Let’s go Jason start. Let’s go. Do you have any intros? Let’s go. Let’s go. Let’s go. All right, if you want intros

We’re not willing to pay for him. So don’t even go there

Saks is awake. All right. Well, then we’ll start with you Saks if you want to do your job

You’ll do the intros and if you wanna

You want to slow roll your effort because you think you’re negotiating with us

Don’t we don’t give a shit. Listen, I’m doing all the projects. I think we care about your intros do a bad job. We don’t care

Waiting in the wings all we do it. Well, then I’ll just do three sacks intros in a row. Oh my god

It’s so true. Do do a couple of bad jobs so that we can boot you off the show. Oh, that’ll be so quick

All right. Here we go

Rain man David

All in summit I packed the joint but Saks won’t give me an extra point his crypto holdings

They can’t find a floor gonna have him flying commercial for the first time since 2004

Welcome David Saks back to the program the rain man. Good to be here. Ah now Freeberg

I never wanted to see him go, but you got to show up for work. You can’t do every other show the Sultan of science

He’s certainly not a fad. Then again, did you see those ratings with Brad? Welcome back the Sultan of science?

By the way, our show beat Brad’s rating. So thank you very much Jake out. Okay. Well a little drama always builds a little audience

Okay, here we go. Chama healthy competition. Well Chamath ease in Italy living a life

So grand his next back a luxury wine and sweater brand this market is leaving him in a daze

So he’s been tipsy in the Mediterranean for the past 10 days. Welcome back the dictator. Thank you

Thank you. I just I put them on stun. I didn’t want to do any kill shots there

Everybody’s a little

On edge including the audience the audience had a lot to say about whether we cover a lot of the controversial topics

Roe v. Wade January 6th and

Ukraine all I did a bunch of surveys 50% of people want us to talk about a 50% don’t so

We’ll see which one’s we get to say

Yeah

Do you think we should be?

Surveying the audience to ask him what they want us to talk about because when we started the show we just talked about stuff that

We thought was interesting sure and people happen to look like it and listen and tune in for it

If you end up asking the audience what they want

Don’t you end up becoming like a Fox News or like any other media company where you just ultimately use the feedback loop to drive?

Yeah, I mean I wouldn’t every week of the show. I will tweet like hey anything you want on the docket because sometimes people have good

ideas

But yeah, certainly you shouldn’t base it on like a survey. No, I think it was just like a way to get some feedback

Yeah, we were just yeah, that’s how we started was we were just kind of being intellectually honest with each other and curious

That’s what we were interested in and it worked and if people don’t like it, they don’t like it

I mean, I don’t think we should the big controversial thing like a like a vote for your topics

And that’s what we follow definitely not we shouldn’t I think we’ll agree on that

I think just there is an ongoing debate amongst the audience of what percentage of this show should be

Politics and when should we talk about politics and are we doing too much politics?

And so I think let’s start with markets. Let me ask you one more question

Do you think our objective should be to grow the audience or should our objective to be talking about the things we want to talk

About yeah, what do you think? I mean, what do you think sex?

Yeah, I don’t think it’s a good idea to pull the audience about what you want to talk about. I mean

Yeah, well, I think it’s good to have an audience otherwise, what are we doing but yeah, um

but look what the audience showed is that half and wanted to talk about those topics roughly and half didn’t I suspect that

Most topics are going to be like that, you know

Unless it’s just not markets and people like I think 80 90 percent of people want to hear us talk about markets and startups

Yes, like our core stuff, right david

I’m, just saying if your objective function is to maximize your audience

You’re gonna end up making a tiktok video of people twerking or something, you know

It’s not like the show. Did you just volunteer to twerk on the show? I’m not gonna do that now

I think i’m pretty sure chamath will I have the video of free bird twerking at uh all in summit anyway

Hey who all right, let’s get started with um

I think what’s going on in crypto because

People do want to hear about that and it’s been quite stunning a british virgin island court ordered the liquidation of three arrows capital

Three ac after creditors sued the crypto hedge fund for failing to repay its debt. They had three billion in assets under management

They had a huge position in the now defunct, uh stablecoin terra and its token luna

And they were trading on some massive amount of margin, uh, how much and

What deposits they were using to do this?

Uh, we will find out

Um now they’re being forced to liquidated to be liquidated three ac owed voyager digital 650 million

Could not pay it which sent voyager stock down 60 and caused them to need a bailout from sam bankman freed

which has led to

Sbf as he’s known in the industry bailing out a couple of other major folks in crypto

He provided a 200 million dollar credit line to voyager

Digital, this is a canadian crypto lender. They’ll lend you money against your crypto

uh, and

Ftx provided a 250 million dollar credit line to blockfi

Ftx is obviously spf’s company

And according to early blockfi investors, the ftx credit line would wipe out all existing shareholders

So we’re starting to see the really uh onerous term sheets to keep these things alive

This is of course in the face of an entire crypto collapse

With many crypto coins seeing what we saw in growth socks

Is this the end of crypto, uh, is it going to rebound again? What are your thoughts?

Chamath sacks friedberg who wants to start on crypto?

Did you guys see the chart that I posted into the group chat that showed bitcoin?

Activity as a function of year and value. Can you just put that up just so that we can look at that together?

the crazy thing about this chart when you look at it is and it’s pretty obvious is that we

Are collectively in one way shape or form basically trading up

Uh ever since 2018 really with all the stimulus because if you look at you know, the mean price of bitcoin

About 2018. It was a nothing burger

You know what we were talking about was, you know a price that was sort of between a few thousand dollars two three thousand

Ten thousand three thousand, you know, and then all of a sudden when all of the stimulus money hit the market

Look what happened to it?

But I think something unique also happened which is that people really understood how to run these very complicated

off-chain bitcoin arms

And I think we should explain what those are because those are what’s behind the three arrows capital. It’s behind

You know, I think sam had this kind of

Oblique tweet that said, you know, some of these exchanges are actually already in solvent

They’re already the walking dead

So the first thing to keep in mind is that you know, this is a completely unregulated market, right?

There are no middle maker market makers per se that actually have reporting requirements to any regulatory authority

There aren’t any clearinghouses

There isn’t a way for us to understand systemic risk as it builds in the crypto market

So what happened starting in 2018 and 19 is people realized the following things were true

It’s sort of what we talked about last week

You go and do some crazy round

you

You know mark up some phantom equity in a company

That company then issues tokens

You then list the tokens not on, you know a blockchain per se

obviously but

Uh in a place where trades can happen off-chain

Right, and there’s a bunch of exchanges where these things happen off-chain because it’s one, you know

Company and then they have a bunch of segregated sub accounts

And what happens is when these things initially get listed retail goes crazy. The price goes up folks basically dump on retail

And you know you spin that loop as fast as you can and you can extract an enormous amount of money

Along the way all these things like defy all of a sudden popped out of nowhere and it’s like hey

You can earn 15, 16, 17, 18 percent just deposit the bitcoin and so folks would deposit bitcoin

But then what would happen is like the places where those deposits were held would then need to obviously

find places to make that

11, 12 or 13 percent

And so then they would go off-chain

To some other random person who was offering to pay them even more than that and they would try to arb the difference

But it all catches up with you

Because when something like a terra goes to zero all the bitcoin that was used to basically, you know

Run that defy process around terra vanishes

You know, and then all of a sudden you the lender are like, hey, can I have my bitcoin back?

And the broker’s like well, actually I don’t have it. I lent it to somebody else

Let me ask that someone else and they’re like i’m sorry. I don’t have it, but I have these terra coins

You know because I was running some arb and now it went to zero and that’s essentially

What we’re seeing right now, so we have two big problems

And then I think we have a third that’s kind of funny

The first big problem is like obviously in the absence of any regulatory oversight. This stuff is going to happen

Systemic risks are going to build up. That’s what we’re facing right now

Is an enormous amount of systemic risk largely around bitcoin a bunch of this money. I think has been essentially just

vaporized

And so all these people that try to find

Their deposits especially in custodial accounts in off-chain brokers

Maybe sol at some point

And I think that’s just going to be a huge shit show if that actually happens and to be clear

Chamath they don’t have the keys to their own bitcoin. They gave money to a custodial account

They then did this lending went out to get them to 15

And they

Don’t have any recourse here. They can’t get there. Well, look at this

Bitcoin owners put them in a wallet and own the keys

Does anybody have recourse to this three arrows capital and all of this other interrelated parties that are now, you know

Gone completely bankrupt because of this scam. The answer is absolutely not

Um, so that that’s the first problem you have absolutely zero oversight, which means systemic risk has been built up in the system

um

The second thing is that exactly what you just said jason is that people don’t even understand chain of custody here

Which is that you thought that you owned this bitcoin?

It turns out you actually may not actually own them at all. You thought that you were properly lending them out

You actually don’t

There is no enforceable contract it turns out and so I think that’s going to be an entire

Set of different legal issues

That are now going to come to the service because people who actually legitimately lent this stuff out

For example, like if you short a stock and you go and borrow stock from any one of us

They’re really tight guardrails, you know, if you wanted to go and put a credit derivative swap on against that

There’s a central clearinghouse that makes sure you’re not over levered

You know

You have to go and get audited by a bank to even get in a the kind of account that allows you to put these

derivatives on

None of that was possible in crypto and then the last thing

Which I think is kind of funny is that we’ve had to listen to every millennial and gen z market observer in crypto

Tout how this is not like boomers and they turned out to be the same same same

I mean, this is the funnest thing of all it’s like of all of the times

You’ve had to hear how it’s so different. It turns out it is entirely the same

Entirely entirely in fact worse the custodian issue is definitely a major one sax

What do you think is happening in crypto right now? The price is obviously going down a lot

I don’t really have a

New point of view on it

I’m mainly pissed off that sbf is trying to raise my taxes in california

Explain that sam bankman freed. He runs ftx and his company he lives in the bahamas

Okay, and there are probably reasons for that related to liability or taxes or something like that

Can you tell us what what ftx does they’re like a coinbase competitor?

But they obviously think it’s beneficial to be offshore and not under us jurisdiction and they’re very profitable, right?

Yeah, supposedly they’re super profitable

I mean, he’s worth like 10 or 15 billion dollars

This is my understanding

So he’s been very successful at this. I don’t know why they’re in the bahamas. I think either they’re in there for

Securities regulation reasons or for tax reasons, but it’s one of those two in any event

He doesn’t live in california and yet

He is sponsoring a ballot initiative here

that would add a

0.75 tax on incomes over 5 million to finance a

Pandemic prevention institute of his design

He’s doing this with dustin moskovitz another billionaire doesn’t know what to do with his money

He was may remember that dustin was the guy funding chase aboudine

In any event, this would be this pandemic preventions to be governed by an unaccountable board

As opposed to something like the university of california

This is like them using the ballot initiative system to fund their pet philanthropic projects. I mean, there’s really no need for this

I mean, first of all, this is sounds like something that should be done federally. Yeah, exactly

It’s well, first of all, it’s looking in the rearview mirror in terms of like a budgetary priority

But even if you believe this was a priority, I don’t know why it’d be the responsibility of california

taxpayers exclusively

And even if it was you’d want to do it under say the uc system

some sort of accountable board as opposed to having a report to

You know sam and dustin

so it makes no sense and this is really going to hurt the california tax base because

If you start raising

taxes on

You know california millionaires more of them are going to leave the state and then that tax revenue leaves the state

And so it actually hurts the general budget

And that’s why you know california teachers association for example opposes this

Is because they know that this is going to have a negative impact on core services

What is but what’s offensive to me is I mean, so first of all, this is just a stupid idea in like every possible way

But what is a guy who lives in the bahamas doing funding ballot initiatives in california to raise our taxes

thereby worsening the california fiscal situation

To fund his pet philanthropic projects if you’re worth 10 billion just fund it on your own, you know

Do it through your family foundation. I don’t know why you need to raise the taxes on all of us

Yeah

It’s very bizarre

Why is he giving well the simple answer is because I think it helps curry favor with politicians that he needs for other things

But this is that’s why you would do it that’s why I would do it

This is currying negative favor because first of all

Every millionaire in california should be up in arms over this but even i’d say

You don’t think we know his game plan?

Yeah, I mean, but I’d say even liberal politicians and interest groups in california

like the like the teachers association don’t want this because

The money’s not going to a cause they support

And it will probably it will almost certainly

drive down the state’s tax base, right because

People on the margins are going to leave we already have the highest taxes in the nation. We’re at what like 13.3

For the top end we have a hundred billion dollar surplus for a reason all these ipos all of these

Venture capitalists ceos and rank and file tech workers are just paying massive amounts of tax here and they’re leaving right?

But that’s highly levered to capital gains, right and so last year we had a boom market

We now know in hindsight that it was inflated

That was all driven by this liquidity bubble

So do you think that’s going to be the case this year?

I think we’re due for a huge budget shortfall next year because there’s going to be no capital gains

They better hold on to that hundred billion for sure. The california tax base is highly leveraged to this boom bust cycle

And driving the top earners out of the state is only going to worsen that impact. So

You know, but again, I question why is a guy in the behind it’d be one thing if it was just

Dustin doing it, I guess but I don’t understand why sam’s taking the lead when he’s not even a california taxpayer because I think he’s a

very sophisticated

Player in not just crypto, but frankly, uh

Regulated and unregulated finance and look he I think he spends a lot of money

in dc as well, and I think that he has a very

Thoughtful game plan and then you know when you look at who his parents are his parents are

Really really smart thoughtful people as well to law professors at stanford. And so I suspect not

Knowing and having spoken to him

um that I think that there’s a really

Specific strategy that these guys have around who they need

to influence

and what they care about and then willing to

As a pass-through fund those things in order to create

the

you know influence that he needs for the things that he cares about and I suspect that it’s that kind of horse trading which

Is I think it’s pretty typical in u.s. Politics. Um

The question though is what will happen

if ftx

um has to really talk about

You know everything that’s actually happening in crypto crypto, you know

I’m sure that ftx could do a lot to help understand a lot of this off-chain

Activity some of the you know, especially the stuff that’s really in the gray

especially the stuff that’s going to come to light over the next few years is

I mean you have to understand guys like, you know, we’ve torched two trillion dollars and it’s not of institutional capital

You know, this is overwhelmingly retail capital

all of this is going to inspire a lot of

District attorneys and doj activity the discovery is going to be bonkers and it’s all going to be regulated

to the point of in which it kills a lot of

The opportunity I think this is going to become the most regulated space. Well, I don’t know

I mean I I if the goal here was to carry favor

Then I think sam must think there’s not going to be a red wave in november because I don’t think republican

Politicians are going to look very favorably on a guy who’s using his money

To raise taxes in a state. He doesn’t even live. All right. Well, let’s move back to the crypto piece

Yeah, let’s move back to the crypto piece here. That’s the bigger. That’s the bigger thing not a few million dollars of lobbying

At this point with this many retail investors, well, actually let me let me start with this freeberg

Is there a real technology here and how much of what we’ve just witnessed with this crypto collapse and the crypto boom bust cycle?

How much is this based on what you would perceive as real technology?

That is going to advance the human species forward and how much of this was hype if you were to put a percentage on it

You know trillions of dollars in assets, you know

Created and then wiped out

How much of this was actually real technology?

How much of it was complete utter waste of fucking time?

And a grift i’m no crypto expert and i’ve not been an investor in cryptocurrencies

I read the original bitcoin white paper

Makes sense bitcoin itself to me makes sense as a potential

Initially was kind of interesting as a potential alternative currency, but the transaction fees were very high

And so it never really seemed to make sense as a replacement for traditional financial networks

Until those transaction fees dropped below those of the traditional financial networks

And the biggest concern i’ve always had which i’ve mentioned multiple times on the show

Is that whenever anyone?

Talks about a quote cryptocurrency

They talk about the price of it in dollars

And if it really is meant to be an alternative

to the u.s dollar

Why are you talking about it in the price of u.s dollars and it’s up and it’s down

Relative to dollars and that implies ultimately that the intention would be to transact back to u.s dollars

Which implies that the intent is not to be a replacement for the u.s dollar

Which was a lot of the early prognostication of bitcoin?

Was it was going to be a replacement for the u.s dollar? It’s going to be an alternative to traditional monetary systems

But ultimately if you’re just measuring this in dollars and it’s up and it’s down everyone’s freaking out every day about cryptos up cryptos down

That means it really is more like a security

Except securities definitionally are supposed to have a secured interest in some underlying set of assets and there’s no underlying asset

It’s not actually a security because it doesn’t provide you a secured interest in anything

So it is effectively a bet on some systems of computers that are meant to facilitate some set of activities

That you know, ultimately people really only seem to value in u.s dollars. So, um

So, I don’t know I mean like where does it all go it seems like I mentioned at our predictions episode last year

That all of these smaller things are going to get blown out

These quote unquote cryptocurrencies, even though many of them don’t really act like a currency

And you know, maybe bitcoin itself persists and it seems to me like that’s always going to have good staying power

As an observer. I’m not a participant

and

You know anytime someone telling you something’s in dollars and it’s going up and it’s going down and you’re betting on whether it’s going

To go up or go down and your intention is to transact back to dollars

You know and and there’s no one these have been securities the whole time

This is the problem I have with it this has been

You know a shadow securities stack that was created in parallel to the existing one with a lot of

You know oversight and what did we think would happen if you created a global casino with no rules

Other securities have an underlying interest in something. This has an underlying sure interest

In some line on the blockchain of that particular network. That’s exactly that’s exactly what it has

Yeah, it’s a secured interest in a line of code in on a distributed. No, it’s it’s it has a secure

a bitcoin has

a legitimate

uh, non-fungible entry in a blockchain that says it and only it represents that thing and I think that that

you know is is I guess that the

The link some may call it tenuous, but I I mean I tend to think at this point bitcoin

Probably has to be regulated like a security even

even if it is not and it’s more of a commodity only because of the

the volume and the sheer size of both the market and the

The potential fallout is the way you’re saying it, right?

The potential fallout when things go off the rails is so great. You kind of need to have some rails

Yeah, I mean I mean like like again as I’ve said like look if you’re a market participant trying to trade

You know, very sophisticated, you know derivatives of any kind for example in the credit markets

We have to go and we create these things called isdas. They’re called isdas, you know

and it’s basically a kind of an account that allows us to go and

You know take risk in some of these very esoteric markets, but the the underlying principle around that

Is a common set of parameters a clearinghouse the ability to monitor risk

None of those things exist here. And I think that’s really what folks have to solve for now

secondarily is

What were all these kind of like shadow activities, you know?

It just it turned, you know, it seemed too good to be true when you would hear

Wow, this d5 protocol will yield you 24 and you’re just like who was paying the 24

It never made sense really but then none of us really questioned it

You know, I you know

I had people on this week in startups

I questioned it all the time and they could never explain it to me and then

Now the explanation was well, we were giving you we were giving short-term loans to other people who basically wanted a margin loan

You know, they want to they don’t want they want to hold all their bitcoin

But that was only four or five percent what they were also doing was giving you tokens in some other cryptocurrencies

That they were basically originating. So they basically were like we’ll give you four percent on your bitcoin loan

Somebody else will pay that

You’ll pay that but then the other 11 is coming from some tokens. We’re giving you that actually

You know, you have airline miles. We have to answer you airline miles. We have to answer a really important question if you

We’ve we you know, look the the markets have incinerated

Many trillions of dollars I just saw like for example, there was 1.7 trillion

you know that was just

Torched in etfs alone just in the since the beginning of this year, right?

We’ve done that or more

in the crypto side

We’ve done that or more on public equities, right?

We’re probably going to do that or more in other markets, but every other market is regulated and there’s a full accounting

Of the pnls on the dollars that are won and the dollars that are lost

and here

Some folks have just you know, basically escaped with billions and billions and billions of dollars

And the bag holder is just you know

A regional investor. So the real question is

Our regulator is going to actually care to try to do something because oh, yeah

The level of grift that’s happened in this market is extreme

And especially when especially when everybody was telling you no this time is different. This market is completely different

It’s transparent. It’s on chain. You can see everything and it turns out actually most of it was not on chain. It was off chain

And they were using they were using this

Hey have fun being poor this like psyops to get you to participate. Okay boomer. You don’t get it

Gensler I was talking to kramer on cnbc. Here’s the quote some like bitcoin and that’s the only one jim

I’m going to say because i’m not going to talk about any of those

These tokens that my predecessors and others have said are a commodity

Um, and then he said

Many of these crypto financial assets have the key attributes of a security aside from bitcoin. He believes

You know, like these things are securities and that makes sense because 99 of people buying them sacks were buying them

Because they wanted to see them appreciate they were never using these as utility tokens

They were buying them to you know, see them appreciate and to flip them

So what do you think sacks is there is there when we look back on this whole mess in 10 years?

Is it going to be like the dot-com era where we’re like, yeah, I got overheated but amazon and google came out of it

Or are we going to look at it and go? Well, that was tulip season

Well, I I think there is um a future technology platform here with crypto

But I mean i’ve been saying this

For the last year that just because there’s a future technology platform doesn’t tell you what the pricing should be and the price action got decoupled

from the level of progress in the space

You know, you should always be looking at what is the real

usage

use cases

customers revenue things like that and

People stop doing that and I think part of the reason why the narrative was so powerful

If you go back to last year

then the chart that shamas showed about the the increase in the price of bitcoin, which is really the the root of everything right because

you know first bitcoin appreciates and then if you think about it like ethereum is

Ethereum’s market cap is like a derivative of the bitcoin market cap

It’s been roughly 40 percent

And then the all coins sort of get the market cap of the all coins is sort of derivative off ethereum’s market cap

So the whole thing kind of moved up in in sync and the reason why bitcoin moved up so much is that as the fed

Kept printing more and more money. You had fans of bitcoin saying look the fed is debasing the u.s

Dollar we’re going to need an alternative

Currency that was a powerful narrative that the fed seemed to be vindicating

And there was a positive feedback loop, which is the more the fed debased the currency

the more that the price of bitcoin went up now the reason the price went up was not because

They were debasing the currency. It was because they were creating so much liquidity

That that it created a liquidity effect that then drove up the price

And so so consumers had money that they could buy bitcoin because they were there was more money in the system

Yeah, you created more buyers of bitcoin. That’s exactly what happened. They

I mean all of this idiotic you sort of sorry go inside

Yeah, you saw an increase in speculative investments across the board including but not limited to crypto

So again, you know when the fed prints too much money, it creates asset bubbles, but there’s a powerful

Reinforcement because as the fed was printing bitcoin and supporters of bitcoin had a really great explanation

For why bitcoin was going up, which is they’re destroying the u.s dollar. We’re going to need an alternative soon

Now I think in the very very long term could bitcoin be a non-fiat currency

yes, I mean, I actually think the technology works you could create a

a new kind of currency that’s backed by math and by

Cryptography as opposed to fiat government, but that could take a really long time

I mean that could be decades in the future and but what happened is the market started thinking well that’s going to happen soon

And that’s where it just got ahead of itself. That was the tulip part of it

Yeah, I think that I think that

they

Found all of these words, you know written in these economic textbooks

That allowed them frankly to justify what a lot of people were doing in a lot of other markets, which is just straight-up speculation

Because the money printer was going burn

And you know if the if you look at this 92 correlation to the equity markets

I suspect in bitcoin and crypto is probably closer to the even a hundred percent

um because it really was the furthest out on the risk curve and it just made the most sense when you thought money was

You know effectively infinitely going to be available to just buy the riskiest risk assets

Think about the friction taken out of this chamath. You could buy these, you know, uh cryptocurrencies so easily

You could trade them so easily you could create one so easily people were popping up forks of these things

So in a way what technology has done over the last 30 or 40 years from cloud computing to software to open source

Has made it very easy to pop up a startup

Well, you could pop up a currency and then you could get an incredible reward

and you get this incredible reward before you actually make a product for consumers and

And absolutely zero rules and oversight. No oversight. Yeah

The feature that was touted

Was actually the first one to get thrown away which was transparency

Yeah, when all of this activity was actually happening off-chain

This is why you have this systemic risk issue now when sam is saying some of these exchanges are actually in solvement

What he’s saying is well that exchange has one master

wallet address

Every time you open an account and transact on such exchange

You’re actually just transferring between a database entry inside of that company

And so it may look like it is fine, but it is actually not fine. That’s what he’s claiming

This is the problem with all of this. So all of this activity, you know built on these principles of openness and

You know defensibility and you know, you you can’t inflate it and you know, devalue it and debase it

Turned out to not even matter because the fundamental principle that would allow us to verify all of that was violated right from the get-go

Which was transparency all of it is happening in the dark

Most of this stuff is happening off-chain

And if you think that you know, it’s okay to torch a trillion dollars of equities

Well, at least there’s rules on the equity side

But to torch two and a half trillion dollars in crypto where there are no rules

It’ll be really, you know

It’ll be a very telling sign to see if these folks get their act together and but meaning regulators and politicians and do something

Well, then we made this crazy hybrid where we had the venture community and i’m not going to talk about any specific firm here

And to be clear, you know, nobody knows exactly what’s happening, but you had coins

You can’t know by the way, you can’t know because it was happening off chain

Exactly

So somebody would originate a coin and I was you know

Offer these deals and you would as a venture capitalist be buying some equity in a company

And then some amount of tokens would be created

Before the token was released to the public or before anybody had insights into this these tokens were swapping around

Everybody had different rights. Some people could sell early. Some people could never sell and it was as if

you know you took the

Process of going public and you gave that to a seed stage or a series a company before they launched their product

So you’re taking a company public

Essentially before they go if you if you subpoena, they launch their product

If you subpoena the exchanges

All of this gets turned over. Yeah, because the exchanges are

The honeypot of off chain activity. Yeah, so and that’s what’s going to happen

I think in all of this and it’s going to be really funky

This is and what’s terrible about this is this is why the accreditation laws

Exist is like only sophisticated people top six percent of americans are allowed to participate in private companies

And what did we do?

We allowed a hundred percent of people on the globe to participate

Backed by pure math back that less than a thousand people in the world actually understand

That could go wrong. What could go wrong?

You cannot buy a stock

But you can buy this cryptographically secure

You’re not allowed to buy a share of linkedin or uber or airbnb, even though you stayed in an airbnb

We’re an airbnb host. You’re too stupid to buy airbnb shares when it’s private

But you can buy this cryptocurrency that doesn’t even have a product in market and and here’s this white paper

That has you know university level pure math as the explanation of why it nothing can go wrong

And you turn it turns out again because nobody actually understood in the first place

This is going to be a decade of discovery

If you look at that price chart what it really means is like again, you know, we talked about this

If the equity markets have to rebase and get all this qt or qe out of it

Yeah, right and then you have to rebase for earnings if you believe you’re in a recession and then you have to rebase

For margins if you believe that there’s rampant inflation those three things have to happen in the equity markets. We’re in the midst of that

Yeah, but that also has to happen on the crypto markets in the crypto markets and if you look at that chart

What it really tells you is that the baseline price of bitcoin where things seemed, you know

Where rational supply and demand were meeting each other before all these, you know, five ten thousand

3,500 to 5,000. Yeah, I was saying about 5,000 still 75 percent for me

Yeah, it’s 20,000 now. So yeah, we got we got we could we have ways to go one thing that I thought was an interesting

sign of potentially bouncing along the bottom

Um zendesk has agreed to be acquired by an investor group in an all cash transaction. They’re basically going private here

Uh for around 10.2 billion, uh, if you don’t know zendesk

It’s a help desk software company. It’s a sas software company

They turned out a similar acquisition of 17 billion earlier this year their market cap is 9.1 billion in the public markets

It’s gone up obviously since this announced this was announced but um, they have

Uh a billion three in revenue. They’re up 30 percent year over year. So this is a strong company

But the acquisition price is 7.7 times their 2021

Multiple sorry. Did you say they’re up 30 percent of the revenue? The revenue is up 30 revenue is up 30 year over year

They have 1.5 billion dollars in cash and securities, uh that are you know marketable security so they’re cash rich

Small loss 223 million for the year in 2021. So they have six years of runway if nothing were to change

Yeah, what do you make of this sax is why would they do this?

They don’t have to so and is this to you like the sign of a bottom if we start seeing

A bunch of these companies that went public that are seemingly strong start to go private

And to go maybe clean up their balance sheet and go public again in three years what’s going on here

Well, I mean this isn’t a horrible outcome. And by the way, I mean I remember we shared uh

When I was doing yammer a decade ago, we shared a floor in uh, our an office building at 410 townsend with um with zendesk

And they launched a tech crunch 50. Yeah

Yeah, exactly

So we had I think 5 000 square feet and they had the other 5 000 square feet and we were in a standoff both

Of us were expanding and we needed the other half of the floor and it was like who had moved first basically

And anyway, they ended up moving and we took over their space

But so I mean look this is a company that you know was worth 100 million bucks 10 years ago

So whatever it was, I mean they were still, you know, they were very early stage. So

This is still a great outcome. So they’ve taken the 17 billion sure with 2020 hindsight. That would have been better

But look you’re seeing the valuations here being roughly reflected

The sas index is now down to about five and a half times

Revenue, I think next 12 months revenue for them for the median sas company and the median sas company is growing about 20

if

You’re a high growth company, which starts at 40

You’re trading at about eight times next 12 months revenue. So then zendesk is sort of in there

I mean that is what they’re trading for

And sas founders why go why would the founders the board

I’ll tell you want to go private is the question on people’s minds. It’s not it’s not that they wanted to go private

I think that they wanted to stay public and they wanted to build a large business

But this is where the law of large numbers catches up with every company

That’s why it’s so rare to have an apple or a google or a microsoft or a facebook or netflix

Where you can grow for 20 years at 25 plus percent because at some point

25 percent growth over last year just becomes too hard of a mountain. It’s a big nine

And so what zendesk suffered from is what most of these sas companies?

Not and i’m not trying to disparage them just calling it out. We’ll have to go through which is the following

The easiest kind of sas company to start and the one that folks, you know

Really talented investors like sax will fund overwhelmingly over others are what’s called bottoms up sas

Right things that sell to the low end of the market things that sell into

You know individuals can buy them in a corporation as opposed to the cio

Yeah, the the unfortunate part of that growth curve

Is that it’s pretty terminal within seven to ten years and after that you’re forced to go

To the mid market and that eventually you’re forced to go enterprise

But when you go to the mid market and you’re selling to 500, you know, 1000 2000 person companies and then eventually even enterprise

You’re talking about massive investments of opex people

engineers product managers sales people

And all of that stuff costs money and it’s not clear that your product is any good

So in the zendesk’s example, it’s not to say their products were bad

But all of a sudden they were going up and selling a crm tool a salesforce automation tool

And now you’re going head to head against companies like salesforce who are going down market

And all of a sudden salesforce and microsoft and all these companies can play very aggressive pricing games with their products

They can bundle all kinds of other things in for free. They can give you discounts

And it’s very hard to compete as a single individual company. So your growth starts to stall

So I suspect what happened at zendesk

Is they said we can make it

And we believe in ourselves

And they found that it was hard then instead of organically growing. That’s when they turned down the 17 billion dollar offer

They tried to grow inorganically. They looked at survey monkey, right?

Which our friend xander runs and said we’re going to try to buy that for 4.1 billion dollars and the market said

No

And then the market basically contracts and now they’re like well if we go and now torch

Our epita goals and tell the market we’re going to go and spend all that billion dollars

We have to try to go up against salesforce and microsoft with a product that we don’t know is going to work

Our stock’s going to be at a dollar

And so I think that that’s sort of the the parade of terribles that happened for them, but

it’s a little bit of a

warning sign for how difficult it is to get big like what salesforce pulled off right and what

Workday is starting to pull off what service now has pulled off

I mean

You can’t underestimate the quality of I mean google apple facebook. No, i’m saying i’m saying specifically enterprise. Yes. Yes those companies

Service now probably being the last one that’s really did it

Incredible

So difficult palo alto networks is probably the next closest one now salesforce

Let’s be clear right salesforce doesn’t matter how you get there organically and organically doesn’t matter. The point is it’s very hard

Most ceos fail nobody. So is this going but okay

So my original question is is this the bouncing along the bottom moment because we have peloton buzzfeed

We have so many of these companies. This is a warning sign

Okay

There’s not yet the bottom

Well, this is a warning sign that says you cannot go into a massive investment cycle

for all companies

Unless you can prove that you can sustain margins

Sustain growth and minimize opex, but isn’t this a very sophisticated buyer?

Taking it private. They must have a thesis of how they’re going to get their money back

Right, so that’s my point is sax. Do you think that this is like

If if the company’s already public and somebody thinks hey, you know

If I take this private I can do better than if it’s public and i’ll reintroduce it to the public markets to get liquidity

Later, isn’t that what’s going to happen here in all likelihood?

You’re making that statement in the absence of understanding how these things are financed

Well, it’s got a billion five and it’s and it’s breakeven almost. So

What about the what about the the billions of dollars of debt?

They’re going to take out and slab off this company, right?

What about the number of people they may be talking about post going private at the end of the day?

The private equity firms are not trying to make you know, this 10 billion dollars go to

25 they’re trying to make the 2 billion of equity they put in go to three

And there’s a lot of ways that two can go to three before 10 goes to 25

So they want a modest return

I still don’t understand why it’s 50 return. It’s a lot. It’s making a billion dollars. It’s hard

Yeah, but but compared to the management team and the board’s view of being a public company and growing 20 a year

Or it’s actually in their case 30. Would that be a better opportunity for those shareholders?

That’s what doesn’t add up here sacks. What do you think if I had to guess?

I mean, I haven’t talked to michael about why they’re doing it

I think that they’re operating at a new stage of the business

I don’t think it’s as fun to be

Growing a company at call it 20 to 30 a year and now all of a sudden you have to generate

Cash flow and you’re being valued on that. I mean they’re past

Your thesis. I don’t know. I mean it’s it seems a potential thesis

I think that’s basically why people sell good businesses. Like I actually don’t think there’s a problem in their business. I think that

Growing 30 a year with 1.3 billion in revenue plenty of cash in the bank. I think they have a good product

I don’t think there’s anything wrong with the business

Yeah, I think that that I do think founders get burned out and this is an exit

And I do think that the phase of their business they’re in right now is not going to be as fun

As the high growth phase look when you’re growing 100 200 a year

And investors are willing to fund that growth and they don’t really care if you’re profitable that is just more fun

than growing a business 20 to 30 a year and

Investors are breathing down your neck saying when are you going to deliver cash flow?

And what the private equity guys do is they’re going to go in there and they’re going to restructure the business to deliver cash flow

Now I think ultimately these types of businesses

They’re great these software businesses. They’re great business to own because they’re high gross margin

And you know, they’ve got a subscription base that just keeps growing organically if they’ve got positive net dollar retention

So you’ve got a let’s call it a 1.3 billion dollar subscription base that will grow

To 2 billion over the next whatever half dozen years

And quite frankly, I bet you the private equity guys are going to take out half the cost structure

There’s no reason this thing could be generating 500 million a year in free cash flow

But the management team would be unwilling to do that because it’s a different

It kind of sucks to do that every day to come in and fire half the team that you hired

And take that hard medicine it just as a bummer for that

Personality type. I think it is a different kind of management challenge. And yeah, I don’t think it’s that fun

And but look the thesis behind software companies the justification for them burning money

The justification for them burning money was look we’re gonna we’re gonna spend

Every dollar in revenue that we make and then some because we’re building a subscription revenue base

That again has positive net dollar retention. So one day

Okay, one day we won’t have to keep investing so much in sales and marketing

We won’t have to keep investing so much in r&d. We’ll still keep investing to some degree

We’ll make the product better, but it’s going to be a little bit more maintenance mode. We will get to

Maturity and then you can lay off a third of the staff and all of a sudden and then and then all of a sudden

The company is going to be super profitable

And the fact of the matter is is that day never came because the markets never demanded it

Now that day is here. No, no, no

Hold on it never came because the markets kept demanding more growth

If you look at their long-term operating margins, you know when they first when they first came out public

It like had like a negative 30 percent margin

Two years later they had a negative 50 percent margin and over the last seven years

So that was 2015

Up to now they’ve crawled their way back to negative 13

So at some point I think investors said oh my gosh, this company has never made money

It needs to keep investing more in order to grow

And I think david to your point, maybe the decision that he didn’t want to make was to flip it to a cash cow

I don’t think that’s true. I looked at

These guys have been generating cash

Their reported gap earnings are negative because of the stock-based comp expense meaning that they’re issuing

There’s a big topic to discuss here

And I think that that’s actually worth highlighting because this is an important one because people have been talking about this considerably lately

So this company’s been making money every quarter they generate cash

But in the last quarter

They issued 60 million dollars in stock to employees to compensate them for the work that they do. So that’s 250 million roughly

Dollars per year of stock-based comp which is two and a half percent

Of the total shares outstanding in the company are issued as employee comp every year

That number results in a dilutive effect to shareholders over time

Even though the business is generating cash your relative ownership as a shareholder in a business that’s generating cash

Is going down by two and a half percent every year because of all the new shares that are being issued

To compensate employees for the work that they’re doing

And I think that’s part of the issue that a lot of folks kind of have taken for granted

This was well rooted

In I would say probably google who became very generous very early on with issuing rsus

And stock in their publicly traded securities to employees as part of their compensation package

But google has a 30 40 percent EBITDA margin in terms of incremental contribution of new new revenue

And they can afford to take a point or two of dilution

Google, by the way, it’s actually not dilutive. They they buy back shares with their extra cash

So as a shareholder, you actually benefit from this considerable cash generation

But a lot of software businesses and tech companies in general

Have had to rely on issuing shares to compensate employees for the work that they do

So even though the core fundamental of the business is generating cash and cash is going up every year

The business doesn’t know how to get out of this cycle of how do you pay these engineers?

$400,000 a year

Without diluting shareholders by issuing all these new shares every year

And you’d have to do that more likely as a private company to figure out how to consolidate earnings how to trim headcount

Isn’t that get the thing to generate the cash it needs to generate but freeberg?

Isn’t that a real like you’re pretending like it’s some fake cost

Yeah, it’s not it’s it’s a real cost. It’s a cost of shareholders for sure. But why but why why the asterisk?

Well, no, there’s a specific reason because the business itself

Running out of cash. It’s not burning cash. The business is growing its cash balance

But in order to compensate employees for that cash balance, they’re diluting you the shareholder, right?

Look

When you own a share of a company, okay

Let’s just say by the way is another way of saying that the company is effectively issuing two and a half percent new stock

Every year to fund its operations. I mean, that’s another way to think about it

Look, i’ll give you the Warren Buffett school

You can tell me that it’s stupid but it kind of makes sense which is you take the number of shares you own

You divide it by the total the number of shares outstanding

You look at the total profits

And you say my look through earnings equals that percentage times the total profits. Yeah, your percentage is going down every year with stock based comp

That’s the problem. And so the question is

It’s also going down because you’re buying real estate

You’re hiring people you’re paying them more like it’s going down for a whole host of reasons that asterisk is an irrelevant asterisk in my

Like the end of the day you spend money to grow how you spend the money is not that important to me

Let me say two quick things on the topic. One is um, yeah, I totally agree. It’s an expense

on enterprise software and sax you’re you’re the the the master of the art, but

You know as an observer, it seems to me that many of these companies once you have an enterprise account

You benefit from being able to cross sell new products into that account and you can grow this net revenue retention

Number over time and ultimately generate cash

Many of the big enterprise software companies that we’ve talked about from salesforce to workday and others have succeeded in doing that

Autodesk is another good example and carl bass. I think it’s on the board of zendesk

They’ve done um, they’ve done this successfully by bulking up their product categories

And they’re they’ve done acquisitions or they’ve done buildouts. And so over time your incremental cost to uh,

to sell a new product and generate

um

Incremental gross profit goes down and the business performs better with scale

This seems to be one of those businesses where ultimately they couldn’t bulk up through acquisition

And they couldn’t organically try products and they tried and so the challenge is they’re kind of a I don’t want to say a one-trick

pony

But the portfolio of things that a business like this can sell into and ultimately increment gross profit is very limited

And that business becomes challenging to operate as a public company

Because you really do have to show that momentum as a scaled enterprise software business

That you’re actually generating real cash over time

The other thing I just want to say on stock based comp and sorry sacks

Let’s come back to one sec, but chamath and you guys I don’t know if you realize this but the standard in silicon valley today

Um when a company goes public in an ipo

Is to have what’s called an evergreen stock grant proposal

And evergreen basically means that every year the company is authorized the board

automatically

Authorizes the issuance of some percentage of new shares per year. This is typically in the range of four percent

And iss and other you know kind of institutional shareholder advisory services actually vote against

These shareholder proposals and push back against them. But most of the companies in silicon valley that go public

Automatically include evergreens as part of their you know, kind of ipo prospectus. I mean, can we agree?

It’s out of control like it’s yeah, which means every year they can they can dilute shareholders by four percent

And independent of how the business operated that year which is effectively the same as doing a four percent

Secondary cash offering every year because it’s this you’re issuing those shares into the public market

And instead of getting cash you’re paying your employees with them

And so it avoids you having to use your own cash balance to pay your employees

So you’re effectively raising money every year and you’re allowed to raise

Up to four percent dilutive effect to shareholders to do that every year

And it’s become a real topic and it seems to me that a lot of the big portfolio managers

Of big institutional funds are starting to pay really close attention to this quote-unquote standard in silicon valley

That stock-based comp expense has become so high and evergreens have become kind of a standard

as almost like an ordinary course of business and it’s become

Um, you know a really contentious topic and I don’t think it would be too surprising

Number one to see cash salaries go up and number two as a result of that to see salaries become rationalized in silicon valley

Where engineers may start to get challenged on the standard 400k per year

That everyone’s become used to um, you know in terms of you know, high tier

uh, you know

Promote work. Maybe there is a a compromise that could be had but this compensation you have to remember has been outrageous in some cases

Especially for senior management, and so it makes the core business look broken

But what we actually have is maybe people who are on these boards

Are also in on this compensation

And it’s just bad hygiene and it’s not related to the performance of the company, right?

I don’t think I don’t think the board people are quote in on it

I think that’s it’s just it’s you have to pay an engineer 400k a year to compete effectively in silicon valley today

I was talking more about the management’s the management stock comp the management stock comp is different than the engineers

You would agree free very like there have been some enormous stock grants board. Yeah. Yeah, certainly if you want to run the company

As a high growth startup with employing these high paid engineers and executives including stock compensation

That is a certain kind of way of running the business

But again, if you’re trying to run the business for profitability, that’s a different way of running the business

And just to add a layer to what happened here that zendesk was under intense pressure

From an activist investor called janna who was basically trying to replace the board of directors. They’re running a proxy battle against them. So

Jana has been pressuring them to replace the board to make all these changes

That to take the 17 billion dollar offer, I guess back in march. They didn’t do it

Now they did a lower offer at 10 billion. Why I think because the market has clarified we now it’s it’s clearer that we’re in this

Regime change what the market is valuing is free cash flow as opposed to profitless growth

And my guess is again without having talked to michael

My guess is they probably just threw up their arm and said listen, you know

like it’s not going to be fun to run the company this way, but you also have to

You have to ask the question. Why are these highly sophisticated private equity firms buying it for 10 billion?

I think they’re going to make a lot of money and the way they’re going to make a lot of money more than a billion

Yeah, they are going to slash the hell out of the cost structure

They’re going to run it to be highly profitable

They’ll probably bring the growth down from 30 percent a year to 20 percent or 15

But the benefit the offsetting benefit to reducing the growth a little bit will be they could probably generate

Three four five hundred million of free cash flow on that business if it’s doing 1.3 billion

And they stop investing in r&d and they stop and they bring down the sales and marketing

That could be a that could be a cash cow like you said

So I think that’s probably what’s what’s going on here

Um is the I just want you guys to know not to burst this bubble, but when people talk about free cash flow

they touted a lot tech companies touted a lot because

You’re allowed to add back in stock-based comp as if it didn’t exist. The problem is that stock-based comp is non-cash

So when when you’re only sourced, so if you see a company that has negative EBITDA negative everything

All of a sudden are like quote unquote free cash flow positive

It’s because they were able to add back in stock-based comp, but that money is not real

So when the only source of free cash is stock-based comp that free cash flow doesn’t reflect the company’s true profitability

This is what I mean by people play these shell games with these numbers to allow, you know

Oh, let’s you know value something based on EBITDA actually

No, because you know our stock-based comp is off the charts. Let’s actually go to something else

You know, we’ll do a non-gap EBITDA measure, you know

You know adjusted EBITDA and then oh actually wait

Sorry, look at free cash flow because you can add back in this gargantuan amount of stock-based comp

I mean, it’s crazy. I’ll just the quote from community EBITDA. We work

The quote from Warren Buffett summarizes the best if compensation isn’t an expense. What is it?

And if real and recurring expenses don’t belong in the calculation of earnings where in the world do they belong?

I think what we’re seeing right?

My point is is not that comp isn’t an expense

It is but rather that it’s an expense that you can control by reducing the amount of staff

I think these private equity guys are gonna basically whack the cost structure of this

I’m, just saying you can distort free cash flow as well because you can head back in stock-based comp. It’s a joke

It’s a little bit of a shell game going on. It’s like the dirty secret. Let me ask you a like

an important investing accounting question

Let’s say that a business like

Zendesk is generating 100 million dollars of free cash a year

No, no, what does that mean?

Well, hold on. So every year their cash balance goes up by 100 million dollars

They have a business it generates 100 million dollars of incremental cash every year the cash balance goes up

So you as a shareholder own shares in a company that is creating 100 million dollars of cap of incremental capital per year

However your shares that you own are going down because they’re getting diluted every year

By roughly two and a half three percent and that’s it’s two and a half percent is Zendesk’s actual number

So every year you’re getting diluted by two and a half percent

Would you rather have a business that you are getting diluted by two and a half percent?

But it’s incrementing its overall balance by 100 million dollars

Or would you rather own shares in a company that’s burning cash each year?

And I think that’s where this ended up from a market perspective getting rationalized

Is shareholders said I want to have the safety and security of cash generation and i’m willing to take on the dilution for it

And that’s how this became, you know as standard as it is when I think about funding a new startup

And I look at the competitive landscape when I see that the competitors have all been acquired by private equity companies

I generally think okay. There’s room for innovation here because I know that the first thing the PE

Firms are going to do when they acquire a company

Is like a zero out r&d or just put the product on maintenance mode. There’s no innovation that happens

Yep with the product once the PE firms buy the buy it, right?

So the reality is I think those are good targets for startups to do acquisitions, right sax. I mean they’ll find yeah

They’ll do roll-ups right because it’s they will do financial innovation. They will innovate the the structure

Although the wasteful spending and all the nonsense and lunches. Yeah, exactly

Once like cut out all the kind bars

Yeah, the kind bars are exposed brick walls like all this nonsense. Yeah

So who do you think it’s a vegas trip?

Yeah, this stock based compensation is going to go away because they’re going to get rid of all the high price engineers

They’re going to get rid of the a lot of the high price executives

They’re going to probably they’re going to have to keep customer support. They’re going to increase cash salaries probably

They’ll bonus people they’ll just do bonuses for hitting targets instead of giving people as much equity in the business

And they’ll run it like a you know, private equity type type play. Why don’t you do this sax?

It’s not fun. It’s not interesting to me, right?

Yeah, I mean we’re going to see it’s not a new product

I think david the other reason why it wouldn’t be fun is like it’s a it’s a level of financial engineering

Which is highly sophisticated. I think for some people it is fun. I think for us it’s less fun because you’re not

Necessarily creating a company per se not innovative. You’re not being a product person

You’re yeah, but I would say that it is highly sophisticated and the folks that do it at these places that these private equity firms

Are incredibly they’re very good at it savvy at how they do it

um

and it’s it’s all the twists and turns of how you you know lever this up and use debt and blah and use a margin loan

and pre-fund the I mean

And it’s not the stuff that necessarily we want to be thinking about

But that’s what you’d have to do as well. I totally agree with that. Look i’m

i’m happy they exist in the ecosystem because we need firms we need more exits, right and

we know that right now in washington the

The regulatory regime is very difficult. It’s very hard to get deals through

So at least you have private equity firms that are providing some exits and we need the ecosystem needs and those exits

You’re saying sacks don’t trigger

Like comp competitive concerns with lena khan and her group, right? Like yeah

Some private equity firm took this private. Okay salesforce didn’t buy it

So we don’t need to get through regulators. You’re going to see a lot

We need exits in order to justify the risk capital that goes in

At the earliest stages which in most cases is going to be a zero

And just to give you some other numbers out there manscaped, uh, which is a company that sells razors for guys

Uh, they had 315 million in net loss in 2021

With 310 million in stock based comp by the way

That number can also be distorted just to be clear if you give a one-time big grant to an executive like a ceo

Yeah, the way that the accounting works on stock based comp. It’s not the kind of thing

You can have a very simple

Kind of descriptor on but you can have these very significant short-term costs associated with a big grant

That could vest over a long period of time sure with that has very high strike prices

I mean when elon got that massive grant at tesla, the stock based comp expense was significant

Yeah, but you know what the interesting way into it

It was that was there were 20 targets or something crazy like that and all of them were based or a lot of them were based

On the stock price and the delivery of cars. So that’s one of the things that I think is broken. Yeah

Yeah, so this is one of the things that’s broken in silicon valley is that

The the comp in the stock based comp is not tied to performance. It’s like just giving people guaranteed salaries

In fact, I was gonna say jason for junior people like there is more sophistication to be clear

In executive comp and public technology companies, I think that should trickle down to the junior people, too

I think everybody should rise and fall with the company’s performance. That’s my personal feeling

I mean, this is the problem with entitlements, you know, and people being entitled

I started to be like a red pelt here

But we should have like performance should be lauded and compensated for not just showing up and hanging out

There’s going to be a bunch of companies in this position. So look for this as a trend peloton

964 million last quarter in revenue lost 757 million in the quarter

They have a 3.1 billion dollar market cap. They’ve only got 879 million dollars worth of cash

I’m just looking at these numbers. Hopefully they’re they’re tight. Um

And they have a billion for an inventory that company’s going to get taken out

Uh buzzfeed. I don’t know why that even went public. They’re down 84 percent

They had 91 million media company 91 million dollars in q1 revenue. They lost 45 million

Their market cap is down to 210

Million and they’ve only got 74 million in cash or so with some, you know, maybe 100 millions in accounts receivable

So there’s a bunch of companies right now that are public

that are

About to hit in a couple of quarters running out of cash going into a recession. Are we going to see?

Some big flame outs. Do you think and are you watching specific companies because the private equity folks must be salivating watching this

Well, I mean look

You asked what the takeaway was around this and I think the takeaway is there’s been a regime change in the public markets

The way that investors look at these companies is changing. It’s not

About growth at all costs anymore. They’re not just looking at revenues. It’s also about margins and cash flow

and you know, we talked about in the last pod how

I think a lot of founders understand intellectually that we’re headed for a downturn

If not a recession, but they weren’t taking the medicine of basically reducing their burn. Well

This is an indication of what investors are valuing if the only way for zendesk to create value as a public company

It’s a sell to a private equity firm

Who’s going to cut half the staff is going to cut off or some huge number of staff to run it for free cash flow

That’s just an indication of the regime change. So

You know, we need founders to start

Internalizing this information so they can run their businesses more efficiently, you know what investors want right now

They still want growth, but they want it with low burn high burn operations are going to get punished. I’ve transitioned most of my

public markets time to focus

on debt

um, and i’ve been looking at these companies because yeah, because there’s a lot of these really interesting tech companies with a lot of

Because what david said I think is a hundred thousand percent right what sax just said

There is a massive massive regime change here

And yeah, and when shocking you if you don’t take the medicine, you know

And and what what’s funny is like so many of these companies have been left for dead

But what is really juicy?

Is the few companies that you think will survive?

And specifically making sure you’re protected in the capital structure

Which means to own the debt because the debt is always senior to the equity and there’s some really really interesting companies out there

That are in that situation and it’s just like it’s a much better risk reward

In a moment where again, you know, we talked about this, but why would you give up your liquidity today?

I don’t know the answer

Why why let’s go around before you use this term jason before like skipping along the bottom

I just think it’s like psychological wishful thinking as opposed to sort of like a rational summation of the actual jerome

Powell just said I will tank the economy in order to beat inflation. He just said it in the wall street journal

But people believe inflation might be turning over. Do you buy that or not?

No, as i’ve said, I think you’re going to see eight and nine percent inflation prints for at least the next three or four months

minimum

I think that things could get

Marginally better after that

But I think the thing we don’t know and again it just touches and I don’t care what the fucking audience thinks touches

Russia and ukraine

So sorry to bring up politics, but no these things are inexorably

intertwined

and if people want to go and venture and gamble in the stock market, you might as well understand this because I think

You know many of the scenarios will trade

Because of what’s going to happen with putin

Let me let me ask the question here

How many quarters will this recession be if we had to pick a range pick a two quarter range?

I’m thinking three to five. What do you think? I have no idea. Okay

Freeberg you got a

This is the second how many quarters?

plus or minus two, let’s say

Uh, is this recession going to be so five plus or minus two four plus or minus two plus or minus one?

What are you thinking will be the bottom out point? I don’t like the term i’ve told you guys I don’t like the term

Quote recession as if it’s some absolute negative thing. I mean

negative gdp growth coming off of inflated gdp doesn’t feel to me as

Uh systemically challenging to the economy

As uh, you know some other circumstance where for example, there was a global financial crisis or

9 11 or some other kind of factor that that drove things

Uh that that really affected the core economy

We’re certainly we we had we had something that that affected the core economy and covid then we had massive stimulus

So I I don’t I think there’s this unfortunate general characterization of quote unquote recession

being an absolute negative and I think that there’s relative growth and if you’re

If your relative growth is negative off of an inflated number

But over okay, let me give you let me let me just finish but over a historic two or three year period

You’re still growing the economy considerably because jobs, uh jobs are growing and production is growing

Uh, it’s not as negative as it’s being made out to be so i i’m not gonna okay

I get you get into let me let me ask you this way then how many more quarters will we have of

Stocks and real estate and assets declining in value or being flat. That’s a financial markets question

Yes, that’s a different one. And one thing i’ve realized is that financial markets in the short term

Uh, you know the old warren buffett quote or whomever it is that over the long term equities are a weighing machine in the short

Term they’re a voting machine

As we’ve seen with crypto. It was a voting machine that everyone voted on the the hot thing. That’s your

And now everyone’s voting against it. So I don’t they’re weighing it now. Yeah

Well, yeah, I mean at some point

You hold a cryptocurrency long enough. You’ll find out how much fundamental productive value it’s creating

And the same is true for owning businesses or other real assets

You’ll find out over the long run how much productive value they’re creating

So, so you don’t want to answer the question of when we hit a floor, okay sacks

When do you think we hit are we are we hitting a floor now?

We have a lot more to go down. I’ll tell you one point of view

I I am looking at buying high quality share businesses buying shares of high quality businesses right now

I think that there are things that are that are cheaply priced that if I own them for a long enough period of time

The underlying productive value of that business will return my capital to me

And so you have one that you might want to mention here that you’re looking at. I don’t

Because you don’t want to share stock tips at the summit with our friend sunny

He’s his trades are up. But like I told him these are longer-term trades

That’s what do you think in terms of and then we’ll go to some of the political stuff that affects markets after this

Well, I mean, I think it’s all related

So there’s three things going on here right now economically or three underlying causes one is rate expectations

Have changed massively interest rates have gone up and rate expectations are going up even more

Fueled by inflation and until we see where we’re at on inflation whether that gets controlled that issue is not going away

The second big issue is economic slowdown the recession. So the first one is wall street

This is main street and these two things are related because companies are slamming on the brakes

because they’re seeing that the capital availability is

Greatly getting reduced by this re-rating this regime change in markets

So we’re seeing an economic slowdown that threatens to turn into a recession

and consumer confidence is part of that right when your

Wages don’t buy you as much because food and gas prices are through the roof

That reduces consumer confidence and that also plays into that. So that’s the second big issue and I don’t think we’re going to know

about recession

It’s going to take you know

Potentially through the rest of the year before we figure out what’s happening there

And then the third part of this is the overhang of this war in europe the ukraine war

Which is now threatening to become a forever war. There was a pretty stunning article

In the washington post this week

in which the administration

Officials were quoted as saying that they would effectively prefer or countenance was their word a global recession and famine

over letting russia

Keep the donbass region. So they are committed now to basically prying

Russia out of the donbass, even if it means global recession

Not to mention they say specifically the donbass or specifically standing up to putin

Well, that’s kind of minimizing what we’re talking about is is the donbass region what’s happened is look

The russians lost the first few weeks of the war in which they tried

To strike they they basically went for a knockout blow to take over kiev topple zelenskyy

I think we accomplished something in preventing that but since then

They have achieved their objective of taking over this eastern portion of the country this donbass region

In which this is where most of the ethnic russians live and these ukrainian separatists who are

Ethnically russian they’ve been fighting alongside the russian troops and the russians have basically won that part of the war

And so the question is what do we do now?

And what you had is you had administration officials saying that they would not accept the status quo that they are willing to fight on

For years

You know the same geniuses who gave us the forever wars of the middle east are now giving us a forever war in eastern europe

And they are saying that they are willing to basically continue this fight even if it means global recession now

I don’t think the american people

ever voted for this but

This is what the administration is pursuing

And you know, you got to remember that there’s always the risk that this war spins out of control that we get a nuclear escalation

So I think that this is a huge overhang on markets. It’s the third big problem that we have

So I don’t see how we get out of this bear market until you get

Clarity and resolution of inflation and rates number one

slow down to recession number two and basically this war in europe number three and it’s reflexive because uh,

these next three months as I as I

kind of

Indicated last week. I think we’re going to see inflation

Uh prints that are really high in part because things like rents which haven’t you know

Which are on a lag will get folded back in so we’re going to be printing eight and nine percent

And then guess what jason? It’s the fall

It starts to get colder, you know, uh, russia’s depriving europe of nat gas

Um, where’s the oil going to come from?

OPEC is basically still stiff arming the united states with respect to expanded production capacity

Why because they didn’t like the way that we were strong arming them and a whole bunch of other topics

You know, and so where do we stand you could have 180 a barrel oil

By november december when it’s cold not just here but in continental europe

Now all of a sudden inflation gets kicks right back up again, it could be seven eight nine percent again

I so I just think all of these things are now so inexorably intertwined. I think david’s right we need to

Put this war to bed

and

The unfortunate consequence is that right now if we

Want to fight a proxy war there is no elegant off-ramp

that I see so

The prediction markets just so people know are predicting point eight point nine percent

Uh additional inflation in june over and I think that’s over last month and last month was 8.6

So we’re going to be at nine and a half jason

Could you imagine what the markets do if we print a double digit inflation print ten and a half percent?

10.1

Just the psychology of that

Uh, well consumer psychology is really low right now. No not consumer psychology. I’m thinking market psychology. No market, too

Yeah, so we put those two things together and then if this war is never ending and the famine that um

And the impact on 40 million people or something like that that freeberg predicted is actually going to happen in the next six months

Uh, this is going to feel quite chaotic to people around the world

So we we do need to put this war to bed for sure

There’s no deal on the table right now, but the deal that we’ve talked about on previous shows there was always

The broad construct here even before the war began was there were three pieces to it

number one

was that

that

Ukraine had to remain a neutral state as opposed to

Being brought into nato and having american troops weapons and bases on russia’s border

That was always a red line to them and in exchange for neutrality ukraine would get security guarantees

piece number two was that in the eastern region where you had these

Russians these russian speakers that their rights would be respected and that they would have some autonomy

And again, that was something that ukraine agreed to under the minsk accords

But it was never properly implemented and the third piece was that russia got to keep

Crimea, which again was a fait accompli that happened in 2014

Smart observers of this conflict have been outlining that three-point plan

for over a year

And that is what we’re going to end up with the only difference is that it’s going to be implemented by force

And ukraine will be destroying the process

That is basically where we’re at right now

russia has

They’ve taken over the donbass. They’ve taken over this eastern 20 percent of the country. They have crimea

And ukraine basically the the rest of it will not be part of nato

That is basically what the russians have done is implement by force

A plan that frankly we could have agreed to through negotiation a year ago and avoided all this death and destruction

My my calculation is maybe I mean, we don’t know putin’s intent and that’s that that’s the wild card here

He is a bit of a madman. I mean, he’s pretty much of a wild card here. He’s a dictator who invaded another country

Yeah, my my calculus is slightly different. I think I see two things in order to get us back to a state of

relatively predictable growth and price stability number one is we need to

Reset supply and demand by taking 30 trillion dollars out of global markets

And then the second is we need an off-ramp to this ukraine-russia war so that

There is predictable energy and food supply

To the world so that folks can just get back to what they do best

And if those two things can happen, then the markets will have found the bottom

But

Until those two things happen in my opinion

And by the way, the first thing doesn’t actually have to happen entirely

You just need to see a path for it and you know

We’re the only one that’s doing quantitative tightening right now. The ecb hasn’t even started taking all this crazy money out

You know, I don’t know when the bank of england is going to do it

When is you know, the bank of japan going to do it? So this has to be a global coordinated effort before we find the bottom

And this war has to stop

Well, just kind of go back to this, uh unpredictable madman narrative

jason

Yeah, look if you’re the dictator. Yes

If what you’re trying to say here is that putin bears moral

Culpability and moral responsibility the blood is on his hands for this war. I agree with you on that

Okay, however, this how could you how could you not? I mean, he’s the person who invaded right but but just logic there

Right, but the idea that this war was unpredictable or could not have been predicted is simply false because many

Experts did predict it and they did tell us exactly what’s going to happen

And the reason they knew was going to happen is because russia has been saying since at least 2008

Uh when there was this bucharest summit and nato declared its intent to bring ukraine into nato

The russians been saying that is a red line and russia experts biden’s own cia director a guy named bill burns. He was then

our

Emissary to russia and he wrote a memo to then secretary of state connelly’s rice

And what he said is that the idea of bringing expanding nato to ukraine?

Was a red line for the entire russian elite not just putin

So, uh, and if you go back and look about what other russian leaders said about nato expansion

Gorbachev said it was a humiliation to russia yeltsin was against it

They’ve all been against it. And so bill burns warned in 2008

This was a red line and the russians been saying this since 2008

And they were saying it all of last year if you go look at contemporaneous headlines

Describing the tensions between the us and russia

This is the headlines of articles I can provide to nick we can put on the screen

They were saying this was an absolute red line for them

So the idea that this conflict was unpredictable because putin’s a madman listen, you can call him a dictator

We can also predict highly predictable. Yeah. Okay, and you know, it’s also highly predictable is that china considers?

You know taiwan a renegade, you know

province like yes dictators

You know will tell us what they’re going to do

The question is does the free world want to stand up to dictators and so

While you know, uh, it’s messy to stand up to a dictator

The west, you know kind of doesn’t have a choice to stand up to dictators or else

They will roll into other countries history has shown that so as messy as this is and as terrible as it is for the economy

I do think that we have to stand up to dictators. There are plenty of dictators where we work with

Biden, they’re not invading other countries

They’re not invading other countries and that’s the difference here sax

You know, we could have avoided including a bit of a pass here. He invaded the country

We must stand up to dictators who invade other countries. Well, look, look what you’re saying. I don’t mean just america. I mean the free world

Yeah, well look look where you’ve got us then with this policy you and the people we could have avoided

Yeah, because you are basically spouting this this nonsense

that

Look, the question is stand up to dictators who invade other countries. I think you would agree. That’s a good idea

Let him talk

Let us discuss. Okay. Freiberg. Okay. Listen

There’s no question that russia has been the aggressor, but the question is why did they do this?

You don’t really have a theory on that jason except that you believe that on february 24th putin woke up and went nuts

That’s basically your explanation. No, that’s not for what’s happening in the world

We know it’s a debated. We know it’s a debated region. We know that they’ve had this conflict for a long time

Okay, so we could we could have used here on the pod many times every every president from bill

Clinton to obama who has dealt with putin has written largely the same account of him in their memoirs

Which is look they know that he’s a thug. They know that he’s a dictator

However, they always said they always said he’s very businesslike. He’s very direct. He told them what their issues were. Okay

Putin was very direct. He and biden had a summit in june of last year

The russian’s been very direct your attempt to bring ukraine into nato is a red line for us

Why it’s a violation?

Of our security interests the idea of bringing a country into nato

It has huge security externalities for them. By the way, we understand this in other contexts

We understood in the context of cuban missile crisis

we didn’t say that cuba had the right to join any military alliance that it chose to

Because we wouldn’t be able to sleep as well as at night if cuba had nukes

Pointed at us with a first strike capability. We’ve had this conversation. Do you think?

Yes

Sweden and finland be invited into nato

I would table that issue until the war is over

I don’t know why we need to basically deal with that right now

But listen, we don’t even have to go back to the cuban missile crisis right now

Okay, there’s a country called the solomon islands about 3 000 miles off the australian coast

They entered into a deal with china security deal and the u.s has been up in arms about that

So, you know, and the reason is we don’t want china extending its footprint

In asia, okay

So we treat that deal as having a security externality for us

And yet we refused last year to recognize that there’d be any security externality for russia if we brought ukraine into nato

The russians were abundantly clear about what they needed. So my point is this conversation on the pod

Yes, my point is this that this war was easily avoidable through the use of diplomacy

The administration chose you believe that you don’t know that you believe that you don’t know that

You don’t even try it. We never even tried

You actually don’t know that you actually listen to that

It’s worse than that jason because here’s what happened after the june 16th summit in geneva between putin and biden last year, okay

Putin tells biden to his face. This is a red line as they’ve always said. So what does the administration do?

Not only do they not negotiate with the russians. They invite zalinsky to the white house on september 1st of last year

We talked and then on november 10th, they published a massive 10-year charter agreement

This was a huge finger in the eye to the russians

And on the heels of that november 10th charter agreement

The russians basically delivered an ultimatum to the us demanding a written guarantee that ukraine not join nato and then in january

Blinken was tasked with negotiating with lavrov and blinken said there has been no change

There will be no change nato’s door is open and will remain open. This administration was incredibly stubborn

They were absolutely refused to use diplomacy to defuse the crisis now you say well, we can’t know what it would have done

Well, but the point is they never tried

Is ukraine a sovereign country?

Yeah, they are but do they get to pick what they do in their fate?

Look this idea that they get to pick their fate

As a sovereign country, I think you would agree. Yes

Okay. Well, here’s the question is you’re what you’re trying to do and is is create a doctrine

Okay, you’re trying to create a new doctrine

That a country gets to join whatever security alliance

They want whatever military alliance they want that is not a doctrine we believe in when it comes to the solomon islands

It’s not a doctrine

We believe in with respect to cuba and the cuban missile crisis

and the fact the matter is is that the nations of the world are engaged in security competition and the and if

If a country like ukraine joins a new military alliance that has huge externalities

And so we do not believe in that doctrine. Jason. This is a doctrine that did not exist

until february

Wait, we don’t believe more people should be able to join nato

While sweden clearly believe that but this this doctrine that the countries of the world should be able to join

Whatever military alliance they want that is not a that is not we do not practice that doctrine

That is not an example. It’s cuba

Cuba and then more recently the solomon islands. Okay. Yeah, I mean listen, I I

I’m, not saying this war is not a mess all wars tend to be a mess

I’m, not saying we shouldn’t try to resolve it with everything we have

I do think the people of the ukraine and you know get to pick their fate and and I am in support

And I am in support of the of nato being stronger and stronger and i’m in favor of isolating putin

Uh, you know and using diplomacy as the primary tactic

To do that and making sure he doesn’t run over countries because he won’t stop at one

I I think that’s the the big question. I think is will he stop at one? Do you think he’ll stop at one country?

History has proven he won’t you just said are you okay with stopping him?

Listen you you just said that you want to use diplomacy as the primary tactic

Okay, so we agree on that

The question is what you’re willing to give up because the administration was not willing to engage on the key russian concern

Which is the admission? Let me ask you of ukraine. It’s a native. Do you think russia will stop?

With ukraine or donbass? Do you think that’s actually the stopping point for putin?

Listen, I think there’s a few ways to come at that question

One is to ask what is the motivation which is very hard to know because it’s inside putin’s head

Okay, so the second is one of their interests and the third is what are their capabilities?

The capabilities question is pretty easy to answer. I mean they have had a very hard time winning this war

They’ve won this eastern region of the donbass because I think why is that? Why did they have a hard time?

Well because their military capabilities are obviously not as great as people thought and the native ukraine got a lot of weapons

From the west from from nato exactly. So this idea listen i’ve said it before

The eu’s gdp is 10 times greater

than russia’s

And you know economic strength is the foundation for military strength. Moreover, we’ve seen that these nato weapons are incredible the u.s’s weaponry

I mean, it’s so you’re in support of providing weapons to ukraine

nato

The eu the european countries i’m not in favor of creating a forever war in eastern europe

That is what’s in the cards. No, but the question is jason

You just said that we have to isolate putin we have to deprive him of any

Of any positive outcome from this war? No. No, I said we have to stop him from evading countries

That’s what we stop him from evading more countries that are he’s not gonna invade

He’s not gonna evade nato countries because he’s so outmatched well not nato

But I mean there’s a lot of countries that are not in nato

So I mean, I think that’s the thing but I mean listen, we discussed this a million times here

Well, I think we both agree. We want the war to end

I think we might just the question is what are you willing to do to end the war?

and

You know my point is this that the question is what is putin willing to do in terms of starting wars and evading other countries

And what does the west have to do to react to that?

You know, I think that’s what we’re talking about here

We didn’t start this war, you know, but anyway, let’s move on. I think well, hold on

I’m saying we and i’ve started this war, but we failed to prevent it through the use of diplomacy

That’s always been my point. Yeah, I think this war

It may be out of our control

I think this war was easily preventable if we had listened and engaged in diplomacy

Easily. Yes. Okay. Yes. I’m not sure that’s what

Let me just tell you right now the deal that would end this war is the same deal that was on the table last year

Was zero bloodshed which is ukraine remains a neutral state. There’s autonomy for the russian speakers in the donbass and crimea

Basically remains part of russia. That was the deal. That is the deal. That will be the deal the only question

Is does the whole country have to be destroyed? All right

Well, we’re going to find out in the coming months. And does the world have to go through a global recession and famine?

These are big questions. Uh, yeah, it’s not the sacrifice it takes to stand up to dictators is very significant

And especially ones with nuclear bombs and it will be even worse with taiwan

I mean if we think that this is difficult, can you imagine this kind of escalation with a capable?

Adversary if russia is not super capable and their weapons turned out to not be as strong my god

What would taiwan look like did you guys read this story where?

It was the deputy foreign minister got demoted

and there was all this, um

speculation like why did he get demoted and one of the things that came out was that

you know, he was very very pro russia and

And she is not

And g is not and g is much more hedged and moderate and yeah

You know wanted to have more optionality and felt that he was cornered because I think there was some

What was the quote? I mean nick you can pull it but it was something about like

You know the the strength between basically china and russia is infinite

But that was that was a quote that he said that was a little bit off the reservation it seems and so yeah

It’s got a fence. Yeah. Yeah. Yeah. Yeah. No, it’s an important story as well

I mean, and you know, it’s one of the things that we can look at what’s happening in these political situations

I think we probably have 50 60 70 percent of the information not even not even really quick

Tell us what’s going on in alpha fold world sultan of science

There was a paper published about two weeks ago in the journal science. It’s actually

An important paper because it used alpha fold

Uh to do some really important work and the work is to actually create

a 3d

structure 3d model

of the nuclear pore complex and that nuclear pore complex is really the

Scaffolding that makes up the nucleus of a cell so all eukaryotes, you know

All plants and animals have a nucleus in our cells and the nucleus holds the dna

And the big question freeberg’s internet connection is getting bored

She’s

Just let him finish his sentence did it break up

You’re fine. Keep going. No your internet connection

Because it was so boring what you’re talking about keep going

So what does this mean in terms of well, hold on?

So, um, so what this team did and this is a the problem that’s uh kind of been around for decades

Is we’ve never really understood

What the physical structure of the nucleus in a cell looks like and this is important because the physical structure

Regulates how molecules get into and out of the nucleus

And how dna is expressed and how the rna that comes out of the dna goes into the rest of the cell

And this regulates so much of human health. In fact, it’s been shown and demonstrated

that dysfunction

in the nuclear pores or the nuclear pore complex in the cell

Um can lead to things like viral infection brain injury

cancers

cardiovascular disease

Many diseases their underlying driver may result from dysfunction

In the transmission of molecules into and out of the nucleus of the cell

And so scientists have always tried to figure out what does that transport mechanism look like? What does that infrastructure?

look like

And um, so for the first time and scientists have published theories on this and they’ve shown using x-ray

imaging

You know some theory around what these complexes look like

Um, and what this team at harvard did that they published two weeks ago is a really groundbreaking

Extremely detailed view of the entire nuclear comp nuclear pore complex around the nucleus of the cell

by combining

Both x-ray imaging and alpha fold. And so what they did is they took the predicted physical structure of those proteins

From alpha fold and use that to construct a sample of what the you know, the nuclear pore complex looks like

How do they know it’s accurate?

And so using this x-ray imaging they’ve been able to kind of verify some of the assumptions

Alpha fold yields and now they’ve created this 3d model

And this 3d model now gives and by the way just to think about this physically what it means like for a second

The nuclear pore complex think about it as like a fence like a spherical fence that sits around the nucleus

And some parts of that fence open and close

Some parts are static

And the way that certain things open and close and what can fit through them and how they fit through and how stuff gets stuck

It’s really important to understand as a way to both

Um understand the underlying cause of diseases like cancer

But also how we can create therapeutics and how we can target specific things that we can fix

And how we can get molecules into the nucleus of the cell to regulate dna expression and edit the dna inside

That’s mind-blowing. So wait if I were to translate this from nerd

You basically alpha fold predicted. No, i’m being sincere

There’s a map here that we were not able to see through x-rays and through you know, physics physics

But alpha fold predicted some of that and filled in the gaps. So now we have the map has been filled

That’s a great that’s a great way to describe it

And so now we have this incredibly detailed 3d image and nick can share the images on our youtube. Um

Stream here of what the nuclear pore complex looks like and how each of those pores work. How do they open and close?

What’s the structure of them? This isn’t simply like a circle

This is like all these weird tentacles and little things sticking out and that can help us predict what molecules get stuck

And how one error in one of those proteins can cause things to get like a cancer or something like that

How this can cause certain dna to be overexpressed or underexpressed causing things like cancer

So we’re going to live forever a whole new area of research in medicine

Gene therapy and new things that we can think about targeting to fix a lot of these underlying diseases

And so this was a groundbreaking paper

Incredible. What’s the name of the paper?

Can we just get the name of the paper so people can google it? We’ll put it in the show notes as well

Uh, there’s been an amazing episode. Yeah, so it’s a team out of harvard

We’ll send the link in the in the show notes structure of cytoplasmic ring of nuclear pore complex by integrative cryo em and alpha fold

Uh terrible naming not for the general audience

No, no, it’s okay. Sax is printing it out right now, and he’s going to use it for his

His new kittens, but I just want to highlight, you know, because we talked about alpha fold

I think last year or the year before and how it was going to open up all these new areas of research

Here we are a year later

Incredible example of how alpha fold’s been used to solve this really misunderstood or never really well understood

Aspect of biology that is at the root cause of so much of disease and creates all this opportunity for medicine and therapeutics

Research and discovery. All right, this is it’s great. It’s great to see this breakthrough. Sorry

We didn’t get to january 6th or uh, roe v wade. We’ll get to those the next episode and we’ll see

Listen, I think roe v wade. I’m not sure there’s uh, I mean do something about the reactions

But we did a pretty thorough episode. So folks really want us to double click we double clicked with two

Of the most constitutional experts in the space when it first got leaked. So please go and watch

Yeah, or listen to that. All right

Which episode is that number? I don’t know which we’ll put it in the show notes

It’ll be in the show notes for everybody and we’ll see you all next time. Bye. Bye

Bye. Bye. Bye. Love you

Rain man david

And instead we open source it to the fans and they’ve just gone crazy with it love you queen of

We should all just get a room and just have one big huge orgy because they’re all just useless

It’s like this like sexual tension, but they just need to release them out

I’m going