科技文化战：马斯克对决 SBF，特朗普与共和党的裂痕

Chamath Palihapitiya (00:00:00): I tell you a funny story? So I -- Yes. -- I was in I was in -- and then I when I landed, there was an assistant message on the plane, and then the pilot text me like, hey. Bad news. We're not gonna be able to take you tomorrow. There's an error message, and if we can't resolve it, we can't fly. That's it. Okay. So I text that I'm like, hey, dude. I'm in a really tough spot. Is there any way that, you know, I could catch a flight, you know, with you tomorrow? absolute dead silence. Uh-oh. 3 hours later, Paul pilot Paul texts me and says, good news. Clared us. We're going tomorrow. I text Saks right away. Hey. No worries. It's all resolved. In 8 seconds, he responds. Awesome with an exclamation mark. Yeah. Jason Calacanis (00:00:46): Yeah. No. He texted Speaker 3 (00:00:48): me. Also Chamath Palihapitiya (00:00:49): -- Speaker 3 (00:00:49): He had zero intention Chamath Palihapitiya (00:00:51): of bringing me and my family with him. 0. David Sacks (00:00:53): I fell a buster. Chamath Palihapitiya (00:00:54): He fell a buster. David Sacks (00:00:56): No. The truth is the plane was with me. I was using it. I'd be happy to let you borrow the plane if I'm not using it. Jason Calacanis (00:01:01): Here's Saxx the last time we went to dinner. Ready? The check comes. Miller unlocks lands on the table. Here's Saxx. what you're seeing? See that? You know what that is? Saks going for his wallet. You can just count it. David Sacks (00:01:11): It's almost there. because I I can't remember the last time. Jason Calacanis (00:01:14): He's almost there. David Sacks (00:01:15): the last time you picked up a check, Jacob. Jason Calacanis (00:01:17): What are you every time I pick it up on the way in? David Sacks (00:01:19): Maybe for a slice of pizza, Speaker 3 (00:01:21): Come on. David Friedberg (00:01:22): Saks is one of the most generous people I know. Chamath Palihapitiya (00:01:24): I remember we went to a bar once. We barely had time to get a glass of still water, a diet coke, and some of the free nuts. And then Jake Howe was like, guys, it's on me, but we have to eat. I pulled out a 20. I gave Speaker 3 (00:01:36): it right to the bartender. Jason Calacanis (00:01:37): That's my turn. David Sacks (00:01:38): My turn. Chamath Palihapitiya (00:01:39): I got my turn. Speaker 3 (00:01:42): Oh, wow. David Sacks (00:01:44): Chima, you got the the white truffles and the flaming young last week. I think these bar nuts are on me. Jason Calacanis (00:01:50): It's it's only fair. David Sacks (00:01:52): Yeah. I throw in some cashews too. during the cashews and raisins, the trail mix. I'll get the trail mix because you got the truffles last time, Chamath. Speaker 6 (00:02:01): Oh my god. The weather winner is wide. Rainman, David Sachs. We open source it to the fans and they've discovered Jason Calacanis (00:02:19): Alright, everybody. Welcome to the all in podcast. We're still here. Episode 105. I don't know if you saw a voice last week. The pot hit a new high watermark, 16th overall in the world. So congratulations. incredible. David Sacks (00:02:33): I thought we peaked at 14, actually. Jason Calacanis (00:02:35): Was it 14? The 14. Yeah. David Friedberg (00:02:36): People listen to this pod. Chamath Palihapitiya (00:02:38): When I was in DC this week, I had a bunch of meetings. And so many of the of the staffers listen to the pub. And they came up to me. They're like, hey. Love you guys. Listen every week. It's really great. It's really crazy, actually, the reach of this thing. It's really cool. Jason Calacanis (00:02:52): Now when you were in DC, how gleeful were they about Saks's absolute shellacking last week? That must have been my fives all over. The dems, like, they won twice. Trump announced and Saks lost. Listen. Chamath Palihapitiya (00:03:06): We we talked a lot about -- David Sacks (00:03:07): Are they about s b and how much money he gave them in order to to stop that red wave. Speaker 6 (00:03:12): Oh, oh, Speaker 3 (00:03:13): oh, oh, Jason Calacanis (00:03:13): take it easy. Chamath Palihapitiya (00:03:14): I talked to I talked to a lot of folks, folks. And what I would say is we talked A lot about energy policy. Life life sciences, obviously, two areas that I invest a lot of money in, and foreign policy. And Actually, David, you'd be surprised by how many fans you have there. David Sacks (00:03:29): Cool. Well, I mean, like general Milley, like we talked about last week, he's come around. Jake Sullivan just this week. said that he told the Ukrainians it was reported that they can't have Crimea back, get realistic. So Jake Sullivan and Millie are, like, the voices of reason now. in the administration on this. And they're just saying the same thing I've been saying for which I was excoriated by the foreign policy establishment. And I got into a little Twitter spat with Ian Bremner this week because all of a sudden, he post said, oh, everybody has been privately saying that we need to negotiate. No. No. You haven't. You are criticizing, you were denouncing Elon as a Kremlin agent when he posted that Twitter poll suggesting that the Ukrainian should negotiate. So you were publicly denouncing those of us who are calling for negotiations. And now all of a sudden, you're saying, well, this has always been the position. But I think what's significant about that is The guy is just a weather vain for the blob and the the foreign policy establishment. And so the weather vain is not pointing towards negotiations. So that that's the good news here. Chamath Palihapitiya (00:04:28): Do you think that if DeSantis wins the presidency, you will be nominated as second Thursday. Jason Calacanis (00:04:34): Treasury. What would you take? Treasury? No. Chamath Palihapitiya (00:04:36): No. No. No. state. David Friedberg (00:04:38): Sachs, if you were offered a cabinet position where you take it, Chamath Palihapitiya (00:04:40): you should. You should take it. David Sacks (00:04:41): What you what you have to understand is that my position on foreign policy or Ukraine specifically is not it's not it's not adopted by either party. I mean McConnell And the center of public and leadership are very much on board with the Biden administration's policy on this. They are very, very hawkish. It's really the unit party on this issue. There's really just one consolidated blob. Jason Calacanis (00:05:04): Okay. But back to the question, would you Would it be a dream of yours? Would you find great joy in having a White House position? To serve your country. And DeSantis goes in. To David Friedberg (00:05:14): serve serve your country. Jason Calacanis (00:05:15): Would you serve? David Sacks (00:05:17): Would I serve? If if if the president of the United States calls you up and and asks you to do something, obviously, you have to -- You do. Chamath Palihapitiya (00:05:24): -- David Sacks (00:05:24): to serve your country. But It's not something -- Mhmm. -- I'm actually looking for. Jason Calacanis (00:05:28): That's a yes. David Friedberg (00:05:29): What if he asked you to serve as the US ambassador to Burkina Faso. Where? What? David Sacks (00:05:35): The ambassador roles David Friedberg (00:05:37): are so funny. It's like you have to compete for the good ones, and then some people get stuck with the bad ones. Jason Calacanis (00:05:46): You can talk. Those are those are available for purchase. Yeah. David Sacks (00:05:49): Yeah. Exactly. You know, there's like a there's like a menu of these things, like these ambassadorships like that. I don't think it's, like, written down anywhere, but it's kind of, like, unspoken. It's like, if you want the ambassadorship to the UK, that's, like, $10,000,000. And then, you know, like -- Affordable. Chamath Palihapitiya (00:06:05): No. No. But the the the thing with with UK and France, it's every every embassy. Every ambassadorship comes with an annual budget. But the cost of actually running that embassy and really throwing the parties is much more. So for the UK and France, the gap is 10,000,000 a year that you have to fund out of pocket. So you gotta be really willing you know, to put the money up. But apparently -- You gotta pay for the parties? My my friend my friend was was the ambassador to the UK under Obama, and I went to a party there. It's unbelievable. And he has the best life because, like, you know, he was meeting everybody in the world. You can imagine, goes through the UK and then wants to meet the US ambassador. It was a great job for him. David Sacks (00:06:44): Right. But the money I'm talking about is the cost of buying 1 of these senate cures. You have to typically raise that bunch of money. -- bundle. You gotta buy it. You bundle that much money for whoever. This is what I've heard. I mean, I don't know. This is what I've heard. Is that -- Well, Chamath Palihapitiya (00:06:56): does that mean that SBF's parents, if Elizabeth Ward wins the presidency, SPS David Friedberg (00:07:00): It's okay. It gets a pass for ship. Jason Calacanis (00:07:02): Right now, the Illuminati right now just revoked all of our Illuminati cards. We're not supposed to talk about those guys that you can buy an ambassadorship. But speaking of buying politicians and coverage, let's get an update on FTX. So Chamath Palihapitiya (00:07:16): -- David Friedberg (00:07:16): Well, you've heard this Trump. Speaking of politics. I mean -- You know, you bring it up. -- talk about this. Jason Calacanis (00:07:21): If I bring it up, Sat I David Friedberg (00:07:22): didn't wanna tilt Sat in the first five minutes. David Sacks (00:07:24): The only thing I wanna bring is is is I think I'm entitled to and I told you so on this. There was a story where the FBI said that the reason why Trump kept the boxes in his basement. They've now the FBI has definitively said, it's because he was just trying to preserve Mementos. not try to sell state secrets to the Saudis or something like that that, like some people, were making wild conspiracy theories about So Jake, it looks like I was I was right about that. In fact, I think we had that very discussion on this pod. Yeah. Jason Calacanis (00:07:54): I mean, we I I said I thought he was keeping it for, like, keepsakes, like MOMENTOs. That was my position too because he's Speaker 6 (00:08:01): a boarder. David Sacks (00:08:01): You didn't you didn't support the selling conspiracy theory. Speaker 3 (00:08:03): Let me ask David Friedberg (00:08:04): a question because I I mean, Jason Calacanis (00:08:05): I wouldn't put it past them. He's a maniac. David Sacks (00:08:07): I think if you believe that this was about Mementos, which the FBI has now said it was, I think you also have to say that the FBI's approach in raiding his home with armed, you know, soldiers was heavy handed. Now I'm not saying they didn't have the legal right to do it. I'm sure they checked all the right boxes. but it was heavy handed. But, look, that brings me to another point. Why do they do it? I actually suspect now that what the Biden administration's trying to do is keep Trump in the news. I think they actually want to provoke him. Chamath Palihapitiya (00:08:33): They want him to run. David Sacks (00:08:34): They wanna run with this. It's the exact it's the exact same thing. Remember the the 50,000,000 that went into Republican primaries to support the, you know, the the election denier candidate. Turns out, that was a successful strategy for them as much as I hate to admit it. It's as reckless as I think that was and hypocritical. because I don't think you can be out there claiming that these candidates are a threat to democracy at the very same time you're funding them. So I think it was completely hypocritical and sort of Machiavellian, but it worked. And I think in a similar way, what the Democrats are gonna try to do over the next years is is keep Trump and then use as much as possible. And in fact, CNN ran his entire speech announcing last Tuesday, I think, for this reason. Chamath Palihapitiya (00:09:15): If Trump wins the Republican nomination -- He's going to. -- then he will lose the presidency. Because if you look at all of these exit polls that came out of these midterms, he's just so massively unfavorable. But that's not what's going to be, you know, litigated in the primaries. In the primaries, it's just republican on republican, and there are a nontrivial number of paths where Trump actually beats DeSantis. And I think that's very scary to the Republicans who wanna just move on and have a chance of actually consolidating power. And it's gleefully blissful for the Democrats because if, again, And we saw this. Look. If if if the Democrats were able to fund and field MAGA candidates in the Republican primaries that then lost in the general election, Well, the best MAGA candidate of all is Trump. So it David Sacks is completely right. Now, like, the balance of power here should be if you're the Democrat, Whatever you can do to keep him in the news, whatever you can do to induce him to run makes a lot of sense because he will he'll cripple the Republican party. He'll split he'll split and fracture the vote. David Sacks (00:10:23): Look at look at how Jake House got a big grin. He's admitting to the hypocrisy, which is for years, He's just screaming about what a threat Jason Calacanis (00:10:29): This is your voice. David Sacks (00:10:30): Hold on a second. You've been screaming about what a threat to democracy is, how he's secretly on the payroll of the Kremlin or foreign governments. And yet, And yet, you wanna keep him in the news. You want it to be the nominee. Jason Calacanis (00:10:40): And you Republicans don't David Sacks (00:10:41): have the common sense Jason Calacanis (00:10:43): to kick him out of the party. David Sacks (00:10:44): No. I do. I do. I do. Come on. I was on the DeSantis train before at the midterms election. You know that. Jason Calacanis (00:10:51): We you on this pod will never kick him out of the party. You should say Chamath Palihapitiya (00:10:54): -- Jason Calacanis (00:10:54): How much does it kick David Sacks (00:10:55): him out? Chamath Palihapitiya (00:10:55): -- Jason Calacanis (00:10:55): think we You guys should all disavow him. How would you disavow him? David Sacks (00:11:00): How? I've already said I support to Santos. I said it before the midterms. What else do you want me to But by the way, Jason Calacanis (00:11:05): I don't think you're David Sacks (00:11:09): I think you and many other people on the Democratic side in the media are being very hypocritical about this because you want to claim that he's this unique threat to democracy while playing this game where you wanna keep him in the news, you wanna base the product with as much auctions as possible because you think he's more beatable. And by the way, I agree that he's less electable than DeSantis, which is why part of the reason why I'm on the DeSantis train. I was thinking of DeSantis. Hold on. I also think DeSantis would get more done. But look, don't think it's a foregone conclusion that he's gonna be the nominee. Did you see the new polling that came out after the midterms? DeSantis is now the favorite in among Republican primary voters, among every different slicing that you wanna do of whether it's likely Republican voter primary voters, whether it's Fox News viewers and on and on and on. DeSantis is now ahead of Trump by about Okay. Jason Calacanis (00:11:58): Wait. Hold on. I need to be able to state my position because Saxon interrupted me seven times. I just would like to get my position on Number 1, you all backed somebody who is a horrible human being, who made terrible decisions. And now you guys keep supporting him. At some point, you have to put your foot down and say, listen. We don't want this guy. You have to publicly say, January 6th, you know, and this guy's approach, the election denial, you guys have to come out and just say, we don't want this person to run. I think you've been hedging too much. I think that's the problem. Now Chamath Palihapitiya (00:12:26): -- David Sacks (00:12:26): Who has? Chamath Palihapitiya (00:12:27): -- Jason Calacanis (00:12:27): I am not -- How can I disappear? -- party. Yeah. No. You always were a little bit late because I I did guess you understand. Hold on. David Sacks (00:12:33): Hold on. Jason Calacanis (00:12:34): In this very pot, I asked you, If he run, would you support him? Would you ever vote for him again? And you were like, wow. And you would vote for him again. If he wins the nomination, you'll vote for him. That's the truth. Republicans will still vote for him. David Sacks (00:12:44): Look. You know that before it was popular, before the midterms, I was on the DeSantis train. I was seeing so on this pod for over a year when it was very unpopular certainly in the area in which I live. Mhmm. And so, you know, and there are a lot of Republicans. Now most Republicans now agree with me on this issue according to the polling that just took place. Jason Calacanis (00:13:02): But if you win this nomination, you will be transferred. David Sacks (00:13:04): Jason is that you want us to buy into every bullshit narrative that you've ever told about this Jason Calacanis (00:13:10): issue about from -- -- a bullshit? No. It it was it was a long time. Chamath Palihapitiya (00:13:13): -- Jason Calacanis (00:13:13): finish his bullshit. David Friedberg (00:13:14): Jake, I'll finish it up. Let him finish. Let him Jason Calacanis (00:13:16): He's interrupting me every 2 seconds. Stay out David Friedberg (00:13:18): of it, Freeport. Chamath Palihapitiya (00:13:18): Oh, I David Friedberg (00:13:19): just want you guys to god. I just want you guys to speak and then let the other person speak. That's it. I don't come out any second. David Sacks (00:13:25): My my point is just Speaker 3 (00:13:26): Here we go again. I I David Sacks (00:13:27): don't I don't wanna rehash every single thing in the past. But but look. The the point is that I think we have more electable candidates. I think we have candidates that would get more done in office. But and I've already said so But I, you know, but I that doesn't mean I believe this whole, like, threat to democracy thing. I think that is massive inflation of the actual threat. But but look. If you want me to say that we have more electable candidates, we have candidates who will get more done, who frankly would be less alienating to moderates and independence and could even win over some moderate Democrats the way that DeSantis did in Florida to win by 19 points. Yes. Happy to say that. And I've been saying that. Jason Calacanis (00:14:07): I will just say, if I if I'm if Friedberg allows me to make a point, I would like to say, It is a threat to to democracy, January 6, and election denial. Those 2 things are acute threats to democracy. Chamath Palihapitiya (00:14:17): -- David Sacks (00:14:17): party fund over $50,000,000 to those candidates. Jason Calacanis (00:14:21): cynical because they want it to win. Synacism, pure cynicism. Okay. David Sacks (00:14:25): We're on the same page about that. Jason Calacanis (00:14:26): Yeah. Yeah. It's pure cynicism. But do you let me ask you a question. and then we'll wrap on this because I know it's uncomfortable for free bird to watch mommy and daddy klay. Speaker 3 (00:14:34): You that's -- Yeah. childhood trauma. I know this has to do with childhood trauma. It's cool. Yeah. Jason Calacanis (00:14:42): It's okay. Bobby, daddy's still love Speaker 3 (00:14:44): each other even if we fight sometimes. David Friedberg (00:14:46): just makes me wanna turn the volume down. Go ahead. David Sacks (00:14:49): We're almost done. Jason Calacanis (00:14:49): Anyway, I do think fielding moderate candidates is the pack. And I I think Tremonti, you brought this up a ton of times. Who it's the race to whoever can get that moderate middle, and I hope that they feel better candidates. But do you think, Saks, he's running this is one of the cynical takes is that he's running because it will help all the legal cases against him. Do you think there's anything David Sacks (00:15:11): my guess is that that they see him as an easier candidate to beat, and they're gonna do everything they can to try and keep him in the news. And and I don't I actually I don't think that's your position. I actually think that you're being sincere that you don't want him to win a second term. I mean, remember, like, we don't know I think we all believe that we're gonna have a pretty severe recession next year. So just because the democrat cynical strategy in the midterms are promoting you know, what they called election deniers in the primary. That happened to work, but just because it worked last time doesn't mean it's gonna work next time. Chamath Palihapitiya (00:15:41): An abortion, absolutist, and a whole bunch of other things. I think I think point is pretty much this, which is that people gave Trump a lot of credit for being an idiot Savant. But it looks like he's more of an idiot Savant minus the Savant. Okay? This is a this is kind of a goofball who has a brilliant media strategy, and he had his finger on the pulse in a moment. And then he just couldn't execute, couldn't put 22 together, couldn't put one foot in front of the other, and he was way too divisive and he got booted out, and he lost Fair and Square. And now what the Republicans have to realize is if they don't figure out how to field somebody out of the primaries that is different than Trump, the Democrats will win. Because if it is Trump, Whoever the democratic candidate is, I don't think it really matters, will crush Trump. David Sacks (00:16:31): Yeah. Look. I I think that's like correct. I mean, I think I think that we talked about it last week. You cannot win the presidency with, call it, 45% of the vote. I mean, Trump has at that amount. Chamath Palihapitiya (00:16:41): And the scary thing for Republicans, by the way, is Trump does a much better job than anybody else in getting his base activated. So the thing that all these polls get wrong And I think they've consistently gotten wrong, and and as a result, have underestimated him is they don't give him the credit he deserves duly for being able to curate a fervent base of that 30 or 40 percent of America that will show up for him. And even if they didn't show up as much, In the midterms, they sure as hell showed up in the primaries for his candidates oftentimes. I just think it's a very dangerous cocktail that that you can't sleep on. So the Republicans have to take this really serious. Moderate Republicans wanna have a chance of winning. you guys have to figure out how to beat Trump in a ground game. Because if his base shows up, he has a decent chance of winning the nomination but then you will lose the general. David Sacks (00:17:32): Yeah. I think that's I think that's pretty much spot on. I think Republicans really have to be smart and disciplined and think about we have to nominate the the most electable candidate. But here here's the thing is we're not even debating policy right now. No one No. No one really says that, hey, on a policy basis, there's a huge difference between, say, Trump and DeSantis or some other folks. It's all about personal style. And is it really worth it to their Republicans to potentially lose the next election based on personal based on style points? It's a silly reason to lose. You know, William F Buckley a long time ago said that he would always support the most electable conservative candidate. He didn't always go with the most conservative candidate. He wanted to go with the most electable candidate who met a basic policy bar And he sometimes got in trouble for that. For example, he supported Push 41 over Jack Kemp. I know I'm going back a long way. But But in any event, you know, having thinking about electability is just really important. Jason Calacanis (00:18:32): There's one simple lining here. The head of the Republican Party Rupert Murdoch has absolutely dissed Trump. I don't know if you saw the New York Post, but he put on the cover of the New David Friedberg (00:18:41): York Post a little Speaker 3 (00:18:42): lower, like, temp Florida man makes announcement. And on page 26, he had the announcement of Trump running for president. Chamath Palihapitiya (00:18:49): And the funny thing was the -- Who knows Rupert Murdoch. He didn't even name Trump as the presidential, the absolute last line of that column, and he said, oh, and he also happened to be the 45th president of the United States. Yeah. It was very funny. David Sacks (00:19:02): What you're seeing a lot of Republicans saying, I think, correctly, is that if you wanna win elections, you have to look out the windshield, you know, not in the rearview mirror. And what we saw in the midterms is that even talking about 2020 was at minimum a giant waste of time and a distraction and at maximum potentially cause these candidates to lose. I mean, the fact of the matter is that that a lot of candidates, including semi supported, in battleground states, who got lured into trying to re litigate 2020, they all got vaporized. And I just think it's stupid to be talking about the past Voters want you to focus on the future, and especially when there's no policy outcome that matters. That's at stake. for you to be talking about a past election instead of the future and the current election program. It's just it's just completely stupid. Jason Calacanis (00:19:50): Friedberg, if I may bring you into this discussion uncomfortably as if my I've come to place, it might be. Would you vote for Biden incredibly old? I don't know. He's gonna be 81 or 82 in the next election. Do you vote for Biden or DeSantis? David Friedberg (00:20:05): As I go through the list of things I'm most concerned about in the world today, Number 1 is the debt and spending cycle of the federal government in the US. I'm I think it it's the most kind of scary set of facts and conditions that we're getting set up for kind of a major crisis Chamath Palihapitiya (00:20:24): 10 David Friedberg (00:20:25): to 15 years from now. because you can't afford all the debt that we've taken on as a country as well as the entitlement as well as defense. And so something's gotta give And there's a bunch of paths that that could emerge from that set of conditions that are all really scary paths and not not good. I'm more concerned about that than I am about nuclear war, climate change. Just to be clear, because I think that the social effects and the the the global geopolitical effects that arise from the US kind of destructuring because of our our our debt and spending cycle that we're in right now are are far more significant than what we'll experience over the same period time. And, again, I do think that technology is gonna resolve a lot of our issues with climate change, and I think nuclear war, cool heads will prevail. Everyone's got a family. So that's what I'm most concerned So any kind of voting decision I make is made with that lens, which is what's the the best path to supporting some some sort of steps. -- responsibility. Set that or step back to resolve those issues. As Charlie Munger said so well in this interview that was published this week. And I I said it a few times on the show, but he he did a he's he's a much better speaker than I uses far fewer words. But, you know, in democracy, eventually, the populace realizes they can vote themselves all the money. And, you know, that's what we see happening in an accelerated way in Latin America. We've seen that with a lot of these democracies and ultimately resolve to kind of socialism. And in in the US, we're seeing a lot of this behavior where we're kind of voting ourselves all the money. We're putting in place politicians, and the populace is saying, I want, I want, I want, and more money comes out. And it it it totally decreases the strength and the resiliency of our nation and our economy And it's the most concerning thing to me because the the incredible innovation and economic engine that is the United States has threatened, and it really threatens a Jason Calacanis (00:22:10): lot of stability. in the world today? Tremav, any any final thoughts here as we wrap up the political discussion. I mean, I think you were -- Obviously, Democrats are you voting for Biden, but you also care about fiscal responsibility. So where are you at with your vote for 2024? I Chamath Palihapitiya (00:22:25): don't think that we know who's actually running on either ticket just to be completely honest. So that's my perspective. My other comment is I think what David said is so spot on. The single biggest issue that we have is that we have made a huge decision to de globalize, and that de globalization has the risk of introducing a hyperinflation loop. And we won't know how bad that is for another year or 2. Jason Calacanis (00:22:52): Why would it do that? Why would it Chamath Palihapitiya (00:22:54): -- Well, think Jason Calacanis (00:22:54): about globalization costs today. Chamath Palihapitiya (00:22:55): -- Jason Calacanis (00:22:56): inflation, explain that. Chamath Palihapitiya (00:22:57): So today, let's just say you buy a chip to make the iPhone. You buy that chip from, you know, TSMC that makes it in Taiwan, ships it to China. And the entire world is serviced with that supply chain that keeps that chip as cheap as possible. Now with the chip stacked as an example, we will build resilient supply chains where now instead of one place, it'll come from six places, 5 of those 6 will be in allied territories. the United States, Western Europe, potentially Mexico. The thing with that is that that now is 6x more equipment that you're buying. Right? Instead of one machine, you now have 6 machines. Instead of one person operating the machine in one country, you have six people in six countries. As you can imagine when you layer up all these costs, there is no world in which that chip is as cheap as it was before. And so the cost of that has to be born either by the consumer who pays a higher price, that's measured as inflation, or by the government who subsidizes it at the point of import, that'll be measured by debt. And so one way or the other in our in our path now towards more resiliency and national security, which by the way, I think is the absolute right decision. Okay? Energy independence, all of this stuff we have to do today, We are at risk of a hyperinflationary loop, if not managed well. And so you have to be really on the levers of the economy, and you have to understand it deeply. The person that deserves the most credit of preventing this hyperinflationary loop right now is Joe Manchin. And, hopefully, the history books, whatever J Powell does, I think, has been good. But the fact that mansion prevented 6,000,000,000,000,000 more dollars of being pumped into the economy in the last 2 years is probably the single thing that prevented inflation instead of being peaking at 9 from peaking at 15 or 16. I think it would have been a national disaster without that. David Sacks (00:25:00): Jamath is right. That extra 6,000,000,000,000,000 that Manchester saw would have been a national disaster, but let's also credit to every Republican because they also voted against it. I mean, the fact that the matter Chamath Palihapitiya (00:25:09): is that -- The pressure was unmanned to do the thing and see the force from the treason he did that. David Sacks (00:25:13): Yeah. Don't look. I agree. I I agree that -- We're following coverage. Chamath Palihapitiya (00:25:16): It's a profile and courage. David Sacks (00:25:17): I agree that he was in the hot seat. Well, so is cinema, by the way. cinema didn't go for the 3 and a half trillion build back better. But then, Mansion, you went along with the $750,000,000,000 version of BBB, which they renamed the inflation reduction act. That was kind of a a disappointment. So frankly, like, I give more credit to the Republicans era against all of it, and the democrats jammed it through. So if you're worried about all of this 1,000,000,000,000 and 1,000,000,000 of unnecessary spending, why don't you give there a Chamath Palihapitiya (00:25:45): whole bunch of chance? I'm talking about the delta between what was spent in what could have been? The entirety of the gap is really was prevented by Joe Manchin. David Sacks (00:25:53): I know. But it was Joe Manchin signing with the Republicans. My point is just look. Jason Calacanis (00:25:57): The other party was David Sacks (00:25:58): perfect on spending. They both wanna spend too much money. But at this particular moment in time, The Republicans are more restrained about spending than the Democrats. Jason Calacanis (00:26:07): Let's go to number 1 issue for each person. Hold on. Number 1 issue for Friedberg is fiscal responsibility. I was going to say the same thing. It is my number one issue in this next election. I wanna see austerity, fiscal responsibility, and get this spending under control so that our kids do not inherit, you know, stagflation, hyperinflation, or whatever cocktail of disastrous economic policies we are handing to them. What is your number one issue? Sachs for 2024. If you had to pick a number one issue, what would it be for David Sachs? David Sacks (00:26:35): Look. I think it's simple. The president's job is to ensure peace and prosperity. So you guys are talking about the prosperity side. I think we do need fiscal responsibility. We need to have a good economy. There's, like, a bundle of policies that go into that starting with I think, greater fiscal restraint. And then on the peace side, I think we need to adjust the America's foreign policy to be less interventionist. We're, you know, we're involving ourselves here, there, and everywhere all over the world. And I I'm hopeful that what I'm hearing out of administration in the last couple of weeks from Jake Sullivan, from Millie. These are some good things that I'm hearing. But, you know, I I would like to see as dial back on the foreign interventionism. Jason Calacanis (00:27:14): If you had to 6040 that or whatever, is is one more important than the other, or are they both equal and then we'll go to Chama? both equal for you? Which one's David Sacks (00:27:20): more important? Chamath Palihapitiya (00:27:20): -- David Sacks (00:27:20): they're both I mean, look. How how can you have a successful United States if we're either in a recession or at war You don't want any either of those situations. Jason Calacanis (00:27:29): So those are your top 2 equally. What is it for each month? What what what what are your options David Sacks (00:27:33): for you? There's also a third one, which is culture. Jay Cal. So this one's a little bit hard to categorize, but I do think culture matters. And, you know, I want us to have a culture of excellence. I want in the schools, for example, I think schools should have grades. They should have advanced math. We should pull our kids to a high standard. I think that we wanna have cities. We wanna, you know, have cities crime's not out of control. We need to have, you know, a sound border policy. So I think there's, like, a collection of policies there under you know, schools, crime, border that are sort of broadly cultural, I guess. But or maybe you could call them quality of life issues. So, you know, yeah, we need to have a good economy. We need to stay out of foreign wars, but also we need to have a high quality of life. Chamath Palihapitiya (00:28:16): Can I steal man something for you? because I I really agree with those three things, David, that you said. But I've I've spent a lot of time thinking about this. In my formation is that there's one thing that allows us to solve all three, if you bear with me for a second. And I think that that is the energy independence of the United States. If you look inside of what's happening in the US today, the cost of generating energy is effectively as cheap as it's ever been and as close to 0 as it ever has been, and it's only gonna get cheaper. The problem that we have is that we have all of these decrepit laws and infrastructure and regulatory capture that causes us to always be in an imbalance. And as a result, we do all kinds of crazy things. We borrow enormous amounts of money to create subsidies we go when we fight all of these, you know, foreign wars that don't make any sense. We wrap the energy problem in setting climate change language would cause us this cultural division. But my belief, quite honestly, is that the the reason the IRA was so important, it has it is the most clarified piece of legislation we've seen that essentially puts all forms of energy on a level playing field and has the chance to get America to permanent energy independence. And if the cost of energy is 0 and we can abundantly create it in the United States, What I think happens, David, is we have energy to rebuild our supply chain much cheaper so inflation gets under control. We don't borrow as much. we have a completely different lens on foreign policy so that this interventionism and fighting over resources is much harder to justify. And we put the climate change language aside, and we use energy independence as a form of national security. which gives us the courage to battle all these other cultural taboos that we otherwise have to say we agree with even if they don't necessarily make any sense. And there's a bunch of them. So I don't know. My my my my answer to your question, Jason, is that one thing. If we accomplish in the next 5 to 10 years, has a chance to really change the course of the United States. Jason Calacanis (00:30:20): Right. And then buy so I I'm guessing then Biden's your vote because it is, in fact, Biden, because Biden is the one who who pushed for these clean energy tax credits and this policy in it. Freeport, what do you think? David Sacks (00:30:31): cancel he also cancel our energy independence. I mean, look, we were energy independent based on fracking. You may not like fracking, but it did get us energy independent. You may think that there's environmental consequences to it that you don't like and and that have to be balanced. But we did have energy. Chamath Palihapitiya (00:30:46): fracking. I believe in that gas I believe in coal actually as a bridge fuel, I believe in all of these things. I believe that these are all more important than going off to all of these foreign lands and trying to justify spending 1,000,000,000,000 of dollars and putting tens of 1000 of American lives at risk, essentially for resources that we can actually create for ourselves at home. David Sacks (00:31:06): Well, I agree with you on that a Chamath Palihapitiya (00:31:07): 100%. Jason Calacanis (00:31:08): I'm fine with I mean, I'll tell you, like, clean fracking as a way as a bridge. Go ahead to getting to, you know, more independence through nuclear And Renewables Go ahead, Free Burke. David Friedberg (00:31:16): Like I said before, China's declared that they're building 450 nuclear power plants. The net cost effective cost of electricity production out of a nuclear power plant is somewhere between 1 and 5¢ per kilowatt hour. The US on average is paying 11 to 15¢ per kilowatt hour. nuclear is Chamath Palihapitiya (00:31:33): -- Just through utility so freeproof. That's with all the regulatory capture and all that trash that you have to spend. For example, we have to spend $220,000,000,000 a year. to replace the power lines in America by law. That's $2,200,000,000,000 just there. David Friedberg (00:31:47): Right. And so the cost for solar and wind off grid I think is around 3 to 7¢ a kilowatt hour in that range. Right? So it gets nowadays, it's gotten much more competitive. But I think that the the nuclear solution is just not even being engaged in the conversation. Now I wanna go back to the previous point, which is because I didn't state the numbers before, so I just wanna state them because they're they're so shocking, and this is what what shocks me. The current federal debt is $30,000,000,000,000. Our GDP is around Chamath Palihapitiya (00:32:17): 23,000,000,000,000. 5% David Friedberg (00:32:19): interest rate on $30,000,000,000,000 is $1,500,000,000,000 in interest payments alone every year. And our Social Security so so 1 and a half $1,000,000,000,000, I mean, that alone is about Chamath Palihapitiya (00:32:31): 6%, 7% David Friedberg (00:32:33): of GDP. So you have to tax every transaction in the country by 6 or 7 percent just to pay the interest payments on the debt. And then we have Medicare and Social Security Chamath Palihapitiya (00:32:43): -- That math is wrong because you have maturities of all different types with different yield to maturities and different coupons. Right. David Friedberg (00:32:50): So on fast forward. Right? So that's it's not today's numbers. It's what's happening over time. So as you look out and you look at the the yield on treasuries and you apply that to the current debt level and the increment in the debt level, you'll get to that level. Right? You'll get to a trillion 5 a year in interest payments that need to be made plus another, call it, Chamath Palihapitiya (00:33:09): 3, 4, $5,000,000,000,000 David Friedberg (00:33:11): a year in mandatory spending. And so that's where the country starts to run into a problem. because at some point, when you have to tax so much to cover the cash payments that need to be made by the federal government, the economy really gets hurt and things start to cripple. And then if you were to take those entitlements away, Social Security, Medicare, you have a real problem with people's ability to support themselves in an economy where they're not working. These are elderly retired people. So there there is a mate at work to pay these expensive medical bills. So there's a major crash coming if we don't figure out how to bridge our way to this gap. So if someone wants my vote and they're gonna run for president, they would put up a simple chart like Bill Clinton used to do and show me a 10 to 30 year plan and just say, here's where we're headed. And here's what we're gonna do to make sure that doesn't happen. And that chart alone, I think, can win the vote. Jason Calacanis (00:33:58): Okay. Let's pull up the chart then. So here is the federal debt, total public debt as a percentage of gross domestic product. As you can see, in the seventies eighties, we were at under 50%. The nineties, we started, you know, growing that badly. Chamath Palihapitiya (00:34:11): I think this matters. I think everybody -- Yeah. -- every self intellectual looks at this chart and says, oh my god. We've exceeded a 100%. You know, the the empire's gonna go to ruin. That's not why the empire goes to ruin. We have the reserve currency of the of the world, and there's an enormous amount of power that comes from that position. So what the right number is is TBD. That's the most honest way to think about it. It was a 100. It's at 150. It coat good or 200. Many countries operate at levels above us and still haven't imploded per se. The real thing is what part of what Friedberg said is, look. If you really wanna look at what we pay, Today, we pay $400,000,000,000 this year. That's the interest payments. Okay? That's when you calculate all of the different maturities we have With all of the different coupons we have, that's what we owe today. And David is right mathematically that if interest rates go to 5% and stay there forever, But we know that that's not how economies work. They ebb and flow. Okay? So the real problem that we have to understand is how do you actually create enough growth? And then the next time that we have a meaningful fall in interest rates like every other person does, You know, look, a lot of people in America know how to refi their credit cards, refi their home loans, refi their mortgages, the United States could have had a much more aggressive and thoughtful strategy of reflying by pushing up these maturities way into the future. And, again, Trump actually suggested that, but because he sounded like a goofball, everybody said absolutely no way. But in hindsight, that one move would have saved us 1,000,000,000,000 of dollars over the next decade if we had done it. And this time around, we have to have politicians who are smart enough and have the werewolf all to say, it doesn't matter where this idea came from. It's really smart. Rates are now back to 2% or 1 a half percent. Let's now issue 50 and 100 year bonds and let's refi this problem out into the future. That makes a ton of sense, and we have to do it. Jason Calacanis (00:36:06): The refi makes a ton of sense. Just to pull up a chart here, and to counter your position there that it doesn't matter to mouth. Maybe you can respond to if you look at GDP ratios here. Number 1, 23, Japan, Venezuela, Greece, Sudan, and, you know, you know, some smaller countries there, but the United States currently -- None Chamath Palihapitiya (00:36:29): of these countries none of these countries look. The this entire this entire world runs on the US dollar complex. Whenever we raise rates, yes, it is true that on the one hand, our interest payments go up. But proportionately and on a relative basis, he I think maybe let me take a step back. Look. One one of the most important things in investing, which is appropriate here, is that people ask, what is the price of a stock? Well, before you go public, you're calculating what the intrinsic value of a company is. Okay? All the things that they do, all the money that they make, Here's what we think it's theoretically work worth. But the minute it goes public, the intrinsic value no longer matters. It's what is it valued relative to everything else. Okay? The United States is a relative if it's a stock if all these countries are stocks, we are valued relatively to others, not not intrinsically. And the reason why we have so much power is because everybody else is actually valued relative to us So this is why I think the right thing to look at, Jason, is the rate of change of debt to GDP for the entire G Eight or g 20 or the rest of the world, and what you'll see is something that goes up into the right. Nobody in the world has been rewarded for not investing in their populations and and basically borrowing from tomorrow to invest in today's human capital. Okay. Jason Calacanis (00:37:52): So we have a disagreement here Freeburg. Do you think this is a major issue? Yeah. because I think you're also magical. Freeburg, you have Chamath Palihapitiya (00:37:57): the floor. David Friedberg (00:37:58): I think there's 2 things that are missing. One is the inflationary effect. you look at that list of countries that are there. They're paying higher interest, and they're paying in the form of inflation. So they have less that they can spend on their people. And ultimately, what ends up happening, it's just simple arithmetic. It's not about relative value of a currency. It's the arithmetic that we have a check we have to write. Every month, to pay for Medicare and Social Security. And it is written into law what that check needs to be. And the rate at which we're having to write those checks, the the the the increment of those checks is going up so significantly that when you add on the interest payments and you look at those checks and then you add on defense, something's gotta give because you cannot raise taxes in the amount that's needed to fund all of that outlay without this causing either number Chamath Palihapitiya (00:38:43): 1, David Friedberg (00:38:44): massive inflation if you just take on more debt or number Chamath Palihapitiya (00:38:48): 2, David Friedberg (00:38:49): you know, significant loss of services, either Social Security, Medicare, or defense. And so something's gonna give. And the the distribution, I think, is not being discussed. Chamath Palihapitiya (00:38:57): Sorry. Just one just one point. The president's budget, county anybody who is a president of the United States gets hold of their annual budget, it's about 5 and a half $1,000,000,000,000 this year. So you're talking about interest payments that are still less than 10% of their total budget. Now that includes the entitlement payments. Okay? So it's about $3,000,000,000 3,000,000,000, sorry, 3 and a half 1,000,000,000,000. is what you have to pay for -- No. 20%. No. $3,000,000,000,000 is the sum of Medicare and Social Security. Okay? So the president still has 1 and a half to $2,000,000,000,000 of leeway, of which a quarter are debt payments So my my perspective, quite honestly, is mathematically there's a lot of room to run here before these things get really out of control. And even if they do, I think the relative problem is for the rest of the world will be so egregious that the ability for the United States to go to those banks and those economies and basically sell in more US debt is quite high because they cannot afford to own debt in their own country. So if you think that if the United States is bad, go back to that list. Guess what? Those central banks in those countries are gonna be buying US dollars faster than they can go out of stock. David Friedberg (00:40:01): Unless we see some Union of India, China, Saudi Arabia, Russia, Japan, Brazil, but obviously not Japan, but some Some of that consortia will become a closer trading partner and perhaps could cause a shift in the balance of the dominance of the US dollar. And that's one path to to consider. Jason Calacanis (00:40:23): Saks, what do you think of the balance sheet here? Obviously, we have 2 opposing opinions here from Tremont and Friedberg. Where do you stand on the United States balance sheet? Are we over our skis? David Sacks (00:40:31): Yeah. That's the balance sheets of disaster. What what are we at? Like, a 130 percent of debt to GDP. I mean, we have, like, 30 we're 33,000,000,000 of -- Sorry. Yeah. It's not even stable. I mean, we could David Friedberg (00:40:41): add to it. 27% of GDP right now. Chamath Palihapitiya (00:40:43): 27%, David Friedberg (00:40:44): it should be 15%. Right? So the spending is -- Where Chamath Palihapitiya (00:40:47): does that number come from? Why? David Friedberg (00:40:48): There's a there's a bunch of economists who have shared these papers there more ons. Chamath Palihapitiya (00:40:52): More ons. Fake. Listen. Fake. So let's put up his -- David Sacks (00:40:55): Hold on. Hold on. If you look at Chamath Palihapitiya (00:40:57): -- Speaker 6 (00:40:57): That sucks. David Sacks (00:40:57): If you look at government tax receipts over time with all different kinds of tax rates, including very, very different top marginal tax rates, What you see is that federal tax receipts as a percentage of GDP is in the 17 to 19% range. And, like, the best years you make 19% is usually in a good economy. And in a bad economy, it's like 17%. And it really it doesn't matter whether Reagan was president or Clint Bill Clinton and so on. So there's only so much blood you can get from a stone. And historically, spending was around 90% of GDP. And so you would have a 1 or 2%, you know, deficit every year. and that really accelerated. First, you had the the financial crisis of 2008, and then you had COVID. And Freiberg's right. You know, we we went from, call it, you know, 20 percent of GDP spending to roughly 30% or more during COVID as kind of this emergency measure. But like everything else in government, you know, the emergency measure becomes a permanent program. So now we're at 27%, it doesn't seem to be going down. And the Democrats want a lot more. I mean, we talked about it. Build back better would have been 3 and a half trillion. instead of 750,000,000,000 if they just had 1 or 2 more votes David Friedberg (00:42:08): in the David Sacks (00:42:09): senate, so they now have. So so hold on. So so Friedberg is right. There's, like, nothing stable about the point we're at. It's the point we're at is bad on its own terms, having 30,000,000,000,000 of debt. Let's say that interest rates stabilize at 3%. That's still a trillion a year of debt service, which is more than David Friedberg (00:42:26): the entire Jason Calacanis (00:42:27): if interest David Sacks (00:42:29): rates stabilize at 3%, which is optimistic, And we're servicing a trillion sorry. 30,000,000,000,000 of debt. That's roughly a $1,000,000,000 a year of debt service payments. David Friedberg (00:42:37): Trillion. David Sacks (00:42:38): That could be spent I trust you. Chamath Palihapitiya (00:42:40): -- David Sacks (00:42:40): on other things. The Jason Calacanis (00:42:40): guys keep saying 1,000,000,000 when it's a trillion. The average yield Chamath Palihapitiya (00:42:43): the average yield to maturity needs to be factored in there. So over a 15 year period, David, you would be right mathematically if all matured. But that's not what this is because you rear you you'd have to refi and reissue a bunch of debt that is at lower yield right now at these interest rates. I wanna be clearer. I'm not -- David Sacks (00:42:59): I don't understand how any of this is good. I mean, remember Chamath Palihapitiya (00:43:01): -- Well, no. No. No. No. I I understand. Jason Calacanis (00:43:03): Well, here finish them off. Say why it's good or neutral? Chamath Palihapitiya (00:43:06): I'm not saying that this is a good or it's a trend. What I'm saying is I have this issue that all of a sudden people up makeup and you guys are doing it now, an arbitrary number with no rooting in history or fact and say this is bad, And all I'm saying is I know it feels bad to us, and I think we would all run this country differently if we could could control of the balance sheet. I would as well I would try to get debt way way down. I would try to get deficits way way down. But all I'm saying is using this justification of an arbitrary number always falls flat. So I'm encouraging us all. Let's find a better model of reasoning because every time we point to some Rando's book and say, a 127% is bad. Nobody listens, and I think the message that you should take away is is because it's imprecise and it's not rooted in any actual logic. And if there's a That's not true. Jason Calacanis (00:43:54): The reason I believe that this is concerning is I look at the top 10 countries that have, you know, debt ratios that seem out of whack. And I think, wow, what has their fortune been for the last 10 years? Visovese, Japan, and Venezuela. That's not Chamath Palihapitiya (00:44:06): the right comparison. The comparison Okay. Go back Jason Calacanis (00:44:08): and say, look at Chamath Palihapitiya (00:44:09): look at the British empire. And when and what was the debt to GDP when it started to actually fall off? David Sacks (00:44:15): Does anybody here know? -- collapsed. I -- No. -- collapsed. Chamath Palihapitiya (00:44:17): No. I'm saying -- Okay. -- was it triggered was it triggered by debt to GDP? And I think your answer will be -- David Sacks (00:44:23): In part, Chamath Palihapitiya (00:44:24): I again, I I David Sacks (00:44:26): think -- -- ruinous they took on ruinous debt, and they couldn't maintain their empire anymore, and the whole thing collapsed. Chamath Palihapitiya (00:44:30): I'm just asking for something -- -- numerical specificity. Jason Calacanis (00:44:34): Alright. Well, at the end of the year, we're not gonna bear it Chamath Palihapitiya (00:44:36): right now. David Sacks (00:44:37): the last word. The last time they were. David Friedberg (00:44:39): of numerical specificity. There is a ton of work that's been done on this. It's not the word. pulling shit out of their ass. So it shows that historically, the best way to manage the growth in a in a in a in a country is to have deficit spending be equal to or less than the growth rate of the economy of that country. So, for example, if your income the the tax revenue that's being generated by the government is equal to say 15% of GDP. You do not want your spending to be more than 17% or 18%. the economic growth rate is 2 to 3%. That's it. If you do anything more than that, you're no. If you do anything more than that, you're borrowing from the future. to pay for today. That's the simple truth. Okay. So what happens? And when you do that, the rates go up and the prices go up. And, eventually, your currency doesn't work anymore. David Sacks (00:45:24): So you're David Friedberg (00:45:25): making So you're making a bet. Read the book that I talked about last year. The the -- One book. Chamath Palihapitiya (00:45:29): -- David Friedberg (00:45:29): the most recent Ray Dahlio book. He goes through six stories with the economic data to prove it, the factual data, the history of what's happened with 6 empires over the last 500 years where this exact same scenario has played out This isn't some random arbitrary story. Everyone and everyone in that everyone had the exact same perspective that you have when they were living in those days. And they said, you know what? We're gonna be okay because we're the reserve currency. And and the world loves us, and we're the empire, and we have influence everywhere. And they all lost primacy, and their currencies collapsed. and they all broke apart. And that was it. Chamath Palihapitiya (00:45:59): -- saying that that can't happen in America. What I'm saying is you get so full throated. I read that book. It's great narrative, but the numbers are brittle. Okay? They're fragile and they're mostly made up. Jason Calacanis (00:46:10): Everyone can David Sacks (00:46:11): read it and make David Friedberg (00:46:11): an auto payment on that. Speaker 6 (00:46:13): So I'm Chamath Palihapitiya (00:46:13): I so all I'm saying is In the absence in the absence of numerical specificity, I agree with you that this trend is alarming and it's bad. I agree with you. And I agree that we should spend a lot less What I'm saying is when you say to the world, stop spending because x yz number is bad. You have no credibility because it's not something that you can actually back up. And all I'm saying is if you could find a better logical argument, you would probably get a lot more people to you I show it to you. David Friedberg (00:46:42): You're just being ignorant. You're ignoring it. You're saying you don't wanna actually believe it. The numbers are there. Chamath Palihapitiya (00:46:47): Show me the numbers. David Friedberg (00:46:48): And and I'm not saying ignorant burging way. I'm saying you're literally just ignoring the data. Chamath Palihapitiya (00:46:52): Show show me the numbers. Show them to me. Show them Jason Calacanis (00:46:55): to -- They get upset at us for fighting David Friedberg (00:46:57): on you on PDF, Chamath. I'll send it to you tonight. I promise. And I'll post it on our frigging things so people can watch it. Alright. Well, Jason Calacanis (00:47:03): listen. The the group chat's gonna be on fire this weekend. final word for you Chamath Palihapitiya (00:47:07): before we -- David Sacks (00:47:07): A final word. Okay. Jason Calacanis (00:47:08): Final one, please. Tomorrow that I've never gotten David Friedberg (00:47:10): into it before like this, but, you know, obviously, we're on opposite sides. David Sacks (00:47:14): I think it's great. David Friedberg (00:47:15): I still I still respect and love each of them. Go ahead. David Sacks (00:47:17): If you if you go back in history and look at debt debt to GDP levels, the only other time we're anything remotely like the level we're at right now is right after world war Chamath Palihapitiya (00:47:26): 2, David Sacks (00:47:26): when we had just saved the world from nossism. Okay? That was worth going into debt for. you look today, what is it that we've gotten into this 130 percent debt to GDP? What is the Chamath Palihapitiya (00:47:36): $30,000,000,000,000 David Sacks (00:47:37): of debt for? What have we bought with all that money? huge amounts of it have been squandered. David Friedberg (00:47:42): You're right. David Sacks (00:47:42): And Biden wanted more if if the courts didn't stop him, he would have spent a trillion you're you're forgiving. for giving a bunch of student loans to for basketball degrees or liberal studies or what Chamath Palihapitiya (00:47:52): have you. Speaker 3 (00:47:53): You know what Speaker 6 (00:47:53): I mean? David Sacks (00:47:53): So so we'll get rid Speaker 3 (00:47:54): of that. mean, graduates agrees that David Sacks (00:47:56): So by let me finish. The that's point number 1 is that this money is being squandered at levels we've knee never seen before. And the squander is continuing. It's not like we've reached a steady state. It just keeps going and going, and it won't break at some point. I can't precisely saw a second. I can't precisely say when it's gonna break, but I do know it's gonna break. The other thing, point number 2 is about consequences today. There is a phenomenon economist call crowding out where when interest rates go up, more and more money flows into the risk free rate of return, and then that crowds out investment capital. And we've talked about it on the last pod where if the risk free rate is 5% and then, like, high quality corporate bonds are offering 8 to 10%, Now equity investments must generate 15% and VC must generate 20%. And there are very few VC investments that can generate that kind of IRR. So what happens? The money flows out of VC, and there's less money for risk capital. What drives our economy? Risk taking -- David. Chamath Palihapitiya (00:48:57): -- David Sacks (00:48:57): and not for no shift. Chamath Palihapitiya (00:48:58): Can can I just think? David Sacks (00:48:58): So Hold on a second. So this massive debt service that we have, which drives up interest rates, will crowd out the very kind of economic activity that the United States needs to stay on the cutting edge. The Jason Calacanis (00:49:10): bottle. rebuttal to the rebuttal to the rebuttal. Chamath Palihapitiya (00:49:12): No. You're so right. So why don't you just bookend the argument exactly the way you just did? My point is not that you said it just before that we don't know at what upper bound these things break or don't break. And all I'm saying is every time you throw up a random number, You guys sound like the boy who cries wolf. Okay? And you're shouting into a vacuum is it's just the it's the advice that I'm trying to give you guys. I agree with you I spend my entire days investing in and trying to figure out what is the risk adjusted rate of return of the things that I'm doing And I'm trying to tell you as somebody with some reasonable financial numeracy. Every time I hear you or Radalia or somebody else say, this number is where it it all breaks and it doesn't. you lose a little bit of credibility. Then you go to this number, and you're like, oh, wait. I had a 127 Okay. Let me get Jason Calacanis (00:49:56): your points about. Speaker 6 (00:49:57): Let me David Friedberg (00:49:57): let me put that here to making up. No. Let me put Jason Calacanis (00:49:59): it back to you. We got David Friedberg (00:50:01): how much is too much? How much debt can we handle and how much spending as a percent of GDP should we handle? What is the limit in your mind? And how do you decide what that limit can or should be? Chamath Palihapitiya (00:50:13): I think the honest answer is every time that I have been alarm that we had hit a threshold that was meaningful. So for example, like, I think under Obama, we passed a 100, and it felt very scary. because I was like, wow. That seems like a demarcation. It turned out to not be a demarcation at all. Because it relative to every other country and what they're going through. And I understand that you don't want to believe that, but I do think that America's economic vitality is not an independent function. It is a dependent function on everybody else. We are relative to everybody else. If there's a a different cosmos and a different planet somewhere, Maybe this will all reset, but right now it's not. And so we all trade relative to the United States. And in that as much, I would like to just say, I don't know enough to guess what this number is, and I'd rather focus on what David said, which is there are things that we need to do that we need to incentivize people to invest in, extreme risk taking, that create new businesses that move the world forward, You can have that conversation without belly aching and crying to mommy about a GD debt to GDP number because every time you throw it out there, Nobody knows what you're talking about, nobody knows what reaction to have, and everybody feels over time David Friedberg that you're crying wolf. So all I'm saying is I get that it's concerning to you and it creates anxiety. But every time yeah. And you probably this is not the first time you've had anxiety. You probably had anxiety at 50, 75, a100, a125. Guess what? I bet you'll have anxiety at 150. I don't know what it means. I do know what Saks means, though, which is that right now, we have a risk free rate that's going to fight. We have corporate bonds that'll be at 10. We have equity investing at the most risk taking, which is the early venture that has to return 25, and that is an incredibly high bar. But we need to do it, and we need to do maybe fewer investments, quite honestly, with fewer participants, with less dollars that are more effectively put to work. Okay? Maybe this is a good jumping off point to talk about all the waste in Silicon Valley. Chamath Palihapitiya (00:52:14): And that stuff can happen without debating incessantly this debt to GDP number, which David Friedberg (00:52:19): is a policy. I'll say I'll say one bit one bit no. Hold on one second. Jason Calacanis (00:52:22): One I would eat David Friedberg (00:52:22): them up. Alright. Jason Calacanis (00:52:23): Friedberg Saxx, and then we're gonna move. Go. I agree Birx. David Friedberg (00:52:26): I have never had anxiety about debt to GDP. It's never been anything on my radar. The conversation I'm trying to have today is the amount of spending, the federal spending, including interest payments as a percent of the GDP as a percent of how much we can tax to pay all those to make all those payments every year. And so what I'm concerned about is the ballooning cost of paying out all the obligations the federal government have Speaker 3 (00:52:49): to stay out there. Chamath Palihapitiya (00:52:49): -- different than what you were just saying. That's if you were cared about only that, then refinancing the debt is an equally valid proposition and David Friedberg (00:52:56): changing operation. -- holy expense. It's not the only expense. So interest payments are ballooning. In addition to interest payment, Social Security and Medicare payments are also ballooning and defend Jason Calacanis (00:53:05): that of control spending. Everybody has their hand at everybody wants an arrow. When you David Friedberg (00:53:09): add those 4 big categories together, you don't have any room leftover category. Chamath Palihapitiya (00:53:13): You're talking about you're talking about discipline in spending in defense. Great. I agree. You're talking about discipline and capping health care costs. Great. I agree. What does that have to do with this other orthogonal thing you've been talking about, which is this random number that the GDP Okay. Jason Calacanis (00:53:29): We can get let let's move on from that discussion. David Sacks (00:53:32): Sacks. Tell me, like, one final point that we can move on. Okay. So so look. Jason Calacanis (00:53:35): I think Chamath Palihapitiya (00:53:35): -- -- Jason Calacanis (00:53:35): time for the final point. Go. It's important discussion apparently. David Sacks (00:53:39): Look. In the in the interest of bestie harmony, I will partially agree at the point that Shamont is making, which is that for a long time in American politics, people have sort of cried wolf about debt to GDP. For example, if you remember, way back in 1992, Ross Perot, basically, basis candidacy on the idea that the US was racking up way too much debt. You know what debt to GDP was in Chamath Palihapitiya (00:54:03): 1992, 41%. David Sacks (00:54:05): Okay? So people used to care a lot about this. I remember when Reagan was president and debt to GDP was 30%, People were saying that he was this, like, you know, wild spender. Okay? But I think that precisely because nothing broke at Chamath Palihapitiya (00:54:19): 30, 40, 80 David Sacks (00:54:21): percent, a 100%. You then had the rise of this theory called MMT or modern monetary theory. which said that the debts don't matter. If you're the reserve currency, you can print as much money as you want. And so people started indulging in this. And so now I actually think we are at a point. I can't say precisely where it breaks, but I do think that because debt to GDP didn't seem to matter for so long, I actually think we got carried away. And now we're at levels which are just gonna be runess If for no other reason, then our debt service is gonna crowd out whether you want more guns or more butter in our federal budget if you want more defense spending, you want more entitlements, you want more discretionary spending. There's no question that debt service is getting bigger and bigger is gonna out those programs. Chamath Palihapitiya (00:55:08): There's no question we need to spend less. I a 100% agree with. Okay. Okay? But all I'm saying is we should spend less on defense because we have different ways of defending ourselves. That should be the logical argument for less defense. Jason Calacanis (00:55:20): Energy independence is defense, and a balanced budget could be defense as well. Chamath Palihapitiya (00:55:24): If you look at the IRA, that was less than a $1,000,000,000,000 over a decade. Okay? That has the potential to shift 1,000,000,000,000 of dollars a year in defense spending. Jason Calacanis (00:55:35): Yes. Okay. Chamath Palihapitiya (00:55:35): Okay? Jason Calacanis (00:55:36): That's incredible. Okay. Let me wrap here for a second. Thank you everybody. This is important to Ben. Chamath Palihapitiya (00:55:40): You you can look at these bills in and of themselves and try to actually do the right thing for the country. Without without wrapping up all of these random arguments. And I by the way, just to be clear, I don't believe in that argument. Speaker 3 (00:55:51): I Sucks. Don't do it. Don't do it, Sucks. David Friedberg (00:55:53): The world's worst moderator. Come on, Jacob. That's Jason Calacanis (00:55:56): what I David Sacks (00:55:56): wanna shout I wanna go back to. Actually, even during the Obama presidency, we had a thing called the sequester. I don't know if you guys remember this. David Friedberg (00:56:03): Yeah. But David Sacks (00:56:03): rap Republicans and Democrats agreed that basically that because we had just had, like, these $1,000,000,000 deficits because of the 2008 global financial crisis, they got together and said, listen. We're gonna hold the line on spending, and there'll be no increase on defense spending in exchange for no increase in discretionary spending social programs. And for a few years, we held the line on spending, actually. And then, of course, both Democrats Republicans didn't want that. for different reasons, and the sequester went away. We need to go back to something like that. Jason Calacanis (00:56:37): There are two things, like, just to get Chamath Palihapitiya (00:56:38): one one one detail. Like, when you go and send a bill so, look, the way you pass bill. Right? You have to send it to the CBO to get scored. One of the things that I learned this week is that sometimes the CBO and they're not really empowered to actually tell you how things get offset. So, for example, like, if you have a medicine, what they will do is say, well, we'll look at at the population level How much would this medicine cost if it's taken by the population? But if that medicine then all of a sudden has the potential to actually off ramp you over here, those savings are not really factored in as well. So, David, to your point, another way that we can refine how we build budgets to make sure that we're not overspending is to actually improve the toolkit and the data that, like, the CPO is given so that when they score things, they can actually look at the total impact. Like, for example, like the IRA, Again, one of the biggest benefits will be to defense spending. If we choose to make those cuts, you will be able to do it differently once we have, you know, no reliance on foreign energy. Jason Calacanis (00:57:38): Okay. To wrap this segment, the first segment, which took 57. So so, obviously -- Wow. -- really well, I think it's an important discussion. David Sacks (00:57:45): Jacal, would you vote for DeSantis to be promised this fiscal responsibility? Jason Calacanis (00:57:49): Well, here's the thing. I am gonna take a look at the candidates. I'm gonna make the best decision in terms of what I think is that that's for the country's suffering Speaker 3 (00:57:56): like you sex. I mean, something like, you are giving no answers. Jason Calacanis (00:57:59): Yeah. It depends on Chamath Palihapitiya (00:58:02): -- David Sacks (00:58:02): If DeSantis you everything you want on fiscal policy, why wouldn't you vote for him? Jason Calacanis (00:58:06): If he stays out, if he if he's in favor of what's right to choose? David Sacks (00:58:10): For the 1st 15 weeks, that's Florida policy. Are you yes. Jason Calacanis (00:58:14): You know, I would take a look. I would take a look. I I honestly take a look. not to vote David Sacks (00:58:18): for him. 15 weeks right to choose combined with fiscal responsibility. I What's not to like? Speaker 3 (00:58:24): I I'm I'm voting for a Jason Calacanis (00:58:26): moderate this time. To anti sex. Chamath Palihapitiya (00:58:28): Antax. Antax. Jason Calacanis (00:58:29): Okay. But to wrap up here, the two things that matter, I believe, and based on our panel's discussion, austerity and excellence are what are gonna get us out of this mess. Here is what the platform seems to be shaping up. Our 2024 platform, control spending, everybody here thinks that's important. Energy independence, everybody here thinks that's super important. stop fighting unnecessary wars and maybe rethinking our foreign policy. I think we all agree on that. And the cultural focus on excellence not excess. This is chipping up to be a little bit of an all in platform here. Great discussion, everybody. Speaking of austerity measures, I think you know, we should just talk right right up top here about what's going on at Google. Chris Hone, I believe, is how you pronounce his name. David Sacks (00:59:13): Chris Hone. Yeah. Jason Calacanis (00:59:13): Chris Hone. He sent a letter to Google and Amazon. Amazon today, after already announcing 10,000 layoffs, they just said again, Andy said, Prepare for more layoffs in 2023. And these are not factory workers. These are white collar, high paying jobs. that are being laid off here. David Sacks (00:59:31): They're surplus elites. Jason Calacanis (00:59:33): Surplus elites. It is definitely a a part of the zeitgeist right now. So they're gonna reduce headcount massively. But in this letter to shareholders, he points out, notably, not just hey. Google needs to do a riff, a reduction in force. But he points out a a more granular point that I want the panel to talk about here, which is he says, hey. You need to reduce the actual salaries at Google, the average salary being Chamath Palihapitiya (00:59:58): $296,000 67 Jason Calacanis (01:00:02): percent higher than an incredibly well paying workforce Microsoft, quote, we acknowledge that Alphabet employs some of the most talented and brightest computer scientists and engineers. But these represent only a fraction of the employee base. Many employees are performing general sales marketing and administrative jobs who should be compensated in line with other technology companies. And he says we need to establish an EBITDA margin target, as you can see, in this chart, and reduce the losses on other bets, perhaps increasing share buybacks as well. So what we're looking at here now after Chamath Palihapitiya (01:00:37): -- David Friedberg (01:00:37): What an incredible Chamath Palihapitiya (01:00:38): business my god. Jason Calacanis (01:00:40): I mean, the business is nuts. Friedberg, you worked there. What in this rings true to you or not? And then how many people does Google need to employ to operate the business and invest in the future of the business in your mind. They have a Chamath Palihapitiya (01:00:59): 187,000 Jason Calacanis (01:01:01): employees at Google. It's grown Chamath Palihapitiya (01:01:03): 24 0.5%, Jason Calacanis (01:01:06): rounded up 25% year over year. They grew 25% year over year in their business. How many people need to run this business to have it aggressively grow? David Friedberg (01:01:16): Look. I think there are 2 main drivers of the issue that Google, maybe Meta, maybe Twitter prior to Elon's involvement, and and really Silicon Valley as a whole, the bigger companies have states. The the first is the war for talent. The war for talent started I mentioned this last time around Chamath Palihapitiya (01:01:39): 2004, 2005 David Friedberg (01:01:41): because prior to that, there weren't as many grads coming out of undergrad with computer science degrees. Right? I think Chamath Palihapitiya (01:01:48): 10% David Friedberg (01:01:49): of of grads in the Bay Area schools were finishing with computer science degrees. Today, the numbers like 60%. So, you know, around that time, the war for talent led organizations, particularly Google, down a path of offering more perks and benefits to their employees to create a workplace that was more competitive. And that ends up being a slippery slope because then other organizations try and find parity. then other organizations try and overdo it and push it even further. So this leads to both wage inflation across the the ecosystem. But it's also led to almost like the acceptance or the allowance for degrees of complacency. And so I'm not saying that the workforce is all complacent. But I do think that complacency is forgiven, some amount of complacency. I'm gonna take a Friday off. I'm gonna take 2 Fridays off. All of a sudden, I'm not working any Fridays. The other thing that's happened is as this workforce has aged, I worked at Google 20 years ago, And a lot of the folks I work with, almost all of them now have families. At the time, everyone was young, and as the demographics of Silicon Valley has matured, you have more people that are less about killing themselves and giving everything that they have to their organization, and they're more interested in being with their families and now spending less time at work, especially in light of the fact that compensation has ballooned to a point that you can now live a very, very comfortable lifestyle. And you don't need to have a big payday in order to be able to take really good care of your family, which was the case as a startup. And then the other issue is just one of innovation. At Google, if you work on a new project and it doesn't work, there's no loss. You still have your job, and they've started programs where they'll give you equity and new start up ideas, or they'll give you all the stuff. So they'll give you upside if you win. They'll give you bonuses if it succeeds, but there's no downside. David Friedberg (01:03:38): And so the pain and the burn that you would feel as a startup founder or as someone building a new business isn't experienced to realize. And I cannot I don't need to tell you guys this. But for anyone else that's listening that may not really be fully aware, the lack of pain, the lack of risk, the lack of downside, the lack of having no safety net, and and falling through the pits removes all so much of the incentive to succeed and to drive and to innovate. And I think that's become part of the complacency problem that's caused larger organizations to simply say, let's throw more heads at the problem. And when you just throw more heads at the problem, you have more of kind of talent war problem that I mentioned, number Chamath Palihapitiya (01:04:15): 1. What is the average salary? 280,000? 300,000. Jason Calacanis (01:04:19): Rounded it up. Yeah. That doesn't I I don't know if that includes benefits, whatever. Let's just call it 300,000. Yeah. David Friedberg (01:04:24): And by the way, that doesn't mean that those people should all get fired. But I think it speaks it speaks to the fact I think there are wonderful people there. Some of my best friends work at Google. It's a great organization. People do incredible work there. But in terms of return of dollars invested as a shareholder, that's the question. That's the that's the analysis. That's the scope. that the shareholder is looking at is do I wanna spend a dollar to make a dollar 5, or do I only wanna spend a dollar where I know I'm gonna get a dollar 80 back? And so if you just bucketed where the dollars are going, you would end up saying, you know what? I'd rather just focus on the places where I spend a dollar and I get $2 back or dollar 80 back I don't wanna do any of the stuff where I spend a dollar and make a dollar 5 back. And that's called ROIC or return on invested capital, and that includes return on invested human capital. And so the analyst in the stock that that's an investor in the stock, we'll look at it through that lens. Whereas everyone that's working there is still contributing meaningfully. They're still doing valuable work. But in terms of return on invested capital, a good chunk of the projects are not driving the majority of the value. A minority of the projects, a minority of the headcount is driving almost all the value. Chamath Palihapitiya (01:05:30): I mean, if you sensitize it to what you said, David, a if it was just 75 or a half that number, then, you know, the stock goes up 35% overnight. And if it goes up to the full number Jason Calacanis (01:05:43): yep. Chamath Palihapitiya (01:05:44): The stock goes up 65% overnight. David Friedberg (01:05:46): Mhmm. I think that's totally feasible. And then and and then I think what you do is you take $10,000,000,000 a year and you have a high accountability model that you speak to the street about. And you say, here's how we're gonna hold ourselves accountable to investing this $10,000,000,000 every year. and not just have everything be a nebulous 15 year project, and then it's always a 15 year project, and you're always just burning cash to to go after those projects that are highly nebulous. Chamath Palihapitiya (01:06:11): If you had to steel man the other side, I think the argument would be I I would say they they would make probably 3 arguments. Oregon number 1 is like, look, don't get overly distracted by other bets because it's a small category of spend, and we've contained that cost pretty rationally relative to the rest of the core business. The second thing that they would probably say is there's an enormous amount of work that has never seen by Wall Street that explains how good our service is, whether that's, you know, in in early iterations of you know, technical capability like GFS And Bigtable to things like TPU, to things like TensorFlow, and all of that builds up all the things that DeepMind does, all the compute we have to throw against search to support that. So I think they would probably say, well, people probably don't have a great sense of today that it's not just 25% of the team that's required. And then the third thing is what they would probably say is it it's very hard to explain, but Google has all kinds of other things that they do for free to create the ecosystem so that the Internet works well. You know? I I heard this one thing where somebody was explaining that Google is like, you know, the the the DNS server. Right? Google is the time server, and all of this stuff they do for free. And all of it is just about making the Internet work more efficiently, and that has some cause So that's probably how they would steal man how to build back up to some number. But it's probably there's still a gap between that number, David, and what their prevailing head count is. David Friedberg (01:07:40): Yeah. I think I think that's that's totally true because the infrastructure team led by Urs is the most remarkable engineering organization on planet earth, in my opinion. And they have laid fiber lines across the Atlantic. They have built their own data center infrastructure, their own switches, their own silicon, like everything is built by this team from the ground up, from First principles, and it gives extraordinary motes and advantages to the business. It makes the Internet a better place. It allows you know, ultra fast, super cheap YouTube video viewing across the Internet. I mean, there's just so much of of these core advantages in a business. But if you look at the headcount over time, you have to ask yourself the question, you know, how many of these investments that are core are really, you know, captured in the headcount that blossomed from Chamath Palihapitiya (01:08:25): 2013, 47,000 David Friedberg (01:08:27): people. So that the business has gone up in headcount by 4 x in the last 9 years. One of the things that Jeff Bezos was always so incredible at. And I saw him give a speech on this at one point. Bezos gave a speech that I saw, and he said, we are really good at failing. And he showed all these projects that Amazon tried. And he said, we tried a 9. We tried to do our own search. We tried to build our own cell phone, the fire phone. We tried to do this. We tried to do that. When they don't work, we kill them. And when they did work, they became 100 multi $100,000,000,000 enterprise value craters for them. like AWS, which was one of these projects. And so Amazon was so good at taking the stuff that wasn't working, knowing when it wasn't working and ending it. and they were still able to drive an innovation engine. One of the challenges I see with Alphabet is that they are so good at bringing the best talent to work on these innovation problems But where they're not good is saying, you know what? This isn't working. It's time to move on. And if they did just that if they added that one disciplinary capability, then I think this as you said, the market cap would go up by Chamath Palihapitiya (01:09:28): $600,000,000,000. What about this I just want your reaction to this thing that A lot of people whisper in Silicon Valley, which is part of what the big companies should do. It's part of the positive game theory. is to not let these talented people actually leave. It's better to pay them 300,000 or 200,000 or whatever and stay at Microsoft and Meta and Google or whatnot, then go off and start up build a start up that could actually then disrupt them. And so, you know, it's it's a cost worth bearing because it's actually a blocking strategy. Yes. It's a blocker strategy. Yeah. David Sacks (01:10:00): What do Chamath Palihapitiya (01:10:01): you think about that, sweetheart. David Friedberg (01:10:02): Super interesting idea. I think that the people that are likely going to actually be able to execute on that are gonna leave and do it anyway. Jason Calacanis (01:10:11): Right. They're surely aggressive entrepreneurs are Chamath Palihapitiya (01:10:14): not gonna be blocked. David Friedberg (01:10:15): Look. I was not super I I had made a little money when I worked at Google. But I was not super wealthy, and I left the last the vast majority of my stock options and RSUs on the table when I left Google in Chamath Palihapitiya (01:10:26): 2006. David Friedberg (01:10:26): here's -- -- start Chamath corp. Because I could not help but do that. I could not help myself. I had to go do that thing. Speaker 3 (01:10:32): Of course. Chamath Palihapitiya (01:10:32): And I David Friedberg (01:10:32): think the kinds of people that are gonna succeed in entrepreneurism cannot help themselves. It doesn't matter how much money is being thrown at them. Jason Calacanis (01:10:39): Here's the chart. Basically, these companies have been correlating their spend and their headcount to their revenue, not what's necessary. You look at Alphabet, total employee change since Chamath Palihapitiya (01:10:50): 2018, 95.36%. Jason Calacanis (01:10:53): I mean, Chamath Palihapitiya (01:10:53): I don't know. That looks pretty good Jason Calacanis (01:10:54): to me. Revenue, a Chamath Palihapitiya (01:10:56): 132%. David Friedberg (01:10:57): It's pretty good. Chamath Palihapitiya (01:10:59): It doesn't look like they were massively overhiring if you ask me their tweet. David Friedberg (01:11:03): Totally. So what what are you Chamath Palihapitiya (01:11:04): guys talking about? David Friedberg (01:11:05): maybe I'm wrong. I will say, look, a big part of Larry Page's decision to ship the company from Google to Alphabet. Was he believed that the core business at some point would ultimately be disrupted, that the core advertising engine was gonna be disrupted, and there wasn't gonna be the sustaining term growth advantage in that business. Maybe he's been disproven or maybe the it hasn't been it hasn't been proven yet. But the concept was we need to find the next Google. and we need to build the next Google. And so we wanna allocate capital within a portfolio of bets and have some number of those things, maybe not all of them, maybe not even a lot of them, maybe just 1 or Chamath Palihapitiya (01:11:40): 2 David Friedberg (01:11:40): of them turn into the next $100,000,000,000 revenue line for us. Now he he always said that that's gonna take a long time. Chamath Palihapitiya (01:11:47): He definitely underestimated the quality of Google search and the the dominance of it. Now it's prob it probably stands to reason that if we have enough innovation at the fundamental model level in AI, particularly like a bunch of really powerful multimodal models, the new form of search can disrupt Google, but the problem is they are so ahead of everybody else with respect to those models as well. So the real question is, even that next big leapfrog isn't going to happen without 1,000,000,000 of dollars of capital invested. And, you know, the most likely folks that are able to do it, I think OpenAI at some level But, again, they're gonna always have to raise money from other folks. Google can self fund it, and it makes an enormous amount of sense to drive that technical mode. So it just seems like Larry made the ball. Jason Calacanis (01:12:36): What do we think is gonna happen here? Any any are they gonna make the cuts or not? You think they'll make do they have the ability to not make cuts and just ignore a 6% shareholder, Chamath, or are they just gonna make them? And then we're gonna go on to you. Speaker 3 (01:12:48): I'll tell you David Friedberg (01:12:48): the the dynamic will be how much Ruth is able to convey. Ruth Prorat is the CFO. And -- Right. -- she's hardcore. She's hardcore. She's incredibly everyone on that leadership team is is incredibly impressive. But she has a very particular lens, a a Wall Street lens, and she understands what the shareholders are thinking and looking at. And she will convey these points to the board. And and there will be engineers and Sundar is an engineer, and he will and he's a very good he he's very good at gathering the the different points of view and having balance around this. and he will share his points of view at the board. And I think, ultimately, it will come down to my guess is like we just talked about some portfolio allocation decisions. which is how much risk and how how much beta, how much alpha, and do we have the right mix in our portfolio. And it is inevitable there's gonna be some cutting. So I think that there will likely be some reduction Chamath Palihapitiya (01:13:39): 5%, 10%, 10,010,000 Jason Calacanis (01:13:42): employees. That seems like the number that people Chamath Palihapitiya (01:13:44): are going with. David Friedberg (01:13:44): Yeah. Yeah. Yeah. Let's see. Jason Calacanis (01:13:46): I thought that'd be my guess. Okay. Saks put your take on austerity measures and moving to an age of excellence and efficiency, which is happening inside of the tech industry as we speak. David Sacks (01:13:58): I think Friedberg right that these companies could operate a lot more efficiently. I think there's an economic argument there. But I wanna uplevel it and talk about the cultural ass aspect of this for a second and also bring in 2 of the huge stories this week, the the SBF story, the interviews he did within your times and vox. and then this hysteria around, well, you know, what's happening at at at Twitter. Look, I think that there something clearly has hit a nerve here in this last week where you have all of these employees who have voluntarily left creating all of this drama. And, you know, Antonio Garcia Martinez had a good quote about this. He said what Elon is doing is a revolt by entrepreneurial capital against professional managerial class regime that otherwise everywhere dominates. And that same PMC, which includes the media is treating it as an act of less measure there's another version of this that came out a couple weeks ago. Jason Calacanis (01:14:51): And by the way, Les Majestay just means, like, you're insulting the monarch, the ruined glass if that craziness. Chamath Palihapitiya (01:14:57): -- David Sacks (01:14:57): the crown. there was a good one here. There's an article on Compact Magazine a couple weeks ago where the editor Jeff Schulenberger tweeted The layoffs at Twitter are no different than what's happening across Silicon Valley. But because of the ideological antagonism of the professional left to Musk, they make clear what's at stake. the collapse of a jobs program for surplus elites. And then and then there's a great quote from this article. which again is Chamath Palihapitiya (01:15:23): -- That's so hard hitting. David Sacks (01:15:25): I know. It's not it's okay. It hits a deep nerve. I'll get into Jason Calacanis (01:15:28): the water. -- differently. David Sacks (01:15:29): Yeah. Exactly. So a quote from this article said, one of the biggest and least talked about social questions in the west is how to economically provide. For our own modern version of Frances' impecunious nobles, That is how to prop up high status people who can't really do much economically productive work. Wow. I mean, like, Jason Calacanis (01:15:48): this was this was pretty brutal. Yeah. David Sacks (01:15:50): Yeah. Brutal. So listen. I think this is really hitting a nerve because The fundamental quip pro quo of our civilization is that in order to achieve economic and social advancement, you go to college and get a degree and you submit to voluntary reeducation of yourself at one of these woke Madrasas one of these reeducation camps. That's a good pro quo. And you get now some people Chamath Palihapitiya (01:16:17): -- Did your punch up guy right Jason Calacanis (01:16:18): that intro. No. David Sacks (01:16:19): No. Look. This is this is what I believe for a while. Now there are some number of people who get useful degrees like computer Science Or Engineering. But huge numbers of people get degrees in like we talked about, the basket weaving or whatever the you know, politically correct degree is for sure. And they graduate with a $250,000 in debt and no marketable skills. Right? And Chamath Palihapitiya (01:16:41): -- Jason Calacanis (01:16:42): Right. David Sacks (01:16:42): And what was propping up all of these people were these fantastically wealthy monopolies tech companies that were hiring huge numbers of these people. Now all of a sudden, we get to a point where we're in an economic recession. And these companies are starting to do layoffs, and they're starting to do a little bit more sole searching about who's really adding value, and people are starting to get laid off. And I think there this hysteria is coming from a place of deep insecurity. You had all these people go to college. They did not learn critical thinking skills. What they learned was that, listen, if we pay lip service, to the right platitudes, then we will have career advancement. And now they're learning that that may not be true. And, actually, the person who's pulled the mask off this entire regime is not other than SPF. And he did it in an interview with Vox, and we have to go to this. Okay? Jason Calacanis (01:17:34): This is just insane. Yeah. David Sacks (01:17:35): He's the devil, but he basically pulled the mask off. This whole civilizational quip pro quo that is a sham. Okay? And here's what he said, that the Vox reporter said you were really good about talking about ethics for someone who kind of saw it all as a game with winners and losers. What did SPF said? Yeah. He he, I had to be. It's what reputations are made of to some extent. I feel bad for those who get fucked by it. Basically, all these people who incur a quarter $1,000,000 in debt and think they can just spouse the right -- Yep. Chamath Palihapitiya (01:18:05): -- David Sacks (01:18:06): you know, platitudes. He says, by this dumb game we woke Westerners play where we say all the right triple s, so everyone likes us. How stupid Does the New York Times feel right now? How stupid do all these nonprofits and foundations who received all this money from SPF? He played them All he had to do was say the right words and say the magic woke words, and they would basically cover for the most enormous grift that's ever been perpetrated. That is basically the quiproquois of our civilization is be woke and you will have indefinite career opportunities, no matter how how Jason Calacanis (01:18:45): uncomfortable -- VertuSignaling would be another way to say it. I mean, it doesn't necessarily have to be the work, woke ideology, but virtue signal and give donations to people This has been a playbook of Grifters for a long time. Bernie Madoff gave a ton of, you know, donations, and he used the same playbook. David Sacks (01:18:59): How many donations did he give to the Republican Party? None. They're not part of the regime. How many how many conservative Yeah. Jason Calacanis (01:19:05): I'm not sure this is a political. I don't know that this is not Christian's right. David Sacks (01:19:09): I'm not making a political point. I'm making a cultural point. I'm making a cultural point. Jason Calacanis (01:19:11): Okay. Good. Yeah. David Sacks (01:19:12): Who were the charities that he donated to? It was all the right woke causes. Not -- Yeah. You know, it was not Chamath Palihapitiya (01:19:17): -- -- Jason Calacanis (01:19:17): endemic one was not woke. He he was passionate about the pandemic stuff. David Sacks (01:19:21): are you kidding me? Freaking out about the pandemic. Jason Calacanis (01:19:24): No. No. He wanna be pandemic for veterans. Has he explained it to me? David Sacks (01:19:27): The neuropsych It was the new -- No. No. Jason Calacanis (01:19:29): No. That was not what he was funding, Saxx. He I I actually talked to him about this when I interviewed him. He said he wanted to do pandemic per mention and early warning systems and wanted to invest in strategies to fight their Speaker 3 (01:19:40): cases too. David Sacks (01:19:41): And definitely freaking out about COVID is was the sexual crisis of the professional managerial class for the last couple of years. It is -- But that's not Jason Calacanis (01:19:49): what he was funding. I just wanna make that point. David Sacks (01:19:51): Yeah. Whatever. Jason Calacanis (01:19:52): I mean Chamath Palihapitiya (01:19:52): -- Jason Calacanis (01:19:52): He wanted to prevention. I mean, you could frame not, but I actually literally talked to him about it. He wanted to do pandemic prevention in Speaker 3 (01:19:57): the future. David Sacks (01:19:57): He wanted to steal money. No. Speaker 3 (01:19:58): No. No. David Sacks (01:19:59): No. He wants to steal money from California taxpayers via ballot initiative to fund his brother's organization, which would have dispersed the money in who knows what ways, probably not legitimate. out of a professed concern about the next pandemic. Why? Because the PMC is neurotic about the last pandemic. Come on. This is all Chamath Palihapitiya (01:20:20): -- David Sacks (01:20:20): You're saying it's pandering Jason Calacanis (01:20:21): to them. I understand what David Sacks (01:20:22): you're pointing to. Yes. Thank you. It's pandering. Jason Calacanis (01:20:24): I understand. David Sacks (01:20:24): It's absolutely pandering. Now listen. Why well, hold on a second. Why did this work? Why did this work for 2 singling work? And, again, why were they only charities and causes that appeal to the sort of the left? It's because they're the ones with the power in our society and in our culture to define what virtue is. When you're virtue signaling, who are you signaling to? Jason Calacanis (01:20:45): The people with the power to David Sacks (01:20:45): decide what is virtue and what is vice. Right. That is why people go to work at the New York Times. That is why they basically go into, you know, all these influential jobs at nonprofits and foundations. They're the ones deciding what virtue is. They're the dupes. They're the ones who are fooled. And now what's happening is there's an economic consequence to it, which is It is coming out. These people have no marketable skills and companies are tightening their belts. And now all of a sudden, they're starting to become deeply in care about their own future. Chamath Palihapitiya (01:21:14): My comment is that, you know, when you look at Twitter as an example, Bill Gerley had a really powerful quote as well, which is when companies cut you know, they don't cut nearly enough and they and they miss estimate and underestimate how resilient the company is back in, you know, Twitter had 200,000,000 MAU they had only a 1000 employees. And so clearly at that point, they knew what they were doing. And now the business has, you know, increased in MAU by, call it, 50% to 300,000,000, but the employee base increased by 7 and a half x. So clearly, something is misaligned. And I think the thing that, you know, people are gonna find out is, by the Jason Calacanis (01:21:52): way, with contractors, probably 12 x. Chamath Palihapitiya (01:21:55): Right. So I think that well, there you go. So I think that the the thing that frustrates a lot of folks that are leaving or that are trying to throw bombs is they don't want Elon to be right. Because I think to David's point, if Elon is successful, he has uncovered this very uncomfortable truth that was frankly hiding in plain sight, which is that many of these technology companies using technology get so much operational leverage that they have some enormous efficiencies. And then it's only a decision by the professional managerial class to reward themselves with fiefdoms and kingdoms of employees and, you know, the surfs that work for them. I mean, it's really quite crazy if you think about it. Jason Calacanis (01:22:41): Well, Freightberg made this, you know, early on in the history of this podcast, Freightberg said it's gonna take us well, hold on. I wanna add to your position. Fruberks said something that adds to your position, which is early in this pocket, is that the nature of organizations is they want to grow. And that's government or even these departments you're talking about. anybody who runs a department is never gonna say my department needs to be 20% less so we can hit the bottom line. They're gonna say give me 20% more because everybody else is getting 20%. Go ahead, Jamila. Chamath Palihapitiya (01:23:06): The the And then if you if you if you layer in the Charlie Munger quote, show me the incentive and I'll show you the outcome, you can understand why because the professional managerial class is rewarded by compensation that is actually independent of dilution. Right? Because if you look at these compensation plans, all of these professional stock owners, they complain all the time about stock based comp. Right? And these companies have budgets between 2 5% a year that they give away. And so you have this situation where an engineer or an engineering manager or a sales manager or a marketing manager In success at a 1000 people can grow to 5000 or 10000, their compensation doesn't change. In any other organization, their compensation would change because let's say that it's a percentage of the profits that are distributed unless the company is phenomenally growing, Eventually, you'll see it in the bottom line of what you take home. And so these folks are incentivized to have these status signals of value. I have a 50 you know, you guys have heard this. I have -- Jason Calacanis (01:24:09): I have 50 person team. I have a 100 person team. Chamath Palihapitiya (01:24:12): I oversee 35100 employees, and you and everybody is conditioned to think, oh my god. That's incredible. You must be really important. And so we're gonna sort of now see in real time a questioning of that belief system. And if Elon proves to be right, it's a really important decision because if you are an 80 to 90 percent gross margin business built on software, maybe you have a bigger responsibility than you've discovered to date to your shareholders and to the existing employees to find the efficient rate of return. Right? What is the efficient frontier of headcount? The other thing is it now allows let's just say that now Twitter goes to I'm making up a number, 2000 employees. after this whole Google Form thing. The great thing about the 2000 and first employee for the 2000 employees and for the shareholders is that that 2000 and first new employee is a 100% aligned because they're coming into something eyes wide open. And I think that that's also an interesting thing that is isn't getting enough recognition is he's putting out there what he stands for, this hardcore culture, irrespective of whether we think it's right or wrong, all the people that stay are voting that it's right. And, you know, as long as it's not breaking any laws, he's allowed to do that. And so if people now wanna join that organization, they should be allowed to do that too just like the people who don't want to should be allowed to leave. Jason Calacanis (01:25:38): Sachs, you and I, came up, and we talked about this. I think on last week's show or maybe it was 2 weeks ago, we talked about what the expectation was in Silicon Valley at a startup, what startup culture was, In terms of just the effort that was required to build a winning company, and we all said 60 hours a week was the baseline, that's something that you know, has been I think a lot of people you you mentioned this, Shamoff, people working 2 jobs for 30 hours a week and taking 2 salaries from 2 of the FANG companies. 10 episodes ago. Chamath Palihapitiya (01:26:06): -- to TikTok and search for, you know, engineering salaries. You'll see some of the craziest TikToks kids are making 350 k working 30 hours a week, it's nuts. Yeah. Jason Calacanis (01:26:16): And so I think we're gonna have is a I think we're gonna have a cultural divide here. There are gonna be a series of companies that say this is classic Silicon Valley. We're gonna we're gonna crush it. We're gonna work aggressively. We're gonna put in 50, 60, 70 hours a week, and we're all gonna benefit from that. And then there'll be another class of companies that says hey. No. We want to have a more lifestyle business. And if people wanna work 30, 40 hours a week and they contribute, we don't need to be perfectly efficient. And you know what? the playing field of the playing field of capitalism will show who is right, sex. David Sacks (01:26:45): Yeah. I mean, look. I actually went out of town a few days ago, so I wasn't keeping up with, you know, every detail of what was happening at Twitter. And I started getting all these text messages about how Twitter was dead or dying or whatever. Like, the site had been unplugged or what have you. And I'm like, what is going on? I and, you know, you tweeted this morning, hey. Is this working? And I'm like, yeah. Like like, yes. It's working. Like, And -- Yeah. Jason Calacanis (01:27:06): Actually, this morning, is this working today, David Sacks (01:27:09): And so -- My tweet went through. Yeah. So I I came to learn what they're talking about is that all Elon did was give a voluntary offer that if you didn't wanna stay, you could take 3 months severance. Now remember, last week, they had a riff, you know, which was basically economically required in which they gave employees 3 months severance, which is 50% more than what he had to. It was generous. Now it seems to me that what if you're one of the employees in the other half that made the cut, but yet you're not really motivated to stay, and maybe you don't really wanna operate like a start up. I mean Elon is basically saying we're gonna go back to working and operating like a start up. That means that you might have to work nights weekends like a start up. What if that's not what you signed up for? You may be sitting there at Twitter saying, oh, man. I wish I had gotten riff. Well, now Elon is offering you the opportunity to take the same package. Sounds good. So I'm like, how can this possibly abate be a bad thing? Jason Calacanis (01:28:06): It's actually the great management technique that Tony Shea rest in peace from Zappos created. He would say when people went through their first couple of months of training, he'd say, now if you don't want this job, I will pay you a month's salary. This is on their 1st day after they went through training their first, like, day on the job. He said, okay. Now that you've gone through the training, I'll pay you. I think it was $5000 or $3000 to not take the job. And something like Chamath Palihapitiya (01:28:29): 1 Jason Calacanis (01:28:30): out of 5 people would do it. And so he said, listen. I I don't have to fire them later on. This is gonna make my management easier. It was a it's a it is actually a kind thing to do to give people David Sacks (01:28:39): the opportunity to -- -- how giving in employees an option to opt out if they're not on board. Jason Calacanis (01:28:46): The the reason people are upset, let's be honest, Saks, is some people you know, live to work and some people work to live. And the people who are working to live find it crazy that hustle even exists and people who are part of hustle culture, like the 4 people in this podcast, finding crazy. Chamath Palihapitiya (01:29:03): It's just working. Jason Calacanis (01:29:05): Hustle culture is working above the hours you're being paid for. that's that's basically what hustle culture means. Chamath Palihapitiya (01:29:09): If you're getting paid for 40 hours when you're getting paid a Speaker 3 (01:29:11): salary -- That's Jason Calacanis (01:29:12): how most people would define it. Chamath Palihapitiya (01:29:13): The salary is is actually not you work for 40 hours. The salary means you get your job done. Jason Calacanis (01:29:18): Okay. That's how we look at it. That is not how other people look at it. Chamath Palihapitiya (01:29:22): And you also oh my god. David Sacks (01:29:23): Look. There's no there's no question that Elon is gonna raise David Friedberg (01:29:26): the bar. If we if Chamath Palihapitiya (01:29:27): we lose American primacy, it's because of that, not because of -- I agree I Jason Calacanis (01:29:30): agree with you. I'm just I'm still near on the other side. I'm still near on the other side. People look at their salary, and they look at themselves as getting compensated for 40 hours, and every hour above that -- But do you know who -- -- a this generation's mind look at? hustle culture. Chamath Palihapitiya (01:29:44): There there are people that Jason Calacanis (01:29:45): are working with it. Chamath Palihapitiya (01:29:46): There are people that are working 60, 70, 80 hours a week as a teacher to make 30, 40 k firefighters, you know, working on oil rigs. And to hear somebody like hustle culture at a start up where you're making $350 in set because, like, the matcha lot ran out or whatever. It's just so out of touch. Jason Calacanis (01:30:04): I'm not disagreeing. David Sacks (01:30:04): Yeah. Look. My my my my view on it is that people need to love their jobs and love what they're working on because I think the only way to be successful is to work hard, but the only way to work hard and be happy is to really love what you're doing. And if there's a lot of people at this company or others who don't really love it and they are just there to pay the bills or whatever, then I actually think it's extremely generous for Elon to be offering them a package. Jason Calacanis (01:30:29): It's the right thing to do. It's the right Chamath Palihapitiya (01:30:30): thing to do. Speaker 3 (01:30:30): I I David Sacks (01:30:30): don't understand how giving them an option was anything but positive. And yet, the media's gone berserk on it. Meanwhile, while giving SBS a virtual pass on the largest one of the largest frauds in history, a made off level fraud. You read the New York Times? Allegiant. No. There's no alleged dude. It's come out. He loan himself like, this is just one data point. He loaned himself a $1,000,000,000. he loaned the head of engineering $500,000,000 off the balance sheet. Chamath Palihapitiya (01:30:55): Nothing to see here. David Sacks (01:30:56): What possible justification? And, you know, and SBF at this interview -- -- the Chamath Palihapitiya (01:30:59): reason just say the word just say the hard part out loud. The reason why these same publications are not covering this is because they were complicit in his reputational laundering. Yes. So New York times before that article put out this other puff piece where they talked to him, and they were excoriated on Twitter because it was, like, not a single question about the fraud. Or alleged front? Jason Calacanis (01:31:20): Allegi. Allegi. Allegi front. Allegedly, obviously. Allegedly slash obviously. Chamath Palihapitiya (01:31:25): $1,000,000,000 David Sacks (01:31:26): suddenly goes missing, and no one knows where it is? I'm willing just to call that a fraud. Speaker 3 (01:31:31): You're willing to jump the fence? Chamath Palihapitiya (01:31:33): They're busy scrambling to sort of save their own reputations, which is why they are trying to, like, hide the cheese effectively and point over here and say, hey. Look at what's happening. Elon sent an email worth only one button. Yes. Jason Calacanis (01:31:47): I mean, let's be in some way, honestly, honestly. Speaker 3 (01:31:48): I love David Sacks (01:31:48): I love that meme that Elon tweeted out. Do you see that the 2 Rhino smiling? No. Speaker 3 (01:31:54): So But I sure don't. Jason Calacanis (01:31:56): Oh, god. You I mean, Chamath Palihapitiya (01:31:58): you know, this Jason Calacanis (01:31:59): is all gonna get reblogged. David Sacks (01:32:01): It's too funny. It's just too funny. It's too good. Jason Calacanis (01:32:04): It's too good to not put up on the screen. David Sacks (01:32:06): And that that nature photographer is the New York Times. It's it's Chamath Palihapitiya (01:32:10): Okay. Yeah. Jason Calacanis (01:32:10): People who don't see David Sacks (01:32:11): it. There are there's Jason Calacanis (01:32:12): there are 2 rhinos David Friedberg (01:32:14): that have Jason Calacanis (01:32:15): they're fornicating. Copyating. Chamath Palihapitiya (01:32:16): And yeah. Yeah. The copywriting. But Right Jason Calacanis (01:32:18): now it's calculating is like, it's 22,000 pound animals populating Chamath Palihapitiya (01:32:23): -- Doggy style. -- 10 Jason Calacanis (01:32:24): feet behind a nature Speaker 3 (01:32:26): please decide your mind. You can make it worse. Jason Calacanis (01:32:29): Behind I'm trying to Speaker 3 (01:32:30): be the worst. Chamath Palihapitiya (01:32:30): That's a David Sacks (01:32:31): fiction photographer. Jason Calacanis (01:32:32): A nature photographer with a $6000 tele you know, photo lens that could shoot across the entire Serengetty. But his 10 feet behind him are the 2 rhinos The 2 rhinos, it says FTX losing over a $1,000,000,000 of flying funds. And the the photographer is senators calling for the FTC to investigate that. David Sacks (01:32:51): The important thing is the pointing and completely the wrong direction. Speaker 3 (01:32:54): The wrong direction. He's just totally missing it. David Sacks (01:32:56): see the thing that is obviously right in front of his face. Jason Calacanis (01:32:59): Right. David Sacks (01:33:00): That he should be photographing. Jason Calacanis (01:33:01): Yes. And he's using that long telephone lines. Speaker 6 (01:33:03): And that Jason Calacanis (01:33:03): is that is the New York Times. That's Senator Warren. David Sacks (01:33:04): That's the ICC. David Friedberg (01:33:10): Point the Jason Calacanis (01:33:10): arrow in the right direction. Yes. Point the camera in the right direction is the point. I just wanna point out that David Sacks (01:33:15): my -- -- one bulgy tweet on this in this regard. Jason Calacanis (01:33:17): Oh, god. Like The biology is not capable of one tweet. That's gonna be seventy six tweets in a store. Go ahead. David Sacks (01:33:21): You meant to pluck you're right. So you David Friedberg (01:33:23): don't pluck David Sacks (01:33:23): it up, but it's a really Speaker 3 (01:33:24): good one. Of course, it's a tweet term. It's biology. David Sacks (01:33:26): He says, I Think of a regulator as a binary classifier. What's their false positive and false negative rate? BTF e Bitcoin ETF blocked for years. FTX ignored for years. The actual filter is not is this a scam? The actual filter is is this a scam? David Friedberg (01:33:43): Who? Spicy. David Sacks (01:33:44): It's not consumer protection. It's reelection. Why the hell? That that that's a moderation in rhymes. Can young Spielberg make a banger out of that? Jason Calacanis (01:33:51): It is a banger. It's not consumer protection. It's reelection. David Sacks (01:33:54): Listen. If you are part of these interlocking power structures that we call the regime, it's the New York Times. It's the regulatory state. It's a democratic party. You get a big pass. Republicans. Chamath Palihapitiya (01:34:06): Hold on. Let's be clear. Your your team now controls a house, and so Who's Tim? David Sacks (01:34:12): David's team. Jason Calacanis (01:34:13): Oh, David's team. Chamath Palihapitiya (01:34:14): David's Oh, yeah. I I understand. But starting in January, you know, there's any amount of congressional Yeah. Well, for saying How's Jason Calacanis (01:34:20): your Hunter Biden investigation going back? Chamath Palihapitiya (01:34:22): -- David Sacks (01:34:22): a month. Jason Calacanis (01:34:22): Let's see how's your Hunter Biden investigation? David Sacks (01:34:24): No. No. Hold hold on a second. Let me say this right now. The first investigation by the House of Representatives needs to be SPF and FTX, not Hunter Biden. SPF makes Hunter Biden look like a piker. I mean -- Yeah. Chamath Palihapitiya (01:34:36): -- David Sacks (01:34:36): you know, Hunter Biden was when a couple $1,000,000 of grift. This is $10,000,000,000 plus of grift. So I think that's it. Chamath Palihapitiya (01:34:42): It also touches regulators. It could touch you know, it it's a big it's a big deal. David Sacks (01:34:46): It's a systemic failure. It's a stomach failure. Chamath Palihapitiya (01:34:48): -- Jason Calacanis (01:34:48): knows how to party, so let's be honest here. I mean, that is the issue. I I just think the quote of the week goes to John Jay Ray. He's FTX's new CEO. He famously oversaw the liquidation of Enron. And he says, I have over 40 years of legal and restructuring experience. I have been the chief restructuring officer and or chief executive officer in several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance and run. Nearly every situation in which I have been involved has been characterized by deficits of some sort in internal controls, regulatory, compliance, human resource, and cyber integrity. Never, in my career, have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. This is the person who oversaw Enron saying this is unprecedented. Enron was the previous unprecedented situation, which is now being framed as manageable by none other than John Jay Ray. What a great name. Congratulations on being the chief restructuring officer of FTX. Chamath Palihapitiya (01:35:56): There was an article that showed Nick, if you could please throw the picture up on the screen of of all the people that invested -- It's the universe of SPF. Jason Calacanis (01:36:07): Oh my god. Chamath Palihapitiya (01:36:08): What and they and the article headline was it's a who's who of VC. And my comment is actually, no. This list is a who's who of people who did no diligence -- Yeah. -- whatsoever. And I just wanna call one person, Nick. If you look at the alameda research, this this firm called 1 inch. Jay Cal invested in a firm named after the life of his penis. Speaker 3 (01:36:31): Come on. Come on. Jason Calacanis (01:36:34): Come on. Maybe coming out of the cold plunge. Okay? But, you know, that cold plunge, this is shrinking, Shivan. Chamath Palihapitiya (01:36:40): You was that an s treatment? Was that an s Speaker 3 (01:36:42): p p? What a jazz payment? Jason Calacanis (01:36:44): Listen. I'm a shower. Not I'm a grower. Not a shower. Alright? Listen. You guys coming at Everybody knows. Coming out of the cold plunge, it's it's not gonna be the best performance for any of us. Chamath Palihapitiya (01:36:54): What a neighborhood what a pipe what Speaker 3 (01:36:56): a pipe called 1 inch? Oh god. Chamath Palihapitiya (01:36:58): What is that? Jason Calacanis (01:36:59): We've lost the script on the show. Jesus, please. We gotta wrap. I mean, it's just too much. David Friedberg (01:37:03): Do you guys not think that all these investors received audited financials, and, you know, they got they had a a lawyer, a legal firm that represented these financials. David Sacks (01:37:12): Did you guys see who FTX's auditing firm was at called Frager Medis, and that says it's based in the metaverse. This is like the Hollywood upstairs medical college of the auditing world. Chamath Palihapitiya (01:37:22): Their address was in decentral land, David Friedberg (01:37:24): burning that off I think his brother-in-law ran the accounting firm that did their audits. Right? It was, like and it was in -- On Jason Calacanis (01:37:29): a dead floor in the lipstick building. David Friedberg (01:37:31): It was in the same building. Right? Jason Calacanis (01:37:32): an electric building to have, like, Speaker 3 (01:37:33): a secret floor with nobody on it. David Friedberg (01:37:35): I like, look. I mean, even in that case, people relied on an audit from a CPA that said, here are the numbers, and those numbers were fraudulently conveyed. And I think that there's probably some, you know, some forgiveness necessary here that there was fraud. there may have been serious fraud that took place, so I don't wanna be too disparaging of all this one people that we know -- -- on this. Chamath Palihapitiya (01:37:54): -- David Friedberg (01:37:54): that work at these investment firms made an investment, and they all got duped, and the LPs got duped. And so I don't think this is just fundamentally like failure of diligence. Chamath Palihapitiya (01:38:02): So we we we we were part of the process where they tried to show. Speaker 3 (01:38:05): I mean, Chamath Palihapitiya (01:38:05): I I have to be careful. My lawyers remind to be that we're still under NDA actually with FDX. So but what I can tell you is we did not get any financials. So we were verbally As Speaker 3 (01:38:13): they told you Chamath Palihapitiya (01:38:14): to ask for it. David Friedberg (01:38:15): When you -- Well, I we we said we said Chamath Palihapitiya (01:38:17): to sent to 2 pager of stuff. Anyways, I can't say more than that, but k. Jason Calacanis (01:38:20): Yeah. Don't get your stuff in trouble. Oh, I Chamath Palihapitiya (01:38:22): wanna I wanna say something else, by the way. Last Friday, David and I were at Yuri Milner's birthday party, and there was a chess tournament. And Magnus Carlson was there. And, anyways, David was in the finals Oh. Okay. It was David and his partner. Jason Calacanis (01:38:38): Look at the smile on David's side. Chamath Palihapitiya (01:38:39): Versus hold on. Wait. I'm getting to a great punch line versus Magnus Carlson and his partner. David Friedberg (01:38:45): David One. Chamath Palihapitiya (01:38:47): Wow. Amazing. -- David Sacks (01:38:47): partner was was should I say Yuri's daughter who I think is probably what, like, 10 year old. Jason Calacanis (01:38:52): Oh, she's incredible. Yeah. She's, like, Chamath Palihapitiya (01:38:54): stuck in David Sacks (01:38:54): in America. Yeah. She's good. Jason Calacanis (01:38:55): She's good. She's incredible. David Sacks (01:38:56): Anyway, yeah, thank you to Yuri. That was a really unique in front of me. It was partner chess. My partner was Prognanonda, who's an Indian grand master, who's, like, a superstar. Yeah. And look. Playing and, you know, with Magnus Proson was obviously that was a real thrill. Yeah. There you David Friedberg (01:39:10): go. Congrats. Jason Calacanis (01:39:11): So when you rank this with the birth of your children, your marriage, and and this, where would that rank on the scale of 1 through 5? This is a Chamath Palihapitiya (01:39:21): -- Speaker 3 (01:39:21): This is a -- -- for your pork tins. David Sacks (01:39:23): But you know what? Speaking of Paul? Jason Calacanis (01:39:24): Look at this wild. Zach's just happy. Oh my god. I haven't seen him that happy since That's since Trump won't. David Friedberg (01:39:30): Guys, look at look at that document I just sent you. -- lost. Jason Calacanis (01:39:32): Before before we gotta record this thing, David Friedberg (01:39:34): but I wanna show you this. Basically, I pulled all IPO since 2020. So this glutes all spec mergers and real estate finance material energy utility. So kind of the big, bulky, private equity type stuff. So it's it's mostly tech consumer. Chamath Palihapitiya (01:39:47): 627 David Friedberg (01:39:48): IPO since 2020. More than half of them or basically half of them are trading at less at point two times the total cash they've burned. So there you know, you can kind of look at total lifetime capital burned by these companies. in the retained earnings line on the balance sheet. And so when you pull out the retained earnings, it shows you right how much money they've burnt over their lifetime. And so the total money burnt by half of these companies is about a Chamath Palihapitiya (01:40:13): $107,000,000,000. David Friedberg (01:40:16): And the market cap of those companies is only $26,000,000,000 in aggregate. So a point 2 times return on capital invested to date in terms of enterprise value divided by total capital invested in parts today. Chamath Palihapitiya (01:40:30): Let me say let me say it in English and you tell me if I said it right. So 627 non spec, non real estate non finance companies went public. So, basically, 627 start companies went public -- Mhmm. -- since 2020. So 2 years, Yep. And of those 627 tech companies, almost half or 300 of them, 48% of them are today worth about point two times all the money that went into them. Speaker 3 (01:41:00): Yep. Yep. Chamath Palihapitiya (01:41:00): My gosh. Wow. Yep. David Friedberg (01:41:03): It's tough. And then and on the other half, the other half is is the ones that have worked. So this kind of goes back to a power law point But, like, as a venture industry, you think once you get a company public, it's successful. And the reality is that many of these companies from a from an economic perspective are still not successful. It it looks like half and perhaps much more if you include all the SPAC mergers. which is another couple 100, and and I I would guess the vast majority of those meet this criteria, are trading at less than the total cash that's been invested in them. Jason Calacanis (01:41:37): Friedberg this speaks to the age of excess that we just went through. We just weren't as efficient as we needed to be in running these companies, and now we're in the age of efficiency, austerity, excellence, But it all -- And these concepts -- -- this great setup for a rebound, isn't it? Friedberg? Like, I would be looking through these. David Friedberg (01:41:53): Look. I mean, one way to read this. I was speaking with someone who I you can bleep them out. I was talking to Chamath Palihapitiya (01:41:59): 2 David Friedberg (01:41:59): weeks ago, 3 weeks ago, and he showed me in their how much should I say here? This is a big investment firm, and they have a big growth portfolio. less than they have about a Chamath Palihapitiya (01:42:08): 160 Speaker 6 (01:42:08): investments, a 180 investments in their growth portfolio. Chamath Palihapitiya (01:42:09): 85 David Friedberg (01:42:09): percent of the Speaker 3 (01:42:13): returns David Friedberg (01:42:17): are generated by 10 companies of the 180. And that's in the growth portfolio. These are supposedly de risked businesses. Powerwall exists even in Powerwall, exists in growth as you can see here, the Power Law exists quite dramatically post IPO as well. So -- Yeah. Chamath Palihapitiya (01:42:33): -- David Friedberg (01:42:33): you know, as you can see here, only 9% of these businesses have generated positive earnings over time. 43%, or about half of them are worth more than the total cash that's been invested in them. And that multiple -- This Jason Calacanis (01:42:47): is a production board study here, by the way. This is your done by your firm. David Friedberg (01:42:51): Yeah. Yeah. Yeah. It's off public data. So the the multiple on the value of the companies that are worth more than their cash invested is 5.5 times. So in aggregate, IPO since 2020 are worth 4.3 times the total cash that's been invested in them over their lifetime. But the crazy statistic is half of them are worth significantly less than the cash that's been invested in them only point two times. So the Power Law dominates both early growth and and clearly being public. But I think to your point, Jay Kal, it also seriously speaks to be a a of excess, and it's really gonna rationalize probably based on the conversations we had today about Twitter, Meta, Google -- Amazon. Google. Amazon and this as well. So, certainly, a -- Also a big new service -- -- happening. Chamath Palihapitiya (01:43:37): -- Jason Calacanis (01:43:37): Friedberg, and and correct me if I'm wrong here, Shamalff. We want more companies to go public and have that discipline of being a public company. This was the big critique of this quiet era of companies taking 10, 12, 14 years to go public. This is gonna be a strength for these entrepreneurs to have to fight it out in the public market under scrutiny. Correct, Chamath? Chamath Palihapitiya (01:43:56): 100%. I think, like, the Chris Home letter, I think that there are a lot of VCs on boards of companies who would love to say the equivalent thing to their private company. -- Jason Calacanis (01:44:05): company. Yeah. For sure. Chamath Palihapitiya (01:44:07): And part of the the dynamics, as as Friedberg just said, because it's such a power law and people believe that, you know, you being with other VCs are really important. It turns out that most of these VCs abandoned their role on these boards and don't really hold people accountable because they're worried it'll affect their deal flow. And the problem is it's a negative reflexive loop. It's but so these companies do poorly, and then as a result, they're viewed as not an effective board member. And so the next deal they get is a poor and poor quality. So the highly correlated Portfolios in Silicon Valley are the ones that will get torched because most of those companies will receive very poor or no advice. And then the few that will get to the end is because they have hard nosed people on the board that will force them to make really hard decisions. Jason Calacanis (01:44:52): Yeah. That's it. Sachs, any thoughts here on the public markets? Chamath Palihapitiya (01:44:56): Sorry. Wait. Last thing. And by the way, Sequoia, who has had exceptional returns, has always been known to be hard nosed. You know, a lot of people that critique against Sequoia from founders would would be that, oh, if I take Sequoia's money, they may fire me. Well, yeah. because if you're not good, it's the the mission of the business is bigger than your ability to be the CEO. And so, you know, you just have to remember, like, there is no free lunch. We were not giving out free money here for you. Jason Calacanis (01:45:21): Swung one direction too far. They used to the traditional Silicon Valley used to be. You always replace the CEOs, the the founders with a professional CEO, and Google being the turning point there or maybe the last one. And then it became founders will control their companies with super voting shares forever. hopefully, the pendulum now swings to some equilibrium. Saks, what are you seeing in private markets? David Sacks (01:45:41): The the Shaw program for surplus elites is going away. Jason Calacanis (01:45:45): the child's part. That's the TLDR. David Sacks (01:45:48): The child's part of it. -- plus elites going forward. Chamath Palihapitiya (01:45:51): -- managerial classes under pressure. Yes. Speaker 6 (01:45:53): That's for sure. David Sacks (01:45:54): If you went woke, you may go broke because you have no marketable skills. Chamath Palihapitiya (01:45:59): Man, you're a bunch of eyes Jason Calacanis (01:46:00): on there. Is Dean having Chamath Palihapitiya (01:46:02): you piece one liners? Who's Dean? Do you Jason Calacanis (01:46:03): have somebody in the room with that? Speaker 3 (01:46:05): Dean's not a David Sacks (01:46:05): bunch of guy. Chamath Palihapitiya (01:46:06): Dean's helping you for standing David Sacks (01:46:08): himself. -- myself up. Jason Calacanis (01:46:09): Oh, Jackie, the joke like Jackie, the joke man, Marling, handing you a little notes there. Alright. Chamath Palihapitiya (01:46:16): 4. Jason Calacanis (01:46:17): the Sultan of Science, David Friedberg, and also the executive producer of All In Summit Chamath Palihapitiya (01:46:23): 2023, Jason Calacanis (01:46:25): and the rain man himself, chess master and Chamath, David Sachs, as well as the dictator. I'm gonna go on a little road trip. Army dictator. A little road trip Speaker 6 (01:46:37): for the Jason Calacanis (01:46:38): dictator in Jake House. Yeah. It's gonna be fun. I am the world's greatest moderator who couldn't control the panel today. I'll do better next week, and we'll see you next time. David Friedberg (01:46:47): Love you, guys. Happy Thanksgiving. Jason Calacanis (01:46:48): in podcast. Happy Thanksgiving, boys. Chamath Palihapitiya (01:46:50): Bye bye. Speaker 6 (01:46:52): The Leggett winner's ride. Rainman, David Sachs. And it said -- We open source it to the fans, and they've just gone crazy with it. besties are gone. we should all just get a room and just have one big huge ordeal because they're all just useless. It's like this sexual tension that they just need to release somehow. What? Speaker 3 (01:47:31): You're the BP. Jason Calacanis (01:47:32): What? You're a thief. BP. Speaker 6 (01:47:35): What? That's gonna be it. Where did Jason Calacanis (01:47:36): you get merchies are back. going all in.