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.
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
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
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
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
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.
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
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.
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
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.
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.
It’s not a threat to safety.
If one of those two things is a threat to safety, it’s the real-time doxing
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.
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
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
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
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.
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
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.
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
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.
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.
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
Today, we can do it in a couple of minutes for $100.
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
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.
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
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.
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.
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
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
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.
We can solve this problem all forms of energy.
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.
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
That’s a good question.
Here we go.
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?
Can I just say?
Jake, I’ll call your intellectual dishonesty and raise you a steel
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.
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
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
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.
You can come in and you can do it.
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
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.
This was a fantastic science corner where we actually engaged David
Sachs, which country did you find anything to disagree with their
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.
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
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!
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.
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.
The David Saxe Jake house bestie friendship has never been
I don’t know about Friedberg and Chamath that seems to be on
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
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
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.
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
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?
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.
Here we go.
I’ll cut it out.
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
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
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
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
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
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
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
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, Checkout.com 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
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
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
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
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
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
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
I don’t know.
But if I was if I was figma, I try to close this thing ASAP
and get that money.
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
But again, the job of the venture capitalist is to convert
the gray bar into the purple bar and historically there’s been
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
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
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
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.
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
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.
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.
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?
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
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
Yeah, of course.
Yeah, so I think explain why Chamath just so people 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
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
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.
I know that’s it.
That’s we don’t need you sacks.
I’m a permanent.
No, that’s all.
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.
You know, this is no conflict.
No interest to go along with doing the no conflict.
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.
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?
Sachs versus in the most hated person in tech.
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.
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.
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.
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 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
That’s a lock.
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.
Slow down, bro.
You’re not even letting us read these things.
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.
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.
Chris Dixon wins much more loathsome than Sam Altman.
I got to run.
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
Love you besties.
Love you guys.
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.