All-In with Chamath, Jason, Sacks & Friedberg - E108: Doxing debate, Nuclear fusion breakthrough, state of the markets & more

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Captain Calacanis is here reporting for duty with a Spirit Airlines cap.

Absolutely Spirit Airlines.

I just want to say all in podcast now sponsored by Moncler and Spirit

Airlines or now sponsored by the village people.


Are you a pilot or a flight attendant?



He’s a flight attendant.

I don’t think he’s thin enough to be a flight attendant.

Are you fat shaming me?

Are you body?

You can’t do that nowadays.

I’ll get you canceled.

Getting sacks canceled at this point like fat shaming would be number

72 on the list.

He can’t get canceled because all the libs have left Twitter.

There’s nobody to there’s no home monitors left.

They all pretend.

No, they quit every week.

It’s like all the libs you said they moved to Canada when Trump got


Yeah, Canada immigration.

Go ahead.

And they’ve just gone crazy.

A hacker figured out a way to take all this data and track, you know,

people’s yachts people’s planes.

Obviously, one of those people was Elon.

Elon had a security issue.

This is all public information.

So the larger issue at stake here is.

The fact that the law allows for people to do this persistent tracking

of planes, which then becomes persistent tracking of a person.

And what really is at stake here is how we define the term doxing for

people who don’t know the term doxing.

It means giving a person’s location that could be your home that could

also be your at a location for some period of time.

You’re you’re at a hotel, you know for a basketball game and it’s pretty


You can take a picture of a celebrity say there’s a celebrity here.

Oh Lady Gaga’s at the farmers market what I object to here.

We all understand doxing is dangerous and it in fact is against the law

to just give people’s addresses and stuff like that.

The issue here is a new type of doxing which I’ll call, you know,

persistent coordinated doxing where dozens of times a month you’re

giving a person’s location.

It may not be against the First Amendment sacks.

I think you would agree, but we have to ask ourselves do we want to

live in a world where whether a person’s on an electric bicycle or an

airplane or any device in between somebody should be releasing dozens

of times a month a specific dedicated feet of their location.

It is terrorizing as a parent when this happens.

I’ve had doxing people on the call here have had various security


We don’t want to live in a world with de facto doxing what these sites

were doing was de facto doxing.

I think it was a bad decision and I think that it represented you on

the least generous statement would be that it represents deep hypocrisy

in that not just a few weeks ago.

Did he say he would never delete that account?

But he also said he was buying Twitter to enable freedom of speech and

freedom of expression and that he wouldn’t come in and do the same sort

of content moderation that was done by the old regime and then he came

in and did exactly what the old regime did, which is that he took the

rules and he took the quote moderation policies and he found a way to

use them to make some editorialized decisions that he thought was


Now, the more generous thing is what you guys are saying, which I don’t

think is necessarily wrong, which is that he’s trying to protect people

where there’s some loophole or some law that doesn’t seem right morally,

but it is the law and it is what it is.

In those cases, I think you run into the exact same issue that the old

guard at Twitter had that the moderators and the executives at YouTube

have dealt with and that the executives at Google have dealt with and

that we sit here and we criticize until you’re on that side of the

table and you’re forced to make these moderation decisions.

You’re forced to make these policy decisions and you’re forced to

implement these policy decisions because of some moral framework that

you now think is appropriate.

And guess what?

Some people will say that’s not freedom of expression.

That’s not freedom of speech.

You’re taking that away from some people.

You’re taking this particular case away from a 15 or 16 year old kid

who’s built a Twitter feed.

And so I think what it shows is just how hard it is to moderate these

sites, these platforms, and that there is no simple, easy, idealistic

ideologue of, hey, all these things are open.

All these things can be used by anyone all the time, because as soon as

one of these edge cases start to happen, you want to come in and do

something about it.

Shamath, what do you think?

What should happen going forward?

So I have had these issues happen to me multiple times.

I’m not nearly as important as Elon is, but it feels the same when you’re

in the middle of it.

It feels pretty terrorizing.

That being said, I think the real decision for somebody like me is that

if it’s too much, it’s frankly just to get rid of it and to find a

different mode of transportation that’s a little bit more anonymous.

You’re pragmatic about it.

And the reason I say that is that I just think that you would have to

go and get the government to basically change the law, which they’re

not going to do.

And so then as a result, your reaction will seem somewhat contrived and

deeply personal.

And in that, I think you lose credibility.

Let me just summarize this and be the first one to just state this.

I think that if there’s any person in the world that can figure out

Twitter, it’s probably Elon.

But man, has he taken on just a gargantuan battle?

And increasingly, I am not a fan of this battle and I’ll tell you why.

This is a man who is essentially proven that he can bend the laws of

physics on behalf of humanity.

He’s done it twice.

Once in electric cars and once in rocketry.

The problem is that the realm of decision-making at Twitter has nothing

to do with the laws of physics and is governed by emotions and psychology

in which there is no canonically right answer.

And so he’s quickly finding out that half the population will always

find fault with him, no matter what he does.

And now the implication of that becomes very important.

We saw yesterday that he had to sell another 3.8 billion dollars of

Tesla stock.

Why is that?

It’s because this transaction, which was, you know, very tight to get

done, probably required lots of margin.

You know, there are I look, I have a margin loan at Credit Suisse.

So I know how these things work and you can very quickly get margin


You have to sell down things that you own in order to maintain your

collateral limits.

We’ve talked about this before.

He said to do this twice down the last few weeks and that’s because

again, not because of the demand at Tesla as far as we can tell, but

because people believe he’s distracted and so people are anticipating

weakness at Tesla.

People are now shorting the stock.

Anyways, it’s causing this downward spiral.

And can you fix it?

I think so.

Can you pull it all out?


Is it just putting himself under an enormous amount of pressure that

he could have avoided?


Yes, and I think that this is sort of where we’re at six weeks in my

God, I was saying this guy learned in six weeks what it took YouTube

seven years to learn how hard it is to moderate content and you know,

I think this is where I disagree is you’re attributing so much good

faith to these content moderators at YouTube and Twitter when the

Twitter files reveal that they made no effort to suppress their bias.

In fact, they were like pretty much dancing in the streets every time

they booted off someone they didn’t like enough before you react to

what free bird just said at the end that Koda can you respond to what

I just said?

Isn’t it true?

Like it’s like well look, I mean if you define what Elon is, you know

doing there as you know, acting as a judge arbitrating on every little

content moderation decision.

Is that a great use of his time relative to what he could be building

at Tesla and SpaceX and doing on behalf of humanity then no clearly

not but if you define what he’s doing in the larger sense as restoring

free speech to the most important Town Square social network, hopefully

thereby inspiring other tech companies to move in the direction of

opening things up then I actually think it’s a pretty good use of his


So look, I think we can quibble about this or that decision that he

makes or this or that tweet, but I think the overall thrust of what

he’s doing is very important for the country and for humanity.

So I get where you’re coming from.

Hopefully he’ll find some people at Twitter who he can empower and

trust to make these content moderation decisions.

So he’s not drawn into every single little battle, right?

We do want him focused on the highest priority problems.

My point is just that I get that.

I just think that what he’s learning and what we’re living and seeing

in real time is that there is no canonically right decision ever in

this space.

There’s only a decision where some percentage will support and some

percentage will always be against.

That’s my point.


He did say when he took over he knew that would be the case.

He said you will know I’m doing the good job when both sides are equally

upset just to put a pin in it.

I think it’s important for people to understand what the new policy is.

So I’m just going to quickly read it just to hang on.

Sorry, hang on one sec before you get to because I think the philosophical

point rather than the specific one is it is an important one and I just

want to respond to what you said and have sacks respond to this in the

case of the points you make around the Twitter files.

And by the way, I don’t agree with any of the moderation decisions


So I don’t think that someone should be suspended for posting public


I don’t think someone should be suspended for saying controversial


That’s my personal opinion just so I’m clear on that because I know that

you know, that’s describe yourself as a libertarian speech.

Yeah, libertarian.



Got it.


And and so in this particular case, I think what really irked me I was

trying to identify why it made me so angry yesterday.

It triggered me.

It really did.

And I think the reason was that in the case of the Twitter file points,

it was a minority.

It was a minority that was affected.

It was one person that was affected because the majority wanted to do

that thing to that person.

And I think in this case, it’s that the minority wants to affect the

majority in the sense that Elon has aggregated this control and this

power over moderation, and he’s benefiting himself and a few people

that have private planes, and he’s shutting down hundreds of tweet feeds

Twitter feeds that are using publicly available information.

And so it feels even more onerous of a use of power and influence because

he’s taking he’s doing something that benefits a small number and

affecting a large larger number.

Whereas the alt whereas the other one was affecting a small number that

benefited a large number because that’s what a lot of people wanted to

see happen.

A lot of people wanted to see Trump suspended and it wasn’t right either.


I don’t know if that if that makes sense.

Yeah, we understand your position completely.

I just want to add to that in this policy.

I think it’s very important to understand what he is saying about this

accounts dedicated to sharing someone else’s live location are going to

be suspended going forward.

You can still share your own location.

Obviously content required, you know content for public engagements, you

know, the president is speaking somewhere whatever you just really

can’t be persistently consistently tracking an individual otherwise known

and you know, sorry, Jason, if I’m talking, but Jason, if NPR is live

tweeting, sure, Jerome Powell speech, perfect.

No problem.

XYZ location.

Not a problem.

If they do Jerome Powell’s location for the next year for the next year

10 times a week on his off duty on duty.

That is something we’re talking about.

I’m just saying like, let’s just say he gives a speech every week.

Is that illegal?

No, if you’re totally fine, if you’re giving a speech at a public place

where you’ve announced that you’re going to be appearing at a certain

time and place, you’ve already made public where you’re going to be.

What we’re talking about is and what Elon Jett was showing was a

live stream of precision GPS coordinates over a sustained period

of time.

Yes, and not to be too dramatic about it.

But if you look at like the weapons are so successfully being used in

Ukraine right now, they’re all precision GPS guided.

Now right now you have to be a state actor to get a hold of those weapons,

but you could imagine over the next decade that having someone’s precise

GPS coordinates over a sustained period of time.

It would be pretty easy to target them for and not to be dramatic here,

but for assassination.

No, that is a security risk.

There’s no way around that.

I brought this up with Palmer Lucky man.

I’m scared that Duke come at me anytime when I get my jet.

I don’t want Palmer Lucky taking me out.

Yo Palmer.

I’m sorry, dude.

Do not take me out.

I’m going to get my jet.

I’ll be on my first flight and he’s just going to send a drone in.

But look, let’s talk about hypocrisy for a second.

Okay, because here we go.

Let’s let’s talk about CNN’s hypocrisy and the media’s hypocrisy because

earlier in the week.

They were saying that any criticism of Yoel Roth who is Twitter’s former

head of trust and safety amounted to a threat to his safety and they had

this like theatrical tweet where they claimed he was having to flee his

house, which a lot of people found pretty preposterous.

They were basically saying that public criticism of someone who has put

themselves out there to engage in a public debate who’s writing op-eds

New York Times.

That is a threat to safety.

However, publishing someone’s real-time location on a continuous basis, so

they can be targeted.

Intellectually consistent.

It’s not a threat to safety.

I’m sorry.

If one of those two things is a threat to safety, it’s the real-time doxing

of somebody.


I think we now understand why Elon did what he did.

He basically had an incident in LA in which the safety of his kid was

threatened because he’s got stalkers coming after him.

So his safety is a real issue.

It’s not like a made-up issue.

But why should his personal experience affect the usage of the service

that hundreds of millions of people use?

And that’s the big issue.

The decision should not be based on what affects him personally.

There needs to be a principle basis.

There needs to be a principle basis for any decision about content

moderation or censorship.

Maybe in the first few hours of that decision, it wasn’t handled perfectly

because there wasn’t a principle basis.

But since then, one has been put in place.

The principle basis is what J-Cal showed and this applies to everybody.

And so, you know, now it’s a debate about whether that policy makes


Now, is Elon just as arbitrary and capricious as the former executives

who are running trust and safety at Twitter?

I don’t think so, for two reasons.

Number one, he’s promised transparency.

He said that when we ban or shadow ban an account, there has to be a

reason for it and you have to be alerted to it.

In other words, none of the shadow stuff.

No shadow.

You need to be informed.

You get your speeding ticket, you get your ticket.

It’s there, right?

No more shadow.

That is different.

And then the second thing is that, and again, I think you could say they

didn’t do this perfectly in the first few hours, but there needs to be a

principle basis for a censorship decision and it needs to be applied to

everyone equally.

And so far, we haven’t seen any basis for believing that he’s not applying

this principle equally.

I mean, still very early.

Whereas the former rulers at Twitter were indulging their personal bias and

personal preferences and who they were banning.

There are two standards of justice.

If you were someone who is allied with them, it was almost impossible to get

censored no matter how hateful your tweets were.

But if you were somebody on the other side of the political debate, they were

eager to suppress you.

And I think that at least so far, Elon has not shown that type of selectivity.

He selected against someone that put him at personal risk.

I think, yes.

If that’s where the decision had stayed, then I would agree with you.

But I think that since then they’ve put in place, they’ve undergirded that


I got to tell you a policy.

I think those sites are I think those tweet streams are cool.

I think there’s some cool tweets streams that some of these people run and there

are hundreds of them and they’re actually kind of cool.

You can see where these different favor of people tracking people’s planes like

where Air Force One is they show all these different planes it look and

whether or not the FAA should be publishing the state as a separate

question, but it’s on the open internet.

It is already there.

It’s like turning off the RSS feed from the open internet to protect himself.

Okay, that’s why it feels onerous.

So here’s the part I agree with which is I think this policy with regard to

plane specifically is going to be futile.

Yeah, it’s going to be at best harm reduction because as long as there’s

many ways to publish this information on Reddit, it’s on Facebook.

So listen, I think this whole I think this whole policy on Twitter is a

little bit of a red herring.

I think the real issue the real underlying issue is that the FAA is

publishing these icon numbers thereby making every plane personally


I don’t think there’s I have a counter to it.

If I’m necessary, I have a counter to it actually sacks if I may what we

saw, whether you agree with it or not, with the mass banning of certain

individuals did actually silence them and take them out of the public


One of the reasons in fact, Elon wanted to buy Twitter.

So if you look at certain individuals, whether it’s Milo, Alex Jones, Trump

himself, right on down the line when they got banned across all systems,

it was dramatic in terms of the reach of the that information.

So because of the size and scale of YouTube, Facebook, Twitter, etc.

When they act in coordination, they can have a dramatic impact, not a

perfect impact, but a dramatic which is why we have this issue of hey,

should 230 be rethought?

Because when they act en masse, it is extraordinary what they can do to

an individual.

They took their Alex Joe.

How do you consume Alex Jones?

You have to seek that out in a major way.

It’s distinctly different Chamath last word and then we’re moving on to

what could be the greatest science corner ever in the history of all in

pod final.

I think this is this is a great transition.

We’re about to talk about nuclear fusion.

And my point is I don’t care about any of this stuff.

Like I said, like this is my point is like the if you if you take like an

average person, okay, you know, we are let’s say awake 16 hours a day.

And you know, if you take out the time with our family, David, the family

is people that are related to you.

We’ll get there.

Can we DM sacks those people one more time?

She has that will send you their names.

But if you take that out and you take out, you know, exercising and you

know, we also explain that to sacks.

That’s when you increase your heart rate and sweat sacks.

The point is that you have let’s just call it 12 hours, you know, a

functional executive time that you can apply to a problem and you can break

that down into these blocks, right?

I would really love what is basically the smartest human and the most

productive human of our generation to be filling those blocks with things

that sort of like really transcend and increasingly, and I agree that

freedom of speech is important.

Increasingly, those buckets are being filled with things that are very

low level and hyper tactical and are distractions at best to the to the

path of free speech.

And so I think that hopefully he gets all this shit under control over


He finds a good executive team.

I would like to see him get back to landing rockets on barges getting to


Let’s get it.

Get it.

I mean, finish self-driving.

We’re almost there.

Chamath definitely has a point.

I would say one of the reasons why we don’t care that much about this

issue is because I think something to understand that’s important is there

are different kinds of speech and different kinds of speech deserve

different levels of protection.

The fact of the matter is like business advertising is not as protected as

political speech.

Porn is not as protected as political speech, political speech, speech

criticizing the people in power is the most protected category of speech

because the founders of the country understood that the people in power

will always try to insulate themselves from accountability by limiting

that kind of speech.

But that is precisely the kind of speech that the former rulers of Twitter

suppress the most and showed the least sensitivity to.

So listen, I mean, is Ilan going to be the perfect content moderator?

No, I mean, nobody is, nobody is, but I do not believe that puts him in the

same category as, you know, Vijaya Gaudi or Yoel Roth, who showed no

sensitivity for political speech.

He has indicated a desire to restore freedom of speech.

And I think they ultimately ended up in a good place.

I want him to get us to Mars.

I want him to get us to Mars.

Let’s move on to the best science corner ever.

So according to sources, scientists work for the US government have

achieved a net energy gain in a fusion reaction.

No, no, not net energy gain.

Get it right.

We had ignition energy, which is very different from net energy gain.


Hold on.

I know that you’re in the anti camp.

Please let the science nerd have you.

You have to, you have to say it correctly so that people understand what

you’re talking about.

Let me just make it even simpler than

explain to us what fusion is, Dr.

Friedberg, and explain to us why this could potentially change


We did this on a on a show once before, but I’ll kind of do a quick

kind of summary again.

Basically, if you take atomic nuclei, which are made of protons and

neutrons, and they repel one another, right, because protons are

positively charged, so they want to push apart from each other.

So with enough energy and enough density, meaning that they’re moving

fast enough and they’re close enough, they’ll overcome their repulsion

and jam into each other.

When that happens, some energy is released because the total mass of

the fusion of those nuclei is actually less than those nuclei when

they’re on their own.

And so some energy is released and that energy drives a chain reaction.

And so fusion is this concept that is fundamental to physics and

fundamental to the energy driver of our universe.

So the star in our in our sky, the sun is driven by fusion and only

about 15% of the mass of the sun at the center is dense enough to

actually drive fusion.

So the big challenge with fusion is how do you get these these atomic

nuclei close enough together and moving fast enough that they’ll

actually fuse and release energy.

And that’s super hard.

The reason it happens in the sun is because the sun has so much mass

that the gravity pulls all those particles together, they get close

enough, they get hot enough, they move fast enough, and fusion happens

boom, all this energy comes out and every day we’re warm.

Now to do it on Earth is very difficult.

But if we can do it, what happens when you fuse nuclei together is you

don’t release any this isn’t like a radioactive fission reaction.

You release energy that can be harnessed to drive our systems, our


How is it done?


So in the 1950s, you know, this was theorized, hey, we could do fusion

on Earth, we got to get a really, really dense plasma, meaning the

atomic nuclei and the electrons have kind of gone off the atoms.

And it’s just the nuclei spinning apart, you got to get them to move

super fast, like 10s of millions of degrees Celsius, and you got to get

them really close together.

So how the heck can you do this?

So there’s a couple of concepts to do this, one of which is called

inertial confinement, which is where you basically create a little

pellet of the material, you’re going to try and get to fuse, and you

put a ton of energy on the outside, you compress it really hard, really


And when you compress it really hard, really fast, and you can get it to

be done in a perfect sphere, and you can get it to collapse on itself

very quickly without, you know, kind of shooting all over the place,

enough of those particles will come close enough together fast enough

hot enough, and they will start to fuse.

Another way is through magnetic confinement, where you use magnetic

fields to create a really hot plasma, get it to spin around or to move.

And then the magnet brings that super hot plasma closer and closer and

closer together until all those particles are moving fast.

And they’re dense enough that they start to fuse.

So you know, one is called magnetic confinement, the other ones inertial


And so what we saw happen this week is at the National Ignition Facility,

which is a facility that was built starting in 1997.

And they’ve spent about three and a half billion dollars to date, they

demonstrated a net energy output from the fusion reaction of an inertial

confinement system.

And what that means is they took a little pellet, and that pellet was made

up of deuterium and tritium, the atomic nuclei that they use the particles

that they use are deuterium, which is a proton and a neutron stuck together.

And then tritium, which is a proton and two neutrons stuck together.

And the reason they use those two combinations is of all the different

ways you could fuse nuclei together.

This has the best energy output of any kind of reaction.

Freiberg, what actually happened this time that made this work for what

apparently only $3 billion.

You said you didn’t say 3 trillion said 3 billion, three about a third of

Yeah, about a third of what Sam Bankman fraud stole.

We have done something here.

Yeah, allegedly.

So what actually happened that is so dramatic that we have a press

conference, everybody’s losing their mind.

So yeah, I just want to highlight one more thing about why this is so hard.

You have to get such an incredible density, you have to get an incredible


So high temperature and high density, that confining those atoms and not

letting them escape and and you know, basically dissolve before they fuse

is super difficult.

It requires so much energy in such a controlled way in such a perfect and

precise way that all of the digital technology, the magnets, all the

measurement systems, all the software, it’s taken us decades to get

everything that allows us to do this today.

And now we’re at the point that we may be able to start to realize production

scale, kind of versions of this.

So what they did is they had a small deuterium and tritium pellet, and they

shown 192 lasers onto this container that held that little fuel.

Those 192 lasers, the whole thing happened in a billionth of a second,

the lasers pulsed, boom, here’s an image of it.

And as they did that, they, you know, basically x rays kind of hit the

sphere, this little BB, if you will, BB kind of thing and compressed it and

it compressed so quickly.

And with such heat, and it didn’t dissipate because it was done so

precisely, all the lasers hit at the exact right time, boom, this thing

compressed, and then energy came out.

And the energy that came out that was measured was one and a half times the

energy that kind of went into that reaction.

And here’s a chart that that I’ll show you from the National Ignition

Facility, which shows just how inefficient the system still is.

And this isn’t even speaking to to Chamath’s point.

But basically, these guys lose 90% of the energy that they put into the

center of the system, only 10% is actually used to drive the compression,

the rest of it is lost.

And there’s a lot of ways to improve the efficiency of the system from here.

But basically, they put two megajoules in, they got three megajoules out.

And so it was the first proof point production proof point in the 70 years

that we’ve been theorizing about nuclear fusion here on planet Earth, that

this is possible, and it’s real.

Now, this is these kind of inertial confinement systems.

There are 33 private technology companies today, that have raised about

three to $4 billion so far this year, to pursue several other technologies,

besides what the National Ignition Facility is showing to try and build

production ready versions of nuclear fusion.

And so these 33 companies are using a bunch of different types of tools, one

of which is the tokamak.

If you show the image, I’ll show you this one.

There it is.

Yeah, tokamak.

This is what we talked about.

That is the magnetic spinning thing that looks like Iron Man’s arc reactor.

Yeah, I think they based it on Yeah,

yeah, you create a plasma, you basically speed up the hydrogen nuclei super,

super fast, these deuterium and tritium nuclei, super, super fast.

And then you use magnets, and the magnetic field has to precisely squeeze

the plasma, squeezing it, squeezing it, squeezing it.

And if it’s slightly off in even the tiniest way, think about a balloon,


If you put a pinhole in a balloon, everything escapes from the balloon.

Yeah, you got to do it.

That’s how technically hard this is.

You’re basically trying to create a balloon with a magnetic field, and

you’re trying to keep the gas, and you’re trying to make it smaller and

smaller and smaller.

And if any tiny hole emerges, the entire plasma.

Is that what happens in Uranus?

Like when you’re trying to hold in the Wagyu?

Anyway, let me ask this question then about the consistency of this and

then we’ll go to you Chamath.

Can they do it consistently?

Or do you think this is like they got lucky once?

Or are we going to be sitting here a year from now?

And they’re like, we put in two when we got out six.

So we did it five times.


So now we’ve proven that humans can do this.

Okay, which is look, I mean, I want to give you guys some and I know kind

of some of Chamath’s concerns, which is how humans can recreate the sun

is what we this comes down to.

No, yeah, but guys, no, I want to just say one like, even close.

I want to say one important thing from a historical context, all

breakthrough technology starts out seeming impossibly large, impossibly

expensive and impossibly slow.

The human genome project 20 years ago cost $100 million to sequence the

human genome.

Today, we can do it in a couple of minutes for $100.

Okay, credible.

The first computer, the ENIAC computer had 500 flops of compute capacity.

It filled a room.

It cost $8 million to build 20 years later.

We had a mainframe 20 years later.

All the wrong.

No, this is all this emotional bullshit.

You’re using the wrong examples.

Okay, let him finish.

Then you go to my good finish your sentence freeberg.

And then we go.

And today we have an iPhone that can do 2 trillion flops of compute in

your pocket.

I think that what we’re seeing with fusion today is similar to what we

saw with the ENIAC computer in the 1950s, which is the demonstration

that compute is possible.

And now we’re seeing a demonstration that fusion is possible.

Okay, and a lot of folks have anticipated this moment and they’ve

invested ahead of this.


I don’t know if any of these companies that are currently kind of being

built are going to be production ready anytime soon.

My estimate is that we will see production demonstration.

Okay fusion.

Here we go.

23rd in the 2030s.

So call it eight years from now plus and then you’ll see grid scale scale

up in the 2040s.

So this isn’t something that’s going to happen next year or two years

already happening.

What are you talking about?


Now Chamath your rebuttal.

Oh my god, knowing you’re a huge fan of solar.

This is the most naval gazing head up your ass scientific bullshit.

I’ve ever heard.

Okay, couple points.

Let’s start with the basics.

The first is that there was no previous technical.

John, why are you being like, why are you angry at me?

I’m not angry.

I find this so tiring hearing this.

It’s all syrup.

You’re seeing a little triggered.

He’s right.



Well, it’s not like I don’t get it because I find I don’t because I

don’t find this intellectually honest.

Okay, I find it exactly intellectually dishonest.

Let’s keep emotions.

Let me finish.

Let me finish.

Okay, when you talk about sequencing the genome, there was no alternative.

So you’re right.

It was an enormous technical leap forward when we built a computer.

There was no analog.

It was an enormous technical leap.

And so you’re right.

We have a cost curve.

We don’t understand and then we iterate as rapidly as possible.

And all these innovations where we built an entire infrastructure to

ride down the cost curve.

The thing is fusion energy exists today.

It’s called the sun.

We actually know how to capture it at virtually no cost right now.

So according to the IAEA today, you can capture grid level solar energy

for about 3 cents a kilowatt hour.

That’s as close to zero as we’ve ever been and over the next 10 years.

Their forecast is it’s going to get to one and a half cents.

If you then want to store it and you layer in storage costs will be at a

whopping 3 cents a kilowatt hour.

That’s where we are today.

And so I think that fusion does exist.

I do think that this is an incredible technical leap to replicate something

that exists and I think that’s where the intellectual dishonesty is.

It does exist.

It has been captured.

It can be harnessed and there is a positive energy equation just in a

different modality that doesn’t speak to these technically minded


A couple of other points about what I saw.

I think it’s incredible what happened.

Okay, but just to make sure.

We’re clear.

This is a hundred and ninety two lasers.

The size of three football fields.

That consumed three hundred and twenty two megajoules of energy, which

then ultimately deliver two megajoules to a target which then released


So this is why I’m saying we had positive what’s called ignition energy.

We did not have positive electrical energy captured.

So yeah, could we figure this out?


Can we then shrink the three football fields down to something that looks

the size of a laptop?

We possibly could will it take 20 or 30 years possibly but in the

meanwhile, if the goal is unlimited costless energy, you’re on that

cost curve already.

Yeah, but why can’t it be both?

So you said I was being intellectually dishonest.

What was I was dishonest?

Yeah, you’re comparing.

I’m saying what you’re saying is right.

Yes, you can get you.

You seem to be an agreement.

Like yeah, I just think that I think that you’re trying to say that

this is an entirely new thing.

No, it’s a different approach to a thing.

We’ve already beaten and basically captured.

Let me bring what I would argue to mop.

And I think this is important be the net energy you can capture on say

a football field sized facility from solar is, you know, a tiny fraction

of the energy you could generate from a football field sized fusion


And that’s why the argument would be like, hey, you know, when we were

developing computers, hey, we have abacus is we shouldn’t be developing


And I think that’s the analogy I would use here.

This is why the cost per kilowatt hour is what the the levelized cost

of energy tries to do.

It tries to to normalize that argument away because everybody would

say that.

Hey, hold on a second.

You’re going to need plane fulls of this or boatloads of that and

people said no.

What’s the levelized cost of energy?

How what is the cost per kilowatt hour to generate energy?

And what I’m saying is that is an absolute scale and free is zero.

And we’re at 1.5 cents.

So here’s what I would say once check out one sec.

Okay, come off.

The opportunity here is not necessarily about cost reduction.

It is about scalability.

And if hydrogen is abundant, which it is on this planet, it is nearly

infinitely abundant.

We can take that hydrogen and we can scale up energy and electricity

production in a way that is unimaginable compared to solar.

And I don’t think that solar should be excluded.

Solar is key today and should be scaled up and I’m 100% agreement with

you, but the scalability to go 100x if we want to make 100 times more

electricity, I think we need fusion and I think that it’s feasible.

So I think we have reached a good settlement here.

Chamath, you’re saying hey, listen, we’re getting solar down.

So cheap.

We can solve this problem all forms of energy.

Okay, great.

We are solving that.

So for our needs today and then what Freeberg is saying, but what if

you had unlimited a thing that we can’t even imagine beautiful now

watch as I get sacks involved in a science conversation.

He has zero interest in Mr.

David Sachs.

If in fact there was 100% more free electricity available in this time

frame the next 10 to 200 X 100 X the available energy in other words

supply of energy just becomes flooded and it’s free essentially what

would be the geopolitical reaction on planet Earth in terms of

this incredible rivalry rivalry.

We have with China and for humanity on a political basis such a good



Go ahead.

That’s a good question.

Here we go.

Thank you.

World’s greatest moderate TM.

Why don’t we let Freeberg answer?

No, no, but you’re the politics guy.

Get in there.

Take a second to think it through already has thought about this.

Let’s I want to hear his answer.

No, I want you.

I actually want to hear your answer.

Yes, you know in a world where you know energy becomes more abundant

David hasn’t been paying attention guys.

This is what he’s trying to say.

Don’t we just on a group thread with Tucker?

Milo Yiannopoulos.

Can I just say?

Jake, I’ll call your intellectual dishonesty and raise you a steel


Go ahead.

Go ahead.

I love you.

I love you sexy.

So, you know, I do.

I like that.

I had a great night on Monday night, a Sunday night.


Let’s talk later.

I just want to be great.

I need to get drunk together.

Last week.

He called me petty too.

I think we’re well, here’s what I want to be clear.

I think that I’m just glad that you guys are fighting not me and

sacks guys, please.

Let me finish.


I think that this breakthrough is really valuable.

I think it’s interesting to see that these kinds of scientific

breakthroughs continue to happen in government-sponsored facilities

and not private companies.

And I think that that’s probably where a lot of these innovations

will continue to come from because look at the scale of what had

to be built three football fields and 322 megajoules of energy and

192 lasers.

This is really complicated expensive stuff.

I’m an enormous fan of these kinds of scientific breakthroughs.

I want to be clear.

I think that where I struggle is translating this into actually an

investable area and I worry that this is going to consume lots of

money by folks that could otherwise put money to work in things that

will actually pull forward our energy independence and energy

abundance sooner and faster.

So for example, you know, there are all kinds of things that we could

do to secondary ternary third and fourth and fifth generation batteries

that aren’t happening today.

There are a bunch of things that we could do to actually create an

infrastructure of green hydrogen and the the simplistic answer is we

could do it all but the reality is money is finite and we can’t and

all I’m observing is I do think that more practical things that do

have geopolitical ramifications sooner are not going to get funded

because people do get enraptured by this and my skepticism is that

this is still in the realm of government-sponsored research and is

not really an area that for-profit private companies can tackle and so

I would rather those for-profit companies, for example, Y Combinator

just today put out something where they were, you know, call to action

a request for startups in climate and when you look at that list, those

are really practical investable areas and I just want to make sure that

the capital allocators that listen to this weigh those equally.

I am glad I’m glad that the US government did this.

I hope they do more of this, but if you’re asking me quite honestly, I

would rather the next 10 billion dollars go into energy efficiency

HVAC then fusion because a fusion exists and B.

I think it’s going to happen at an innovative bench scale level by the

government and not by a particle.

Let me just let me just respond to that real quick.

I think that the idea of allocating our resources as a society should

be done on kind of, you know, on a portfolio basis 80% on the pragmatic

near-term 15% on the kind of next-gen and 5% on the moonshot and this

maybe starts to shift from the 5% to the 15% maybe it’s still in the

5% but I don’t see kind of over funding happening.

So I’ll tell you guys there was a survey done.

There’s 33 private companies in fusion that are kind of fusion companies

today VC back eight new this year.

So the number is kind of increased by 33% this year and so far this year

those companies have raised around three to four billion dollars, which

by the way is a fraction of what was done by 15-minute delivery companies

for convenience stores exactly my point and and by the way, the biggest

funding is happening in I tear which is the largest construction project

in Europe.

And this is a 30 billion dollar production scale fusion demonstration

system that should be online by the end of the 2020s government

sponsored government sponsored.

Yeah, and so to my point, I’m a huge fan of government sponsored


Now we get finally the first science corner.

Everybody brace themselves.

It’s the first science corner where David Sachs has a lot of the cherry


Here we go.

Come on.

You can come in and you can do it.


David Sachs.

What was your thoughts on this question?

Your question was a little bit was was not a let me rephrase.

Okay, hold on coming in.

What’s the geopolitical impact if this does happen 100x energy is

fantastic for the United States if it actually happens and the reason

is if you look across the world, there’s this thing in politics known

as resource curse where the worst governments the most despotic

governments tend to be in the countries that have the biggest natural

resources ironically.

So the countries that have huge amounts of petroleum or other kinds

of minerals, they’ve tend to have pretty corrupt governments.

And the reason for that is that if you’re sitting on a giant oil

reserve, you don’t need to make anything else work.

You just fight over who gets control that oil reserve and that’s what

politics ends up being.

You don’t need to create policies that foster innovation or attract

knowledge workers, right?

You just basically mind that oil.

So if all of a sudden you’re talking about turning energy into a software

problem or an innovation problem that looks a lot more like the software


That’s an area where the United States has a huge advantage.

And yeah, I think it would pull the rug out from under many countries

all over the world in favor of the United States.

I mean, it’s a big if because where I agree with Chamath is this stuff

still seems pretty far off and it’s still pretty unproven from a

commercial standpoint, but I agree with Freeberg.

Why not try investing in and cultivating and see where it goes.

Okay, fantastic.

This was a fantastic science corner where we actually engaged David

Sachs, which country did you find anything to disagree with their

J Cal?

All right, take it easy.


I just want to let you do that.

I think you like that answer, right?

Well, I love all of your intellectual enough for you or was I love your


I love it wasn’t a steel person felt silver silver silver manning, but

I love what you’re intellectually on a silver person.

Yes, your silver veying your silver thing was on a plot.

Was that platinum gold or silver?

I think that’s your you’re in platinum with some diamond dust.

I think the fact that I just can I just say spent a couple nights

together this past week has really really does the mood of the show.

I mean when you guys go out and drink together and have fun.

You guys are exactly I left our asses off Sunday night.

Can I just say we Saxon I had the best 48 hours together in a decade.

This is Sunday night.

It turns out Chris Rock and Chappelle are playing at the Chase

Center where Chamath used to own a piece of the Warriors, right?

And this incredible arena has this incredible show and you know, me

and Saxon some friends will leave it at that go to the show.

Our bestie Draymond is at the show.

So I text Dre and I’m like, hey, you’re going to see Chris Rock

by chance tonight with Chappelle say yes, sir.

I said, hey, I’m going to go with a couple of friends.

Maybe we roll together hang out after the show.

We go.

And after the game after the show, which was incredible, we go

backstage and I’m sorry to the to the practice court and we’re

hanging out with Draymond in the practice court with Dave Chappelle

Dave Chappelle and I start shooting hoops.

David Saxe is talking to Chris Rock about free speech.

Steph Curry comes out and starts giving Dave Chappelle and Jake

how shooting lessons where Chappelle and I are breaking like old

men, you know, you know on a concrete court all of a sudden Steph

says, hey Jake, how you got it?

And by the way, he’s fan of the show says you’re short every time

and just, you know, hit the backboard.

You got to go long.

Then he tells Chappelle that you got to change this all of a sudden

we start hitting shots.

Like, you know, we’re on the raining threes.

You’re raining threes.

It was literally like cut into here were these mid-range jumpers

or threes.

I was a free throw line extended free throw line extended cut into

here rain man and rain dance from along came Polly rain dance


Let it rain!

Rain dance!

Let it rain!

Let it rain!

I was hitting brick after brick rest in peace Philip Seymour


So then we’re chilling.

And Saxe and I are talking to Dave Chappelle.

Joe Lakeham owner of the Warriors are there the majority owner,

you know, as opposed to you being a minority owner.


The only person who drops more names is Phil Hellmuth.

I mean, absolutely.

I’m trying to catch up anymore.

No, he is.

I’m leaving out ten names.

He’s only got three names.



Am I leaving out ten names?

So bad, but I’m not going to say anything.

Not doxing anybody.

So brutal.

There’ll be zero doxing.

So we, I kid you not.

Chappelle comes over and says,

Jacob, Saxe, you guys want to go to after to do a go see me do a

show at like 1 a.m.

At this like local comedy club with 70 seats.

I said word.

Yes, we go at 1 a.m.

Chappelle sits on stage smoking cigarettes.

And doing 90 second pauses and then having a beer and interacting

with the audience and does a two-hour set after doing this

set with Chris Rock at the Chase Center.

Me and Saxe and Draymond hilariously laughing.

The stuff Chappelle is a genius.

And when you see his show and Chris Rock, by the way, he puts

a tight set together.

I mean Chappelle’s got this storytelling thing where he kind

of meanders a little bit and then he hits you with it.

But Chris Rock is just bang, bang, bang, bang, bang, bang,

Extraordinary just two incredible minds at the top of their game

artists artists at the top of their game doing what society


But more importantly doing what David Saxon I needed which was

to laugh our asses off together and remember our friendship.

So it was a great night out.

I want to say to bestie Draymond Dave Chappelle and Chris Rock.

Thank you.

The David Saxe Jake house bestie friendship has never been


I don’t know about Friedberg and Chamath that seems to be on

the rocks.

Yeah, it’s weird.

We’ll be in there.

We’ll be we’ll be we’ll be vacationing together next week.

So we’ll I love I love Friedberg.


Well, well, we are going to be whatever whatever’s going on.

We’ll take a walk and figure it out.

Well, I just want to say the alliances amongst the besties


I got mad.

I’ll be honest.

I got mad at Friedberg when he edited that Google bit to say

the exact opposite of what he actually said that yeah, don’t

bring that up.

Please don’t bring that up.

Yeah, just beep that.

But yes, that is the thing that bothered me.

I have to be honest.

That’s you playing to the crowd versus you being honest and

telling what you think.


That didn’t work.

Let me put that in the form of a question.

Freeberg has your fame as the sultan of science.

Because listen, you nobody knew who you were outside of Silicon

Valley before this.

Look, you guys it impacted your ability to speak.

No, no, no, not my family.

Look, I’ll be I’ll be honest.

And I’ll speak openly about this.

I had said that there could probably be a significant head

count reduction of like 75% at Google, and the business could

keep operating.

And I took it out.

And I took it out because I have a lot of friends that work at


Google is a close partner of mine.

They’re an investor of mine.

And frankly, I just want to be careful about that.

It’s not something I commonly do, you know, as you guys know,

I usually speak my mind pretty clearly, but I was just trying

to be respectful.

And that’s the reason I did it, you know, so that was fine.

What I’m saying is not that it’s just that the part that you

edited in actually made it seem like you were not saying that

at all, but the opposite.

I think if you had cut the whole thing, it would have been more


So to keep that other thing in actually led the perception of

the opposite.

So you were triggered by that.

No, no, I don’t have triggered.

I’m saying, but I think we should have a principle.

Don’t hold on.

Hold on, guys.

Very often tomorrow.

If you like, yeah, I know.

I think that we should just have a principle to not play to what

the perception of what we say should be especially if it means

we could be saying the opposite of what we actually mean.

That’s all.

Intellectual honesty is a bestie tenant.

It’s a bestie tenant.

I think so.


Bestie 10 always and the other bestie tenant besties always come

back together.

If we have a fight, we always come back together.


Can I’m still mad at you a little bit?

I’m just kidding.

Okay, but just talking about hypocrisy.

I mean, so how great was Sunday night?

How great gets up there and he gives like right out of the gate.

He’s attacking woke right out of the gate swinging came out swinging

like Will Smith.

Suge Smith, you mean?

Suge Smith.

He took down Will Smith.

I mean the Will Smith takedown which you will see in this special

is so complete.

It is just chef’s kiss.

But how great was his set?

Let’s say just give Chris Rock his flower.

He did he did he fillet and fricassee?

He he did but I thought the more important part of the set was the

it came right out like calling out all this, you know, you know,

earlier than thou woke stuff.


And and there was an undercurrent to Chappelle’s set as well.

And also he said listen words can’t hurt you unless you write them

on a piece of paper and time to a brick.

We these a bigger point right now and this does tie into our first

story is I think comedians look at Twitter as a place to get cancelled

not a place to be part of the discourse and that’s a huge loss.

That’s indicative of our society being broken and it’s

incredibly important that these comedians be allowed to mock and

to speak and to step over the line and challenge us as citizens in

a free society and we should cherish them and we should not even

try to cancel them.

Let them cross the line.

Let them say things that make us uncomfortable so that we can

understand ourselves and our society better and I just want to

say why can’t you include lives of tick-tock in that?

Oh, do we want to have a discussion about it?

I can’t go.

What’s the next conversation about?

I’m just asking you.

I’m okay with mocking.

I just don’t start you guys.

You did so well.

Come on.

Let’s go.

Here we go.

No, Jake.

I’ll cut it out.

All right.

Well, we have two more science corners to get to.

All right, if you don’t want I mean, I just know let’s talk about

the Coupa deal and sacks.

This is right up your alley.

Have you ever paid attention to it?

To be honest, I really the thing you guys asked is like, you know,

what signal will Elon’s moves at Twitter be for the rest of the

tech industry?

I think the biggest wake-up call is to actually PE companies.

So if you played this out and you think that Coupa is, you know,

explain what kind of test plays Coupa is a is a software as a

service company that does revenue management, I guess or expense

forecasting or some something in the financial realm.

I don’t particularly know to be honest.

But anyways, this is a company that you know was off 70 or 80% from

the high like a lot of SAS companies were when rates started to go

up and they got this offer from from Toma Bravo.

But here’s what’s so interesting about this deal.

If you think that you know, these guys bought a company.

I’m just going to make up a number at 20 times EBITDA, right?

And and you see Elon at Twitter and you think well wait, maybe we

can’t cut 75% but maybe we can cut 50% headcount and the company

can still do well and you know, you take half of the expenses out

of the business all of a sudden, you know, if you’re EBITDA doubles,

you’re actually buying it at 10 times.

So I think the thing that is the that is the real insight here is

twofold private equity can still put out a lot of private credit

to fund these deals and SAS companies are perfect because they

have huge free cash flow, right?

So instead of funding it based on earnings, they can fund it based

on ACV and ARR so private equity will be super active and to all

these rifts basically show what the efficient frontier is for the

number of employees you need to run a company and if you can cut

50% of the headcount private equity folks will do that.

And so I think Koopa is like the canary in the coal mine.

It is the beginning of what I suspect is a tidal wave of PE

sponsored deals in tech companies, largely SAS, but may go into

other realms.

Recurring revenue that can go advantage of these two things tap

the private credit markets and finance it based on ARR and then

fire 50% of the team and double earnings capacity.

Zach, your thoughts.

So on Koopa, I thought the most interesting thing was just the

we got a public comp.

Well, we got a comp on what private equity is paying for public

companies right now.

So the deal happened at an $8 billion valuation.

That was a 31% premium to the public price.

It was 8.4 times next 12 months revenue and on a trailing basis.

It was about 10.4 times the last 12 months revenue.

And by the way, all the comments were around how what a rich price

Tomo Bravo was paying.

People generally thought they were paying a premium to the


So it was 77% premium before the rumors came out that this was


So it’s a pretty big premium.

Yeah, good point.

And there was and there was a there was a bidding war with


And so it was a it was a really rich kind of deal that got done



So my point is that people thought this was a really rich deal and

yet the valuation multiples are so much lower than what private

company founders expect.

So remember last year at, you know, the peak founders were

thinking a hundred times ARR was normal a hundred times and you

know, you could roughly say, you know, ARR is roughly equivalent

to next 12 months revenue.

It’s not perfect, but it’s roughly the case.

So these founders were expecting evaluation multiple 10 times

what the public markets are paying and the public more and

actually the public markets are half of where Tomo Bravo was in

this particular deal.

So the public markets right now are valuing.

The median SAS company at about five and a half times and a high

growth, but that’d be for like a 20% year over year growing

company and they’re valuing the high growth companies that may

be eight times, you know, and Tomo Bravo did this at 10 times.

So that gives you a sense of what the ballpark is.

And these are companies that are already public.

They’re at scale.

They’re doing roughly a billion dollars of ARR.

They have already kind of won their category to some degree.

Whereas private companies are subscale.

They’re, you know, typically you’re talking about companies

with 1, 5, 10, usually under 20 million dollars of ARR.

They are, they’re not de-risked.

There’s still a ton of risk.

We’ve seen many, many SAS companies fizzle out and plateau

at 20 million of ARR, never get to a hundred million, never mind

a billion.

And yet these founders think that they’re entitled to, you

know, even in this market, 30 to 40 times ARR, no way.

I mean, like it’s getting to the point now where, you know,

maybe it should be 10 times, 20 times like max for, and that

would be for a company that’s growing two and a half, three

X year over year.

So I still think that like, so I think basically what we’re

seeing here is even a good scenario, like a coupe acquisition

that was done at a premium, like it’s still a wake-up call to

the private markets that the valuations are still completely

and utterly out of whack.


Let me ask you a question, Zach.

So this company was growing 45% last year.

They’re growing 35% this year and they got this multiple.

Why is it not worth a significantly higher multiple?

If a company is growing two and a half to three X, which is

250%, 300% and these guys are only growing 35%.


I mean, it is and that’s what you’re paying a premium for.

But so the, so the, here’s the theory of it is that if you

can invest in a private company that say tripling year over

year and they can do that for another five years or whatever,

then you’re paying for that.

You’re paying for that outcome in a couple years, right?

You’re basically, well, think about it.

You’re getting a discount to the outcome in a couple years.

Well, if you’re paying 30 times today and it triples next

year, you’re only paying 10 times next year.

And if it’s again, you’re only paying three times.

So if that keeps going, that’s where your arbitrage is.

But here’s the thing you have to weigh against.

That is that these early stage private companies, many things

go wrong and they hit a plateau.

They fizzle out or their growth rate starts to the bigger they

get, the harder they should be priced at a discount, not a

premium because there’s risk.

There’s more risk.

They’re growing faster, but there’s more risk.

But also it’s very hard.

Once you get to a bigger number of ARR 50, 100 million of ARR,

it’s extremely difficult to be doubling or tripling year over


Let me just point one thing out.

So I looked at the numbers on Coupa.

I think they had about 170 million of stock based comp expense

in the last nine months.

So those are employees that are getting $170 million in

compensation in the form of shares.

So they get those shares.

They can then sell those shares and get cash for them on the

public market and then on the public markets and pay their


So when a company like this goes private for those employees to

just remain at their baseline comp, that stock based comp needs

to be replaced with something else or else they’re seeing their

salaries reduced.

So, you know, there’s this balancing game when these companies

go private in terms of how do you give them the comp that they’re

earning to keep them engaged in the business?

The answer is you don’t.

Versus no, but you let them quit because you want to do a riff



So I mean, but for the people that stay, right, so there’s a

balance because it’s not just, hey, cut the OPEX, you have to

cut the OPEX, including stock based comp, and this company

generated about $100,000,000, sorry, $210,000,000 of free cash

flow or operating cash flow in the last 12 months.


So if you if you take out the stock based comp, these guys are

actually breakeven or losing money, roughly.


So yeah, I’m growing break even roughly.

So there’s a real question mark on this business and businesses

like this that go private, where if you actually cut the OPEX and

you cut the salaries and you cut the headcount, but you have to

find new ways to pay people, because you’ve been paying them

with stock in the past, how do you kind of bridge that gap?

And I think that’s probably a little bit of the balance and

the art of what these guys do.

Well, Jamal, if I may, can you explain to the audience, what a

private equity firms expectation is in terms of return when they

buy a company like this, and then sacks, I saw your tweet that

you want to feature and you’ll go next.

Go ahead, Jamal.

Well, I think it’s changed over time.

And this is what’s so powerful about the private equity


Look, you have to think about what their incentive is because

it kind of guides the out.

Yes, early on.

They were very much like venture capitalists.

They were out in the, you know, edges of risk-taking doing all

kinds of very difficult gnarly deals.

So if you look back in the history of private equity, you know,

these huge crazy deals like RGR Nabisco or TWA Airlines were the

first of the industry and they weeped enormous returns, but there

was a lot of risk and it required very heavy-handed management.

Oftentimes, what that meant was firing a lot of people.

Over time, private equity has gotten institutionalized and they

don’t generally

feature themselves as a place to get the best necessarily returns,

but they are places where you can put enormous amounts of money

where the likelihood of loss is extremely zero and you generate

very good rates of return.

Now, again, this depends on whether you want to look at IRR or DPI,


So a lot of people will market IRR.

Which, you know, I think is kind of like a gameable metric, but you

know, those IRRs can be 20-25%.

If you look at DPI, which is really how much cash you get back, you

know, private equity firms can generate one and a half to 2x of the

money you give them, but they do it consistently and they very rarely

lose money.

So all of that is important into understanding what’s going to happen

in this cycle.

These folks are going to buy a ton of these private software companies.

I think that they are going to fire lots of people.

I think they are going to make these companies run hyper-efficiently

and they will make sure that they generate that 1.2 to 1.7x that has

been historical.

Very rarely will they lose money in these things.

By the way, that’s going to mean that a lot of these other companies

will have to reset valuation.

So you saw yesterday, went from a $40 billion valuation

down to 11.

You’re seeing some companies only go down 10 or 15%.

But it’s a process, isn’t it, Shamath?

Isn’t this just like what happens in real estate?

It’s the beginning of this process.

Yes, because in real estate, my understanding, having lived through

these boom-bust cycles, is the person living in the home still believes

their home is worth this incredible valuation.

And then the people who want to buy it are like, that doesn’t match


And then the real estate brokers go back and forth trying to get people

to go through this messy middle and come to true price discovery.

A private company, it’s hard to get true price discovery until they’re

on the brink of insolvency.

They don’t have the money.

We just got some data on that, actually.

Can we bring this Cooley data in?

Let’s do it.


So Cooley looked at- A law firm in Silicon Valley.

Yeah, they’re a prominent Silicon Valley law firm.

They looked at a thousand deals over the last three quarters of this


And what they saw is that the later the stage, the bigger the

valuation correction.

So Series D rounds went from $3.5 billion to $527 million.

That’s an 85%.

Yeah, that’s an 85% drop.

Series C went from $502 million to $130 million.

That’s a 74% drop.

Series B went from $164 million to $90 million.

That’s a 45% drop.

And then Series A went from $58 million to $45 million.

That’s only a 22% drop.

There’s just less room to compress there.

But the point is that Series B, roughly a 50% drop.

Series C, roughly a 3 quarters drop.

And Series D, roughly a 85%.

Yeah, 1 7th drop.

So I think founders right now are they’re just like a little bit

delusional about this money they raised last year.

They’re still way too anchored on last year’s valuation.

And if only they would think in terms of this capital they raised

last year in terms of of its real dilution in terms of what the

company is worth now, I think they’d be treating it more more


So for example, for example, hold on if you won the lottery and

they don’t want to they don’t realize they won the lottery.

I had this conversation with the founder.

This is the only money they’re ever going to see is the bottom

line and they’re spending like they’re going to win the lottery

every year.

So for example, let’s say you take a company.

Yeah, let’s say you take a company that raised $200 million last

year at $2 billion.

So it was 10% dilution.

So in their heads, they’re thinking, oh, well, this isn’t that

expensive. Like 10% dilution is a rounding error.

But really, probably the company is worth maybe $400 million now,

right? Because it’s gone down 80%.

This $200 million of your $400 million is half the value of the


Yes, and you’re squandering it, you’re squandering it at a rate

of $100 million a year.

So you’re basically burning up 25% of the value of your company

this year and the next year.

And then by the way, you’re going to be in crisis after that

because you’re probably like a lottery winner buying like a

giant superyacht.

I had an observation that a lot of the investors that sit on the

boards of these companies.

They have an incentive to not see those valuations come down

too quickly, do they not?

And so there is this sort of like interest in hey, I don’t want

you to have to go reprice the company or do a down round because

then my portfolio gets written down and then I’m in the middle

everyone’s always in the middle of a fundraising cycle with LPs.

And then I’m going to have a tough conversation with my LPs about

my my value.

So do you not see VCs and investors playing an active role in trying

to keep the valuations propped up to some extent, particularly

where they have big markups 100% either by extending bridge

rounds or doing other sorts of, you know,

look, nobody, nobody likes to go through a down round.

And that includes founders and existing investors in the


That being said, we’re not talking here about new financing

conversations we’re talking about is advice that is happening

in board meetings.

And, you know, maybe other VCs aren’t pushing as hard as we are,

but you the advice I’m giving in board meetings is what I’m

telling you publicly today, which is this is the last money you

may be able to raise on attractive terms.

If at all, you need to treat it much more preciously.

The world has fundamentally changed.

And by the way, we haven’t even gotten into what’s coming the

demand contraction that’s coming next year.

Explain what demand contract construction is for the audience


Thank you.


Look, there’s going to be three major sources of slowdown for

software companies next year.

Number one new business is going to dry up companies are just

going to be spending a lot less money next year because they’re

all cutting costs.

So you should expect your new business to be roughly 50% of

what it was next year.

It’ll be 50% of what it was last year.

That’s my rule of thumb for most companies new business down

50% number two churn is going to be higher.

We haven’t seen that much logo churn yet, but next year a lot

of companies are going to start going out of business and it’s

going to happen over the next two years.

So you’re simply going to see logo churn rates say among small

businesses go from like a historical norm of 15% to maybe

25 or 30.

In other words, your customer the logo is simply not going to


Yes, that’s what I’m going to go means.

Yes, the actual answer is yes logo churn means the entity

doesn’t exist.

Then you’ve got seat contraction, which is these companies are

not hiring as fast.

In fact, they’re doing layoffs.

So they’re simply not going to buy as many seats of your software

as you need to in the past for the last decade.

We’ve had a tailwind an enormous tailwind for software companies

of seat expansion, which is every year your existing customers

would buy more seats of your product for their new employees.

Now, they’re actually going to have fewer employees or maybe

headcount freezes.

So they’re actually buying my God, by the way, if you if you

take all those three things the deal of the century was figma

selling to Adobe for 20, sir, because if you take those three

things, I mean, oh my god, they just absolutely top tick before

any of this stuff was no totally.

So today Adobe could probably buy this thing for like 7 billion

instead of 20 billion.

So does that mean they try to do a breakup fee and get out of

the deal?

I don’t know.

But if I was if I was figma, I try to close this thing ASAP

and get that money.

Yeah, yeah.

Yeah, you’re right about that.

And by the way, what I’m seeing from founders is that they still

want to grow 100% plus over the next year.

The problem is that the headwinds are going to be intense.

So if you’re applying a plane and the headwinds are extremely

intense, and you try to maintain your speed, you’re going to

burn an enormous amount of fuel, you’re going to be incredibly


Yeah, it’s better to basically just moderate your speed.

Let the headwinds basically pass, we’re going to have major

economic headwinds for the next four to six quarters call it

year and a half.

It’s okay to have a slower growth rate preserve your cash.

Don’t burn up your fuel bunker down.

So what we’re trying to do is get down the hatches.

We’re trying to give permission to our founders to grow at a

slower rate because they feel this enormous pressure from

their VCs to grow at insane rates.

Can I build on this?

I think Freebrook said it very well.

The scam in venture capital is demonstrated in the following

chart. This is using Cambridge and our friend Brad Gerstner

helped put this together.

So what is this?

This goes back all the way to 1997 and the gray bar is what

venture capitalists share with their limited partners as to

how well they are doing.

What is the top quartile of venture capital?

And this is the top 25%.


So this is this is a venture capitalist and you know, our

returns have been consistently top quartile.

So instead of cherry picking anybody else, I’ll just use us

but it could be Sequoia, Benchmark, you name it.

We would go back.

We’re in their launch.

You would go back to folks craft.

We go back to folks and say, hey guys, the total value of our

portfolio is three times your money in 1997 vintage.

Okay, it was four times your money in the 2010 vintage feels

really good.

But again, the job of the venture capitalist is to convert

the gray bar into the purple bar and historically there’s been

a decay.

So for every dollar of gray bar that you show you typically

only get 73 cents actually returned to people.


The paper value, the book value versus the valuations that you

get when you sell your company or goes public end up being 73%

of what you marked at the peak what you said they were exactly


Exactly right.

And the actual value of this purple bar going back, you know,

30 years is 1.7 X.

So just to put numerical numbers on this if you were a venture

capitalist, you would raise a hundred dollar fund at the peak

you would actually show that that hundred dollars became 200

and about $28, but when when push came to shove and when it

was all said and done you would return $170 back to your


That’s the rough equation.

So what’s the problem?

Well, the problem as you can see in this charge is right around

2015 which is all of a sudden, you know, what we’ve started

to see are these continually elevated gray bars.

Yes, this stuff is worth seven times six times five times, but

we have not seen the purple bars catch up.


Some people will say well, yeah, but you have to give it time

and you know, this is it has to make other reason to look at

and all you need to do is do what’s called a regression and

you need to regress these things to the mean and make the

following assumption.

Assume for a second that this time is not different.

Assume that these historical averages 2.2 X 1.7 X holds.

Well, that’s what the the black line here shows.

You can calculate the area above the curve as the value at

risk, right?

The amount of money we will destroy because of all these

shenanigans at free bird just talked about propping up marks

not willing to look at actual market clearing prices.

Well, if you do the math the sum of the area above this black

line is almost a trillion dollars around the world and it

is about 600 billion dollars for US venture capitalists.

This is the dynamic that the private equity industry is going

to prey on.

So if you saw Toma Bravo just close to 32 billion dollar round,

you know, Vista is raising a 20 billion dollar round.

Everybody’s stepping into tech.

They are going to destroy those gray bars.

You describe that as bottom feeding.

No, no, they are.

They are the rational actor.


Okay, who is finding the true market cleaner price again?

I will say this.

I think the private equity industry is unbelievably precise

and talented in being dispassionate and telling us what

these things are.

They’re cutthroat.

They’re logic.

No, no, it’s not.

They’re just smart for the private equity industry is going

to be created by profligate founders and look, you could

blame VCs for the high marks last year as well.

They were profligate too.

But look, if you’re a founder, if you don’t start acting

in a more capital efficient way and preserve your cash, your

company is ultimately going to be owned by a private equity

firm and they’re going to make all the money.

Well, here’s an important, because when you sell to them

at a low price, all you’re going to end up doing is paying

back the liquidation preference and then that private equity

firm that was willing to do or less, but that private equity

firm will be willing to do what you were not willing to do,

which was simply act, but cut your burn, cut your costs and

act in a more capital efficient way.

And they will end up making all the upside for your decade

of hard work because you got a basically addicted to venture

capital and the high valuations and refuse to again, adjust

to the regime.

I’ll give you an alternative.

I’ll give you an alternative.

The alternative is that the majority of acquisitions made

by private equity firms are not actually pure acquisitions.

They’re bolt on acquisitions, meaning that these are companies

that are added to existing platforms that they own.

So this acquisition they’re doing of Coupa, I think it’s

very likely over the next couple of years.

You will see like the playbook and private equity includes

not just cost cutting, but also synergy building and they

typically do bolt ons and add ons.

And this happens across all private equity platform deals

of new products and services that can be sold through the

existing sales channel, the existing customer base.

And as an add on to the existing service or product that’s

already offered.

So one of the things that I think you may see in Silicon

Valley over the next couple of years is a rationalization

away from funding feature companies and thinking much more

carefully about what can be true standalone product companies.


And many of these companies that have raised a ton of capital

and have gotten crazy valuations at the end of the day, they’re

more likely better equipped to be a feature of another platform

than they are to be a standalone platform company of their

own. And that’s where the majority of these acquisitions will

likely end up going.

Yeah, in the private equity landscape, and they will be

vacuumed up and attached to existing platforms that these

private equity guys are building out.

And by the way, just look as an example at what Oracle did over

the years, what Salesforce did over the years, what Google did

so many of these companies bolt on acquisitions by bolt on

acquisitions by building a channel building a platform and

then adding on top of that.

And I think that’s a lot of these guys are going to try and

mimic two critical points.

Number one.

What about the bottom 75% of VCs?

If you show that chart just for one more second, I just want

to remind everybody that is the absolute cream of the crop

VCs top 25% of the best.

These are folks.

I mean, again, I’ll just say us Sequoia benchmark.

We’ve consistently been a quartile.

Thank you.


These are these are top chefs return stream.

Thank the Lord.

What about the bottom 75%?

They’re not going to be able to raise funds, man.

It’s over a lot of these people who raise first time funds in

the last three or four years.

It’s also the companies.

Because like like it’s like the today is the most now is the

moment for the sober founder and the sober venture capitalist

to sit and say what is the real valuation?

Let’s go.

What do we need to do to make sure that this company has a

chance because what sack said is so true.

Otherwise all these profit dollars will be made by the

private equity freeze in order to win today.

You’re going to have to grind you’re going to have to work

5060 hours a week.

You’re going to have to be absolutely embrace the age of

austerity and you’re going to have to focus on your customer

your product and your bottom line the age of excess is over

if you’re not working 5060 70 hours a week.

You’re not going to cut it in Silicon Valley.

Also key second point profligate extravagant or wasteful in

the use of resources just so we get the word of the day from

David Sachs.

That’s David Sachs is word of the day after us a very powerful


This is this is that went crazy.

Did you see the tremendous bull wave?

Went we’ve all went we went viral.

This is I think Elon’s biggest non-obvious impact in this


JTOWER here’s your one answer to your question about what

happens to the the bottom 75% of venture firms.

It’s equivalent to what happens with the you know, kind of this

is the bottom of the top the slide that I just shared.

It’s the one we looked at a few weeks ago and I keep referring

to it because it’s just such a staggering like demonstration

of what people call the power law, which is how you know, kind

of excess returns accumulate to minority of investments.

So just a few investments make up the bulk of value that the

you know market cap of 43% of companies that have gone public

since 2020 is 750 billion dollars.

The market cap of 300 the other 300 is only 26 billion dollars

and the cash that went in to the 750 billion dollars is 136 and

the cash that went into the 26 is 107.

And so the cash that went in to generate that 26 billion at

107 that’s your bottom 50% and the top 50% put in 136 to make

750 and I think it gets even narrower as you move further up

to that top quartile.

So, you know, it’s just I can tell you what LPs are saying

because I’m it’s a hard business.

It’s just this is the companies that went public.

So this is also of the top company of the top funds and the

top companies that were actually able to IPO and so it highlights

how much of a power law actually plays through and so the

majority of these companies as you in Chamath even in your

chart you show the top quartile the bottom 75% or the bottom

50% I’ve looked at this data as well of those various vintages

are below 1.0.

They lose money for their LPs.

Oh consistently and it’s just it’s a cycle.

And so what ends up happening is the next generation comes

through and LPs they make a portfolio of bets and they hope

that they make enough bets in the right VCs that their

portfolio generates greater than you know market returns greater

than call it 15 20% target 15% target, but they’re going to

expect the majority or not.

I have an LP of report.

I’m out there raising launch fund for right now and I moved

from like the accredited the individual investor say that.

Oh, yeah, because you’re not 560.



So I’m publicly raising it and I’ve moved on from individual

investors 45 million dollars in commits after five webinars


Now I’m talking to you know, it was amazing.

It’s just 5060 is going to change the entire industry letting

the you know, the masses have some access to this capital and

this opportunity accredited and QB is going to change the world.

I believe you have to do deal with everyone one of them is it

easy to administer.

It’s incredibly complex because you have a large number of

people and they all want to talk to me.

So I did webinars five webinars and it resulted in a hundred

commits hundreds of commits for 45 million dollars, but you’ll

be able to pull you’ll be able to get all those capital commitments

drawn down when you need to like you have to go ping a couple

hundred people and get them all the wire money.

Do you need to have more operations people and we only do

for we let them one thing one thing you may want to do is like

for these smaller slugs is you can prewire you can set up an

escrow can’t where you prewire a hundred percent of the capital.

Yes, and then you also don’t have to you take it down when

you’re going to deploy it.

So you keep your IRR correct.

So we’re actually looking into those solutions.

I’ll talk to you offline, but I just did my first two meetings

with endowments etc fund to funds the entire discussions

right now are around.

What is your secondary strategy?

How are you getting in earlier not later?

And how are you building a larger position?

It is and even like some of the QP’s were sophisticated in our

you know are in over 10 venture funds the entire discussion

governance of these companies.

Are you taking board seats or not?

How early are you getting in and building a larger position

over 10% and what is your secondary strategy?

When are you going to start taking some chips off the table?

So the and I got to say if you’re an LP who didn’t sell into

the upmarket at all and you’re on your first fund, you know,

and you had all these great marks and they’re getting the

coming crashing down.

They’re not going to deal with you.

They just have too many options of top funds in the court.

I don’t think they’ve they’ve started to come down yet.

I don’t think we know what the top quartiles really going to

look like over these last few years.

I think that’s going to take four or five years to really

sort out.

Yeah, of course.

Yeah, so I think explain why Chamath just so people understand


I understand.

Well, I think I think that there are lots of valuations that

have supported huge TV PIs these, you know paper gains that

have allowed venture funds to raise enormous amounts of incremental

capital and new funds.

And so they are going to try to wait as long as possible before

they’re held accountable for that and the best way to do that

is to not change the valuation and so it will happen slowly.

It’ll be a trickle of these things and I think that takes

probably four or five years for it to really sort itself out.

But in the meantime companies will still need to get financed

companies will still need to get built.

That’s why I think like the public markets.

I think what SAC says is true giving us a signal of what these

true market clearing prices are will eventually slip into these,

you know, series D or E companies because a venture capitalist

who has now taken some big write-downs in one part of their


I suspect will now be very open to selling to private equity for

another part of their portfolio so that they can return capital

totally totally agree.

Yeah, it’s going to be rough out there.

You guys watch White Lotus.

Yeah, I just started season one.

I’m third episode in.

Okay, what a treat.

We won’t say anything but how great was season two?

The wrap was awesome.

It’s just incredible.

The last two episodes were extraordinary.

Yeah, let’s not say anything.

Matt and I just finished watching all of Handmaid’s Tale which

I will tell you is that is a fucking stressful show.

It’s like it’s like you’re putting in work when you’re done

those episodes.

You’re like, oh emotional labor, you know when they said this

emotional labor watching that show is like, oh my god.

It could could it could not be more sadistic and insane.

Oh my god, it is brutal, but you can’t look away incredibly

well done.

All right.

Listen, this has been an amazing episode and this is news for

the other besties.

Friedberg and I have been secretly collaborating.

No, we have you have a plan to a plan that we’re working on a

joint plan for all in summit 2023 because we are both helping

each other out on secret projects.

I’m ready to tip guys.

Oh, I love it.

The tip.

I know that’s it.

That’s we don’t need you sacks.

I’m a permanent.

No, that’s all.

That’s fine.

We know that you’re locked in.

No, I love that.

I have sacks as my anchor on this one.

I can always float back that way.

This thing could flip but Friedberg and I I’m like in this

case money is the root of all evil totally in this case, but

power and influence is something that even that’s Friedberg

celebrity Friedberg had so much of a good time at all.

In summit 2022 that his hatred of my producer fee is less than

his joy from the event and we are collaborating on super super


I have made up for my producer’s fee by using super gut and

becoming a big proponent.

I’ve announced it to make use the promo code.

She’s he paid you for that.

That’s the quipro quote.

Oh, yes.


You know, this is no conflict.

No interest to go along with doing the no conflict.

No interest.

That’s what’s going on.

Got bars and amazing.

So I use the double mocha.

The only the only person that you haven’t taken money from is


I mean pretty much you’re by the way.

Can I point out on the most loathsome person in tech bracket?

Can we go through it?

Do not name the company.

Do not name the podcast.

I’m eliminated already in the first round.

This is bullshit.

And you know, I thought you win.

No, I thought you won.

No, he lost.

It was possible.

Okay, let’s pull up the bracket.

Do not mention the podcast.

Come on.

How did Andy Jassy get on your chest?

Not I only want the bracket.

Do not mention the podcast.

We’re not giving them any just black out that in post.

I want you to black out.

Take it easy.

I don’t want to give these guys any credit.

So here we go.

The worst person in tech.

This is Chamath and Sachs.

We would say it’s a B podcast that’s run by literal socialists.

Well, look Chamath got a very tough draw.

I mean, of course, you’re going to lose to SBF.

I mean, that’s ridiculous.

That’s just, you know, you went up against the Warriors with


It is no way to win.


That’s a tough draw.

You had no shot.

You guys should have been on the side.

What about Sachs?

Easy draw.

Sachs versus in the most hated person in tech.

By 1%.

That’s bullshit.

Nobody even knows who Andy Jassy is.

I don’t get it.

Andy Jassy is a complete gentleman.

Andy Jassy is delightful.

Sachs is a horrible human compared to Andy Jassy.

Just in spice.

That is, I want to recount.

No, I wanted to win.


I want to recount.

This is election interference.

Union busting.

This is election interference.

I guess something you’re a specialist in.

I guess it’s worse to be a union busting Amazon CEO than a

reactionary conservative investor.

Yeah, I don’t get it.

This is ridiculous.

I just want to point out that the biggest travesty here is

that I did not make the list.

There are, and you know what?

These guys are trolling me.

These guys.

Shout out to producer Nick who just retweeted this.

Basically, you basically pick the, what is it?

The 30 most relatively well-known people in tech.

That’s what tilts J Cal the most.

This is terrible.

Worst person in tech.

I don’t make the list.

I’m going to double down this year.

Constantly kowtowing to the media.

You’re right.

You’re right.

I need to be horrible.

I need to be a worse human like you Sachs.

I’m going to try my best this year to work against humanity

and society and be more loathsome than you.

I’m really going to redouble my efforts.


I can’t catch up with you.

You buy into all their phony.

I’m too kind.

I got a big heart.

I care.

I have empathy into all their phony.

I know my empathy, but here’s the problem.

These guys left me off on purpose.

If you want to pull up the replies between Andreessen and

Bill Gates.

Oh, Andreessen.

That’s a lock.

That’s Andreessen.

Of course.

Andreessen crushed him.

He’s a 16 co-founder and man of terrible.

I mean, Marc Andreessen is a world-class shit poster.

Bill Gates is hiding somewhere.

Nobody Bill Gates is doesn’t tweet Marc Andreessen blocks


He shit posts with the best of them.

He’s up there.

I mean that guy’s a dark meme Lord.

Any other I mean, I really I really sympathize with you

Chamath that you got your ass handed to you there.

That’s just that’s like going up against the dream team.

Hold on.

Hold on.

Slow down, bro.

You’re not even letting us read these things.

All right.

Give me okay.


Don’t look at this one Twitter former idiot CEO versus

Airbnb CEO making.

Oh my God.

That’s so well-written Brian.

Hold on.

Slow down Brian this weekend.

He’s a great guy guy who really tried to make us believe

web3 was going to happen versus world coin and open.

Of course.

Chris Dixon wins much more loathsome than Sam Altman.


I got to run.

All right.

This has been free bird.

You didn’t even come I want to just congratulate free bird

on an amazing the best science corner ever an amazing product

and super gut that has helped me lose weight.

I feel great and for you know, recovering from whatever

illness you had.

All right, everybody.

I love you besties.

Shout out to David Sachs.

Love you guys, and we’ll see you all next time on the all

in podcast.

Love you besties.

Love you guys.


Oh, man.

We should all just get a room and just have one big huge

orgy because they’re all just useless.

It’s like this like sexual tension, but they just need to

release them out.