All-In with Chamath, Jason, Sacks & Friedberg - E88: First principle politics, China chaos & outlook, state of private/public markets & more

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Two days ago. Oh, here we go. In the piazzetta, I got into a

fight. You got into a fight. I got into a fight. Like a

physical altercation. The physical altercation. Really?

This chick shows up wearing a white wife beater talking all

kinds of **** And I said, listen, lady, you zip it. And

she just kept jawing and jawing and here she is again. She’s

back for more. And so, I was like, listen, now, have you

ever seen? Ah, there she is. Have you ever seen a one, a

onesie wife beater? Look at that little sweetie. Aw. I’m

just gonna rub at you. And you just sit there. And then you

just sit there. And then look. There’s your cold open

everybody. That’s the good stuff right there. Say hi to

everybody. I know I’m not a beagle. I know I’m not a beagle

but I’m even better. I have my own thoughts. Sax, what you’re

seeing here is called affection between a parent and a child.

Just let me know when it’s over.

You’re the worst human being in the world. I don’t need to

watch Chamath boost his Q rating by using his kids as

profs, okay? Oh, Freeberg, where’s your puppy that you

saved from being tortured with Kim Kardashian’s lip gloss?

Nick, we gotta get this guy in cuz he hasn’t been in the show

in a while. There he is. There he is. Oh, Monty. Oh, your

belly rub. Get the props out of the shot.

Rain Man David Sax.

We open sources to the fans and they’ve just gone crazy with

it. Love you guys. Queen of Quinoa. Sax, what’s up with

J.D. Vance in Ohio? Is he gonna pull this thing off or is he

getting beat up? I read an article about him getting beat

up with the Peter Thiel connection being he got

physically beat up. No, no, no. Like in the post. No, no, no,

no, no. No, I think J.D. should win. He’s gonna win, right?

Yeah, I think so. And what about Blake Masters? These are

the two guys that TL is backing. Should we start the

show? We kinda did. Yeah. Can I just ask you a question? If any

of us entered porn, wouldn’t one of our names be Blake

Masters? Like, it’s just, wouldn’t it be on the list?

Like, doesn’t it sound like a great, isn’t it a great name

for porn? It’s a great name, Blake Masters. It’s a great

name. And J.D. Steele. I’m sorry, Vance. Yeah, go ahead.

Explain what’s going on with this mentoring candidate. Would

you, would you accuse him of without any evidence? I’m not

accusing anybody of anything. I’m just saying, tell us about

your mentoring candidates. Go ahead. Well, so J.D.’s already

won the primaries and I expect he will win. I mean, it’s gonna

be, I think, a red wave in November and Ohio is a pretty

red state these days. Blake still has to win the primary in

Arizona. It’s a little bit more of a toss up, but I think he’ll

do well. All right. Well, I had a follow up question, but I’m

not allowed to mention the T word, so let’s just get started.

Why is it such a big deal that like Peter supports candidates?

You got all these like crazy left-wing radicals. No, no, I

think it’s interesting. Soros gives unlimited amounts of

money to, you know, crazy progressives like Gascon in LA

and a zillion others. I mean, why is it such an obsession

that we have to focus on who Peter supports? No, no, I just

think it’s fascinating that he has articulated his rationale

for supporting these candidates and his objective for, you

know, changing government in a way that he thinks would

benefit the country. And Peter’s been generally right. What is

the thesis, Rayburg? I think part of if you watch his speech

from the RNC during the last Trump cycle, I think he did a

good job kind of articulating that there’s a lot of

inefficiencies in government and there’s a lot of call it

accumulated fat. And we need someone to go in and we need

people to go in and really cut this up because so much of

politics is driven by what else I’m going to give you, not

about what I’m going to fix that’s already being spent in an

inefficient way. And as a result, we see debt climb, we

see taxes climb, we see efficiency continue to decline

of every dollar invested by the government. And I think that’s

a really important thesis to see someone actually try and

execute against because very few people are in the position

that he’s in to actually be able to like make that sort of

statement. Everyone wants something more from their

government versus trying to fix the government. I think his

views are more extreme than that. I think his views are more

that orthodoxy is ruining in America. And so you need forms

of heterodoxy to basically reset the status quo. And I think

that’s what he believes more than what you just said. I think

that you need a wholesale reset. And in order to have a

wholesale reset, you need to have these very disruptive

candidates that basically start to change the norms. I mean, if

you think about what Trump did in one election cycle, is he’s

completely sucked an entire cohort of people, Hispanics,

and, you know, moderates, and now, you know, a lot of

immigrants towards the right, because the Democrats have

vacated all of that space in having this massive Trump

derangement syndrome and tacking extremely to the left. And even

if Peter, we’ll never know believed in Trump or didn’t

believe in Trump, it didn’t matter. But the process of him

getting that candidate elected over the long arc of history may

actually serve to pull America back to the center. Pretty good


Yeah. And look at the reason why I support JD and Blake, for

that matter, is they are, they represent this more populist

working class wing of the Republican Party, and they’re

dragging the Republican Party in a more working class

direction. I think that’s the future of the party. I think

that’s the opportunity for the party to Chamas point, the

Democrats have seeded all the sort of this working class

territory by becoming this elite, progressive party. And

the face of the party right now, the Democratic Party is Paul

Pelosi. You know, let’s talk about this. It’s blatant and out

in the open. He’s trading on chip stocks, like Nvidia and

Intel, and so forth. Like the week before, the House is going

to vote on a $52 billion subsidy for chip.

No, no, no, be more precise the week before his wife decides

when critical legislation goes to the floor of the House to be

voted upon. So you have the Speaker of the House, who’s the

third most important person in government, introducing

legislation on her timetable. Her husband trades in those

specific equities days, and maybe even the same day. So

gross of that. They make three times her annual salary just in

one day. And then she and her husband decide to then fly, not

asked by the United States government or the State

Department to Taiwan to then talk about God knows what, which

would have created an international uproar. The Biden

administration and Tony Blinken had to basically call her and

say, Stand down. You should not go. We are not asking you to go.

It is not on the United States agenda for you to go. And all

that would have happened is an entire process and loop where

she controls the legislative agenda. Her husband controls

their private stock account, and he traffic’s in the names.

And then they go to Taiwan to whip up the Fuhrer, which would

have actually positively impacted those same names even

more. It’s inexcusable that kind of behavior. I mean, after

40 years, just she is so past the line, and she doesn’t

realize it. And by the way, sorry, let me just wait. Hold

on. And then on top of that, Jason, the mainstream media

doesn’t say shit. Now, by the way, I’m not a Trump supporter.

I think he’s a complete goofball. But if Trump had tried

to pull this stuff in 2016, or 2017, or 2018, could you

imagine how much media coverage there would be? And today, how

much of that is covered by the mainstream media? Zero? Was it

mentioned on MSNBC? Nope. Was it mentioned in any of the press?

Nope. Let me just set the stage so people don’t know what we’re

talking about. So on Tuesday, the Senate advanced a slim down

version of the original chips bill, if you don’t know what

that is. It’s basically a bill that’s going to provide $52

billion in subsidies to move chip manufacturing here to the

United States, something we really need to do. It’s a

bipartisan bill, everybody kind of agrees on this. But this is

been kind of stuck in committee for a little bit. It comes a

year after the Senate first approved the $250 billion bill

to reinforce US chipmaking to compete with China.

The reason why this is strategically important is

because we have a huge chip dependency on Taiwan, which is

from China. So if chips are the new oil, you know, Taiwan is the

new Middle East or the new Persian Gulf. And it is a very

dangerous situation for us to be completely dependent on Taiwan.

Well, not completely, but like for over half our chips. So

onshoring, advanced chip manufacturing makes sense. But I

think this is an example of how you start with a legitimate

objective in Washington. And very rapidly, it turns into

corporate welfare and graft by politicians. I mean,

that’s gross.

Yeah, I mean, just because we need to answer manufacturing

doesn’t mean that you give Intel and Nvidia giant handouts.

And then you got Paul Pelosi making millions trading and

video options. Yeah, it’s something that is

sex to support on shoring of semiconductor manufacturing,

who would you give the money to? And how would it be kind of

dulled out? What would the terms of it be?

I don’t know that you just give these companies money. I mean,

I think maybe what you do is you give them tax breaks or

various kinds of breaks. But I don’t like

capital, they need capital to support that investment. Because

you know, if you look at the kind of ROIC on these companies,

I would I haven’t looked, but I’m guessing they’re in the

high teens or something mid to high teens. And they’re not

going to be able to invest in some newfangled, you know, fab

project that may or may not actually have customers at the

end of the day, their board would never approve that on

an independent basis. They need to find ROIC, Friedberg,

return on invested capital. So if you’re a big industrial

business, you know, one of the key metrics that your

shareholders look at is the the ultimate kind of profit,

profits that are generated from a big investment, you might

make. And so you know, you kind of look at that over time,

you look at the invested money over time, and the cash and

return over time, you come up with this metric. And so it’s a

key metric for particularly capital intensive businesses.

And so a business like Intel or Nvidia, I would imagine is

going to have a pretty tough time selling their board on some

speculative on shoring fab project, that there really does

need to be capital and acceleration of capital.

Who feeds you this bullshit propaganda, Intel, in 2020,

approved a share purchase plan, where these guys had a hold of

$110 billion, and have spent all of it, except for 7.2 billion,

they have 6 billion left on the balance sheet.

I get it, but they’re not going to put that money at risk,

right? Like, like, tomorrow, imagine you’re on the board of

Intel. And they’re like, hey, we want government. Okay, so

basically, hold on. But I make a ton of money. Yeah, this is

where it all comes from, right? I make a ton of money. I have no

better ideas of how to do it, including theoretically building

a chip factory. So I’m going to go to the government for a

handout. Meanwhile, I’m going to take all the money that I had,

which I could have used to fund this thing. And I’m going to

give it away to people who I don’t know what they’re going to

do with it. I would reframe it, I would say that the government

wants to see our industry onshore semiconductor

manufacturing, and they are going to the companies, not the

companies going to the government, they’re saying, we

want you to onshore semiconductor manufacturing, do

that for us. Now, like in World War Two, we went to the

automobile manufacturers and said, the government said, we

want you to make airplanes, here’s a bunch of money make

airplanes. And that’s the question is, but who does that

who else would you give that money to besides the two best

chip makers in the world? David’s right. If you just give

a capex subsidy, that’s a one time effect that helps you in a

moment, it doesn’t help your business, any reasonable

investor who can actually use a simple calculator sees through

that nonsense. So what David’s right is if you had given them

sustained tax breaks, for being able to build a business line

that then supplies things for the duration, you know, 10s of

years, you’re absolutely right, investors would lot it, it would

make a ton of sense, they would be over earning over a long

enough period of time where people would have to bake that

into their cash flow estimates, where when you discounted it

back, it would make the enterprise of Intel and Nvidia

worth more. And then people would then want to own that

stock more. Giving a capex subsidy is a meaningless way in

which you basically hand out good money to organizations who

have otherwise misallocated the money that they’ve already had.

Yeah, there’s a much simpler solution to sexist point of like,

how do you do this and giving free money is not the way to do

it. The best way to do is to give an incredibly low interest

rate loan, like a 3040 50 year loan, that maybe was has some

warrants in it, just like a, you know, a Silicon Valley Bank or a

co America might give in a venture debt loan, where the

government actually could make money from this. And then you

incent them with something that is just too good not to take a

50 year loan of $5 billion to build factories, you have to use

it for that. So it’s use it or lose it. And then you slowly pay

the government back. And then maybe we get some warrants in

Intel or whoever we give the money to. This is something that

Obama did with Solyndra Solyndra, which didn’t work out,

but he also did it with Tesla. And Tesla paid all that money

back early. So these loans that the Department of Energy did

really did. And you got to give Barack Obama a lot of credit for

this. It really did help drive even though it wasn’t perfect,

by the way, when did drive a lot of AV adoption, it did

really help Tesla become the company it is today.

Sorry, let me just respond. Because, you know, I don’t know

how much we’ve we’ve gone through the details of the bill.

But there are several components to this bill, including and I

just want to highlight if I’m on the board of Intel, I’m not

going to make a $10 billion fab investment. Because, you know,

there’s there may or may not be, you know, profits down the road

to justify that size of an investment. So if the

government comes along and says we will support we will cover

x percent of that investment, I can take on more risk. And I’m

more willing to make that investment. And theoretically, I

can afford to pay people a higher wage or a higher salary

because I now have more capital freed up to support to do that.

And so there is an effect that that arises by having the

government come in, put some money into these projects

accelerate their outcomes. And it gives the business more

freedom. Should it be freeberg free money or in the form of a

loan? So what should the financial device be? I think is

the question that us sacks if I’m interpreting correct. Yeah,

I’m not sure that the loan because the loan doesn’t resolve

the fact that they’re having to put up money, right. And so

they’re not necessarily going to make this on shoring

investment. The rational capitalist decision is to

offshore manufacturing for Intel. Yes, irrational for them

from a business perspective, from a board perspective, from

fiduciary perspective, to onshore manufacturing. So the

reason they’re going to do it is not because they’re getting a

loan where the interest rate is low, that doesn’t really solve

the problem. It’s the government saying we’re going to put a $10

billion facility, we want you to build it and manage it for us.

And that’s effectively what’s happening. And now by building

this $10 billion facility, we’ve created security for the rest of

the US industry. It’s worth it to the government to put that

money up and create security for our economy. No, it won’t.

Why wouldn’t it create security if we if we have more on shoring

of chips?

I’ll say one more thing. There’s also an investment tax

credit built into this bill sacks, which does provide over

time a bunch of incentives to continue to support and drive

the on shoring work that’s proposed in the bill.

If you want the United States point of personal privilege,

can I request that Chamath add this one button to his shirt?


First, I had to watch Jason do the gun show. Now I gotta watch

Chamath show us your guns. Come on, pull up that sleeve and show

us what you want. Let’s move on. I want to say one more thing

about the Pelosi stuff. So here’s the data. I don’t know if

you guys have looked at the full history of the Pelosi trading

data. Here’s the link. She’s all the trading that’s happened

over the last couple years. So and over the past year, he has

bought Nvidia four different times each time in the same kind

of volume range. So the timing certainly may appear a suspect

and it’s certainly a terrible kind of thing to see. He’s also

bought Apple in the last month, Microsoft, sorry, he sold Apple,

he bought Microsoft. He bought Alliance Bernstein earlier in

the year, he’s made a few trades this year. But Nvidia, he’s

actually bought on four different occasions over the

past 12 months. For whatever that’s worth, right? I’m not

trying to defend it. But I think we should be intellectually

honest about the fact that this guy, you know, does take points

of view in certain companies. He trades in a handful of

companies. Are we are we willing to be intellectually honest

enough to think that a husband talks to his wife? And vice

versa? Yeah, or does that not happen anymore? Depends on the

husband and wife. But yeah, I think this is blatant and out in

the open. I mean, it looks really at a minimum, the

appearance is of graft and corruption. Yeah, the appearance

of impropriety is impropriety. They shouldn’t be allowed to

trade, they should have to put their stuff into blind trusts,

or they should maybe trade once a year. And they should have to

announce their trades before the trades happen. Hey, here’s what

I’m planning on doing just like a CEO is planning on doing this

stuff. It’s ridiculous that they can do this. And why does the

mainstream media cover this? They have Jason, do you think

that if Trump if this had happened during Trump, we would

have a lot more coverage than this policy. You remember a lot

of coverage on Trump, it really doesn’t get covered. I mean, if

you just search for today, you’ll see basically the only

media outlets covering it are like Fox News, and then zero

hedge. You know, that’s it. I mean, that’s how I found out

about it is like the zero hedge tweets about it.

Me too. So Daily Beast, you know, headline, you can go seven

hours ago, Dems quietly tried to jam Pelosi on stock trading

ban. But if you’re asking me, you asked me a question. Chamath

is the media largely biased against Trump and gives a free

pass to the Dems? Yes. I would say that that is the trend. Yes.

I think that is intellectually honest of you.

Well, no, I mean, I think the media is bankrupt. They’re just

going for clicks. And I think, you know, we’ve talked about

this before. They saw Trump as an existential risk. And they

just did whatever it took to get him out of office, even

doing so they completely burned all of their credibility. They

lost a lot of credibility. And now the Dems are starting to

become increasingly detached and out of touch and maybe hated.

But then the result is that the mainstream media is just no

longer trusted. The media and the Democratic Party both have

the same problem, which is they suffer from what the Democratic

political scientist Roy to share is called professional class

hegemony. I mean, they are populated by college graduates

with degrees who basically have this very elitist progressive

agenda. And that is what is causing the Democratic the

working class to defect from the Democratic Party, their

historical base in droves. Look at Hispanics. Well, first of

all, if you go to the latest Biden polling numbers, he’s down

to 31% approval, 60% disapprove. Okay, so the trends

is getting worse there. But you look at Hispanics, it’s down to

19% approval, 70% disapproval. It’s an even more intense

version of the same problem. You had Mayra Flores get elected

in that Texas seat. This is a district that went, it’s

basically a predominantly Mexican American district. They

went for Biden by 18 points just, you know, two years ago.

And now they’re voting for her by over 10 points. So you’re

Republicans winning that seat for the first time. So you have

these huge defections. Now, why is that happening? Because the

Democrats are appealing to the donor class on issues like

border, on issues like crime, and on issues like CRT in

schools. I mean, you know, the working class people in this

country, they don’t want open borders, they want crime to be

prosecuted and cracked down on. And they do not want an

ideological education for their kids. Okay, it’s very simple.

But that basically is why the Democratic Party is losing

votes. Now, let me give you a couple other examples of the

Democrats cynically appealing to this sort of donor class. So

you recently there’s an article about the Democrats have spent

$44 million this election cycle, basically running ads in favor

of the crazy MAGA candidate. In primaries, there’s been a bunch

of reports of this where in competitive Republican primaries,

the Democrats will actually spend money on behalf of the

sort of the more perceived crazy, Republican, the MAGA

crazy Trump, the MAGA election denier, and so forth. Yeah,

because of the perception, they’ll be easier to beat in

the general. But I think this is a case to be careful what you

wish for. Because, you know, if we have a red wave in November,

you’re going to end up with more of these candidates basically

winning. So it’s a very cynical strategy. The other example, I

think of a very cynical strategy is you saw there was a vote in

the House this past week on gay marriage, and the House voted to

repeal DOMA, the Defense of Marriage Act and support

basically codify Obergefell, right, the Supreme Court’s

decision on gay marriage. Something like, you know, 60

Republicans voted for it. Look, I would have liked to have seen

more Republicans vote for this. I think it should be like, you

know, majority of the Republican Party should be voting for this.

But the point is that is there any intention of the Democrats

to bring this up in the Senate and pass it and codify

Obergefell when they have a chance? I think the answer is

no. Why? Because the Democrats would rather fundraise off this

issue. The same thing was true about Roe. The Democrats had

super majorities in the Senate under Obama, they could have

codified Roe, they never took the chance. Why? Because they

would rather fundraise off this issue from progressive elites,

the donor class in California and New York. So this is why

they’re not going to codify Obergefell.

You really think that’s the case?


Obama said it on the record. Obama was asked, why were you

not, he campaigned on codifying Roe v. Wade. And then very

quickly into it, he was asked when he had the super majority

and built the house in the Senate, will you act on Roe v.

Wade? He goes, no, it is not a priority anymore. That’s a


It absolutely could have been codified, just like Obergefell

could be codified tomorrow.

Look, there are there are 10 Republican votes. There are 10

Republican votes, at least for this in the Senate, you have a

filibuster proof, super majority in the Senate who would support

this, the same Republicans who supported the gun restriction

bill that Biden just signed, and that supported the

infrastructure bill.

You think they could codify abortion rights in this country

right now if they want?

No, that moment has passed. That moment’s passed. I’m not

saying Republicans would never give women the right. No, look,

there’s not a super majority in the Senate anymore for for

codifying Roe. There is a super majority right now for

codifying Obergefell. They could do that right now. And

they’re not.

Chamath, you’ve been a donor to the Democratic Party. Do you

believe that? Do you do you believe that the the abortion

issue drove you and others to put more money in and that

maybe not?

No, because because the leadership of the Democratic

Party focused on Trump in the last big cycle. It was all

Trump, Trump, Trump, Trump, Trump. Do I think that more

grassroots fundraising focuses on that or gun rights or


What Zach is saying is true that they actually held off on

trying to codify Roe so that they could continue to support


I’m just going to give you the quote because there’s there’s

no opinion needed. April 29th of 2009, President Barack Obama

says on Wednesday he favored abortion rights for women, but

that passing a law guaranteeing these rights were not his top

priority. I believe that women should have the right to choose.

Obama told a new conference marking his first 100 days in

office again when he had super majorities in both the House

and the Senate. But I think that the most important thing we

can do to tamp down some of the anger surrounding this issue is

to focus on those areas we can’t agree on. So you make a

promise, you get into the seat of power, you have the decision

on what your legislative agenda should be. And he made that

calculation. And David is right, sadly, that it was in a moment

where we had a clear line of sight to codifying many of these


Yeah, but the question,

that’s not the question that freeberg is asking. He’s saying

do you think that they specifically did this to keep it

as an open issue to raise money off it? I don’t think that’s

believable. Yeah, absolutely. No way. No way. Absolutely. If you

want to talk about cynicism sacks, the truly cynical move

was, you know, Trump saying, I am going to get this in

evangelical vote to win the primaries to get those 20% who

want to take away the right for women to have an abortion. And

I’m going to stack the Supreme Court to actually achieve that

goal. That’s the most cynical of all of the political stuff.

Okay, let’s define political.

Hold on a second. Hold on a second. Let’s define terms. So

you may be opposed to what Trump did. But there wasn’t that

wasn’t cynical. He stated what he was going to do when he went

for office. And then he did it. He lived up to his promise.

Somebody. He did not believe in that. He did not believe in

that. He did it specifically to get those votes. We all know he

didn’t believe in it. We all know he believes in a women’s

right to choose.

Jason, he he created a platform to get elected. Yes. That’s what

I’m saying. When he was elected, he executed on that platform. I

think what David Sachs is saying is Obama had a platform to get

him elected. And when Obama chose had to choice, he chose to

not execute on the platform. And that is also true. And all I’m

just saying is, we owe it to ourselves to be intellectually

honest about what happened. That is what happened. Okay. Both of

these two guys made claims. Hold on one second. Both of these

two guys made claims acting in your own self interest. I

understand. But please, I want this on the record. Both of

these two guys made claims to become president. It turns out

that Trump actually did execute on most of his claims as

abhorrent as they were to some. Yeah. And Obama on some of the

most important issues of our time did not look what Trump did

was just simple coalition politics. He thought it was

important to win the religious right. He basically appealed to

them. He said that if you vote for me, I will nominate these

judges. He delivered, he delivered. He didn’t believe in

it himself. Right. So that’s what I’m talking about. At a

certain point doesn’t matter. That’s not cynical. People

should have for sure have principles. Okay, look, I know

that he doesn’t have principles, but it matters to me that people

have. Okay, but Jason, what does it mean to have the principle

of saying that he’s going to, he’s going to pass and codify

Roe v. Wade and not do it? What is that then? I think he will

listen, I, the quote you gave doesn’t give why he didn’t do

it. He didn’t make it a priority. It could also hold on,

let me finish. It could also be that he believed that it would

not get overturned. So he should spend his time on Obamacare and

other things. I’m saying cynicism is when you believe one

thing, and then you do something to act in your own

self-interest. And that’s what I think. Hold on a second. We

don’t need to go back all the way to the Obama administration

because the issue I’m talking about today is that in the past

week, they had a vote codifying Obergefell on gay marriage and

repealing DOMA. Okay. So now listen, I actually think there

were so many Republican votes in the house, even though I would

have liked to have seen more, there were enough that, that

this might shame Schumer into bringing up the vote because

it’s going to be so obvious if he doesn’t, that he is doing

this for a reason, right? Because they have the votes,

they can pass this just like they passed the gun bill a few

weeks ago, right? Just like they passed the infrastructure bill.

So if he, if Schumer doesn’t bring this up, it’s a very

cynical move.

You think it’s strategically to have that as an issue to phrase

funding. I get it.

Of course. And it’s really proof. Listen, I think that

Both sides are cynical.

Of course. Both sides engage in politics. However, however,

what I’m talking about is the type of cynicism. So I think

that there’s a lot of issues on which the Democrats would

rather appeal to the donor class, basically that lives on

the coast in New York, California, and be able to keep

fundraising on that issue and basically scaremonger on that

issue. Instead of just winning the issue, they can just win

this issue right now.

Chamath, do you have less interest in supporting the

Democratic Party based on the principle you stated that in

the past, there have been kind of promises and capital raised

against, you know, codifying Roe and then it not happening.

Well, they never made those promises to me. So I never felt

like they lied to me. I want to be very clear. So then nobody

and I never asked for that to be a precondition of my donation.

Again, my capital was focused on one thing, which is I thought

that President Trump was not the right person to lead this

country. And I thought very clearly that the bright Democrat

could do a much, much better job. And I am glad that Biden

won. And I’m glad that the money that I put in, maybe in no in

any small way, but hopefully in some reasonable, non trivial

way, helped. And I’m glad that that money helped even out the

Senate. I’m glad all of those things happened. And so I want

to be clear. They’ve never made those kinds of promises to be

nor have I ever asked. I make a high level decision on who I

think the best candidate should be and support the party that

will get that best candidate affected what I was just trying

to make clear to you guys is that sometimes even a Democrat,

it’s important for us to be intellectually honest about what

has happened. It’s very easy to look at the other guy and find

all the ways in which they screwed up or tried to screw

you or, you know, is in a lack sympathy or lack sympathy, all

of these things. It’s much harder oftentimes to look at

your own team and say, wait a minute, why didn’t x, y and z

happen. And the reason I’m bringing up what happened in

2009 is I think David is right. We have a moment in time where

the leadership of the Democratic Party can codify rights that

should be codified. And they should have in hindsight, they

should have done it. And just to be clear, no, it is still

open. We can do I’m talking about Roe v. Wade. And yes, and

for the for the issue we’re talking about now, it should be

codified. Absolutely. And just to be clear, I’m an

independent, I would vote for a republican who was socially

progressive and fiscally conservative, as long as they’re

for gay marriage, as long as they’re pro women’s right to

choose. And they were fiscally conservative, I would vote for a

republican, I’m a moderate independent, I want to see less

government and more efficient government. And I want people I

want the government out of people’s personal lives. And I

think that’s where sacks and I are exactly the same. We both

want I mean, sacks, do you want the government involved in

people’s personal lives? You’re a Republican, by the way,

according to the Monmouth poll from a few weeks ago, you

represent 4% of the voting base. I do. That’s an extreme. Yeah,

that’s an extreme minority that the the lowest self identifying

quadrant of fiscal conservative versus kind of fiscal liberal

social conservative social liberal is the fiscal

conservative social liberal. What are we all here? We’re I

think we all fit this profile fiscally, we want the government

to be run conservatively, you know, and with less government

and we want progressive social change, right? I mean, I think

we all feel that don’t put me in a corner government out of

people’s personal. I’m just asking you guys, if we’re all

insane, I wouldn’t define my cultural positions as

progressive social change, because the change that

progressives are trying to do right now is radical. What I

favor is social tolerance. I think we need to be tolerant,

we need to be a tolerant society. America is a very

broad, diverse country, we need to find ways to live together

and find accommodation on issues that are very contentious. So

that includes tolerance for gay marriage. So look, I’m on board

with that. But, you know, this radical, progressive agenda of

social change, which includes upending the criminal justice

system in favor of not favor that, yeah, what’s happening in

the schools with CRT, and the sort of hyper ideologized

education, look, they should just be teaching the basics,

reading, leave it up to parents to do the other stuff. Exactly.

I agree. So on down the line,

but maybe progressive is the wrong term, because that that

now has been co opted, less government involved in your

personal life and tolerance. I think we all agree on that. And

I think we’re tolerant. It’s a great word. Everybody agrees

with tolerance. It’s a privileged position to want to

have less government involved in your life, right? I mean,

many people in the United States have been able to thrive

and survive because of the role that government has played in

their lives. And there’s obviously on one end of the

spectrum, extreme grift. And on the other end of the spectrum,

extreme need that is being met by the wealthiest government in

the world. And it is a, you know, it is in that middle where

all of where do you stand? How would you describe your politics

in these two dynamics? Right? Are you also in this 4%

freebird? Yeah, yeah, yeah, no, I’m here. I’m trying to be

thoughtful about this. Because, you know, I think it’s the idea.

Yeah. I think that the government’s role is to support

those in need, not those in want. And I think that the

government should be held accountable for performing that

role. And I think that those of us who can, that are sitting in

privileged positions and seats should enable the government to

perform that role well, and we should be positive actors,

meaning we should support, we should pay taxes, and we should

help people and institutions in need. And that are, you know,

kind of for the greater good. And then we should be holding

ourselves, our government and our, our politicians to account

for inefficiencies. And the biggest concern I have is less

about are the people in need needs being met as much as are

we holding our government to account for the performance of

its services and duties to the American people. And I really

like we are want, I like this want need concept here. Can you

give an example of where the government like people need

something, but then there’s another group that wants

something and maybe we’re overstretching and you know,

giving into wants when we should be focused on needs and

efficiency. Yeah, I’ll give you a pretty

example I know reasonably well, which is the farm bill passes

every four years. And the farm bill in order to get it passed

in both the House and the Senate, it has components that

serve both farmers and support the the food stamp program. So

the food stamp program obviously supports millions of Americans

that are in need of food can’t afford food, they get EBT cards,

they get support and buying food. And there’s a lot of

programs and access that are enabled by that program. But in

order, but that mostly services the needs of urban areas of

cities. So it passes that that that element of the bill is

attractive and appealing to the representatives of cities found

in the house. On the other side, in order to get it passed in

the Senate, where the majority of senators come from rural

states, which are have significant farming populations,

the farming subsidies are planted in that same bill. And

as a result, because everyone’s getting something, that bill as

a whole has now grown to a multi $100 billion bill that gets

passed every few years. Because in order for the Senate to pass

it, the house says, Okay, we’ll give you all these farm

subsidies. In order for the house to pass it, the Senate

says, well, sorry, it’s vice versa, right? We’ll give you all

these food stamps. But But both of them now have incredible what

do they call it pork or fat or whatever? Yeah, the amount of

money that’s wasted, that isn’t actually servicing the original

intention and need of either of the parties that are represented

by that bill is extraordinary. And I’ve spent a lot of time in

the farm bill, I actually went with lobbyists years ago to DC,

and I actually met with the Senate and house ad committees,

I’ve gone very deep into the bill and some of the programs in

that bill. And it’s just shocking to me in the same way

that Palmer lucky shared in our online summit, how shocking it

is how defense spending works in this country. It’s shocking to

me how some of the the programs work in the farm bill, how much

money and how much waste there is and how much grift there is.

And so yes, we are meeting the needs of populations in need in

this country. But so much more of the bill now is about people

wanting more in order to pass the bill, and it’s and it’s

bloated. Alright, so they’re gonna come in and fix it,

because where’s the incentive for anyone to come in and cut

that bill up? Where’s the incentive to fix it? If both

sides are barbelling the grift, then there’s no incentive

there. They’re they’re in a dance to maximize the grift.

Where do you stand now, if we if we were to sort of look at

politics without the Biden and Trump derangement syndrome

without the tribalism, just in terms of first principles, I

think what we’re seeing here is we all want to see radical

competence in the government, social issues fight, you know,

and fiscally how we run the country, where do you stand? How

would you describe yourself now?

Look, I mean, I think of things in terms of risk.

Here’s what I see. I see that there are a handful of issues

that remain in terms of social policy that just need to get

codified. Gay marriage is an example of one abortion rights

is an example of the other. Then, and I think like those are

And I think like those are like really to my to my perspective,

speak about human individual liberty, which I think should

trump everything. So everybody should be allowed to kind of

pursue the best version of themselves. However, that

manifests in the person you marry to in in the gender you

express, not these are like things where what you do to be

happy, you should be allowed to do period end of story. Then

there are issues where I think are much thornier. And as I get

older, I become increasingly ambivalent, or confused,

actually, is a better word. And gun control is a perfect example

of that, where I don’t know what my right is to go and adjudicate

a change to the Constitution that’s been there since the

founding of this country. That’s a much more complicated

issue. And so I think we have to basically devolve that right to

the states, where individual states will have very different

laws and part of how you choose to express where you live will

be defined by some of those rules. So that’s the social

side. Extreme tolerance is really how I would sum it up.

Economically, so but but I think that the risk to America

imploding, quote, unquote, because of an issue in that

surface area, in my opinion, is extremely limited. If I look on

the economic lens, however, I think there are enormous risks

to American leadership and exceptionalism. And we need a

wholesale reset of how we create incentives of how government

should work, of how regulatory capture should work, of how the

capital markets work. These rules are way too perverted. And

it’s creating enormous stress in a system. And again, I go back

to the example I used last episode. The thing that if you

look, for example, like, you know, in that example of Sri

Lanka, Singapore, Jamaica, and how there were these three

completely different outcomes. Underneath the most successful

outcome was an incredibly clear, transparent and simple

financial framework. You cannot spend more than you have. You

need to invest in long term programs like education and

healthcare, you need to make them broadly available. And then

you need to have an absolute free market that gets the best

ideas to the top of the funnel. And if you can just incorporate

those things, the tax law could be four pages, you know, the

number of regulations could be 50 pages, you know, the simple

rule that says to the Federal Reserve, you can’t just print

free money ad hoc. So I’m much more concerned about the fiscal

future of America, I think that there’s so much movement and

progress on the social side, including the freedom of

movement of people to different states. It is an important set

of issues. But in terms of what drives the outcome and future

success for our kids and our kids as kids, people should not

sleep on the economy, because if we get this wrong, that will be

the tinderbox that lights everything on fire.

Saks when you hear, you know, everybody sort of explain their

basic belief system, how far apart do you think we all are on

this podcast? Because I think that’s been a an issue we see a

lot of the fans discussing you and I discussing, it feels like

on most of these issues, and I think that’s people ask me how

I’m friends with you all the time. And I’m sure you get that

question as well. Yeah. And I love you. No, I love sacks like

a brother. And anytime we talk about basic issues, we’re very

much in sync. And then when we talk about politics, it feels

like we’re super, you know, you know, opposed, you know, in

opposition to each other, when you hear that we all have

essentially the same stack of fundamental beliefs, how do you

interpret this in terms of politics and America writ large

and how do we get consensus in this country to be more

effective in running the country for the citizens?

I think the media drives a lot of polarization, right? Because

they’re feeding us a bunch of bogus narratives, you look at

the polling around the trust in the traditional media has

absolutely plummeted through the floor. I mean, they basically

have, instead of just reporting objectively, the facts they, I

think the audience has recognized that they are

activists, they are basically pushing an agenda, and they’re

pushing a bunch of bogus narratives. And I think it does

drive the polarization. So that’s part of it. To go back to

you know, what, what are the core issues that motivate me and

like who I support? Look, I think we could probably agree on

a lot of stuff. I want us to pursue more of an internationally

cautious, you know, agenda, less interventionist, because it

really hasn’t worked out for us very well over the last 20 years

with all these wars that failed. I want us to be fiscally

responsible and promote a healthy economy, to what Jamal

said. And then third, I’d like us to be socially tolerant. Now,

why does that leave me in this current environment to support

Republicans? Well, on international, on sort of

foreign policy, neither party is really very good. Both parties

are sort of pushing some version of book Bush doctrine

light where we’re basically over involving ourselves in all

these countries all over the world. But the Republicans at

least have a faction that’s in favor of realism and restraint.

So I’m trying to help kind of push that direction within the

party. The Democrats just are still very much in this liberal

interventionist mode. On fiscal issues, both parties are guilty

of overspending and creating this ruinous federal debt and

deficits that we have. However, there’s no way to avoid the fact

that the Democrats are just worse. I mean, Biden wanted an

extra 4 trillion of spending on this whole build back better on

top of the 4 trillion he had. So listen, I know the Republicans

don’t have clean hands on this issue, but the progressives are

just worse. And as long as the progressives are calling the

shots, the Democratic Party, they’re just worse on spending.

And then you got social tolerance. Listen, on the issues

on these sort of key rights issues that have been the kind

of the old social issues last 50 years, by and large, not on

all these things, by and large, I’m with you guys, that I’m in

favor of sort of the socially tolerant position. But look at

who is pushing social intolerance today. I mean, the

progressives are the most intolerant group in America.

They’re the ones pushing cancel culture. They’re the ones

trying to shove their positions down the throats of ordinary

Americans. This is what’s creating the backlash. You look

at issues today like CRT, like the progressive approach on

crime, on borders, the progressives are trying to

promote, I think, a social policy that is fundamentally

intolerant and doesn’t accord any respect or room for

traditional Americans to live their lives the way they want

to. And you have to be tolerant of them as well. We’re not going

to have peace in our society without some tolerance of


Let’s wrap on this Chamath and then move to China.

I sent you guys a, this was a quote by Mike Solana, a tweet

from Mike Solana. The caption is, I’ve been wondering how

they were going to spin this. And this builds exactly on what

David just said here. When the Quinnipiac poll came out and

about approve, disapprove about President Biden, you know, the

big outlier was the Hispanic population. 19% approve, 70%

disapprove. And the article in the Washington Post, which tries

to kind of sort of like clean this all up and whitewash it,

says fake news speaks many languages, but it’s

particularly fond of Spanish. Essentially saying that, you

know, the fake news problem in the Spanish language has

basically gotten so bad that, you know, this sort of explains

why Hispanics have moved in droves. And it’s like a whole

race baiting cheap shot article. But the point of all

of this is just to show that the left, this is what really

does kind of bum me out. They are, they are probably more

intolerant than they’ve ever been. They are intellectual

dishonesty. Like if Rachel Maddow really wanted to increase

her standing and position, she would just start the next

program with Nancy Pelosi’s trades and say, listen, we all

know, let’s call this what it is. It’s not cool. And here’s

how it should change. She’ll never do it. I know. And I think

that’s the disappointing part about all this. Okay, so let’s

shift now. I think we

Well, can I say one final thing about this whole thing that we

can move on is, I think, I think if you are sort of purple and

centrist, I think the first two years of the Biden

administration were really a missed opportunity, because I

think there’s sort of this conventional wisdom that the

parties are so polarized, they can’t get anything done. I think

we saw actually, there’s enough Republican votes or there were

in the in the previous Congress, this current Congress, they got

the infrastructure bill done, they got the gun bill done, you

know, with the red flag laws, and so forth that we talked

about, they can get codification of gay marriage done,

if they want to, they could have gotten the electoral count

act reform. So if Biden hadn’t gone all the way with his

progressive voting rights agenda, and just focused on

reforming the electoral count act, then you could have

prevented a situation like we had on January 6, that what was

happening inside the Capitol, not outside. So there was a lot

of stuff they could have passed, and they didn’t. Why? Because

in the first half of his administration, Biden’s been

completely captive to the progressives. There’s another

thing as well, you could get a child tax credit passed, you

could get Romney would basically be the floor leader on that. In

the Senate, they could pass a child tax credit. That’s the

most popular part of BBB. Why don’t they peel that off and

vote on it?

You know, because they went for the whole thing.

That’s right. The progressives are holding it hostage saying

that we’re not going to give that to you unless you do the

whole enchilada. And of course, there’s no votes for that. So I

think there’s, and so who ultimately is the culprit for

allowing this to happen? Well, partly Biden, but also Ron

Klain, the chief of staff. I mean, they’ve made, instead of

triangulating to the center, they should have realized, hey,

we’re a 5050 president, right? I mean, we have a 5050 Senate, we

should be triangulating, we should be building a centrist

coalition. Ron Klain has been letting the progressives ride

the train.

Biden had a clear path to go right to the center, pull

everybody in, pull the working class in, that’s been his

supporting base, working class, and so he is and he blew it by

going too far to the left. If he wants to save this presidency,

he should go straight to the middle and get all the working

class behind him.

Biden isn’t the guy that went to some elite, you know, East

Coast liberal arts school where he got a master’s in, you know,

fine arts and is 400,000 in debt. That’s not Joe Biden, but

he’s let all these people run over the White House.

And it’s too late now, because I think what’s going to happen is

that, well, the Republicans are going to win the House, at

least. How much time did we spend talking about cancelling

student debt for who? Yeah, no, for a bunch of elite, elite rich

graduate degrees from. Yeah, it’s at least listen, there’s

grifters on both sides. It’s disgusting. And we need to get

to a version of politics that maybe is more like our

conversations here. But let’s let’s pivot to another society

that we thought was going to roll over ours. But and that

and that we were in, we were behind on in terms of

competition. China’s in chaos right now, apparently, in terms

of slowing economic growth, bank protests, mortgage protests,

exactly what I predicted last year, when you guys were

talking about China was going to dunk on us. And I said, you

know, it’s very hard to run these authoritarian countries

and the citizens like to protest when they get the short

end of the stick. And here we go. Chinese economy is growing

very slowly. They were going to do five and a half percent this

year. They were only point 4% in q2. COVID has a lot to do

with this. But there’s been a series of bank protests and the

media has been trying to figure out exactly what’s going on

here. To just set the stage here, rural banks in China, in

a couple of provinces, froze a bunch of people’s withdrawals

in April. Okay, sounds like the crypto contagion. In many ways,

they had been offering unusually high interest rates.

Also sounding like the defy griff going on here.

I think it’s I think it’s more like 2008. Jason, I think the

financial, I think it’s more like the financial crisis in

  1. That was driven by the real estate bubble. Yes, they’ve

got their own real estate bubble, which is collapsing

there. Correct. And so there’s there’s multiple things going

on at once. The authorities haven’t said how much money is

frozen. Protesters claim it’s billions of one, but it’s

hundreds of millions in the US. After weeks without a resolution,

customers have been began protesting. Plainclothes thugs

have been hitting and kicking the protesters. And as of

Wednesday, a video went viral of the CCP bringing in tanks to

protect the banks very evocative of Tiananmen Square. I

have a question. So good. Yeah. So China has a very explicit

zero tolerance policy on COVID. Why do you guys think they are

so extreme in that policy? Like any any ideas like had they

explained why it has to be zero tolerance? They have not

explained that. And if you believe that they’re the origin

of COVID, maybe they have some insider information about long

haul COVID. And that was something I want to talk to

Friedberg about if he thinks this, you know, long term COVID

stuff is a really acute issue. But free bird, what do you

think? Yeah, I don’t. Let me I don’t want to answer. Can I

answer that? If you don’t want to? Yeah. I think the answer is

very simple. But I do want to talk about the Chinese economy.

Oh, yeah. There’s a lot to turn over to. Yeah, this is a

complex issue. There’s a lot more going on there. So on zero

COVID, I think this is coming directly from Xi. This is his

policy. And I think that earlier in the pandemic, they were

hailing their response, which they saw as orderly and

effective at controlling COVID. And they were contrasting that

with a chaotic Western response. And so I think that the

credibility of the CCP and G himself got tied up in this

idea of stopping COVID entirely of zero COVID. And so I think

this is coming directly from the top, and it’s having a huge

impact on their economy. And I think this is one of the

dangerous aspects of a autocratic system is you got one

guy at the top making the decisions. And if he’s wrong,

there’s not really a great feedback. And nobody can

question him. Yeah, there’s no questioning the God King. Yeah,

you know, it sort of recalls a situation in China, I think

this is about 500 years ago, there was a Chinese emperor who

banned shipbuilding, and banning having a navy. And because of

that China shut itself off from global trade, and it fell well

behind the West, which then explored and captured the new

world. There’s this question about, you know, the Chinese,

Chinese culture and civilization was much more

advanced than the West than Europe 1000 years ago, but

basically, it fell behind. And a big reason is because this

unilateral decision by one emperor to basically close

themselves off from the rest of the world. So you have to

wonder, does this autocratic move by G basically doom their

economy to a recession? It seems like they’re not learning

from our experience, these lockdowns didn’t work. I mean,

you can’t stop the virus, it’s eventually going to get out.

Even I saw Biden got the virus this week. I mean, it’s out,

right? It’s

everybody’s gonna get it is basically what’s

making a bunch of heavy handed decisions like this. So you

had besides lockdowns, it was, it’s also the crackdowns. It’s

the crackdown on the tech industry.

Yeah. Venture funding has plummeted. And so has so LPS are

no longer investing in funds there with the exception of

sequoias, which seems to be struggling, but is still able to

raise the money. And then additionally, founders can’t

raise money. And founders are questioning when they meet with

VCs if they can actually if the VCs are just meeting with them

theatrically, the story that came out this week in the FT,

if they’re just meeting with them theatrically, because they

want to still hold out hope that there’ll be a venture capital

industry, but there may not be a VC industry in China anymore.

Let me just give you the housing stuff. And then Freeberg, I know

you want to chime in on this. So there’s also mortgage boycotts

happening at the same time as this fugazi bank stuff happened.

The bank stuff seems to be not the national banks. These are

local banks that apparently could have been running some

kind of grift where people deposited money. It looks a lot

like the savings and loan kind of behavior in the 90s. And these

are regional banks. To be clear, this isn’t the national banks.

And so at the same time, the mortgage boycotts are happening

in three at 301 unfinished developments in 91 cities,

homeowners are accusing developers are failing to

deliver the apartments they’ve already paid for, according to

Bloomberg, 70% of household wealth in China’s tied up in

property much higher than the US.

This is downstream of the whole Evergrande thing, right? You got

Evergrande basically defaulted, and there were a whole bunch of

people who prepaid for their homes. And so they’re already

paying mortgage, but Evergrande never finished the homes. And

now they’re rising up because they’re saying, why should we

pay for a home that was never delivered?

Right. I just want to like take a zoom out because I think it’s

worth, you know, we can focus on any one of these particular

things that are happening, and try and diagnose them and

dissect them. But if you zoom out a little bit, I think it

paints a more interesting picture over the last 30 years,

right, the Chinese economy grew from 318 billion to in 1990 to

10 and a half trillion in 2020, right, incredible growth GDP per

capita, you know, grew kind of in a similar ratio, right? Now,

from 318 bucks per person to $12,500 in 30 years, I mean,

really unprecedented in the history of humanity. China now

accounts for 20% of global GDP from less than 2% 1990. Now, if

you look at historically, what drove that growth, we all talk

about manufacturing, right, manufacturing counts for about a

third of the economy. And manufacturing as a sector was

growing in China 25% year over year in 2008, and then only grew

6% in 2022. It’s like basically, you know, kind of reaching an

all time low in recent years. So that’s historically been the

driver for growth of this economy. And so much of the, you

know, the bargain between the people and the Chinese Communist

Party has been keep giving us a better life, keep growing our

economy, keep giving us more housing, more stuff, more food,

more safety, more security, will support the CCP. And the

challenge that the CCP is having is that a lot of that growth,

the core growth engine is starting to slow. So

manufacturing is slowing, then real estate was growing. And so

real estate accounts for 7% of the Chinese economy. And I’ve

got a good stat for you guys here. In 2005, 250 million

square meters of real estate was sold in China. In 2021 1.5

billion was sold every year, it’s been incrementing. So the

amount of real estate that’s being produced and sold was

increasing like crazy. This year, it’s collapsed. So it’s

all it’s down like, you know, forecast to be about 1.25

billion now. So the first decline in real estate building

and sales. So that part of the driver of the of the economy in

China is now collapsing. And then the financial services

sector accounts for 8% of the economy. And that’s been growing

because it’s leveraged off manufacturing and real estate,

and all the capital that’s flown in all of which is slowing

down and stopping, you know, this $58 trillion of assets in

China, generating about $700 billion of annual profits for

the financial services industry, insurance, banking, lending,

and so on. So a lot of the conflict and the things that are

starting to fall apart, which may just be the tip of the

iceberg, is a function of a fundamentally slowing economy.

And the forecast and the outlook for an economy that

doesn’t have the drivers it’s had historically, and things

are starting to come off the wheels are starting to come off

a bit. And so you know, look, the advantage they have is

central planning, long term investments, being able to kind

of be thoughtful about this. But in order to do that, there’s

certainly going to be a need for the CCP to keep people in

line, as some of the long term bets hopefully play out for

them, as they would say, in order to do that, they’re going

to have lockdowns and other sorts of mechanisms of

regulatory control over the people. But really, this could

be the beginning of some of the unwinding and real concern

about, you know, is there a core economic growth engine in

China that can save them? And what will it be?

I think all of this, if we look at what’s happening in the

economy, writ large, Chamath, you know, the global slowdown

plus inflation is now causing a stress test on every country,

Sri Lanka stress test, you know, showed us what’s happening

with their farming issues and with corruption. And here in

China, it the stress test, I think you would agree showing

what’s going on in terms of, you know, banking, mortgages,

real estate, and obviously, this surging middle class and

what their expectations of life are. So what’s your take on

what’s happening in China? And are they, you know, how does

this add up in terms of our rivalry with them as our


At a very macro level, China has one massive, massive,

massive problem, which is one of population. It’s hard to get

an accurate count. But it is an aggressively aging population,

which was the result of the one child policy for a very long

time. China has sort of been on their heels trying to adapt

that policy. But really, the last data I saw, I tweeted this

out, it was a little while ago, Nick, so maybe hard for you to

find in my Twitter feed. But it was a projection of China’s

population, which essentially showed a contracting by almost

50% by 2100. So in the end, so that’s a really, really bad

situation. Now, when you have a slowing population, then the

economy has to morph. Why is that, when you have a young

population, so for example, take what China was 20 years ago,

when it entered the WTO, or what India is today, when you have

lots of thoughts of young people, you can on ramp them

into economically productive activities like manufacturing.

The problem when those folks accumulate middle class income

and wealth, is that they age out of those kinds of jobs like

they did in America. And what we seek our services and service

level jobs, and you spend more money, you spend it in a

different way. So as populations age, your economy has to turn

over, unless you have a large bulwark of young people that is

constantly growing to take up more of the slack, the economic

slack to pay for these folks who have different lifestyles, more

savings, and different needs, specifically healthcare. That’s

China’s enormously big problem. So when you see them talking

about 6% GDP targets, and you think, how does a country that

big even grow at 6%? It’s because they’re reverse

engineering for what they need to create economic vibrancy in

that country. And so when you start to look at 2%, which in

America, you’d say, percent’s great, we would like high fiving

each other for 2%. That’s not a sustainable level of growth for

what’s happening inside that country. It does not create

enough of expansion economically, to cover all these

folks, that is a really, really big issue. So as that happens, I

think what we need to do is figure out how to be

competitive. Now, this goes all the way back to our first

conversation. Subsidies don’t make us more competitive. Things

that governments can do to make us more competitive are long

term drawn out tax incentives that change the earnings

capacity of companies. Why? Because in the capital markets

reward those businesses. Jason, you just mentioned it. Why is

the Chinese capital markets in difficulty? Nobody knows what

the long term earnings are. How do you forecast it? It’s not

simple anymore. It’s not a model. It’s not an interest

rate. It’s not a discounted set of cash flows, right? And so

that’s how they need to refactor themselves. They need to have a

much larger population. If you don’t have that, you have to

figure out how to do it with immigration. If you don’t have

that, what China has done is they’ve tried to go to Southeast

Asia and to Africa. And they’ve tried to create that synthetic

form of a growing pyramid, right? Now that can work as long

as the balance sheet of the country supports that because

ultimately, you’re still talking about moving money offshore.

Okay. So I think they’re in a little bit of a they’re they’re

in a pretty difficult spot. The most difficult spot is the one

they that she put them in. If you get rid of entrepreneurship,

if you get rid of high growth companies that create the

opportunity on a global scale, and then you, you know, take DD

off the public markets, you don’t let education companies

become public, or you basically get rid of their little

co-opting of capitalism, and venture capital, their whole

their whole society is going to become slow growth and slow

growth in a country that doesn’t have safety nets is really

dangerous. sacks your thoughts, in terms of competition versus


Okay, let me get to the competition in a second, just a

bill in which ma said the the birth rate that were the

fertility rate in China slipped to just 1.15. In 2021. So last

year, it takes 2.1 just to maintain your population or

replacement level. So and this is lower than even Japan, which

is also shrinking as it could Japan’s about 1.3. The US

Australia are at 1.6. But we get above 2.1 because of

immigration and China doesn’t have that. So they’ve got a

huge demographic problem to most point, it’s going to be

something like, well, the population is shrinking by 40%

with every generation. That’s what these numbers imply. And

saying the numbers are, it’s gonna be under 600 million by

the year 2100. But I would, I don’t understand how it

wouldn’t even be less than that, if it keeps going at this

rate. So they’re in the commentator, Peter Zeehan has,

I don’t know if that’s the right way of pronouncing Peter

Zion or something. Anyway, he’s pointed out that China is

facing demographic collapse in the next decade or so. On top

of that, like you’re saying, Jason, that you’ve got G

emphasizing Maoist economics, he basically says he thinks

that the Chinese economy, again, he stresses the need for

socialist characteristics. And he seems to be bringing back

that sort of communist ideology to their economy. And they’ve

basically really cracked down on entrepreneurship and

venture capital. It’s really a cell phone. I mean, they’ve

moved away from the policies that have made them so

successful economically over the last 40 years. And then on

top of that, you got this debt crisis in this housing crisis.

So it really looks like the deck is stacked against all of

them. And you’re asking, what does this mean for us? Well, I

think it depends on whether you look at it economically or

geopolitically, I think if you look at it, economically,

you’d say that it’s bad for us, because our two economies are

economically linked, there’s a lot of dependency, they’ve

evolved together for a long period of time. And they’re if

China has a collapse, then that they’re so big now that that’s

going to have, I think, global repercussions, there’s going to

be contagion. But the truth is, if you look at it

geopolitically, and geopolitics is more of a zero, the balance

of power is a zero sum game, economics can be a positive sum

game, but, but the balance of power is, it’s definitely not a

positive sum game. You’d have to say it’s good for us. Because

the reason why China has become such a threat is because of its

growing economy over the last 40 years. Yep. And look, I mean,

what they’ve done and what they’ve been doing over the last

decade or so is translating their economic might into

military might. And that has given them the capability to now

threaten their neighbors to become more belligerent, to

basically rattle the saber against Taiwan. And if their

growth, if their impressive economic growth continues for

the next couple of decades, as it has until now, there’s no

question that they will, they will basically try to assert

their hegemony over East Asia. And Taiwan will be a huge

flashpoint. But there’s also flashpoints in the East China

Sea with Japan over the

but they’re going to need a bankroll to do that. So if they

don’t, if their economy is not growing, they don’t have the

bankroll to do it, they’re going to have to look inward and say,

Hey, we got to fix these domestic problems. We got to get

people stop protesting these streets, we need to this middle

class is demanding of jobs. The great news for what’s happened

in China. And I think this is why the people there are very

happy is the number of people living in poverty has plummeted,

you know, when they started tracking this data in the 80s,

you know, high 90% of people were living in extreme poverty

or poverty 99% of people were in poverty on the on the global

definition of it. And now, you know, it’s just plummeted to,

you know, a couple 100 million people. So a couple of charts

for you here, but just in the data is obviously it’s very hard

to understand what’s going on in China, because a lot of it is

opaque. But just the number of people on a percentage basis

living in poverty has gone. And now the number of people who are

in the middle class has surged. That creates another dynamic,

those people want to have a great life, they want better

jobs, they don’t want to work in factories, they want to have a

more information based economy and a better job than 60 hours a

week in a factory. That’s why they’re moving their factories

to Africa and other places.

I mean, I don’t know if that’s absolutely true. I think that

China’s manufacturing sector is, is aiming to evolve. So you

know, China has about 3 million factories or manufacturing

facilities throughout the country, employing about 112

million people, the US has about 300,000 factories and Paul

employing about 12 and a half million people, the output of

our factories is about 70% of the output of of China’s

factories in aggregate, sorry, the total production output of

all the factories. So we have very high value outputs coming

out of our factories and high leverage. China is observing and

obviously recognizes that there’s an opportunity probably

to evolve their manufacturing capacity to be higher leverage,

higher value output. And so there is going to be, you know,

from the long range perspective, planning, and investment in

technology that allows those factories to become much more

sophisticated and create much more higher value products

moving up from what is effectively just cheap labor, putting

things together in an assembly plant, to being things like

additive manufacturing, 3d printing, automated manufacturing,

biomanufacturing, etc. And I think this is particularly going

to be realized because China announced that they’re building

400 nuclear power plants, that drops the cost of electricity to

under 5 cents a kilowatt hour. In the US, manufacturing

electricity typically costs around 11 cents per kilowatt hour

12 cents per kilowatt hour in that range. So if factories

become much more automated, they start to become a function of

the price of electricity in terms of what they can output,

China is going to have a huge advantage as these nuclear power

plants come online over the next couple of decades, and these

facilities get upgraded. So there is a plan, right? Remember,

this isn’t just a plan. And the reason they have that plan,

there is there’s a question of, do they get there fast enough

to drive economic growth that actually supports all these

other industries like real estate and finance that they’ve

become critically dependent on, because those industries only

work if there’s a core economic driver core economic engine

that’s working here. So this energy infrastructure, this new

manufacturing infrastructure, these are things that, by the

way, they can do really effectively, because they’re not

working on four year and six year political cycles, they can

take a 510 and 30 year outlook and make a make a plan and

invest against it what they did from night. So I wouldn’t count

them out. But there’s certainly a lot of challenges they’re

facing right now. It’s a big question mark right now, what’s

going to happen?

Well, and it to your point, factories in China are, you

know, factory workers getting paid over six bucks an hour now

in Vietnam three in India, even less. And that’s why you’re

seeing a lot of folks. I don’t know if you’re seeing it in your

portfolios. But we’ve seen a lot of folks looking at India,

Vietnam, and moving factories there. And obviously, Japan has

been incentivizing China’s not going to just lose their

manufacturing edge. They’re not just gonna say, hey, we give up

let let everyone go to Vietnam, they’re going to try and upgrade

the capability of those factories and say, hey, instead

of just putting together, you know, parts for with $6 an hour

human labor, let’s start to do the more sophisticated. So then

the next card that turns is well, what happens to those

factory workers if they’ve been automated out? What do you do

with hundreds of millions of people working in factories who

now have been turned into robots? And then if they’re

going to be in an in the answer is information economy, if it’s

going to be an information economy, you need venture

capital, and you need new companies to create those jobs.

And they just killed that. So I don’t know what strategy she is

pursuing here. But it seems like a bad one.

We could talk about this one at length. But we were going to

bring this up. But you know, generally speaking, technology

drives productivity gains, but it’s deflationary.

Explain what that means on in like a practical sense, maybe,

you know, that the technology.

So let’s say, let’s say that you have to pay a bunch of people to

make a t shirt. And then a machine is built that makes the

t shirt, the cost of the t shirt goes down. Because one machine

can just print out 100 t shirts an hour, whereas it would take

five people, you know, 10 hours to make those hundred t shirts

or whatever it is, right. So a technology of kind of emerges.

And those people are now theoretically out of jobs. But

what ends up happening is those people transition into new jobs

that didn’t exist before, and we end up seeing higher order

work take place. Think about the the world 200 years ago, do you

think we would have had any concept of people being uber

drivers, or people, you know, creating crafts and selling them

on Etsy, or YouTubers, content creators, people being yoga

teachers or yoga, or yoga teachers, psychotherapists, only

okay, well, there you go. Only fans or dog walkers, or all of

these, these service businesses, or, you know,

industries that simply did not exist before. And so the labor

that those that that percentage of the population was involved

in historically has gone away, because it’s been automated. As

that automation has happened, it’s allowed higher order

services jobs to emerge. And that will be the progression of

humanity forever. I will tell you guys, I was going to mention

this. Have you guys played with Dolly too? Yeah, the other day?

Yeah, sure. I got the login. I was my brother in law was

visiting, we were playing with Dolly too. And making funny

kind of explain what it is. Yep. So Dolly too is developed

by open AI. We all know Sam Altman, he’s been leading that

organization to great effect over the last couple of years.

And, and what they’re doing is they basically scan the web for

images, tag them, and then applied, you know, machine

learning to, you know, to basically allow natural

language creation of images from scratch. So the AI can

generate an image. And you can go to, you know, the internet

and look at a bunch of these, but the imagery is incredible.

I mean, the creative output, what feels like creative output

from the system, where you just say, hey, you know, make me an

image of four guys doing a podcast on zoom in the style of

Van Gogh. And it creates this image that is unique has never

been created or seen on earth before, and is a function of

the, the learning that’s been done in these neural networks to

develop this AI that can that can create novel stuff is really

amazing. And I started to think about like, what are the

implications for this over time? Think about, you know, the

original movie Ben Hur in today’s dollars would have cost

a billion dollars to make, they had thousands of people, I think

10s of 1000s of people on that set, it took years to make, they

built giant sets, they can only, you know, make one film. It was

an incredible feat and an effort. That’s what movie making

is, you know, still today, there’s there’s teams of people.

Now, what if you could speak to the AI and say, make photo

realistic, you know, Jason and Chamath having a battle on a

field in the middle of nowhere, and now an airplane flies over,

and you can instruct the AI and the AI can generate photo

realistic visuals, audio, the AI can even generate scripts and

narrative for you. It’s really starts to change the role of the

creator, the director, the director is no longer doing this

thing where they have to get it just right, make the perfect 90

minutes, and then line up all the money and all the people to

do that work on that plan on that program, they can be much

more iterative, and they can be much more creative on the fly,

they can create a two hour movie by speaking to the AI, and

then edit the movie by speaking to the AI, change the actors,

change the color, change the voices, change the music, just

speaking to AI to generate creative output, and people will

consume that output. And I think it’s amazing to think about what

creators will end up doing 10 years from now, as AI and these

tools proliferate, and you see version 12 of this, which is

version two, and what version 12 might enable. And so the role,

the number of people that can do that job goes from Steven

Spielberg, and Bob Zemeckis, and a few other people to suddenly

1000s or 10s of 1000s of people around the world making

incredible movies.

So here’s Dolly’s image was pull it up of four guys doing a

podcast. So we have a ways to go. But yeah, that is four guys

doing a podcast. I mean, and to your point, like, you know, this

is gonna we’re on.

So a lot of people are like, Oh, is this going to wipe out

graphic designers? Is it going to wipe out the creative

industry? But the reality is, the roles that those people are

in today will absolutely be gone, but they will emerge and

evolve into new roles that we never even thought imaginable,

they’ll have will really transform that industry and

society. And this is going to be true across everywhere that AI

touches. Yeah. And I think China, China, as China steps up

their technology in manufacturing, you’ll see those,

you know, new markets evolve. Sorry, Jamal, go ahead.

designers will have less leverage to ask for all this

stupid snacks and offices of startups.

Well, I mean, you need only look at designers are the worst,

my god.

They’re the best. I love but anyway, in the 1940s, I mean,

there were literally hundreds of 1000s of telephone operators.

It was totally and totally, they’re all gone now. And not

only that,

have you ever met a designer that didn’t take themselves

incredibly seriously that didn’t have like, you know, tea

that they would see the bad one, you know,

good one.

They’d have like steel straws, you know, video game designers

are a little different. I’m sorry, what did you say about

the steel straws?

That was it.

I am eliminating waste in my life. I mentioned to you guys.

Last year, this video game I played over Christmas by Anna

Perna pictures, and the guy that runs the studio sent me a

DM, he loves the pod. Oh, that’s nice. And they just launched a

new video game, which I started playing a couple nights ago

called stray. And you literally at you, you play the game as a

cat lost in some crazy world. You’re literally a cat. That’s

awesome. The imagery on this thing is unbelievable. Actually,

my favorite game right now saxes I play a cat and I’m a stray

cat. And it’s really amazing. The AI I you know, it’s really

hard to go play the game. Yeah, I’m gonna take a hard pass on

that. I like to play a game where I’m a stray dog and I meet

another dog. And then we eat a bowl of pasta. But this long

string of pasta, we each come closer and closer, then we end

up kissing.

Let’s move on to do we want to go BlackRock has lost $1.7

trillion in six months. VC funding is down. Or Amazon

acquires one medical for 3.9 billion. Which which one do we

want to go to next? Anybody have a favorite here? Sachs? You’ve

been a little quiet. You got one you want to go to?

We can talk about the BlackRock thing.

This is the largest amount of money lost by a single firm over

a six month period in history. BlackRock is the world’s largest

asset manager. And it was the first firm to break $10 trillion

in AUM assets under management. Not right now they’re at 8.4

trillion 2022 ranks as the worst start in 50 years for both

stocks and bonds. Chairman and Chief Executive Officer Larry

Fink said on his earnings call at the end of June, only about a

quarter of its assets were actively managed to beat a

benchmark rather than track it seamlessly as passive strategies

are designed to do. Firm’s passive equity holdings are now

10 times larger than its active holdings, although it does

operate some active multi asset and alternative strategies that

narrow the gap. Collapse in bond markets this year has shaken

money out of active fixed income funds.

Listen, I think there’s less than meets the eye here with

this. I think this was a headline that was trying to grab

attention by saying biggest loss ever. Look, the reason why it

was the biggest loss ever is because BlackRock is so big. I

mean, and what is BlackRock? It’s basically at this point,

their index funds, their ETFs, their index funds. They just

represent market indices. So, you know, the reason why it went

down 1.7 trillion is because it started with 10 trillion. So

the average index is down 17%. That’s all it means. We know

this. The S&P 500 is down 20%, 22% for the year. The Dow Jones

down 15 ish. The NASDAQ is down like 30. So this is just

reflecting what we already know, which is that the stock market

is down this year. Do you think it’s another data point to

support the idea that active managers, generally speaking,

and maybe holistically speaking, over time, cannot be the, you

know, the market cannot beat indices. I mean, you have a

point of view on that as an investor sex.

Well, I think, you know, you’re talking about public market

investors. I think it’s very hard. I think it’s very hard to

beat the public markets over a long period of time

consistently. I just think it is now. You know, the

contradiction, though, is if you have no active managers,

then the indices won’t be efficient anymore. So you need

the participation of the active managers to help drive the

indices and make corrections to it. So and the fewer active

strategies you have, the more inefficient the markets will

become thereby inviting active strategies. So, you know, I

think it’s a good question. I think there are some managers

who are who can probably do it. But I think it’s a very tough

thing to do.

Tim off. What do you think you’re a public investor, active

selector of

Here’s what I’ve been thinking a lot about this. I think that I

have disproportionately benefited from being at the

right place at the right time, backed by enormous amounts of

central bank money. And so I think we all have been. I think

it is very difficult to be a public market individual stock

picker in a world where the central banks are constantly

meddling. Because when they do, the best thing that you can do

is belong the market beta. And the more concentrated you are,

the better returns you would have delivered since 2008, when

the central bank started to get very aggressively involved.

When individual stock pickers reigned, the universe was when

central banks were largely on the sidelines. And so there was

all kinds of dispersion, right dispersion, meaning good

outcomes, bad outcomes, lots of alpha, right, meaning your

performance was independent of the market. But since 2008, it’s

largely been beta that’s driven the market. And the folks that

have done exceedingly well were those in tech because we

delivered the best beta. And every time we confuse alpha and

beta, we get over our ski tips. And there’s always some big out,

you know, blow up.

So I think my general takeaway is that if the central banks stay

on the sidelines, individual stock picking reigns, and active

management can win. If they continue to be involved, and do

quantitative easing and all of this other stuff.

Index funds that are long concentrated market beta will

always outperform in the long run.

I was watching Warren Buffett answer some questions. And one

of the questions, and this goes to the law of big numbers, like

BlackRock, he was saying, Listen, the reason I did better

earlier in my career than later in my career on a percentage

basis is because I was placing at a smaller amount of capital.

And I was placing it on smaller bets, smaller ideas and themes.

And then as I had a bigger chip sack, I had to find bigger ideas

to put more money to work. And therefore more people were

looking at those. And so those assets were not undervalued. And

so I found that very, like, insightful, in terms of when you

participate in the market, if you’re trying to pick between

very large bets, like CO2, and TPG, and Tiger, we’re doing in

the growth space acts. Like, now, everybody knows that these

companies, everybody knows stripes a winner, everybody knew

Airbnb and Uber were winners, you know, in the late stage of

the private, everybody knew Facebook was a winner in late

stage private market. If you’re battling that out, you know,

URI Milner is going to come over the top and pay 2 billion

more than you or Masi Yoshi son is going to pay five or $10

billion more than you. Where is the alpha there? You know, where

where is the gain? And I was in the fees. Okay, there you go.

And so they were playing a different game. And that’s, you

know, I started trading this past two weeks, because I’ve

never traded public stocks, and I wanted to add it as a skill

set. So I put a couple million bucks into an account. And I’m

just trying to actively figure out how does value work there.

And, you know, I’m just starting to make trades that I want to

hold for 10 or 20 years. And we’ll see if I can beat the

market. That’s the other thing is, what do you want to spend

your life doing if the index, if you can put money in a passive

index, and not do any work? Well, you know, that’s

attractive as well. So sacks, what do you think in terms of

active management? You know, in these public markets and the

size of the bets that have to be said, I think it’s very hard

to beat the market consistently. I think it’s a very tough

profession. I’m sure there are people who can do it. But I

don’t know if it’s easy to predict who those people are. So

look, I, you know, I think it’s something that can be done. But

I just think it’s a tough, tough game. I mean, what we do as

private investors is a little different, right? Because not

everybody is in a position to buy shares, right? So not

available to you don’t even know the company access is limited,

and information is limited. And in exchange for that sort of

preferential access that we get, we actually have to do

work. So when you’re when Yeah, when you’re a public investor,

in a company, Disney, or whatever, you don’t do any work,

you’re not involved at all. We do a lot of work for the

companies. And that’s why they choose us. And so it’s not, you

know, it’s you’re not competing against the whole world. I

think the public markets are just so competitive.

Are you tempted, though, looking at these prices, and

because I was looking at a company that was trading at 50

times revenue last year, they’re raising again, they double

their revenue. So now they’re at 2025 times revenue, they’re

raising out last year’s valuation. And then I looked at

the public market comps, and they’re trading at six times. So

now I’m like, wait a second.

You gotta look at the growth rate, you gotta look at the

growth rate was three, the growth rate in this example was

three times fat greater than the public market comps. So how

would you assess that then?

Well, what we’re seeing right now is that pretty good SaaS

companies that are growing, you know, maybe on a trailing basis,

they grew three x, and you know, prospectively, they’re growing,

call it two and a half x, they’re trading right now, not

trading, but basically deals are getting done at 20 times ar 20,

which are this year’s current run rate. Yeah, the current ARR

you’re not getting that like bonus, like, here’s your

projected next year, we’re going to give it based on that this

is current. No, no current ARR is about 2022 23 times ARR.

Down from what last year 100.

It was like 100 times was the rule of thumb. So now there are

some where they’re, you know, deals are getting done in the

high 20s, I’d say, or even 30. If they’re, if you believe that

by the end of the year, it’ll be more like 20. So but I think

the new levels are landing at 2020 something times ARR. Now,

why does that make sense relative to the public SaaS

companies? Well, like you said, the SAS index is trading at

roughly six times, but that’s only 20% average growth, right?

And so, you know, if you’re talking about 10 times the

growth, right, and the high growth SaaS companies are

trading at like seven times. That’s for like a 40% grower.

We’ve talked about this before. So listen, if you’re tripling

year over year, and you pay 20 times, that’ll be a seven times

next year. But if you’re growing to two and a half, three x next

year, that’s way faster. So yeah, I think there’s actually

an arbitrage there. I mean, this is why we’d like doing private

SaaS investing right now.

Deals are getting done. I will say that the people who I’m

seeing who are really struggling, Friedberg are the

people who didn’t turn on I’m talking about the very early

stage, they didn’t turn on revenue, they were making

progress in team building and culture and features, but they

just weren’t focused on the revenue side. And my Lord,

people got a lot of credit. I mean, 50 million $100 million

valuations without the revenue turned on. And that now they’re

faced with not being able to raise money full stop. What are

you seeing on your side, Friedberg in terms of deal flow

in the private markets? Yeah, it’s and raising money. Yeah,

because you have to raise money for your company. It’s not easy.

Okay, unpack it. What’s not, you know, well, what are the

conversations like? Give us the anecdotal information.

I mean, I’ve seen a number of term sheets get pulled. So I

think really, yeah, we’ve heard a lot about companies that kind

of during the q1 early q2 timeframe, had term sheets

weren’t closing, got the laid out. And there’s a number of

kind of examples of repricing, where the investors come back,

markets have changed, let’s reprice the thing. Or, hey,

we’re not going to do this deal anymore. We’re going to sit on

the sidelines and wait till the market settles. Or our LPs

actually aren’t going to let us fund new stuff. So there’s a

lot of those last one for people. What does that mean?

You know, investor, you know, investors have LPs, they have

investors themselves, and their LPs are coming to them and

saying, do not put more money out right now, we are telling

you, we are not going to wire our money to you, we need you to

wait until even though they’re contractually obligated to

they’re telling you, theoretically, they don’t may

not be contractually obligated to, but obviously, these are

long term partnerships. And so when an LP, you know, or a group

of LP says, guys, we’re not comfortable with you deploying

money right now, you know, you’re in a 10 year partnership,

15 year partnership with them, you’re gonna as an as an

investor as a fund, you’re gonna say, Okay, I’m going to kind of

listen to that right now. Now, the bigger issues in series B,

C, and D, where companies, you know, have some traction, have

some performance have raised a bunch of capital have done a

bunch of work, and investors don’t know what they’re worth.

They’re like, hey, is this thing worth 25 million or 125

million or 500 million? Last year, you could have raised

money at 500 million. I mean, look at what happened with one

of those crypto things. Those crypto trading platforms, they

raised $500 million last July, and they just sold the business

for a reported $25 million after being valued at 5 billion a

year ago. Yeah. So the whole truth might have been more like

275 million. Yeah, we don’t know. Yeah. And, and so but

but serious series, a people seem to be pretty active again.

And so active again, but the price is now for seed rounds.

Yeah. But it’s a lot easier happening six to 15 series is

happening 15 to 25. It’s a lot easier to get a deal done in a

series A because people say, Hey, look, I’m gonna give you

this. You say, Okay, I’ll take it. I need the money. Series B,

C and D is where there’s this whole fight because there’s

existing investors, existing shareholders who are saying I

don’t want to take a 50% write down a 70% write down a 30%

write down over the last round, and fighting and then doing

inside rounds and bridge notes, and all sorts of other

shenanigans to not have to take a negative book. Yeah, well,

one thing that’s interesting here is that you think about

like where the opportunity is in the market right now. And I

think one of the things that happened in the boom is that

everyone got pushed to go earlier and earlier because

deals were so competitive. And so, you know, in the SaaS

business, normally 1 million of ARR was considered the rule of

thumb for getting a series for basically graduating to a series

A that you’re ready to go from C to series A when you had a

million of ARR. As we know, during the boom last year, that

number kept going down, you know, yeah, 300,000. And then

you would see crazy deals get done that were pre revenue with

price at 100. Plus, we never did any of those kinds of deals

because we just thought they’re too crazy, but they definitely

happen. Well, think about the dynamic now, which is, let’s say

that that SaaS startup that has a million of ARR, they can do a

series A at 50. Or we can just wait until they get to 5 million

of ARR, and then pay 20 times and do it at 100 pre, which of

those is the better risk adjusted return? Let me tell you,

there’s a lot of risk in going from 1 million ARR to 5 million

ARR. It’s hard. It’s hard. There’s a lot of things. You’re

just you’re not doing it through the founders. Yeah, you need to

start scaling a team, you need a real sales capacity. But also,

a lot of startups that could sort of hack together and

cobble together 1 million of ARR, based on non scalable

techniques that various startup incubators teach like, you know,

don’t do things that don’t scale. It’s okay to do that from

zero to one, but not one to 10. Right? Well, well, or it’s not

that it’s not okay. It’s just that it doesn’t work, right?

Like, you’re not gonna be able to cobble together 5 million of

ARR, you can cobble together 1 million of ARR, you can use the

cheat code to get there. So what I’m saying is, there’s a lot of

risk in going from one to five, you find out whether the

product’s really scalable. So what is the better deal? Wait

till 100. Wait till it’s priced at 100 or 120 million pre or

doing the deal at 40 to 50. Now, if you love that, if you love

the company, you want to get in as early as possible. But I

think you’re going to start seeing a dynamic where in the

same way that last year, everyone earlier and earlier,

you’re going to see VC start to sit back and go a little later

and later prove it to us. A dead man’s own. Nobody should be

putting money into deals right now. What is it? Why? What does

it do? Unless unless you’re in the business, unless you’re in

the business of running a fee generating machine, if you’re

really trying to generate alpha, you have to have a sense

of what’s actually happening in the world right now. If you’re

just trying to deliver the market beta and run an index,

then yeah, you’re right, you should ignore this idea that

there could be more price adjustments. But if you look at

the public markets, which is again, the ultimate terminal

buyer, they have more cash than they ever had since 2008. Which

means that there is no reason to buy. You’re talking about

private companies, it all ultimately ends up in the

public markets. And so if the public markets are saying there

is no reason to buy this stuff, it trickles down. So then the

crossover investor who has a public private business says,

you know what, on the public side, I’m completely de-risked

and in cash. And so on the private side, I’ll just be a

little bit more circumspect and wait, as David said, I’ll just

wait six months and put even more money in later, I’ll

actually have a better IRR, and I’ll make the same profit

dollars. So then the series B and C firm who used to feed

those deals to the crossover folks are like, oh, well, if

you’re waiting, I don’t want to have to write a check to

support these folks. My whole point was to have you mark up

the deal so I could raise a new fund. They slow down. And then

that goes back to the series A person who’s like, well, wait a

minute. You know, the reason I paid it at 50 pre was because I

thought you’d step in and buy it at 100. And then they slow

down. So all I’m saying is, I think that we are at the point

of the cycle where constipation is setting it. And this is why

you’re seeing such a downtick in deal velocity and dollars put

to work. This is great advice. I want everybody to take, I’m

going to take the opposite advice. And I’m going to do

twice as many deals in the seed stage as everybody else. But I

encourage every venture capitalist and seed fund to take

advice. I’m doing the opposite because a five person company,

this is an advice. This is just a market observation. I’m just

telling you, I hope everybody takes that as the truth. Because

what I’m seeing is the founders who are raising and who have

real businesses are so sharp right now and so focused on

costs, and profits, and what matters and they have eliminated

all the shit that doesn’t there’s a whole contingent. I

don’t know if you’re seeing it sacks. I’d say it’s one out of

five, one out of four that are like, I understand what’s

happening here. And I’m going to take advantage of this moment

in time. And I’m going to just drive revenue and profit. What

happens to the $250 billion that’s been put to work in the

last two years that need to get up rounds? Yeah, it doesn’t

matter to me. All I care about is meeting young companies that

are growing with revenue. But I think they’re they’re just

trying to have I’m not trying to have a conversation. Yeah,

yeah. No, I know. I’m just that’s a lot of indigestion.

Yeah, they’re gonna have to cut their staffs by half and get to

profitability. Ultimately, the way that valuations matter, or

price levels matter is there’s an entry price and an exit

price. And ideally, if you can time it right, you want to

invest when valuation levels are low. And you want to exit when

valuation levels are high. If you were a VC last year, you

should have been realizing as much as you can, because

valuation levels are really high. There was a good tweet by

one of Breckers’s colleagues at Altimeter, basically saying she

was talking to LPS and asking what they care about. And what

she reported LPS is saying is that if you’re a fund, that’s

more than five years old, and you didn’t distribute during the

best Yep, window ever, which was 2018 to 2021. It’s a hard No,

you know, we’re not going to be re upping with you.

I’ll say it even more. If you’re if you’re a venture investor who

took a longitudinal view on public market stocks, and then

have now seen 60 to 70% write downs of those same stocks that

you could have distributed, you should still have something to

answer to that makes no sense. It turns out that the skill of

private market investing and the skill of public market

investing are different. Even if all you’re doing is delivering

the market beta, it’s still different. And we had this

discussion last year, remember, I was saying, should I

distribute the shares of Robin Hood? Should I hold them? What

should I be doing? We told you to distribute and I distributed

I distributed everything, you know, and, and in terms of

secondary, I feel particularly like a genius now, because your

LP should say thank you, Jason. No, I mean, some of them are

saying that what I feel smart about, I’ll be honest is, we

had, I think, let’s just say, I’m making up a number four to

five times, we were offered the opportunity to trim our

positions in secondary, with our winners, from people who wanted

to buy secondary shares, I did it probably four to five times.

And I’m just kicking myself, I didn’t do it the fifth, or I

didn’t ask if they would take more. Because my god, we were

able to clear some positions at very high valuations that are

now lower than that in the private markets and send cash

to our LPS and get our, you know, get over our hurdles in

our first two funds. Which, you know, I feel smart about, I

think that you should feel so, so good about that. That is,

that is really hard what you did. And I think people

underestimate how hard it is, it is really hard to actually

return more money than you have taken it. Yeah, I mean, that’s

just what I’m focused on that simple statement. And, and by

the way, it was hard in the last 10 years, where we’ve had

basically a massive upmarket and the four of us, frankly

benefited from the extraordinary luck of being in

tech. Yeah, no, it’s super lucky. I think the big thing

that’s going to happen right now, I’m seeing it all over the

place is M&A, I think is going to start ticking up just today,

Amazon acquired one medical for 3.9 billion, one medical

operates a network of clinics, if you don’t know $3.9 billion

enterprise value for 182 franchises, which is 21 million

a franchise, look at what happened to their look what

happened to their stock price. No, I know I went from 60 in the

peak in February of 2021 to seven in May, and they bought it

basically bought it the same price it was trading out in

January. No, my point is, you could buy a McDonald’s franchise

for 2 million, or you could buy the company that fixes the

people that needed McDonald’s for 21 million. That’s why they

got by the way, at McDonald’s, you can’t make money selling

pharmaceuticals and upselling, you know, other stuff that

Amazon’s gonna certainly I think it’s super interesting that I

think it’s super interesting that Amazon’s getting into this

business. Wow. I mean, they clearly have a an economic model

that shows some significant footprint and retail footprint.

Well, yeah, and there may also be kind of a supplement

pharmaceutical kind of upgrade opportunity. There’s synergy in

this business. And think about the synergy between what they’re

getting is also not just the physical locations, but a

network of doctors that can do telehealth. I don’t know if you

guys have ever used one medical, but they do really, you know,

easy zoom telehealth services. And so you could hop on, get a

prescription, have it fulfilled by Amazon, it shows up at your

doorstep in under an hour genius, it’ll be an incredible

synergy for that business, and probably a real value driver,

not just at the core units, but with respect to other things

they’re going to sell through your one medical doctor will

provision a blood test, he or she will analyze those blood

tests over a telehealth, they will prescribe a better diet

that will be sent to Whole Foods, who will then I’m sorry,

I’m serious. And then medicine is eating at home, Amazon, it

makes so much sense for Amazon to expand into built out retail

footprints, because that business model now gets more and

more complete by the day where you become so ingrained and

enmeshed in this. This is really about at the end of the day is

the subscription business, Amazon Prime is the driver of

Amazon. That’s gonna be yet another Amazon Prime lock in. So

you’re I know it sounds silly, but today, it’s all about your

subscription. But I will bet you got I will bet you guys $1

that within a year after closing the deal, they’re going to

massively expand the telehealth footprint of what we’re medical

is doing percent because one medical had to go out and do

customer acquisition to go and acquire customers to make money

doing telehealth services. And they’re spending $1,000 probably

CPA to acquire these customers. Amazon wanted to do this. Why

didn’t Google Amazon’s already got the Amazon’s already got the

customers. They’ve got 70 million everybody. By the way,

I think another thing I know another doesn’t know how to do

messy things in the physical world. They don’t know how to do

service. I mean, Amazon’s been working warehouses. What about

Apple? Apple knows how to do stores. They know how to do

four products in a beautifully designed $20 billion services

business. Amazon knows how to get in the nitty gritty and the

nuts and bolts. Yeah, thanks. Yeah, real world stuff. The

other thing that’s really interesting about this Amazon

deal is that it was done with Bezos not at the helm. And I

think it really, you know, begs the question and begs an answer

around, are these guys going to continue to innovate like this?

And I think right now the jury’s saying yes, they are going to

continue to push the synergies they can drive from this

business by expanding into ancillary services and industry.

And it’s really impressive to see them doing this without

without Bezos running the day to day as a shareholder. I feel

that. So really great to see. Yeah, I mean, this is where like

they could buy DoorDash, Uber, Lyft, those kind of real world

services. They’re buying a cheap asset. They’re buying it just

like they did with Whole Foods. They’re buying an asset that

they’re gonna get tremendous leverage and synergy out of very

cheap. They’re buying this company at the same price. It

was trading at a few months ago. Yeah, no, no, it’s a great

deal. They have a great CEO at One Medical who’s a friend of

mine, Amir Rubin. Congrats. Shout out. Congrats. Yeah. All

right, everybody. Did you wet your beak sucks? No, I never I

never wet my beak in this deal. Dry beak syndrome. No, I would

just learn from DBS. By the way, I’d be taking a victory lap

right now if I was in that company. I missed it. I’m

shocked. We haven’t seen the J Cal victory lap. He goes on some

podcast tells Bloomberg that VCs are going to get pinched for

insider trading all these tokens and lo and behold on the Wall

Street Journal. Three guys, I guess a guy at Coinbase got

pinched for basically insider trading these token sales

front running it by buying them in his wallet and stuff. And so

where’s your victory?

That would be our reoccurring joke.

Do you want to take your victory lap? Well, no, I mean, I told

everybody like if it’s if it smells like a security and

people are buying it for that reason for it to appreciate

don’t be surprised if the SEC, you know, starts having tips

dropped on them that different VC firms in cahoots with law

firms in cahoots with everybody were liquidating their

positions. We talked about liquidating positions as being

the goal of venture capital. They created a shadow economy

next to securities law and said we’re going to just start

liquidating these things but under what they made the rules

up under which they could liquidate them. I’m not picking

on any firm or anybody we’ll see over time who gets pinched. But

you know, if you decide you’re going to talk yourself into

this is not a security, even though it kind of feels like

one that’s on you. That’s on you as the person buying the

tokens, issuing the tokens, giving the legal briefs on the

tokens. I think people suspended disbelief and talk themselves

into thinking that they weren’t trading securities. And I think

the SEC now that everybody’s lost their money is going to

just tick off one firm after another, and it’s going to be

massive settlements, it’s going to be three or four years of

litigation. So it’s not a victory lap. It’s just it was

such an obvious observation. We all saw it. I mean, how do you

liquidate up your shares in a company that has no product in

the world? Like, come on. Come on people knew what they were

doing. And if they get the book thrown out on they deserve it.

All right, everybody. This has been another amazing episode,

even though sacks is going to say it’s the worst one. I like

it. I do. That’s a lake. Is that real? That’s late? Is that a

zoom background? Can I get that new zoom pack? Take a photo so

we can all use it. Love you, boys. Love you besties. All

right, we’re back. Back at you.

Oh, man.

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 that they just need to release somehow.

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