All-In with Chamath, Jason, Sacks & Friedberg - E105: Tech culture wars: Elon vs. SBF, Sabotaging Republicans with Trump

Can I tell you a funny story? So I, I was in, I was in. And

then I, when I landed, there was a, an assistant message on the

plane. And then the pilot texts me like, Hey, bad news. We’re

not going to be able to take you tomorrow. There’s an air

message. And if we can’t resolve it, we can’t fly. Okay. So I

text sacks. I’m like, Hey, dude, I’m in a really tough spot. Is

there any way that I, you know, I could catch a flight, you

know, with you tomorrow? Absolute dead silence. Three

hours later, Paul pilot Paul texts me and says, Good news.

Cleared us. We’re going tomorrow. I text sacks right

away. Hey, no worries. It’s all resolved. In eight seconds. He

responds. Awesome. With an exclamation mark.

He had zero intention of bringing me and my family with

it. Zero.

I filibustered. He filibustered.

No, the truth is the plane was with me. I was using it. I’d be

happy to let you borrow the plane if I’m not using it. Here’s

sacks. The last time we went to dinner. Ready? The check comes

Miller and Lux lands on the table. Here’s sacks. What

you’re seeing. See that? You know what that is? sacks going

for his wallet. You can just count it.

It’s ironic because I can’t remember the last time. He’s

over the last time you picked up a check. J Cal. What do you

every time I pick it up on the way in maybe for a slice of


sacks is one of the most generous people I know. I

remember we went to a bar once. We barely had time to get a

glass of still water, a diet Coke and some of the free nuts.

And then J Cal was like, guys, it’s on me.

I pulled out a 20. I gave it right to the bartender.

That’s true. My turn. My turn.

I got

Jamaa, you got the the white truffles and the filet mignon

last week. I think these bar nuts are on me. It’s only fair.

Yeah, throw in some cashews to throw in the cashews and

raisins, a trail mix. I’ll get the trail mix. Because you got

the truffles last time to month.

All right, everybody, welcome to the all in podcast. We’re

still here. Episode 105. I don’t know if you saw boys last

week, the pod hit a new high watermark 16th overall in the

world. So congratulations.

I thought we peaked at 14. Actually, was it 1414 people

listen to this pod when I was in DC this week, I had a bunch of

meetings and so many of the of the staffers listen to the pod.

And they came up to me. They’re like, Hey, love you guys listen

every week. It’s really it’s really crazy. Actually, the

reach of this thing. It’s really cool. Now when you’re in

DC, how gleeful were they about sacks is absolute shellacking

last week that must have been high fives all over the dams

like they won twice, Trump announced and sacks lost.

Listen, we, we talked a lot about are they about SPF and how

much money he gave them in order to stop that red wave.

I talked to a lot of folks, folks. And what I would say is

we talked a lot about energy policy, life, life sciences,

obviously, two areas that I invest a lot of money in, and

foreign policy. And actually, David, you’d be surprised by how

many fans you have there.

Cool. Well, I mean, like General Milley, like we talked about

last week, he’s come around Jake Sullivan just this week, said

that he told the Ukrainians, it was reported that they can’t

have Crimea back get realistic. So Jake Sullivan and Milley are

like the voices of reason now, the administration on this, and

they’re just saying the same thing I’ve been saying, for

which I was excoriated by the foreign policy establishment.

And I got into a little Twitter spat with Ian Bremner this week,

because all of a sudden he posted Oh, everybody has been

privately saying that we need to negotiate. No, no, you haven’t.

You were criticizing you were denouncing Elon as a Kremlin

agent when he posted that Twitter poll suggesting that

the Ukrainians should negotiate. So you were publicly denouncing

those of us who are calling for negotiations. And now all of a

sudden, you’re saying, well, this has always been the

position. But I think what’s significant about that is the

guy’s just a weather vane for the blob and the foreign policy

establishment. And so the weather vane is now pointing

towards negotiation. So that’s the good news here.

Do you think that if DeSantis wins the presidency, you will be

nominated as Secretary of State? Treasury? What would you take

Treasury? State? If you were offered a cabinet position,

would you take you should you should take what you what you

have to understand is that my position on foreign policy or

Ukraine specifically is not it’s not it’s not adopted by either

party. I mean, McConnell and the Senate Republican leadership are

very much on board with the Biden administration’s policy on

this. They are very, very hawkish. It’s really the

uniparty on this issue. There’s really just one consolidated


Okay, but back to the question, would you? Would it be a dream

of yours? Would you find great joy in having a White House

position? To serve your country? Would you serve?

Would I serve if if if the president of the United States

calls you up and asks you to do something, obviously, you have

to serve your country, but it’s not something I’m looking for.

That’s a yes.

What if he asked you to serve as the US ambassador to Burkina

Faso? Where? What? The ambassador roles are so funny.

It’s like you have to compete for the good ones. And then some

people get stuck with the bad ones. Those are those are

available for purchase. Yeah,

yeah, exactly. You know, there’s like, there’s like a menu of

these things like these ambassadorships. Like, I don’t

think it’s like written down anywhere. But it’s kind of like

unspoken. It’s like, if you want the ambassadorship to the UK,

that’s like $10 million. And then, you know, like,

the thing was, with UK and France, it’s every every

embassy, every ambassadorship comes with an annual budget. But

the cost of actually running that embassy and really throwing

the parties is much more so for the UK and France. The gap is 10

million a year that you have to fund out of pocket. So you got

to be really willing, you know, to put the money up. But

apparently, you got to pay for the parties. My friend, my

friend was was the ambassador to the UK, under Obama, and I

went to a party there. It’s unbelievable. And he has the

best life because like, you know, he was meeting everybody

in the world, you can imagine goes through the UK and then

wants to meet the US ambassador. It was a great job for him.

Right. But the money I’m talking about is the cost of buying one

of these synacures. You have to typically raise that bundle.

Yeah, you bundle that much money for whoever. This is what I’ve

heard. I mean, I don’t know. This is what I’ve heard is that

does that mean that SPF parents if Elizabeth Ward wins the

presidency, it’s gonna get some passership right now. The

Illuminati right now just revoked all of our Illuminati

cards. We’re not supposed to talk about this, guys, that you

can buy an ambassadorship. But speaking of buying politicians

and coverage, let’s get an update on FTX. So what about

Trump? Speaking of politics, I mean, you know, you bring it up

because if I bring it up, I didn’t want to tell five minutes,

the only thing I want to bring up is, I think I’m entitled to

and I told you so on this, there was a story where the FBI

said that the reason why Trump kept the boxes in his basement,

they’ve now the FBI has definitively said, it’s because

he was just trying to preserve mementos, not try to sell state

secrets to the Saudis or something like that, like some

people were making wild conspiracy theories about so

Jake, it looks like I was I was right about that. In fact, I

think we had that very discussion on this pod.

Yeah, I mean, we I said, I thought he was keeping it for

like, keepsakes, like mementos. That was my position, too,

because he’s a

you didn’t support this.

Let me ask a question, because I mean, I wouldn’t put it past

him. He’s a maniac. I think if you believe that this was about

mementos, which the FBI is now said it was, I think you also

have to say that the FBI’s approach and rating his home

with armed, you know, soldiers was heavy handed. Now, I’m not

saying they didn’t have the legal right to do it. I’m sure

they checked all the right boxes, but it was heavy handed.

But look, that brings me to another point. Why do they do

it? I actually suspect now that what the Biden administration’s

trying to do is keep Trump in the news. I think they actually

want to provoke want him to run. They want. It’s the exact. It’s

the exact same thing. Remember the the 50 million that went

into Republican primaries to support the you know, the

election denier candidate. Turns out that was a successful

strategy for them as much as I hate to admit it. It’s as

reckless as I think that was, and hypocritical because I don’t

think you can be out there claiming that these candidates

are a threat to democracy at the very same time you’re funding

them. So I think it was completely hypocritical and sort

of Machiavellian, but it worked. And I think in a similar way,

what the Democrats are going to try to do over the next year is

keep Trump in the news as much as possible. And in fact, CNN

ran his entire speech, announcing last Tuesday, I think

for this reason,

if Trump wins the Republican nomination, he’s going to, then

he will lose the presidency. Because if you look at all of

these exit polls that came out of these midterms, he’s just so

massively unfavorable. But that’s not what’s going to be,

you know, litigated in the primaries and the primaries,

it’s just Republican on Republican. And there are a

non trivial number of paths where Trump actually beats

DeSantis. And I think that’s very scary to the Republicans

who want to just move on and have a chance of actually

consolidating power. And it’s gleefully blissful for the

Democrats. Because if again, and we saw this, look, if the

Democrats were able to fund and field MAGA candidates in the

Republican primaries that then lost in the general election,

well, the best MAGA candidate of all is Trump. So it David Sachs

is completely right now, like the balance of power here should

be if you’re the Democrats, whatever you can do to keep him

in the news, whatever you can do to induce him to run, makes a

lot of sense, because he will kill cripple the Republican

Party. He’ll split, he’ll split.

Look at how Jake has got a big read. He’s admitting to the

hypocrisy, which is for years, he’s screaming about what is

your life. Hold on a second. You’ve been screaming about what

a threat to democracy is how he’s secretly on the payroll of

the Kremlin or foreign governments. And yet, and yet

you want to keep him in the news. You want to be the

and you Republicans don’t have the common sense to kick him out

of the party. Oh, I do. Come on. I was on the DeSantis train

before the midterms election.

You on this pod will never kick him out of the party. You should

say how am I supposed to kick him out? You guys should all

disavow him, publicly disavow him.

How? I’ve already said I support DeSantis. I said it before the

midterms. What else do you want me to do? But by the way, I

don’t think I think you’re I think you and many other people

on the democratic side in the media are being very hypocritical

about this because you want to claim that he’s this unique

threat to democracy while playing this game, where you

want to keep him in the news, you want to basically provide

him with as much oxygen as possible, because you think he’s

more beatable. And by the way, I agree that he’s less electable

than DeSantis, which is why part of the reason why I’m on the

DeSantis train. I also think DeSantis would get more

done. But look, I don’t think it’s a foregone conclusion. He’s

gonna be the nominee. Did you see the new polling that came

out after the midterms? DeSantis is now the favorite in among

Republican primary voters among every different slicing that you

want to do, of whether it’s likely Republican voters,

primary voters, whether it’s Fox News viewers, and on and on and

on. DeSantis is now ahead of Trump by about

Okay, wait, hold on, I need to be able to state my position

because Saxton interrupted me seven times. I just would like

to get my position on here. Number one, you all backed

somebody who is a horrible human being who made terrible

decisions. And now you guys keep supporting him at some point,

you have to put your foot down and say, Listen, we don’t want

this guy. You have to publicly say, January 6, you know, and

this guy’s approach, the election denial, you guys have

to come out and just say, we don’t want this person to run. I

think you’ve been hedging too much. I think that’s the

problem. Now, who am not? How can I think party? Yeah, no, you

always were a little bit like, because I did. Hold on, on this

very pot, I asked you, if he run, would you support him?

Would you ever vote for him again? And you were like, well,

and you would vote for me again. If he wins the nomination,

you’ll vote for him. That’s the truth. Republicans will still

vote for him.

Look, you know that before it was popular before the midterms,

I was on the DeSantis train. I was saying so on this pod for

over a year when it was very unpopular, certainly in the area

in which I live. And so you know, and there are a lot of

Republicans now most Republicans now agree with me on this issue,

according to the polling that just took place.

But if he wins the nomination, you will vote for Jason is that

you want us to buy into every bullshit narrative that you’ve

ever told about this January six and bullshit. No, it was

let him finish. Let him finish. He’s interrupting me every two

seconds. Stay out of it. Freeburg. I just want you guys

to guys, I just want you guys to speak and then let the other

person speak. That’s it. I don’t come on.

My point is, here we go again. I don’t I don’t want to rehash

every single thing in the past. But But look, the point is that

I think we have more electable candidates. I think we have

candidates that would get more done in office. But and I’ve

already said so. But I you know, but I don’t that doesn’t mean I

believe this whole like threat to democracy thing. I think that

is massive inflation of the actual threat. But But look, if

you want me to say that we have more electable candidates, we

have candidates who will get more done, who frankly would be

less alienating to moderates and independents and could even win

over some moderate Democrats the way that DeSantis didn’t

Florida to win by 19 points. Yes, happy to say that. And I’ve

been saying that.

I will just say, if I if I’m if I’m if freeberg allows me to

make a point, I would like to say, it is a threat to

democracy, January 6, an election denial. Those two

things are acute.

Party fund over $50 million to those candidates.

cynical, because they want it to win cynicism, pure cynicism.

Okay, we’re on the same page about that. Yeah, it’s pure

cynicism. But do you let me ask you a question. And then we’ll

wrap on this because I know it’s uncomfortable for free bird to

watch mommy and daddy fight.

Some childhood trauma drama is okay. Mommy daddy still love

each other even if we fight sometimes. It just makes me want

to turn the volume down. Go ahead.

We’re almost done anyway. I do think fielding moderate

candidates is the path and I think you brought this up a ton

of times who it’s the race to whoever can get that moderate

middle and I hope that they feel better candidates. But do

you think sacks he’s running? This is one of the cynical takes

is that he’s running because it will help all the legal cases

against him. Do you think there’s anything to that?

My guess is that that they see him as an easier candidate to

beat and they’re going to do everything they can to try and

keep him in the news. And I don’t, I actually I don’t think

that’s your position. I actually think that you’re being sincere

that you don’t want him to win a second term. I mean, remember,

like we don’t know, I think we all believe that we’re gonna

have a pretty severe recession next year. So just because the

democrat cynical strategy in the midterms of promoting, you know,

what they call it election deniers in the primary that

happened to work, but just because it worked last time

doesn’t mean it’s going to work next time.

And abortion absolutists and a whole bunch of other things. I

think I think the point is pretty much this, which is that

people gave Trump a lot of credit for being an idiot

savant. But it looks like he’s more of an idiot savant minus

the savant. Okay, this is a, this is kind of a goofball, who

has a brilliant media strategy, and he had his finger on the

pulse in a moment. And then he just couldn’t execute couldn’t

put two and two together couldn’t put one foot in front

of the other. And he was way too divisive, and he got booted out

and he lost fair and square. And now what the republicans have to

realize is if they don’t figure out how to field somebody out of

the primaries, that is different than Trump, the democrats will

win. Because if it is Trump, whoever the democratic candidate

is, I don’t think it really matters. We’ll crush Trump.

Yeah, look, I think that’s likely correct. I mean, I think

I think that we talked about it last week, you cannot win the

presidency with call it 45% of the vote. I mean, Trump has

capped at that amount. And the scary thing for republicans, by

the way, is Trump does a much better job than anybody else in

getting his base activated. So the thing that all these polls

get wrong, and I think they’ve consistently gotten wrong, and

as a result have underestimated him is they don’t give him the

credit he deserves duly for being able to curate a fervent

base of that 30 or 40% of America that will show up for

him. And even if they didn’t show up as much in the midterms,

they sure as hell showed up in the primaries for his candidates

oftentimes. So I just think it’s a very dangerous cocktail that

you can’t sleep on. So the republicans have to take this

really serious moderate republicans want to have a

chance of winning. You guys have to figure out how to beat

Trump in a ground game. Because if his base shows up, he has a

decent chance of winning the nomination, but then you will

lose the general.

Yeah, I think that’s, I think that’s pretty much spot on. I

think republicans really have to be smart and disciplined and

think about, we have to nominate the the most electable

candidate. But here’s the thing is, we’re not even debating

policy right now. No one, no one really says that, hey, on a

policy basis, there’s a huge difference between, say, Trump

and DeSantis or some other folks, it’s all about personal

style. And is it really worth it to the republicans to potentially

lose the next election, based on personal based on style points,

it’s a silly reason to lose, you know, William F. Buckley, a long

time ago said that he would always support the most

electable, conservative candidate, he didn’t always go

with the most conservative candidate, he wanted to go with

the most electable candidate who met a basic policy bar. And

he sometimes got in trouble for that. For example, he supported

Bush 41 over jack Kemp. I know I’m going back a long way. But

but in any event, you know, having thinking about

electability is just really important.

There’s one silver lining here, the head of the Republican

Party, Rupert Murdoch has absolutely dissed Trump. I don’t

know if you saw the New York Post, but he put on the cover

that you’re a little lower, like 10 Florida man makes

announcement. And on page 26, he had the announcement of

Trump running for president. And the funny thing was the last

Rupert Murdoch, he didn’t even name Trump as the president of

the absolute last line of that column. And he said, Oh, and he

also happened to be the 45th President of the United States.

Yeah, it was very funny.

You’re seeing a lot of Republicans saying, I think

correctly, is that if you want to win elections, you have to

look out the windshield, you know, not in the rearview

mirror. And what we saw in the midterms is that even talking

about 2020 was at minimum, a giant waste of time and a

distraction and at maximum potentially cause these

candidates to lose. I mean, the fact of the matter is that that

a lot of candidates including some I supported in battleground

states who got lured into trying to re litigate 2020. They all

got vaporized. And I just think it’s stupid to be talking about

the past. Voters want you to focus on the future. And

especially when there’s no policy outcome, that matters.

That’s at stake for you to be talking about a past election,

instead of the future and the question is just politically


Freeberg, if I may bring you into this discussion

uncomfortably, as it might as uncomfortable as it might be.

Would you vote for Biden? Incredibly old? I don’t know

it’s gonna be at one or 82. And the next election to vote for

Biden, or DeSantis

as I go through the list of things I’m most concerned about

in the world today. Number one is the debt and spending cycle

of the federal government. In the US. I’m I think it’s the

most kind of scary set of facts and conditions that we’re

getting set up for kind of a major crisis 10 to 15 years from

now. Because you can’t afford all the debt that we’ve taken on

as a country, as well as the entitlement as well as defense.

And so something’s got to give and there’s a bunch of paths

that could emerge from that set of conditions that are all

really scary paths and not good. I’m more concerned about that

than I am about nuclear war, or climate change. Just to be

clear, because I think that the social effects and the global

geopolitical effects that arise from the US kind of destructuring

because of our debt and spending cycle that we’re in right now,

are far more significant than what we’ll experience over the

same period of time. And again, I do think that technology is

going to resolve a lot of our issues with climate change. And

I think nuclear war, cool heads will prevail. Everyone’s got a

family. So that’s what I’m most concerned about. So any kind of

voting decision I make is made with that lens, which is what’s

the best path to supporting some some sort of responsibility,

setback or step back to resolve those issues. As Charlie Munger

said so well in this interview that was published this week.

And I’ve said it a few times on the show, but he did. He’s a

much better speaker than I uses far fewer words. But you know,

in democracy, eventually, the populace realizes they can vote

themselves all the money. And, you know, that’s what we see

happen in an accelerated way. In Latin America, we’ve seen that

with a lot of these democracies that ultimately resolve to kind

of socialism. And in the US, we’re seeing a lot of this

behavior where we’re kind of voting ourselves all the money

we’re putting in place politicians and the populace is

saying I want I want I want, and more money comes out. And it it

totally decreases the strength and the resiliency of our nation

and our economy. And it’s the most concerning thing to me,

because the incredible innovation and economic engine

that is the United States is threatened. And it really

threatens a lot of stability in the world today.

Tremont, any any final thoughts here as we wrap up the political

discussion? You’re obviously a democrat. So you’re voting for

Biden, but you also care about fiscal responsibility. So where

are you at? With your vote for 2024?

I don’t think that we know who’s actually running on either ticket

yet, just to be completely honest. So that’s my

perspective. My other comment is, I think what David said is

so spot on the single biggest issue that we have is that we

have made a huge decision to de globalize. And that de

globalization has the risk of introducing a hyperinflation

loop. And we won’t know how bad that is for another year or two.

Why would it do that? Why would it? Well, think about it this

way. Inflation costs today. So today, let’s just say you buy a

chip to make the iPhone, you buy that chip from, you know, TSMC

that makes it in Taiwan ships it to China. And the entire world

is serviced with that supply chain that keeps that chip as

cheap as possible. Now, with the chips act, as an example, we

will build resilient supply chains, where now instead of one

place, it’ll come from six places, five of those six will

be in allied territories, the United States, Western Europe,

potentially Mexico. The thing with that is that that now is

six x more equipment that you’re buying. Right? Instead of one

machine, you now have six machines. Instead of one person

operating the machine in one country, you have six people in

six countries. As you can imagine, when you layer up all

these costs, there is no world in which that chip is as cheap

as it was before. And so the cost of that has to be born

either by the consumer who pays a higher price, that’s measured

as inflation, or by the government who subsidizes it at

the point of import, that’ll be measured by debt. And so one way

or the other, in our in our path now towards more resiliency, and

national security, which by the way, I think is the absolute

right decision. Okay. Energy independence, all of this stuff

we have to do today, we are at risk of a hyper inflationary

loop, if not managed well. And so you have to be really on the

levers of the economy, and you have to understand it deeply.

The person that deserves the most credit of preventing this

hyper inflationary loop right now is Joe Manchin. And

hopefully the history books, whatever Jay Powell does, I

think has been good. But the fact that Manchin prevented 6

trillion more dollars of being pumped into the economy in the

last two years, is probably the single thing that prevented

inflation instead of being peaking at nine, from peaking at

15 or 16. I think it would have been a national disaster without


Chamath is right that extra 6 trillion that Manchester would

have been a national disaster. But let’s also give credit to

every Republican because they also voted against it. I mean,

the fact that the pressure was on Manchin to do the thing and

see the forest from the trees and he did that.

Yeah, no, look, I agree. I agree that I encourage, I agree that

he was in the hot seat. Well, so was cinema, by the way, cinema

didn’t go for the three and a half trillion build back better.

But then Manchin, you went along with the $750 billion version of

BBB, which they renamed the Inflation Reduction Act, that

was kind of a disappointment. So, frankly, like I give more

credit to the Republicans, they were against all of it, and the

Democrats jammed it through. So if you’re worried about all of

this trillions and trillions of unnecessary spending, why don’t

you give the

I’m talking about the delta between what was spent and what

could have been the entirety of the gap is really was prevented

by Joe Manchin.

I know, but it was Joe Manchin siding with the Republicans. My

point is, look, we got your point perfect on spending. They

both want to spend too much money. But at this particular

moment in time, the Republicans are more restrained about

spending than the Democrats.

Let’s go to number one issue for each person. Hold on. Number one

issue for Freeberg is fiscal responsibility. I was going to

say the same thing. It is my number one issue in this next

election. I want to see austerity fiscal responsibility

and get this spending under control so that our kids do not

inherit, you know, stagflation, hyperinflation, or whatever

cocktail of disastrous economic policies we are handing to them.

What is your number one issue? sacks for 2024? If you had to

pick a number one issue? What would it be for David Sachs?

Look, I think it’s simple. The President’s job is to ensure

peace and prosperity. So you guys are talking about the

prosperity side, I think we do need fiscal responsibility, we

need to have a good economy. There’s like a bundle of

policies that go into that starting with, I think, greater

fiscal restraint. And then on the peace side, I think we need

to adjust America’s foreign policy to be less

interventionist. We’re, you know, we’re involving ourselves

here, there and everywhere all over the world. And I, I’m

hopeful that what I’m hearing out of the administration the

last couple weeks from Jake Sullivan for Millie, these are

some good things that I’m hearing. But, you know, I would

like to see us dial back on the foreign interventionism.

If you had to 6040, that or whatever is one more important

the other or they both equal and then we’ll go to both equal for

you, which one’s more important?

Both? I mean, look, how can you have a successful United States

if we’re either in a recession or at war? You don’t want any

either of those situations.

So those are your top two equally? What is it for you?

Chamath? What are you there?

There’s also a third one, which is culture, Jake out. So this

one’s a little bit hard to categorize. But I do think

culture matters. And, you know, I want us to have a culture of

excellence. I want in the schools, for example, I think

schools should have grades, they should have advanced math, we

should hold our kids to a high standard, I think that we want

to have safe cities, we want to, you know, have cities where

crimes are out of control, we need to have, you know, a sound

border policy. So I think there’s like a collection of

policies there under, you know, schools, crime border that are

sort of broadly cultural, I guess. But or maybe you could

call them quality of life issues. So you know, yeah, we

need to have a good economy, we need to stay out of foreign

wars, but also we need to have a high quality of life.

Can I steel man something for you? Because I, I really agree

with those three things, David, that you said, but I’ve, I’ve

spent a lot of time thinking about this. And my formation is

that there’s one thing that allows us to solve all three, if

you bear with me for a second. And I think that that is the

energy independence of the United States. If you look

inside of what’s happening in the US today, the cost of

generating energy is effectively as cheap as it’s

ever been, and as close to zero as it ever has been, and it’s

only going to get cheaper. The problem that we have is that we

have all of these decrepit laws and infrastructure and

regulatory capture, that causes us to always be in an imbalance.

And as a result, we do all kinds of crazy things. We borrow

enormous amounts of money to create subsidies, we go when we

fight all of these, you know, foreign wars that don’t make any

sense. We wrap the energy problem and set in climate

change language, which causes this cultural division. But my

belief, quite honestly, is that the reason the IRA was so

important is as it is the most clarified piece of legislation

we’ve seen, that essentially puts all forms of energy on a

level playing field and has the chance to get America to

permanent energy independence. And if the cost of energy is

zero, and we can abundantly created in the United States,

what I think happens, David, is we have energy to rebuild our

supply chain much cheaper. So inflation gets under control, we

don’t borrow as much, we have a completely different lens on

foreign policy, so that this interventionism and fighting

over resources is much harder to justify. And we put the climate

change language aside, and we use energy independence as a

form of national security, which gives us the courage to battle

all these other cultural taboos that we otherwise have to say we

agree with, even if they don’t necessarily make any sense. And

there’s a bunch of them. So I don’t know my, my, my, my answer

to your question, Jason, is that one thing, if we accomplish in

the next five to 10 years, has a chance to really change the

course of the United States.

Right, man. So I’m guessing then Biden’s your vote, because if it

is, in fact, Biden, because Biden is the one who pushed for

these clean energy tax credits, and this policy in it, freeway,

but he also canceled, he also canceled our energy

independence. I mean, look, we were energy independent based on

fracking, you may not like fracking, but it did get us

energy independent, you may think that there’s environmental

consequences to it that you don’t like, and that has to be

balanced. But we did have

energy against fracking, I believe in that gas, I believe

in coal, actually, as a bridge fuel, I believe in all of these

things. I believe that these are all more important than going

off to all of these foreign lands, and trying to justify

spending trillions of dollars and putting 10s of 1000s of

American lives at risk, essentially for resources that

we can actually create for ourselves at home.

Well, I agree with you on that 100%.

I’m fine with, I mean, I’ll tell you, like clean fracking as a

way as a bridge, go ahead to getting to, you know, more

independence through nuclear and renewables. Go ahead, freeberg.

Like I said before, China’s declared that they’re building

450 nuclear power plants, the net cost, effective cost of

electricity production out of a nuclear power plant is somewhere

between one and five cents per kilowatt hour, the US on average

is paying 11 to 15 cents per kilowatt hour. Nuclear is just

three utilities. So freeberg, that’s with all the regulatory

capture and all that trash that you have to spend. For example,

we have to spend $220 billion a year to replace the power lines

in America by law. That’s $2.2 trillion just there.

Right. And so the cost for solar and wind off grid, I think is

around three to seven cents a kilowatt hour in that range.

Right. So it gets nowadays, it’s gotten much more competitive.

But I think that the nuclear solution is just not even being

engaged in the conversation. Now, I want to go back to the

previous point, which is because I didn’t state the numbers

before. So I just want to state them because they’re so shocking.

And this is what shocks me. The current federal debt is $30

trillion, our GDP is around 23 trillion 5% interest rates on

$30 trillion is one and a half trillion dollars in interest

payments alone every year. And our social security, so one and

a half trillion dollars, I mean, that alone is about 6%, 7% of

GDP. So you have to tax every transaction in the country by

six or 7%, just to pay the interest payments on the debt.

And then we have Medicare, and Social Security, which

that math is wrong, because you have maturities of all different

types with different yield to maturities and different coupons.

So that’s, it’s not today’s numbers, it’s what’s happening

over time. So as you look out, and you look at the, the yield

on treasuries, and you apply that to the current debt level

and the increment in the debt level, you’ll get to that level,

right, you’ll get to a trillion five a year, in interest

payments that need to be made, plus another call it three, four

or $5 trillion a year in mandatory spending. And so

that’s where the country starts to run into a problem. Because

at some point when you have to tax so much to cover the cash

payments that need to be made by the federal government, the

economy really gets hurt, and things start to cripple. And

then if you were to take those entitlements away, Social

Security, Medicare, you have a real problem with people’s

ability to support themselves in an economy where they’re not

working. These are elderly retired people. So there is a

mate at work to pay these expensive medical bills. So

there’s a major crash coming if we don’t figure out how to

bridge our way to this gap. So if someone wants my vote, and

they’re going to run for president, they would put up a

simple chart like Bill Clinton used to do, and show me a 10 to

30 year plan and just say, here’s where we’re headed. And

here’s what we’re going to do to make sure that doesn’t happen.

And that chart alone, I think can win the vote.

Okay, let’s pull up the chart then. So here is the federal

debt total public debt as a percentage of gross domestic

product. As you can see, in the 70s and 80s, we were at under

50%. The 90s, we started, you know, growing, I don’t think

this matters. I think everybody, every self proclaimed

intellectual looks at this chart and says, Oh, my God, we’ve

exceeded 100%. You know, the the empire is going to go to

ruin. That’s not why the empire goes to ruin, we have the

reserve currency of the of the world. And there’s an enormous

amount of power that comes from that position. So what the right

number is, is TBD. That’s the most honest way to think about

it. It was 100. It’s at 150. It could go to 200. Many countries

operate at levels above us and still haven’t imploded, per se.

The real thing is what part of what Friedberg said is, look, if

you really want to look at what we pay, today, we pay $400

billion this year, that’s the interest payments, okay, that’s

when you calculate all of the different maturities we have,

with all of the different coupons we have, that’s what we

owe today. And David is right, mathematically, that if interest

rates go to 5%, and stay there forever, but we know that that’s

not how economies work, they ebb and flow. Okay. So the real

problem that we have to understand is how do you

actually create enough growth. And then the next time that we

have a meaningful fall in interest rates, like every other

person does, you know, look, a lot of people in America know

how to refi their credit cards, refi their home loans, refi

their mortgages, the United States could have had a much

more aggressive and thoughtful strategy of refi by pushing out

these maturities way into the future. And again, Trump

actually suggested that but because he sounded like a

goofball, everybody said absolutely no way. But in

hindsight, that one move would have saved us trillions of

dollars over the next decade if we had done it. And this time

around, we have to have politicians who are smart enough

and have the wherewithal to say, it doesn’t matter where this

idea came from. It’s really smart. rates are now back to 2%

or one and a half percent. Let’s now issue 50 and 100 year bonds.

And let’s refi this problem out into the future. That makes a

ton of sense. And we have to do it.

The refi makes a ton of sense. Just to pull up a chart here.

And to counter your position there that it doesn’t matter

tomorrow. Maybe you can respond to if you look at GDP ratios

here. Number one, two, and three, Japan, Venezuela, Greece,

Sudan. And, you know, you know, some smaller countries there,

but United States,

none of these countries, none of these countries, look, this

entire world runs on the US dollar complex. Whenever we

raise rates, yes, it is true that on the one hand, our

interest payments go up, but proportionately and on a

relative basis, he I think I think maybe let me take a step

back, look, what are the most important things in investing,

which is appropriate here is that people ask, what is the

price of a stock? Well, before you go public, you’re

calculating what the intrinsic value of a company is, okay, all

the things that they do all the money that they make, here’s

what we think it’s theoretically work worth. But the minute

it goes public, the intrinsic value no longer matters. It’s

what is it valued relative to everything else. Okay. The

United States is a relative, if it’s a stock, if all these

countries are stocks, we are valued relatively to others, not

not intrinsically. And the reason why we have so much power

is because everybody else is actually valued relative to us.

So this is why I think the right thing to look at Jason is the

rate of change of debt to GDP for the entire G eight, or G 20

or the rest of the world. And what you’ll see is something

that goes up into the right. Nobody in the world has been

rewarded for not investing in their populations and bought and

basically borrowing from tomorrow to invest in today’s

human capital. Okay, so we have a disagreement here. Freeberg,

you think this is a major issue? Yeah, because I think it’s

manageable. Freeberg. Yeah, for

I think there’s two things that are missing. One is the

inflationary effect. So you look at that list of countries that

are there, they’re paying higher interest, and they’re

paying in the form of inflation. So they have less that they can

spend on their people. And ultimately, what ends up

happening, it’s just simple arithmetic. It’s not about

relative value of a currency. It’s the arithmetic that we have

a check we have to write every month to pay for Medicare and

Social Security. And it is written into law, what that

check needs to be. And the rate at which we’re having to write

those checks, the increment of those checks is going up so

significantly that when you add on the interest payments, and you

look at those checks, and then you add on defense, something’s

got to give because you cannot raise taxes in the amount that’s

needed to fund all of that outlay without this causing

either number one, massive inflation, if you just take on

more debt, or number two, you know, significant loss of

services, either Social Security, Medicare or defense,

and so something’s going to give and the distribution I think is

not being discussed.

So I just want just one point the President’s budget.

Anybody who is a president of the United States gets hold of

their annual budget, it’s about five and a half trillion dollars

this year. So you’re talking about interest payments that are

still less than 10% of their total budget. Now that includes

the entitlement payments, okay, so about $3 billion, $3 trillion,

sorry, three and a half trillion is what you have to pay for 20%

now $3 trillion is the sum of Medicare and Social Security.

Okay, so the President still has one and a half to $2 trillion

of leeway, of which a quarter are debt payments. So my

perspective, quite honestly, is mathematically, there’s a lot of

room to run here, before these things get really out of

control. And even if they do, I think the relative problem is

for the rest of the world will be so egregious, that the

ability for the United States to go to those banks and those

economies, and basically sell in more us debt is quite high

because they cannot afford to own debt in their own country.

So if you think that the United States is bad, go back to that

list. Guess what those central banks in those countries are

going to be buying us dollars faster than they can go out of

stock unless we see some union of India, China, Saudi Arabia,

Russia, Japan, Brazil, obviously not Japan, but some some of that

consortia will become a closer trading partner, and perhaps

could cause a shift in the balance of the dominance of the

US dollar. And that’s one path to consider.

Saks, what do you think of the balance sheet here? Obviously,

we have two opposing opinions here from Chamath and Friberg.

Where do you stand on the United States balance sheet?

Over our skis?

Yes, the balance sheet is a disaster. What are we at like

130% of debt to GDP? I mean, we have like 30. Yeah, it’s not

even stable. I mean, we

27% of GDP right now 27% it should be 15%. Right. So the

spending, where does that number come from? Why? There’s a there’s

a bunch of economists who have shared these papers.

morons, morons, fake experts, fake experts.

Hold on, hold on. If you look at sex, if you look at government

tax receipts over time, with all different kinds of tax rates,

including very, very different top marginal tax rates, what you

see is that federal tax receipts as a percentage of GDP is in the

17 to 19% range. And like the best years you make 19% it’s

usually in a good economy. And in a bad economy, it’s like 17%.

And it really it doesn’t matter whether Reagan was president or

Clint, Bill Clinton, and so on. So there’s only so much blood

you can get from a stone. And historically, spending was

around 19% of GDP. And so you would have a one or 2% you know,

deficit every year. And that really accelerated first, you

had the financial crisis of 2008. And then you had COVID.

And free works, right, you know, we we went from call it, you

know, 20% of GDP spending to roughly 30% or more during

COVID, as kind of this emergency measure. But like

everything else in government, you know, the emergency measure

becomes a permanent program. So now we’re at 27%. It doesn’t

seem to be going down. And the Democrats want a lot more. I

mean, we talked about it build back better would have been

three and a half trillion, instead of 750 billion, if they

just had one or two more votes. So hold on. So so free burgers,

right, there’s like nothing stable about the point we’re at

it’s the point we’re at is bad on its own terms, having 30

trillion of debt, let’s say that interest rates stabilize

at 3%. That’s still a trillion a year of debt service, which is

more than not a trillion. If interest rates stabilize at 3%,

which is optimistic, and we’re servicing a trillion, sorry, 30

trillion of debt, that’s roughly a billion dollars a year of debt

service payments. That could be spent on other things. Guys

keep saying billion when it’s a trillion.

The average yield to maturity needs to be factored in there.

So over a 15 year period, David, you would be right

mathematically, if all matured, but that’s not what this is,

because you we are you’d have to refi and reissue a bunch of debt

that is at lower yield right now at these interest rates. I want

to be clear.

I don’t know how any of this is good. I mean, remember,

I understand. Let your mouth say why I’m good or not. I’m not

saying that this is a good or it’s a trend. What I’m saying is

I have this issue that all of a sudden people make up and you

guys are doing it now. An arbitrary number with no

rooting in history or fact and say this is bad. And all I’m

saying is, I know it feels bad to us. And I think we would all

run this country differently. If we could control the balance

sheet, I would as well. I would try to get debt way way down. I

would try to get deficits way way down. But all I’m saying is

using this justification of an arbitrary number always falls

flat. So I’m encouraging us all. Let’s find a better model of

reasoning. Because every time we point to some randos book and

say 127% is bad. Nobody listens. And I think the message

that you should take away is is because it’s imprecise, and it’s

not rooted in any actual logic. And if there’s a better, the

reason I believe that this is concerning is, I look at the top

10 countries that have, you know, debt ratios that seem out

of whack. And I think, wow, what is their fortune been for the

last 10 years vis a vis Japan and Venezuela, the right

comparison, the right comparison. Okay, go back and

say, look, look at the British Empire. And when and what was

the debt to GDP when it started to actually fall off?


I know lapsed. No, I’m saying, okay, was it triggered? Was it

triggered by debt to GDP? And I think your answer will be in

part, I, again,

ruinous, they took on ruinous debt, and they couldn’t maintain

their empire anymore. And the whole thing collapsed.

I’m just asking for some numerical specificity.


The last time there was a lot of numerical specificity, there

was a ton of work that’s been done on

pulling shit out of their ass. So tell us that it’s

historically the best way to manage the growth in an in a in

a country is to have deficit spending be equal to or less

than the growth rate of the economy of that country. So for

example, if your income, the the tax revenue that’s being

generated by the government is equal to say 15% of GDP, you do

not want your spending to be more than 17 or 18%. If the

economic growth rate is two to 3%. That’s it. If you do

anything more than that, what happens? No, if you do anything

more than that you’re borrowing from the future to pay for

today. That’s the simple truth. Okay, so what happens? And when

you do that the rates go up and the prices go up and eventually

your currency doesn’t work. So you’re making a bet. Read the

book that I talked about last year, the most recent Ray Dalio

book, he goes through six stories with the economic data

to prove it, the factual data, the history of what’s happened

with six empires over the last 500 years, where this exact same

scenario has played out. This isn’t some random arbitrary

story. I read that book. And everyone in that everyone had

the exact same perspective that you have when they were living

in those days. And they said, You know what, we’re gonna be

okay, because we’re the reserve currency. And the world loves

us. And we’re the empire. And we have influence everywhere. And

they all lost primacy, and their currencies collapsed. And they

all broke apart. And I’m not saying that that can’t happen in

America. What I’m saying is, you get so full throated. I read

that book. It’s great narrative, but the numbers are brittle.

Okay, they’re fragile, and they’re mostly made up.

Everyone can read it on that.

So I so all I’m saying is, in the absence, in the absence of

numerical specificity, I agree with you that this trend is

alarming, and it’s bad. I agree with you. And I agree that we

should spend a lot less. What I’m saying is when you say to

the world, stop spending because XYZ number is bad. You have no

credibility because it’s not something that you can actually

back up. And all I’m saying is, if you could find a better

logical argument, you would probably get a lot more people

to you.

You’re just being ignorant. You’re ignoring it. You’re

saying you don’t want to actually believe it. The

numbers are there. I’m not saying ignorant in a

disparaging way. I’m saying you’re literally just ignoring

the data.

Show me the numbers.

Show them to me.

They get upset at us for fighting.

I’ll make you a PDF, Jamal. I’ll send it to you tonight. I

promise. And I’ll post it on our friggin thing so people can

watch it.

All right, listen, the group chat is going to be on fire this

weekend. Saks, final word for you.

Okay, final word. Okay.

Final word, please.

Jamal and I have never gotten into it before like this, but

yeah, obviously we’re on opposite sides.

I think it’s great.

I still respect and love you, Jamal. Go ahead.

If you go back in history and look at debt to GDP levels, the

only other time where anything remotely like the level we’re at

right now is right after World War Two, when we had just saved

the world from Nazism. Okay, that was worth going into debt

for. You look today, what is it that we’ve gotten into this

130% debt to GDP? What is this $30 trillion of debt for? What

have we bought with all that money? Huge amounts of it have

been squandered.

You’re right.

And Biden wanted more. If the courts didn’t stop him, he

wouldn’t spend a trillion for giving a bunch of student loans

to for basketball degrees or liberal studies or whatever.

Graduate degrees at Brown.

Let me finish. That’s point number one is that this money is

being squandered at levels we’ve never seen before. And the

squandering is continuing. It’s not like we’ve reached a steady

state. It just keeps going and going.

I can’t precisely say when it’s going to break, but I do know

it’s going to break. The other thing, point number two, is

about consequences today. There is a phenomenon economists call

crowding out, where when interest rates go up, more and

more money flows into the risk free rate of return. And then

that crowds out investment capital. And we’ve talked about

it on the last pod where if the risk free rate is 5%, and then

like high quality corporate bonds are offering eight to 10%.

Now equity investments must generate 15%. And VC must

generate 20%. And there are very few VC investments that can

generate that kind of IRR. So what happens, the money flows

out of VC, and there’s less money for risk capital. What

drives our economy risk taking?

David on for North ship. So hold on a second. So this massive

debt service that we have, which drives up interest rates will

crowd out the very kind of economic activity that the

United States needs to stay on the cutting edge.

rebuttal to the rebuttal to the rebuttal. No, you’re so right.

So why don’t you just bookend the argument exactly the way you

just did. My point is not that you said it just before that we

don’t know at what upper bound these things break or don’t

break. And all I’m saying is every time you throw up a random

number, you guys sound like the boy who cries wolf, okay, and

you’re shouting into a vacuum is, is just the is the advice

that I’m trying to give you guys, I agree with you. I spend

my entire days investing in and trying to figure out what is the

risk adjusted rate of return of the things that I’m doing. And

I’m trying to tell you as somebody with some reasonable

financial numeracy, every time I hear you or Ray Dalio, or

somebody else say, this number is where it all breaks, and it

doesn’t, you lose a little bit of credibility, then you go to

this number, and you’re like, Oh, I know 127.

Okay, we get your point.

No, let me put it back. How much is too much? How much debt can

we handle? And how much spending as a percentage GDP should we

handle? What is the limit in your mind? And how do you decide

what that limit can or should be?

I think the honest answer is every time that I have been

alarmed that we had hit a threshold that was meaningful.

So for example, like I think under Obama, we passed 100. And

it felt very scary, because I was like, wow, that seems like a

demarcation. It turned out to not be a demarcation at all.

Because it’s relative to every other country and what they’re

going through. And I understand that you don’t want to believe

that. But I do think that America’s economic vitality is

not an independent function, it is a dependent function on

everybody else, we are relative to everybody else, if there’s a

different cosmos and a different planet somewhere, maybe this

will all reset, but right now it’s not. And so we all trade

relative to the United States. And in as much, I would like to

just say, I don’t know enough to guess what this number is. And

I’d rather focus on what David said, which is, there are things

that we need to do that we need to incentivize people to invest

in extreme risk taking that create new businesses that move

the world forward. You can have that conversation without belly

aching and crying to mommy about a GD debt to GDP number because

every time you throw it out there, nobody knows what you’re

talking about. Nobody knows what reaction to have. And everybody

feels over time, David Friedberg, that you’re crying

wolf. So all I’m saying is, I get that it’s concerning to you

and it creates anxiety. But every time you and you probably

this is not the first time you’ve had anxiety, you probably

had anxiety at 5075 100125. Guess what, I bet you’ll have

anxiety at 150. I don’t know what it means. I do know what

sacks means, though, which is that right now we have a risk

free rate that’s going to five, we have corporate bonds, it’ll

be a 10. We have equity investing, the most risk taking,

which is the early stage venture that has to return 25. And that

is an incredibly high bar. But we need to do it. And we need to

do maybe fewer investments, quite honestly, with fewer

participants with less dollars that are more effectively put to

work. Okay, maybe this is a good jumping off point to talk about

all the waste in Silicon Valley. And that stuff can happen

without debating incessantly, this debt to GDP number, which


all right, Freiburg sacks, and then we’re gonna move. Go. I

agree. I’ve never had anxiety about debt to GDP. It’s never

been anything on my radar. The conversation I’m trying to have

today is the amount of spending the federal spending, including

interest payments, as a percent of the GDP as a percent of how

much we can tax to pay all those to make all those payments every

year. And so what I’m concerned about is the ballooning cost of

paying out all the obligations the federal government has to say

something different than what you were just saying. That’s if

you were cared about only that, then refinancing the debt is an

equally valid proposition and changing the rate expense. It’s

not the only expense. So interest payments are ballooning. In

addition to interest payments, Social Security and Medicare

payments are also ballooning, and defense out of control

spending. Everybody has their hand out. Everybody wants an air

drop those four big categories together. You don’t have any

room left.

You’re talking about discipline in spending in defense. Great. I

agree. You’re talking about discipline and capping health

care costs. Great. I agree. What does that have to do with this

other orthogonal thing you’ve been talking about, which is

this random number debt to GDP. It doesn’t mean let’s move on

from that discussion.

One final point that we can move on. So so look, I think time for

the final point. Go. It’s important discussion. Apparently

luck in the in the interest of bestie harmony. I will partially

agree with the point that your mouth is making, which is that

for a long time in American politics, people have sort of

cried wolf about debt to GDP. For example, if you remember way

back in 1992, Ross Perot, basically based his candidacy on

the idea that the US was racking up way too much debt. You know

what debt to GDP was in 1992? 41%. Okay, so people used to

care a lot about this. I remember when Reagan was

president and jet to GDP was 30%. People were saying that he

was this like, you know, wild spender. Okay. But I think that

precisely because nothing broke at 3040 80% 100%, you then had

the rise of this theory called MMT or modern monetary theory,

which said that the debt to GDP debts don’t matter. If you’re

the reserve currency, you can print as much money as you want.

And so people started indulging in this. And so now I actually

think we are at a point I can’t say precisely where it breaks.

But I do think that because debt to GDP didn’t seem to matter for

so long, I actually think we got carried away. And now we’re at

levels which are just going to be ruinous, if for no other

reason than our debt service is going to crowd out. Whether you

want more guns or more butter in our federal budget, if you want

more defense spending, you want more entitlements, you want more

discretionary spending, there’s no question that debt service is

getting bigger and bigger is going to crowd out those

programs, there’s no question we need to spend less, I 100% agree

with you. Okay. But all I’m saying is, we should spend less

on defense, because we have different ways of defending

ourselves. That should be the logical argument for less

energy independence is defense, and a balanced budget could be

defense as well. If you look at the IRA, that was less than a

trillion dollars over a decade. Okay, that has the potential to

shift trillions of dollars a year in defense spending. Yes.

Okay, okay. So let me wrap. Okay, let me wrap here for a

second. Thank you. You can look at these bills in and of

themselves, and try to actually do the right thing. Without

wrapping up all of these random arguments. And I by the way, just

to be clear, I don’t believe in it. Don’t do it. Don’t do it.

The world’s worst moderator. Come on.

Actually, during the Obama presidency, we had a thing

called the sequester. I don’t know if you guys remember this.

Yeah. Republicans and Democrats agreed that basically that

because we had just had like these trillion dollar deficits

because of the 2008 global financial crisis, they got

together and said, Listen, we’re going to hold the line on

spending. And there’ll be no increase on defense spending in

exchange for no increase in discretionary spending social

programs. And for a few years, we held the line on spending

actually. And then of course, both Democrats, Republicans

didn’t want that for different reasons. And the sequester went

away. We need to go back to something like that.

There are two things.

One detail, like when you go and send a bill, so look the way you

pass a bill, right, you have to send it to the CBO to get

scored. One of the things that I learned this week is that

sometimes the CBO and they’re not really empowered to actually

tell you how things get offset. So for example, like if you have

a medicine, what they will do is say, well, we’ll look at at the

population level, how much would this medicine cost if it’s taken

by the population. But if that medicine then all of a sudden

has the potential to actually off ramp you over here, those

savings are not really factored in as well. So David, to your

point, another way that we can refine how we build budgets to

make sure that we’re not overspending is to actually

improve the toolkit and the data that like the CBO is given so

that when they score things, they can actually look at the

total impact. Like for example, like the IRA. Again, one of the

biggest benefits will be to defend spending. If we choose to

make those cuts, you will be able to do it differently once

we have, you know, no reliance on foreign energy.

Okay, to wrap this segment, the first segment, which took 57

minutes. So obviously, really, well, I think it’s an important

discussion. Hey, Jake, how would you vote for DeSantis to be

promises fiscal responsibility?

Well, here’s the thing, I am going to take a look at the

candidates, I’m going to make the best decision in terms of

what I think is that that’s for the country.

Giving no answer to this.

If DeSantis gives you everything you want a fiscal policy, why

wouldn’t you vote for him?

If he stays out if he if he’s in favor of a woman’s right to


for the first 15 weeks, that’s Florida policy. Are you? Yes.

You know, I would take a look. I would take a look.

I honestly would take a look not to vote for him 15 weeks right

to choose, combined with fiscal responsibility.

I I’m voting for a moderate this time. And tax cuts. Okay, but

to wrap up here, the two things that matter, I believe, and

based on our panels discussion, austerity and excellence are

what are going to get us out of this mess. Here’s what the

platform seems to be shaping up our 2024 platform control

spending. Everybody here thinks that’s important. Energy

independence. Everybody here thinks that’s super important.

Stop fighting unnecessary wars, and maybe rethinking our foreign

policy. I think we all agree on that. And the cultural focus on

excellence, not excess. This is shaping up to be a little bit of

an all in platform here. Great discussion, everybody. Speaking

of austerity measures, I think, you know, we should just talk

right, right up top here about what’s going on at Google. Chris

hone, I believe is how you pronounce his name. Chris own,

he sent a letter to Google and Amazon, Amazon today, after

already announcing 10,000 layoffs. They just said again,

and he said, prepare for more layoffs in 2023. And these are

not factory workers. These are white collar, high paying jobs

that are being laid off here. They’re surplus elites, surplus

elites. It is definitely a part of the zeitgeist right now. So

they’re going to reduce headcount massively. But in this

letter to shareholders, he points out, notably, not just

hey, Google needs to do a riff a reduction in force. But he

points out a more granular point that I want the panel to talk

about here, which is, he says, Hey, you need to reduce the

actual salaries at Google, the average salary being $296,000 67%

higher than an incredibly well paying workforce, Microsoft

quote, we acknowledge that alphabet employs some of the

most talented and brightest computer scientists and

engineers. But these represent only a fraction of the employee

base, many employees are performing general sales

marketing and administrative jobs, who should be compensated

in line with other technology companies. And he says we need

to establish an EBITDA margin target, as you can see in this

chart, and reduce the losses on other bets, perhaps increasing

share buybacks as well. So what we’re looking at here. Now after

what an incredible business, my god, I mean, the business is

nuts. freeberg, you worked there, what in this rings true

to you? Or not? And then how many people does Google need to

employ to operate the business and invest in the future of the

business in your mind? They have 187,000 employees at Google.

It’s grown 24.5% rounded up 25% year over year, they grew 25%

year over year in their business. How many people need

to run this business to have it aggressively grow?

Look, I think there are two main drivers of the issue that

Google maybe meta, maybe Twitter, prior to Elon’s

involvement, and really Silicon Valley as a whole, the bigger

companies have faced the first is the war for talent. The war

for talent started, I mentioned this last time around 2004 2005.

Because prior to that, there weren’t as many grads coming out

of undergrad with computer science degrees, right? I think

10% of grads in the Bay Area schools were finishing with

computer science degrees. Today, the number is like 60%. So you

know, around that time, the war for talent led organizations,

particularly Google down a path of offering more perks and

benefits to their employees to create a workplace that was more

competitive. And that ends up being a slippery slope, because

then other organizations try and find parity, and then other

organizations try and overdo it and push it even further. So

this leads to both wage inflation across the, the

ecosystem, but it’s also led to almost like the acceptance or

the allowance for degrees of complacency. And so I’m not

saying that the workforce is all complacent. But I do think that

complacency is forgiven some amount of complacency, I’m going

to take a Friday off, I’m going to take two Fridays off, all of

a sudden, I’m not working any Fridays. The other thing that’s

happened is as this workforce has aged, I worked at Google 20

years ago. And a lot of the folks I work with almost all of

them now have families at the time, everyone was young. And as

the demographics of Silicon Valley has matured, you have

more people that are less about killing themselves and giving

everything that they have to their organization. And they’re

more interested in being with their families and now spending

less time at work, especially in light of the fact that

compensation has ballooned to a point that you can now live a

very, very comfortable lifestyle. And you don’t need to

have a big payday in order to be able to take really good care of

your family, which was the case as a startup. And then the other

issue is just one of innovation. At Google, if you work on a new

project, and it doesn’t work, there’s no loss, you still have

your job. And they’ve started programs, or they’ll give you

equity and new startup ideas, or they’ll give you all this stuff.

So they’ll give you upside, if you win, they’ll give you bonuses

if it succeeds, but there’s no downside. And so the pain and the

burn that you would feel as a startup founder, or as someone

building a new business isn’t experienced or realized. And I

cannot I don’t need to tell you guys this. But for anyone else

that’s listening that may not really be fully aware, the lack

of pain, the lack of risk, the lack of downside, the lack of

having no safety net and, and falling through the pits removes

all so much of the incentive to succeed, and to drive and to

innovate. And I think that’s become part of the complacency

problem. That’s caused larger organizations to simply say,

let’s throw more heads at the problem. And when you just throw

more heads at the problem, you have more of kind of talent war

problem that I mentioned, number one,

what is the average salary? 280,000? 300,000? Rounded up?

Yeah. That doesn’t cloud. I don’t know if that includes

benefits, whatever. Let’s just call it 300,000. Yeah.

And by the way, that doesn’t mean that those people should

all get fired. But I know it speak, it speaks to the fact I

think they’re wonderful people. They’re some of my best friends

work at Google. It’s a great organization. People do

incredible work there. But in terms of return of dollars

invested as a shareholder, that’s the question. That’s the

that’s the analysis. That’s the scope that the shareholder is

looking at is do I want to spend $1 to make $1 five? Or do I only

want to spend $1 where I know I’m going to get $1 80 back. And

so if you just bucketed where the dollars are going, you would

end up saying you know what, I’d rather just focus on the places

where I spend $1 and I get $2 back or $1 80 back. And I don’t

want to do any of the stuff where I spend $1 make $1 five

back. And that’s called ROIC or return on invested capital. And

that includes return on invested human capital. And so the

analyst in the stock that that’s an investor in the stock will

look at it through that lens. Whereas everyone that’s working

there is still contributing meaningfully, they’re still

doing valuable work. But in terms of return on invested

capital, a good chunk of the projects are not driving the

majority of the value, a minority of the projects and

minority of the headcount is driving almost all the value.

I mean, if you sensitize that to what you said, David, a, if it

was just 75, or a half that number, then, you know, the

stock goes up 35% overnight. And if it goes up to the full

number, yep, the stock goes up 65% overnight.

I think that’s totally feasible. And then and then I think what

you do is you take $10 billion a year, and you have a high

accountability model that you speak to the street about. And

you say, here’s how we’re going to hold ourselves accountable

to investing the $10 billion every year, and not just have

everything be a nebulous 15 year project. And then it’s always a

15 year project. And you’re always just burning cash to go

after those projects that are highly nebulous.

If you had to steel man the other side, I think the

argument would be I would say they would make probably three

arguments. Argument number one is like, look, don’t get overly

distracted by other bets, because it’s a small category of

spend. And we’ve contained that cost pretty rationally, relative

to the rest of the core business. The second thing that

they would probably say is, there’s an enormous amount of

work that is never seen by Wall Street that explains how good

our services, whether that’s, you know, in early iterations of,

you know, technical capability, like GFS, and Bigtable to things

like TPU, to things like TensorFlow. And all of that

builds up all the things that DeepMind does all the compute we

have to throw against search to support that. So I think they

would probably say, well, people probably don’t have a

great sense of today, that it’s not just 25% of the team that’s

required. And then the third thing is what they would

probably say is, it’s very hard to explain, but Google has all

kinds of other things that they do for free, to create the

ecosystem so that the internet works well. You know, I heard

this one thing where somebody was explaining that Google is

like, you know, the DNS server, right? Google is the time

server, and all of this stuff they do for free. And all of it

is just about making the internet work more efficiently.

And that has some cost. So that’s probably how they would

steel man how to build back up to some number. But it’s

probably there’s still a gap between that number, David, and

what the prevailing headcount is.

Yeah, I think I think that’s, that’s totally true. Because the

infrastructure team led by ours is the most remarkable

engineering organization on planet Earth, in my opinion. And

they have laid fiber lines across the Atlantic, they have

built their own data center infrastructure, their own

switches, their own silicon, like everything is built by this

team from the ground up from first principles, and it gives

extraordinary moats and advantages to the business, it

makes the internet a better place, it allows, you know,

ultra fast, super cheap YouTube video viewing across the

internet. I mean, there’s just so much of these core advantages

in the business. But if you look at the headcount over time, you

have to ask yourself the question, you know, how many of

these investments that are core, are really, you know, captured

in the headcount that blossomed from 2013 47,000 people so that

the business has gone up in headcount by four x in the last

nine years, one of the things that Jeff Bezos was always so

incredible at, and I saw him give a speech on this at one

point, Bezos gave a speech that I saw and he said, we are really

good at failing. And he showed all these projects that Amazon

tried. And he said, we tried a nine, we tried to do our own

search, we tried to build our own cell phone, the fire phone,

we tried to do this, we tried to do that. When they don’t work,

we kill them. And when they did work, they became 100 multi

hundred billion dollar enterprise value craters for

them, like AWS, which was one of these projects. And so Amazon

was so good at taking the stuff that wasn’t working, knowing

when it wasn’t working and ending it. And they were still

able to drive an innovation engine. One of the challenges I

see with alphabet is that they are so good at bringing the best

talent to work on these innovation problems. But where

they’re not good is saying, you know what, this isn’t working,

it’s time to move on. And if they did just that, if they

added that one disciplinary capability, then I think this,

as you said, the market cap would go up by $600 billion.

What about this? I just want your reaction to this thing that

a lot of people whisper in Silicon Valley, which is part of

what the big companies should do. It’s part of the positive

game theory is to not let these talented people actually leave,

it’s better to pay them 300,000 or 200,000 or whatever and stay

at Microsoft and meta. And Google or whatnot, then go off

and start up, build a startup that could actually then disrupt

them. And so you know, it’s it’s a cost worth bearing, because

it’s actually mitigating strategy as it’s a blocker

strategy. Yeah. But what do you think about that? super

interesting idea. I think that the people that are likely going

to actually be able to execute on that are going to leave and

do it anyway. Right? They’re surely aggressive entrepreneurs

are not going to look I was not super I had made a little money

when I worked at Google. But I was not super wealthy. And I

left the last the vast majority of my stock options and RSUs on

the table when I left Google in 2006. Here’s our climate core

because I could not help but do that. I could not help myself. I

had to go do that thing. Of course, I think the kinds of

people that are going to succeed in entrepreneurism cannot help

themselves. It doesn’t matter how much money is being thrown

at them. Here’s the chart. Basically, these companies have

been correlating their spend, and their headcount to their

revenue, not what’s necessary. You look at alphabet total

employee changes 2018 95.36%. I mean, I don’t know that looks

pretty good to revenue 132%. It doesn’t look like they were

massively overhiring. If you ask me, totally, totally. So what

are you guys talking about? So maybe I’m wrong. I will say

look, a big part of Larry pages decision to shift the company

from Google to alphabet was he believed that the core business

at some point would ultimately be disrupted that the core

advertising engine was going to be disrupted. And there wasn’t

going to be the sustaining long term growth advantage in that

business. Maybe he’s been disproven, or maybe the it

hasn’t been just it hasn’t been proven yet. But the concept was

we need to find the next Google, and we need to build the next

Google. And so we want to allocate capital within a

portfolio of bets, and have some number of those things, maybe

not all of them, maybe not even a lot of them, maybe just one or

two of them turn into the next $100 billion revenue line for

us. Now, he always said that that’s going to take a long

time, he definitely underestimated the quality of

Google search and the dominance of it. Now, it’s probably it

probably stands to reason that if we have enough innovation at

the fundamental model level in AI, particularly like a bunch of

really powerful multimodal models, the new form of search

can disrupt Google. But the problem is, they are so ahead of

everybody else with respect to those models as well. So the

real question is, even that next big leapfrog isn’t going to

happen without billions of dollars of capital invested. And

you know, the most likely folks that are able to do it, I think

open AI at some level, but again, they’re going to always

have to raise money from other folks. Google can self fund it,

and it makes an enormous amount of sense to drive that

technical moat. So it just seems like Larry, what are we

think is going to happen here? Any? Are they going to make the

cuts or not? You think they’ll make to have the ability to not

make cuts and just ignore a 6% shareholder Chamath? Or are

they just going to make them and then we’re going to go on to

your dynamic will be how much Ruth is able to convict Ruth

Porat is the CFO. And she’s hardcore. She’s hardcore. She’s

incredibly everyone on that leadership team is incredibly

impressive. But she has a very particular lens, a Wall Street

lens, and she understands what the shareholders are thinking

and looking at. And she will convey these points to the

board. And, and there will be engineers and Sundar is an

engineer, and he will, and he’s a very good, he’s very good at

gathering the different points of view and having balance

around this. And he will share his points of view with the

board. And I think ultimately, it will come down to, my guess

is like we just talked about some portfolio allocation

decisions, which is how much risk and how much beta how much

alpha? And do we have the right mix in our portfolio? And it is

inevitable, there’s going to be some cutting. So I think that

there will likely be some reduction.

5% 10% tank 10,000 employees. That seems like the number that

people are going with.

Yeah, yeah, let’s see.

I guess. Okay, sacks. What is your take on austerity measures

and moving to an age of excellence and efficiency, which

is happening inside of the tech industry as we speak?

I think freeberg’s right that these companies could operate a

lot more efficiently. I think there’s an economic argument

there. But I want to up level it and talk about the cultural

aspect of this for a second. And also bring in two of the huge

stories this week, the, the SPF story, the interviews he did

with the New York Times and Vox, and then this hysteria around

well, you know, what’s happening at Twitter. Look, I think that

there’s something clearly has hit a nerve here in this last

week, where you have all of these employees who have

voluntarily left, creating all of this drama. And, you know,

Antonio Garcia Martinez had a good quote about this. He said,

What Elon is doing is a revolt by entrepreneurial capital

against the professional managerial class regime that

otherwise everywhere dominates. And that same PMC, which includes

the media is treating it as an act of last measure state.

There’s another version of this that came out a couple weeks

ago. And by the way, let’s mess just a just means like you’re

insulting the monarch, the

insulting the crown. There was a good one here. There’s an

article on compact magazine, a couple weeks ago, where the

editor Jeff Schellenberger tweeted, the layoffs at Twitter

are no different than what’s happening across Silicon Valley.

But because the ideological antagonism of the professional

left Musk, they make clear what’s at stake, the collapse

of a jobs program for surplus elites. And then. And then

there’s a great quote from this article, which again, that’s

so hard hitting. I know. It’s no, it’s a deep nerve. I’ll get

into one differently. Yeah, exactly. So a quote from this

article said, one of the biggest and least talked about social

questions in the West is how to economically provide for our own

modern version of Francis impecunious nobles. That is how

to prop up high status people who can’t really do much

economically productive work. Wow. I mean, like, this was

brutal. Yeah. Yeah. So I think this is really hitting a nerve

because the fundamental quid pro quo of our civilization is that

in order to achieve economic and social advancement, you go to

college and get a degree and you submit to voluntary re

education of yourself at one of these woke madrasas, one of

these re education camps, that’s a good pro quo. You get some

did your punch up guy write that intro? No, this is this is what

I believe for a while now. There are some number of people who

get useful degrees like computer science or engineering, but huge

numbers of people get degrees in like we talked about the basket

weaving or whatever the politically correct degree is

because you’re and they graduate with a quarter million dollars

in debt and no marketable skills, right? And right. And

what was propping up all of these people were these

fantastically wealthy monopolies, tech companies that

were hiring huge numbers of these people. Now, all of a

sudden, we get to a point where we’re in an economic recession.

And these companies are starting to do layoffs, and they’re

starting to do a little bit more soul searching about who’s

really adding value. And people are starting to get laid off.

And I think this hysteria is coming from a place of deep

insecurity. You had all these people go to college, they did

not learn critical thinking skills. What they learned was

that, listen, if we pay lip service to the right platitudes,

then we will have career advancement. And now they’re

learning that that may not be true. And actually, the person

who’s pulled the mask off this entire regime is not other than

SPF. And he did it in an interview with Vox, and we have

to go to this, okay. He said, Yeah, he’s the devil. But he

basically pulled the mask off this whole civilizational

quiproquo that is a sham. Okay. And here’s what he said, that

the Vox reporter said you were really good about talking about

ethics for someone who kind of saw it all as a game with

winners and losers. What did SPF said? Yeah, he he, I had to be

is what reputations are made of to some extent. I feel bad for

those who get fucked by it. Basically, all these people who

incurred a quarter million dollars in debt and think they

can just spouse the right platitudes. He says, by this

dumb game, we woke Westerners play where we say all the right

so everyone likes us. How stupid does the New York Times feel

right now? How stupid do all these nonprofits and

foundations who received all this money from SPF, he played

them, all he had to do was say the right words that say the

magic woke words, and they would basically cover for the most

enormous grift that’s ever been perpetrated. That is basically

the quiproquo of our civilization is be woke and you

will have indefinite career opportunities, no matter how

virtuous signaling would be another way to say it. I mean,

it doesn’t necessarily have to be the work woke ideology, but

virtue signal and give donations to people. This has been a

playbook of grifters for a long time. Bernie Madoff gave a ton

of, you know, donations, and he used the same donations that he

gives the Republican Party. None. They’re not part of the

regime. How many how many conservative? Yeah, I’m not sure

this is a poll. I don’t know that this is right. I’m not

making a political point. I’m making a cultural point. Okay,

good. Who were the charities that he donated to? It was all

the right what causes not, you know, it was not a demic one was

not woke. He was passionate about the pandemic stuff. Are

you kidding me? freaking out about the pandemic? No, no, he

wanted a pandemic. As he explained it to me, the

neurosis, it was the No, no, that was not what he was funding

sex. I actually talked to him about this when I interviewed

him. He said he wanted to do pandemic prevention and early

warning systems and wanted to invest in strategies to fight

the next. And definitely freaking out about COVID is was

essential neurosis of the professional managerial class

for the last couple of years. It is. But that’s not what he was

funding. I just want to make that point. Yeah. Whatever. I

mean, he wanted to prevention. I mean, you can frame it as not

but I actually literally talked to him about it. He wanted to

do pandemic prevention in the future. He wanted to steal

money from California taxpayers via ballot initiative to fund

his brother’s organization, which would have dispersed the

money in who knows what ways, probably not legitimate, out of

a professed concern about the next pandemic. Why? Because the

PMC is neurotic about the last pandemic. Come on. This is

to them. I understand. Of course. Yes, thank you. It’s

pandering. It’s absolutely pandering. Now listen, why?

Well, hold on a second. Why did this work? Why did this work

virtue signaling work? And again, why were they only

charities and causes that appeal to the sort of the left is

because they’re the ones with the power in our society and in

our culture to define what virtue is. When you’re virtue

signaling, who are you signaling to the people with the power to

decide what is virtue? And what is vice, right? That is why

people go to work at the New York Times, that is why they

basically go into, you know, all these influential jobs at

nonprofits and foundations. They’re the ones deciding what

virtue is. They’re the dupes are the ones who are fooled. And

now what’s happening is there’s an economic consequence to it,

which is, it is coming out, these people have no marketable

skills, and companies are tightening their belts. And now

all of a sudden, they’re starting to become deeply

insecure about their own future.

My comment is that, you know, when you look at Twitter, as an

example, Bill Gurley had a really powerful quote as well,

which is when companies cut, you know, they don’t cut nearly

enough, and they and they miss estimate and underestimate how

resilient to company is back in, you know, Twitter had 200

million ma you, they had only 1000 employees. And so clearly,

at that point, they knew what they were doing. And now the

business has, you know, increased in ma you by call it

50% to 300 million. But the employee base increased by seven

and a half x. So clearly, something is misaligned. And I

think the thing that, you know, people are going to find out is

all the way with contractors, probably 12 x, right. So I think

that, well, there you go. So I think that the thing that

frustrates a lot of folks that are leaving or that are trying

to throw bombs is they don’t want Elon to be right. Because I

think to David’s point, if Elon is successful, he has uncovered

this very uncomfortable truth that was frankly hiding in plain

sight, which is that many of these technology companies using

technology, get so much operational leverage, that they

have some enormous efficiencies. And then it’s only a decision

by the professional managerial class to reward themselves with

fiefdoms, and kingdoms of employees. And you know, the

surfs that work for them. I mean, it’s really quite crazy if

you think about it.

Well, freeberg made this, you know, early on in the history of

this podcast. Well, hold on, I’m going to add to your position.

freeberg said something that adds to your position, which is

early in this podcast, he said the nature of organizations is

they want to grow. And that’s government or even these

departments you’re talking about. Anybody who runs a

department is never going to say my department needs to be 20%

less. So we can hit the bottom line, they’re gonna say give me

20% more because everybody else is getting 20%. Go ahead.

And then if you if you if you layer in the Charlie Munger

quote, show me the incentive, and I’ll show you the outcome.

You can understand why because the professional managerial

class is rewarded by compensation that is actually

independent of dilution. Right? Because if you look at these

compensation plans, all of these professional stock owners, they

complain all the time about stock based comp, right. And

these companies have budgets between two and 5% a year that

they give away. And so you have this situation where an

engineer or an engineering manager or a sales manager or a

marketing manager, in success at 1000 people can grow to 5000 or

10,000, their compensation doesn’t change in any other

organization, their compensation would change

because let’s say that it’s a percentage of the profits that

are distributed, unless the company is phenomenally growing.

Eventually, you’ll see it in the bottom line of what you take

home. And so these folks are incentivized to have these

status signals of value. I have a 50 you know, you guys have

heard this. I have a 50 person team. I oversee 3500 employees

and you and everybody is conditioned to think, oh my god,

that’s incredible, you must be really important. And so we’re

going to sort of now see in real time, a questioning of that

belief system. And if Elon proves to be right, it’s a

really important decision point for a lot of other technology

companies, because if you are an 80 to 90% gross margin business

built on software, maybe you have a bigger responsibility

than you’ve discovered to date to your shareholders and to the

existing employees to find the efficient rate of return, right?

What is the efficient frontier of headcount? The other thing is,

it now allows let’s just say that now Twitter goes to making

up a number 2000 employees after this whole Google Form thing.

The great thing about the 2001st employee for the 2000 employees

and for the shareholders is that that 2001st new employee is 100%

aligned because they’re coming into something eyes wide open.

And I think that that’s also an interesting thing that isn’t

getting enough recognition is he’s putting out there what he

stands for this hardcore culture, irrespective of whether

we think it’s right or wrong, all the people that stay are

voting that it’s right. And you know, as long as it’s not

breaking any laws, he’s allowed to do that. And so if people now

want to join that organization, they should be allowed to do

that too, just like the people who don’t want to should be

allowed to leave sacks, you and I came up and we talked about

this, I think on last week’s show, or maybe it was two weeks

ago, we talked about what the expectation was in Silicon

Valley at a startup, what startup culture was, in terms of

just the effort that was required to build a winning

company. And we all said 60 hours a week was the baseline.

That’s something that, you know, has been I think a lot of

people, you mentioned this trim off people working two jobs for

30 hours a week and taking two salaries from two of the fine


10 episodes, go into tick tock, and search for, you know,

engineering salaries, you’ll see some of the craziest tick

tocks, kids are making 350 k, working 30 hours a week, it’s

nuts. Yeah.

And so I think we’re gonna have is a I think we’re gonna have a

cultural divide here, there are going to be a series of

companies that say this is classic Silicon Valley, we’re

gonna we’re gonna crush it, we’re gonna work aggressively,

we’re gonna put in 50 6070 hours a week, and we’re all going to

benefit from that. And then there’ll be another class of

companies that says, Hey, no, we want to have a more lifestyle

business. And if people want to work 3040 hours a week, and they

contribute, we don’t need to be perfectly efficient. And you

know what, the playing field of the playing field of capitalism

will show who is right sex.

Yeah, I mean, look, I actually went out of town a few days ago.

So I wasn’t keeping up with, you know, every detail of what was

happening at Twitter. And I started getting all these text

messages about how Twitter was dead or dying or whatever, like

the site had been unplugged, or what have you. And I’m like,

what is going on? And you know, you tweeted this morning, hey,

is this working? And I’m like, yeah, like, like, yes, it’s

working. Like, and this morning, is this working? And so what my

tweet went through? Yeah. So I came to learn what they’re

talking about is that all Ilan did was give a voluntary offer

that if you didn’t want to stay, you could take three months

severance. Now, remember, last week, they had a riff, you know,

which was basically economically required, in which they gave

employees three months severance, which is 50% more

than what he had to it was generous. Now, it seems to me

that what if you’re one of the employees in the other half that

made the cut, but yet you’re not really motivated to stay. And

maybe you don’t really want to operate like a startup. I mean,

Elon’s basically saying we’re going to go back to working and

operating like a startup. That means that you might have to

work nights and weekends like a startup. What if that’s not what

you signed up for? You may be sitting there at Twitter saying,

Oh, man, I wish I gotten riff. Well, now Elon is offering you

the opportunity to take the same package. So I’m like, how

can this possibly be a bad thing? It’s actually the great

management technique that Tony Shay rest in peace from Zappos

created, he would say when people went through their first

couple of months of training, he’d say, Now, if you don’t want

this job, I will pay you a month’s salary. This is on their

first day after they went through training their first like

day on the job. He said, Okay, now that you’ve gone through the

training, I’ll pay you I think it was $5,000 or $3,000 to not

take the job. And something like one out of five people

would do it. And so he said, Listen, I don’t have to fire

them later on, this is going to make my management easier. It

was, it’s, it is actually a kind thing to do to give people the

opportunity to leave

and how giving employees an option to opt out.

The reason people are upset, let’s be honest, sacks, is some

people, you know, live to work, and some people work to live and

the people who are working to live, find it crazy that hustle

culture even exists. And people who are part of hustle culture,

like the four people in this podcast,

find it crazy. It’s just working.

hustle culture is working above the hours you’re being paid for.

That’s, that’s basically what hustle culture. That’s how most

people would define it.

A salary is actually not you work for 40 hours, a salary

means you get your job done.

Okay, that’s how we look at it. That is not how other people

look at it. Oh, my God.

There’s no question that Elon is going to raise

if we lose American primacy. It’s because of that. Not

because I agree with you. I’m just giving the other side. I’m

still made on the other side. People look at their salary. And

they look at themselves as getting compensated for 40 hours

in every hour above that. But do you know, this generation’s mind

looks as hustle culture. There are people that are not agreeing

with it. There are people that are working 60 7080 hours a week

as a teacher to make 3040 k firefighters, you know, working

on oil rigs and to hear somebody like hustle culture at a

startup where you’re making 350 grand and you’re upset because

like the matcha lot ran out or whatever. It’s just so out of

touch. I’m not disagreeing.

Yeah, look, my view on it is that people need to love their

jobs and love what they’re working on. Because I think the

only way to be successful is to work hard. But the only way to

work hard and be happy is to really love what you’re doing.

And if there’s a lot of people at this company or others who

don’t really love it, and they are just there to pay the bills

or whatever, then I actually think it’s extremely generous

for Elon to be offering them a package, the right thing to do.

I don’t understand how giving them an option was anything but

positive. And yet the media has gone berserk on it. Meanwhile,

while giving SBS a virtual pass on the largest one of the

largest frauds in history and made off level fraud. You read

a legend. No, there’s no alleged dude. It’s come out. He loaned

himself like this is just one data point. He loaned himself a

billion dollars. And he loaned the head of engineering $500

million off the balance sheet. Nothing to see here. What

possible justification? And you know, an SBF interview reason

to say the word to say the hard part out loud. The reason why

these same publications are not covering this is because they

were complicit in his reputation laundering. Yes, the New York

Times before that article put out this other puff piece where

they talked to him. And they were excoriated on Twitter

because it was like not a single question about the fraud, or

alleged fraud, alleged, alleged fraud, allegedly, obviously,

allegedly slash obviously, billion dollars suddenly goes

missing and no one knows where it is. I’m willing just to call

that a fraud. You’re willing to jump the fence. They’re busy

scrambling to sort of save their own reputations, which is why

they are trying to like, hide the cheese effectively and point

over here and say, Hey, look at what’s happening. Elon sent an

email worth only one button. Yes. I mean, let’s be

intellectually honest.

I love that meme that Elon tweeted out. Do you see the two


You know, this is all gonna get reblogged.

It’s too funny. It’s too funny. It’s too good. It’s too good to

not put up on the screen. I mean, that’s that nature

photographer is the New York Times. It’s

okay. Yeah, we don’t see it. There are two rhinos. They’re

fornicating copier and copier. Yeah, they don’t know what

formulating is like it’s to 2000 pound animals. populating doggy

style 10 feet behind a nature. It’s your mom. Behind I’m trying

to be the world’s major photographer, a nature

photographer with a $6,000 tele you know, photo lens that

cameras. But he’s 10 feet behind him are the two rhinos. The two

rhinos that says FT x losing over a billion dollars of

client funds. And the the photographer is centers calling

for the FTC to investigate.

The important thing is the photographer is pointing in

completely the wrong direction. You’re wrong.

The thing that is obviously right in front of his face,

right that he should be photographing. Yes, he’s using

that long telephone. And that is that is the New York Times that

Warren, that’s the point. See,

it’s the arrow in the right direction. Yes, point the camera

in the right direction is the point. I just want to point out

my one biology tweet on this in this regard. Oh, God. He’s not

capable of one tweet. That’s gonna be 76 tweets in a store.

I’m gonna pluck your eyes. But it’s a really good one.

He says, think of a regulator as a binary classifier. What’s our

false positive and false negative rate? btf Bitcoin ETF

block for years, FT x ignored for years. The actual filter is

not. Is this a scam? The actual filter is? Is this a scam? Who

spicy? It’s not consumer protection. It’s reelection.

Young Spielberg make a banger out of that. It is a banger.

It’s not consumer protection. It’s real. Listen, if you are

part of these interlocking power structures that we call the

regime, it’s the New York Times, it’s the regulatory state. It’s

a democratic party. You get a big public and hold on, let’s be

clear. Your, your team now controls the house. And so

who’s team? David? Oh, David’s team. David. Yeah, I understand.

But starting in January, you know, there’s any amount of

congressional oversight.

No, no, hold on a second. Let me say this right now. The first

investigation by the House of Representatives needs to be SPF

and FTX, not Hunter Biden. SPF makes Hunter Biden look like a

piker. I mean, yeah, you know, Hunter Biden was what a couple

million dollars of grift. This is $10 billion plus a grift. So I

think it also touches regulators, it could touch, you

know, it’s a big, it’s a big failure. It’s a party. So let’s

be honest here. I mean, that is the issue. I just think the

quote of the week goes to John Jay Ray. He’s FTX his new CEO,

he famously oversaw the liquidation of Enron. And he

says, I have over 40 years of legal and restructuring

experience. I have been the chief restructuring officer and

or chief executive officer in several of the largest corporate

failures in history. I have supervised situations involving

allegations of criminal activity and malfeasance and run. Nearly

every situation in which I have been involved has been

characterized by deficits of some sort in internal controls,

regulatory compliance, human resource and system integrity.

Never in my career. Have I seen such a complete failure of

corporate controls and such a complete absence of trustworthy

financial information as occurred here. This is the

person who oversaw Enron saying this is unprecedented. Enron was

the previous unprecedented situation, which is now being

framed as manageable by none other than john j. Ray, what a

great name. Congratulations on being the chief restructuring

officer of FTX. There was an article that showed Nick, if you

could please throw the picture up on the screen of, of all the

people that invested the universe of SPF. And oh my god,

what and they and the article headline was it’s a who’s who of

VC and my comment is actually no, this list is a who’s who of

people who did no diligence. Yeah. So ever. And I just want to

call one person, Nick, if you look at the Alameda research,

this, this firm called one inch, J Cal invested in a firm named

after the length of his penis.

Maybe coming out of the cold plunge. Okay, but you’re that

cold plunge this shrinkage. You know, this shrinkage was that an

listen, I’m a show or not. I’m a grower, not a shower. All right,

listen, you guys coming out. Everybody knows coming out of

the cold plunge. It’s it’s not going to be the best performance

for any of us.

We’ve lost the script on the show. Please, we got a wrap. I

mean, it’s just too much.

Do you guys not think that all these investors receive audited

financials? And no, you know, they got they had a lawyer, a

legal firm that represented these financials.

Did you guys see who FTX is auditing firm was it’s called

Frager Metis. And that says it’s based in the metaverse. This is

like the Hollywood upstairs Medical College of the auditing


Their address is in decentral and Bernie Madoff. I think his

brother in law ran the accounting firm that did their

audits, right? It was like, and it was on a dead floor in the

lipstick building. It was in the same building, right?

On the lipstick building to have like a secret floor with nobody

on it.

Look, I mean, even in that case, people relied on an audit from a

CPA that said here are the numbers. And those numbers were

fraudulently conveyed. And I think that there’s probably some

you know, some forgiveness necessary here that there was

maybe there may have been serious fraud that took place.

And I don’t want to be too disparaging of all the people

that we bring on this that work at these investment firms made

an investment and they all got duped and the LPs got duped. And

so I don’t think this is just fundamentally like a failure of

diligence. So we we we were part of the process where they tried

to show I have to be careful. My lawyers reminded me that we’re

still under NDA actually with FTX. So but what I can tell you

is we did not get any financials. So we were verbally

going on when you ask for it when you

we sent a two pager of stuff. Anyways, I can’t say more than

that. But yeah, don’t get yourself in trouble. Oh, I want

to I want to say something else, by the way. Last Friday. David

and I were at Yuri Milner’s birthday party. And there was a

chess tournament. And Magnus Carlsen was there. And anyways,

David was in the finals. Okay, it was David and his partner

look at the smile on David versus versus Matt. Hold on.

Wait, I’m getting to a great punch line versus Magnus

Carlsen and his partner. David won. Wow. My partner was was

should I say Yuri’s daughter who I think is probably what like

10 years old. She’s incredible. Yeah, she’s like second in

America. Yeah, she’s good. She’s good. She’s incredible. Anyway,

yeah, thank you to Yuri. That was a really unique partner

chess. My partner was Prajna Nanda, who’s an Indian

grandmaster who’s like a superstar. Yeah. And look

playing, you know, with Magnus Carlsen was obviously that was a

real thrill. Yeah, there you go.

So when you rank this with the birth of your children, your

marriage, and this, where would that rank on the scale of one

through five? This is for your poor kids. But you know what,

speaking of the pause, Zach is happy. Oh my god, I haven’t seen

him that happy since Trump won. Guys, look at look at that

document I just sent you before we can wrap this up. But I want

to show you this. Basically, I pulled all IPOs since 2020. So

this excludes all SPAC mergers, and real estate finance material

energy utilities are kind of the big bulky private equity type

stuff. So it’s mostly tech consumer 627 IPO since 2020.

More than half of them are basically half of them are

trading at less at point two times the total cash they’ve

burned. So they’re, you know, you can kind of look at total

lifetime capital burned by these companies in the retained

earnings line on the balance sheet. And so when you pull out

the retained earnings, it shows you right how much money they’ve

burnt over their lifetime. And so the total money burnt by half

of these companies is about $107 billion. And the market cap of

those companies is only $26 billion in aggregate. So a point

two times return on capital invested to date in terms of

enterprise value, divided by total capital invested in. Let

me say let me say it in English. And you tell me if I said it

right. So 627, non SPAC, non real estate, non finance

companies went public. So basically 627 startups companies

went public since 2020. So two years. Yep. And of those 627

tech companies, almost half or 300 of them 48% of them are

today worth about point two times all the money that went

into them. Yep. My gosh, wow. Yep. And then on the other half,

the other half is, is the ones that have worked. So this kind

of goes back to a power law point. But like as a venture

industry, you think once you get a company public, it’s

successful. And the reality is that many of these companies

from a from an economic perspective, are still not

successful. It looks like half and perhaps much more if you

include all the SPAC mergers, which is another couple 100. And

I would guess the vast majority of those meet this criteria are

trading at less than the total cash that’s been invested in


freeberg. This speaks to the age of excess that we just went

through. We just weren’t as efficient as we needed to be in

running these companies. And now we’re in the age of efficiency,

austerity, excellence. But it’s this great setup for a rebound,

isn’t it freeberg? Like, I don’t know these

look, I mean, one way to read this, I was speaking with

someone who I you can bleep him out. I was talking with two

weeks ago, three weeks ago, and he showed me in there. How much

should I say here, this is a big investment firm, and they have a

big growth portfolio, less than they have about 160 investments,

180 investments in their growth portfolio. 85% of the returns

are generated by 10 companies of the 180. And that’s in the

growth portfolio. These are supposedly de risk businesses

power exists, even in our law exists in growth. And as you can

see here, the power law exists quite dramatically post IPO, as

well. So you know, as you can see here, only 9% of these

businesses have generated positive earnings over time. 43%

about half of them are worth more than the total cash that’s

been invested in them. And that multiple production board study

here, by the way, this is your done by your family. Yeah, yeah,

it’s all public data. So the, the multiple on the value of the

companies that are worth more than their cash invested is 5.5

times. So in aggregate, IPO since 2020, are worth 4.3 times

the total cash that’s been invested in them over their

lifetime. But the crazy statistic is half of them are

worth significantly less than the cash that’s been invested in

them only point two times. So the power law dominates both

early growth and clearly being public. But I think to your

point, Jake, how it also seriously speaks to the amount

of excess and it’s really going to rationalize probably based on

the conversations we had today about Twitter, meta, Google,

Amazon, Amazon, and this as well. So certainly, also the

good news here is freeberg and correct me if I’m wrong here,

Jamal, we want more companies to go public and have that

discipline of being a public company. This was the big

critique of this quiet era of companies taking 1012 14 years

to go public. This is going to be a strength for these

entrepreneurs to have to fight it out in the public market

under scrutiny. Correct?

100% I think like the Chris home letter, I think that there are a

lot of VCs on boards of companies who would love to say

the equivalent thing to their private private company. And

part of the the dynamics as as freebird just said, because

it’s such a power law and people believe that, you know, you

being with other VCs are really important. It turns out that

most of these VCs abandoned their role on these boards and

don’t really hold people accountable because they’re

worried it will affect their deal flow. So the problem is

it’s a negative reflexive loop. It’s but so these companies do

poorly. And then as a result, they’re viewed as not an

effective board member. And so the next deal they get is a poor

and poor quality. So the highly correlated portfolios in

Silicon Valley are the ones that will get torched because most of

those companies will receive very poor or no advice. And then

the few that will get to the end is because they have hard nosed

people on the board that will force them to make really hard

decisions. Yeah, that’s it.

sacks. Any thoughts here on the public markets?

Oh, sorry. Wait, last thing. And by the way, Sequoia, who has had

exceptional returns has always been known to be hard nosed. You

know, a lot of people that critique against Sequoia from

founders, which would be that, oh, if I take Sequoia’s money,

they may fire me. Well, yeah, because if you’re not good,

it’s the mission of the business is bigger than your ability to

be the CEO. And so, you know, you just have to remember, like,

there is no free lunch, we were not giving out free money here.

For you pendulum swung one direction too far. They used to

the tradition Silicon Valley used to be you always replace

the CEOs, the founders, the founders with a professional CEO

and Google being the turning point there, or maybe the last

one. And then it became founders will control their companies

with super voting shares forever. Hopefully, the pendulum

now swings to some equilibrium sex. What are you seeing in

private markets? The program for surplus elites is going away.

managerial classes under pressure. Yes, that’s for sure.

If you went woke, you may go broke because you have no

marketable skills.

Man, you’re a bunch of

somebody in the room with a bunch of guy Dean’s

I think he’s got somebody

myself up.

Who Jackie the joke like Jackie the joke man Marling handing you

little notes.

All right for the Sultan of science, David Friedberg and also

the executive producer of all in summit 2023. And the rain man

himself, chess master and champion, David Sachs, as well as

the dictator, I’m going to go on a little road trip. Aren’t we

dictator a little road trip for the dictator and Jake out? Yeah,

it’s gonna be fun. I am the world’s greatest moderator who

couldn’t control the panel today. I’ll do better next week.

And we’ll see you next time.

In podcast. Happy Thanksgiving.

Let your winners ride.

Rain Man David

we open source it to the fans and they’ve just gone crazy.

Love you.

What your winners ride.

Besties are gone.

That is my dog taking a notice 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.

What you’re about to be

waiting to get

I’m going

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