Hey everybody, welcome to another episode of the All In Podcast.

It’s been a crazy couple of weeks here.

We had the All In Summit, and boy, was it amazing.

Our bestie David Freeburg couldn’t make it today.

He had some personal things he had to attend to.

So joining us again is Brad Gershner.

Welcome back to the fifth bestie on his, is this your fourth appearance now, including

the All In Summit?

I think you’ve been on four times now.

Very good.

All right.

That’s about 5% of the episodes.

Nice, nice.

I think that’s a nice little chip in your, in your, in your, your belt there.

I mean, unworthy replacement to Freidberg, but I do what I can do.

Nobody can replace Freidberg.

That is the truth.

Just going around the horn here, Tramov, did you have a favorite moment on stage, a favorite

moment off stage?

Well, what is your general impressions of the All In Summit 2022?

I thought the people I met were really impressive.

I really enjoyed meeting people and learning what they did.

I also thought you and your team organized really an incredible event, and I forgot how

good you are at these things, but, um, so I give you a lot of credit.

I really enjoyed participating.

The only thing that I was nervous about during that whole thing, which probably limited a

little bit of my fun, was my mom was coming, she’s 81.

And so it was not, I was not super psyched to really be in the throes of all the parties,

to be honest, just because I was like, I didn’t, I didn’t necessarily want to get COVID and

I didn’t want to introduce it to her and.

Got it.

Yes.

You know, Nat ended up getting really, really sick, but more like a flu and a cold.

Yeah.

Um, but you know, I’ve been fine.

My mom’s fine.

I know a bunch of folks that came out, unfortunately tested positive.

So that was the only, that’s the only downside where I would, I would have wanted to be a

little bit more carefree, but, um, that was the only thing that was, but that’s not in

anybody’s control.

So.

Yeah.

I, I recall that when I had a Christmas party back in December, like a week later, he called

my Christmas party at a super spreader.

Even though I tested everybody at the door, every single person was negative at this.

So, so my parents went to this conference, they both got COVID my aunt who lives in Miami,

he was in her 70.

She got COVID.

How are they doing?

Are they okay?

By the way?

Are they okay?

Yeah.

Yeah.

It’s, it’s, it’s Omicron.

It was like, you know, it’s like bad for two days and then you get better.

So they’re going to be fine.

Thank God.

Or no.

Yeah.

One did.

And one didn’t.

So, um, my brother’s got COVID and your brother’s got it, Josh and Jamie both got it.

And then Josh’s wife got it.

So she, um, took the PAX love and everybody’s great now, but yeah, if you go to my, a lot

of people who came to the event, it was their first time out.

Like this was for a lot of people, I think very emotional and exciting because it was

their first venture out.

And if you go to Miami to a conference, like you’re going to get, especially if the event

organizer doesn’t test anybody, it’s impractical to test 850 people.

Nobody would come.

Not if you want to make a profit.

Right?

Nah, it wouldn’t have actually been that expensive.

You could put that on the people.

They could just, you know, share their results.

But I think at this point, you know, even on the planes going out there, nobody’s wearing

masks.

I don’t know if you know, well, you guys are flying private, but you know, my flight out

there, it was all, you know, nobody’s wearing masks anymore, but anyway, J Cal, I think

everybody who went to the conference took the risk upon themselves of getting COVID

and you know, it’s not the end of the world or anything.

They’re all fine, but I’m just pointing out the hypocrisy.

My hypocrisy.

Yes, exactly.

It’s like, you’re like Nancy Pelosi or something where every time a Republican gets COVID,

it’s their fault.

But when you throw a super spreader, and I think AIS now stands for all in super spreader.

Yeah, it’s not your fault.

It was well beyond your control.

It was the virus.

And in fact, it was probably just Florida.

It was just, it was Miami.

Yes, it’s the Santa’s fault.

In fact, I was going to bring it up.

Both of you now have thrown super spreader events.

Yes, but in mine, I tested.

Yeah.

It’s not even proven that mine was a super spreader.

All right.

In all seriousness, did you have a favorite moment on stage or some reflections on the

event?

I thought the Elon thing was really good, by the way.

And the only thing I’ll say is the Palmer Lucky thing was pretty incredible.

Yeah, which will be we will be releasing the Palmer Lucky episode next week.

I’m excited to see that.

I think that that episode is eye opening.

Yeah, we don’t want to say too much, but I think that you were really, I think you handled

yourself really well there.

Thank you for that.

Chamath, what actually happened?

I wasn’t there for that portion.

I haven’t heard anything.

We gave a mini summary here of it, I guess.

I’ll give you the outside inversion.

He gives what I can only describe as an incredibly motivating breakdown of American defense and

what his company and, you know, you have to remember to put it in context, this is a 29

year old young man who has now started two multibillion dollar unicorn.

So, you know, this he’s going to be around for a long time doing amazing things.

But he talks about Anduril, which is his defense company.

Really impressive.

And then the whole, you know, everybody’s kind of like rousing and cheering and applauding.

And then he said, you know, I have something else that I want to get off my chest.

And I was standing beside Jason backstage, Jason was looking at the monitor.

I was looking at the mirror at myself.

But and check your sweater.

And he said, you know, there’s a person here that that has been, you know, really hard

on me, you know, tried to ruin my life, attack my family.

And represents, you know, these really this strain of very influential people in Silicon

Valley, who have gotten it totally wrong, basically.

And he called out cancel culture.

And then he called out Jekyll.

And to Jekyll’s credit, after he was done, Jekyll was the first one that walked out

on stage, shook Palmer’s hand.

And then we all sat down, we talked to him, and then the two ended up hugging it out at

the end.

But there were moments that were very heated in the middle of it.

The whole thing was incredible to watch.

I got to be honest with you.

It was super dramatic.

Yeah.

Incredible.

I would say that the most shocking and surprising aspect of the whole thing was that a person

as important as Palmer and Lucky felt the need to get revenge on a person as unimportant

as Jason Calacanis.

That was the part I mentioned when he’s like, my career was said important people in Silicon

Valley.

I initially thought, oh, my God, he’s talking about me.

What did I say?

I was I was thrown by that, too, if I’m being honest, he’s like, my entire career was stopped

in its tracks.

And I had to claw my way back because Jason Calacanis said this.

And I was like, um, no, actually, I’m looking forward to when you’re going to be a great

episode.

It’s going to be coming out next week.

Thank you to all.

Yeah.

I want to give a shout out to Glenn Greenwald, Matt Taibbi and Antonio Garcia Martinez for

appearing.

And, you know, we did two different panels.

We did one on domestic politics with Glenn and Taibbi.

And then the we did a debate on Ukraine, which has now been published between Glenn and Antonio

And particularly, I want to thank Antonio, because it did end up being a little bit of

a two on one at the end, which wasn’t my intention.

But I have my own views on it, too, although I did try to be somewhat restrained and even

handed in the moderation.

But it’s a really good debate.

We should have had longer.

We only had about 30 minutes.

But you can see that online right now, it actually is a great example of actually how

to listen to somebody else having a completely diametrically opposed view and still be respectful.

I thought those guys were great to listen to.

I think it’s a new format, Saxon.

I think, you know, somebody was like, hey, maybe you and J-Cal could do it.

I think you and I moderating like two people with different sides, it could be like a really

interesting format for us for future events.

Brad, did you have a favorite moment on stage?

Maybe outside of Elon?

Of course, you can mention.

Well, I would say, you know, maybe both on stage and off stage, you know, I think listen,

I think this podcast has taken some shots and probably appropriately so at times for

being a bunch of men in a little bro culture.

And the effort made to build authentic community and diversity into that room, I’ve been to

a lot of conferences, whether it’s Claire Thielke, you know, Patty Wexler, extraordinary,

you know, minds, women, all diverse cultures, economic backgrounds.

When we walked around the floor, you know, Indiana, Kentucky, West Virginia, everywhere,

right?

And who are starting companies having authentic conversations, and frankly, we’re grateful

for the community and the advice that they were being given.

These were from big startups to very small startups.

And so for me, that was a highlight the effort you made, I don’t know, almost 40% women,

you know, both economic, I thought, as well as, you know, geographic diversity.

And then, you know, listen, I had a moment.

After Bill and I after Gurley and I got off stage, I was stopped by a group of founders

and they said, Hey, we need your help.

I said, What?

And they said, We are that company you and Bill were just talking about and said was

screwed.

We raised $100 million last November from from Tiger at 100 times ARR.

What do we do?

Right?

And like, like the fact that that, you know, that those conversations are going on, of

course, they’re not screwed.

And it’s a very interesting company.

But it led to a real conversation that you don’t often have at conferences like that.

And so I thought it was much more than just a bunch of talking heads on stage.

I thought it was a real give and take in, you know, in the crowd afterwards, the parties,

the in betweens.

And so I really enjoyed that.

The other big thing that we avoided failing on was putting back the AMA.

I think these AMAs are some of the most interesting parts of that conference.

And I think that we should make sure that we probably do an AMA Jason, like, both days

if we do a two day conference, the AMAs are awesome.

Yeah, when the audience is asking us and just to explain to people how we were able to,

you know, curate the audience, we asked people, I think it’s a good playbook for other people

if they want to steal it, to they could, they could pick the price they wanted to pay based

on their station in life.

And so people said, I want to come, I’ll pay 500, I’ll pay 1000, I’ll pay 2500 instead

of the 7500 ticket price, which was like 300 people in the audience.

And we just said, hey, what do you love about the show?

You know, what would coming to the conference mean to you?

And we kind of just sorted that and we look for people who are passionate about the show.

And then, you know, the thing that stuck out to me, and I know Freeberg had a great time

as well, was the passion of the audience and how much they appreciate what we do here every

week.

So the love that we got people asking to take selfies, people telling us what the show meant

to us, you know, and people coming from all different stations in life, really, it made

it not elitist.

But it felt like the people who were there, were all builders.

And that was really an interesting part, what I instructed the team to do was anybody who

was like a real estate broker, a money manager, a sales executive, a business development

person, I said, let’s not have them there, no offense to those, you know, critical functions,

but a lot of people will come to these events to sell and get customers.

But I said, anybody who’s a builder and artists, they’re making something in the world, let’s

give them the priority for these scholarship tickets.

So, you know, when you met people, they were all building something interesting in the

world.

And no press, I think also created a certain vibe there.

We didn’t have the media, they’re criticizing every panel and, you know, every speaker.

And so it I think it just, yeah, I mean, it’s a great show.

Well, I think it really couldn’t do it without all you guys, and Freeberg and the besties

and Brad, you were helping behind the scenes.

So couldn’t do it without everybody.

And my team, you know, great job.

It turned out surprisingly well, I thought.

I thought the whole thing was a J. Cal grift, and it actually turned out well, there’s been

there was there’s some grifting going on, for sure.

We still haven’t seen an accounting of exactly where all the money went.

So it’s close, we’ll have that accounting any day now, Saks, any day now.

What could you have done better?

What would you change for the next time?

You know, I guess a great question.

You know, we always do a document with lessons learned right after the event.

So I went through my team, and I had 26 people for my team, 21 from launch, and I think five

from insight came and, you know, helped staff the event, a little more time to work on the

speakers in the agenda.

If we had a little more time, I would have teased out of each bestie, you know, maybe

five or 10 speakers or topics they wanted and worked backwards.

So just a little more time to, to experiment with the format.

But I took an experimental approach to it.

We did have people who did solo dolo, like Ted style talks.

We then had people come on stage with the besties and do discussions.

But having all besties on stage all the time is a little hard for for everybody.

I know David likes to focus on maybe a couple of things.

Other people like Chamath and I like to be on stage for everything, I think.

But the format was experimental.

And there was a couple of great moments, I think when we overlapped folks, I think Nate

Silver overlap with Keith Raboy, you and Bill Gurley together, Tim Urban, I’m sorry,

overlapped with Keith Raboy.

Those were magical moments, I think.

And so I have something in my brain about weaving individual talks and data points with

the besties and then having the next speaker on the stage, the next speaker, and I would

have liked to have more time to refine that format, I think.

Okay, my only question is, was the Palmer Lucky Deal, was that a plant?

Did you plan that?

No.

I’ll tell you the backstory is, I, you know, I had invited him on this week, it starts

before all in came out.

Many times he said, fuck you, basically, in so many words, I hate Jake out.

And then when all in came out, he’s a fan of this show, I think he’s particularly a

fan of David Sacks’s.

And I think David knows a lot of the investors, the investor pools, I think overlap in a lot

of different circles of ours.

And I said, Would you like to come to the summit?

And I, and I basically said to him, heartfelt, like, Listen, I think the work you’re doing

to protect the country, most people in Silicon Valley don’t believe in building weapons systems,

but I kind of am with you on this.

So we probably have some common ground here.

I think the mission of what you’re doing is more important than our disagreement from,

you know, the Hillary Clinton versus Trump days, maybe we could just, you know, put that

aside and have you speak.

And surprisingly, as people were like, Yes, I didn’t know they were doing yes, because

he had a plot to dunk on me.

But who cares?

You know, like, I don’t mind being dunked on, if I’m wrong about something, or I’m right.

The whole spirit of this show is to, you know, to learn and grow and have great conversations.

So with that, maybe we start the show now.

Let’s do it.

All right, let’s go.

Let me Am I still allowed to do intros?

Or is it too triggering?

Because I do have interest for this week.

Do it.

So do it.

Okay, I got thumbs up.

Only if they’re nice.

Well, yeah, that’s the caveat that I cannot guarantee.

But anyway, here we go.

Getting ready to gallivant across the Italian countryside.

He spent 40k at all in summit on food and wine.

He took 400 selfies in three hours.

Those sweaters, my lord, they reek of power.

The dictator himself is back.

Chamath Palihapitiya, welcome back to the show.

Thank you, Jason.

All right.

His body looks like he doesn’t eat cake.

He’s got a major stake in Snowflake.

You might have heard him earlier on the week with Bill Gurley.

He’s the crossover fund manager with that BDE.

Our fifth bestie, the audience hangs on every word he has to say, the Dark Knight of Namaste.

Welcome back to the program, Brad Gershner.

I like it.

I like it.

What’s BDE?

If you don’t know, then you don’t know.

You can look that up, Urban Dictionary.

He’s about to turn 50, but he looks like he’s 65.

After 72 hours in Miami, we’re not sure he’s still alive.

The crib creeper is jealous of the bags under his eyes.

His portfolio has been down for 35 straight days.

No surprise, the rain man himself is back.

David Sachs.

All right.

Too rough on Sachs?

No, it’s okay.

Is it okay?

I felt like I might’ve gone too rough on Sachs.

All right.

With markets and S&P 500 down 15% year to date, Dow down 11%.

Two stocks of note that did particularly well during COVID, Zoom and Snowflake reported

their earnings this week, and they beat expectations.

Of course, that gives them no reprieve.

Market cap for Zoom, 31 billion, got almost $6 billion in cash, which was a prescient

move to cash up, I guess, during the boom times.

Their stock jumped 18% after the earnings, so great for them.

Q1 revenue 2023, 1 billion, 12% year over year.

They got an 80% gross margin for that business, pretty impressive.

500 million in adjusted free cash flow, 7,000 employees.

They’re at almost 500,000 per employee at this point, and stock is still down 43% year

to date.

There’s a bump here, so I guess we might be bumping along the bottom soon, and just to

quickly recap Snowflake and get your comments after that, Snowflake reported their quarterly

earnings yesterday, $41 billion market cap.

They got almost 4 billion in cash.

They were down slightly at the taping of this episode today, and they’re down 67% from the

peak of $409 a share in November.

So they’re not in the 85% plus club like Coinbase and Peloton, but still they’ve lost two thirds

of their market cap, 422 million in revenue, 85% year over year, beat their expectations,

and gross margin 72%, net retention 174%, 70% growth within their existing customers

to David Sachs’ point about why SaaS is so great.

They got 4,000 employees, 6,300 total customers.

So I guess maybe starting with you, Brad, since you’re in this in the thick of it, thoughts

on I know you’re a major Snowflake early supporter, thoughts on what’s happening in the market

and maybe any indication from these two, let’s face it, strong results in the bouncing along

the bottom, I think is how we’d all describe what’s happening right now.

Well, I think, listen, what makes investing hard is sometimes you have to hold simultaneous

truth, right?

And the reality is there’s a lot of cognitive dissonance when you see something down 30,

40, 50%, but it may be still fair value, right?

We were talking about last October, like make no mistake about it.

Just take Snowflake as an example.

The move from 400 to 200 was probably just what I would describe as normalization in

a world where rates were going back to two and a half or 3%, right?

The market last October had gone too high.

We discussed it on this pod.

We discussed it on CNBC.

And so I expected a return to what we call the five-year average, as we discussed at

the summit.

What’s been surprising to me is the negative reflexivity that’s kicked in as a result of

the war in Ukraine, uncertainty about hyperinflation, uncertainty about hyper rates.

And so now we’re seeing software generally, all risk assets, growth assets trading now

30, 40, 50% below the five-year average, right?

So I don’t think it’s helpful to say, well, none of that should have happened.

No, the reality is normalization meant that all of this stuff was going to be down 20

to 50% because it was way overvalued last fall.

We gaslighted ourselves in many respects.

We didn’t hedge it perfectly in many respects.

But that’s what happens in late market cycles.

So the question is, where are we today?

And for example, why is the NASDAQ up 300 basis points today, right?

It feels like whiplash.

I come in one day and you have market caps up 10% one day, down 10% the next.

And so I think it’s really important to help the people listening understand what happened

this week and what’s going on.

It is been kind of a pretty mixed bag this week, in fact, of things going down.

Chamath, what are you going to take on this of what we’re seeing in the market this week

specifically with precipitous drops and then, you know, the bouncing up again?

Look, we, we still had some amount of rate uncertainty from the Fed.

I think people weren’t sure how aggressively they were going to hike.

But by early this week, it was pretty clear there’s going to be two 50-point hikes, one

in June and one in July, and then effectively a pause because then the Fed funds rate will

be at around 2%.

And everything from there will probably be path and data dependent, OK?

That’s effectively what they said.

Now, I think the markets had actually already started to see that writing on the wall.

So if you go back to, you know, one of our favorite measures, which is the 10-year breakeven,

it’s effectively rolled over, which meant that, you know, which means that from the

highs in sort of late April, it started to come down, which says that, you know, they

were thinking that, you know, the inflation was not going to be as bad in the back half

of the year.

And then the second is that corporate credit, which is really what matters in some ways

to the Fed because that’s where they can intervene.

What is the spread above treasuries that a company can issue debt?

When it goes crazy and it goes up, it means, oh, no, the cost of capital is going up.

That’s going to be hard for companies to raise money.

They may have to lay people off.

They may need to get into cost-cutting mode, right?

That’s what goes through everybody’s mind.

But that’s also now about 35 and 40 days rolled over, which means that the gap has started

to shrink, you know, between the U.S. treasury price and what, you know, decent corporates

can issue debt at.

So it looks like we are set up for potentially a decent little rally here.

The problem is, is it a rally that is sustainable or is it a rally that’s basically what we

call a dead cat bounce or a bear market rally where, you know, you just get some one or

two weeks of relief before the thing spears down again.

And we’re not going to know, although tomorrow, on Friday, there’s going to be a really important

set of inflation data that gets released, and I think everybody’s going to be sweating

these details.

So right now, we’re in a moment of pause, and there is the potential, if this data comes

back as reasonably good, which means prices are, you know, not escalating as much as we

thought.

Inflation is not going to be as bad.

Growth is going to be moderate.

That gives a lot of ammo for the Fed to kind of take their foot off the gas here, and if

that case, markets will go boom.

Sachs, the interesting note, I think, is what we talked about here.

Everything was correcting except housing, and we were wondering when this, you know,

the increasing rates would hit mortgage rates, mortgages way above 5% in the last two weeks,

I think it’s come down a little bit.

But the mortgage rate basically doubled.

And then we finally saw it earlier in this week.

What day was it?

It was two days ago.

So we’re taping this on Thursday.

So I think on Tuesday, new home sales 591,000, they expected 749.

And I think the last month before that was 763.

Is that indicative of the raising the rates and slowing down inflation has finally occurred,

and that maybe we, the Fed, maybe skewed too much into the turn?

How do you interpret that massive, it was a pretty massive miss in terms of home sales

in the estimate?

Well, the costs of buying a home are going way up because home loans are now more expensive.

So that’s going to factor into all sorts of consumer purchases.

Anything that’s finance can be more expensive.

You’re also seeing companies starting to slow down spending, really starting to slam on

the brakes.

We see in a startup land, startups are all slashing costs right now.

But that’s eventually going to percolate up to big companies too.

You saw Dara’s memo, basically, when he got back from Wall Street, remember he published

that a couple of weeks ago saying we need to sharpen our pencils, cut everything.

What Wall Street is looking for now is free cash flow.

So it seems to me like we’re headed into a pretty serious downturn or recession here.

I mean, I’ve been saying we’re in a recession for months.

The tricky thing for the Fed is that they don’t have a lot of good options because we

have a lot of recession indicators blinking red right now.

At the same time, inflation is still high.

So they’re kind of caught between a rock and a hard place.

I think what the Fed should have done in 2020 hindsight is back last summer, we first

got that shock CPI print, remember it was like 5.1%, seemed to come out of the blue

because for years and years, we’ve been talking about deflation, nobody thought inflation

was a problem.

All of a sudden, we got that 5.1% print.

They were in total denial about it.

They just dismissed it saying that inflation was transitory and Yellen said the same thing.

Basically, everyone just ignored the data for six months.

What they should have done was stop QE right then and there.

They could have taken a little bit of time to think out a rate increase strategy, but

they were still basically engaging in QE for nine months after that first inflation warning.

If they had stopped QE there, then we wouldn’t have had this asset bubble in the second half

of last year.

That’s when it inflated the most.

We could have had more of a soft landing.

Unfortunately, now, they kept inflating and really until the end of Q1, and they’ve yanked

away the punch bowl so violently that I think the real economy is going to go into recession.

That’s where we are right now.

I don’t know what the right answer is now, given that we’re in this almost stagflationary

position.

Let’s try and answer that, Brad.

If we didn’t act soon enough, if you agree with Sax’s point, pretty hard to disagree

with, and we didn’t take the medicine a little bit at a time, and now maybe we’ve overreacted,

or maybe it’s going to get worse, what is the right thing for us to be doing now?

Because all these companies doing hiring freezes, layoffs, at the same time that the housing

market tanks, at the same time crypto tanks, at the same time the stock market tanks, this

feels like a major shock to the system.

Is it time to maybe reconsider some of these, you know, for the Fed to reconsider, or just

slow and steady wins the race here?

What’s the best option?

First, we should erect statues to Senator Manchin for saving the republic by vetoing

stimmy two.

That would have been devastating, that would have been devastating.

So we’ll revisit that.

Listen, the Fed said two really important things this week.

They said, number one, our communications have been helpful in shifting market expectations.

What that means, the Fed is the air traffic control.

They said to the markets at the beginning of the year, you’re 90 degrees off runway

heading, get your ass back on runway heading.

It was a slap in the face to markets, and it was a radical adjustment.

Now you hear the Fed in these little statements this week.

They said, hey, we’re well positioned this year to assess the effects of policy firming

in the back half.

So they’re saying we’re going to hit it with 50-50 and then we’re going to take a look.

So now think of it as air traffic control.

You’re two degrees to the left, you’re two degrees to the right.

They’re steering us on runway heading.

I don’t think the Fed wants to do anything at this moment to lose credibility in the

inflation fight.

We’re going to get 50.

We’re going to get another 50.

But they’re doing what they want to do, which is keeping markets sufficiently tight.

They wanted to take the crypto market down.

They wanted to take all the excessive risks in the stock market down.

You’re absolutely right.

The inventory of $350,000 homes spiked from four months to nine months.

Used car prices are rolling over the last three months.

All the things they needed to do, they’re doing.

They need to stay the course.

However, the hyperventilation this week by Bill Ackman on Twitter, that the Fed needs

to be doing radically more, that somehow we need to be raising rates to 6%, 7%, 8% in

order to squash inflation, to me seems highly misdirected and totally out of touch with

the fact that on layoffs.fyi, they’ve already announced 750 companies that are announcing

layoffs.

The market is getting the drill.

I totally agree with this.

I think we’re in a pretty reasonable place here.

The real question is now, what do you need to take the market lower?

This is more of a nuance, but when you look at companies that are now, quote unquote,

cheap, right?

Let’s take an example like you, well, we hear a lot about Google or Facebook, right?

People will say, my gosh, this is cheap because if you run a screen on it, it’s like 10, 11,

12 times price to earnings.

Well, the price, you know, because you can look on the screen.

The real question is, are the earnings right?

And the thing that can take the market lower is if you actually think earnings are modeled

incorrectly, right?

So we saw this week as well, Snap, I mean, completely just blew themselves up.

46% down intraday yesterday, I think.

I just want to say something about Snap.

In one day.

They have the most incredible propensity to self immolate on earnings calls than any other

company I’ve ever seen.

There’s probably been three times, no less than three times over the last four years

where I don’t know whether it’s just poorly scripted or not well rehearsed or the people

that are helping Evan get ready for these things, but these are disastrous calls.

You know, Facebook’s had a couple in its lifetime, but Snap consistently, probably once every

18 months, will do this anyways.

The thing just completely implodes.

The stock implodes by 48% or something, and then it, you know, rolls over to companies

like Facebook and Google, who then are off eight or 10%.

My point in telling you the story is that if you think Facebook and Google, just as

an example, again, are cheap at 10 times, well, you better hope that the earnings are

right because the earnings are actually wrong.

That’s actually 27 times and 19 times, you know, I’m making these numbers up to give

you the example because the earnings are fundamentally wrong.

So that’s the risk now that’s left in the market, in my opinion, that could take it

much, much lower is if that, you know, all of this slowdown really contracts spend and

the earnings are actually not accurate.

The forecasted earnings will need to be revised over the next two or three quarters, and that’s

where we will probably see the low.

If however, growth is muted and the Fed can, as Brad said, it’s a really good analogy now,

is course correct by degrees, you know, a degree here, degree there, we’ve probably

consolidated the lows.

So said another way, we look at a company like snap, or Google, a lot of their expected

value has to do with people’s ad spend, we now see less homes being sold.

So maybe people in real estate stop spending less on ads, there are major advertising category,

maybe direct to consumer, people are not buying because the supply chain issues, this stuff

is too expensive.

And we’re not going to spend on ads.

And so all of this ad revenue, that’s some of the first to come out of people’s budgets.

So you know, even as great as snaps results, actually, look, they were up 38% year over

year, they’re generating over 100 million free cash flow,

the guide was terrible, because what they said was our E, right, our earnings, right,

are not modeled accurately, right.

And so that’s the risk that you now have to take to every company, you cannot look

at a screen on Yahoo Finance, or Bloomberg, look at a price to earnings ratio and say,

wow, seven times, that’s so cheap, it may not be seven, you have to do your own work,

it could actually be much higher than that, because your earnings may be at risk.

The earnings being at risk is this contagion that we talked about, I don’t know, six, maybe

it was like, we’re going on almost a year now, sacks, we talked about a contagion happening,

because we’ve all experienced it in the last two recessions to that the dot com bust in

the Great Recession.

So what are you seeing in terms of at companies, this contagion risk, are people canceling

SAS contracts on the margins, obviously, people are doing hiring freezes, obviously, people

are laying people off, are people going to start renegotiating salaries?

You know, what’s the next couple of shoes to drop here, sacks, and that would signal

to you a true bottom here?

Like, have you seen, I thought maybe one would be if somebody offered somebody an investment

with a two or three times liquidation preference?

Have you seen one of those yet?

Have you seen people say, we’re going to renegotiate salaries, because that’s when it was really

dark, right?

The last two times?

Yeah, no, it’s gonna take time to get to that point.

I mean, where you start seeing structure and deal is in deals is when a founder is trying

to preserve a valuation they got last year, and that can’t really be justified, but they

don’t want to just take the down round.

So you try to preserve the optics of the last round by building all these preferential terms.

We don’t like to do deals that way.

But you’ll start to see them happen later this year when companies get more desperate.

That’s not the first thing that happens, though.

I think that, to your point about the talent market, it’s definitely going to happen.

Has it happened yet?

No.

What has to happen is first, all these open recs get canceled, companies freeze their

hiring plans, then eventually they do layoffs, that’s coming.

That’s here.

Both of those things are here.

Both are here.

Exactly.

So what’s the next in talent wars?

Well, yeah.

I mean, look, but within the next six months, the talent market is not gonna be as hot.

And you know, in the same way that startups aren’t getting 10 term sheets, now that maybe

they get one or two, if they’re a good company, same thing with talent, right?

They’re not gonna have 10 job offers, they might have one or two, and that’s gonna create

the same upward pressure, continuing upward pressure for increases in comp.

To your point about, like, will SaaS contracts be cut?

I mean, I think software is pretty sticky, I mean, if it’s a good product.

Will deal cycles get longer?

Yes.

Will there be more mortality risk in the startup or SMB customer bases of companies?

Yes.

I think one concept that startups may want to wrap their heads around is what I would

call deferred mortality risk, meaning that during the last few years, during the boom

times, the graduation rate from C to Series A to Series B was very high, perhaps artificially

high.

So there’s a lot of companies that got funded in advance to the next round, where in more

normal times, they wouldn’t have made it.

So now if those companies haven’t really fixed their issues, they’ve just deferred the mortality.

So I think all of us probably in SaaS land need to be modeling out higher logo churn

for customer bases that are skewed towards startups or SMBs, and we don’t know what those

numbers are gonna be yet, but that is likely to happen.

I think that that’s right.

I think the other thing is that there’s a lot of companies that are gonna have to get

religion on free cash flow conversion, ASAP.

And I just think that most CEOs, to be very blunt, are poorly educated and innumerate.

So their level of numeracy to even understand this is pretty poor.

And most board directors are equally.

Can you unpack it right now?

What does it mean to get the business to free cash flow?

What does it take?

Why is it important?

And what are the how do those businesses look differently to spend less than you make?

Okay, hold on, I just want to make sure I got it correct.

You make money, but the number of the money you make is higher than the number of the

money you spend.

Got it.

Okay.

And then there’s a delta there.

There’s some difference between those two numbers.

And that number is important to some people is what you’re saying.

I think increasingly getting that number to be greater than zero is going to be really

important.

It allows you again, everybody starts to throw out this whole thing, which is, oh, my God,

you can never slow growth and the company will die.

And yeah, maybe in a vacuum that that’s true.

But when every other company is fighting tooth and nail to survive, the only thing that you

need to do is actually survive.

By surviving, you win.

And if you can basically make your cash last as long as possible, even if you cut to the

bone and stop growing, if you come out the other end, and you’re the only company that’s

left, you will win and run over the market.

You may have pushed to the right a few years, your plans of world dominance, but they’re

still available to you.

It’s the company that foolishly thinks that they can continue to spend money at the same

rate or in the same ways that are going to learn this hard lesson.

Because I think that investors are not going to tolerate being able to provide incremental

capital to organizations funds who are then, you know, misallocating that capital to basically

support a poorly marked portfolio.

And I think that is going to be the real come to Jesus that actually makes all of this thing

come clean, like pension funds, family offices, endowments, all these organizations are smart

enough to realize that they’re giving good money after bad if what those folks are going

to do is not demand portfolio rehabilitation, and instead are just going to basically keep

the marks of their old funds because they’re just in a in a game of waiting it out, where

the whole taking action greater than you know, blind hope and just going, you know, steady

doing what you’ve been doing, you got to make some changes.

I mean, look, I’d love Brad’s reaction.

I think that most growth oriented funds are looking at their portfolios.

And they’re trying to balance two strategies.

Strategy one is get into massive rehabilitation mode.

The problem is, most of these people have never built or run a company.

So they have no idea how to rehabilitate anything.

They’re, you know, market momentum folks, and in that they were excellent, but in actually

helping CEOs build and rebuild a business, I think that they’re not as well suited doesn’t

mean they can’t do it, but they’re not as well suited.

That’s pathway.

But I think that path is very painful.

And it requires you to take medicine to bitter medicine, which is to basically mark your

portfolio down 50 or 60%.

Just like the public market, terminal valuations have gone down.

The other alternative is to basically raise enough money to do, for example, unpriced

converts into those same companies so that you don’t have to remark so that the auditors

will be allowed to carry these fake valuations, you can maybe mark it down 10 or 15%.

But you don’t have to mark it down 50 or 60%.

And hope the market returns to his previous state.

But as we’ve all talked about, that previous state is probably unreliable, because it was

a moment where we had a global pandemic where we took rates to zero, and we printed nine

or $10 trillion of excess liquidity that inflated these things.

So I got to think that, you know, prices in 2019 were a little bit ticking up 2020 were

really ticking up 2021 was egregious and 2022 is the is, you know, where it all comes home

to roost.

So, Brad, explain to us, we hear free cash flow, we hear income, net income, EBITDA,

we hear all these terms now free cash flow is what everybody is focused on.

I believe that seems to be the predominant rallying cry and a lot of public market companies

now.

Can you explain to people what the difference between these things are?

Because people kind of bundle them together?

Why would somebody like Dara at Uber?

say, hey, you know, we’ve been talking about adjusted EBITDA, EBITDA, income, net income,

all this stuff.

But free cash flow is what we want to focus on now.

Or is that correct?

Yeah.

You know, and our friend Bill Gurley, rails on this adjusted adjusted and, you know, look

to your left, look to your right adjusted one more time EBITDA, right?

Like in markets like this, what people want to know are what’s the green stuff I can take

out of the business and put under my mattress, free cash flow, distributable free cash flow.

And not only that, how much per share, I think the single biggest issue growth investors

are focused on today is the easy way out for all these companies.

They’ll tap down a little bit on their hiring.

They’ll tap down on their spend, but out of the back door, they want to give a bunch of

free stock to employees to help offset that pain.

This is really important to understand because stock is a real expense, right?

When a company goes public, the more shares you have, the lower your price.

So it is a real expense to everybody, the founders, the employees, the investors, right?

And so what’s what I think the single biggest conversation going on in boardrooms in Silicon

Valley today is, hey, can we have a little bit more stock this year, whether it’s options

or whether it’s outright RSUs to give to employees, because if we don’t give it to employees,

they tell us they’re going to leave.

This is a real hard truth.

I had a CEO of an incredible company call me and say, listen, we pay our engineers a

million bucks ahead, but we give them stock that over the last five years has been worth

another million dollars each year.

So they built their lives as though they had $2 million a year in income.

They bought a house, they bought cars, they sent their kids to private schools based upon

that $2 million.

And now when we tell them that this upcoming year, we’re not making whole on that million.

It can’t be when we win, you win, and when we lose, you win.

So the tough conversation is we’re not re-upping you because the stock’s been cut in half.

And so now that engineer is saying, yeah, but this year that means I’m only getting

paid $1.2 million.

And the answer, the tough answer is yes, right?

Shared sacrifice.

You should have never assumed that that was going to be worth an incremental million dollars

a year.

But that takes leadership, that takes courage, that takes a board that knows what they’re

doing to explain that over the full arc of that employment.

And the first thing the mercenary employee says is, well, I’ll just go work somewhere

else.

And the right answer for a good leader is okay.

If that’s your approach to this business, then you need to go work somewhere else.

I mean, you just did a great test, right?

That’s a great filter.

You’re a mercenary, and you were with us when we’re up, but you’re not with us when we have

to take some austerity measures.

Is this the end of entitlement across the board, Sax?

I mean, we had an entitlement class.

Everybody thought they could raise a VC fund.

Everybody thought they would have 100% IRR because they would just buy NFTs and flip

crypto projects that had no released product.

And the same with employees.

They just thought, I can just keep raising my salary X amount.

And now it looks like Apple said everybody comes back to work three days a week.

And we don’t see a lot of people quitting Apple because there may not be another option.

And maybe a lot of the firings that are occurring, I’m thinking of Cameo here, had top three

of their top like six or seven leaders leave.

I interpreted that as maybe they had really big comp packages.

And when they did the layoffs, they said, you know what, the number twos in these positions

can get the job done for a third of the price.

Maybe that’s better for the business.

So is this the end of austerity, the end of entitlement?

I think so.

Or a lot of it.

There was a great article here that came out recently about Netflix, where Netflix, they’re

finally getting real about their woke entitled employee problem.

And this is in the New York Post, but there are many other newspapers that covered it.

Basically, it says here, Netflix tells woke workers to quit if they’re offended.

If you find it hard to support our content breadth, Netflix may not be the best place

for you, said the memo.

Period.

Full stop.

Yeah.

They’re just sick of it.

They’re just not going to put up with it anymore.

They’re sick of being held hostage by their employees who think that they can kind of

muscle the leaders of the company by starting a petition or boycott campaign every time

they want to drive the company in a certain direction.

And so I think companies are finally figuring out this is the only way to react to basically

being held hostage.

If you don’t like it, quit.

If you don’t have seven, eight job offers, you know, and recruiters calling you constantly

because everybody’s on a hiring freeze, well, then maybe people will appreciate the contract

of I work for you, you give me money, and then everything else is superfluous.

On that note, did anybody see the Ricky Gervais Netflix special yet?

If it’s on Netflix, it’s on Netflix.

It’s unbelievable.

I mean, Dave Chappelle, you know, in terms of bravery, Ricky Gervais was like, I’ve already

made my money.

I’m burning the whole building down.

I mean, he went full equal opportunist.

And I mean, I think the trans issue became like 10 or 20% of the of his latest special.

So it does seem like the comedians are saying, you know what, we’re gonna make jokes, make

jokes about everybody.

We’re not gonna buy into this, you can’t cancel us, we’re just gonna keep making jokes, and

we’re gonna keep making money.

And that whole concept that, you know, people are going to be held hostage, I think is over

independent of what you think of making jokes of, you know, various marginalized or smaller

groups of people.

Can we just go back to something Brad said a while back about how Manchin saved the Democratic

Party?

Because I think there’s actually an interesting point there.

Yeah.

Yeah, such notorious right wingers as Jeff Bezos have said something very similar lately

when you see that where Biden tried to blame billionaires for the inflation and Bezos was

having none of it.

He said, no, listen, it’s not because of us or our companies, because you printed too

much money.

And Joe Biden, or he said, Manchin saved you from yourself, because it would have been

another $4 trillion of spending on top of all the other trillions of spending that we

had last year.

So it’s absolutely the case that if the administration was left to its own devices, remember, they

were touting back in December, they were touting the idea that this $4 trillion of Build Back

Better spending would somehow be the cure to inflation.

Even if they had poured that gasoline onto the fire.

I mean, we would go to 20% inflation, we might have had a currency, you know, like a serious

currency issue.

No, Chamath.

But let me just finish the point.

I don’t want to just make a partisan point here.

I want to there’s there’s a serious economics point here with learning.

I hope our policymakers learn from this, which is what happened over the last couple of years,

we had $10 trillion of money printing, right?

Why do they do that?

Because they thought that they could stimulate our way out of this COVID recession that they

had induced with lockdowns.

In any event, the point is, they thought they could stimulate economic activity by printing

money.

And maybe cynically, politically, they thought it’d be good for them in the midterms.

What actually happened?

That $10 trillion goes into the economy, but there’s no corresponding increase in the output

of goods and services.

So two things happen.

First, price levels rise, and we get inflation.

And second, we get an asset bubble in the stock market.

And then the way both those things sort of come crashing down to earth is the Fed looks

at this inflation and suddenly has to jack up interest rates.

That pops the asset bubble, it vaporizes something like 14% of global wealth.

And then simultaneously, workers feel a lot poorer, because their wages haven’t kept up

with inflation.

So this whole idea that you can just print money as a way to create wealth and prosperity,

I hope we take away from this, I think, recession that we’re going into, is that is not a viable

strategy.

The only thing that creates wealth in a society is the output of goods and services that people

want.

And you just can’t try to sort of play games with that by creating phantom, this sort of

phantom money that doesn’t represent a real increase in good services or productivity.

Yeah, it’s hard for people not to take this all as partisan.

But if you just look at the objective facts, the last two administrations have printed

money like drunken sailors.

And it’s a mess right now.

You can divorce yourself from any conception that this is partisan.

Trump spent a shit ton of money.

And so did Biden, and who’s more qualified than Trump and Biden, Elon, Bezos, the people

who appear on this podcast, we have much more of a pulse on what’s happening in the actual

real economy and in entrepreneurship and capital allocating than these people.

And I love the fact that now, you know, Bezos is a shit poster, he just doesn’t get he doesn’t

care.

And I think we’re having like an honest discussion now, right?

One of the one of the areas where I don’t think Elon gets enough credit is when he explains

macroeconomics.

I think he actually really understands the what an economy is.

I mean, an economy is basically a trading system for the production of goods and services.

If you were to go this point he’s made, if you were to go to a desert island, and somebody

just gives you a billion dollars, when you’re sitting there on that island, you can’t buy

anything.

What makes you wealthier, what makes you wealthier is the production of goods and services

that people want.

And that’s ultimately what an economy is.

Money is just the accounting system, the dollars is the accounting system.

If you start printing lots of money, all you’re doing is debasing the accounting system, it

doesn’t make anyone richer.

And yet, you know, the way that conversations around economics really take place, the only

thing you ever hear about is stimulating demand, you never really hear anything about production.

And I mean, this is an old debate that goes back to the 1980s about, you know, supply

side economics, but regardless of what you call it, wealth ultimately comes from our

capacity to produce goods and services that people want.

It’s a great point.

Chamath, all of this adds up to companies and the government’s balance sheet becoming

tighter and more efficient.

So the talent diffusion across the industry, perhaps everybody being entitled and getting

paid, people not wanting to go to work, people who have jobs not wanting to go to the office,

all of this seems to have actually reversed in three months.

So this medicine we’re taking, we stopped eating the bad food, we started working out,

we’re getting better sleep, this is going to turn around for the companies that take

the medicine, the management teams, the capital allocators who do the hard work and sharpen

their pencils, as we’ve talked about.

This will all result in a more efficient and vibrant economy.

Yes.

I think for the most part, I think there’s still going to continue to be examples of

folks who basically run themselves into a brick wall because they don’t want to make

the hard decisions that is going to be more exaggerated in Silicon Valley, because we

have a culture of tolerance.

And we have an economic business model that supports kind of irresponsible decision making

and supports poor governance.

Look, I’ve said this many times, but a fund’s job ultimately is to make a very important

decision about whether they truly care about generating massive returns or whether the

fee income becomes so meaningful so as to drown out every other incentive that they

have.

And I think by and large in Silicon Valley, if you track all of the increased frequency

and fundraising, you can also probably follow those dollars and they generally will be the

most poorly run.

They’ll be held the least accountable.

And I think those will have the largest negative outcomes.

And then instead, if you follow the dollars of the the real practitioners who have discipline,

they look kind of sheepish and silly for years in the middle of a rally.

But they’re the ones that are able to really reset and help some of these few companies

really win.

And I think that you’re going to go through that cycle over the next four or five years.

And so you know, I think it’s super well said Schmuth because I have felt at or I’ve been

made to feel silly by some folks who said, Why are you asking to do diligence?

Why do you want to have a board seat?

Why do you want to talk to customers?

Why are you asking for month by month revenue made a sub economic decision like the idea

that over the last four or five years you optimized for anything except the market beta

was kind of dumb, you know, and it’s and and the worst thing that you could have done in

that period was confuse alpha and beta, meaning alpha is what you are able to do because of

your discrete skill versus anybody else.

Beta is when just the market goes up, said differently.

You could take any NBA player and put them on a high school basketball team.

And they would be the you know, college player of the year, any single one.

Okay?

That’s beta.

Yeah, it can be the MVP of the NBA.

That’s alpha.

Yeah.

Okay.

And I think that a lot of folks were made to feel very silly or, you know, a downer

or a wet blanket in these last few years, who will probably have the last laugh.

It’s been unbelievable, Brad, to watch the changing of attitudes and the entitlement

in fundraising and private markets in the last 60 days.

And it’s been even more pronounced in the last 30 I literally have people we talked

to last month, who had really crazy expectations, they’ve come down by 50%.

They wanted 50.

Now they’re at 25.

They didn’t want board seats.

Now they’re okay with board seats, information rights, they were fighting against information

rights.

I don’t know why that’s a hill to die on.

Now.

They’re like information rights.

Yeah, sure.

Here’s our CFOs email, we need to get money in the doors.

So I guess what’s the silver lining here does seem to me as a great setup right now.

Jason, let me ask you a question.

Hold on.

Yeah.

I go to Brad, like, and then you’re forgetting one other key thing in the in the race to

raise all of this money.

What did these folks do?

They hired these mid level kids as partners into their venture firms and gave them money

to put into companies.

What are these people know?

No mentoring.

I’m not saying it disparagingly.

I’m just like, what do they know?

How do they know how to actually invest?

investing is just not you see it, you just say, Okay, well, I think it sounds cool.

Yeah.

There are some of those younger folks who are going to turn out to be all stars in there.

You just like in the NBA, and they’re gonna be some that, you know, prove to be right

in the beta.

Let me answer Jason’s question, because, you know, maybe end on a on a note of optimism.

You know, in some countries, you know, notably China right now, they’re doing a lot to prop

up a bunch of companies that should be allowed to fail.

Right?

One of the beautiful things about free market capitalism, the creative destruction, the

cycle time on creative destruction in this country has never been faster.

Right?

Make no mistake about it.

If you took money at a valuation over a billion dollars, okay, last year, you’re not that’s

not a venture capital bet.

I call it quasi public, right?

You stepped into the bigs and you said, I will deliver this plan.

And if you don’t deliver the plan, there’s not going to be a lot of tolerance.

There’s not going to be tolerance for just giving away a bunch of more stock.

There’s not going to be tolerance for no course correction, right?

Maybe in seed or series A, right?

There’s a lot of tolerance because you sign up to a lot of unpredictability.

But the level of tolerance that you’ll see out of late stage growth investors is going

to be akin to what they do with a public company that runs them off a cliff.

You know how that is.

You’ve been on those earning calls.

So I think this is going to shine a light on the bifurcation that we really have.

We call all of this venture capital.

But the truth of the matter is, series C and before is venture.

Once you’re stepping into the bigs and taking money at a billion, two billions, the expectations

are different.

Your access to capital will be different.

The expected course correction will be different, right?

But I take it as a sign of strength that we’re going to work through this.

We’re going to have the private markets are absolutely going to go through a reset.

But we’ll get through it and the winners will win and those who failed a course correct

and want to fly into the wall will do that.

And we’ll get on with the next generation of incredible entrepreneurs solving big problems.

The secular curve of technology solving big problems has never been steeper, right?

And the cycles that overlay that secular curve are not suspended.

We have not suspended wars.

We have not suspended economic cycles.

And so we’re going to have to get through this one.

It’s happening in record pace.

Actually, that’s an interesting point.

Let me ask Brad a question about that, which is what’s the potential here for more of like

a V-shaped recession where, to your point, the market’s correct more rapidly and violently

than ever, snap, issues a new forecast down 40%.

Is there a possibility that this thing gets resolved in, say, six months?

That’s not to say that valuation levels are ever back to where they were in the second

half of 2021.

But in six months, could we have sort of done this big reset, washed out a lot of the problems?

And again, valuations are not back, but the capital markets become unfrozen and we’re

back to a more normal operating environment.

As opposed to, say, like more of a U, where we’re kind of bouncing around the bottoms

here in this volatile state for about 18 months, and then it’s more like the dot-com crash

would come out of it in two years.

I see smart people on both sides of this.

I hear Jason Lemkin’s been saying, I think this is kind of short, deep, sweet, six-month

reset.

Fred Wilson just wrote 18 months at least.

I think Sequoia is saying two years.

I think our instinct is 18 months to two years.

But what do you think the possibility is that we could be in a more normal environment in

six months?

Right.

Let’s separate public markets and venture markets, because venture markets, as you know,

have a six to 12-month lag just in terms of the reset.

But I would say, you know, the future is a distribution of probable outcomes.

There’s a downside case, an upside case, and a base case.

I think the base case is by this fall, we’ll have very good evidence, right, of where inflation

is rolling over.

I think it is rolling over.

What the Fed is likely to do, the upward bound on interest rates.

And I think we’ll be at a point where we can start underwriting to the five-year average

again.

Make no mistake about it, the S&P and the Nasdaq today are still 30 percent above where

they were in January of 2020.

30 percent above where they were in January 2020.

How much better is the world today than where it was in January 2020?

Well, I think what the market is saying is that we’ve grown the economy on a nominal

basis about 15 percent during that time.

And earnings have about doubled, right?

The earnings margins of those companies have about doubled.

So you would expect, normal course and trajectory, maybe that those companies would be 30 percent

more valuable.

The problem is, as we look ahead, to Chamath’s point, the earnings are likely to come down.

Profit margins are being squeezed.

So I think there’s a decent argument.

There’s more pain to come in the public markets that we haven’t seen the bottom.

However, I do think that the Fed is taking a good course here.

I don’t think that we have runaway inflation.

I think that we’re going to have an investable environment come this fall.

However, I think for venture, there’s a six to a 12-month lag to that.

So I think you’ve got to add it to those six months to really get to the market clearing

prices for all these companies.

But I think it’s incumbent upon all of us to give really good feedback today.

And I see a lot of it, right, to entrepreneurs about making that course correction.

If they’re only turning the plane 10 degrees when they see lightning dead ahead, they’re

making a huge mistake.

The default action by every founder today should be a 90-degree course correction unless

they have very good idiosyncratic reason in that business in terms of their outperformance

to stay the course.

Plan for the worst, hope for the best.

Yeah.

And you could even bifurcate the companies in private markets to ones that have strong

product market fit and the ones that don’t.

There’s a lot of companies, to David’s point, that were getting Series Bs without product

market fit.

You know, it’s one thing to get your Series A when you have this like weak product market

fit and a great story.

But when you start seeing Series Bs happening on momentum, it’s like, that to me is going

to be impossible to resolve.

That company has to go to zero or has to reset or even give money back to founders.

Those are really the three things I would see as a true bottom, like the really dark

moment where people have two or three liquidation preferences, people reset comp and tell people,

listen, we’re going to cut comp 30% across the board for management.

If you don’t like it, leave.

And then finally, people saying, you know what, we’re going to give the 60 cents on

the dollar back to investors.

Those are the three things I saw during the two downturns.

You’re saying something that I think is also important that’s not really talked about,

which is that there’s going to be a lot of really good companies with really horrible

capital structures, really terrible cap tables, really bad valuations, really big overhangs

of preference stock that are going to have to get worked out.

And in getting that worked out, going back to what Brad said, the person that course

corrects 90 degrees will win.

And the reason they’ll win may not even be because they’re being that courageous.

They’re just being less stupid than everybody else, quite honestly.

Because you have to remember, in most of these markets over the last four or five years,

we funded four or five versions of every imaginable company.

And there’s going to be two winners, 70 and 30%.

And they’re really only going to be one winner.

And then there’s going to be a marginal second kind of also ran that captures some value.

And everybody else is not that valuable.

And you know, that’s roughly been true.

But the reason we were able to support that was that every company look kind of interesting,

anyone with traction could be, you know, competed against because the only differentiator at

the time was very cheap money that was effectively free, and it was flowing in, you know, faster

than you could count.

So all of that has to get sorted out.

So I just think that that those dynamics shouldn’t be ignored.

And so you know, again, hard work to I mean, to the thing we’ve been saying here, it’s

hard work for a board and founders to do this.

But what choice do you have?

Well, the problem is the much more sophisticated markets like the debt markets, which I would

say are much more sophisticated, okay, cutthroat, liquid, covenants.

When you see the people that make the money, two things are true.

Number one is they’re incredibly sharp elbowed and number two is they make money in moments

like this.

Right?

If you look at Apollo’s great returns, or Blackstone’s great returns or cerebrus, you

know, these folks were the you know, they really were the barbarians at the gates.

And they made all the money in moments of true dislocation.

If you apply that construct here, you know, we’ve never had to go through a period where

there are some real terms and conditions attached to the incremental dollar.

And I think that if that does come to pass in Silicon Valley, you’re just going to have

a reckoning and I think that that what it will really do is just sort out the winners

and the losers and it’ll sort out the folks that were able to get to default or close

to default alive, or at least default life support.

Saks default investable, default investable.

I like that one, too.

I mean, Saks made a great tweet, he basically said it’s not default alive or dead, investable

or not.

And that’s an even finer filter.

Well, default default alive is fantastic.

If you can get there basically just means cash flow positive.

I mean, all default alive means is that your cash flow positive or you’re going to be cash

flow positive based on the money you have in the you don’t need money.

Yeah, exactly.

You don’t need money.

I think that’s the best place to be is you don’t need money.

But I think for early stage companies, that’s almost an impossible standard.

It takes time to get to the point of being cash flow positive.

So therefore, I was trying to propose a standard that I thought was more actionable for founders

because it wasn’t impossible.

And I call it default investable, which is here are the metrics that you need, at least

I can tell you what they are in the SaaS world.

Here’s what great metrics look like, here’s what good metrics look like, here’s some danger

zone metrics.

And you need, you know, out of the five key metrics, you really need three or four great

ones and one or two good ones to raise in this environment and no dangerous metrics.

And if you don’t have those, you need to give yourself the time to fix the problems in your

business to get to those metrics.

On that note, you know, Sequoia had a really good chart called Survival of the Quickest

that illustrates this concept of giving yourself time.

And I threw it in the chat.

But basically, what it shows is there’s a green line and an orange line.

The green line is the company that realizes in May of 2022 that we’ve gone into a very

different environment.

And they slash their burn in half, and they basically double their runway.

And then there’s the other company that just keeps going along the same path they were

at until they realize, oh, wait a second, you know, and then, you know, some point in

the future, they realize there’s been a change.

They make a small cut, they make another small cut, and they’re always behind the eight ball.

And I’ve seen this so many times before, that the company doesn’t make cuts until they’re

forced to.

And so they never really lengthen their runway.

And then when they finally do make the cuts, they go into a death spiral and die.

And now they’re over the Atlantic, and there’s not enough fuel to get to a landing strip.

And you just plunge into the cold ocean and die.

Founders really have to think about the asymmetry of the risks that they face, right?

Which is, let’s say that you cut too much, and the environment is better than you think

it’s going to be.

Well, you can always hire back.

At a lower price, in all likelihood.

I promise you’ll be able to hire back, okay?

But on the other hand, if you don’t cut enough, and the situation is worse than you think,

then you just die.

So this is why Andy Grove said, only the paranoid survive.

You’ve got to think about the downside risk and be more skewed towards the bad scenario

than sort of the sort of wishful thinking scenario.

David, just one final point here.

You know, because we have all these decks flying around now by venture capitalists telling

founders to go make these really tough decisions.

Being a little self-reflective, where were we all six months ago?

Where were we in October when we were putting more money in and they were hiring like crazy?

Where were we in November, right?

I remember some of the conversations that we were having.

But I look, I posted in chat, layoffs.fyi, right?

The number one company on that list, get here, Sequoia Company, okay?

Are they making a course correction?

You bet your ass they are.

They’re laying off 4,500 people, 15% of the workforce.

The second company on that list, Lacework, an altimeter software company that’s doing

terrific, growing hundreds of percent, laying off 300 people, 20%, right?

A 90 degrees turn of the plane, right?

That company will never need cash again, but it’s not just flying toward the lightning.

They’re making the tough decisions because that’s what leaders do in businesses that

are even good businesses.

There are a lot of companies that are shit businesses that should be on this list, but

they’re bumbling along and not making the tough decisions.

We need venture capitalists that instead of, you know, this being a popularity contest,

venture capitalists need to look inside as well and say, what about our firm?

Didn’t work, right?

Why weren’t we issuing these course corrections and telling people to tap the brakes a little

bit when we knew markets were overheated last year, right?

And so I think there’s a lot of responsibility that sits on both sides of the table, but

I’m, you know, there’s 714 startups on this list.

By the time we’re done, there are going to be at least 3,000 startups on that list.

Add a zero, add a zero.

That’s another reason I say the Fed is getting what it wants, right?

This labor market is, you know, is cooling down very quickly, at least in Silicon Valley.

Well, I mean, and the fact that people felt like they didn’t need to take a job and they

could live off credit and there would always be jobs for them.

I think people are going to have to rethink, like, can I be fun ployed forever?

And you know, do I need to take my career seriously during to pay down my debt?

Do I need to have a balanced balance sheet?

My personal balance sheet needs to be in order as well.

I think that’s what individual workers need to think about.

Yeah.

I mean, Brad’s right that there’s certainly enough blame to go around in the ecosystem.

And you know, VCs bought into these frothy valuation levels last year.

To some degree, we’re all gaslit by the Fed and these low interest rate policies.

I wrote my post about burn multiple and how to measure capital efficiency two years ago.

It’s getting a lot more retweets now than it did back then.

But look, do VCs have some self-reflecting to do?

Definitely.

But, you know, I’m seeing a lot of tweets going around basically saying, like, people

objecting to this advice on the ground.

So you’ll hear something like, if you VCs wanted us to operate more efficiently, then

you should have invested more efficiently.

Or if you wanted us to be disciplined, you should have been more disciplined in investing.

And to me, that’s kind of missing the point.

It’s kind of cutting off your nose to spite your face.

The reason we’re giving this advice is because we just want our companies to survive and

we don’t want a zero.

We don’t want a zero.

We’ve been through multiple down cycles.

And the truth of the matter is, unless you’ve been in the business world for over 14 years,

you’ve never been through a down cycle.

I mean, that means that, you know, no founder under the age of what, like 36 has even seen

a down cycle before.

They don’t know what it can be like when you go into a two year nuclear winter.

They probably weren’t the pilots at that time anyway.

So it’s more like people who are 40, 45 have the scar tissue because they were in the pilot

seat.

Totally.

Totally.

So the reason you’re hearing all these VCs all of a sudden say, get more disciplined

is mainly because we’ve seen this movie before and we don’t want our companies to run out

of money and die.

I think you can safely short, if you could, the stock of all of these rando peanut gallery

CEOs tweeting their disdain on Twitter.

If you’re right, that would be a great index index down, fixing stuff.

Just write that company to zero.

Yeah.

Just turn your fucking Twitter and just sharpen your pencils.

We would be remiss if we didn’t talk about, at least for this last segment about the tragedy

in Uvalde, Uvalde, Texas, 80 miles west of San Antonio on Tuesday, 19 elementary kids

to adults were murdered.

How are we going to talk about this without losing our shit?

It’s really hard.

I think maybe the roadmap, I did give this a lot of thought.

I was like, why, why is this first segment on the market trundling along on fucking life

support for an hour and 10 minutes?

And I think part of it is because none of us can really talk about this without losing

our cool.

It’s really hard.

And, but I do think we did good work.

Chamath.

I was thinking about the good work we did in the episode of Roe v. Wade.

And we actually came to a point where we said, you know, here are the extreme positions.

And then you were like, Hey, wait a second.

I found this data point.

And we actually figured out, Hey, 80% of people want this definition of abortion in

the United States.

So I’ll throw it to you, Chamath, you know, we’re all outraged, we’re all frustrated,

but maybe we could start there.

Is there a consensus of what could be accomplished here that you’ve come to?

I’ve started to think about it a whole bunch, but you know, we’re all outraged.

We could all yell and scream here, but a path forward is where my mind goes.

I’ll just tell you what I have been thinking about.

This is just a random stream of consciousness.

I think that the Democrats will not make any progress because they try to make this, unfortunately,

a moral virtue signaling issue.

The Republicans will not make any progress because they become sort of very binary, adamant

absolutists about constitutional rights and the interpretation of that right in a very

specific way.

The truth is in the middle.

You know, if you go back before we talk about Uvalde, Peyton Jondron, who was the kid that

shot up a Topps supermarket in Buffalo and killed umpteen, you know, black shoppers,

lived in a state where there was a red flag law.

For those that don’t understand what red flag laws are, David, you know, tweeted some stuff

about it as well, but essentially it allows a community member or a family member or a

school teacher or a police officer to essentially put a restraining order around an individual

that they think could cause harm and use that as a way to confiscate their weapons.

People have talked about red flag laws as being possible while he lived in a state.

The kid was, you know, put under a psych hold, you know, a year ago and it all just falls

through the cracks.

Now, you know, Ted Cruz or somebody else said, let’s spend $10 billion and only have one

door into a school and put an armed guard there.

Well then you find out that Uvalde, you know, doubled their security spend over the last

two or three years.

They actually had a person that may or may not have just kind of like stepped to the

side or something to let them in.

The police, according to the AP, showed up and stood around for 40 minutes before they

were able to actually breach the school.

You know, so much so that the quote in the AP article was that there was a parent that

tried to get other parents to, for 40 minutes they were standing there.

You know, in California you have, you know, very restrictive measures, but we’ve had,

you know, in San Bernardino and other places, we’ve had mass shootings here as well because

the guns can just get transported across state lines and there’s no real way to stop this.

The NRA, I find out, just so if you guys are interested, Mitt Romney took $13.6 million

from the NRA.

This is the moral finger wagger of the Republican side who, you know, last time I checked is

a multi-centi millionaire, but somehow still needs to take $13 million from these folks.

Rich Burr took $7 million, Roy Blunt $4.5 million, Tom Tillis $4.4 million, Cory Gardner

$4 million, Marco Rubio $3.3 million.

There’s no effective counter lobby that says, how about we have a more moderate and restrained

pro-gun set of rights and field candidates on the left and the right that could, Jason,

find this middle ground.

And so, you know, we’re in this two or three day period, it seems like, where folks will

get extreme and then nothing will happen.

Here’s one thing that I think we can all agree as well.

If you look at the underlying family situation of all of these mass shooters, there is a

really disturbing theme that I think is worth putting out there.

These are all universally young men, 18, 19 odd years old.

They come from broken families.

This individual, Salvatore Ramos, father was absent, again, according to the Times and

the Wall Street Journal article I read, mother, intermittent drug use issues, lived with the

grandmother.

Bullied.

They’re unemployed, barely graduated, if graduated at all in high school.

They harbored these deep resentments towards women or minority groups.

They then project a lot of their frustration.

They were bullied potentially in high school growing up.

And all of the, they were posting all kinds of very challenging content.

You know, apparently this kid had a one TikTok of where he sat in a car with a dead cat in

a paper bag.

You know, he would post on Instagram of assault rifles and nothing happens.

So I just think that we have to acknowledge that there’s a complete failure of our politicians.

And at this point, I think they should all be replaced writ large, every single one.

Nobody has added value to this solution is nobody has really tried to figure this out.

But then also like parents have to do something incrementally more from the perspective of

the community, because these kids are going to school with our kids.

The red flags are there.

The red flags are there.

So just one last thing.

And I said, I said, Brad, I said to my kids, when you interact with your friends, I just

want you to understand when you’re on social media, and you encounter this content.

I hope you’re never like either scared, or embarrassed or unsure enough to just show

somebody when this stuff is happening, so that you can let somebody with a little bit

more maturity and judgment try to figure out what to do, if anything at all.

But these communities are completely failing.

These kids as well.

Brad, you have something.

I would say that every fucking country on the planet has kids with mental health disorders.

But not every country on the planet has kids getting shot up in schools and supermarkets

and churches.

That is a unique feature of the system that we accept this system we created.

Right?

I’m not against guns.

You guys know I took my kids to a shooting range last weekend.

But the idea that we let, you know, assault weapons be sold in this country with no background

checks that we let assault rifles be sold in this country with no limits on magazine

sizes that you can just replace magazines.

It’s total insanity, right?

So I think this is a country that does a lot to self-help, but we are not self-helping

here.

When we look at the assassination attempt of Ronald Reagan, amazingly, Republicans found

their voice and they said, let’s have an assault ban on assault weapons or let’s have a ban

on assault weapons that expired.

And we as I asked my analysts, I said, plot the number of shootings since the expiration

of that ban.

And it’s terrifying.

Yeah, it’s obvious.

And it should be something that we just like, don’t accept like the middle ground, Jason.

I saw what you tweeted.

There is an obvious middle ground, right?

There’s about whether it’s background checks that Steve Kerr, I mean, he’s gone viral feeling

the same way we all feel, but there are also technical solutions.

Why the hell do we let assault weapons?

Why not put a scrambling device on these weapons so that you can’t fire them in schools and

churches?

If somebody says that’s a breach of their second amendment rights, I’m sorry.

I’m also not going to allow you to drive into the schoolyard with nuclear material.

There are some rational limits we can agree to.

So I don’t think this is a partisan thing at this point in time.

Nobody’s saying, you know, ban all guns.

Right.

In fact, I think there’s a plurality among gun owners.

They too want reasonable limitations on these things, which are killing machines, not hunting

machines.

Sachs, any thoughts on this?

Yeah.

I mean, I, so I think if we’re looking for solutions, I think these red flag laws and

building on them is, is the way to go.

You know, the, the problem with, with background checks and I’m not against them.

I mean, you know, I’ve, I’ve gone through background checks to get, you know, my guns

and I’m in favor of them, but they wouldn’t have done anything to stop the Buffalo shooter.

They didn’t.

I mean, you know, the Buffalo shooter was in New York.

They’ve got the toughest gun control laws in the nation.

The background check didn’t stop him from getting the gun because he bought it lawfully,

didn’t have a criminal record.

So, you know, it doesn’t, that by itself isn’t going to do it.

So I think where these red flag laws are useful is that we’ve seen with these, all these school

shooters, they have a similar kind of profile, right?

They are disturbed young men, like in their, who are still school age, 18, 19, early twenties.

Exactly.

Now this shooter in Uvalde, I mean, there are reports coming out now that he had been

cutting his face, that he had aimed a BB gun at people.

So he was clearly idiating towards this idea of shooting people.

He had posted violent fantasies, basically of mass shootings on social media.

And he told his classmates he wanted to kill them.

I mean,

There’s almost always a call for help here.

Almost always.

Same with the Buffalo shooting.

I mean, the people who these like psychos go to school with are the least surprised.

They all know because these people have been warning, they’ve been saying that they’re

going to do it.

So I think we have this problem of we’ve got these young psychotic people.

And I think the reason why it happens young is when somehow they get into adulthood, whatever

this mental illness they’ve got basically takes hold and they snap or they become psychotic

and it doesn’t take long for them to act on those fantasies, those violent fantasies.

So the simple solution here, I think, is to prevent those people from getting guns.

You know, if you threaten mass violence, you shouldn’t be able to get a gun.

And I, you know, I personally don’t think that’s an abridgment of second amendment rights

because look, felons can’t get guns either.

If you commit a felony, you can’t get a gun.

These people haven’t committed a felony yet, but I don’t want to wait until they do.

If they’re if they have these kinds of red flags against them, then there should be a

way to file to basically get a protective order.

We don’t let 12 year olds drive cars.

We don’t let them drink beer, because we don’t want 12 year olds drunk driving.

Right.

And then at some point, there’s a licensing that occurs.

I think a lot of this is framing.

I think it just is once again, very analogous to this abortion issue, where most people

are pro choice and want restrictions on abortion where they don’t occur after a certain number

of weeks, just like Europe got to.

And I was just, you know, ideating on this.

And I think replacing the NRA, to your point, Chamath, they have funded people, they’ve

become a key funding source for a lot of folks, and they’ve they’ve been overfunded themselves.

What if we had Americans for reasonable gun safety, and we have this organization raise

a ton of money, and they just outbid the NRA for Republicans, and for people who are against

background checks?

And we just have a question.

But look, Mike Bloomberg started Everytown for gun control after Newtown, and it did

it hasn’t really had, I think, the impact that that we wanted.

I mean, I think part of it is cheap what you said.

So let me just give you my my little four bullet points here and have you react.

You are right that people are absolutists, no abortion, you know, no restrictions, and

no guns, or no restrictions on guns, background checks, we all agree on, make them more intense

and make them proportional to the caliber of the weapon.

If you want one of these weapons, why don’t we have you go through a training course.

So for a pistol, you’ve got a two hour training course for an AR 15, or something that’s more

powerful.

How about an eight hour course, a four hour course, then you could actually see the red

flags emerge.

And when somebody who has this red flag issue, go through that, the red flag law should be

national, and they should be very strong.

And then finally, what if we introduced insurance for certain classes of weapons, not all if

you want to get a rifle, you know, to go hunting or a pistol for self defense, maybe you don’t

need to have insurance.

Or maybe if you have one, you don’t need to have insurance.

But once you get to high caliber, once you get to having clips that are a certain size,

what if we just had some basic insurance, because that would force then somebody to

underwrite the danger of that weapon.

I mean, look, the trick here is to figure out a system that has the least possible impact

on law abiding Americans, there’s maybe a few 1000 of these mentally highly mentally

disturbed young men, but like I said, their schools know who they are.

Yeah, right.

And what we need is a process where, you know, that doesn’t turn into the no fly list, where

all of a sudden, everybody’s on it, or training or insurance, or content moderation or something

like that.

This is the problem.

Look, this is what the NRA is afraid of is that you create a red flag process.

And all of a sudden, thousands or millions of people could be on it, right?

So you need a right, but that’s not true.

Because you had you had this kid who could have been put on it in New York, he wasn’t

right.

No, no, no, look, I think we need to I think we need to figure out how do you create due

process around this.

And I think I think if a school they know, I mean, you get multiple affidavits from a

teacher, they should be put on the list.

Yeah, school is a no brainer, a police officer isn’t over isn’t the problem isn’t that these

these kids aren’t identifiable.

Because as you say, David, they’re hiding in plain sight in these schools.

The problem is that there’s no mechanism or incentive for any of these kids, parents,

educators, teachers, community members to do something about it.

Because they don’t know what that something is.

And this is where these kids are left to fester, fester, fester, and then the end it

boils over.

And it’s all of us that have to pay a collective price, David, can you see even worse than

that Chamath because in the Buffalo case, the Buffalo shooter was referred to for psychiatric

evaluation because they thought he did have mental illness.

And then they released him released after a weekend, and then he got the gun.

So he should have been put on a red flag list.

And that should have been the end of it.

It’s a database like a federal database, which they’re the NRA fights to.

I also want to say something about these technology companies.

There is an explicit decision that technology companies can make to be able to review content

from certain kinds of accounts and start to build a cluster and a distribution of risk.

It is possible I helped build one for one of these companies.

So don’t tell me it’s not and I, I will not tolerate some non technical person telling

me it’s not possible.

It is absolutely possible.

And these technology companies should have a mechanism to be able to say, you know what,

here are these 1000 accounts, David in the United States of these 1000 individuals that,

you know, are sort of getting to a red line here.

Yeah.

And line whatever.

But it’s it’s also it’s it’s not it’s not just going to be what they post on social

media.

It’s although in both cases, Buffalo and Uvalde, they both posted that they were going to do

what they did.

But in addition to that, no, it’s the breadcrumbs.

Warning system, there’s a warning system is a great idea with you’ve all the the cops

were called out multiple times for violent disturbances, you know, and you combine that

with what he’s telling people in the schools, and what he’s posting on social media, you

it’s, there’s an identifiable profile here.

It’s not one red flag is multiple red flags.

This is where these corporate social media companies need to take off all of this for

profit focus.

That’s extreme at this point, be willing to degrade margins to hire the 10s of 1000s of

people to manually review content.

Okay, there should be a mechanism that allows these folks to plug into some system that

law enforcement can use.

There is an early warning system that can be built.

Yeah.

layer.

Great idea.

human review before this stuff gets out of control, David to control people’s individual

civil liberties, okay.

But that is a big step forward from where we are today, which is nothing.

There is zero leadership in America.

Can I just ask David one question, David, you used correctly pointed out, I think it’s

astute that we can’t penalize people who are legally getting guns or create too much friction

for them.

I understand that.

Would you consider training or insurance and just take each one individually for high capacity,

these deadly assault rifles?

Would you consider what would you consider each of those in terms of realistic, you know,

having some basic training, a four hour training class?

I mean, like, like you do for like you do for driving a car, should we have that for

assault rifles?

And then should insurance be required?

What training does is prevent accidental shootings.

Okay, that’s great.

I’m not against training.

I love training.

I do training.

But But look, what should be mandatory?

What training prevents is is accidental shootings, Buffalo and Uvalde and all these school shootings.

They’re not actual shootings.

They’re going out there and killing as many people as possible.

And they know how to use these weapons.

I mean, the problem is, is what their objectives are.

So I don’t think training solves it.

Well, let me ask you this.

If you were in training for four hours, and you’re an instructor, and you were trained

to look for red flags, and it prevented some friction from this person going and buying

it and doing the next day, wouldn’t that help and then going to have to buy insurance?

The Buffalo shooter case this this grocery store for like four months.

I mean, they are patient.

They are methodical in how they go about it.

They would have gotten to the train.

I think so.

But we don’t even necessarily need that filter, Jacob, because I’m just telling you that the

profiles of these psychos, it’s so dramatic.

When you go back and look, I mean, again, multiple red flags are killing animals.

I just don’t want to be beguns that they’ve been the cops have been called out on them.

They’re posting on social media, their classmates are all terrified of them.

Their own families are terrified of them.

Now, we just need to basically, we need an incentive to Jamal’s point for schools, I

think, to create these profiles and file the right forms, the affidavits in the data.

Now do insurance for high capacity assault rifles.

Would you be in favor of and do you think it’s a viable solution?

I do.

I don’t understand what that does.

Well, it means you would have to apply and say, Hey, I’m Jason Calacanis.

I’m 18 years old.

I’m in this school, I would like to apply to own an AR 15.

And then some insurance company would say, Okay, you’re 18 years old, you’re a male,

you live in Texas, your bill is going to be $600 a year for this gun.

Okay, you’re a 45 year old male in Wyoming, your bill is going to be $100 for this, because

we’ve done some actuary tables on the actual risk.

Would you be in favor of insurance?

I think the key to solving this problem is to create the minimum disruption on law abiding

Americans.

Okay, 10s of millions of them who like to do insurance.

Look, I don’t know what that would do.

Exactly.

I want to stop the basically that I think what are a relatively small number of psychos

young psychos, maybe there’s only a few 100 or a few 1000 sort of candidates in the entire

country.

I don’t want I don’t want to wait for them to become felons to basically prevent them

from getting guns.

And by the way, there’s a there’s there’s a bunch of study about this.

There’s been a lot of social science studies about the individuals that own guns legally

and those individuals that sort of break and commit these crimes.

And whether we want to admit it or not, there is a definable archetype.

It starts with gender, then their socio economic conditions, then there’s, you know, home conditions.

These are knowable things.

These can be built into a combination of software and human review.

And we need to create incentives so that these kids can get some kind of help or intervention.

And the worst case is we kind of, you know, do something with them in a way that helps

us protect everybody.

Because sorry to interrupt, but we do this every day.

We turn this country on its head after September 11.

We started profiling everybody.

And this acts is like minimum standard of disrupting other people’s lives.

The Department of Homeland Security disrupted everybody’s lives.

Take off your shoes, go through the security before you get on a plane.

We changed everything in months because we said we’re under attack.

But there we’re under attack by a foreign presence, a foreign terrorist presence.

Here we’re under attack by sick kids who need help.

OK, but we need to disrupt our lives.

We need to change things right in order to save these innocent kids who are being shot

up in schools where they’re supposed to be safe.

And so I agree.

Let’s profile them.

Let’s get these companies doing their jobs, helping us identify these kids, get these

kids help.

But we need to raise the volume and raise the urgency in D.C. the way we did after September

11, 2001, that this is a national crisis as opposed to going back to the normal right

distribution here.

By the way, after 2011, I was on a no fly list.

And I think I’ve told you guys this story before, but I would have the triple S on my

boarding pass for years until about 2007 or 2008.

Constantly profiled, you know, put in the back room the whole nine yards.

But in the end, you know, did did it make me feel kind of like less than a lot of other

people?

Yes.

And I think it was because I think it was the on the broad strokes, the right thing

to do.

Yeah.

So you would take a little friction.

And so, you know, if I needed to basically turn over all my kids, you know, social media

or there was a mechanism where, you know.

As much as we try to teach our kids, you know, all of these other things that that allow

us to make a socially progressive society, if the guidance counselor also sat around

and asked these kids anonymously, hey, is there anybody in your class you think needs

your help?

Why don’t you do that, too?

There’s there is friction because that that I think we’re all willing to take because

the counterfactual is too horrible to bear.

And this is an example of one of those things.

Would you be in favor of insurance and training trauma?

I don’t think rifles.

I don’t I think these are good ideas.

Okay.

I don’t think they will curb the issue.

I do think what David said is right.

There’s a level of evil or mental illness in these people that cause them to be incredibly

methodical.

And I think that we shouldn’t underestimate.

So they would get through the insurance screen, they get to the training screen.

Well, I think I think, you know, look, there’s a lot of people that drive cars without insurance,

right?

It’s you can drive a lot.

It can happen to be insured.

And, you know, so I think that those are good ideas, Jason.

Where it will falter is we have a political system where the primaries for both sides

are dictated by the looniest 10% of the left and the right.

Yeah, we got to vote in our primary makes practical gun control, just like abortion,

an impossible task, unless we completely turn our political class upside down on both sides

of the aisle.

Okay.

So I think these are good ideas.

But in the meantime, I think parents have to do something because nobody’s coming to

our aid.

And I think this the most important thing we can do is just say the truth out loud.

There is an identifiable archetype of these we should profile these kids, we should profile

them.

There’s no doubt there.

The politicians who are making this about lawful gun ownership.

They’re not helping.

They’re they’re actually hurting because you’re activating millions of Americans who lawfully

own guns and believe in the Second Amendment to oppose reasonable measures, like, like

I’m saying, hyper targeted measures, like these red flag laws, right.

And so if we make the whole issue about gun ownership, in general, you’re not going to

get any reasonable changes.

The opposite the sales go up, the sales go up every time we have this happen.

My kids, and I’m sure your kids as well, have now gone through multiple active shooter drills

in our school.

But at no point have my kids been sat down and taught some of the warning signs of their

fellow classmates and a mechanism to raise their hand and say, you know what, this is

actually really worrisome here.

They don’t have that training.

They do have training on how to lock the door, how to flip a desk, how to go into a closet,

which is a horrible thing to have to teach a child.

But if we’re already there, I just say, take the extra step and teach the kids because

they’re living on Instagram and tick tock every day.

They see their friends and their, you know, classmates every day.

And we need to start figuring out an early warning system because what is happening continues

to happen.

These politicians are ineffective, they do nothing to help parents, right?

That’s true.

I like I like the early warning system, because you’re right, like they’re so first of all,

the red flag laws are something that’s done on a state by state basis, something like

19 states have red flag laws, including New York, but it didn’t work in New York, the

Buffalo shooter, because no one, no one used the system.

No, I don’t think it has to be federal.

I just think that people actually, I think people just have to use the system.

So you had in the Buffalo shooter, the kid was referred for psychiatric treatment, and

they still didn’t red flag him.

That’s just bonkers.

So people have to, the school systems have to learn how to use these laws.

And so to Jamal’s point, we need an early warning system.

We need that translating into red flags that go on someone’s record, and then they can’t

buy guns after that.

It’s really simple, at least till maybe they turn 30 or something.

I mean, it’s, it’s, the problem is that about half the states don’t have this mechanism.

And then the half that do aren’t using it effectively enough.

I just shared with you guys a chart, the the the the most pernicious part of this debate,

and I think this is a pretty solid debate we had here.

So thank you to the gentleman for all participating in it.

Is every time we have one of these gun sales spike, if you look at the chart in the New

York Times, I just shared a Nick, you can you can share it on the YouTube channel.

Too many guns in the January after Obama’s reelection, the Sandy Hook shooting, we hit

peak guns, obviously, during Coronavirus, people got scared and bought a bunch of guns.

After September 11, they bought a lot of guns.

But these moments are sadly going to drive because all the conversation is about banning

guns.

Yes.

And what we should be doing is preventing psychos from getting guns, known cycles, reasonable

gun control increased by 50% in the last 10 years, the last 10 years have been the

safest 10 years in our lifetime.

Yet for some reason, people feel the need to arm themselves more and more and more.

Now, I as an immigrant into this country, except the rules of the country that I come

to.

There’s a constitution, there’s a Second Amendment, I respect people’s rights to own gun, I’ve

held a gun by once in my life, I had a panic attack, and I had to put it down.

So it’s not for me, okay.

But I respect your right to have them.

I think that we need to teach people how to think about the precursors before they get

the hold of these things.

Really sadly, what’s killing our kids?

It turns out I just put a I just put the tweet in the chat for you guys to take a look at

New England Journal of Medicine, massive uptick.

Now gun deaths, combined, it’s all gun deaths, includes gangs, includes suicide, and includes

mass shootings.

But firearm related deaths and injuries now exceeds motor vehicle crashes, and so does

opioids.

So we have a crisis after New England Journal of Medicine, just to be very honest, it’s

no, it’s not necessarily only about kids, because they included 18 and 19 year olds

in that chart.

Sure.

So those are adults.

Those are adults and kids.

And so drug overdoses and firearm related are spiking massively.

This is my point about having this debate.

This is being armed by the by the left.

And then the right says, Well, hold on, it doesn’t include 18.

And then everybody gets caught in that whole, absolutely, the shooting, these shootings

are being done by people 1819.

But putting all this aside, I just want to make a bigger point about our children.

In the last few years with this COVID, the spike occurred during COVID of drug overdoses

and firearms.

So there’s a lot of suicide in here as well.

So we should think holistically about, you know, how kids are dying.

Yeah, one other thing to that, which is we have plenty of gun laws on the books that

aren’t enforced right now in San Francisco, you can’t get Jason Boudin to enforce a gun

charge.

He, a young kid named Kelvin Chu got killed, because his his killer, a guy named Zion Young,

he was arrested weeks before on gun charges, and Jason Boudin just let him go.

And in LA with Gascon, he’s dropped all gun enhancements to charges.

The whole thing is incompetence across the board.

So you got all these progressive prosecutors who aren’t even prosecuting the gun laws we

got on the books.

That’s got to change.

And Ted Cruz thinks this is about the backdoor being unlocked.

I mean, the stupidity across the board, left or right, everybody in between the incompetence

is stunning, and it has to stop.

Yeah.

Look, I mean, if you make this about people’s lawful gun ownership, they’re going to oppose

what you want to do.

We got to make it some incremental controls, don’t you agree there has to be some control.

The controls are basically preventing known psychos from getting weapons.

Okay, so you want to focus on that.

But to be clear, no additional gun control for you.

Background checks or anything.

Background checks.

I just want to be clear, red flag laws and background checks are good.

I know we have to wrap.

I think the consensus was around red flag.

There’s a known profile Chamath articulated it well, David, I don’t think we helped the

cause to build the consensus by calling a sick 16 year old kid struggling with self-identity

a psycho.

And because they’re their kids who live all around us, this isn’t about lecture.

This is about building consensus.

I think we can profile those folks.

They clearly have psychotic challenges, right?

But there is intervention to help these kids.

I know a lot of kids who frankly had challenges during high school who turned out to be great,

great human beings.

So these are kids at a very vulnerable age.

We should profile them within the community.

Social networks should help us identify these folks.

And we should get them help.

And I think you can build a reasonable consensus around that.

Yeah, I agree.

Just to explain myself, I’m right.

When I use the word psycho, I’m referring to the the ones who actually became shooters.

You know, I’m referring to those ones.

You’re right that if we’re talking about people who haven’t done anything yet, who are mentally

ill, yes, we should get them help.

So I mean, mental illness, you know, this is and this goes to healthcare as well.

We should have national mental health services available freely to every American we are

in a mental health crisis between COVID and just modern life and suicide is becoming the

number one cause of death, sadly, for many demographics now, including our kids.

And so while we do a great job making cars safer, and creating life saving drugs and

emergency rooms and medical attention has gotten unbelievable and we’re making all these,

you know, great advances, mental health, we’re not making the advances we need.

I’m so so so sorry to all those families.

Yeah, this is just I get emotional.

Yeah, I’m just so sorry for all those people dealing with it’s heartbreaking.

Yeah, heartbreaking.

Let’s take some action here.

Enough with the thoughts and prayers.

Let’s actually come up with a fucking plan and just I’ve been on it for years.

I put up with it.

Sorry for the indignity.

It’s okay.

I said, my honest perspective is there’s a clustering and a technology component to this

that can meaningfully help.

And we need to start knowing that there are these patterns, we need to say the words out

loud.

There are patterns for these school shooters for these mass shooters.

Those patterns can be written down, they have been written down.

And we need to do something about it, they need to be codified in some form of algorithms.

And if we’ve already taught our kids how to duck and hide, I think we can also teach our

kids how to raise your hand well before they need to learn to duck and identify who’s being

bullied.

And to your point about being profiled, if we profile somebody, and they’re not a mass

shooter candidate, but they’re just depressed, or they’re being bullied.

Well, that’s that they deserve help as well.

So there’s no downside to profiling somebody who’s struggling, you’re profiling them with

the intent of getting them help.

So let’s just profile the kids who are struggling, profile them for good.

And you’ll catch some, you know, who’s struggling a priori.

My point is that you actually know they’re being bullied, they’re going to probably be

struggling.

I mean, you know, the kids getting psychographic and demographic profiles of the 99% of the

cases that we’ve seen over the last two decades.

And all I’m encouraging politicians and technology companies to do is come together, create some

standard, you know, we have the downside, what’s the downside, none, zero, have mechanisms

like this, by the way, where, you know, these technology companies already do these kinds

of profiles on other kinds of situations.

You know, typically, you need a physical request and other kinds of like legal interventions

in order to unlock this data.

But it’s not as if this is, you know, antithetical to what they do in other situations.

They certainly do it for fraud and advertising.

It’s not as if the technological prowess of these companies cannot be applied to a k means

clustering of this issue.

Okay, just to use a simple machine learning context like this is they put a lot of effort

into finding click fraud, right?

This is going to be a very similar problem.

We don’t allow angry young men who’ve been emailing with the Middle East, who are citizens

of this country who’ve been posting online that they want to run a plane into a building

to go get their pilot’s license.

Right, we profile them after September 11.

And we said no mass.

And all Chamath is saying is use your fucking common sense, identify these folks that we

know are struggling to need help, and put them on a list and say they can’t buy an assault

weapon.

Period.

Yeah.

All right, everybody, it’s time to go.

Thank you to Brad Kirshner for sitting in.

Thanks again to the dictator Chamath Palihapitita and thanks, Sax.

And thanks to everybody who spoke at the All In Summit.

We’ve been releasing all of the videos.

Freeberg will be back next week, as will the Hammer Lucky Explosive episode.

So look for a great week of All In content next week.

We’ll see you all next time.

Bye-bye.

Oh, man.

Oh, man.