fact that sacks his greatest moment in life was beating Peter
TL in a multi game chess. You ever see that picture of? Yeah,
of him with his arms raised. I can’t believe he beat Pete. I
mean, tell us about that moment. Nick, show that picture of
sacks. I mean, listen, here’s what I say when I saw when I
saw that picture. I had a couple thoughts. Number one, I’ve seen
this picture somewhere else. And then number two is oh my god,
it was on NBC’s to catch a predator.
I mean, I have never seen sacks happier. I like the birth of his
children. Oh my god. This moment, I’ll tell you that was
the day of PayPal’s IPO. And so we did a party in the it was
like a keg party in the parking lot. That was the extent of the
celebration. And Peter did it off. He did a 10 game
simultaneous, which means he’s playing against 10 people at
the same time, and he goes board to board makes his move. And I
was the only one out of the 10 that beat him. And somebody I
guess on the left, I put money down, I put like 20 bucks down
or something on the game, which is a foolish thing to do against
Peter because he’s like a chess master. And and I somehow I won
and you can see I’ve got the money in my hands. Great stuff.
Look at the look on Peter Thiel’s face. It’s losing. Look
at the look on p I mean, he’s so angry. He and he but he sees
the joy in your face and he can’t process it. And look at
Max Max is to my right and roll up and they’re so pure joy.
Yeah. But this was a few seconds before Peter smashed all the
pieces off the board. And yeah, he flipped the board. He always
does that when he loses and his motto is when you call him a
sore loser. He says show me a good loser and I’ll show you a
loser. Wow, such a great line. But I just want to also comment
on the pleats on sax’s pants and how high that way
holster and the cell phone holster. Zoom in on the
cell phone holster. Is that a blackberry? It just keeps
giving. It’s a free iPhone, guys. This is like, I mean,
this is like late 90s fashion. The gift that keeps on giving.
I do have to say Roloff’s hair game. I mean, strong hair.
Roloff’s always had incredible hair. His hair is incredibly
great hair to this incredible thick. Yeah, it’s still thick
like that. Beautiful hair. Never noticed.
Rain Man, David Sacks.
Alright, everybody. Welcome to another episode of the All In
podcast. With us again today, the dictator Chamath
Palihapitiya, Rain Man, David Sacks, and the Sultan of
Science, formerly known as the Queen of Quinoa. He’s out of
that business. David Friedberg, we got a lot on the agenda.
However, one thing that we’ve had a hard time figuring out is
the state of the supply chain. And it’s confounding. It seems
like nobody knows what the hell they’re doing. But there’s one
guy who’s been on Twitter. And we happen to know him. He’s
been on my pod and Friedberg knows him. And his name is Ryan
Peterson. And he’s a bit of an expert on this. And we thought
we’d have a bestie guestie come on. We don’t do this too often.
Maybe it’s the third or fourth bestie guestie. And welcome to
the pod, Ryan Peterson from Flexport. What’s up, guys?
Thanks for having me on. What’s up, Ryan? Ryan, did you tell
Olivia you’re doing the show today? No, I didn’t tell her.
So, she’s gonna, she’s a huge fan. Oh, don’t tell her. Where
is she right now? Is she like not there? She was in the room
next door but I told her, leave me alone. I’m doing a podcast.
She knows I’m doing a podcast. She doesn’t know which one.
That’s awesome. Fantastic. She’s a super fan. She’s a very
big fan. She’s literally wearing the wet your beaks hoodie right
now. It’s awesome. Fantastic. By coincidence, she doesn’t know
I’m on the show. Fantastic. So, what you’re not gonna tell her,
right? She’s just gonna watch my next show and you’re gonna be
on it? We’ll listen to it. Yeah, we’ll probably listen to it
together tonight whenever it comes out. Ryan, what is the
state now? Should we be worried about the supply chain? Is it
getting better? Is it getting worse? What’s 2022 gonna look
like? Yeah, I mean, I think the supply chain means a lot of
things and it’ll depend what your industry is, what’s really
happening but it goes for everything from manufacturing
products, which means sourcing all the subcomponents like
semiconductors through logistics and final delivery all the way
to a customer store and where Flexport focuses on that is
sort of picking goods up from factories around the world and
delivering them into fulfillment centers all over the
world. So, kind of that global mile is what we sometimes call
it. There, you’re seeing real disruption and it starts really
with the pandemic shift in consumer behavior where people
started buying more goods because they couldn’t go to
restaurants and travel and things and so, a lot of spend
shifted onto goods and imports are up almost 20% imported
container volumes. So, that’s the start of it all and then
what we learned is our infrastructure is dilapidated
and unable to handle a 20% increase and by infrastructure,
I mean, the number of ships in the world, the capacity of
throughput of the ports, the number of trucks and
availability of trucks and chassis, which is the trailers
that haul containers around. We just didn’t have enough of
these things or the port capacity, you know, like, look
at American ports operate. This, I just learned the
statistic pretty recently and I keep saying it because it
appalls me. Our ports operate with a lower throughput and
productivity level than Mombasa, Kenya and you know, we
just do not have modern port infrastructure. Rotterdam’s
been fully automated for 20 years. So, if they want to run
24-7 and keep containers flowing through the port, they
can do that with self-driving trucks and everything. Is that
a technology issue or do you think that’s a regulatory
capture and union issue? Like a labor issue, like a labor. The
tech is there, you know, it’s existed for a long, long time.
It’s it’s really about labor getting together with
management, negotiating these things and allowing it to
happen and the the way that our our ports are run is it’s
pretty crazy when you look at it. They treat labor as a
fungible commodity is in the the port terminal operators
will say, I need this many workers tomorrow and the union
provisions that many workers but there’s different people
every day doing operating complex, you know, heavy
machinery that you can’t like the number one thing in
business is like, what did we learn today and how are we
going to do better tomorrow every day with your team? But
if it’s a new team every day, like that’s not even possible.
So, I don’t know how you can drive a productivity
improvement when it’s different workers every single day of
the week, right? So, wait, they’re not full-time
employees. They’re like staffed by the hour. They’re union
workers. They’re paid by they have annual contracts. The
union decide who goes to work every day and who gets shifts.
Yeah. And where and so they’ll show up at different
terminals and there’s like fifteen different terminals.
So, they just kind of move around do different jobs.
Essentially, what we saw it on the waterfront. Yeah. Where
like the union decides you get to work today. These other
people didn’t whatever. It’s like literally like that movie.
Yeah. Yeah. It’s literally like that. Even going further back
in supply chains to manufacturing centers. How much
are you hearing about and seeing kind of labor shortages
because people are out for COVID and hey, someone’s sick.
They got to take 10 days off. And when 10% of the employees
get sick and they lose 10 days of work, the facility sees a
decline in productivity to 70-80% of normal. And then all
of the output of that facility goes way down. Are you hearing
about more of that stuff happening, particularly during
this Omicron wave, where the real effect of that hasn’t
really hit the supply chain system yet. And we’re still
kind of seeing a buildup of demand and we haven’t really
kind of hit the problems. So, for the last 18 months, China
had this total zero tolerance policy and was very successful
in keeping COVID out of their country. And so, manufacturing
just kept running as if not no problem in China, which is the
majority of this manufacturing. With Omicron, you’re starting
to see that it is still taking hold in a zero tolerance policy.
We haven’t yet seen major shutdowns and waves of
shutdowns, but a little bit. You’re seeing that here and
there. The zero tolerance policy has shown up, for example, at
least twice where one port worker in a Chinese port got
COVID and they shut the whole port down for like three weeks.
Yeah, that’s crazy.
Which is really extreme. I mean, US workers have been getting
COVID nonstop and the ports keep operating, even though we
have lower levels of productivity, but they’ll shut
the whole port down. That happened both at Yantian, which
is the largest port in China, or second largest, and Ningbo,
which is the third largest. So, it’s been very, very
disruptive. It’s also happened at the airports over there.
So, that’s something I’ll definitely keep an eye on here
over the next couple of months, or even next several weeks.
Are we still having this like, we’re ordering too many goods
and we’re backed up? Or is it that we’re backed up for six
months just trying to fulfill all those pandemic orders?
Like, what’s the state of the backlog today, if you could
So, volumes are high, but they’re sort of flat. They’re
year over year, they’re flat now. They’re much higher than
pre-pandemic, but they’re pretty much flat year over year.
And that’s what has me so worried here, is that you have
increasing delays, even though the input’s the same. And we
have a complex system where the same amount of input’s coming
in, but the delay’s getting longer and longer. That’s a very
worrisome sign. Like, if you’re ever building a technology
system, you’re building this system and you’re sending the
same amount of bits in and performing the job is taking
longer and longer. That would be a very alarming sign that
you’re going to want to send some of your best engineers in
here to debug the thing.
But I think we’re seeing that because a lot of companies,
people don’t realize when they buy capital equipment, like
machines that are either sold to end users or machines that are
used in their own production systems, capital equipment is
typically assembled last minute. It’s not like there are
companies that own huge pieces of equipment, and then they
ship them and they just get plugged in and turned on.
There’s usually components associated with them. And in
businesses I’ve been involved in over the last couple of
years, we’ve got a lot of lab businesses and hardware
businesses. And just getting capital equipment has been like
delays like we’ve never seen. It’s like a year to a year and
a half for something that used to take four to six weeks to
arrive, because the company that makes that equipment is
having delays with each of their component suppliers.
And then all of this stuff backs up into the system. And
it plays out where the end user is now stuck waiting a year,
year and a half, and the business doesn’t make progress.
And a lot of hardware companies in Silicon Valley right now are
facing these significant shortages, where they can’t get
the equipment they need to ship product to their customers.
And they’re sitting around burning money every month. And
so the when the result will actually show up down the road,
when all of a sudden they miss revenue three, four quarters
down the road. And that’s why I’ve been saying for, you know,
a couple shows now, that the biggest thing I’m concerned
about is when the revenue shortfall start to hit the
companies that are dependent on these supply chains, but you
don’t actually see the revenue shortfall for a couple of
quarters after the supply chain problems hit them. And just
this quarter with the quarterly earnings, we’re now seeing that
the company yesterday that reported called ingredient on
their big food ingredients company, and they just reported
how supply chain problems have now backed up to effect and the
stock was down like 10 11% yesterday. And this is like a
very stable, very mature, third largest producer of starch in
the United States, and their business got totally hammered,
but it took a while before that hit them. And so you know, it
feels to me, Ryan, I mean, correct me if I’m wrong, but
like, a lot of the the business level and market level risk
isn’t going to show up for a while after the supply chain
problems really persist within their organization.
This is the thing that has me most concerned is what’s
happened is it’s now taking 115 days on average across our
customer base, from when the factory says, hey, these goods
are ready, come pick them up to when they finally get delivered
to a warehouse in the United States, 115 days, before the
pandemic, that was 50. And 50 even felt high, like the ship is
only taking 15 days, like what the heck is going on? A lot of
inefficiency, a lot of customs processing, hard to find a
truck, etc. Even in normal times, when you go to 115, all
of a sudden, these companies are so much less agile, like
because you’ve placed the orders and you’re expecting
forecasting demand is so hard. And now you’re forecasting
demand for twice as long of a time period, you’ve already
placed all that inventory, if your demand goes down, guess
what, you’ve already ordered the goods. So I’m really worried
that we’re going to find out in six months or in some time
period in the future here, that people have ordered way too
many goods that these companies expected demand to stay high
and keep booming. At some point, consumers start going to
restaurants and start traveling a lot more, you get pre COVID
consumption patterns. And all these companies get stuck with
way too much inventory that they paid way too much to ship
and get delivered and they can’t sell it. And so I’d be
very worried for like, middle market kind of retail,
directed consumer econ, these types of businesses that aren’t
very sophisticated in demand planning and end up with way
too much inventory. I think that there’s been this weird
dispersion, actually. And I think that like the supply
chain issues are not broadly distributed. So if you bear with
me for a second, if you watch the earnings reports, I don’t
know how closely you watch them Ryan this past couple weeks,
but like, Apple and Tesla basically said, it’s kind of
reasonably well managed, particularly on the chip side.
And we see the whole thing using q4 q1 of next year. Amazon
last night basically said, Yeah, there’s some, you know,
toughness in the system, but we think it’s sort of like, you
know, reasonably achievable. And they’re past it. And so it
seems like the bigger companies who have influence, we’re able
to manage through it, these smaller companies, to your
point, who really do rely on many actors in the supply chain
have been really thrown left and right, they probably don’t
know where demand really is. So is that sort of the more
nuanced actual the way that it’s running out? Yeah. And it’s
sort of, it’s very interesting to see this flip. So pre
pandemic, the biggest companies paid the least for freight,
because they buy the most freight. So they negotiate good
rates. Now they’re paying the most. And the biggest companies
for a reason, they have the best businesses, they either have
the best margins, the best, you know, they just built something
that people want at scale to be huge. Well, when times are
tough, and you need to spend extra to prioritize your freight
to get loaded, to sign a contract and make sure that
these ship owners and airlines honor their commitments and
serve up step up. It’s the big companies that can afford it.
And so they’re not paying extra for freight. But they’re getting
around these problems. And freight is a really interesting
market, because it’s pretty inelastic, like you’re either
going to ship the thing or you’re not the whatever the
price is, you probably still shipping it. And so like, you
haven’t ever looked at an apple at this level. But I’m sure that
if you did, you’d see that it’s a percent they spend on freight
is just negligible. So if they doubled it, it wouldn’t matter.
But to Chamath’s point, it seems like and I think we’re seeing
this a lot, the bigger companies can actually afford to integrate
their supply chains, whereas before it didn’t make sense to
vertically integrate. Like I think Walmart announced that
they’ve spent like 11 or $12 billion kind of rebuilding their
supply chain themselves. Apple obviously has captive
facilities all the way down to the fab, where they’re driving
the whole supply chain from fab to components. All these Foxconn
facilities that are operated for them are captive facilities.
But Tesla, obviously, has a very deeply integrated supply chain
team, whereas GM probably relied on subs who relied on subs who
relied on subs. And that’s why GM delivered like no electric
cars, but Tesla was able to keep volume up. The guys that are
winning are the ones that are integrating supply chains.
And do you think that that kind of becomes a persistent
solution here where bigger companies, their competitive
advantage becomes, hey, we’re going to own our whole supply
chain all the way through, we’re going to own more of the
infrastructure all the way through, like Amazon’s done with
delivery vans, and ultimately be able to kind of, you know, have
a true competitive advantage because of this disruption
that’s going on right now?
Yeah, potentially. I mean, I think my vision for Flexport is
that we become that layer and we allow small businesses, medium
sized businesses to get access to world class logistic services
and get them, you know, sort of almost be a union that can
represent them at the table against these bigger guys. I
think it’s very interesting to see a company’s like the biggest
companies have gone out and chartered their own ships.
Wild experiment to watch for my sitting here with popcorn.
You’re bringing up a really important effect of all of this,
which is what happens now in six or nine months to your point,
when the consumption of hard physical assets turns towards
the consumption of services, which it typically does, right?
If you revert back to the mean here, you know, people aren’t
going to be buying as many Pelotons and all of that stuff
because they bought them all, right? They bought all the
physical goods they need. And to your point, these companies have
over ordered all this inventory. Actually, Peloton is a perfect
example, because they basically shut down their entire supply
chain last at the end of this past quarter and essentially
said, our inventory turns will be more than enough to meet,
you know, existing demand for the foreseeable future.
That’s an enormous capital problem that these companies now
all of a sudden will face, right? So like, the next step
beyond all of the supply chain issues could be, and I think
Saks has been talking about this a lot, like a pretty bad
recession, if these companies have all this inventory, and
they don’t know how to get working capital.
Yeah, it’d be really ugly. And the other factor is the price
has gone crazy. So the price of shipping a container, long run,
like I’ve been in this business and been a customer of this
business for 20 years, and you can just rule of thumb, it costs
you 2000 bucks to ship a container from China to the West
Coast. During 2016, that price collapsed. So you have these
booming bus cycles of an asset market. 2016, it was 550 bucks.
Last year was $20,000. So it’s up 10x over normal, it’s up 40x
over or more right over just a few years ago. And what that’s
done is create a real barrier to entry. Like for a DTC ecom
business, you used to be able to just go to China, find some
product, put your slap your label on it and go sell it on
Amazon, and you’re in business. And there’s like a huge number
of people doing this. Right now, you have to come up if you
want to ship 10 containers, it used to be you needed 20 grand.
Now you need 200 grand. That’s like, that’s a real barrier to
entry. So actually, I’ve talked to some companies in this space,
we’re really happy. Like if you have an established business,
you’re like, great. Now, it’s much harder for Joe Schmo to
show up in China and start competing with me. So I was
really surprised to hear that. I thought that was, I guess,
pretty sophisticated take.
What dollar point does air freight compete with containers
because when we start hearing about chips, I was always
wondering, and again, I’m no expert. But putting a bunch of
chips on a plane versus putting them in a container, given how
much those chips are valued by a Tesla, whoever’s putting them
into, you know, a car isn’t what was the break?
Certainly, but air freight price has just gone in line. And
it’s gone up five as well. And one thing to remember is that
50% of all the world’s air freight flies in the belly of
passenger planes, which should kind of horrify you if you’re
ever flying on a passenger plane from from East Asia, but
to the United States, there’s probably a whole bunch of stuff
down in that belly. And those are grounded. So the supply of
why are they grounded? Nobody’s flying to China right now.
Oh, I see. So now we’re seeing kind of the backlog play into
commodity cycles, right, Ryan. So we’re seeing like a lot of
these commodities because of these discontinuities in the
supply chains. Suddenly, commodity prices are spiking
all over the place. And I mean, do we think that that settles
down? Or do you think it kind of continues for, you know, the
foreseeable future until this all works its way out?
Yeah, I’m not the right person to ask about commodity prices.
Maybe Chamath has a view on that. But I, you know, on the
logistics market, I don’t see it sorting itself out for the
next year, the next couple of years.
In fact, you’ve you’ve warned that it might get worse, right?
You’ve I mean, I saw in Bloomberg, you said that there
could be a union strike in maybe October. What are the
prospects for that? And what happens if that takes place?
So it’s on July 1st. The West Coast Union, it’s called the
ILWU. That union extends from the southern border. So from
Mexico all the way to Alaska, and it includes Canada. So the
whole West Coast of the United States is run by this one union
at the ports. And their contract expires on July 1st. And in
years past, so the last time this happened was in 2015. This
is a contract that was signed then and extended at some point.
But in 2015, I had a three month period where nobody could
import anything on the West Coast. And some major companies
missed Christmas that year. So that’s July 1st. Typically,
these, there’s kind of slowdowns in the months leading up to
that. And we’ve already had slowdowns for a couple of years
with hundreds of ships are now waiting offshore. So yeah, I
can’t make a prediction.
This is a slowdown, basically a negotiating tactic by the
In the past, it has been I’m not convinced that that’s what
we’ve seen over the last year versus, you know, they are
there are legitimate problems, staffing, people getting COVID,
So is there a role for presidential leadership in
sorting out these union issues, or just sorting out the issues
with the port more generally, or avoiding a strike in July?
I mean, it seems to me that if Biden wants to get reelected,
this inflation supply chain issues are pretty top of mind
and in the news and are going to be on people’s, you know, you
want to be seen doing things. And I do think there are things
that can be done. So yeah, there’s a role.
And as far as union negotiations, Biden’s probably
pretty as equipped as any president’s ever been to
negotiate with the union and get them to play nice and not
screw up his reelection with a with a strike. He’s known as a
union friendly president, and go sit down and do a deal with
them where Trump would probably never be able to do a deal with
the union because they know that they’re sort of natural
adversaries. So there’s something there.
There’s a lot more to be done. And I, you know, I got some
arguments with people that are like, you know, that’s not in
the President’s power to do such and such. I’m like, yeah,
but he’s the President of the United States pick up the phone
like you can do things that aren’t legally in your power
just by asking for favors. And other people do them. And
negotiating when unions a good idea, a good example.
Convincing to change the zoning laws in LA, so you can stack
containers higher would be another Yeah, that’s not the
president of the United States jurisdiction. But if he calls
the mayor of LA or the city council,
can you explain that? So what does that mean?
So in Southern California, you can’t stack a container more
than two high in a truck yard, by law. Well, we got no place to
put these containers.
But is that is that a danger issue? Or is that like a site
issue site lines? Like what?
I see a little bit of us. I think there’s some safety
issues, although they’re stacked six high all over the world. So
that’s not that legitimate to my in my view.
And in California, it’s what four or something
to too high.
It’s too hot. Oh, wow.
At the truck yards at the port, you see them stacked up six
high, but in the truck yards to is the limit. Okay. And so it’s
a it’s also an eyesore, especially in California,
containers are a sign of free enterprise. And it’s just the
people in California can’t stand to see them. Right? They
really just object to the idea of capitalism in their
neighborhoods like that.
But there could be like some kind of temporary waiver that we
do just to get through all of this backlog, which is to say,
okay, let’s just ease all of these small little things that
slow the process down just to get all these ships, you know,
unloaded, right? Yeah, off into the world where they need to be.
And then we could revert back to what we are after things, you
know, kind of normalize. Yeah, so we did that. So like, I wrote
about this, this zoning law. And what’s what’s happening then
is if you can’t stack the container three high, there’s
nowhere to put that third container. So you leave it on
the trailer. And now you have one less trailer in rotation
servicing the port to unload. And that’s that’s true across
Southern California right now, there are 1000s of trailers
with containers on them, because they’re not allowed to stack
them, they’ll get fined if they do. So I tweeted about this. And
the the city of Long Beach actually responded. I tweeted
about it at 6am. By 3pm, the city of Long Beach had changed
the zoning law to allow stacking up to five high, I believe. I’m
told the fastest response by any government to citizen action,
That’s incredible. You must feel great about that.
It was great. But unfortunately, only Long Beach did that LA
never followed through. Other and there’s not that many
truckyards in Long Beach. A lot of them are in Los Angeles,
Compton, Rancho Dominguez, etc. So I saw this kind of thing.
Like, yeah, Joe Biden could call these mayors and say, hey,
let’s work on this, right? Yeah, but let’s face it. He’s
super union Joe, right? Like, I mean, he wouldn’t even say the
word Tesla over the number, Jason, isn’t that more pro union
because won’t these won’t folks be working more and getting
paid more. And I don’t think there’s a reluctance to pay.
Right? Because clearly, like, you’re gonna have to put some
money into the system. And where the money comes from, we can
figure that out later. But the point is that there’s a there
should be a desire to actually get the people on the ground to
be working. There wasn’t even a third shift shift, Ryan, right?
Like that was another thing you were working on on top of the
stacking of these containers to get, you know, more of these,
you know, to alleviate the problem. You were also talking
about they don’t even have a third shift some nights, but
they seem to have added a third shift. Did that become
permanent or not?
No, they do have a third shift, but nobody’s showing up is the
problem. So truck drivers don’t work in the middle of the night
warehouses aren’t open in the middle of the night.
But is that a compensation issue? Right? Like if we paid
more folks show up, like, is that just a supply demand issue
that never underestimate incentives. There’s there’s just
a lot of factors and a lot of a lot of it is it’s so easy to
point fingers at somebody else and blame someone in the chain,
right supply chain, you’ve got all these different people. And
it’s everybody has their own opinion. You know, we at one
point, I wanted to hear what the union’s opinion was, what are
they saying? Because everyone else is calling them lazy, and
not working hard, what’s really happening. So we I said to taco
truck down to the port a couple of months ago, just because we
figured we’re getting free tacos, they’ll talk to us. And
that’s a game changer right there. Yeah, that really works.
Well, we got, they loved it. These are the only business ever
to send tacos to the port. And then they told us all about what
their viewpoint was, they viewed that the truckers are screwing
up that 50% of all the appointments, where a truck is
supposed to come and pick up a container, they’re missing their
appointments, right? And because and then and then so
that’s what sent me investigating, wait, why are
they missing the appointments? That’s when I learned, oh, they
don’t have any trailers, these chassis, because they’re stuck
under containers and can’t be unlocked. So a lot of it is
going here, it’s the supply chains kind of like this, that
metaphorical elephant in the dark room, right? And everybody
sees their own aspect of it. But you got to synthesize all those
perspectives and kind of take a systems view and see if you can
get some real understanding. I’m not convinced I have it yet. By
the way, I think it is more complex. And I’m really beware
simple narratives. If someone, even including me says, Oh, this
is exactly what’s happening. Like, there’s really a lot of
complexity in all of this, right?
And how much how much of this is sort of the the, the extreme
end of the other spectrum, which is basically the US
exceptionalism view that says, Okay, we just need to really
in house more of the stuff that we need so that we don’t
actually have to rely on some of these arcane methods of just
transporting goods for, you know, from point A to point B,
in my view, that would be a shame. If we have the best
companies in the world, who need to be able to source raw
materials, components, finished goods, anywhere on planet Earth,
and we should have a modern infrastructure that makes that
possible instead of being like, Oh, we can’t trade with the rest
of the world. So we’re going to become like, self sufficient,
you know, we might as well go back to everybody being a farmer
on subsistence farmer on our own land. Like, I think we should
have global infrastructure that’s really great and
seamless and makes it really easy. But you’re right, that
might be an end result is people can’t rely on these
supply chains and start saying, Hey, let’s manufacture at home
or let’s manufacture in Latin America. Let’s manufacture
closer to home. That to my perspective, that would be a
Well, I think the I think the prod the pendulum always starts
from one extreme to the other. And I think the the middle
ground is probably that you need to have some heterogeneity,
right? You have to have some amount of it that is not just
singularly reliant on China, maybe it’s maybe it’s the
central or Latin America, right? Some that’s domestic,
but that domestic production probably has to be subsidized
by something because we’re never going to be able to run as
efficiently and as cost effectively as, you know,
cheaper international labor, you know, unless we invent
something really, you know, incredible. So the balance is
probably in the middle. But it’s going to take us a long
time to kind of get there. I think I saw Governor Abbott was
pitching people on, hey, just send your containers to Texas
were cheaper and more central in the country. Is that true? Is
that a solution takes much longer cost much more. When if
the union goes on strike on the west coast, it’ll be one of
your only options bringing stuff through the canal. What
you’ll very quickly see is that the canal is going to back up.
Can’t move that many more ships through the canal that are
currently going to the west coast. So a lot and you’ve seen
that a lot where the bottleneck just moves for a while. Last
summer, the for example, the trains that were going into
Chicago, they were really having a hard time staffing the
railroads out there. And it was taking them a long time to
unload containers at the at the port at the terminals inland in
Chicago. And drivers, a lot of the truck drivers are owner
operators. So these are entrepreneurs are on their own
truck, work for themselves. And they were able pre pandemic to
do three loads per day at the Chicago railheads. Go drop it
off, come back at another one three times. With the delays
and the traffic jams that resulted, they were only able
to do one a day. And so you opt out, because you can go drive
for UPS or FedEx or take your truck and do something else. So
we had this huge reduction in drivers. And that’s the kind of
a feedback loop that we should all be really mindful of here,
where a problem begets more problems, and you get these
positive feedback loops in the system, that really vicious
cycles. And so you know, bottlenecks move, and you’ll see
as soon as they everybody started to ship to Houston,
guess what, Houston port won’t be able to handle the volumes
either. It’s not like it’s magically better just because
it’s a republican state or something.
Do we need more ports? Or do we just need to run them more
efficiently? And then who determines who runs the port?
Because I know that they I’ve seen some tweets of yours where
they license the government, I guess own supports, but they
license it to people to have the franchise there. More ports,
better run ports. And then what’s the business model of
I’d say better run ports is the answer. I don’t think we need
more ports. You can’t really create ports out of thin air
there’s only a handful of geographic locations that
actually make sense for a port. And we have, we have great
geography, like the San Francisco Bay, like this is
probably the best natural harbor in the world, or one of
them. And the Oakland port is perfectly fine. It’s who owns
it is the city of Oakland, or the city of Long Beach, the
city of LA. So the local cities own the ports in the United
States. That is a difference between United States and
Europe, for example, where they’re sort of national
strategic assets, they’re still government owned, but it can be
operated as a sort of public good for everybody, instead of
what are the odds, given what’s going on in Oakland, that that’s
the big priority of the mayor of Oakland to like, run a better
port, like she’s got a lot of other things on her, on her
list. And so that’s one problem with our system. And then
second, they do rent it. So the government owns it and then
rents it to a private company that operates it. And then but
those as a condition of renting the port, you must agree to
hire the ILWU. You can’t run a non union port in the United
States. Should the government buy the federal government by
the port from Oakland by the port from Long Beach, offer
them some, you know, trillion dollars or billions of dollars
and buy it out from them. It’s not a terrible idea. I mean, as
long as you’re forcing everyone to use union labor, it’s not
really like a private sector endeavors. It’s like you can’t,
especially with the way that the unions run, so you can’t do
that much. But like, here’s an example where technology could
flex what already made this technology, we could 10x the
throughput of one of these ports overnight, which is today, a
truck driver shows up looking for a specific container. He’s
like, I got this container number. So they have to make an
appointment at that hour. And as I said, they’re missing 50% of
their appointments. Well, on the back end inside the port, they
got to go find that container in this in the needle in the hay
stack and make sure it’s at the front during that one hour when
the guy shows up for it. And you could we already have this
tech to make it what we call a free flow stack, where you just
have this the truck pulls up and you give them the first the
first container off the line. And then the mobile app tells
them where to take it. And he doesn’t have to come for a
specific container. And if you did that, you just be every 30
seconds coming out of here, instead of every 1015 minutes,
you’d easily 10x the throughput. And this is we already have this
tech. So it’s a matter of implementation, deployment, and
how do you get around a lot of people that don’t really want to
see better running ports. And it’s pretty sad to sit where I
sit, they don’t benefit from better running ports, although
that’s the good point. Although at the back end, they they
suffer from higher prices and inefficiency and not getting the
things they want on time.
Well, if you listen to Elon talk about unions, and why Tesla
is not a union shop, it’s got nothing to do with wages, you
know, he said, we’ll pay you the union rate or better. And it’s
not about mistreatment, because he said, Listen, if someone
mistreats you, we’re gonna have a no assholes rule, and we’ll
get rid of them. The issue is inflexibility, right? He wants
to drive continuous process improvement at Tesla. And he
can’t do that with a union shop, because every change has to be
negotiated. And then if there is a worker who’s not living up to
the performance bar, you can’t get rid of them. And they can’t
repurpose workers and have them work a different line. So that’s
why Elon has always resisted being a union shop, not the
wages, not mistreatment, purely inflexibility. And it seems like
that’s what you’re seeing in the ports as well is we can’t drive
changes and improvements, because everything’s so highly
contractually negotiated. That’s my comment, Ryan, what do you
think about that?
No, I mean, it’s, it’s, it’s worth studying a little history
here is that, like, you know, we went through the container
revolution in the 60s and 70s, and the union agreed to it. And
they that dramatically transformed the waterfront of
these guys, like, you see the photographs from that era, they
would put it on their back, like burlap sacks full of stuff, like
hauling it on and off these, these ships, and the kind of
load them by hand, it was a real art. And it was a massive
employment driver. And by the way, we’ve still barely
recovered from this, like the West Side Highway in New York is
finally like a nice park. But it sat there for 50 years, like
dilapidated piers and ugly ass buildings. And some of those
are still there. San Francisco waterfront still mostly like
that south of the Bay Bridge, it’s still like these old
dilapidated buildings. So it’s kind of funny to see how long it
takes like that infrastructure to change. But there was, and I
don’t know, I’m not like the world’s expert on this history.
But somehow they convinced the union to adopt containerization,
which is about, it’s far more radical than anything we would
be proposing now, in how you would change their workflow, or
change their work. Like that was complete change, where it’s
really these giant automated, or these giant cranes that replace
Couldn’t Biden deploy his commerce secretary? Or I mean,
isn’t there some cabinet official he could deputize to
say, go solve this problem, go bring the parties together?
Yeah. And I think I suspect that’ll happen over the coming
months, because July 1, is pretty bad timing for a
midterm election if they were to go on strike. And I think
he’s got a lot of incentive to make sure that he does have the
incentive. It just seems like I mean, you’ve been tweeting about
this for months, that nobody’s paying attention in the
administration. I mean, we’ve all been reading your tweet
storm saying like someone in Washington really should be
paying attention to these ideas over two administrations now,
right, right. It’s both administrations have been out to
lunch on this.
The union is a really big issue that’s going to come up this
summer. There’s in my view, an even bigger issue that’s gotten
even less attention, which is on January 1 of next year,
January 1 2023, which is tomorrow in shipping terms, that
all the ships in the world will have to reduce their carbon
emissions by 13%. And these are internal combustion engine.
There’s not right, right, right. Hold on a second. Wait, just
explain what that means. But who’s mandating that? And how is
that enforceable? And why is that have to?
It’s the International Maritime Organization. It’s part of the
United Nations. And it’s the group that is overseeing global
ocean freight. It’s the regulatory body for ocean freight
in the world. And it’s the United Nations group. So any
member state of the United Nations must follow the rules of
the IMO. And they’ve all said they will. And so the IMO has
said, all existing ships in the world must reduce their carbon
emissions by 13%. And again, it’s an internal combustion
engine, we don’t know how to make it 13% more carbon
efficient, or we would have done that already.
Can you actually buy indirect offsets? Like, can you go and
buy some Amazonian rainforest credits and offset the
No, you can’t offset it. And it’s not about the fleet either.
So some of these fleets have LNG, liquid natural gas. So the
fleet might be more efficient, but it’s no it’s down to the
individual ship. And it has to. So there is one way to reduce
the emissions of a ship. And that’s to go slower. And if you
go 30% slower, then you can achieve a 13% reduction in
reduction in carbon emissions. Well, if you look at it on a per
container basis, by the way, it’s the same amount of carbon
emitted because the ship is still carrying the same number
of containers just go slower. But it will reduce the supply of
shipping capacity and slow everything down another 30%.
That that takes place January 1 2023. It’s getting very little
attention. But to my view, it’s going to be massively disrupted
if we slow everything down, reduce the capacity of the
network that much further prices are going to go to the moon.
And it’s like really asinine law because it doesn’t actually
achieve any carbon reduction. The fuel type correct me if I’m
wrong. Is this like MGO MDO? Like it’s dirtier fuel? Is that
correct? So the same group IMO actually passed a new logic
January 1 of 2020. And it got totally it was supposed to be a
huge deal in our industry and then COVID hit and we all kind
of ignored it. But that eliminated the worst kinds of
fuel. sulfur used to be you could have this bunker fuel that
was up to 3% sulfur, she led to crazy amounts of sulfuric acid,
which is like apparently like 15 times worse than carbon as a
greenhouse gas. And so that was eliminated. And now it’s still
kind of ugly bunker fuel, but it’s not like it used to be the
reputation is probably still carried over from from pre 2020.
If you could wave your magic wand as we wrap up here and
change two or three things that to you seem like layups, and I
think you kind of hinted at them in order, what would be the
changes just based on your intuition and your knowledge of
the supply chain? What two or three things are the layups we
got to do right now?
I think first off, it’s got to start with some with metrics
like what, if you care about something, measure it, the
metric that the government’s been using for ocean freight
delays has been how many ships are waiting offshore at the port
of Long Beach. And this is like one of the most mischievous, I
don’t know if it was just like outright fraud or incompetence.
But one of the worst things I’ve seen from government in terms
of PR is they they pass this rule that the ships have to
wait 150 miles offshore, so that the carbon so that the
pollution wouldn’t hit LA like reasonable good. But then they
kept using the same metric for how many ships are waiting right
outside the port. And it went way down and they started
celebrating that success. So like, let’s actually use the
right metric, which is how long is it taking cargo to transport
you can’t just hide the ships and celebrate that there’s no
ships there. If we get the government,
you’re saying that the government pushed the ships
beyond the measurement window and then said they don’t exist.
Yes, basically, the transportation secretary and
the port of LA director got up there. This government
that’s like when I went to an XL sweater to hide my gut. And I
was like, I’m thin. Yeah, look, better to look at the scale.
So if we at least get them focused on the right metric,
which I think we have the best metric right now, we call it the
flexport ocean timeliness indicator. It’s how long is it
taking the cargo to from when the factory says it’s ready to
when it can be delivered. Now, any solution that we create,
we have a metric, we know, okay, there’s a KPI here door
door. Yeah, door to door.
You mentioned the transportation secretary was part of that press
conference where they’re taking credit for changing the metric.
So I assume that’s Buddha judge who’s in charge of dispersing
the $1.2 trillion infrastructure bill. Is there any money in the
infrastructure bill to solve this problem?
There’s, there’s $17 billion allocated to ports. I went and
read it and I couldn’t find any money that was going to be
spent on building ports. It was like, study, here’s a crazy
thing. We just had this trillion dollar infrastructure bill
that’s supposed to modernize and update the infrastructure of
the country. And it’s doing nothing to solve the most
pressing supply chain issue in the country, which the bottleneck
at the ports, which is driving inflation, which is causing
interest rate increases and wrecking the economy.
There’s a term in Washington, which is called the Christmas
tree bill. And the infrastructure bill is an example
of that, which is this is not a directed shot on goal. What this
is, is a random, you know, tree that you go and hang little
things on top of and eventually the whole thing is covered. So
it kind of looks beautiful from afar. But when you get really
close to it, it’s a little bit chaotic and you don’t understand
what’s going on. And so to your point, the fact that Ryan can
say there’s $17 billion allocated to something like
ports, but it’s unclear to him who’s an expert in the space
where that money goes and how it’s spent gives us zero chance
of figuring this out.
Yeah. I mean, it was like, it’s like things like, oh, each state
must create our supply chain readiness report about is like,
what, what are you talking about? Like, Singapore put $20
billion to build a badass automated port. Like, that’s
like a reasonable thing to do. Like, let’s spend $20 billion
to make the most automated, amazing port in the world.
There’ll be a good use of government money, but like to
then create studies and consultants, I don’t know that
any of it’s going to hit the ground and shovel.
Right. So you’re saying you’re saying that $17 billion that
goes to, you know, studies and consultants could actually get
redirected and we could pick a port where there’s an amenable
city and actually completely modernize it to set the example
of what modern shipping should look like in the United States
that at a minimum matches what’s happening in the rest of
Yeah, I think that’d be pretty awesome. And doesn’t seem to me
like science fiction, like when government wants to build a
port, who’s going to stop the government?
That seems too, too logical and too obvious, right?
Well, I could have something else compete for who gets to get
that $20 billion to be the modernized port, like,
Well, if you put it to your point, Jason, put the put the
mayors in competition and see which mayor wants us in their
backyard. Does Greg Abbott want it? Does Long Beach want it?
Does Oakland want it? Who wants to fight to be the most modern
port that should be?
DeSantis wants it. I’ll tell you that.
DeSantis, Miami. Yeah, exactly.
I’m sure DeSantis and Greg Abbott want it. I don’t know
that California’s two incredible ports want it. And those are
the two that are closest to China, by the way, spoiler
You guys remember when Google Fiber ran that competition and
they got, like, the mayor of Pittsburgh to swim in, like, a
frozen lake. And it was awesome, right?
Like, government, yeah, please bring us stuff.
So, yeah, I think I don’t have a lot of faith. Even if that
came around, it would take five, six years, right? Even if it
was done right, you don’t get a port overnight.
There are some very simple solutions like this, changing
the zoning law, adopting technology to go with a free
flow out of the port, put some metrics in here, like, have
someone focus on this.
A key part of problem solving is make sure the problem doesn’t
get worse. So let’s assign someone to go work with the
union and the and the company terminal operators, make sure
that they don’t go on strike and make sure and then someone
needs to go look at this IMO, UN thing and figure out if the
United States is really going to go through with that because
it’s pretty crazy.
Well, listen, Ryan, you’ve been incredibly generous with your
time and knowledge and your leadership watching you as, you
know, a CEO and a leader go out there on a boat and go visit
and buy the frickin tacos and actually boots on the ground
figure this out. Like the country owes you a debt, the
world owes you a debt to really keep this, you know, problem
down to first principles and figure it out. And our
government should be taking notes and really the other
leaders who are importing whether it’s Apple or Tesla, you
know, it’d be great for all of them to be supporting you. I
don’t know if they’ve reached out, but maybe the you know, a
half dozen of you can then sit with this administration and the
next one and just tell them where to point the money cannon.
Well, it doesn’t seem like they know where to point it.
We have a lot of people in Washington that listen to this
pod, please. Yes. Just reach out to Ryan and just reach out
to Ryan and have lunch and just sit there and please just goes
for these. Let Ryan buy you a taco guys. Ryan, bring your
taco truck to Washington. One of the big common denominators
of both business and politics is that leaders have to focus on
the right problems. And when they’re not focused on the right
problems, like bad things happen. And, you know, we know
that inflation is a huge problem. The Fed now is raising
rates are projecting raising rates very quickly, which is
creating, it was created a huge market downturn, it’s a very
blunt instrument, it could cause a downturn or recession. So
that’s the big problem. And yet there are specific solutions and
fixes to the inflation problem by updating or modernizing the
ports that Ryan suggested, but who’s focusing on it. And now
they’d be more strategic, right? sacks, it’d be a more
strategic sniper shot, as opposed to this blunt
instrument, like, right, exactly. So, you know, and so
what have they been focusing in Washington on? Definitely not
this, you know, absolutely. And then I see Ryan posting
suggestions on Twitter, and then all these people come in,
they’re all like fatalistic. Oh, well, the President can’t do
anything. You know, the President can emergency war
time. If there was ever a time for presidential leadership,
this would be it. What I worry about is that if you’re the
union leader, and you know that you’ve got Biden in the White
House, who’s always going to take their side? Why wouldn’t
you make your demands more unreasonable? Yeah, they should
be asking for triple time to keep it open overnight. Why
wouldn’t they? Do you really if you’re the leader of that
union? Biden’s gonna break your strike? No way. No way.
Ask for quadruple time. Yeah, just make it painful. You
shouldn’t make the most of the crisis. egregious as possible.
I mean, this is your max leverage right now. Max
leverage. Never waste a crisis. Yeah, this is your time. All
right, man. Listen, right. Thanks a lot. Great. Thanks,
my pleasure. I’m a big fan of the show. So being a guest he
means a lot to me. So thanks. Yeah. And we’ll continue the
discussion perhaps at the all in summit in May. Exactly. See
you in Miami. Facebook stock has dropped over 25% after
reporting negative user growth for the first time and not only
$10 billion or maybe even $12 billion lost a year on their
AR VR headsets and project, but also a $10 billion decrease in
projected 2022 revenue thanks to Apple’s privacy features. I
guess we got to go to PayPal drop 25% to Yeah, we have to pay
what we’ll and then Snapchat had a whipsaw back and forth. But
Chamath when you see this, you call this with your spread
trade. Maybe you could walk us through what you saw, you know,
whatever it was three, four or five months ago. And then what
you’re seeing now and at this level with $250 billion wiped
off the market cap, what do you what do you think about the
future of this as a trade and as a company? Well, I think the
trade did what it was supposed to do, which is in a period of
a lot of volatility, I saw an opportunity to, you know, just
reduce my risk exposure. Look, I’m generally long, very risky
assets, right? I mean, all of us are in the business of building
companies that have huge volatility, because all of our
companies generate earnings very far in the future. And so,
you know, in November of last year, I was trying to figure
out what I could do to shield myself. And the reason I wanted
to shield myself was because I saw Elon and Jeff in part
selling, but also I saw that clearly, we were going to go
through a period where that high growth tech was going to
trade down. So I sold some of that high growth tech. But then
I also wanted to figure out a way where I could be less
exposed to some of that volatility by continuing to
hold what I had. And the best way that I figured out how to
do that was to do the spread trade. And so, you know, what I
saw at the time was that there is one business above all
others that I think is immune amongst big tech, from any sort
of real long term issues. And that’s Microsoft. And I think
David expressed the reason well, is that it’s an enterprise
business. Now, you know, politicians generally don’t
tend to care about enterprise businesses, they have enormous
longitudinal growth in front of them. And they’re able to do
things on the margins, specifically around M&A to keep
building their business with very little oversight. And we
saw this because they had the courage to do this Activision
deal. You know, just a few weeks ago, if you could imagine
again, no other company in big tech could even dare try to do a
$70 billion acquisition because of the scrutiny.
In this climate, it was a bold move. Yes. Yeah.
I think it’s not a bold move. I actually think it says the
obvious, which is Microsoft is beyond the level of regulatory
scrutiny that the rest of big tech actually has, because they
are consumer businesses. The second safest company is Google.
And the reason is that Google has the best of both worlds.
They’re both a platform because of Android. But then where they
are at risk of being an app, they have an incredible deal
with Apple that blunts that effect. And so when Apple talks
about all their push to privacy, you still have this very
specific relationship and Facebook called it out in their
earnings release, they said, we believe that Google has
preferential treatment relative to the rest of the internet in
that Apple deal because they pay Apple 15 or $20 billion a year.
And for people who don’t know, that’s for search, the default
search on your iPhone goes to Google, Google pays $15 billion
to Apple. And the accusation explain the accusation there of
why that would give them preferential in case people
don’t care if you’re paying somebody 15 or $20 billion a
year, they’re less likely to do bad things to you, they may do
bad things to other people, but they’re not going to do as many
bad things to you. Did you believe that? Yeah, that
allegation from Zack? Yeah. Well, no, I don’t believe the
allegation. But I think that general character, that general
thing is true. Like you’re not going to screw over your
partners, you’re going to screw over other people before you
screw over your partners. Got it. Whether this applies here,
it’ll have to be borne out in some kind of lawsuit or state
AGs or blah, blah, blah. But anyways, the I think the point
is that every other company has a lot more headwinds than
Microsoft and Google and big tech. And then the third thing
is was a market observation from Gavin Baker, which I thought
was incredibly brilliant. And what he said was, when you see a
drawdown, meaning when the markets go down, it’ll affect
high growth tech first. It ended up touching a bunch of
other areas second, like biotech. But he said this key
thing, which is big tech will be the last to crack. But when
they do, they are going to get shot. And so I spent a bunch of
time just trying to figure out when big tech gets cracked,
who’s going to get cracked the hardest. And I just kind of
wanted to create a spread between those who were the most
inoculated to those that were the most at risk. As it turned
out, Netflix puked it up, Facebook puked it up. Amazon
actually got really crushed, even though this past day, they
had a pretty decent rally because of their earnings, but
they really got crushed. So in any event, the trade is what the
trade is, the bigger thing is what is going on at Facebook.
And I think what you see are three really important headwinds
that Facebook called out explicitly. One is that when
they talked about usage, kind of flattening, and starting to
decay, what they’re really talking about is tick tock. And
I think what we learned is that tick tock is an enormous threat
and a huge competitive force now in the consumer social app
ecosystem. The second is that Facebook is fundamentally an app
that sits inside of an ecosystem that is subject to the rules of
the platform owner. And that’s Apple and Google. And so this
IDFA change, so the change in how you can track advertisers,
Facebook said is going to have a $10 billion impact in 2022.
And then the third thing, which was more implicit, is in order
for them to grow, if you can’t grow organically, the only other
way to grow is inorganically. And unfortunately, as we’re
seeing, the regulatory focus on this company is really enormous.
And so it was a, you know, it was a pretty watershed moment in
I think that company’s discussion of their future. And
Mark actually kind of said that as much in the in the press in
the sacks, you look at this business, you made a interesting
observation, Facebook rebranding itself as meta before meta
exists, it may be looked at as another sort of sign that maybe
they got a little tilted, maybe what we should take on the sort
of changing the name of the company before that business
really is at scale or exists.
Yeah, I mean, it’s a bubble move. Because look, when you’re
in an up market, and the market is super frothy, we had in
hindsight, last year was a giant asset bubble funded by all this
liquidity coming out of the Fed and the federal government. So
yeah, in a bubble like that, all investors care about is the
growth story. And so Facebook went all in on the story around
metaverse. But in the cold light of day, you know, once the
once the sun came up, yeah, once the punchbowl has been taken
away, and you’re in the hangover, and you’re in sort of a
very volatile, potentially packed it in bear market,
investors go, wait a second, you know, this VR division is
losing 10 billion a year.
It might even be 12, by the way, because they said it was a
little higher. So
they lost 6 billion last year, they lost 10 billion this year.
So the losses are escalating. And so in that kind of market,
investors are like, wait a second, do I do I want to invest
in a company that whose future is that unclear? I mean, if you
look at this, at this market, we’ve seen that the growth
stocks are down 60. Today’s an update yesterday was a horrible
day. So they’re bouncing around 60 70% down off the highs in
early November, okay, but the fangs are only down like 14%,
or something like that, right. But Facebook basically took
themselves out of the the sort of the market leader bucket and
put themselves in the growth bucket.
But they’re like, treat us like Peloton. We’re speculative.
Why would why would they want to do that? You know, it’s a
terrible strategic decision, you’re saying?
Well, it was a it was a decision. It was the kind of
decision where you look back with 2020 hindsight, and you
say, look, that kind of decision could only be made in a bubbly,
frothy market, you would never make that decision in the kind
of down market you have today and other decisions look stupid
as well. So PayPal was just down 25%. Okay, why was it down?
Yeah, well, they just, well, no growth and users. It was mostly
on the forecast. And yeah, they revised their forecast down
considerably. And of course, they tried to blame it on the
economy. But other companies, you know, Amazon just had a huge
beat relative expectations. Yeah, they’re up 15% today. So
not everybody is blaming the macroeconomic picture of the way
that PayPal did any event. My point is, you go back six months
ago. And you know, what was PayPal doing? I wrote a story
for Barry Weiss, for her sub stack about how PayPal was
taking the lead in financial de-platforming. They were
working with the ADL and the SPLC to kick to identify groups
to kick off their platform. So that’s what management was
spending their cycles on figuring out how not to grow
how to kick people off their platform and trying to figure
out how to get more people on it.
Sounds familiar. Who else is trying to
it’s the kind of thing you do, when you’re in a frothy market
and your stock is up and you’re trying to find, you can waste
your management cycles on stuff like that. Now their stock is
down 25%. You have to wonder, gee, do we wish we had spent our
time on other things?
Okay, so Friedberg, I have a question for you about the
future. Obviously, Facebook has bet the farm on meta, they’re
betting on VR. And I guess eventually AR or what
collectively is called XR. And then we have news that Apple has
a seemingly brilliant goggles product coming out, developers
are getting into it, and they are the masters of hardware. So
now, Zuckerberg has decided he will be on a collision course
with a company that just took $10 billion in revenue from them
by doing the non tracking. And that is the masters of hardware.
So we have this collision course coming. And then just two weeks
ago, Google said, Hey, by the way, remember that Google Glass
thing? We’re not giving up on VR, AR either. And of course,
Microsoft, we all know, has their HoloLens. So when we look
at that four horse race, if you were to bet and rank who’s
going to win, Apple, goggles, Google Glass, whatever they’re
going to call the new thing, HoloLens and Metas Oculus, who’s
going to win? And what do you how do you look at that
competition between the big four?
I don’t know if that’s a race you want to be in.
So I like that answer. Race to nowhere.
Have you guys used the Oculus Quest device?
Absolutely. I have two of them. Try. Oh, my.
Have you played the games where you like move continuously
through space? And like, when you do that, it’s like you’re
gonna throw up, you’re gonna throw up. I mean, I’m not sure
that this notion that that becomes the new computing
modality is like a fair and true notion. And so, you know,
there may it may end up becoming kind of a niche entertainment
device, almost like a Nintendo Switch where there’s a, you
know, a mode when you’re using it, but I’m not sure it
replaces traditional static two dimensional computing in front
of you. The jury’s still out. I don’t see like a computer
sentiment that says these things will ultimately kind of
prevail over the current mode. So, you know, if it does work,
who would win? In your mind, who’s got the best chance? Well,
let’s assume we’re all going to use it every day for two hours
as our desktop, we’re going to put it on, we’re going to find
workout apps to use whatever it’s going to become. Let’s
let’s assume, you know, that I think you just answered your
own question in, in, in all of these things, when you build
hardware, I think you can take a lot of parallels from what
happened in the PC space. If you have commoditized PC
manufacturers, compact, Dell, IBM, right, their innumerable
number 1000s of companies that made PCs, the value created to
the application layer to the operating system, and the people
that can actually build ecosystems are typically the
ones that win. And the people that already have an ecosystem
and all they have to do is port somebody from, you know,
platform A to platform B has a meaningful advantage over
somebody that has to convince you to come to a new platform
altogether. And so, you know, if you’re a Microsoft, and you
have 1000s or 100s of 1000s of developers, or if you’re Google,
and you have 100s of 1000s of developers, or if you’re Apple,
and you have millions of developers, it’s just a smaller
bridge to cross in order to convince them to that for one
extra endpoint, iOS versus Android, you know, versus
Microsoft. And by the way, it seems like the obvious
transition, whereas like Facebook is like, you got to go
build all this stuff. And Apple made an incredibly important
set of decisions a few years ago, which I didn’t think a lot
of people talked about, but they had an OS tree that was
branching far too widely, right? They had a different
operating system for the phones, they had a different
operating system for iPads, desktop for watches, and they
started to try to converge and shoehorn these things into into
a set of basic primitives, so that it’s more controllable. And
I suspect the reason is because that gives them more
optionality to go into a car to go into a headset, without
having to do an entire developer, even better than that
Chamath is a great point you bring up, because they also
started investing in their own chipset. And I think all of
that chipset innovation gives them a dramatic advantage in
having smaller batteries and more processing power in a
headset if it does work, which what chips does what chip asset
does Facebook have none. So I don’t want to I don’t think we
should say that Facebook is down or not. But let’s just qualify
what we think can win. So that’s one thing. The other thing to
remember is when you look at the PC industry, how did Intel
become so dominant part of what Intel was able to do to out
compete AMD and everybody else was that program called Intel
inside, which is effectively these co marketing pass through
dollars that they would use to actually give an incentive for
Dell and for compact and for all these other folks to
basically build the spec. And that was the Wintel monopoly,
right, Microsoft and Intel. If you play that out in VR, what
you really need is just a bag full of cash. Because if you
give developers a subsidized incentive to build for your
platform, they’ll do it. So then, again, if you rank the
companies, you just need to look at how much cash do they have,
because those with the most cash. So again, I think the best
way to think about this is how many developers do you have
today? How much cash do you have today? How much cash will
you have in the future? And you can probably rank and just do a
reasonable expected value to think about who has the best
chance of winning assuming the platform is roughly equal. Now,
if the if the if the if the company on that list with the
fewest developers and the least money has a superior device, if
that device is superior enough, they can overcome those things,
right? And Facebook has the least money and Facebook has the
least if you have rough parity. I think the person with the
most money and the most developers probably has the
best chance of winning sacks. Facebook has the least
developers, they have no relationship with developers. In
fact, they kind of screwed them over with Facebook Connect a
couple times they have the least money, but they do have the
largest user base of profiles. So does that give them some
advantage here? And how would you rank who’s going to win
who’s going to lose? Well, I think it gives them an
advantage and Tomas framework of porting over their app onto
whatever the you know, dominant platform is going to be but
probably it’s the operating system players who are probably
gonna be able to extend their operating system into this new,
you know, VR, AR world, probably. What I wonder about
is, would Facebook have been better off if they were going to
run a $10 billion a year money losing division that’s highly
speculative? Would they have been better off gambling that on
building their own phone, or maybe their own like forked
version of an Android phone with and the reason why I say
that is project that I started, I was about to say. We’ve now
seen we’ve now seen let’s not redig that. Well, they’re
losing, they’re losing 10 billion a year now, because of
this one permissions change that Apple has made, right,
because they’re completely dependent on Apple’s operating
system for a big portion of their revenue. So what is their
defense against that? I mean, they’re really pretty helpless.
If you look just to make a comparison, if you look at the
strategic brilliance of Google, what was it first of all, after
they came up with this cash cow, the idea of search, and
then they combined it with the sort of keyword auction they
got from overture, they said that, listen, the next
strategic move is we can’t let anybody disintermediate us. So
what do they do, they started moving upstream. The first, the
first sort of upstream player was the portal, right? So they
start competing against Yahoo, they gave away Gmail, then it
was the browser. So it was Microsoft Explorer. So they
gave away Chrome, then it was the operating system, they gave
away Android, they said, we’re not going to let anybody else
be upstream of us. And so they started replacing all those
layers of the stack, giving away free products with free, right?
Yeah, sorry, and a good free product.
Yeah, great. I mean, all those have billions of users.
Also say a big part of the monetization lock in was Google
then extended into the publishers very quickly with the
acquisition of AdSense. And the publishers then allowed Google
to offer the greatest CPM that those publishers could have over
any other advertising network. And as a result, Google built
their network and then built their advertiser base. And they
effectively, you know, got this huge lock in. The only
disruptive threat to Google was what Facebook did, which is to
create demographic profiles where instead of targeting ads
based on keyword or search intent, you could now target
ads based on demographic and then Facebook took it a step
further and did retargeting. So basically following you across
multiple sites, but Facebook always knew. And as we just
discovered, that was always going to be a weak point for
them, because they were dependent upon hardware devices
that we’re going to let them do that tracking across apps and
across sites. And that’s why Google always had this kind of
key, you know, lock in advantage that, you know, will
persist. And the network is just so big on both sides, you can’t
compete to sacks is thought bomb. If they had invested in a
phone, let’s say they made $1,000. Let’s say they made a
phone with a bomb of $800. By the way, just remember the fire
TV. And he gave a bunch of great speeches, you can watch
these and what happened with that. And just, you know,
despite his extraordinarily large user base, his committed
loyal users, all these reasons, his magical, talented technical
team, he hired the best people. He also tried to do the same
with search, by the way, with a nine. And remember, Apple also
tried to do the same with search, all these guys tried to
kind of compete. It’s not easy to execute. Yeah, it’s not easy
to execute. And you get a lock in with the network value. But
you also get a lock in with the talent. And you know, this was a
really hard thing to pull off. And you have to get it all
right. So let me ask him off the question based on what sack
said, could that should they have deployed 10 billion into
phones? If we go back two years, and they did deploy 10
billion into phones, they take an $800 bomb, which is probably
what the best iPhone cost, I think it costs 700 for Apple to
make and they sell it for 1500. They could basically give the
phone away for half price, maybe give it away for four or $500.
That’s what fire phone was. And if they gave away for $400, and
you had to be a Facebook user, you buy it, they get the credit
card of the person that would be they could put 25 million
phones into the market every year. That’s what that’s what
Amazon thought. And I don’t think that moves the needle. So
you don’t think it would work and create a better user
experience for users, users got a better experience with the
iPhone, okay. And then they got a better experience with
Android. The window of time was in 2009 10 and 11, when there
wasn’t lock in. And, you know, I think that’s, look, that’s been
well discussed about what we were doing and what we tried to
do. So there’s no point rehashing. But why did Facebook
give that up? Because there wasn’t an initiative, right? It
was it wasn’t that it was it came down to, you know, an ask
that I made that we didn’t get, and it didn’t happen. So it
didn’t happen. We’ll leave it at that.
I’m not saying that would have been successful.
I’m just saying neither did I, we didn’t get to the starting
line. So we’ll never know.
In fact, I think it’s unlikely that it would have worked,
because I’m not sure exactly what Facebook’s value prop
would have been. My point is just if you’re going to lose $10
billion a year on a division, wouldn’t it be better for it to
be something strategically vital, as opposed to something
that feels a little bit optional,
even if the majority chances you don’t win? The question is,
if you had a 2030 35% chance of being a player in smartphones,
would you take that chance? And I think you have no choice but
to take that chance that it would be worth it the expected
Yeah, one thing I’ll say in defense of Facebook is I think
that all of this like antitrust scrutiny is a little bit
ridiculous today. And it looks pretty ridiculous. And let me
just explain why, like, it seems that capitalism is pretty much
working as intended. Because if you looked at Google’s results,
if you looked at snaps results, at Pinterest’s results, at
Amazon’s results, there is a vibrant and growing advertising
ecosystem, by no means, could you claim that Facebook has any
real monopoly on that number one. And when you fold in TikTok,
it’s absolutely true. And then if you think about the usage
curve of TikTok, there’s a check and balance there on usage.
And so anybody that thinks that Facebook is a monopoly today,
I think is a little misguided. So really, I think what
politicians need to do today, you know, February 4, is be a
little bit more honest about what they really care about,
which is really around section 230. And the misinformation
disinformation fears that they have related to Facebook’s
distribution power, because now if you’re going to try to
legislate this company, it’s really unfair, like, especially
going back 10 years to litigate an acquisition, you’d never do
that to any other company that you know, is sort of maybe on
the back half of their growth cycle, it just doesn’t make any
It would be like going after Google now for the YouTube
acquisition is like $31 billion of advertising revenue crazy,
there is a vibrant, diverse advertising ecosystem, Facebook
is not in control of that ecosystem. And so trying to
legislate them as a monopoly in that ecosystem is insane today.
What do you think, Saks? Do you think this regulation is based
on the fact that Facebook kicked off Trump and is scaring
politicians over actual competitive reality?
I think that politicians are using the threat of regulation
to try and drive the, the speech policies they want on these
social networks. That’s what’s really going on. I mean, the
So you agree with me, it’s nothing to do with the business.
Yeah, look, who should get regulated on antitrust grounds,
Apple, you know, Apple is that maybe Google, I mean, well,
they’re the big monopolists. I mean, they control the
operating system. I mean, those guys percent of search, and I
would say Amazon with respect to the verticals where they’re
competing with their own, with the basic exactly. So in other
words, when you control an operating system, and then
there’s developers or other, you know, downstream players on
that ecosystem, you have to treat them fairly, you can’t
privilege your own policy to then dominate vertical after
vertical. So yeah, there are real antitrust concerns with
those three companies, the Facebook way less so. And yet
they get the brunt of the attacks. Why? Because the
people in Washington are trying to coerce Facebook into
controlling what they call misinformation, which is really
just speech they don’t like. And that is highly inappropriate.
Perfect segue. Last week, we didn’t jump into the Rogan
Spotify debate, maybe we should have. But we’ll talk about it
now with a lot more context. Obviously, Neil Young and some
other folks that were pulling our music off, Joni Mitchell,
whatever, some actual high profile blogger said they don’t
want to be on there. And then Joe Rogan and Daniel Eck both
decided to talk about this. Joe Rogan said, Listen, I’m a
comedian, I don’t prepare for these interviews. And I just see
where they go. But this show has gotten very influential. It’s
the number one podcast in the world’s got a ridiculous
listenership. So maybe I should write about having right now,
maybe I should have it labeled. And his and maybe I should have
people on afterwards. And maybe I should do some extra fact
checking. I thought it was the best nonpology. You know,
explain ology of an apology, because he did say, I’m sorry,
if you don’t like it. But he did kind of say that he would do
better. And then Daniel X said, and then I’ll let you guys
comment. Daniel, I said, Listen, we produce shows, and we
approve guests for the ringer. And for gimlet, which we own
those studios, we license Joe Rogan, we don’t do any editing
on his show. And we will remove ones after the fact, but it’s a
licensing, they’ll therefore we’re not a publisher. I’m
curious what you thought. Friedberg on the nonpology and
culpability for someone like Joe Rogan having guests on who are
anti vax, or, you know, maybe are debatable in terms of
science. Because yeah, he is a comedian. But as he says, like
the show is kind of big now. So maybe I should do a little fact
checking. What do you think he should do when he has scientists
and people and people on I’ll make two points. One is I don’t
think that journalism is regulated, in the sense that,
you know, we have freedom of speech. So anyone can stand up
and they can say, I have this belief, or I have discovered
this fact. And you may not actually hold that belief. And
that fact may not be true. But you’re still allowed to stand up
and say it and you’re still allowed to have someone come on
and say it. And so I don’t think that there’s any disclosure
obligation, he’s putting on a show, it’s the same as any new
show or entertainment show. I don’t think that there’s a clear
line or boundary. I mean, what the heck do we do here? We’ve
all got opinions, we try and talk about the news, we talk
about our perspectives on the future, you know, what the heck
is it that we’re doing here? You know, there’s no kind of
clear line there. So I don’t think that he has any
obligations to do anything he doesn’t want to do, except if
and when his audience tells him, or the listeners that he cares
about, tell him his customers tell him, this is what we expect
and want from you. And then he responds to his customers.
That’s the way the market works. And that’s the way the
enterprise system should work. I think the separate bigger
question here, that’s really important and worth noting.
You know, and I just want to speak about this for one second,
all of the great internet companies started with this
notion that they were creating democratization, that they were
creating access to information that didn’t exist, whether it’s
access to media or access to search results or access to
content or whatever, that may not have been available to you.
And that was a driving force for the entrepreneurs and the
founders that started all these businesses. And all of them had
these very idealistic points of view that we’re not going to
censor, we’re not going to take a point of view, we’re not going
to put our foot down and say what is and isn’t going to be
displayed or shown or made available to our users, we’re
going to let users choose what they want to get access to and
what they want to hear and listen to. And in all these
cases, from Google, to YouTube, to Twitter, and now to Spotify,
the idea of being just an access, a platform for access is
proving to be wrong. All of them are de facto publishers,
they ultimately have to make decisions about what they do and
don’t let on the platform. And de facto, if you let something
on the platform, you’re giving it permission, you’re giving it
a voice, you’re giving it amplification, and you’re giving
it access. And so all of them are now getting caught up in
this problem that I don’t think anyone from Larry or Sergey, or
Jack Dorsey or Daniel ever wanted to be in, they all wanted
to be these democratization platforms. And now they’re
finding that there is no way to avoid being treated like a
publisher and a publisher has someone that’s called an editor.
And an editor decides what is and isn’t put on that publishing
platform, as has always been the case in old media. And now
in new media, they’re all kind of stumbling into this problem.
And they’re not set up for it. And it’s creating issues where
people on the right are saying you’re censoring us. And people
on the left are saying you’re not giving us access to
information we want. And it’s, you know, it’s just kind of the
I think the transition that none of them expected, but we’re all
Chamath, if Daniel Lack is giving $100 million to Joe
Rogan, can he claim listen, it’s just we’re a platform when
you know, listen, we’re on Spotify as well, but they don’t
pay us. Doesn’t it change the relationship when they give him
the 100 million? Or can Daniel say, you know, intellectually,
honestly, like, hey, listen, we’re not responsible for this.
I mean, they’re backing up the brinks truck. And they’re
promoting it like heck. Are they a publisher or not in your
I read yesterday that Barack and Michelle Obama’s deal with
Spotify just expired, and they’re going to shop it. I
suspect that somebody will pay them 10s of millions of dollars
to produce content. That’s not illegal. And it’s a sign of a
free market that’s working. Spotify has a business to run.
And that business is to get content in front of the users
that are paying them a lot of money on a monthly basis to get
access to that stuff. And so who are we to say how Spotify
should run their business? I think you have a choice. Neil
Young expressed his choice. There was a person in the New
York Times, she took her podcast off of Spotify. Yep. There are
subscribers that probably left, but then there are also
subscribers that probably joined. Yep. And paid. Yeah. And
paid. And so the reality is, that’s the free market, being
allowed to choose, and being allowed to vote with their feet.
And I think that all sides of that are in the right. So I
think Spotify should be allowed to run their business. I think
Joe Rogan should be allowed to say what he wants. If Spotify
chooses to put a disclaimer in front of that podcast, that’s
their right. And that’s good, too. And if Joe Rogan decides
that he wants to have, you know, point counterpoint across
podcasts or within a podcast, that’s laudable as well. And
that should be his decision. But I don’t think people should
be forced to make these decisions by law, because I
think we get into a very slippery slope. Because you
don’t totally understand the incentives of the lawmaker
there. And we have a free market, as you’re pointing out,
the framework is working perfectly. And more people
don’t like this free market. More important than the free
market. We have a founding document of principles that we
all agree to. Yes. Yeah. And unfortunately, there’s a lot of
people who don’t agree. That says we have a right. So here
we go. Let’s go to our constitutional attorney
counselor. Take us there. If you’re talking about the
principle of free speech, there’s a lot of people who
don’t believe in it. That’s the problem. First of all, you have
this geriatric hippie. Whoa, whoa, whoa. Just Jerry, can I
finish? Let me finish my rant. You got this geriatric hit. I
love Neil Young. No, you know what happened here? Wait, sorry,
sex just there. That was J Cal seeing Oh shit, he’s gonna get
a bell claster clip. He had to interrupt you there. That’s
really brutal. J Cal. I thought you were talking. I thought
you were talking about Joe Biden. Can I explain what
happens? I think frankly, you guys are completely missing it.
The wheel of censorship broke on Joe Rogan this week. They
tried to Alex Jones him and it failed. Okay. First, you have
this geriatric hippie Neil Young, who somehow has turned
into a narc, and he plants a flag and he tries to get all
these people behind him. And the very online crowd says, Yes,
we got to cancel Rogan. And then you got Jen Psaki from the
White House, weighing in bringing in the coercive power
of the administration on the side of censorship. Okay. And
what happens? Rogan comes out with this nonpology, like you
said, and he seems so reasonable. He’s a guy who’s
inquisitive. He’s on the side of just asking questions. He’s on
the side of balance. He says, Yeah, look, I want to present
both sides of the issue. And everybody was like, there is no
reason to be censoring this guy. Rogan is an every man. And if
they would censor him, they would censor every man. And that
is why there was enormous backlash to it. And everybody
has opposed this. And so I think this is the week that this
ridiculous idea of censorship has broke. Now, it would be
nice if everybody to Chamath’s point, did agree with this
principle, but they don’t. The fact of the matter is, Jay Cowell
that censorship is now the official position of the
Democrat Party. And you see it in the poll numbers. There was a
great tweet that Glenn Greenwald Glenn Greenwald posted, where
he showed the polling numbers on this. So okay, you go back to
the days of the Obama administration, both Democrats
and Republicans agreed that the US government and tech
companies should not get involved in this type of
censorship. But today, there’s been a bifurcation. Democrats or
lean Democrats versus Republicans who lean
Republicans. It’s 6528 in favor of government taking steps to
restrict info online. And it’s 7637. Democrats versus
Republicans on tech companies. So Congress, the First
Amendment is no longer a consensus. And that is
fundamentally the issue. But I gotta tell you, I think there
is a backlash against this. And I think that most of the
country now, and I think this is where they went too far is
that Rogan is not Alex Jones. He’s not Trump. He’s not
Milo Yiannopoulos. He seems like a reasonable guy. He is the
biggest figure in independent journalism. He gets 11 million
viewers every week. And I think there’s a lot of people,
especially young people who are going, this has gone too far.
And by the way, I do not think Obama ever would have made this
political blunder of effectively denouncing Rogan
because Obama tried to appeal to young voters. And I think
Jen Psaki, by putting the administration on the side of
the censorship, they’ve made a huge mistake. And the same week,
we saw that Tucker Carlson now gets more young Democrats
listening to his show than CNN and MSNBC. And I’m telling you,
this is the reason why
Okay, Henry, you can put in the roaring crowd of applause at
this point. The best the best
You’ve got big problems. I’m telling you, Jacob, you got big
I’m an independent. Stop making me the democrat. I’m an
There are now more Tucker Democrats, okay? Among the key
In your writer’s room or on Tucker’s writer room? Which one?
I’m a Tucker Democrat, Jacob.
You’re a Tucker. You are. You love, you love Obama. You love
Clinton. I think what’s happening is that, I mean, and
Chamath, you’ve said this over and over again.
I’m sorry, Chamath Palihapitiya.
You had on one side, you know, the right when lost their mind
in the all right, now they’ve come a little bit more center.
And then you may not have the the democrats have lost their
minds. The fact that anybody can’t look at Joe Rogan and say
he’s a comedian. He worked on a show where they fed people
shakes of blended insects, feel factor, and he’s taking
mushrooms. And he’s like, Why are you taking me so seriously?
Well, wait, I don’t understand.
Hold on. I think you’re being super dismissive of Joe Rogan.
I think he’s actually, as Zach said, a pretty reasonable,
curious person. And then yeah, he does the stuff that
everybody else does.
He doesn’t prepare for the show. He literally said, I don’t
prepare for the show. I don’t do any preparation.
Maybe he doesn’t.
No, he said explicitly he doesn’t. And he fact checks in
real time. So you got to keep your expectation at a certain
level with Joe Rogan, I think.
I think that that’s a dig. I think that that’s implausible to
believe. I know that that’s what he said. But, you know, 11
million people a week, $100 million deal, I do suspect
that he does some sort of preparation. I don’t think he’s
a, he’s completely winging it. Okay.
He literally said he wings it. But okay.
I understand that. But I think that’s not the point.
Okay. The point is, whether he prepares or not, the excuse
isn’t sorry, the dog ate my homework. It’s Hey, listen, I
have a right to have this guy on my show. Just like I have the
right to have this other guy on my show. You can listen to
both. And then you can decide for yourself.
You could change the channel.
Okay, that’s the important point. So Jason, I would not
like try to make this whole argument about whether he was
prepared or unprepared as the excuse. It’s whether you
believe there’s a fundamental right to free speech, or
whether you believe that people who disagree, can disavow
people and get them canceled and get them.
I obviously don’t agree. I don’t agree. Anybody should be
canceled. I think he should keep going.
Whatever Rogan’s level of preparation, which I think is
actually pretty high, the people who are accusing him of
putting out misinformation are far more guilty of it
themselves. And I think one of the best points in Rogan’s
nonpology, as you called it, is he said, Listen, a lot of the
things that we used to consider misinformation are now the
truth. For example, we’ve talked about it on the show.
Yeah, well, we’ve been ahead of the curve and calling all this
stuff out. You know, we could have been accused of
misinformation. So examples, the lab leak theory used to be
considered information. The cloth mask not doing anything.
Listen, Dan Bongino was kicked off YouTube two weeks before
the CDs for saying that Dan Bongino, he’s a pretty big
conservative commentator. Okay, he’s got an audience of
millions, you can be dismissive, but a lot of people like him.
Yeah, Jake out. But look, my point is, he was kicked off
YouTube for saying cloth masks don’t work. Then the CDC comes
out two weeks later, and says the same thing, right?
I think that’s a valid point.
Yeah, well, it’s the key point.
I personally like you know, for example, we’ve talked about
this thing where like, if you look at like the top
distributed links on Facebook, who do you see Ben Shapiro?
Yeah, Dan Bongino? You know, bright Joe Rogan, right?
My takeaway with all of these things is there are people of
those things, if I listened to, I’d probably find abhorrent.
But there are people there that are probably I would be, you
know, I would, I would, I would, they would appeal to me. In all
cases, they should all exist, though, because the whole point
is let me spider my way through this stuff and figure out for
myself. Yeah, what works and what doesn’t work?
Yeah, more speech is the best counter.
The summary of this that makes the most sense is Elon tweeted
this out, Nick, you can put this because I gave you the image,
but it’s a it’s a meme of Neil Young, where it says, if you
won’t censor the guy I don’t like, I won’t let you listen to
keep on rocking in a free world.
And, and it’s, and it’s just so true, which is like, on the one
hand, you know, you are a standard bearer. Now, maybe what
we should really do is talk about what has happened to this
boomer generation over the last 50 years, where they were, you
know, sex, drugs, rock and roll, no war in Vietnam, let’s fight
for our rights, let’s fight for equality, then punk rock, you
know, no, I’m talking about just those, those, those folks back
then, who are now 50 years later, you know, sitting on $70
trillion of wealth, and who are basically like, you can’t say
this, you can’t say that. Don’t do this. Don’t do that.
Wear masks, don’t leave your house.
You know, yeah.
Fauci is right.
They’re scared, because they’re old.
Wear masks, don’t or you’re getting a pangolin.
Yeah, you know, this is, I mean, that generation, I think we
all have some soul searching to do about what happened to that
I think they’re scared, because they’re old, and they feel like
they’re going to die from COVID.
Is it that generation, or is it the fact that every generation
rebels against the prior and ultimately becomes conservative?
And, you know, that’s the, that’s just how life goes.
I don’t think they’ve become conservative.
I think they’ve become authoritarian.
I think that what happened is they’re now in power.
The boomers are in power.
They’ve been making the decisions for the last 20 years.
I think there is enormous popular discontent with the way the
country’s been run over the last two decades, the futile,
pointless wars in the Middle East, the debt, the economy,
the unfairness that goes on and on.
And what, and especially with COVID, I mean, this COVID policy
over the last two years has been a fiasco.
And the point of this censorship of misinformation is to suppress
I mean, what ultimately is the point on take, for example,
COVID of saying that people cannot take a point of view, it
is to stifle the debate that’s to prevent an honest debate on
And the people have an interest in doing that are the people who
are in charge and are failing.
And if you gave people the information, they’d be voted out
If you look when I asked what are the specific claims that
either Joe Rogan or his guests made that people are objecting
to a lot of the people who are objecting and wanted him
censored, really didn’t know.
And one of them was he said early on, I don’t know for a
young person who’s in shape, if I would advise them to take the
I know a lot of people who have that position, which is like if
you’re young, and I think actually, Friedberg, you might
have said mRNA early on in this podcast is a very new
And I could see people wanting to wait and see.
Did you not say that?
I don’t want to get you canceled here.
But I think we did have that discussion, have that
That’s a valid conversation.
mRNA is a new technology, right?
Freeberg, you should think about it.
And we should be cautious.
Don’t draw me into your cancel.
That’s why I said we I just changed it to we were talking
Don’t you remember that discussion we had like, and I
asked you, I think, mRNA, what do you think of this versus the
regular one, the J&J?
I think generally, we’ve seen science being used as a way as a
term to discredit what I think would arguably and typically be
scientific principles, which is inquiry, challenging
hypotheses, and having, you know, vigorous debate to resolve
to some sort of objective truth.
Otherwise, you’re having some sort of subjective belief.
And more often than not, we’ve seen politicians and others
grab on to the term science and saying, this is science, it says
this, when in fact, the process of science is inquiry, and it is
to challenge, you know, again, a hypothesis and what might be
kind of a thesis.
So, yeah, I think generally, this has been a pretty scary
time to watch, because it’s almost like gaslighting, you
know, it’s like, hey, you know, you’re using the term science
to discredit the notion of science.
It’s been pretty brutal.
I sent you guys this, this cartoon link, by the way, it’s
Oh, I just got an old left versus the modern left.
It’s a Volkswagen bus with a bunch of hippie dippy flowers.
And it says free speech, free love 1971.
No CIA, screw the establishment, resist authority.
And then it shows like a modern SUV with 2021.
It says masks up, I heart the CDC, obey the establishment,
no free speech, do what you’re told obey.
Basically, you have another poll you want to share sex?
Well, yeah, this is a really interesting one.
It says a majority of voters 55% say COVID should be treated
as an endemic disease, while a majority of Democrats say it
should be continued to be treated as an emergency.
And then there was a similar poll, the Monmouth poll just
came out where 89% of Republicans 71% of independents
say that it’s time we accept we accept COVID is here to say
we need to get on with our lives.
Only 40% of Democrats.
So the reality is that the rest of the country I think has
moved on, it’s ready to move on.
The split is not between Democrats or Republicans anymore.
It’s within the Democratic Party.
The Democratic Party is now divided on this question of
whether we should move on as a country past COVID.
Half of the Democratic Party still believes that COVID
should be treated as this emergency.
Do you think that it’s cut by age?
Do you think there’s a bias by age?
I think yes, absolutely.
Old people are more scared.
But I think I think the media and the party they’ve programmed
their soldiers to be, you know, to treat COVID as an
emergency, and they can’t deprogram them.
And this is why I think we’re seeing Tucker’s Tucker is now
the biggest demographic among young Democrats.
That’s insane to me.
The idea that idea is insane.
This does not bode well for the on top of everything else
that’s happening in the country.
This is not bode well for the Democrats in November.
And then you had this crazy thing at the, you know, the
Magic Johnson party at that held my breath.
I took a picture of Magic Johnson.
I held my breath so I wouldn’t get the virus with Garcetti
and Newsom Newsom claims the new I didn’t inhale.
And then he says that he was only photographed at the exact
moment where he took off his mask for two seconds, you know,
you know what, if you go to the ski slopes, there is nobody
with a mask on and nobody’s enforcing it and no restaurants
and this is in democratic country.
Everybody has moved on at this point.
Everybody’s willing to why haven’t they why haven’t why
haven’t the media and the politician because they’re
virtual signaling and they want to keep power.
I don’t know.
You tell me that’s that’s that’s the point.
Well, I think they’re dumb.
They should take the position that we reopen.
Yeah, they should just take the rails but wouldn’t take in
the reopening position get you more voters at this point.
People are tired of this.
They want to move on.
It doesn’t make any sense.
They’re making a bad political decision.
I think they’re holding to their base.
That’s the point is I think I think the whole country has
moved on even most Democrats have moved on, but the
democratic base has not moved on.
And that is why, you know, Newsom and Garcetti have to
pay lip service to this.
Well, I mean, and these guys have been telling everybody
gotta wear a mask, gotta wear a mask, and they’re not
And let’s face it.
They weren’t wearing masks at the front French laundry.
They have never worn masks.
They’ve been throwing their own parties with no masks.
They’re a bunch of hypocrites.
The whole lot of them.
In other news, Xi Jinping and Putin got together and they’re
Here’s the quote some actors representing, but the
minority on the international scale.
I think that’s us continue to advocate unilateral approaches
to addressing international issues and resort to force.
They interfere in the internal affairs of other states
infringing their legitimate rights and interest and incite
contradictions, differences and confrontation.
The statement said, I am willing to work with President
Vladimir Putin to plan a blueprint and guide the
direction of Sino Russian relations under new historical
Mr. Xi said he added that China and Russia should act like big
countries as they intensify coordination on fighting the
Coronavirus pandemic, yada yada.
Any feedback from our squad?
I mean, you could have rewritten that press release as you know,
we will we want to try to destroy us hegemony and replace
it with ourselves.
This is the beginning of the end of US cultural and economic
influence globally, or dominance, rather influence
And I think that it’s, you know, something that we’ve talked
about quite a lot.
You know, I mentioned in the prediction episode that I
thought that Putin was going to play a major role this year.
And, and, you know, he’s clearly not just, you know, out
for his own interests, but he’s going to play a really
important role in China’s rise to economic and cultural
You agree, Chamath, is this the sign that they’re going to be
running the show?
Or does this look like something else to you?
No, no, no, I don’t think that there’s a show to run.
I think the point is that there was a first among equals for
the last many decades in the world order where, you know,
America was it was that first among equals.
And I think what they’re saying is that it’s time for that to
And, and, and they’re going to tie that to their ability to
influence foreign policy in countries the way that we have
So, you know, this is sort of basically putting a marker on
the table that says, this is going to be about, you know, a
different cohort of people that are also going to have an equal
And if you think about where this all plays out, it’s always
in economics, right?
And this is where, again, you have to think about what China
has done, which is they have while we were fighting wars,
you know, putting trillions of dollars into the Middle East,
they took their trillion dollars and bought resources all
They built infrastructure, they bought infrastructure all
through South America.
They put infrastructure all through Southeast Asia, you
know, that say, call it $15 trillion that we spent in one
direction, they spent another, that’s a $30 trillion gap,
that’s going to create a resource imbalance that they
will use to create even more influence in the future.
And we have to figure out a way to counteract that.
Sax, what do you think?
Is this a changing moment in the world order?
Should we be worried that these two dictators are going to act
in unison, and then maybe one gets the Ukraine, one gets
Is this like really earth shattering news?
Or do you think it’s saber rattling and not that big of a
Well, I think it’s a dramatic statement and photo that was
was put out.
It was a continuation of what we’ve seen where they have, you
know, Xi and Putin have been getting and Russia and China,
they’ve been getting friendlier and friendlier.
What saddens me and sort of sickens me as really an American
patriot who would like to see the American world order
continue is the way that we have blundered and created this
type of situation.
So, to Chamath’s point, first of all, we wasted 20 years
trying to do nation building in the Middle East, we wasted
$6 trillion on that.
How did China, you know, lose by not being part of that?
They benefited, they were building Belt and Road while we
were, you know, engaged in this foolish interventions in the
And now more recently with Putin, we’ve really driven Putin
into Xi’s arms because we keep threatening to add Ukraine to
NATO, which is not something that’s in America’s interest.
If we would just give up on that position, or just reaffirm
that Ukraine should not be admitted to NATO, it would
enormously help defuse tensions with Russia.
And by the way, your point that these are dictators or
natural allies, that’s not historically been true.
So, during the days of the Soviet Union, you know, you had
Nixon and Kissinger make the great opening to Mao and China,
and we were able to cultivate a relationship there because
China and Russia were natural antagonists.
And it was a major move in the Cold War that we were able to
And we did so even though he was a dictator with blood on his
So Russia and China are not natural allies, we should be
doing a better job of not so thoroughly alienating Putin that
he is rushing into his arms.
That’s the blunder I see here.
By the way, after this summit, they’re going to meet with
There’s a tripartite think access of dictators.
This is like the Legion of Doom.
We need to be playing our cards a lot in a much smarter way.
Yeah, we need to play our cards.
What is the strategy?
I mean, look, we want the American led world order to
continue, but we got to be much more selective about picking
and choosing our battles.
Yeah, Iraq, Afghanistan, Syria, Libya, they were huge mistakes.
And now on top of it, what about Ukraine?
Yeah, looking forward, like you keep bringing up the past,
what’s the look forward strategy in your mind?
The look forward strategy, I think, is to diffuse and
deescalate the situation in Ukraine, exactly the way Obama
did it, which is to recognize that America does not have a
vital national interest the way that Russia does to hold on to
reaffirm that the nations of the caucuses that have border
disputes with Russia, Ukraine, Moldova, Georgia, they are not
eligible candidates for NATO at the present time, kick that
can down the road by 10 years.
Okay, we talked about that last time.
Taiwan is a much more complicated situation.
I do think we have a vital national interest there.
Okay, so two very different situations.
I actually agree with you.
Yeah, I think Taiwan, we have to hold the line.
Yeah, we have a responsibility in the United States.
And I think we’re starting to do it.
So I think there is good news where, you know, part of the
strategic vital interest for Taiwan is because they have
critical resources that we need.
And we depend on and specifically, those are
You know, we have now I think, allocated, you know, 50 $100
billion of capital of capex across a bunch of companies
that have committed to building domestic capability.
And so we have to make sure we follow through on that, that’s
And the reason is that it gives us optionality, it allows us to
breathe, it allows us to actually make rational decisions
and be patient in our decision making.
And I think that’s going to be really important over the next
10 or 20 years.
And so we have to invest in the United States.
So the solution to all of these things is we cannot be overly
dependent on any one country, any one shipping lane, any one
product, any one natural resource, you just
can’t do that anymore.
We have to be strong at home.
And we have to build strong relationships with other
And yeah, I think I think we’ve got a an operating philosophy
All right, listen, let’s wrap there.
We’ll see everybody on the next episode for the dictator
Chamath Palihapitiya, the Sultan of Science, David Friedberg,
and the rain man himself triumphant versus Peter Thiel and
that PayPal match.
Love you boys.
Love you besties.
We should all just get a room and just have one big huge orgy
because they’re all just like this like sexual tension that
they just need to release somehow.