All-In with Chamath, Jason, Sacks & Friedberg - E89: GDP growth negative in Q2, $SHOP layoffs, Alzheimer's fraud, Ginkgo acquires Zymergen & more

All right, his monthly burn rate would make even Bezos wins. He’s living the life of a Sri Lankan

prince. He drinks nothing but the absolute highest top shelf. He’s lifting Italy’s GDP

by himself. The dictator’s back to mouth Polly. I’m back to the program.

Thank you, Jake. When you mentioned that burn rate, I thought you could be talking about me.

Sometimes these intros, you’re not sure which which way it’s a misdirect. It’s a misdirect

comedy. It is inconceivable that my burn is higher than David’s. I have I own one house.

How is it possible? And maybe one or two next.

He’s analyzing macroeconomic charts and grids while at the same time ignoring his kids. He’s

the sultan of SAS. It’s no surprise. The only thing heavier than his pockets, the bags under

his eyes. The rain man is back. David Sacks. It’s not bad. Oh, here we go. Here we go.

The admiral of anxiety. He’s rife with strife. He plays on his PS five and he also plays one

in real life. Meow. The commander of the Catboys, David Friedberg. I mean, I’m totally cool with

that opening because you’re going to look like an asshole. It’s all good. I mean, more of an

asshole. I mean, you didn’t ignore it. Every time Friedberg spoke, you would have heard

that the guy from unimportant pictures reached out to him, gave him a link to download a free

game about cats, which he downloaded and he’s been playing. It’s now the most popular video

game in the world. You introduced the cat game. It’s on you. By the way, what shirt are you

wearing? It looks like a carpet. Yeah, you really do look like one of the characters from Goodfellas.

Like one of the older guys in the Kansas City. Oh, yeah, I have my cigars right off screen here.

And I got my coffee. I got from Duncan. You remind me one of the guys in Kansas City from

casino. Absolutely. I sit around the table in that restaurant. It’s like, should we whack him?

Why take a chance? Boom. You get him. I got my style icons. Joe Pesci’s my style icon.

You look really bad. Thank you. Thank you.

GDP fell by point 9% in q2 marking two straight quarters of negative growth.

In q1, we all know GDP fell 1.6%. Here’s the real GDP chart. Current dollar GDP increased 7.8%

an annual rate or 465 billion in q2 to a level of 24.85 trillion home construction down 14%

ostensibly because of the interest rates increasing inventories which helped boost

GDP in 2121 drag down growth in q2. So supply chains easing, taking away two percentage points.

Chamath, what’s your take? Do these year over year comparisons work? We were talking in the

chat a little bit about the spike in 2021 versus the dip in 2020. What’s your take on this?

I think you just summarized it. People are really fixated on these numbers without understanding

basic statistics. So just taking a step back, if you go to the Bureau of Economic Analysis,

which is an official website of the government of the United States that hosts GDP, the title

makes it pretty self-obvious what we’re dealing with here, which it says, Nick, you can put it

up there. Real GDP, the percent change from the preceding quarter. So things can still go

up positively, but still be negative if it doesn’t go up by the same or more than the quarter before

it. The thing that we really have going on is that over the last eight quarters, we’ve had all

kinds of very turbulent data that’s made the trend line unpredictable. And the most obvious way to

see this is actually in one specific subsector, which we’ll get to in a second, which is around

US e-commerce adoption. You see this one huge spike coming out of nowhere. And then eventually,

everything has settled back to trend. The same way, I think what we’re waiting to figure out

is how many quarters does it take for us to get back to on-trend growth in the economy?

We had a massive shortfall in Q2 of 2020. We had a massive surplus in Q3 of 2020. We’ve had a

country that’s been getting back to finding equilibrium over the last five quarters. So we

don’t really know what the steady state growth should be. This is why I specifically had such

an issue with the tone the White House took, which was trying to explain away that this isn’t a

recession by trying to create doubt in the definition. Instead, I think it would have been

much better off just repeating what I just said and explaining basic statistics and actually

showing that the country is headed in the right direction, largely speaking from a really crazy

one-time externality that nobody could have predicted, that it’s going to take some number

of quarters. And so really what you should look at, and Jason, you’ve pointed to this,

is employment and wages and try to be a little bit more circumspect in overreacting to any one

quarter of data. By the way, the Fed exactly just said the same thing yesterday when they raised 75

basis points. They said, we are not going to give guidance anymore because things are too turbulent.

We’re going to remain vigilant on inflation, but mostly we’re going to be very

near-term data dependent. So I would boil all of this in saying, let’s not overreact to a quarter’s

print here or there, and specifically the label. I think the White House made a mistake in trying

to basically think we all didn’t understand what a technical recession was. I think instead,

we should just focus on what we have to do to get back to solid state equilibrium.

Yeah. And just to put a pin in the definitions, we all know the common definition,

two successive quarters of negative GDP. However, people have said it’s a temporary

economic decline during which trade and industry activity are reduced. So there’s a sort of debate

and splitting hairs going on, Sax, which was kind of stupid. The big news this morning is that we no

longer know what a recession is. This is such a vast and complicated question. You might as well

be asking, what is the meaning of life? Now, I remember in the days of Republican presidents,

we had a very simple definition of recession, which was two quarters of negative GDP growth.

But now that we have a Democrat in the White House, we just can’t know these things. Why even

ask such difficult questions, right? I mean, that’s basically the media coverage today,

and that’s absurd. I mean, and you saw for the last week, the administration and its spokespeople

have been trying to muddy the waters on the definition of recession. And it was laughable

as they’re doing it. But now you see the media coverage today, and you realize like they’ve

bought into this nonsense, and they’re carrying so much water for the administration. Look,

the headline should be the Biden recession has begun. That’s it.

If you had three minutes and 45 seconds for your Biden over under with sacks,

you took the under you won.

We’re in a recession. He’s the president. And if we had a Republican in the White House,

it would be Republican president recession has begun. Yeah. So the media here is carrying so

much water to try to avoid the obvious headline. I just explained it. Instead of reporting the

obvious headline, they’re now saying that we’re approaching a recession, or we might be in

recession. We have all these difficult technical issues. Listen, we’re in a recession. It started,

it might be a shallow recession. We don’t know yet. Yeah. It’s a recession in which the unemployment

rate as of today is low, although the labor participation rates also low. So listen,

we’re at the beginning of a recession, it might turn out we might have a bouncing Q3,

this might be more of a double dip, I suspect that’s what it will be. But we know the cause

of this. The cause of this recession is inflation. If you look at the economy’s growth on in nominal

terms, it grew at seven point something percent, but because inflation was at 9%, you have to

subtract them in real terms, the economy is shrinking. And who is to blame for reset for

inflation? Well, Jay Powell, the Fed, because he reacted way too slowly, but also the Biden

administration for all the spending they did. How much sooner do you think they could have reacted

two quarters? No, like nine months earlier. So three, we got that we got that first surprise

inflation print last summer, it was May, I believe that 5.1%. We started to talk about

10 year break evens tips in May of last year. Yeah, so they could have gotten a quarter to

nine months, and they continue not only do they not raise rates, or signal any desire to raise

rates for six months, they continue to quantitative easing for nine months, which just makes no sense.

But they should have taken their foot off the accelerator, right?

Nine months, they only start they only stopped in June of this past year. So we’ve only been

quantitatively tightening for two months. They stopped the bond buying program in March.

Maybe that’s right. Yeah. Yeah. But they saw quantitative easing in March. But you’re right,

that tightening is just something they’re getting started with. But the point is,

they should have stopped easing, right? Like, why would you need to keep intervening

in in the in the markets to buy more and to basically push out more money?

Is the reason for this that Powell and Yellen just haven’t lived through highly inflationary

times? I just read they’re older than I am. They haven’t been in office and doing

Fed policy. Like I just read Volcker’s book, if you haven’t read it, it’s pretty great. His

biography. I mean, what he had to do in 8182 was super severe. But we just haven’t lived through

this in our lives. So I guess people are just not used to having to tap the brakes in no,

no, look, what happened is that the administration reacted in a political way to the inflation

print, they invented this word, well, the word transitory existed, but they applied it, you heard

this word use relentlessly for about six months. So the administration went into denial mode. Yeah.

And then by the end of the year, it became clear that it was persistent. And I think the issue with

Powell is that he is basically responding to headline risk, right? So he didn’t respond to,

you know, the inflation problem last summer, he waits until the headlines tell him he has to

react. And so now the the thing that he’s worried about is his recession. Obviously, he knew

no, he’s worried about inflation, mostly, right? He was worried about inflation. But if you look

at yesterday’s, right, but if you look at his comments yesterday, it was more dovish comments,

they just 75 point rate hike, but the comments were more dovish. And I think it’s because he

knows that today we have this second consecutive quarter of negative GDP growth. So now he’s trying

to balance recession risk against inflation risk. But the point is that the feds been very slow to

react and the administration basically just tries to relabel and rebrand problems instead of

confronting them at all. Hey, Chamath, when we look at this chart, you pulled up four, and we

see this massive spike. Q3, Q4, Q1, Q2, little bit in Q3, and then Q4. I mean, this massive 123456,

just extraordinary quarters, or five out of six, in terms of GDP. That’s all stimulus in your mind,

right? This is the money drop lockdowns in Q2 2020. Jason, they lock the economy down.

Yeah, but so people were spending online, and we’ll get to the Chamath story about Spotify. But

it’s not all of it. But the point is, it’s some combination of lockdown and access money,

right, access money, because, because of loose financial conditions, distort what true supply

and demand should be. Got it, right. And access money can come from the government. But in this

case, access money money went from the government into the hands of individuals who then participated

in the public markets. And they distorted what it what it all looked like. And so there was a lot

of purchasing activity that was propped up by what seemed like an endless supply of free money.

Right. So we know that. Yeah, good. And so now that that money is getting taken out,

we don’t yet know what the real equilibrium economic growth rate should be. Because you

have to remember, we have not seen an era without federally introduced spending,

without federally introduced forms of quantitative easing, since the great financial crisis. So we

have been propping up our economy for 14 years straight now. So we have distorted the prices

of bonds and fixed income. We’ve distorted the prices of equities. We’ve, we’ve created an asset

bubble in crypto out of nowhere. And now we have to do the hard work of figuring out what the real

supply demand is in the economy. And we took six quarters here, there’s six quarters of just massive

GDP spike there from the preceding quarters. And we have two down quarters, is it going to take

six quarters to wash us out or longer, I guess, longer, because what David said is now

making the problem even worse. So because Powell was catering to whatever pressure he’s been

getting, and he must be getting some severe pressure from the White House. Those were

really dovish comments. But what is the problem when he is dovish? Well, the practical reality is

a couple of things. Number one is typically the yields of long dated bonds go down. Okay.

That essentially tells everybody else to reprice assets. What does that practically do? It makes

the cost of borrowing roughly cheaper. Okay? It makes the price of equities, particularly ones

that are far out on the risk spectrum. So specifically, let’s focus on NASDAQ and crypto,

right, tech stocks, biotech stocks, and, and crypto stocks go up much more aggressively.

So what is Powell effectively done? He is synthetically created a form of easing,

again, right? Like his job at the Federal Reserve, if you think about the money supply as a pipe,

it’s to shrink the pipe to close off demand to get things in equilibrium. So even though he’s

doing this, by the language that he’s doing, he’s effectively allowing market participants to

basically guess that the worst is over. And now we’re going to start to expand the pipe again.

And so they go to the end state. So what he effectively did in one speech is basically put

a pin at the end of this year. And it’s telling the markets I’m mostly going to be done. And if

anything, I’m probably going to be cutting in the back half of 23. Go on your merry way.

And there is no secret.

The problem with that Jason is, it’s now pushing the problem out another eight quarters. Like we

need to stop this nonsense. He needs to be definitive. And he needs to fundamentally

break the back of inflation so that you find out what the true demand is in the economy.

Yeah, and he did point seven, five yesterday, the markets rallied on his sort of the assumption

that he would do a couple of more of these rate hikes, and then he’d be done at the second half

of the year. And then hey, maybe we can get back to growth, or some normalcy in real in

really related to all of this. And by the way, there was an interesting story. The sacks would

be interested in how did you read Paul Volcker’s biography at sex?

No, I’ve not read it. It’s familiar with his record. But yeah.

Like at one point, Baker, and Ray took Reagan and Volcker into a room off of the White House,

so it wasn’t recorded, just said, Volcker to Volcker, the President does not want you to

raise rates going into the 84 election, full stop. And Volcker’s like, well, I wasn’t planning on

raising them. So there’s a lot of politics in this, even though people claim

already done enough. I mean, Volcker raised rates all the way up to like 20%. He broke the back of

inflation, it created a very severe recession in I think 1981 82. But by 1983, the economy was

rocketing back. Yeah, with lower interest rates, and they basically solve the inflation problem.

Hopefully, we’re not in that situation where Powell has to jack up rates so much to break

the back of inflation, because it means that we’d be in an even more serious recession.

So I hope we’re not in a Volcker type situation.

Just think about that spread sacks 20% versus like three or 4% we’re trying to get to.

We’ve never in the history of America ever had CPI print above four and a half or 5%

without inflation being brought down by having fed funds not also be greater than four and a

half or 5%. So at some point, inflation will turn over and will print six and 7%.

But that’s still not below four and a half or five. And right now, our target fed funds rate

is between 2.25 and 2.5%. So we could still be only 50% of the way there. If inflation remains

at four to four to 5%. And this is what I think market participants don’t want to hear. They don’t

want to hear that there has to be a meaningful form of tightening. And politicians don’t want

to hear that the White House for sure doesn’t want to hear. The problem is that if Powell

caters to too much of that feedback, he’s not going to do what he’s supposed to do and why

he’s put in that job. His job is to get it to 2% and keep price stability and full employment.

I think there is a balance here. I mean, the reality is we do not want Powell tightening

more than he should or more than is necessary to solve inflation because it will cause a serious

recession. So I think we’re caught between two pretty bad options here. And it’s because I think

that what happened last year contributed to this. I mean, look, if you go back to that chart that

you just showed, what happened in Q2 of 2020, we had a very healthy economy going into 2020 in 2019,

right? And then in Q2 of 2020, we had COVID, but we made the situation even worse with lockdowns.

And we basically shut down the whole economy, brought it back, at least in most states in Q3.

And then the Fed started printing and Congress started printing $10 trillion. Well, still, by

last year, the economy was back, we had something like 5.7% annualized growth. This year, it’s

negative. Why is that? I mean, this may be the lingering effect of all that stimulus, but I think

that it is, but I do think that the administration made it worse by sending checks into an overheated

economy. They also created energy scarcity. And they just kept, you know, spending more money.

I’m not saying the White House isn’t without fault, David. But I do think that if all of

these geniuses could have actually just taken a simple econ and stats 101 class and explained how

year over year measurements work to the American people, I think they’re smart enough to understand

it. We didn’t have to go down this convoluted route, we could have just explained, we put a

lot of excess money in the economy, we don’t yet know what the full effect of that is, we need to

let that wash through. In the meantime, you’re going to see some crazy numbers from time to time,

and we just have to be patient. And the other crazy things you’re going to have looking at second and

third order effects is all these downstream effects, people are making business decisions

going into these economies, Shopify just laid off 10% of its workforce about 1000 people on Tuesday,

their stock is down 10% past five days overall 70% year to date. And if you look at this chart,

and Toby took blame for this, he basically said, Listen, we thought that this was going to be a,

you know, fast forward into the future that people would adopt e commerce in a major way,

and that would stick. Here’s us e commerce adoption growth rate massive spike when people

were forced to buy all their goods online. And now it is regressing to the mean.

I mean, mean reversion is a bitch. If you look at Shopify stock, if you look at Peloton stock,

if you look at a firm stock, if you look at arc, you know, a lot of these things were trending in

a great direction. They had this short term, crazy behavior in the middle of all of this free money,

and now they’ve mean reverted. And, you know, we’re in the midst of finding out what the real

price is, I got to give Toby a huge, you know, round of applause, because he is such a great CEO.

And I’ll tell you why. Last year, in the middle of all of this woke ism, he wrote this incredible

memo, which was, you know, we’re not a family, we’re a team, which I thought was exceptionally

well written and really got the point across. This time around, he just owned it. He’s like,

you know, I made a huge bet that all of this behavior change was going to be discontinuous

and permanent. And it turned out I was wrong. I’m sorry for that. And here’s how we’re gonna

have to course correct. In both cases, he kind of just put it all out there. And he owned it.

And I think that that’s all you can do when you make a bet. And it’s wrong.

And here’s what he said. It’s now clear that bet didn’t pay off ultimately placed in this bet

was my call to make and I got this wrong. Now we have to adjust as a consequence,

we have to say goodbye to some of you today. And I’m deeply sorry for that.

I mean, everybody made that mistake, right? So you know, it is, it’s just you’re right,

you’re not just own it. Everyone was thinking the same thing. We’re all we’re talking about

how COVID was this acceleration as virus, and it was going to accelerate all these trends. And

well, that’s the acceleration awakening is going to be for all these people who made all these bets,

assuming that it’s permanent. And specifically, I mean, you know, especially around real estate

and work from home and all of this stuff, benefits, and it’s all going to change now.

And the reason I say that is the combination of reversion to the mean will impact a company’s

bottom line. And those boards of directors and CEOs will say, Okay, we’re just going to have

to reset expectations. And that’s going to touch the employees. I don’t know if you saw

this leaked transcript. But, you know, Zuck was asked the question from this.

That was classic. That was unbelievable. He was asking about his emotional support days.

I think in the in the middle of like Zuck having like a really serious,

you know, heart to heart with the company about how we’re gonna have to buckle down and,

you know, performance, performance, one dude, one dude, you know,

Schmenge from the back racist and he goes, What about the COVID extra vacation days?

Like, he literally his head almost as well. He’s like, Did you not just listen to what I said? I

just said, if people are not performing at a high level, maybe they shouldn’t be here. And you’re

asking me about more days off fire that person to say like, you obviously you don’t get it. You

didn’t listen to anything I said. You’re not right for this team at this time. Goodbye. He said a

version of that. He’s like, there’s a lot of people here that may not be the right.

Friedberg, when we look at these trends, okay, commerce seems like people are going back to

shopping. But I want to ask you about two specific ones. healthcare. It does seem like

telemedicine was one of those things that got accelerated during COVID. Do you think that’s

going to revert to the mean? Or do you think that, you know, doing doctor’s visits over,

you know, FaceTime and text and all these consultations going to stick with us? And

then what about work from home? Because that does not seem to be shifting all that much.

Freebird work, the work from home is not shifting. Well, I mean, it’s people are still staying home.

And you know, Amazon just put a hold on six buildings where they said you can finish the

outsides. But let’s not do the insides. Because we don’t even know what we’re going to do with

these buildings and what hybrids going to look like. And Zuckerberg hasn’t been able to get

people to come back to the office. And Apple seems to be getting people two or three days a week. So

it seems like it’s still been a struggle and downtown San Francisco is empty. So we’re getting

mixed. We’re getting mixed results back now, I would say is the best way to describe it. So work

from home and telemedicine. What do you think freebird? I mean, certainly the knowledge economy

seems to prefer work from home. I mean, you’re working on a computer, and you don’t need to

interact with people. And you got kids, or family, you’re inclined to stay home. So that seems to be

a sticking point. You know, younger people probably have their own motivations. But

there was a good stat on telehealth. I’m just trying to find it. And I think telehealth surged

during COVID. And 36% of patients used a telehealth service in 2021 420% increase over 2019.

And so despite some reversion post COVID post lockdowns, there’s a significant sticking point.

That, and I think 60% of telehealth patients are women. So there’s particularly female

services that are being rendered through telehealth at an increasing rate than pre COVID.

And so there’s a lot of stuff. I mean, look, we’ve all had to go sit in the doctor’s office

for two hours to get some prescription or get a doctor to give us some advice on something

they don’t need to physically check us out for. So you know, it certainly seems to be a

acceleration in that department. offices was the Amazon like was working on 15 warehouses,

they shut down as well, right? I mean, if you guys remember at the start of COVID,

when you place something on Amazon, it was like a two week delay, because they didn’t have enough

capacity to fulfill the order volume. You know, you look at Toby’s chart, it’s nearly a doubling

in e commerce volume in a week. When that happens, Amazon’s, you know, plus or minus 5%

supply chain has to revert to servicing twice as many customers, it’s just not going to happen. So

they overbuilt, tried to get ahead of the curve, remember, they hired like, you know, 100,000

workers. And, you know, they had to make a pipeline for quarters ahead to build warehouses.

Now they’re realizing the demand is not going to be there. And they’re cutting back on 15

warehouses around the country and not going to build them. They were buying up so many

warehouses that a couple of companies that were looking for warehouses in Los Angeles,

Northern California, and Amazon just bought an option on every single warehouse they could find.

And now they’re putting them back on the market. So they, they definitely went too heavy. And then

everybody started betting on Peloton and Teladoc. And if you look at Teladoc, I mean,

it’s off 90% from the peak, I would show the I would show the Peloton chart as well. But

that would just be gratuitous. Some of the stuff to note is like at the end of the day,

whatever product is better for the consumer, they’re going to pick,

you know, what’s the better way to buy shirts? You know, what’s the better way to get to find

better? Yeah, I mean, for the consumer, it’s like, do you want to try them on? Or do you know your

size, right? Are you buying a brand that you know, in a size, you know, you’re gonna buy it online

at this point. I mean, the one thing COVID did is it basically created a trial by fire.

My parents never used DoorDash before COVID. So then they were forced to use DoorDash during

COVID. Now they know what it’s like. And so you know, there are now people that never trialed a

lot of these services that have trialed them and are now making decisions based on that experience.

But that’s a beautiful example. So just use your parents, why do you think? Let’s assume they did,

why do you think they mean reverted to now using DoorDash only in the same percentage as they

would have otherwise x a little bit. I think the quality of the food, the time to wait,

the experience of going out to dinner, there’s a lot of motivating factors that are different by

different demos. And so whatever the consumer wants, they’re going to pick. If I want to go

have a dining experience in person with my friends, I’m going to go do that instead of

sitting at home ordering DoorDash and having everyone come sit on the couch and eat dinner

together. So I think that there’s this, you know, this call it mean reversion, but we have seen

call it a broader exposure. And we’re really going to see the true market dynamics play out.

I don’t think everyone wants to buy shoes online. I don’t think everyone wants to buy every piece of

clothing online. I think people want to go to the store and try stuff on. I think it’s that and I

think that there’s a lot of ancillary social benefits that come with a lot of these activities

that you lose if you just optimize for efficiency. So to your point, like, yeah, you can get a

burrito. But even going to Chipotle with your friend is more fun. Totally get out of the house.

Get out of the house shooting the shit, you know? Yep. It’s just it’s the serendipity. Yeah,

you may run into somebody that you nothing beats that. I will tell you, by the way, I do believe

that there is a counter narrative to the idea of work from home and e commerce moving together.

I think as people work from home, they want to go be in person for other activities more.

Yes. The more you’re working from home, the more you want to go to dinner with people or lunch to

people. Yeah, or you want to go shop in person, because you’re stuck in the house all day,

and you want to go do other stuff. And so if you’re working in the office, you’re going to

do more e commerce. And if you’re working at home, you’re probably going to do less e commerce. So

there’s probably some net net balance. We saw both of them rise together during COVID. But now

there’s more of an equilibrium being reached. Well, I mean, if you don’t, by the way, I think

we’re change your behavior may stay home for three days straight. And all of a sudden, remember,

and just remember 60% of the US population lives in urban areas where this is kind of an effective

kind of conversation we’re having. I think outside of that, it’s a very different world.

And so for 40% of Americans, this is not like the conversation that you know,

in deeply suburban and rural areas. Do you guys know what shadow ghost quitting is?

You know what ghost quitting is? Go. So I saw it on TikTok. You stop you stop working.

I saw it on TikTok, but you’re still getting paid. It’s when you decide to quit mentally,

but don’t actually quit. And so you basically get out get off the corporate rat race by doing the

bare minimum to not get fired at a company. Oh, like sacks during the science segment.

And so I, you know, I think that there’s all of these like invented things that people do,

that they think they can get away with, which they generally can in a moment of prosperity,

where in a moment of actually like buckling down when earnings matter, and profits matter,

and investor pressure matters, all of this stuff, I think is going to mean revert. So this is sort of

my my opinion on all of this, which is, I think that most of these behaviors will eventually

take over. But it’s still many years away. And right now, we have to go through the process

of just getting back to where we were meant to be in the first place.

I think one area with significant disequilibrium right now, I mean, to your point is productivity,

I think it’s very hard to assess and qualify productivity for knowledge workers in this

environment. And this is for employed base, right? Remember, we talked about last time,

like a large percentage of the US workforce has moved to more of an independent contractor,

sole service provider kind of model for how they’re interacting and working in the world.

But I’m talking about knowledge workers in an employed environment. And it is becoming difficult

for managers and for companies to assess, you know, the quality and the level of work being

produced relative to its potential. It’s not the same as it used to be when you’d be able to have

in person monitoring and interaction. And so, you know, I saw a stat the other day,

where it was like, most companies are asking workers to come home, most of the workers are

to come to the office, most of the workers are saying no. And then most of the bosses don’t

know what to say in response. And they’re still sitting on the sidelines, like, okay,

okay, don’t come to work. Okay, fired. Yeah. And so there is this signal. And by the way,

this may yield a competitive advantage for businesses in the marketplace that figure out

how to assess productivity and how to assess performance in their organization right now,

in this rapidly shifted, totally different workforce than what we had a few years ago,

because it’s so easy to take four hours off in the afternoon, go to lunch, hang out, have beers,

come back, get back online, get back on Slack, do stuff. And so there’s this real challenge,

I think, for organizations and a real disequilibrium of productivity and output right

now. I’ve had to do you guys look at the tech talks of these people that are like, yes, in the

life of like a Google engineer or day in the life they work for 30 hours at the gym work. They don’t

work. They’re literally smoking weed and playing video games. And everyone knows cats. Managers

know what you’re talking about. Managers know it. Senior VPs know it. The CEOs know it. It’s

this is my point. People just don’t know how to manage it. It’s a real I figured out. It’s a real

disequilibrium in the workforce, because the way you manage it before is everyone would show up to

work or they wouldn’t. Someone’s not in the office, they’re not working, they get fired.

Now, what do you do? You know, we and no one wants to be monitored. No one wants to manage

keystrokes through a friggin remote computer and figure out how much you’re typing. Actually,

it’s interesting. You mentioned what you do, J. Cal to your employees. No, no, no, no, no,

no. There are people doing that call centers actually do that. So call centers and sales

teams. They have monitoring software, customer service and call centers. Totally. Yeah, sales

people, you can totally track productivity. I’m talking about creators, producers, right? Like,

yeah, I actually have come up with some strategies for this. So we have a lot of writers doing

newsletters and stuff like that. And so we did was we created a block in the afternoon,

we’ve been testing where three writers will get together in a pod and they work on a newsletter

together. So instead of three writers writing three different newsletters, you have three

writers collaborate on three different newsletters, they do one for two hours, one for two, one for

90 minutes, one for 90 minutes, whatever three people read the newsletters. Well, it’s doing

four or $5 million. I think it’s hundreds of 1000s of people a day, but okay. But anyway,

the point is, I didn’t mention the name of the company. There’s no plugin here. But

by putting people into a zoom, yeah, no, no, you put people in a zoom or a huddle on Slack,

which is like an audio only. And then they have to deliver work to each other. It’s kind of how

developers work or sales teams work with leads. And then in programming, like pair programs,

like pure program, exactly. And then with and it also makes people less lonely, and it builds

social fabric. So there are techniques that are emerging. The other one I’ve looked at is I tell

anybody, if you’re doing any type of knowledge work, you need to create a notion or a coda page,

depending on what you use, and update us on that, and then send it to the group chat, you know,

to the general channel, hey, I was working on the strategy for this. So when people say they’re

working on strategy, I have them documented. And I say share us share with us the Google Doc,

and I use the Amazon six page, you know, philosophy of a right first culture. And now people have to

write it down. So I’ve been teaching people how to write use Grammarly or Hemingway app to be

better writers. And then what you can do is as a manager, you can just look at your notion or your

coda and see the changelog. And when I see people in a changelog, and I see they made no commits,

I’m like, what is this person doing? They said they did all the strategy stuff. Where is it?

Where’s the strategy stuff, write it down. So if you switch to a right first culture, and then

train people how to write and become more confident writers, all that knowledge gets captured on your

knowledge base. And you can actually see people getting done. It’s not perfect. But I think it’s

actually intellectually better than being in an office if you know how to do it. Because in an

office, people are also performative, they’re doing like bullshit meetings, they’re pretending

they’re working, they they’re, they’re actually reading the news, or, you know, whatever. So sex,

what are you doing to monitor your employees covertly and keep them productive?

We don’t need to monitor our employees that way. Because we’re a small team of yes,

they’re highly motivated, you know, but look, it is an issue. I don’t, I think where work from home

is beneficial is on the hiring side, right? It’s so much easier to hire for a job. When your

potential pool is anyone in the world, you’re not just geographically limited to the city in which

your office is. So that was the temptation for all these companies to go remote is it made hiring so

much easier. But there’s no question that it makes management much harder and scaling the company

much harder and building culture much harder. And so there’s some real trade offs there. I don’t

think companies totally wrap their heads around it. But look, in addition to productivity, there’s

one other aspect of this economy that I think is really broken. So the Chamber of Commerce says

that 3.25 million fewer Americans are working today than they were in February of 2020. So

basically, if you go back to the month before COVID, we had over 3 million more Americans in

jobs than we do today. And yet the unemployment rate is still in the 3% range. And the reason is

because that if somebody drops out of the labor force and isn’t looking for work, they don’t get

counted on the unemployment rate. So we do have, if you define unemployment as a large number of

people who aren’t working, we have a huge unemployment problem. But the problem is

they’re not counted because they’re supposedly not looking for work. So I don’t think this

economy is that healthy. And I think that there’s a lot of distortions that have been created

by government in the last couple of years. The job data is suspect is what you’re saying,

right? Like labor participation is down. All this data, the data is suspect, the labels are

suspect. I mean, like we talked about, all of a sudden, we can’t know what a recession is. And

let’s just bring up one other thing that just happened today. So Manchin cut a deal with Schumer

to bring back a slimmed down version of BBB. Thankfully, it’s not $4 trillion like Biden

wanted. It’s $750 trillion, okay? But what are they calling it? Billion, right. Okay. So,

you know, thankfully, it’s a slimmed down bill. But what are they calling this? They’re all of

a sudden calling it the Inflation Reduction Act of 2022. It’s like, are you kidding? This doesn’t

pass the lab test. Are they trolling us with the names of these bills? The bills are never what’s

in the bill. Why don’t they just call it the green energy bill and the screw private equity bill? I

mean, that’s basically what it is. Yeah, well, inflation reduction sells to everyone, right?

But Jason, the media, the media is not holding the administration accountable. If we had,

if we had an honest media, they the headline today would be you’re not going to get it from

left the station sacks. We can only get it on this pod or other podcasts. Yeah. What did

President Manchin get for this deal? He agreed to it. What did President Manchin get?

Well, he secured some bag, right? Did you see what I said during the group chat?

What did he agree? He’s like, I got a pipeline. There’s going to be huge handouts and pork for

the state of West Virginia. There’s no question about it. I mean, if you look at this bill,

okay, they, I mean, let me just, we should just look at what’s in it. And more and more is going

to come out over the next few weeks, right? It’s only one day old. So we’re going to learn a lot

more about what’s in this. But the largest Republicans feel like, can you explain the

dynamic as well, after you get through this, of why the Republicans felt like now that he

double crossed them, because the Democrats felt double crossed by managed President Manchin.

And now the Republicans are feeling double crossed by President Manchin.

Well, I don’t know that you can use the word double cross because he’s not a Republican,

and he had no obligation. But look, there’s no question that Manchin went back on what he said

just a few weeks ago, he was saying that Build Back Better was unacceptable, because it would

contribute to the inflation problem. In fact, he’s been saying that since last summer, he’s been

saying that we have a growing inflation problem, we can’t contribute to it with a lot more

government spending. Now, he’s agreed to a $750 billion, of which something like 450 is new

spending. So yeah, it’s a smaller package than we had before. But if your concern was inflation,

a few weeks ago, you can’t justify this, you certainly can’t call it an inflation reduction

act. I mean, that’s just patently dishonest. Well, how do they come up with it? Being inflation

reduction? Is it because the healthcare stuff is theoretically going to help consumers have

more money to spend? Because I think it’s a 10, it’s a tenuous argument. But if you want to,

if you want to make the argument, there’s some cap on what seniors pay for prescription drugs.

And then there are subsidies for people who are in the market for an electric vehicle. However,

those are small adjustments. Those are small rebates to a small segment of the population.

I don’t think you can argue in good faith that this bill will reduce CPI. That’s just not a

plausible argument. And the vast majority of the bill, like you said, are subsidies for clean

energy, which are basically handouts to special interests in the donor class in the Democratic

Party, just to itemize some of these things. So the largest single outlay, $60 billion,

is for quote, environmental justice initiatives to address the unequal effects of pollution on

low income communities and communities of color. This includes $3 billion to invest in community

led projects in disadvantaged communities, another $3 billion to support neighborhood equity, safety

and affordable transportation access, another $30 billion shoveled to states in the form of grant

and loan programs for state’s electric utilities to advance the green energy transition, $30 billion

for additional production tax credits to accelerate domestic manufacturing of solar panels, wind

turbines, batteries and critical minerals processing. So it’s basically going to companies,

right? $20 billion in loans to build new clean vehicle manufacturing facilities across the US

and $2 billion to revamp existing auto plants to make clean vehicles, $20 billion for the

agricultural sector to quote curb emissions, $3 billion to reduce air pollution at ports,

$10 billion investment tax credit to manufacturing facilities for things like electric vehicles,

wind turbines, and solar panels. It seems redundant to the $30 billion outlay I just

mentioned, but it’s another giveaway to democratic donors. And wouldn’t that be good for Chamath

wouldn’t that spending be good for energy independence in addition to climate because

we’ve been talking about being energy independent, if we have more EVs, more batteries, more solar,

that’s a good thing, right? We want to be energy independent. So this seems like we get two wins,

or possibly three one, we get economic activity to we reduce our dependence on foreign oil. And

three, we stopped burning a hole in the ozone and increasing the temperature of the planet

seems like three good things. We have to I think we have to see the forest and the trees here.

And there’s a, there’s one good part of this bill. And then there’s the kind of more ugly reality

that it avoids. The ugly reality is, unfortunately, or fortunately, or maybe without taking emotion

of it, we are dependent on fossil fuels for a very long time. It is a necessary bridge fuel.

And so we need to if we’re talking about energy independence, it can’t happen without us,

frankly, drilling more, and subsidizing the capital incentives of private companies to go

and do this exploration work, which they have stopped Jason. And the reason they’ve stopped is

that they don’t trust that these oil prices will stay this high. And so they don’t want to make

these outlays and investments for the next five to 10 years, because they’re worried that it’s

going to be a rug pull, which did happen to them in the back half of last decade and the early

parts of this decade. So they’re like once bitten twice shy, they’re not they’re not going to touch

this. So you’re saying oil companies that would do some exploration, it would cost them whatever

amount $2 to get the gasoline out to get the gasoline out of the earth and then process it,

but they’re afraid it’s going to be negative. They’re not gonna be able to sell that gasoline.

I think I think they’re afraid that, you know, the United States government may

impinge on their ability to actually process it, that it may there may be tariffs and costs and

taxes that they don’t, they’ll be upside down forecast, they’ll be upside down. So they just

don’t want to be and right now, when you saw this, I don’t know if you guys saw but like shell and

Exxon, and these guys are printing enormous record profits. So their incentives to change

the status quo right now is zero. They want less supply, because then they can raise prices,

they have the perfect situation right now, which is it’s an incredibly energy intensive world we

live in. And we don’t have nearly enough energy to do the work that needs to get done. And by the

way, and you saw this this week already, where, you know, Putin cut Nord Stream by another 50%,

it was already running at 40% capacity, he cut it down to 20%. It’s only getting worse.

So I don’t know. I mean, I think this bill could be good. I haven’t looked at the specifics to

give you a very, well, the specifics aren’t even out. I did see the EV credits, Friedberg. And

I thought that these were particularly well constructed 7500 bucks off of a new car, but

you have to be in the 150k salary or less on your taxes of rich people can’t get these. And it can

only be for an $80,000 new car, a $50,000 or $25,000 used. And so they did seem to be started

pretty well. And I do know that those incentives did work in the early days of Tesla. Because

when you went to the website, you would look at the price. And, you know, this would be 10% off

of a new car. And they did drive sales. And it was pretty significant. What are your thoughts

on the EV tax credits? That’s something that’s a wise thing. And then what do you think, overall,

about spending a couple $100 billion on reducing emissions and becoming more energy independent at

the same time? It seems like a laudable strategy to you? Nope, seems like a total waste of money.

Okay, unpack it, please. The EV tax credit is just giving away money to EV car manufacturers,

there’s already enough demand, the prices are low enough. There’s enough consumer interest,

there’s enough consumer intent, I don’t think you need to put this money out there distorts a market

that’s already functioning well. And this goes back to my point about the role of, you know,

government and how we create, you know, create incentives or spend money. This is not a place

we need to be spending money because there isn’t an absolute need. There’s no data that indicates

that this will accelerate a transition to a carbon free economy or that it’s even needed.

It really is a point of view that people hold and they believe that EVs are good,

they’re good for climate change, we should accelerate it, therefore, we should spend money

on it, without any accountability or proof that these tax credits will actually motivate a market

to move faster or quicker than it is already moving. And so it is just spending taxpayer dollars

that could theoretically not be spent, or be spent in a more effective way to improve the

lives of people broadly in this country. So yeah, I don’t, I don’t fully agree that I haven’t seen

any data that tells me this makes sense. Anecdotally, I don’t think $7,500 off of

$75,000 EV is attractive. $7,000 GM and others have great low priced TVs, and there’s a ton of

market demand and they can’t keep up with production. And you know, giving people $7,500

off a car that manufacturers are still struggling to keep up with making because there’s so much

demand already, you don’t need to do it, it is so much cheaper to drive an electric vehicle now,

by plugging this thing in and spending money on gas that people already want to buy these things,

they pay for themselves, super fast. Every consumer wants to save money on transportation,

and you will save money by buying an electric vehicle. So you will already buy an electric

vehicle, you don’t need government money to get you to buy an electric vehicle.

To Friberg’s point, there was a lot of analysis that’s been done on consumer adoption patterns.

And typically for a new good or service, the tipping point is around 5% mass market adoption

from when it goes from early adopters to the mass market. And EVs just cross 5%. So to his point,

the historical data would tell you that we’re now past the critical point where it’s no longer

questionable now it’s just going to happen. So it’s not early adopters, we’re getting to the

mass market.

I mean, I’ll tell you like the best the best thing about EV adoption,

or for me for having an EV is never having to go to the gas station.

Amazing. Amazing. Yeah.

I just just that one thing is

I’ll just give you guys currently it’s about 34.6 kilowatt hours per 100 miles. Okay, I’ll just get

let’s just do some math together. Let’s say kilowatt hour in the US costs about 10 cents.

Okay, so that’s about $3 and 50 cents to drive 100 miles in an electric car. That’s a lot cheaper

than paying $15 for gas to drive the same distance in a gas car. You don’t need the

tax credit to get people to buy these things. These cars are financeable. There’s a very liquid,

very active lending market. You get paid back on these cars within a year.

Better would you direct if you were going to direct some stimulus to

I would not say anything right now. We don’t we just talked about how we don’t need to stimulate

the economy. I would not know where the economy I’m talking about to you believe global warming

is happening, Friedberg. Yes. Look, you want my point of view on climate change and industry.

I think I think humans, I think humans are on a driven, naturally market driven path

to resolving carbon output in our industrial systems. And I don’t think that government

intervention with tax credits and specific consumer products is actually going to accelerate

or resolve. You know, these changes that are needed, we need to not change consumer behavior,

consumers always want to have cheaper, faster, better. What we need, you know, at the end of

the day, what we need to do is change the way that we’re producing and making things, because

that’s ultimately what’s going to drive this transition. And guess what, consumers are

demanding things that are, you know, more efficient that are more effective and efficiency ultimately

resolves to less carbon ultimately resolves to less land, less energy, and industry has always

resolved to greater efficiency, natural market forces improve the efficiency of every industrial

system. So stimulus not necessary, mankind is ever created. And I think it is it is a matter of

time, and a matter of natural evolution that we will resolve all of the factors that are driving

climate change from animal agriculture, to transportation systems to energy systems,

these are all going to get completely really do it in time. We absolutely will. And at the end of

the day, we can pull carbon out of the atmosphere and resolve it into products. We have tools to do

that as well. So I am an eternal optimist. But in this particular case, I think that this century,

much of what we’re throwing our hands about, and you remember, at the beginning of the 20th

century, we thought we were going to run out of food. Then suddenly, we invented the Haber-Bosch

process and created fertilizer out of air. It was an incredible, incredible invention that

saved mankind. We have had time and time again in the history of humanity, these thoughts that

we’re in an existential crisis, we thought we would have peak oil, and we have had these, and

we have had these points of view that we’re in an existential crisis, and humanity is about to end.

And every single time, we figured out a way out of it. And we didn’t figure out a way out of it,

because the government came along and said, here’s a tax credit. And we’ve gotten sick. And we’ve

gotten drunk on government spending. And we think that it is the solution to every problem we have

as a species. You know, the biggest solution to our problems is our ingenuity. And then they’ll

let the markets figure it out. Consumers are smart, businesses are smart, they will figure

out ways to resolve these solutions, they don’t need to have these handouts. And I think that

that’s, that’s a really important point that we’ve kind of missed. And I’ll say, we were talking

earlier about the economy, this stimulus, we’ve been giving ourselves caffeine since 2008, when

the Fed started to build up this balance sheet. And we got used to the idea. Remember, before this,

it was like, oh my god, multi million dollar bills, and then it became multi billion dollar

bills, then we had an $800 billion bay out in 2008. And suddenly, it was the multiple of 100

billion and the multiple of a trillion. And this expectation now we’ve kind of reset the clock,

and everything now is in what multiple of 100 billion or what multiple of trillion we’re going

to spend on stuff. And no one’s even batting an eye at the size of these, the bills anymore.

Freeberg, what is a bigger existential threat to the United States? Is it climate? Or is it

overspending by our government?

I think it’s over. I think the biggest threat is, is productivity. I think that as a society,

we’ve gotten to the point that we are so well off, that we have so many things that we don’t realize

we didn’t have 50 years ago, and you know, read Pinker’s book on enlightenment now,

and just go through those 200 charts he puts in there, it will blow your mind. And if you

actually sit down and think about it and have a broader perspective on where we sit in this

country today, versus where we were 100 years, 50 years, even 30 years ago, you will say, Oh,

my God, we live in an absolute luxury estate in this country, golden and golden era. And

it is a condition that unfortunately, reaps, you know, a decline in productivity, because at that

point, we’re entitled to some degree, some people are entitled, there are many people in this

country that are still very hungry. There are many people in this country that still want to progress.

And frankly, I think a lot of the the lax behavior from government entities actually

holds us back from accelerating our productivity outbreaks, because it gives people many incentives

and many reasons and industry, many incentives and many reasons to not solve problems. And I

think that we solve problems, and we’re left to our own. There was an article I posted, Nick,

you can put it in about the Congo, and that they’ve decided to auction a bunch of land to

oil companies. And I think before, they tried to heed sort of, you know, the West’s directives,

and they said, Okay, well, let’s build a land bank, and we’ll put a bunch of money in. And so

then the, you know, people in the in the Congo will have money for things. And you won’t have

to sell off the oil rights, and only 10s of millions of dollars showed up. And then the

Congolese were like, they threw up their hand, I’ll just read the quote, because I think it’s

interesting. Congo’s sole goal for the auction, said the government official is to earn enough

revenue to help the struggling nation finance programs to reduce poverty and generate badly

needed economic growth. That is our priority. He said, our priority is not to save the planet.

And it’s quite a stark statement when you read it. But But the reality is, in one generation,

what will happen is they will feed the world’s desire for fossil fuels that will generate a lot

of revenue. Hopefully, it doesn’t get pilfered. And so it gets invested in healthcare and education.

And within a generation, this country could be in a completely different situation,

allowing the productivity of that entire population of that country to do what they think is right.

So I’m generally of the belief that that that freebergs right on this.

Do you think that we should subsidize EVs to increase the percentage and then also for solar

just give me those two Chamath solar and EVs? Do you think they should be subsidized or not?

In the United States, it depends on how and at what point of the market cycle, the government’s

job is to create economic incentives that tip the balance of power towards investment. So if you are

sitting here 15 years ago, the price of solar panels was sky high. It was incomprehensible

that we could make solar equivalent to any other form of energy. The only way that we were able to

close the gap was through government subsidies. But what that did was allow a bunch of companies

to build businesses to make revenues, and then also to make profits that then the public markets

valued. Those public markets then put pressure on those companies to take those profits to become

more efficient to make the panels cheaper. And 15 years later, we’re now at parity. So that was a

really great example of the government stepping in to smooth out an imbalance in the investment

incentive of the private markets. That is where they are exceptional. So in any market, they should

be able to do this. But I think what freeberg is saying is when then they do do it successfully,

and a market starts to germinate on its own, where supply and demand happens naturally between the

private markets, the worst thing a government can do is step in, because it completely perturbs

what true supply or true demand is. And that is what causes all of this crazy stuff that we deal

with J Cal fast forward, assume that there’s a $7,500 tax credit for EVs that artificially makes

EVs cheaper, and then a better technology than EVs comes along, let’s assume it’s some nuclear

fusion, cold fusion, Mr. Fusion car, like from back to the future. And that car inevitably has

to fight against the cheaper car, because the cheaper car is subsidized by the government.

We see this in a lot of markets that already exist in food, in energy, in infrastructure,

where government subsidies that are embedded in the operating model of that industry,

and that industry becomes kind of reliant and dependent on it totally distorts the ability for

the market to naturally transition to a more productive, more efficient state. And that more

productive, more efficient state ultimately is cheaper, better for consumers and better for the

planet. And we’re we hold ourselves back when we insert government dollars into well functioning

markets. I do think the government has an important role, as I mentioned last time,

in pure science, in seeding new markets and seeding these opportunities in identifying paths

that are quantum leap efficiency improvements in production systems in industrial systems in ways

of living. Once those have been identified, if those breakthroughs have been kind of catalyzed,

boom, let the market take off because it’s gonna take off. But we shouldn’t believe

EVs and solar are there already. Absolutely. They’re cheaper. And so let me point let me

just give you one one point of reference. Let’s let’s use Chemoff’s Congolese example.

Let’s assume that there’s someone that lives in the Congo. And I said to this person who’s probably

subsisting on less than $3,000 a year of income. And they’re probably living, you know, day to day

on finding food. And you said to this person in the United States, they have these cars, they’re

called electric cars, and they’re cheaper than gas cars. And they’re, you make more money, or you

save money by buying one of these cars, and they’re cheaper now. And we’re giving people $7,500 to buy

one, this person who’s making three grand a year would say what it is a state of luxury that allows

us to do this. And frankly, I think it’s, it’s a state of excess abundance. And that’s what I’m

most worried about. sax, what are your thoughts on the government giving these type of subsidies

to accelerate solar and EVs? The whole bill seems anachronistic. You know, first of all, it’s raising

taxes by 739 billion at a time when we’re entering a recession. I don’t know any economists who thinks

that tax increases help the economy. We just talked about how the economy is in a really tenuous

position. So this is not the right medicine right now. Then you’ve got the fact that the vast

majority of the spending this bill goes to these, you know, energy subsidies, which are just, they’re

not going to help the average person, there’s very little money in this bill that helps the average

working class person. These are basically handouts, there’s basically pork barrel spending for

Democratic Party donors and special interests. And like Freeberg, I think just articulated very well,

they’re not necessary right now. The what’s driving demand for electric vehicles and solar

panels and so on, is first of all, the products just keep getting better and better. And second,

they keep moving down the cost curve as technology and innovation gets better, these products get

cheaper. That’s what’s fundamentally driving the demand. We don’t need the government now.

Again, we need to accelerate it

in an anachronistic way to shovel out all this money at a time we can’t afford it.

Look, I’m glad that 300 billion of the bill is supposedly going to deficit reduction. I hope

those numbers actually materialize. But we’re still 30 trillion in debt. And now that interest

rates have gone from basically zero to around 3%. The imputed debt service on our debts basically

gone has increased by almost a trillion dollars. That is a lot of money.

So just like somebody who had a variable mortgage, the United States is on a variable mortgage with

our debt. And so when interest rates go up, we’re gonna have to pay

more interest.

Yeah, exactly. So if interest rates stay at this, call it 3% level, which is roughly where the 10

year T-bill has been bouncing around at, that is a lot of debt service, a trillion dollars a year

of debt service. So I think we’re probably entering an era, an overall era of austerity

that lasts more than just this year or even this presidency. And I think we’ll look back at all this

wasteful spending, this last 10, 20 trillion of spending as money we didn’t need to spend,

they’re gonna be paying for, for a long time. So to be shoveling out another 300 billion plus of

these programs, and again, once again, going to corporations and special interests, not to the

average, you know, person who needs it. It’s just so irresponsible.

I have a question for Friedberg. One of the one of your exceptions there was

investments in science. You want to talk about your opinion on the quality of the grant process

at the NIH and whether we are doing the real work necessary to get the right things funded?

Yeah, I mean, I think it’s a good transition to what happened this week, which was that there was

a major potential fraud uncovered in Alzheimer’s research, which has led to over a billion and a

half dollars of funding and grants being given out to follow on Alzheimer’s research programs

in the years that followed this initial paper. So, you know, in 2006, there was a paper published

in the journal nature about amyloid beta proteins that impaired memory and brains, which then became

kind of the leading theory for the cause and the driver of Alzheimer’s disease. And much of the

research and funding that followed from there, which is now up to nine,

several billion dollars in total funding in private and public institutions. Last year alone,

the NIH funded $287 million in research into amyloid beta. And it turns out that the initial

paper was shown to be fraudulent. And so, you know, just recently, the Journal of Science

published in detail, an analysis of the photos of the Western blot measurements, the protein

recognition images that the scientists used in this initial paper were forged,

and that many papers of his were then forged years later. And this paper is one of the most cited

papers in Alzheimer’s research. And much of the work that’s been done on Alzheimer’s came out of

this. And if you guys remember, last year, we talked about that biogen drug, that biogen drug

is meant to stop amyloid beta plaque. And you know, the projection is that Alzheimer’s drug and

remember, there was a panel of scientists that looked at the data for that drug that biogen got

approval for from the FDA. And they all said this does not show conclusively in any way that it

improves Alzheimer’s. And the FDA still approved the drug, because so much of the NIH funding went

into the research for amyloid beta. And so the assumption has always been, this is the cause of

Alzheimer’s, this is the way to resolve it. And everyone gets so strongly held in that core belief.

And there’s so much money behind it, that we can’t turn away and say maybe we’re wrong.

And this is the problem when science meets money. Once you go from funding something,

and then suddenly a whole bunch more money pours into it, everyone’s gonna look bad. And everything’s

gonna fall apart. And everyone fears that the system fails. If you realize that something you

didn’t said was so totally wrong. We can even argue this is what happened recently with COVID,

the masks, the vaccines, all of the statements that were made that you have to keep doubling down.

Every system has bad actors, you know, people plagiarize fraud, whatever, is this like a

systematic thing? And doesn’t science protect against this? Because people then do double

blind studies and try to replicate studies, two things, because like Jason Blair eventually got

caught right at the New York Times, it was only a matter of time before somebody said, like,

his description of my back porch was not accurate. And I never talked to this journal,

let’s say that you’re a smart up and coming scientist. Your job is to is to publish research

that gets attention. And that you can then go raise grants from the NIH and others from on.

So you want to get some good papers out, you want to get attention. And then you want to forward the

research that’s already being done. It is to no one’s incentive to go out and try and retest

something that someone’s already published on. Even though that’s what you’re supposed to do in

science. There’s no motivation. There’s no dollars to do this. It’s, it’s a disincentive to your

career. It’s a disincentive to your ability as a scientist to source funding and to source grants

to go back and retest assumptions that are already strongly held beliefs in the industry. I’ll give

you another strong example that just came out two weeks ago. You know, you guys heard of SSRI

antidepressant drugs, right? 37 million Americans are on these drugs. The market is is projected to

be at about 25 billion in the next few years. That’s how much Americans are spending on these

on these antidepressant drugs, half a sacks, but yes, go on. Right. So there was a paper published

in nature a few weeks ago. And the nature journal pulled all the research and all the data from

17 other studies that was across several hundred thousand patients. And their conclusion was that

there is effectively no proof that these SSRI drugs have an effect on depression have a positive

effect on depression, that, you know, serotonin and the idea that, you know, serotonin uptake

should kind of have a driving effect on depression. And this has been the assumption that’s been held

now. For you know, for many years, I mean, you know, I think the original paper on this was

published probably north of 20 years ago, but the industry is so big, right? The drug companies are

making 2025 billion dollars a year on this drug on these drugs. And scientists are incentivized

to further that research that supports that research. And so they can go out and get NIH

grants because it’s already an SEC accepted, proven belief that this is there a solution to

this, like for every dollar that’s spent on primary, you know, $1 needs to be sent on

double blind testing it and making sure that it’s accurate. Should there because we have this issue

in journalism, right? Everybody’s a content creator, reblogger and opinion journalist.

But there’s very few now investigative journalists left.

The actual problem is the peer is peer review systems, entirely, in my opinion, like the

problem with this study is that this was done by an up and coming researcher in 2006 at the

University of Minnesota, under a researcher who is well known. And so there was zero incentive,

as Friedberg said, to really push back when well credentialed scientists tried to find this

amyloid beta star 56, they couldn’t find it. And, you know, lo and behold, those articles don’t get

published because they don’t get accepted. Why? Because it unravels the entire game that folks

will play. So you know, if you’re a well educated PhD with postdoc in the right places,

supporting other people, it’s just the loop that goes on forever. The article goes on to talk about

how that person who wrote that initial article eventually got this very prestigious multi year

grant from the NIH by a person who was his reviewer who worked on the 2006 paper with him.

I mean, these are some pretty blatant conflicts of interest. But the reason they don’t get

uncovered is like, who is who’s going to step in and all of a sudden become the

let me strike an analogy here. You know, there’s a seedling of fraud here, obviously,

some guy took some friggin photos and Photoshop them and doctored them or whatever. But we then

tell ourselves stories. And those stories get us access to money, which allows us to pursue more

science, which is meant to forward the market. And then eventually the market gets forwarded so much

and you spend a billion and a half dollars. And it turns out the whole thing doesn’t work.

Just like stock markets, it starts out as a voting machine in the beginning,

and it’s a weighing machine over time. The same is true in science, you will have a voting machine

in the beginning where everyone has some belief, some theory, some hypothesis, and they all want

to believe it. And they forward it and they fund it and they fund it. But ultimately, if it’s not

true, and it doesn’t actually resolve in real world change, the market will collapse, the stock

will collapse. And that’s what just happened with amyloid beta and Alzheimer’s to a large degree,

there’s a billion and a half dollar market cap, you can think about it, or a billion and a half

dollars of funding that’s gone into this. No, that’s right. That’s pretty. No, there was a

billion and a half of NIH funding over time. This is just the NIH money.

What I’m saying is the NIH budget per year for Alzheimer’s and dementia is 1.9 billion. Yeah,

yeah. And half of it, if you look at the tags, if you just search the tags,

half the money has gone into Alzheimer’s disease amyloid beta. So the point is,

you could orient the terms you used and the way in which you wrote your grants to disproportionately

affect the likelihood of getting money. Separately, there’s a whole body of researchers

that have felt for a very long time, that specific forms of infection viruses,

Lyme disease could actually be a precursor to Alzheimer’s. And it has been poorly researched

because the funding dollars weren’t there. So there’s a lot of other theory,

dysfunction. Yeah. Yeah. So freeberg, when we look at this, a bad actor, committing fraud,

can send the entire deployment of capital in science on a multi billion dollar trajectory

of the human race. Come on, like, it’s not just about like, we didn’t get the dollars in,

it’s if you don’t take the path, the drug doesn’t get discovered. That’s a really big deal.

And now that and now the drug is in the market, biogen gets approval, and people start taking it

and we’re seeing the data doesn’t work. And no one wants to use it. So the market has collapsed,

and you kind of go back to the origin. It’s like the market collapses. Ultimately,

the weighing machine happens, because the science doesn’t work. It’s not there.

And there was no incentive. No one got paid along the way. Imagine if there was a bounty program

to go and disprove papers. I mean, imagine if there was a system,

that’s what I was talking about. What is the safeguard? And we do have that in public markets.

It’s called shorting. No, there is short stocks. It’s called pub peer. The problem is, if you go

to pub peer, and all of a sudden put your name out there, as someone calling it out,

your professional career inside a research institution is finished.

Right? If your job, they’re not heroes. No, if your job is to disprove other people’s stuff,

you don’t you don’t forward your career, right? I mean, there’s a it’s a real challenge.

Those people should be heroes. There’s those are like bug bounty programs, they have to look at it

like bug bounty programs in tech, or shorting stocks in problem is that this community is

extremely small, highly specialized, and their impacts are enormous on all of society. But you

can’t replace them with somebody else very easily, because it takes an enormous amount

of expertise. Like if you read that science article, the amount of work science took six

months of due diligence before they even had the courage to put this thing out there. They had

all kinds of different teams trying to prove what this guy had found before they were willing to put

ink to this thing. Yeah, when things are starting to feel like they’re altering, moving to market

or getting to market, the more money starts to flow in. Another good example of this is

Zymergen and Ginkgo. Okay, so in the past week, Zymergen was acquired for $300 million. It was

announced that they’re going to be acquired by Ginkgo Bioworks, both of whom are public companies

Ginkgo went public, and I think a $20 billion market cap as a SPAC a few months ago, Zymergen

went public at, you know, 4 billion or whatever they went public at Zymergen being acquired for

$300 million comes off of them having raised a total of one and a half billion dollars of capital

from many investors, including SoftBank, and in their IPO, since they were founded in 2013. Both

of these businesses do exactly the same thing or similar things, which is pursue the industrialization

of synthetic biology. Synthetic biology has been talked about, you know, or pursued for 20 years in

an industrial setting, the kind of Gen One of synthetic bio companies was Amaris, Jivo, Kior,

Solazyme. These companies were all engineering cells, you change the genome or the DNA of the

cells, you get those cells to make a product you want them to make, you put them in what’s

called a bioreactor, and they make the product, you can make bioplastics, you can make animal

proteins, you can make fuel. And so these and you put sugar water in the tank. So you’re programming

the organism to make stuff for you. And there’s a lot of technical challenges, right? How do you

change the genome? How do you get it to be more productive? What are the environmental conditions

of the bioreactor? How do you scale this thing up and so on. And so many of them had early stage

proof points and then extrapolated out that this is going to work at scale. So all the Gen One

companies largely failed Jivo, Kior, Solazyme, they were all trying to compete with the price of oil,

and they lost. And so they could never actually the science worked in the lab. But getting it to

a big scale, there was a million things that went that suddenly were kind of proven or disproven

along the way. And they all kind of pivoted and became cosmetics companies and kind of did high

end food and other stuff. And then Ginkgo and Zymogen were kind of Gen Two, they were like,

we’re going to reduce the cost improve the timescale of the synthetic biology programs.

And they started using industrial robots and arms. Zymogen made a bunch of kind of strategic errors

where they were like, we’re going to make the product and design the organisms. So it took a

lot more money, a lot more time. And as they kind of stepped up and tried to scale up, turns out a

lot of the things that they believe to be true weren’t quite true. But the CEO did a great job

selling the story. Josh Hoffman, he went out for years, and he told everyone, you know, we’re going

to kind of create this this factory, and we’re going to make everything in the world using

biology, it’s going to transform the world. And we’ve talked about this. Is it a true story?

Yeah. And so look, there’s so much of the fundamentals are true. But the industrialization,

the amount of capital these guys raised, and what they promised they would deliver on when

turned out not to quite beat the economics not to quite get there. And the market decisions they

made about what products to go after how quickly to scale up building their own facilities,

there’s just a lot of strategic errors. And I think the storytelling got ahead

of where the business was, you know, we saw this a lot in other businesses in the past year,

as we’ve talked about crypto and other markets. But these were really key examples, because the

science is so compelling. And the narrative is so compelling. And if it’s right, and if it works,

it changes the world. And I think the same was true of amyloid beta and Alzheimer’s, everyone

wanted it to be true. SSRIs, everyone wants there to be a cure for depression that you take a pill,

and you solve depression, everyone wants to, you know, have a drug that you take,

and it ends Alzheimer’s, everyone wants to print all the world’s products in a factory using cells.

But there’s a lot more to it. And as you kind of get through the nuanced 10 to 20 year cycle of

science moves to technology moves to industry, those stages are wrought with errors and issues,

and ultimately may not actually yield what we expected it to yield. And those stories start

to fall apart. And that’s what happened with dimergen. They’re getting bought.

We look back on this Friedberg in 20 years and say, Hey, yeah, these things were total train

wrecks, they flip the car. But it was a step in the right direction. And yeah, that was 100%

capital. But you know, something will be built on top of it, just like mainframes,

or many computers to smartphones, the first system of college synthetic biology, a recombinant DNA,

where we took DNA from one organism, and we put it in a, in a, you know, microbe to make stuff for

us was genetic in 1978. Prior to 1978. The way we got insulin is we actually process pig parts.

So it would take like, you know, hundreds of kilograms of pig parts to make just a few grams

of insulin. And genetic took the DNA for human insulin, and they put it in a bacterial cell,

and they made human insulin in a bioreactor. And that really kind of ushered in this this era of,

you know, industrial synthetic biology that all of these companies kind of followed suit to do

in different markets. But remember, biologics, the entire pharma industry and biologic drugs

is all made this way. We take the DNA to code for certain antibodies or proteins,

we put it in microbes, and those microbes make those products for us. That biologics drug industry

is a $350 billion annual revenue industry today. And so it works. It’s just a matter of when and

what the right products are industrial enzymes $25 billion annual revenue today. So there are

markets that are working, it is working, but this whole like, we’re going to change the world

overnight isn’t really, you know, true. And so these stories catch up to us. And I think we’ve

seen this where I call it science meets money, you know, money usually wins. And the science isn’t

quite there yet. And so we’ve seen as a kind of genentech story is amazing. I mean, Tom Perkins

from Kleiner Perkins fame, like will that company into being and they Yeah, it’s pretty amazing how

in the old days of venture capital, they basically built these companies like you’re doing today,

Friedberg in like a production board model, he basically incubated genentech, and then surprised

the world with like, hey, we have synthetic insulin here. It was like, I mean, the Silicon

Valley, there isn’t a single material or food, or fuel or product that we ultimately won’t be

able to make using synthetic biology. It’s just a matter of how do we get from here to there.

And the storytelling kind of gets you a bunch of money, and then you get ahead of your skis,

and then boom, you fall down. Same happened in Alzheimer’s, same happened with SSRIs. And I

think we’ll see this happen a lot. But like when science gets exciting, a lot of money gets behind

it. And sometimes it can kind of, you know, get ahead of its skis and fall down. But and it will

result in our sex, how excited are you for this revolution? Instead of biology, actually invested

with us in one of our companies in synthetic biology, he may not remember, but he’s got some

money. I won’t name the company, but he’s got some money. Oh, yeah. How’s that doing?

Yeah. Did you fall asleep in the board meeting?

No, we’re not on the board. We’re, we’re passive. We didn’t is that the one we brought to you

freeberg? Yeah, well, I have three people brought, but I’ve known him since they were small. But yeah,

I know there was a deal that came in that looked interesting, but it was a little bit out of our

area. So we went to freeberg with it is an interesting business because these guys provide

a tooling service to other symbiote companies. And so it’s a recurring revenue service. Yeah,

it’s a picks and shovels. Exactly. Yeah. Yeah. It was very sass like in that regard.

Like a babushka doll of nerds. Unbelievable. So we’ve woken saxes awake. Okay, so we’re talking

about an area where, you know, I’m not going to be able to contribute a lot to the discussion of

SSRIs. I’m not going to pretend to know. I’m just a consumer. I’m not. Why do I know? I just lied.

Sax had these SSRIs helped you in any way with your depression about Biden? No. Okay.

The story that I think kind of fits with everything we’re talking about this week,

is, there was more, there were more stories this week about this cynical ploy by the Democratic

Party to fund candidates. No, hold on. We talked a little bit about this last week, but they spent

you should be really opposed to this J kal. Yeah, listen, as an independent, I think it’s

gross. I am an independent. You’re an independent only votes for Democrats. So

not true. Not true. I’m going to vote for Liz Cheney for president. I think Liz Cheney or

Bezos. Those are my two choices. Have you ever voted for a Republican candidate for any office

ever? I had. Yeah, I have. You have really? Yeah. Yeah. People, I, I’m a moderate. I don’t feel

like when I voted for, um, what did I vote for? We’re going to say Reagan. We’re about to say

we’re too young. Patrick. He was a Democrat. It’s been a long life, but I did. I did vote. I

remember for Republican and when I lived in New York, David Sachs has a look on his face that

says, finish your stupid banter. So I can go on my money. Go, go, go. Hold on. Henry Belcaster in

three, two, go. No, I don’t, I don’t really have a monologue on it, but I just think that this is,

this is a pretty amazing story that you’ve got Democrats spending almost $50 million this primary

season boosting MAGA candidates. Yes. Um, at the expense of moderate GOP candidates. Perfect. And

so let’s get the crazies in there. Yeah. I mean, they’re easier to beat, right? And that’s the

theory. If you get a crazy, but in a, in a year, in a year in which you get a red wave, it’s really

dangerous. And it totally undermines what the Democrats are saying in their January six.

It’s completely cynical. I agree. You can’t, you can’t on the one hand backing Trump.

You can’t on the one hand say that we’re facing an unprecedented existential crisis for our

democracy. And on the other hand, be giving money to the very same people you’re saying are the

threat to democracy. It makes no sense. It just shows that both sides are completely cynical

backing anything that is toxic. No, no, no, no, no, no, no. You’re what you’re saying. You’re

trying to both, you’re trying to both sides that you’re trying to both sides. No, but the

difference here is that there, this is, I’d say partisan political gamesmanship. But the point is

you can’t on the one hand be engaging in ordinary partisan gamesmanship while you’re saying that

democracy faces an unprecedented threat. That’s the disconnect. No, no, I guess you’re trying to

get too cute. What do you think about Liz Cheney? I’m curious. Well, I think for her, if she was a

nominee, she’s a warmonger, just like her father. She’s like, she’s basically Darth Vader 2.0. So

that’s my biggest problem with her is no, I would not, I would not vote for her. There’s not,

there’s not a war she doesn’t want to get us involved in. And there’s not a country she

wouldn’t try and impose democracy at the end of a barrel. Okay. So that’s why I don’t like her. But

to your point, Democrats say they want to work with more Republicans like Liz Cheney. But if

you look at who they’re donating money to, they’re donating money to support

the MAGA election denier against every single Republican who voted for impeachment. Okay. So

you look at like the specific races. It’s completely cynical. And it’s just about winning,

just like the Republicans. To give you one example, Democrats, they gave, they launched $450,000 of

ads to take out a Grand Rapids Congressman Peter Major, who also voted for Trump’s impeachment.

They did this with a Democrat, with a Republican in California, David Valadao, and just on and on.

So you’ve got on the one hand, you’ve got Democrats saying that this is an unprecedented

threat to democracy. They want to work with more reasonable Republicans who aren’t denying

the election, while at the same time, trying to basically fund the campaigns of the MAGA candidate.

Yeah, the reason they’re doing it, obviously, is if you fund one of these maniacs,

then they’re easy to beat. So they’re trying to serve up somebody who’s an easy candidate to

buy. But in a year of strategy, I think it’s a very dangerous strategy, because it was my question.

No, I don’t think so. Because this year, I think this November is likely to be a wave election.

And when you get a wave election, the specific candidate matters less, and party matters more.

So you could get some of these crazy swept into office. So I think it’s a cynical and

counterproductive strategy. And you say that Republicans do it, too. I can’t remember any

example. I think Trump itself is like supporting Trump is that I can’t I can’t remember. I can’t

remember a single time ever where Republicans have basically funded, have funded the Soros

candidate. I just think this is very stupid and dangerous. But let me ask you a piece.

Listen, it’s of a piece. Okay, it’s of a piece with the administration claiming we’re not in

a recession, trying to redefine recession now that we’re in one. It’s of a piece with Joe

Manchin all of a sudden calling the slimmed down BBB, the Deficit Reduction Act, after saying that

it would increase the deficit. And the media is not holding these guys accountable. That’s why

politicians are going to be as dishonest as the media allows them to be. And the media is not

Conan O’Brien kept the White House on as he tweets out. The White House now says it’s

only a recession if you see a salamander wearing a top hat. Absolutely. The comments are the best

one guys. It’s a moment. What about a what about a rabbit pancake? But let me ask you a serious

question, Jake. Jake, I’ll seriously going beyond just the specifics of the political issue. I think

we really have a problem with the media class. I mean, the media is carrying water for these

Democrats because they agree with the ideological agenda. We do not have an honest media who’s

willing to hold the party in power accountable. Given what you’ve said about being disgusted by

like the, you know, denying, you know, this voter fraud conspiracy stuff by Trump or whatever,

if Trump wins the nomination, which I think he will, how are you going to be able to when we’re

on the show a year from now, and Trump has the nomination, or, you know, 18 months from now,

whenever it is that he locks it up, and he will lock it up if he runs? I don’t think so.

So if he does, though, I don’t think conceivably be able to back Trump for a second term,

would you be able to come on this program and say I back Trump as a Republican because you don’t

want to vote for a Democrat? What would you do just not vote because you don’t like Trump? You

said you would not support him. Listen, politics is always a choice of the lesser of two evils

are a lot of so you would vote for Trump. So I hope I’m not in that situation. Listen, I

What would you do? Listen, the election that America does not want in 24 is Biden versus

Trump. I think the race that they want, I think the choice they want to make is actually DeSantis

versus Newsom. That’s the choice I’d like to make. So look, I’m on the DeSantis train. That’s

what I’m supporting for 24. You know, if it ends up being something different, we can talk about

Bezos DeSantis, what would you do? Would you vote for DeSantis? You go? Really? Yeah. What about you

Chamath? Would you go Bezos or DeSantis? Who would you vote for? Bezos or DeSantis?

I Bezos or DeSantis? Hmm. Well, that’s a tough one. Probably DeSantis.

Okay, Freeberg. Bezos. I’m good. I’m gonna sit this question out. Let’s keep going. Okay. All

right, everybody. There you have it. Everybody. It’s a it’s a dumb question, J. Cal, because

Bezos is not running. I mean, and honestly, the fact that people were even discussing is

he’s a thought experiment. No, but his thought. But the thought experiment, the reason why I would

go to DeSantis is at least he knows how to play the game of politics. Bezos would just in a matter

of a week be like, why did I do this? I had the best life in the world. Exactly. There’s just no

way. It’s a stupid idea. He is living his best life. Listen, J. Cal, Bezos had two tweets

criticizing the administration on inflation. And you’re like, he’s running for president. He’s

running. No, no, no, no. There’s two. There’s other reasons. Come on. Stop being such a clown.

He bought the Washington Post. He bought the biggest house in D.C.

And he gave that $10 billion climate patch. I think those are all little cards that you could

check boxes. And if he writes a biography, probably has houses all over the world. Doesn’t mean he’s

running for president of those countries. Come on. I’m just saying you’re just scared. You’re

scared of the basis presidency. You know that he would roll over DeSantis. He would roll DeSantis.

Even if Bezos were dumb enough to run for president, I think he’s too smart to do that.

The Democratic Party would never nominate him. That’s not why he would pass like some purity

test because of what happened to Bloomberg. I mean, listen, don’t get me wrong. I’d love to

see a candidate like Bloomberg or Bezos nominated by the Democratic Party because they clearly

understand economics. Right. Would it be a masterstroke by the Democratic Party to embrace

a model? I would like to. I would love to see a candidate like that. But look at what happened

to Bloomberg. Bloomberg spent one hundred million dollars. He lasted to the first question of the

first debate. They knocked him out of the first course of the first debate. And then, you know,

Elizabeth Warren knocked him out by just basically calling a billionaire. And he’s

there stunned. He had no answer. Terrible. Yeah, he did. Terrible,

terrible. But I mean, it would be a masterstroke if they went with a moderate. You know it.

All right, everybody, for David Sachs, Chamath and Friedberg, I’m Jay Cowell. We’ll see you

next time on Episode 90. Love you. Love you. Love you.

That’s my dog taking a piss in your driveway.

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.

I’m going all in.

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