed as this mad dictator. He has no

legitimate concerns. Now look, Putin is an authoritarian, and

you could describe him as a bully and a thug. And he has

provoked a dictator. He has provoked this situation.

Certainly. Okay. But, you know, we treat him as if he has no

valid concerns whatsoever. And I think the simplest thing to do

to defuse this crisis would simply be to say, yes, we have

no intention of adding Ukraine to NATO. And then we will find

out if Putin is a liar or not.

Well, that would be a great move. Like it’s a that would be

like, hey, let’s take a five year pause. Okay, you know what,

we’ll negotiate with you. We’ll take five years, we won’t put

him in NATO, give give a little bit of a concession, because

their country is not doing well, their GDP trails, China and the

United States, their GDP per, you know, each citizen is

incredibly low compared to the West, like, and then we could

just work with Germany to get on sustainables, which is what

their goal is. And we could economically continue to trounce

them. Because as you point out, every week, Chamath, they’re not

an important economy.

Here’s what Obama said about Putin. Obama said, The truth is

actually Putin in all of our meetings is scrupulously polite,

very frank, our meetings are very businesslike. He never

keeps me waiting two hours like he does a bunch of these other

folks. He’s constantly interested in being seen as our

peer. And as working with us, because he’s not completely

stupid. He understands that Russia’s overall position in the

world is significantly diminished. Yeah, he’s not crazy.

He’s not dumb. And by the way, nationalism, as Saks points out,

which is a primary, you know, drum call for for Putin, is not

a novel sense. We we are a nationalist country. nationalism

is, you know, pride and wanting to make sure that your country

is treated with treated with respect and has sovereignty. And

so I don’t think that Putin is an irrational actor, his

behavior is very rational in response to what’s gone on for

30 years. And his requests are that he is feeling threatened,

and he’s trying to avoid military conflict as much as he

can. And we portray him as being an aggressor that’s demanding

military conflict. And at the end of the day, our behavior

over a long period of time as a country has driven us to the

brink here. And I think Saks is right, you know, the right

decision may very well be to kind of, you know, leave the

region alone and focus on issues that matter more deeply to us

and are a higher priority rather than drawing us into this,

but a better investment would be in sustainable energy. I think

the economic seed is planted for us to be in some sort of

conflict this year. So, you know, we’re gonna end up by that

freeberg economic seed to be in some sort of conflict. I think

that, you know, generally, if you’re not going to see

homegrown, you know, economic productivity gains, and you’re

suffering trade issues, like we’re going to suffer this year,

given the supply chain problems globally, we’re going to look

for some place to manufacture growth. And there’s no better

way to manufacture growth and through the dog through

conflict, the foreign policy establishment in Washington,

you know, the neocons, the you know, the so called Washington

blob, I mean, here they are being the drums for war, we

haven’t been in a war for what, six months, we just got out of

Afghanistan. And now they want us back in another war. And the

media just keeps no one ruling and fomenting this. And they

don’t, you know, their coverage of it is, well, it’s exactly

what we talked about last week, Jake out when I pointed out that

your, your rhetoric, your humanitarian rhetoric, as noble

as the sentiments are, when it gets whipped up into a lather

and a frenzy by the media, it blunders us into a bunch of

stupid foreign intervention,

I would not call it rhetorical, but let’s call it beliefs. My

beliefs are not rhetoric, but I get your point. Is there one

week later, and exactly what I said, the risk of this is has

now materialized. Clearly, you’re blaming my position on

human rights.

What I’m saying is that this type of rhetoric is used by the

military industrial complex and the washer blob and the neocons

to stampede us into wars that don’t make any sense. That’s

what I predicted a week ago. That’s or that was my concern.

Death that would occur later, and we’re in exactly that

situation. It is our most successful export. It is our

most successful export.

Jekyll really important. There’s a difference between

there’s a difference between belief. And how do you act on

that belief? And what are your actions based on belief? Yeah.

And I think that a big part of what’s gone on and this harkens

back to a few episodes ago when we all got in trouble. There

was an attempt to canceling us after we spoke about this. But

but when those beliefs are, we got sacks pointed out harnessed

in a way that is ultimately co opted in a way to fuel and to

drive. You know, conflict, it, it obviously goes beyond belief,

and it starts to move into an area where there is a very wide

spectrum of action. Yeah. And it’s very easy to tip yourself

onto the one side of the spectrum. And as a result,

caused a lot of harm and a lot of damage like we’ve done in

Afghanistan, like we’ve done in Iraq.

Here’s a great lens. What is the cost of going to war in the

Ukraine versus whatever human rights or sovereignty issues

they have hundreds of 1000s of troops going to war is going to

result in more human suffering than what’s currently happening

for Ukraine. It’s sort of exactly they’re going to they’re

going to be in the middle of the war is going to happen on

their turf, the humanitarian interest is in diffusing this

situation. The way the way to do it in a way is to is to, you

know, exceed to this one demand that yes, Putin has about not

admitting Ukraine to NATO, which just to say something more

about why we shouldn’t want that the problem in Ukraine and

Georgia and Moldova, first of all, these are not North

Atlantic countries, right? This is mission creep by NATO,

they’re in the caucuses. And the problem they have is they’re

sort of these breakaway, you know, Russian republics, but

inside of these countries, there’s breakaway provinces, you

know, they’re ethnically Russian areas within these

countries that want to break away from them. So you have a

breakaway within the breakaway. And so you’ve got these

powerful forces complicated, it’s very complicated. So for

example, in Georgia in 2008, when there was a war there, and

Russia did invade Georgia, but it was on behalf of these

breakaway provinces of South Ossetia and Abkhazia. And then

in in Ukraine, they’ve got the Donbass and Crimea, and it was

now been annexed by Russia, which are these majority

Russian areas. You know, and same problem in Moldova. So the

problem is, you’ve got these like incredibly complicated

border disputes within these countries, based on ethno

nationalist tribalism. And, you know, familiar, right? The US

does not have a vital national interest in getting involved in

those disputes. And by admitting these countries into NATO, they

could pull us into those disputes, because the key

provision Article Five of NATO says an attack on one is an

attack on all we’re obligated to go to the defense of those

nations. How is the security of the United States enhanced by

that requirement, they get a lot out of it, we don’t get

anything out of it.

This is a distinctly different than say, Taiwan is an issue.

But let’s put that aside. And we’ll get to that in a second.

If China and Russia and the United States are in this very

complicated chessboard, is there a way not only to diffuse

this situation, but is there a way and I know this sounds like

a crazy Hail Mary to deepen the relationship with Putin and make

Russia and the United States in some way allies against this

relationship with China, because the Russia China relationship

is also very complex. Is there some path to us having a better


She’s holding a summit. The last person he saw in real life

was the leader of Pakistan in 2020. Before the pandemic

started, you know who he’s meeting with in two weeks before

the Olympics start or in a week, it’s put Yeah, in person. And

then the there’s going to be a tripartite alliance conference

between China, Russia and Iran. Great. So I think this idea that

that all of a sudden, somebody is going to found some holier

than thou perspective on what the right thing to do is for

other people is going to be challenged. So those guys are

going to think about themselves. And they’re creating alliances

to basically further advance their own objectives. And so I

think we have to as well. The thing here, I think what

deescalates all of this is economic sanctions and monetary

impact. Because if Nord Stream two doesn’t get turned on, which

is in Germany’s control, that has a huge economic impact to

Russia explain what it is. Nord Stream two is that pipeline

that I just talked about the nat gas pipeline that that

basically doubles the amount of nat gas flowing from Russia into

Germany and essentially into all of Europe. But hasn’t Germany

said if they invade the Ukraine, they haven’t said it, they

haven’t said it on the record, they it is it is thought that

Chancellor Schultz that that it’s theoretically on the table,

but it hasn’t been officially declared. Biden today said that

he’s talked or somebody in the White House has talked to all

the major banks in the US about crippling economic sanctions. So

I do think the way this gets deescalated is through money.

And if you, you know, if you severely impinge Russia’s

ability to sort of grow their economy, that foments a lot of,

you know, anger at home. And I don’t think that, you know,

that’ll probably weaken and destabilize Putin more than, you

know, trying to sort of have a, I don’t know, some kind of,

like, get together and hug it out session with him.

Yeah, I mean, so Jason, you raise a good point with, you

know, can we improve our relationship with Putin, Obama

tried, right, we had the whole reset. And ultimately, it

wasn’t tremendously successful. But I think a lot of it has to

do with the way that the foreign policy established from

Washington sort of reacts. And Obama had some really good

quotes about this. I think it was in that Atlantic article

where, you know, first, he’s described that, you know, that

Russia has a vital interest in Ukraine in a way we don’t,

because it’s right there, it’s on their border, they’ve been

attacked, Russia has through the Ukraine, you know, throughout

history. So again, it’s just a primary interest of theirs. And

so after saying that, Obama, then, you know, he basically

got attacked, you know, by, you know, in a, but it was some of

it was partisan, but, and then he responded to the attacks by

saying, if there’s someone in this town, Washington, DC, that

would claim that we would consider going to war with

Russia over Crimea and Eastern Ukraine, they should speak up

and be very clear about it, that he challenged. And then he

said, so the issue, and no one did, right? No one was willing

to just come right out and say that we should go to war over

this. And that’s how he diffused the attacks on himself.

And then Obama continued, he said, there’s a playbook in

Washington, that presidents are supposed to follow. And the

playbook prescribes responses to different events. And these

responses tend to be militarized responses, you’re judged

harshly, if you don’t follow the playbook, even if there are good

reasons. So what Obama is saying is that no one would defend a

more militarized posture and going to war against Russia over

the Crimea. And yet, he was somehow portrayed as suspect,

you know, by not being tough enough on Russia. And so, you

know, if you’re Putin, and you see constantly the foreign

policy establishment, you know, reacting in this way, it’s not a

problem that even one president can just fix overnight,

you know, what would change this is if when we send 100,000

troops over there, it’s a draft. And, you know, it’s not an all

paid military, the fact that these people in Washington who

got their kids in Georgetown, or Harvard, or wherever they are,

Stanford, don’t have to send their kids over there to fight

this war is one of the reasons they can write these documents

and have these doctrines that hey, you got to send all these

troops into harm way harm’s way like if they had to send their

sons and daughters, it would be a much different discussion of

like where we’re going to start a war, whether it’s Afghanistan

or the Ukraine.

But let’s go to markets. Bill Ackman came over the top, he’s

buying a ton of Netflix, and Tesla just absolutely flipped

to becoming a money printing machine and had a ridiculous

quarter revenues up 53 to 53 billion up 71% year over year,

q4 revenue 17,000,065% year over year. And they increased

their deliveries by 71%. And now you’re all of a sudden to

start see some, you know, income coming into the company.

So flipping from money losing to break even to now printing a

ton of money. Microsoft had an absurd quarter, their revenue

hit 51.7 billion up 20% in the quarter 20% year over year pays

for $200 billion in revenue in 2022. And their net income was

also up 20 plus percent at 18.8 billion. So the money printing

machine in these companies is just extraordinary. Chamath,

what are your thoughts?

I think you’re, you’re, you forgot a couple of key things,

which is that the FOMC meeting happened this week. And Powell

basically said, Look, we’re going to start tightening in

March. I think the way that he said it, you know, all of these

words tend to be so scrutinized and overanalyzed. But the

instead of figuring out what people thought, I think their

actions post the FOMC are important, which is that, you

know, we effectively now started to price in about five rate

hikes this year. So probably 525 point rate hikes,

effectively, that’s what that’s what the that’s what the yield

curve tells us. If you take a big step back, I just want to

remind people like, it’s really hard to live through volatility,

right? And we’re in the phase of it now. But typically, these

big drawdowns are like, you know, when stocks go down, it

actually precedes so it comes before the actual starting of a

rate hike cycle. And so if you go back to the, you know, from

1950, onwards today, every time the government has started to

raise rates, or the Federal Reserve has started to raise

rates, the stock markets have actually rallied. Now, why is

that? It’s typically that they see through the end of the rate

hike cycle. And they start to price the business as if these

rate hikes are done and to rebase things. And on average, I

think the stock markets go up between seven and 8%. So call

it seven and a half, eight and a half percent. And so what’s

interesting to me is now, we’re finally starting the process of

these hikes. And the real question is going to be how data

dependent do these guys get? And what I mean by that is, so

you know, we talked about this before, but, you know, China cut

rates, this past weekend, actually, Germany decreased

their GDP forecast. And so you’re starting to see two huge

countries already say, Hey, wait a minute, we need to be, you

know, we need to be more realistic about what long term

growth looks like here. It’s inconceivable, in my mind that

those countries are slowing down, and we won’t. And so I

think what happens in these other huge GDP drivers of world

GDP will affect us. And so, you know, Saxon, I have said this

before, but the marginal risk will be that we overcorrect and

actually create a recession that doesn’t need to be one. So we

slam on the brakes too hard. And another way of saying it is,

the rate hikes are the market is a leading indicator of what’s

going to happen post the rate hikes,

we had a nice relief rally going until I think some of the words

that Paul used was that there was plenty of room for

meaning that because unemployment’s at three and a

half percent, that, you know, we’re at full employment. And

that means that the Fed can, you know, has this dual mission

of keeping inflation low and, you know, keeping employment

high. So if employment is high, then they’ve got more room to

raise rate. Anyway, it was that language around the plenty of

room that freaked markets out, and they triggered a huge

selloff. I think to Jamal’s point, I don’t see how you can

have this much wealth destroyed so quickly and have it not

impact the real economy. There’s a lot of people out there who

feel a lot poorer, because their portfolios have gotten slashed

in value. I mean,

it’s all tightening, they’ll clench not spend as much money

on a vacation, not buy a TV or a car. So these waitlists for

cars might get, you know, become sales,

the luxury markets of the economy, the optional purchases

start to really slow down. And so I think that the risk of

recession now is much higher than it was even a month ago.

Now, you know, it’s gonna be hard to know. So basically, I

think what we’re saying is, it’s gonna be very hard for the Fed

to engineer a soft landing here, where we don’t trigger a

recession in the process of stopping inflation. And look,

we’ll judge Powell’s performance. You know, at the

end of this, you know, we’re not going to know, I think it’s,

but I but I think that he’s turned out to be much more

hawkish in his statements than markets were expecting.

Again, and in 2018, you know, he was probably overly hawkish,

and he actually created effectively, a little mini

recession, we we didn’t pay attention enough to it, because

you know, Trump made it impossible to see the signal

from the noise. But it did happen. And it was Powell being

a little too trigger happy. And so, you know, we have to

remember that, you know, the Fed has $9 trillion of assets on

their balance sheet. And so, you know, if they start to take

$9 trillion of cash out of the system, by selling these assets

into the market, right, you’re taking the money out, right,

because you’re getting money back, that’s going to have an

enormous, huge impact as well. So if you think about question

about what happens, one second, one second, let me finish,

please. So, you know, so when you have these two things

happening at the same time, you have a potential rate hike

cycle, which makes the cost of a used car more expensive, the

cost of your credit card balance is more expensive. The

obligations you have to pay just become naturally more expensive,

you feel poorer, so you spend less. And then separately in the

financial markets, you actually take liquidity out of the

system. And so people value, you know, liquidity more, it

becomes, it becomes worth more, you, you value current cash

more. I mean, we’re putting ourselves in a really delicate

position. So he’s got a delicate balancing act here, he is

definitely on a tightrope. So if we pull 9 trillion out, we’ve

been talking about this deficit, if he starts selling all of

those assets, does that mean on the United States balance sheet

that will reduce our national debt? No money, we’re getting

9 trillion of cash, right? You sell an asset, you get cash for

it, right. And so it pulls money out of the economy in the same

way. Yeah, it created liquidity when they were buying assets,

right? When they’re buying this debt, it would put money, push

money out. If they’re selling the debt, it pulls money back

in. What happens to those dollars is my point, like, what

is the impact of the dollar sitting around in the United

Bank, the dollar, the dollar stays in the US USA’s bank

account, but the obligation the note exists in some financial

intermediary that holds it. Clearly, Powell does not want to

be remembered as the Fed chief that let inflation slip the

leash, right? I mean, he, he’s gotten religion now around the

idea that this inflation is not transitory, which was his

position for months. I think that now bit him. And the risk

is potentially an overcorrection, but he’s not

going to let inflation

He’ll then he’ll be the first Fed governor to have caused two


I think it’s like a serious risk. And by the way, these

market levels that we’re at right now, I mean, look, 60%

correction and growth stocks. Okay. But this is with that’s

still in a good economy in peacetime conditions. And now

we have a risk of recession and war. So, you know, there’s

still room for, you know, a lot more negative news here is kind

of my point. And, but look, sentiments also very negative.

So when sentiment is this negative, there’s also the

potential for markets to quickly recover.

But the sentiment is there for the wrong reasons. I think I

don’t think people are thinking recession, I think people are

thinking, my gosh, these rate increases, my gosh, I can’t own

these high growth stocks anymore. And none of those

things are true. Those are just perceptions that get amplified

by one’s emotions when you’re getting punched in the face,

which is what happens when you wake up every day in your

portfolio, by the way, five or 6%.

It generates incredible opportunity.

The, you know, the idea that markets bucket, quote, unquote,

growth stocks together, I think, kind of obfuscates an

important point, which is that some of the businesses in that

category are real businesses that are going to succeed over

the long run. And some of them are speculative and are likely

to fail over the short run. And, you know, as you saw Netflix

sell off, Bill Ackman, very smart came in and bought a bunch

of the stock. I don’t know if you guys remember this, but in

2011, TCV, which is traditionally a private equity

investor at the time, and there wasn’t a lot of crossover and

public market stuff happening.


They were a private investor in Netflix. Netflix stock tanked

from I think it was around $220 a share down to 70 bucks a share

in a couple of months. And TCV did a $200 million pipe into

Netflix. And everyone’s like, oh my god, what are they doing?

It’s incredible. And by the way, that was on an adjusted

basis. That’s $10 a share in today’s share price. So that

$200 million investment that they made went up 60x, you know,

at the peak of Netflix a few weeks ago. And so, you know,

seeing Bill Ackman come in and underwrite Netflix again, and

make a big investment at its current market price.

So J-Hope?

I think it really highlights that they’re just because the

market price is down doesn’t mean that a business isn’t

fundamentally valuable and going to grow and going to

generate significant returns over time as a as an operating

business. And that distinction starts to present significant

opportunities in a market condition like this. And the

businesses we all talk about generally growth stocks are down

60%. But maybe most of them shouldn’t have even been public

companies in the first place. Maybe they should have been

speculative, private investments, where more than

two thirds of them were likely to fail, and they shouldn’t be

failing as public companies. And the few that are getting

damaged and hit with this market sentiment shift can be

picked up cheap. And there’s a lot of opportunity. And so I

wouldn’t view the market condition to be necessarily

reflective, again, of the economy, or the condition of

businesses in general.

J-Hope was a partner at TCV. He’s a founder of TCV that did

that deal. And he’s also the one that participated and led the

billion dollar round into Peloton before they whiffed

earnings and got and got decapitated. But he’s an

incredible investor. That trade is probably one of the best

trades of all time.

So let’s look in the good news column. wages way up, earnings

way up. 10 million job openings in the United States, pretty

close to record low unemployment, and the pandemic

ending ending and people having record savings in their bank

accounts and personal balance sheets. So how does all that

good news the pandemic hasn’t ended?

It’s ending for people. I think it’s over for people like I’ll

tell you the thing I’m most concerned about there’s a

reverberation that persists in supply chains. I don’t know how

much hardware lab biotech consumer goods businesses you

guys are involved in. I’m involved in a number of them.

Every single one of them are crippled in some way right now

by supply chain issues. I mean, I’m talking about like,

businesses that have been operating at steady state for

many, many years.

When do those get worked out?

We don’t know. And everyone’s getting surprised and hit

upside the head every week with some new supply chain shortage,

whether it’s some chemical you need for some lab equipment,

or, you know, the delivery of some big piece of equipment,

or even plastic bottles that we use to kind of fill up our

beverages that we ship. That’s a pretty sizable business.

We’ve never had supply chain disruption like we’re seeing

right now. I’d like to bleep out the name of that company.

Yeah, but it but it’s it’s like it’s a bleep this out. But it’s

a significantly sized business that has never had supply chain

issues. It’s all us based, but some of the suppliers of the

suppliers have had complete failure and delivery. And all

of a sudden, it’s now reverberating through the supply

chain. You guys saw that GM didn’t deliver a single friggin

electric vehicle last quarter, because they couldn’t actually

get the chips that they needed to make cars. So the real risk

to the economy, in my opinion, right now, is when and how we’re

going to work our way through the supply chain issues. And it

is so complex. And there’s a myriad of problems. And it is a

global problem, that it’s really unclear how this is going to

play out over the next six months. And what will happen is

this quarter, next quarter, businesses that you didn’t

realize and didn’t expect are going to get hit with supply

chain problems are suddenly going to say, guess what, our

revenues off by 2030%. Because we couldn’t sell this product

because and half our shelves are empty, because product didn’t

show up or whatever the narrative might be. All right,

so it’s a real problem.

I think it’s a really, I think it’s a great point, because you

don’t solve these supply chain issues with rate hikes. Right?

It’s like nothing to do with that. Nothing to do with it. So

the rate hike slow the economy. I’m way more worried about this

than rate hikes. Right? What does clean it up is capitalism,

the end of the pandemic time, unless we’re Asian. And the

reason I’m less worried is when you actually talk to the

companies that that are spending enormous amounts of money on

CapEx, they’ve actually guided to the fact that by the end of

this year, in the beginning of next year, most of these things

will be worked out. It’s indigestible. I think I think

we’re, I think we’re dealing with a, you know, six to nine

month issue of having turned things off. And now we’re now

rapidly trying to turn things back on. And we can’t

necessarily get that timing, right. But I do think it’ll work

itself out faster than people expect. Personally, that’s what

I think, because the cost of Apple and Tesla specifically

guiding to that is too enormous, you’re talking about, you know,

collectively, almost 4 trillion of market cap, so they’re not

going to get something like this wrong. And they were pretty

clear in the last few days that that this will be done by 2023,

early 2022.

Saks or Chamath, I just listed all the good news to counter,

you know, the the slog and the and the bad news. How do you

account for record low unemployment, record number of

jobs, record wages going up, massive cash on people’s

personal balance sheet, massive amounts of sideline cash,

massive amounts of venture funds being raised that have to be

deployed in the next five years. All that good news, where does

that on this balance sheet of good versus bad, you know, work

out for you, Saks?

Well, the the negatives are that yes, the unemployment rate is

very low, but a lot of people have dropped out of the labor

force. So the labor participation rate is still

quite low. So

Because of?

Well, because I think a lot of people dropped out because of

COVID, you know, everyone went remote. And I think, you know,

they got these STEMI checks. And I think a lot of people got used

to not working. You know, maybe maybe you had a household with

two people used to work. And now only one of them is working,

you know, maybe they moved to a cheaper part of the country.

So I mean, maybe it’s a good thing, right? But a lot of

people dropped out of the labor force, and they haven’t come

back. And so that’s the negative. And then, you know,

the fact that wages are going up is good, but we don’t know how

much that’s inflation, right? So, you know, those would be the

negatives. But there was a report that inventory levels did

rise in Q4. And so the supply chain issues do seem to be


anecdotally, I was looking at cars. And now a lot of the

people who had, you know, there’s no way to get this car.

Now they’re like, hey, we got a couple of these cars available

if you want them. And then if you look at the housing

inventory, it does seem that maybe that’s taking a plus two

and people couldn’t find houses. And now maybe, even though

still a housing crisis, maybe there’s more available, or

they’re staying on the market a little bit longer.

Yeah, I mean, it’s, I think it’s pretty clear that economic

activity is slowing. And again, things like rate increases,

they, it increases the cost of a mortgage, right? So that could

affect house prices.

I think there’s an interesting startup story. There’s a private

company that’s doing essentially life extension that a bunch of

rich people put $3 billion into you want to tell us Friedberg

and your science segment, what is this going to make us live

longer or not?

Well, I think I mentioned this company a few episodes ago.

But I think they just announced their $3 billion investment.

And again, this goes back to the point I made on the prediction

show. So last week, Altos Labs announced that they’ve landed

$3 billion in funding. And this has been an ongoing funding

that’s been going on for quite a while into this business.

But this business was set up to commercialize Yamanaka factor

based cellular reprogramming for age reversal. And there was a

paper published just yesterday. I’ll put a link in the show

notes that if people are interested in reading a

scientific paper, they can take a look incredible results.

Scientists took mice gave those mice short bursts of these

Yamanaka factors, and then measured all the biomarkers all

of the chemical signatures in the blood of those mice to

determine their age, because there are known ways that we can

measure the age of an organism by looking in their blood at

measuring certain biomarkers. And with just a few short bursts

for about a week of these drugs, these, these Yamanaka factors,

the mice all of their age signals reversed to making it

look like they were very young again. And it did not do what

the challenge has been with Yamanaka factors in the past is

if you put too much of it in in a body in an organism, the cells

rejuvenate to becoming stem cells, which is kind of like

what a fetus might have, and starts to grow a lot of tumors,

they were able to avoid having tumors show up in the mice. And

the mice, in fact, all looked extremely young from a

biomarker basis. So an incredible result and incredible

paper, whether or not it gets repeated and shown by others.

But I think this speaks to the quality of the science that’s

underlying the $3 billion investment that was just made in

Altos labs, which is probably one of the biggest seed

investments ever.

No, it clearly is the biggest seed investment ever in a


I think it speaks to what I highlighted as what I what will

be the new frontier in biotech, and we’ll completely rewrite

like, you know, the course of humanity is if we can take drugs

and for a short period of time, completely reverse the age of

ourselves. And it sounds so crazy and so wacky. But it’s

being now proven in a single week, we’ve now had an amazing

paper published. And we’ve seen the startup announced their $3

billion of funding to pursue commercialization of this

technology. And this is going to be the year I think this will

be the front cover of a lot of magazines this year, as people

realize that this is real, and that it’s getting


Why do you think they have to start with $3 billion? And I’ll

tell you why I asked the question.


Whenever I see these grandiose prognostications of future

progress, and then see these companies raise exorbitant

amounts of money, I have never found a single example where

it’s ever worked. Ever. In fact, every time I see a company

raise an exorbitant amount of money in a Series A, I write

them off in my head.

Yeah, sure. Yeah.

So why? Why should I not in this case? So, or it’s more

actually, actually better question, why would somebody

listening to this pod go work there? And by the way, I, by

the way, the same has been done and can be said about Calico,

which is alphabet subsidiary, that’s that’s pursuing similar

research, where billions of dollars have gone into that

business. And there’s a similar sort of research track underway.

And I think the general principle Chamath is they don’t

know what the product is, they don’t know the way to market,

they don’t know, you know, what area they need to explore.

But the underlying principle is proven. The underlying

principle is something that people believe in. This science

is proven, this science is real, we don’t know the commercial

path. And we have to try lots of different things and run lots

of different research programs in parallel to figure it out.

And each of those research programs is like $100 million

biotech startup. And so I think that the principle is, let’s

put a lot of shots on goal all at once in parallel and make

sure because if any of these shots on goal work, this is

going to be worth many, many billions of dollars. So I think

that’s generally the idea. It’s almost like having a $3 billion

venture fund. But the venture fund is targeted at one core

area of interest that we believe is real. And I think that’s the

way a lot of these things are being set up. But I’m asking

this question. Have you ever seen a company try to do 30

different things and it works? No, no.

Yeah. I mean, it’s not the typical capital allocation

milestone based funding scheme. I have a very

it’s not a product market fit thing, right? It’s it’s a

research program. And it’s a series of research programs. But

I mean, look, let me reframe it for each month. Have you ever

seen a $3 billion venture fund that makes 100 bets with smart

people at the helm with smart people working at the individual

businesses fail, right? Like,

yes. And in fact, I’ve never seen a $3 billion venture fund

do much more than return to X of money.

Yeah, well, look, let’s see. I mean, it’s a it’s a big bet.

And obviously, there’s some people making nice management

fees and nice carry on this thing. I’m not trying to be a

wet blanket. I’m just curious. You know, why do it that way?

Meaning, you know, every startup, let’s get Bob Nelson on

he’ll talk about it. He’ll set it up. Yeah, every startup, I

think, is forced in some ways by the market to make an educated

guess about where product market fit lies and to try to build

some minimum viable product that that tends to be how value is

created. I mean, you could have said that, you know, Google

could have had 90 different algorithms. But you know, Larry

Page started with backroom. That’s how it started. He had to

make an educated guess that he had to make decisions. And

that’s what startups about. You have to make decisions and

your asses. Well, you have to make a bet on your on your own.

Why don’t you put all your capital into one company? Oh,

because mostly the companies won’t let me. But I would if I

could. Oh, interesting. So I think that what’s happening here

to me, you’re absolutely right. If I could, I would, but they

don’t let me. You could buy you could put all your money back

into Facebook or back into forget Facebook. I know you got

issues. But what about Alphabet or Amazon, just put all your

capital in one bet and just, you know, write it up. Right. But

then it comes to what I think where I can generate the best

return. Meaning, you know, I think that I could generate much

higher returns than what I think Google will give me. Yeah,

that’s why I do it. Well, here’s what I think’s happening

here. There are a lot of rich people who are going to die

soon. And they’re counting down like Bezos. And they’re saying

if why not, if I’m worth 100 billion, put 123 billion into

this, and have them go for it. Because I’ve got nothing to

lose, because I’m dying in 20 years. This is a fear of death

by billionaire bet, which is exactly what I think happened

with the Google guys. They were just like,

I’ll say the team involved in these projects are not first

time founders or people that are great pitchman. It’s people

that are repeated tried and true entrepreneur success stories

that have done this over and over in biotech. And they’re

the ones that are being drawn into working on these projects.

And they’re saying, look, because we’ve got the people

that have done it over and over, give them the capital. I

mean, no, I believe that’s a good argument. Yeah, I believe

in Yamanaka factors. And I believe that there will be

innovation. My only question is, is the innovation going to

come through a small team that raises a small quantum of

capital with one very focused idea that gets it right? Or

this sort of, you know, Monte Carlo simulation approach to

product innovation. And all I’m saying is just an observation

that historically, it’s been very difficult for these Monte

Carlo simulations to ever work either to generate product

market fit and an innovation, and to make money. Now,

hopefully, these guys are the exception that proves the rule,

because I think we’d all want this to work.

No, it’s a it’s a great point. And I hope you’re right. And I

hope to start that small project. And

now you’re saying the key thing, because despite the $3

billion, you’re still going to go after it, which implicitly

is your way of saying, I’m short that company, and I’m long my

own company. And this is this is the point I was trying to get

to, which is when when really, really smart people see these

things, they tend to look at it with a grain of salt thinking

it’s very difficult to build a startup as it is. Yeah.

Sometimes it’s kind of like growing great wine, you need to

have a little pain and suffering along the way. And when you have

$3 billion, it’s the opposite of pain and suffering.

Totally true. And I’ll also say, let me just support your

point, which is the people I see get hired to big projects like

this. And there are a number of them that get funded, not just

also in, in other kind of deep tech stuff. They hire the tried

and true experienced executives, who generally have older kids

and live in a nice house and have made a bunch of money. And

the earnestness, the motivation, the hunger, the fuel, the

creativity, because they know what they know, and they’re not

willing to accept that they don’t know what they don’t know.

Those folks generally are less likely to succeed than the folks

who are doing this maybe for the first time. For that very

reason, when you’re doing something innovative, so I

totally support your point. And, and I really do hope you’re

right. But I thought Jason, when you were talking about talking

about startups, I thought we were gonna talk about bolt and

the stripe mafia fiasco this. Well, that’s a good story.

It’s a pretty crazy story. Where does everyone follow? What

side does everyone fall on that? Does anybody have any equity

positions at either company? Let’s start there? No, no.

Stripe holders? No. Saks? No. Saks. Are you an LP in any firms

that have? I’m an LP. I’m an LP in funds that have exposure to

it. Absolutely. Yeah, for sure. I’m an LP in a fund that has

exposure as well. But it doesn’t but it’s minuscule. That

doesn’t affect minuscule doesn’t matter. Yeah, it’s good

for me, too. Okay, here we go. So for people who don’t know

bolt is like one click checkout software, they compete in some

ways with stripes payment API. The CEO Ryan Breslau did a tweet

thread basically saying that YC and stripe are the mob bosses of

Silicon Valley, it was pretty charged. Obviously, stripe and

YC work together. stripe is the biggest company to come out of

YC ever, I guess along with Airbnb. He claims that a lot of

the top VCs were blocked as a strategy by stripe. And I think

there is some truth to this when you invest in one company, you

don’t invest in the competitor. I don’t know if that happened

here as a strategy, but it is a viable strategy that other

people have used where bolt claim stripe got all the top

investors, therefore, they couldn’t raise money. He also

was saying they were voting things up and down on why

combinators hacker news as if that matters, yada, yada, yada,

it was kind of a weak argument, in my view, I’ll give you a

bunch of VCs dunking on I’ll give I’ll give you my hot take.

So first of all, bolt is now a $14 billion company or

something. Okay, so that, you know, these guys, I think this

was a very brilliant PR strategy. And it worked. What do

I mean by this? This was a company that most people didn’t

know about until this past week, they went and they punched

up, which is a pretty tried and true PR strategy, always fight

up, you pick the big guy, who’s an incredibly pristine,

extremely well run company that is sucking up most of the

talented, you know, people in Silicon Valley to work for is a,

you know, center corn could be a trillion dollar company over

some lifetime. So they went and they punched up. And what

happened, everybody fell for it. They baited all of these

folks. And then all of these folks had to come out on

Twitter and lambast them. And basically, the net result of it

is if one person knew about bolt before, now hundreds and

thousands of people know about bolt afterwards. So not only do

they not know them, they’re now they’re contemporary, just in

terms of the practical reality, they are now part of a

discussion. And in a framework of companies in this space,

that they were never a part of before. This is Steve jobs is

moved with a 1984 commercial, he said IBM, and then Microsoft,

our big brother, we’re going to attack them, join the rebel

alliance, be part of Apple. And of course, Apple and IBM

responded. And that was the big mistake. And Mark Andreessen

Sequoia, a bunch of different venture firms responded. Saks,

what’s your take on this? I see you’re chomping at the bit, or

maybe you’re biting your tongue, which is

no, I saw I agree with Jamal that it was kind of a brilliant

PR move. If that’s what it was, I do like startups punching up.

And he took a punch at Stripe, which is the big company in the

space. So and then yeah, Stripe, Stripe didn’t respond directly

to call since and respond, but their surrogates did. And then

that looks like punching down and it draws more attention to

it. So I get the PR strategy, I would say that as to the merits

of the allegation, I do. It’s interesting that you know, he

didn’t get into YC, because I think that he is a very

talented founder. And, you know, we looked at this company,

pretty, yeah, pretty early on, it was for like, sort of a

mid stage growth round. And it was like one of the toughest

decisions we, we face, I’d say the toughest decisions as a VC

are when you actually want to invest in the company. But the

valuation is like 2x what you think it should be. And that was

kind of the situation at the time, when we looked at it is I

think we actually would have invested, this is the valuation

was too high. So it would have been a great bet for you. Yeah,

he grew into it. And so it would have been a great bet. So it was

a bad decision on your part. Yeah, yeah, clearly, we should

have invested. It’s just that, you know, at the time you invest,

you have to have some basis for valuation. And that’s the sense

in which I think, you know, maybe Ryan’s accusations don’t

totally make sense is that he’s been able to raise a lot of

rounds at really high valuations. And so he, he hasn’t

had a problem, you know, raising a lot of money at, you

know, great prices. And, you know, it’s almost feels like a

slap in the face to his investors where, like, what’s

the complaint? I didn’t get any tier one investors or that it

was just hard to meet with investors. And that stripe

called the investors and told them not to invest that that was

the allegation. Yeah, no, I mean, yeah, I can’t really speak

to that. But he was clearly able to raise great rounds. So can I

read to you an email exchange between me and Ryan Breslow? Oh,

dramatic reading from 2015. Oh, here we go. H math hopes all

all as well. FYI, things felt too rushed on our end. So we’re

toning down our Series A discussions for a couple months.

And this was this was in July of 2015. I’m reading you my

answer because it’s so fabulous. Hi, Ryan. After a wholly

unsuccessful few weeks of attempting to win a World Series

of Poker bracelet, I’m back at home licking my moons. How

about we talk in a week or two? So not only did I have a chance

to win a World Series of Poker bracelet, according to this

exchange, which I didn’t win, obviously, duh, I had a chance

to do the Series A in a $14 billion company and screwed

that one up too. Big dummies. I mean, the the things we miss

are there’s like 20 things you miss as an investor for

everything you hit. So I’ve interacted with Ryan back in

the day, and I just remember him being super, super smart.

And I do think that, you know, there’s a lot of very smart

people now around the table at Bolt, including Joanne

Bradford. So I don’t think that this was something that wasn’t

planned. And I just think that they executed it well. And it

worked. And I think a lot of people know this company that

didn’t know before. Now they still have to execute and build

a product and scale it and do all of these things. But

yeah, and I think that the response he provoked, I mean,

since I was a little bit critical of what he said, let

me to say that one of the VCs responded said that the reason

they didn’t invest was because the numbers weren’t good. That

was not my experience. When we looked at this company, they

had great numbers. It’s just the valuation was ahead of those

numbers. But the numbers were always great.

I actually responded to that. And that was Sequoia partner,

Sean McGuire, who said that. And I responded to him like, Hey,

dude, VC code is you don’t reveal the numbers on things

you learn confidentially, what are you doing? Like, and he’s

like, well, they said some bs about tribe. I was like, yeah,

it still doesn’t change VC code that if you learn something

under NDA, friend, da, essentially, in a meeting,

you’re not supposed to weaponize that.

Unless you unless you have a $30 billion position.

I still think well, whatever. I still think it’s like I’ve never

seen a VC. Honestly, it’s the first time I’ve ever seen a VC

Jason, Jason, come on. I don’t I think it’s pretty, I think we

all knew where he was coming from. He’s defending an

enormous position of his and Sequoia, Jason, you’ve always


never released inside information is my point.

You didn’t say inside information, information.

General statement, he’s he made a general statement met with

them, but he was conflicted out. So why would he meet with

them? Hey, guys, Nick just texted that I had I had I found

a way to get off my lazy ass not be playing poker and do that

deal. I would have generated a 222 x on my investment, which

would have been 15 million times 222.

Well, we screwed it up too. I think I think we looked at when

like a $400 million valuation or something like that or

something in that range. And so my gosh, what would the series

a bit? I mean, the series, they would have been at like 23

years, 63 million, according to pitch book. Oh, yeah, 63

million. You know, it was one of those meetings we came out

of where it’s like, that’s a super interesting founder. So

yeah, me too. And that’s what I remember too from Ryan. Yeah,

super, super, super interesting founder, write the check. I said

it earlier in the program that like our philosophy now is just

to be price takers and just to pick the companies that we want

to be in and then the market sets the price. That’s the

biggest mistakes I’ve made as an investor. We should have done

that with bolt. This was the decision we faced was like a

few years ago. And so we just shouldn’t have worried about

valuation. By the way, sorry, J Cal, as soon as you said it was

63 million, you know what my reptilian brain said, Oh, that

feels so expensive, even now, even now, billion. And so to

your point, David, it’s a really good lesson for for investors to

learn is just you’re a price taker to get behind these

really interesting people that are world beaters and just let

them do the work. All right. So there you have it. This has been

another amazing episode of the all in podcast. Bye bye. Bye

bye. Love you. That’s it.

Let your winners ride.

Rain Man, David.

We open source it to the fans and they’ve just gone crazy with

love you as a queen of

besties are gone.

Should all just get a room and just have one big huge orgy

because they’re all just like this like sexual tension, but

they just need to release