播客被黑，Threads 上线，美联储纪要，移民之争，气球闹剧，心脏健康

David Friedberg (00:00:01): Let me get everything queued up here. How does Jake Hall open the show? What did he say? Hey, everybody. Yeah. Do it, Chamath. Chamath Palihapitiya (00:00:11): Hey, everybody. Hey, everybody. I'm Jason Calacanis. I am the grifter with the most The mostest, that's the shortest. The shortest, that's the baddest, and the baddest, that's the dumbest. David Friedberg (00:00:25): He's not even here. He can't do that. It's awful. David Sacks (00:00:33): We'll let your winners ride. Speaker 4 (00:00:41): Open source it to the fans and they've just gone crazy. David Friedberg (00:00:50): Welcome to Dylan. Chamath Palihapitiya (00:00:51): Where is Jacob? David Friedberg (00:00:51): Where is Jacob? He wanted the week off. And anytime any of us take the week off, Jay Cal says the show must go on. And he rings up Brad Gertzner and says, hey. We need a sub. Come on in this week. This week, when Jay Cow wanted the week off, he said, guys, we're all taking the week off. And Saks said the show must go on. Jay Cal refused to show up. His producer editor refused to show up. So we are here solo hacking our way to all in pod episode 136. As your moderator today, Dave Friedberg, I am extraordinarily joyous and happy to bring you the first episode of the all in podcast without the hostess with the most as Jason Calacanis Joining me today, I'll duce from Elba Island, Chamath Palihapitiya, Chamaq firing up tweet storms lately, taken over the Twitter soon to take the threads by storm. I'm sure Rainman, David Sachs, joining us from a curtain showroom, in the south of wherever. And from an addict in an old house, the man who manages $10,000,000,000 to generate 50% plus returns year to date. The 1 and only Brad Gersner, Brad. Welcome to the show. Great to have you. Brad Gersner (00:02:06): Good to be here. Appreciate the call half hour ago. Yeah. Great. Thank you. David Sacks (00:02:11): Are we are we even able to drop this episode? How are we gonna actually upload it to Apple Podcasts and all the rest. David Friedberg (00:02:18): So here's the deal. I have the email login. I think I can get into the accounts. I I have I'm gonna I'm gonna, like, do the request for password reset on all the accounts. I I also have I have imovie on my computer. So I'm gonna use imovie to edit it. It's gonna be fantastic. I'll send you guys a little link before. I'm gonna create a descript account so we can edit our show and comment on it. I'll see how that works. David Sacks (00:02:44): Shows is magically gonna appear here on YouTube and Apple Podcasts, and Jake House's gonna be like, what happened? David Friedberg (00:02:49): Exactly. So let's not tell Chamath Palihapitiya (00:02:51): my freeburg as Friedberg Freberg is Bernardo Bernardo during the takeover of LVMH, which is a great story if you've never heard about it. I'd love to hear, like, He he basically is like he says he's gonna partner with this Irish entrepreneur to basically buy AlVM Edge. And, you know, they're going through. And at the 11th hour, he pulls a rug out from him, stabs him in the back and basically does the deal himself, gets to own LVMH and the rest is history. But this is you, Friedberg. You're pulling a Bernardo at the last minute. David Friedberg (00:03:19): No. No. I would never stab Jake Hall in the back. I would just steal his passwords. Chamath Palihapitiya (00:03:22): In the front. You'd stab David Friedberg (00:03:23): him in the front. To tell him you should show up to work. No. That was in the front to steal the passwords. David Sacks (00:03:29): It's not it's not stabbing in the front. We showed up. He didn't. David Friedberg (00:03:32): Yeah. David Sacks (00:03:32): He's trying to exercise passive aggressive control over the pod. He's been out voted. He does not control the pod. David Friedberg (00:03:38): We've done a 135 episodes. And every time we've suggested taking a week off as a group and he doesn't want to, he says the show must go on, and he calls up a guest and he keeps the show going at his whim and his, discretion. So this week, we are doing the same. The show must go on. Jake Hall is enjoying a summer break, wherever he is, maybe, I think we're all on vacation this week. Right? David Sacks (00:04:01): I know he why he didn't want the show to go on is he has a deep insecurity that he might get replaced at some point David Friedberg (00:04:07): Yeah. David Sacks (00:04:08): By someone smarter than him. Oh. David Friedberg (00:04:14): Gersner, you were supposed to replace me, but you might end up replacing Jakeow. Brad Gersner (00:04:18): No. No. No. David Sacks (00:04:19): So the fan the fan's old stuff for us now. Brad Gersner (00:04:21): The truth is The truth is last year, remember, the fateful morning when I get a call from Chamath And he said, hey. We need you to come in. Jay Cals out. We got and we need you in as the 4th. And I believe you're talking to Chammat. My my phone rings, and it's Jinkow. David Friedberg (00:04:43): And Brad Gersner (00:04:44): he said, Friedberg out. Chamath Palihapitiya (00:04:46): I need Brad Gersner (00:04:47): you to replace him. I had both guys going at the same time, and it's been that way for the last 12 months. Chamath Palihapitiya (00:04:53): So can I just can I really like I was in Yeah? I was in Vegas when I had to sort this out of burned an entire day. A year ago. It was a year ago. It's right. Well, at David Friedberg (00:05:05): least we got our at least we got our LLC docs signed. That's that's what came out of it. David Sacks (00:05:10): It's it's literally like the show billions. You know? Yeah. All the intrigue or whatever. But that's why Jakeau wanna to sabotage the show rather than have it go on without him because he's afraid that the audience might like the show better without him. There's certainly been a lot of commenters saying that sort of thing. Oh, gotcha. Gonna find out. The fans need to let us know what they think of this episode. David Friedberg (00:05:33): Alright. Well, let's kick it off. First, topic on the docket today, which I think is a great one. And, Shamak, you've been tweeting a lot lately as we just talked about. I think that'll end probably being our cold open. But, Zuck announced, and Facebook meta announced the launch of Red's, Gersner, big shareholder of Meta, I think, right, reasonable, reasonably sized shareholder. This, Zuck this morning announced 30,000,000 downloads of the app overnight. The reds is instagram/facebook/metascompetitor to Twitter. Looks almost like a clone. I mean, it is so similar in features, in interaction, in everything. Brad, maybe you can kick us off and talk a little bit about the importance of threads and how this, is important to Meta, and then we can talk a little bit about the app itself. Brad Gersner (00:06:23): Well, I mean, the the first thing is if rumors are true, they developed this over a period of 6 to 9 months with twenty people. Okay. And so the extraordinary pace that's now occurring with inside, or inside matter. We've heard from several people inside that said people are pumped. They're actually updating real time, user counts. They're over 30,000,000 users already on Instagram. And it just gets back to this culture of flattening the organization, speeding up the organization. I think everybody's excited you know, the best engineers in the world wanna see their products set free. And so, you know, I think threads is really interesting for a couple reasons. Number 1, if we flash back to what went on in China with Tokyo and Doyan, remember that text based social networks were where kind of it started there. And so it's a bit anomalous, Doyan, which is the TikTok equivalent in China, was started based on Tokyo, which was a text based news feed. And so it doesn't surprise me to see the social graph being leveraged into a text based, feed I think initially, they're seeding it obviously with all your friends. So it's it's, it it looks more like celebs and entertainment and it's my team is like, it's easier to use. It's faster. It feels more free. I think, you know, Adam is sorry. He he posted on threads that he stayed up all night last night. So excited with the product launch. He and Zucker responding to people actually live on threads and so I part of this just goes to the pulse of the company. Over the next 4 to 6 weeks, they're gonna have massive launches out of, the AI side of the business. Expect a lot more support for their open AI model, or for their open, LLM. I also think they're gonna launch a bunch of agents on what's happening Instagram. So what I see is just velocity and cycle time within the business improving. And then one final thing, in the age of AI, Right? You want to collect as much data as you can from your users. Brad Gersner (00:08:31): And we know that Facebook is very heavy on video and pictures, but what they're light on is text. And so in a world where the most important thing on the internet to train your model is this is the word. Right? Now they're gonna collect a lot of words, a lot of conversations, a lot of sentiment among the users. And, you know, maybe we'll come back to this. You know, I just wanna kick it back and get people's thoughts on the product, but already by my estimate, these guys get to a 100,000,000, which is looks like they may be able to get to tonight based upon the monetization that Twitter has, that's already a business that's doing something like $2,500,000,000 in revenue if they chose to monetize it. 1.2or1.5000000000 in EBIT, apply their current multiple to that. That's about a $20,000,000,000 increase in enterprise value built by if rumors are true, twenty people over a course of 6 months. David Friedberg (00:09:29): Yeah. It's pretty impressive. I remember in the early days of Friedberg, and MySpace, and then even Facebook, these social networks launched, and everyone thought it was gonna be a conversational system. And so much of the usage and the page views and the minutes spent ultimately accrue to photos and over time video, And now it's almost like this interesting reversion back to the origin that it's back to this conversational system, but these systems always seem to kind of evolve to, hey, just images are what, when. And what, kind of gather up all the the Mindpace. I mean, Shamab, having worked at Facebook, maybe you can share a little bit about your point of view on threads as a product and as an evolution away from social network on Facebook to Instagram and out of threats. Chamath Palihapitiya (00:10:14): I I think what people don't understand is that the successful category winner in each of these categories needed to invent something de novo that nobody else had. In the case of Facebook, we invented photo tagging when it didn't exist, and then we invented the news feed when it didn't exist. And then there was a bunch of people that copied it but it didn't matter because we had refined and owned that use case already. So I think the real challenge for Facebook isn't Can twenty people copy Twitter? I mean, you know, Mastodon is a copy of Twitter. There's a bunch of parlors, a copy of Twitter, truth social is a copy of Twitter. The challenge is going to be can you invent some de novo feature that makes people actually want to use this? And, you know, rage quitting Twitter because you're not a fan of the product right now or Elon isn't a successful long term use case because all of those people will eventually come back. So I don't know. I'm a little bit more skeptical of the whole thing. I think that right now, what you see is not even a full copy of the system. It's, you know, a 50, 60% copy with a lot less usage urgent, so as a result, a lot less traffic. Yeah. But I think you need something new. You know, TikTok, the reason why it became successful was it was a fundamentally new use case relative to the alternatives, and I think that that captures people's imagination and mindshare. So this is not what threads does. And so in as much as it's a copy of something that is already in established behavior, I don't think it has very high chances of success. Brad Gersner (00:11:54): But don't stories and and and and reels undermine that argument? I mean, reels was a copy of TikTok. And Stories was a copy of Snapchat, and they're both giant products today. Chamath Palihapitiya (00:12:05): I think that you can definitely copy features into an existing product with new distribution, but to invent a new product wholly from scratch, that's a carbon copy of something. But, again, Reels attaches on to Instagram which is a unique use case. Right? And so I think that, again, it goes back to you have these 5 or 6 established modes of social media that essentially are from large pieces of content to small pieces. That's probably the best organizing principle that we have. And then that's one axis, and the other axis is text video audio. And along that spectrum, you can basically compartmentalize all these things, and then there are about 4 of them that have real scale. And and so in as much as you have established distribution, yes, you can copy a feature from somebody else, and it will get used. But that's not what this is. So if this instead gets integrated into instagram, I think it's much more dangerous to Twitter than as a standalone product. As a standalone product, I tend to think it's DOA for the most part. Unless, again, it invents something totally new that we're missing. David Friedberg (00:13:14): Zack, you're an adviser to Twitter. What do you advise Elon? And, you know, how do you think about this as a competitive threat? David Sacks (00:13:20): Yeah. I'm not I'm not a formal advisor to Twitter. I was just a guy hanging around during the transition. No. Look, I mean, I tend to agree with with Chamath. The thing that Facebook did really well here is there's a one clicks sign up flow from Instagram where you just click to download threads, and then you can log in with your Instagram account and port over your bio and all of your data and your social graph. It's super easy. It gets set up. But by the same token, you know, if they have 10,000,000 or even 30,000,000 sign ups, that's really just a 3 percent conversion rate on the billion, you know, users that Instagram has. So a lot of people are just gonna make that a click because they're curious. They wanna find out what threads is. I wouldn't be surprised if I got a 100,000,000 users or 200,000,000 users that way. Just people you know, clicking over from Instagram to see what this new thing is. The question is, what's gonna be the habit forming behavior here. And the people who use Twitter are really addicted to using Twitter. It's where the conversation is. There is a strong network effect there. Not just around the users and the social graph, but, like, the habit of daily usage. So know, how many of these people who are signing up are actually gonna go use it every day? Are they gonna take the time to copy over to kinda copy paste all their Twitter posts over to this new medium. And then what about all the comments or replies? So I wouldn't just look at the signups here. I think you have to look at, like, the amount of posting and the actual usage before you know that Twitter has a threat. David Friedberg (00:14:57): Right. Did, did any of you guys use it this morning or last night? Brad Gersner (00:15:03): Yeah. David Friedberg (00:15:05): Would I mean, what do you think was the UX? Brad Gersner (00:15:07): You know, we had we had our team playing with it, you know, all morning, and and I started sharing with you. You know, there it it it feels to our team like common words being used were snappy or faster, lower hurdle. Like, it felt more fun and social. Therefore, you'd it wasn't as, considered a post, right, because most of the post at least, you know, that our team engages in on Twitter are for mostly business purposes. Right? And so there's politics and business and more serious topics. Right? Instagram's the home for fun. It's for frivolity. It's showing pictures of your friends. And so I think it's going to orient more in that direction. And, again, there's probably room in the world for a tech space social network around entertainment and culture and food and and the fun stuff, and there's probably room for one that's more about ticks in business and, you know, more serious topics and perhaps they'll converge more over time. I, you know, I think it's an interesting thing. Yes. It's one click. But you have to download a new app. I mean, this isn't, you know, just open up your Instagram and all of a sudden, click on a new tab. Right? And by my account, I think it's just in the US that they launched. So their conversion rate's probably over 10% already in 24 hours, and you gotta download an app to get there. You know, that feels to me like a little bit more of a hurdle, but I agree with both of you. At the end of the day, it's gonna be about engagement, not about how many people you got download the app. And if they get high engagement, you know, and I think there's plenty of surface area for these guys to monetize, that combined with, you know, Chamath pointed out, you know, as much as we love Elon, certainly there are people, Shamat, you brought up with respect to Tesla that are orienting away because of the brand. Right? Like, it may make sense or not, but we know it's happening. Brad Gersner (00:16:56): And so I do think that there's a natural momentum. I think this was, you know, like, if this was the cage match, right, if was the MMA between the two of them. This is certainly, you know, an offensive blow that that, you know, Meta just landed here, and I expect that, you know, it's gonna amp up the heat. David Friedberg (00:17:15): So it's interesting because at the same time as threads is launching to compete with Twitter, there's, some really interesting data coming out showing declining usage of chat GPT and interest level in Bard. So both if you look at Google Trends, as well as data coming out of similar web, which, tracks, usage across sites, Chouch EPT usage seems to be falling, from, a peak in May and it had a modest increase from March to April and then an even less modest increase from April to May and May to June, we're actually seeing a decline in usage. The question is, is this driven by educational usage? So a lot of kids were using chat GPT to write essays and to use it in school, and that seemed to be a primary use case, or does it speak to a more broad kind of challenge with chat GPT really disrupting search and disrupting other ways that people are kind of accessing and and browsing the internet, that it that as an interface, maybe it's a little bit too challenged. And it doesn't replace the the simple two word keyword click and click on the result. I'd love your guys' point of view on the product and the experience as well as why do we think that there's declining usage, in chat people? Chamath Palihapitiya (00:18:32): You had these products launch in a in a moment where there was an in many ways, a usage vacuum. What I mean by that is if you look back over, like, the last 15 or 20 years, there were these waves that would create these layers of innovation that consumers would infatuated with and try. Actually came right it came right on the heels of a pretty massive head fake, which was around VR. And that was supposed to be this next big title wave of consumer innovation, which turned out to be just a total fart in the wind. And so I think that there was a setup here where consumers were, you know, anchoring for something really interesting and unique and new and novel. A lot of people wrap those labels around the chat versions of these LLMs. And so you had, again, this explosion of usage, but I think what we're going to find there is that there's some pretty useful use cases but narrow where these chat interfaces are very useful, and the usage will decay to that number. And that number is probably a fraction of what the peak was. Mean so then people will get disillusioned, and the press will say this was, you know, another fad from Silicon Valley. But then I think the reality is that the real stuff, which is around enterprise software, health care, the physical sciences. That's where the real AI leaps, I think, will have really momentous value. Those are still 18 to 24 to 36 months away from seeing the light of day in in terms of real products that that actually work. So, Yeah. Again, you know, it's part of the hype cycle, and we all kind of fell for it. The only winner here is Nvidia. I think the loser Here are most of the VCs who pumped in 100 of 1,000,000 to 1,000,000,000 of dollars in Randos stuff too early. And the consumers They tried it. They didn't like it. They moved on. They're waiting for the next thing. David Friedberg (00:20:43): Zach's agree. Disagree. David Sacks (00:20:45): Well, I think that's that's going a little bit too far. I mean, I I think that there may be a couple of things going on here. One is that the curiosity factor may have been played out. I mean, the novelty has worn off a little bit. I think there was a lot of people using it initially just to see what it could do and hearing about it and wanting to test it out. So I think people have sort of scratched that itch. Also, school is now out of sessions. So for all the people who are using it to do some kind of academic research, there's not a need to do that right now. I I I do agree that the use cases that are most exciting to me are our enterprise uses. I agree with Chamath about that. And I think that is all still to come. I think in terms of the consumer, I I don't think it's going away, but I think that they're gonna have to improve the the accuracy. They're gonna have to improve the performance, the speed of it. Maybe improve the interface. That's more features if they wanna get to the next level of usage. Brad Gersner (00:21:43): I mean, think about think about the product today. You know, a 100,000,000 downloads. The the whole the whole downtick here is explained by kids being out of school. I mean, it's down 10%. And, like, kids have to be more than 20% of the usage of this. They Yeah. So I think you set that aside, but just think about how hard it is to use this product. Right? If you most people, you have 4,000,000 people paying 20 bucks a month. Could you imagine paying 20 bucks a month to use Google. Then on top of that, try downloading plugins. It's still a pain in the ass. And if you don't have a plugin, I think there are only 5 thousand people using plug in. If you don't have a plug in, you have no new data past 2021, which makes it dead on arrival as a product. So I don't even think I think we're so early in this that to judge the chat interface based upon the product that exists today. I think it's a huge mistake. I think that what we're going to see is kids come back to school. You're gonna see the normal uptick in traffic. If probably hangs out around this 100,000,000, 150,000,000 level in terms of usage. I think the next 10 x for a chat based interface. At least as it in so far as it concerns the consumer is when we move to in from information retrieval to action. And you've heard Zuckerberg talk about this on the Lex Treatment podcast. You've heard, you've heard meta talk about, you know, this outside of that context. And then you've heard Mustafa talk about it from PI, which is this idea that I say, hey, show me the 5 best hotels in Milan. It shows you 5 hotels, and then you say book me the Chipriani for these dates, and it actually will book it directly with the hotel engaging with an agent there. Now Mustafa from PI says this is months away. Friedberg alluded to the fact that they're gonna have action bots on WhatsApp and Instagram in the not too distant future, I think all of the, you know, all the links exist in the world to do this today. So I would say look for that as the next 10x feature for consumer facing chatbots. And then finally, I'd just say, I was at the Snowflake Summit last week. There were 600 applications. Brad Gersner (00:23:55): So new startups that applied, for their startup contest, they were each using an application of chat GPT, build on top of Snowflake data. 600 new companies, and this, you know, they just they just launched their application layer. So there's a tremendous appetite for people to help enterprises, right, access that information and build much more seamless discovery on top of it. David Sacks (00:24:21): I I tried to use chatgbt, the mobile app on July 4th. I was just trying to find a good quote to use in the, you know, by, like, an American Patriot or founder, framework of the constitution, something like that, to use to tweet out for July 4th, and it just errored out on me. And it was, like, one of these error messages that you can tell an near road. It's just totally non anticipated error. And I tried it, like, 2 or 3 different ways, couple of different chat threads, just didn't work. If completely inexplicable. So when you have those kinds of experiences, it makes you just wanna go to Google, which is what I did. You know, I thought you went to Google to find what I was looking for. I thought Chamath GPT could do a better job because I thought it could help me think find things that would be specifically appropriate for July 4th. So I did I was gonna see what opinion it might have. But Google is just much more performant. So they have to, like, work out those kinks. I mean, that's that's pretty clear. David Friedberg (00:25:16): I think, like, natural language prediction as a capability is certainly here to say to stay along with the agents in the action box that can integrate behind the scenes to do things for you. The real question for me is, is this a winner in interface? If I think back to you, you, user interfaces, user experience in the history of computing, can kinda go back to the original terminal interface on DOS, and you would, you know, have, like, lines that you would type and, you know, you would kinda program the computer to do stuff. That was almost like the first real computing interface that that people could use. And then there was Windows. And when Windows came along, it was a new type of interface, a new type of interaction model, And then we had the icons that arose with the Ipad iPhone revolution, and, obviously, the internet, the browser, was a was a new UX, and the browser provided hyperlinks. And in one window, you would click through and go to lots of different things. And then that browser interface eventually integrated images and video. And then the interface that that we're almost used to lately that we all probably spend most of our time on is the scrolling interface. Where there's infinite personalized content created for you and you just keep scrolling, whether that's on Facebook or Twitter or Instagram or what have you, and that's where we spend a lot of our time now. And if you think about the transition, you're getting more for less, meaning you're getting more content. You're getting more output with less input. The challenge with the chat interface is that you're getting almost today in its current iteration a little bit less output because it's mostly textual. And it's requiring more input. You're having to write sentences and ask it stuff. And so I think in if you think about the evolution of user interfaces in computing, chat as an interface faces quite a bit of friction. The output of it, however, is so compelling in certain use cases that Chamath points out that there's certainly gonna be places where it's absolutely gonna replace the current modality. And then the back end of it can do incredible things that no other computing interface can do but it needs to have, you know, kind of a a a revision or or rebuild on the front end for it to really work. That that's my point of view on how I think about kind of the long trajectory of where we've all been trained mentally with respect to computing interfaces and and how this might kind of be challenged. Brad Gersner (00:27:27): I I think that's the key. How how, you know, four older guys have been trained. Watch how kids interact with their their phones. First, they're they're never on a computer. They're always on their phones. They're always talking to their phones, and it's always chat based. And so I think we have a whole new new generation that, like, it's so native to the way that they interact with the world. And, you know, to be honest, I was sitting there this morning prepping for the for the pod, and I had a brilliant conversation with chat GPT about what happened rate and inflation, etcetera, in 20,021,002,002 is interactive. I was using my voice. I wasn't typing anything. I thought it was terrific way better than the experience I would have on Google. So again, I think we're early in the evolution of this. But, you know, I think that, you know, for my kids, this is completely native. Chamath Palihapitiya (00:28:16): Yeah. I mean, I think for kids, it's amazing. I just don't think kids will have 20, 30, 40 bucks a month to spend on this. I mean, they some kids will, but that that'll just further exacerbate the divide of the kids that can versus the kids that can't. But I don't think that that's what's gonna create evaluation framework for a multi decabillion dollar company. If you wanna see a well used education product, you know, Chegg's got something probably not near you know, this probably is good, and that's a 3 or $4,000,000,000 market cap company last time I So David Friedberg (00:28:47): yeah. Well, Brad, you mentioned, yeah, you were doing a little research for the pod talking about rates. Obviously, that was in anticipation of the discussion on, the Federal Reserve, meeting minutes that came out a couple days ago. I'll read a few excerpts, from the published minutes, where, obviously, the the Federal Reserve meets to discuss overnight rates, whether to raise rates and and their outlook for rates, driven in part by current economic data. Including their view on inflation, their view on economic activity, etcetera. Reading from the notes directly, Participants agreed that inflation was unacceptably high and noted that the data, including the CPI, indicated that declines in inflation had been slower than they had expected. Participants, observed that although core goods inflation had moderated since the middle of last year, it had slowed less rapidly than expected in recent months. Despite data and reports from business, contact indicating that supply chain constraints have continued to ease. In their discussion on the household sector, they noted that consumer spending so far this year has been stronger than expected and that aggregate household wealth remained high as equity and home prices had not declined much from the recent highs, And a few participants mentioned that while overall, the household sector still retained much of the excess savings, and it accumulated during the pandemic, There were signs that consumers were facing increasingly tighter budgets given high inflation, especially for low income households despite savings. So, Brad, maybe you can give us quick read on the minutes. And and they did say that they're not raising rates, but they do expect 2 more 25 basis point rate hikes later this year. Maybe you can tell us what market data is indicating. Is that actually the case. And is the Fed not giving a a a clean reading on economic activity and inflation as it's being published in other places than what the Fed is currently reading? Brad Gersner (00:30:39): Well, I'm I mean, I think the most interesting thing here and perhaps the most non consensus thing here is the fed kinda seems to be orchestrating a pretty soft landing. Right? Nobody wants to hear it. The market fought it for the first half of the year. The Nasdaq was just up 39% in the first half, and most people didn't participate. So everybody wants to talk this down and say that inflation's still out of control not been talking about inflation higher for longer, but notice he doesn't say that's a problem or the economy therefore is going to crash. Just like inflation's going to be a little stickier on the way down. Rates are gonna be a little bit higher for longer. I think when you look at this in totality, the reason they hit pause is because they've come a long way quickly. They know that things are starting to trend in the right direction. So their own forecast for CPI is that it comes down a lot by the end of the year. Goldman Sachs is now at 3.3%. And I know we have readings like true inflation that say the inflation today is actually lower than that, but you don't even need to get to the debate between true inflation and CPI. They're both trending a lot lower. But we got a really interesting reading this morning because, like, why do we want to, you know, raise rates? Well, we wanna cool off the economy. And so everybody's looking for that indication that the economy is cooling. The leading indicator for this is jobs. So we had a really hot ADP jobs report this morning, right, over 450,000 new jobs created, and everybody got nervous The 10 year shot up to over 4%. The market turned down at the start of the day. And then we got the Jolts report. Now Larry Summers has described Jolts as a much more that's job openings. Okay. So this is more of a leading indicator. Like, how many of the job openings are we consuming? Brad Gersner (00:32:28): And that actually came in better than expected. So what it suggested is that more people took jobs than we had anticipated. And remember, jolt peaked closer to 12,000,000 and now we're at about 9,800,000. And so when I look at that, you know, and then look and look at the jobs report, ADP jobs report, over half of the new jobs created were in hospitality and leisure. So think about what was happening a year ago. Airlines were trying to hire people. Restaurants were trying to hire people. Hotels were trying to hire people, and nobody took the job for two reasons. Number 1, they were afraid of COVID, but number 2, they were getting stimuli checks from the government. They didn't need to work. Now what we see is people are starting to take jobs. Those show up as higher employment numbers in ADP, but in lower jolts, right? So fewer job openings. To me again, that probably speaks to a, you know, healthy trend, in the economy. But clearly, the economy is not crashing. We had a lot of people who said that the economy was gonna hit the skids in Q1 or Q2 of this year due to these higher rates. The economy is incredibly resilient. But if I had to describe, you know, the rate trajectory, the fed has said, listen, we may have 2 more rate hikes basically priced in. And if you look at real rates, so this is the the interest rate that really acts as the break on the economy. So this is effectively the 10 year versus future expected inflation. It's now at one of the highest levels we've had since 2008, 2009. Back closing in on 2%. So, you know, it seems to me that the Fed's got its foot pretty strong on the break. It's jawboning the economy. Saying we'll do more if we have to, but the things that they're looking at job openings are coming down. Inflation is coming down. So I don't know. I think you have to leave open the possibility that the fat part of the distribution curve looks like a softer landing than most people wanna wanna admit. David Friedberg (00:34:30): Yeah. So, Chamath, Gerson is predicting a soft landing. Do you agree? I mean, you've said we're gonna see rates stay high for a very long period of time. Chamath Palihapitiya (00:34:37): I mean, I think I've said this for the last few weeks, so I'll just say it again. But I think that it's, there's no hard landing. Right? That's the hard landing was sort of the drug and miller thing that that I think that, you know, I said, I think it was a few weeks ago. It's very difficult to see a hard landing. When China stimulates, just because of their natural gravitational pull, in the world economy. And, you know, we can talk about that again, because it just looks like China's in super, super, super trouble. Meanwhile, I I sent this little image to you and Frebird, you may just wanna throw it up here just to look at. But, you know, when you look at inflation, we've done the best job of the developed nations in getting this thing under control. So, I think now it's just about making sure that we adequately contract the money supply and making sure that we have bullets in the chamber in case things get bad. What do I mean? When you look at this chart, the thing that I think about is I'm glad rates are most at 6%. Why? Because when you look at the UK, Italy, Germany, most of the euro area, France, Japan, and then, you know, China, it's nonexistent, but China has a different issue. The the reality is that, you know, a pretty bad set of economic circumstances could actually touch the Western Develop nations if you start to see some of these countries rip rates higher to, like, 7, 8, 9%. The UK, it seems like I don't know what you guys think. It's definitely going to 7. And it could go to 8. I mean, it could be a very bad situation for the UK. They're in a lot of trouble. And so I think it's important that the Federal Reserve have tools. So by continuing to constrict the money supply, have rates that are relatively elevated maybe a quarter or 2 longer than they need to it gives them a lot of positive optionality if they need to step in if something bad really happens. And so, I generally think they've done a very good job. I mean, 2 and I think go ahead. Brad Gersner (00:36:41): To to to my math, not to interrupt. To your point, what's really interesting is the symmetry with what happened in 2000. So I think I think we had all agreed that the last time we saw the zaniness that we saw in 2021 in the zirp environment it was probably like 1999, 2000 era. Well, in 2000, remember, we had this huge asset bubble, and the Fed raised rates from five and a half to six percent in 2000, okay, in the first half of 2000. And they were saying that they're gonna stay high for long. And remember, in 2001, we entered a recession, and we ended 2000 and 1, and 1 with rates all the way down at 1.75%. Those are the bullets in the chamber that you're talking about. That then pulled us out of the recession. You know, and some people blame them that they caused that recaps recession But, you know, when you look back from No. Chamath Palihapitiya (00:37:33): In this case, it looks like yeah. In this case, it looks like the recession is really not about our making, but, you know, we may actually have a soft landing, but the economy actually contract because when you look at these Western economies turning over, it's it's not a good situation. I think the euro zone, quite honestly, is probably a quarter into a recession already. So, you know, we have 6 or 7 of the really important countries probably in a recession. The UK, in really big trouble, the US, relatively keeping things, you know, in a pretty good place, China economically, I don't know where the demand is gonna come from, you know, on the same time that their that their internal demand is imploding, their creating all these export controls that I think guys are not going to actually help them solve the problem because it just accelerates Western Economy's desire to de lever from China. So the whole setup, I think, is a very complicated one, but the US looks really good, frankly. And David Sacks (00:38:35): Yeah. Look, I don't think we're out of the woods quite yet. So so Druken Miller, by the way, said that He was predicting a hard landing in the second half of the year. We're just starting the second half of the year. So he still got 6 months to be proven correct. I find his analysis compelling or I did at the time I heard it. But think about our situation. We still have an inverted yield curve. It's the most inverted it's been. I think this is the longest it's been inverted. Now the fed is signaling that we're gonna get 2 or 3 more quarter point rate hike. So it's about to become even more inverted. And what that does is it puts incredible pressure on the banking system because the whole banking business model is to borrow short, which is, from depositors and lend long. And if short rates are higher than long rates, that whole business model doesn't work. So either they can engage in lending activities, meaning there's a credit crunch or, deposits to leave the system. And then that's happening too. So any business out there that's dependent on credit, the real estate industry or auto industry, I mean, any industry that depends on loans and credit, they're gonna continue to be hammered by this. So Yeah. David Friedberg (00:39:45): I mean, to your point, Sachs, I'll just read the minute commentary this the meeting did include a discussion on distress on the banking sector and, economic activity in general because of decreased lending. Participants generally noted that banking stresses had receded and conditions in the banking sector were much improved since March. Participants generally continue to judge that a tightening in credit conditions spurred by banking sector stress earlier in the year would likely weigh further on economic activity, but the extent remained uncertain. So, obviously, a wait and see that they mentioned that credit conditions had not appeared to have tightened significantly beyond what would be expected in response to the monetary policy actions taken since early last year, So at this point, saying it's a wait and see does not seem to have overstretched in terms of credit tightening at this stage, but it David Sacks (00:40:32): can vary. Yeah. I mean, so here's the thing is that the Fed engaged in an extraordinary intervention a few months ago. To save the banking system with the bank term funding program, right, where they basically said to all the banks that if you have US treasuries, I think it also applied to mortgage backed securities as well. We will we will basically take all of those assets and give you par value. We'll give you a 100 cents on the dollar. Yeah. In exchange for, I guess, you have to pay. You, the bank would have to pay the, the the 1 year I think it it was the 1 1 the 12 month interest rate with, like, 10 10 basis points or something like that. So if you're sitting on bonds that have gone down 20 or 30 percent in value, you can go get all that money back by you're presenting to the Fed. And then you just have to, you know, you have to then take the 100¢ on the dollar you get and make sure you loan it out. At a higher than the 1 year interest rate, which is around, I guess, 5%. Chamath Palihapitiya (00:41:37): Right. David Sacks (00:41:37): Which you can still do in residential, right, because mortgages are still something like they're over 7%. So the Fed has provided a lot of liquidity to the banks through this, BTFP. It hasn't helped the commercial real estate guys. I don't think. That's why they're they're still I think, huge problems in the commercial real estate sector, but the Fed did engage in a huge intervention to say the banking system. And they may not be done with that yet. You guys So I just wonder yeah. You know, I just wonder if the if you didn't have all these distortions, would the real shape of the economy be? You know, another one on the fiscal side. And on this on the fiscal side was the whole, Biden's energy bill. David Friedberg (00:42:21): It's just supposed David Sacks (00:42:22): to be 350,000,000,000, but as our energy investor friends are saying, it's probably gonna be more like a trillion when they add it all up. Chamath Palihapitiya (00:42:28): No. But that's honestly hold on. Those guys are being hyper like, and they're just stupid and wrong because I know which friends they are, and I and I know them to be mostly stupid and mostly wrong most of the time. Look. The the good thing to know about Oh David Friedberg (00:42:41): my god. I'm gonna I'm gonna get a text after this. Chamath Palihapitiya (00:42:43): Well, yeah, you should because she doesn't know the fuck he's talking about it. He keeps saying. David Sacks (00:42:46): Well, there's a lot of stimulus is the point. Whether it's half a 1,000,000,000, sorry, half a 1,000,000,000 or David Friedberg (00:42:50): a 1,000,000,000,000. Chamath Palihapitiya (00:42:52): He's just talk he's just talking his book, but where can I just go back to where you're fundamentally right and where I think both of us can can be in unison on this, which is there is a looming credit crisis in the United States, and you know, we we've talked about this before? I tweeted something a few weeks ago, but the the the debt wall that corporate America is about to hit is pretty meaningful. And to your point, David, a lot of these companies will have to thread a needle because If rates don't go down materially in the next 18 to 24 months, these folks are gonna be paying rates that they cannot bear. And they'll probably go in to still breach a covenant of some of the debt. So, you know, one thing that's important here is that There's some very strict guidelines and covenants that debt issuers sign up for. And one of them is, you know, how much debt can I have as a percentage and or as a multiple of my EBITDA? And so that's the way that bond holders govern the risk that you don't over borrow. Now the problem is if you have a ratings, you know, an earnings recession and or rates go up, you can get one of these two things to go wrong. And all of a sudden, now you have 7 or 8 times your EBITDA, and you're in a very, very bad state. So I do think that that that's possible, but at the same time, I don't think that that's a calamity touches the entire economy. I think there are a whole portfolio of over levered companies in real estate, and there's a whole portfolio of over levered companies in private equity. Those folks will have to get recapped, and that will probably cost 1,000,000,000,000 of dollars of capital impairment but I do think that that can relatively be done without impairing the the economy real large. David Friedberg (00:44:34): I'll make a prediction right now. My prediction is the federal government is gonna help to monetize that debt. And they're gonna help to support that commercial real estate sector through some sort of structured lending program. I don't see Why do you think that? Chamath Palihapitiya (00:44:46): Why do you think that? David Friedberg (00:44:47): Because because of the donors, I think that there's a significant amount of capital that gets donated to Chamath Palihapitiya (00:44:52): So you think there's gonna be a tar for like program? David Friedberg (00:44:55): Real estate private equity. A real estate private equity debt. Tarp. Chamath Palihapitiya (00:44:59): No. You think there's gonna be a tarp like program for real estate assets and for private? I'll take the other side David Friedberg (00:45:04): I'll say real estate assets. I I don't know about the private equity assets, but I think for the real estate assets, just because so much of it is held. Chamath Palihapitiya (00:45:09): Let's bet. And I'll bet. 1000 to the SPCA. David Friedberg (00:45:13): Yeah. I'll do that. Wait. What's the time frame? Maybe, Chamath Palihapitiya (00:45:16): Well, you do tell me. You want to open it? No. David Friedberg (00:45:19): We'll do it until the Fed starts no. Until the Fed starts reducing rates. So once the Fed does their first rate cut, that's the end of our bet. Brad Gersner (00:45:25): Oh, wow. That's an easy one. Uh-uh. I'm in I'm in for 25. David Friedberg (00:45:29): No. You you can take Chamath Palihapitiya (00:45:30): a 100. I take a 100. David Friedberg (00:45:33): But if Chamath Palihapitiya (00:45:33): you guys take it for myself, for the SDCA for a second, can I just take David Friedberg (00:45:37): the action for myself? I'm doing Brad Gersner (00:45:38): it for the dogs. Yeah. Yeah. You know, Friedberg on that? David Friedberg (00:45:43): I'm sorry. Let me just let me just tell you why. Sorry. In addition in addition to the significant donor dollars that come from real estate, to to politicians, campaigns. But so much of those assets, so many of those assets are held in life insurance companies on bank's balance sheets. I mean, you guys may have seen this report this week that because of the rising interest rates, there are several insurance companies that now be tech may be technically insolvent according to DOI Department of Insurance Regs in their respective states because the impairment on the bond portfolio has declined and has caused them to now not have enough capital reserves to pay out the claims they have. So the same, I think ultimately will come true once you have to do a mark to market on all these real estate assets, that there's a significant number of those real estate assets that are held in pension funds. Are held in life insurance companies that are held as securities in large pools of capital that are meant to support people's long term, needs, and the government isn't gonna let the federal government isn't gonna let that, you know, just get written down and have people's future pensions or insurance claims you know, get hampered. So that that's why I think there's gonna be a moment or 2 where there's gonna be some step in and some structured program to support this, I Brad Gersner (00:46:54): just don't think it's at Traconian. Rates are not that high. You know, we're still talking about a 10 year that's flirting with 4%. And the fact that David Friedberg (00:47:02): I'm just talking about commercial real estate because there's also a demand problem. Right? Yeah. Brad Gersner (00:47:06): I I know, but the the the other side of this is the trend again There is no doubt oversupply and a problem, particularly in a place like San Francisco where we're gonna see some blow ups because nobody wants to you know, to to enter a long term lease in a city that's under siege. I understand that. But the fact is that the market is telling you that rates are gonna start going down, right, that the the Fed's gonna come in battle until the edge, Right? And then they're going, you know, Feds are gonna come rates are gonna come down a little bit. Why is that? Because if they have 2 more quarter point rate increases, now you have restrictive rates That's something like 200 basis points. That's higher than the Fed wants. That's the foot really hard on the break. So it's not like the market crazy and thinking that we're going to have a couple rate cuts next year. I just told you, in 2000, we went from 6% to 2001 ending the year at 1.75%. And the Fed was doing the exact same jaw bony in the summer of 2000. Okay? So they they do evolve rate policy based upon what's happening in the economy, all of the things are rolling over. CPI is rolling over. Joltz is rolling over, etcetera. So again, I just don't see the heightened concern. I think to the bank issue, Saks, to me, that was, you know, that was the much scarier concern. Druckenmiller actually pulled forward his hard landing expectation to q 2 of this year as a result of the bank crisis and now has pushed it back out to q 4 of this year. I think if we had another, you know, black swan like bank or something that I can't foresee today, then, you know, that could certainly be the thing that would be the catalyst to toss us into a hard landing. Barring that, I think that Chamath Palihapitiya (00:48:55): By the way, I think Brad Gersner (00:48:57): the distribution of probabilities, the fat part of the curve is that we have a softish medium, you know, sort of landing here. Chamath Palihapitiya (00:49:03): I I think you're right. I think you're right. And by the way, like, if if if the UK had not left Europe, then the whole contagion of Europe could be one of those black swan events that we would all be talking about as theoretically possible. But it looks like the UK is probably gonna it's re it's really bad, I think. David Friedberg (00:49:28): Britain is now the only major economy we're in is still rising. The the OECD said Tuesday that year on year inflation in the G Seven fell to 4.6% in May down from, you know, 5% in April. So inflation is is tempering a bit, but UK consumer prices rose to 7.9% in May. Which is up from 7.8% in April. So an acceleration, in the UK, it seems like it's a pretty nasty spiral problem. Chamath Palihapitiya (00:49:55): This is where, you know, the benefit of being part of a larger economy really pays dividends. Right? Obviously, there's a lot to do with, you know, language and currency, and there's a whole bunch of issues rolled up into why the UK left the European Union. But my gosh, one of the real obvious advantages is you know, you're smoothing out the variance. Right? And smoothing out variance is really valuable So if you think about, like, all of these economies in Europe, you know, like PMs in a hedge fund, Right? And, Brad, you can, you know, you you know this. It's like you you sometimes some guy crushes it, you know, look how millennium or SAC or citadel makes the real money. It's by smoothing out variants. And that's a great thing about being part of an economic union. Like the EU offers. And in the absence of that, in times like this, is it really exposes the weaknesses of a small subscale economic system which, unfortunately, the UK has. Brad Gersner (00:50:55): Right. So the the charge is Europe. David Sacks (00:50:57): Europe is gonna enter a session too. I mean, Germany has huge problems that Again, it stems from the cutoff of cheap Russian gas economies in the EU. They're going into recession as well. It's not it's not Chamath Palihapitiya (00:51:09): just not with the same levels of inflation. My point is, like, you know, it's one thing for an economy to start to recede, but here, it's you don't have the benefit of balance sheet borrowing of the scale of the EU, nor do you have the disinflation of the EU? And I think that's problematic much more for the UK than it is for any individual country in Europe. That's just my point. That's all. Brad Gersner (00:51:32): Can I can I, you know, one just philosophical thought, you know, because if we rewind the clock to the beginning of the year, you know, there was absolute consensus in the markets, Right? And it you can go back and look at all the headlines. Mike Wilson's consensus was that we were gonna have a hard landing in q 1. Hedge funds, long only funds, had their exposure super low. Everybody had post traumatic stress from last year. It is a sure strategy to lose a lot of money or not make money. If you're trying to always call the market as though you know, you have no idea Right? Q 1 and q 2, sure. There was a possibility we could have a hard landing, right, and the bank crisis made that look as as though as a possibility. What we try to do is look at that distribution of possibilities. Right? It's a distribution curve. And so I put up on the on the screen here what the markets implied fed fund rate changes are from today. So what the market is betting on which from my perspective is better than any one of us trying to forecast, right, what's gonna happen with future rate increases? It's saying, yeah, we're going to go from 5.08% today to something like peaking at 5.45% in November of this year. Mhmm. And then at some point beyond November, could be December, could be q 1 of next year. Right? We'll see enough turning over of CPI enough turning over of Jolts that now will say the balance of risk has shifted to being too punitive on the economy So we're gonna reel back in one of those rate increases. Okay. And I think that, you know, so Friedberg just to to clarify on the bet we just made, which I'm excited about, you have to have this tarp, you know, commercial real estate rescue program before they reel back one of those rate increases, which the market's telling you could be as early as December. David Friedberg (00:53:27): Yeah. Brad Gersner (00:53:28): But I I encourage everybody who listens, you know, like, don't listen. You know, it's not like go all in because Druken Miller says hard landing. Or don't go all in soft landing because we say soft landing, our our net exposure has come down over the course of the year. At Altimiter because we've moved the markets have moved up a lot. They're pricing in more of a soft landing today. So the idea is to have high exposures when the world's panicked and then to reel in your exposures a little bit, but never be all or I mean, the the fascination with calling the big short, the big hard landing, soft landing, it's just a sure way not to make much money. David Friedberg (00:54:05): Today, there was a red hot US jobs report, Brad. US job openings dropped below 10,000,000 in May. But the labor market remains piping hot. Brad Gersner (00:54:17): Like I said, you know, the market, I think, is, you know, it's it's reading way too much. I mean, it's worth even a I mean, we'll get the official, jobs numbers out of the, out of the federal government tomorrow. This was an ADP report, which are have been not particularly good, but I are already explained. There's a rationale. Look peel behind the g the ADP report. 250 1000 of the 400 and, you know, 1000 odd jobs that were created were in hospitality and leisure. I mean, these were desperately needed because we have a peak summer travel season going on. So you have hotels that hire a bunch of people. Those show up in the ADP job numbers. Right? But the great news is the Jolt's job openings goes go down. And, you know, Summers was complaining last year that Jolts wasn't going down fast enough. He also said something that was really interesting. When Jolts re when he said when Jolts goes down by over 10%. So think we've had a move from 12,000,000 to 9,800,000. He said when Joel goes down by over 10%, we have a reduction or or an increase in the unemployment rate by two and a half percent in the subsequent 12 months. So Jolts is a leading indicator. You gotta reel in those job openings and then you start seeing unemployment bump up. So with a tight economy, you know, the foot on the, the fed's foot on on rates, some of the contraction that that Saks has been pointing out and then we start to see these early indicator errors in Jolt. I mean, people need the job clearly or they wouldn't have taken them. Their STEMI has run out all of these things are are what the Fed is trying to manufacture. David Friedberg (00:55:55): So I Brad Gersner (00:55:55): don't look at that jobs number. In fact, we were doing just the opposite. You know, in the market this morning, to, you know, what the market was giving us. I don't I don't think that was a a very good read through at all. David Friedberg (00:56:07): I wanna talk a little bit about jobs. The Florida state, Senate Bill 1718 went into effect on July 1st. This bill now requires that any company with more than 25 employees use the everify system to verify the legal immigration status of their workers, of their employees. And this will create, a, a real impact on businesses that employ more than 800,000 illegal immigrants in the state of Florida, to do a lot of work and a lot of labor. It's unclear how many of those 800,000 illegal immigrants that are working in Florida today are working at a firm with more than 25 employees, but the impact is gonna range from the construction industry to farm labor, and a lot of other manual labor, sectors, in a state that has 2.3% unemployment. DeSantis has made this, you know, an important speaking topic, when he spoken publicly, he did quite a bit of around the passage of this bill as a way to counter Biden's quote open immigration policy. Sex, I know that you've talked about this, Santa, in the past, do you have a read on the impact that this immigration policy will have? Do you agree with it? Would love your thoughts. David Sacks (00:57:29): I mean, I don't think this is a a jobs bill. This is a immigration bill or it's an immigration issue. And Look, I don't know what the impact on Florida is gonna be from this. I don't trust a single story that's out of it. I guess there's just a story in the journal about it. I mean, this feels like a campaign story. So, I wanna see more stories before I reach the termination on what the impact's gonna be, but politically, do I think this is smart? Yeah. Because the border is the number one issue in the country right now. I don't think you guys are as clued in to, like, how on fire the country is about what's going on at the border. Chamath Palihapitiya (00:58:10): And our fundraiser, RFK talked about the the border because he went there. There's a bunch of really good clips online. I don't care who you are. You can't listen to that accounting. It's just an accounting, right, so anybody could do it. So it doesn't matter what your political, perspective is on RFK. Anybody who listens to that accounting Can't be anything but shocked. How are David Sacks (00:58:37): you shocked? What he described is, what what our case describe, I've is he went to the the border at Yuma, and there are literally holes in the wall, you know, from Trump's wall. And literally the building materials to finish the wall and plug those holes are sitting there on the ground, and the Biden administration refuses to use them and plug the hole because they don't wanna give any credit to Trump, presumably. I mean, literally, that's how petty it is. Or it's actually their policy. They actually like having an open border. So something like 7,000,000 illegals have come in through the southern border since Biden's been in office. And And Chamath Palihapitiya (00:59:13): they're not and they're not they're not from Central America. It turns out. These folks are from, Eastern Europe and Africa predominantly, many men of military age, and it's an entire business that's run by the cartels. And as he describes it, it's it's really just plainly shocking. Brad Gersner (00:59:32): Can I David Friedberg (00:59:33): ask you guys that? David Sacks (00:59:33): If one of our if one of our enemies wanted to get thousands of sleeper agents into the country, it would have been very easy for him to do this. David Friedberg (00:59:42): Okay. Can I can I just Think about that? For sure. I get it. Yeah. Can I pivot away from the border policy question to one of labor? We obviously, as evidenced by the jobs report from ADP this morning, remain in a very tight labor market in the US, and we, as a group, often talk about H1Bs and the importance of, allowing educated immigrants into this country, to meet our, our knowledge workforce needs. But there obviously is a pretty sizable manual labor workforce need in this country. And a very tight labor market to fulfill that need ranging from construction where we have, you know, deep, and significant aspirations as a country to improve infrastructure to farm labor where we have, you know, the largest agricultural export market in the world, and many of these industries rely on low cost labor for those businesses to meet their economic objective to be able to be profitable, and we simply may not have enough of a labor force of legal immigrants or legal citizens or residents of the US, to meet those obligations. What is the answer, Saks? Is it that we are supposed to take anyone that's illegal in the country and make it impossible for them to work here. And is that not gonna have a very adverse effect on these important, segments of our economy that today rely on that labor force, that is here illegally. And I'm not David Sacks (01:01:02): I'm not I'm not I'm not stating David Friedberg (01:01:03): an opinion. I'm asking the, like, the important I David Sacks (01:01:05): get what you're saying. I think we can start to resolve that issue when you solve the border crisis. The problem is the average American doesn't wanna hear anything about, you know, quote, unquote comprehensive solutions to the border crisis or immigration? Or What do you want? Like, Chamath Palihapitiya (01:01:20): I I David Friedberg (01:01:20): I'm not talking about politics. I'm not talking about I'm just talking about your personal point of view. David Sacks (01:01:25): My personal point of view is we need to seal the borders so we stop having this problem. David Friedberg (01:01:29): Okay. But what about the work? What about the labor? Yeah. Brad Gersner (01:01:32): Yeah. Let me, I'll I'll take a crack at it for you, Bert. David Friedberg (01:01:34): Okay. I'm just trying to I'm trying to diagnose the difference between the the the the border policy question And the real economic question, I know at the California ag sector very well, there's an important migrant visa, that the entire farming economy depends on in the Calacanis. And, these are illegal immigrants that are legally allowed to work in the farming sector. And it allows farms to be able to do the work they need to do because there is absolutely no labor to do that work without this immigrant pop population. And there there's other elements of this that are critical across the economy. Sorry, Brad. Go ahead. Brad Gersner (01:02:07): No. So why why can't we have a common sense migrant? You know, worker program, worker visa, you know, predicated on that. Right? The problem is I think where, you know, most people are in agreement that if you have a relatively secure border, right, then you design good policies. We should have a policy for people who wanna come and work and earn some money in you know, we we have job openings in this country and then return home, right, or go through a normal process right, to get in line to citizenship. But the problem is people cutting the line, you know, skipping the system And given the social safety nets that states on the border have lined up and we as a a a, you know, a nation have lined up, that's just unsustainable in a world where we're already whatever, $35,000,000,000,000 in debt. So I think these things can coexist. You can treat labor humanely you can create a safe harbor for labor to come to the country, but that doesn't mean that you should just have holes in the wall and anybody who wants to come here can come here in whatever capacity they want. David Friedberg (01:03:14): Timoff, assuming that the border is closed and we fix that problem, what do you think the right solution is to the millions of illegal immigrants that are residing in South Africa? Chamath Palihapitiya (01:03:23): I'll answer that, but let me let me ask you a question. Do you think we should seal the border? Yeah. For sure. And why do you think we should seal the border? David Friedberg (01:03:31): So that we have a system that we can use to manage the flow of late and decide what's appropriate for our country. And we can actually have a conversation about what qualifies someone to come across the border and to immigrate into the US. Chamath Palihapitiya (01:03:44): I totally agree with you. Yeah. I agree. I think that David Sacks (01:03:46): Look. Saying but saying saying that, assume that the border was sealed, what would you do about you know, low skilled immigration, that's kinda like asking, other than that, how is the play of Missus Lincoln? I mean, this is the hair on fire political issue. Is that can't get the border sealed that you've had 7,000,000 plus illegals come across it during the Biden administration. And the administration obviously doesn't have the will to do anything about it. So you're kind of assuming away the central issue. This is the issue. One of the main main issues I got Trump electing in 2016 was building the wall. Chamath Palihapitiya (01:04:23): No. But I think wait. I think we're all saying this. David Sacks (01:04:25): It hasn't gone away. Chamath Palihapitiya (01:04:26): We need to seal the border. We're all saying that. Right? Does anybody think we shouldn't seal the border? David Sacks (01:04:31): No. I agree. Chamath Palihapitiya (01:04:32): But yeah. David Friedberg (01:04:32): I think we yeah. But I I David Sacks (01:04:33): why isn't the analysis on why that doesn't happen when everyone in the country agrees that should happen? They're just everybody. Chamath Palihapitiya (01:04:38): But I David Friedberg (01:04:38): do think that there's a that there's a low skilled labor market need that's not met in this country. There isn't a public restaurant, company that doesn't talk about the challenges that they're having with labor. They cannot fill the jobs that they Alright. David Sacks (01:04:51): Well, let me alright. So if you wanna talk about that issue, I wanna flag a report that was presented to congress. And this is about fifteen years old back in 2007 by heritage, but I don't think the numbers have changed much in the interim. In fact, they've probably gotten worse. The point that this researcher made is that if you look at the cost of low school immigration, The average low skill immigrant household receives approximately $30,000 in direct benefits from the government. By contrast, these households only pay about $10,000 in taxes. So even though those low skilled immigrant households let's assume that they're working and do contribute to the economy in the way that you're saying. There's still a $20,000 gap between, what they contribute and what they receive from the government. And that is a big problem for the country. David Friedberg (01:05:47): My guess is that the counterargument would be that more than $20,000 of economic benefit accrues to the businesses that employ that labor. Because they can now be profitable. They can now get the work done that they need to do. They can grow their revenue. They can expand their footprint. They can service their customers. All the things. And otherwise, might not be able to do without having access to that. Assumption. David Sacks (01:06:09): I think that's a big assumption. One of the problems with the system that we have is that there's a lot of government benefits. And it and so if you wanna have a more open immigration policy, that's sort of inconsistent with the idea of having a super generous David Friedberg (01:06:25): No. I think I think it's I think there there there are 3 distinct things. One is, is it open or closed? And, you know, second, if it's closed, what are the qualification criteria, and how many, and and I think that's totally reasonable. The third is what benefit what government benefits are provided, and you could reduce the government benefits if it's too costly. You could improve the qualification criteria and increase the number of of, you know, folks that are coming in. Chamath Palihapitiya (01:06:47): I know this may sound crazy, but I think that tying together immigration and jobs, is like the best way to ensure that nothing actually happens on immigration. Right. And what I mean by that is that when you go to a restaurant, for example, and the service has decayed because they can't they can't get enough staff. Right? You don't walk out of that restaurant thinking, well, we need comprehensive integration reform. You say thumbs down on Yelp. I'm never going back here again. And so, unfortunately, if it's that if it's service sector jobs in particular, by the way, there is no closed loop way where you actually tie these 2 issues together. And so the issue becomes stranded, which is what it has, which is why I think what Brad said and Saks said is right, which is there's an order of operations here where the American people probably want an immigration system that says something like Here's some, you know, a point based approach, right, where we try to attract the world's best, think about it like a draft, right, and we wanna attract the world's best athletes to come play on our team, team America, team USA. We have all of the capabilities to do that But before we do that, we have to kinda close the border. And I think that that's the only way it's ever gonna get done. Meanwhile, the problem with the job's saying it's a bit of red herring towards immigration because people just don't tie the 2 things together, practically speaking. David Sacks (01:08:18): Well, I was gonna say one final point on this is that when you admit lots of low skill immigration, or labor into the country, you're creating wage pressure for Americans at the lowest end of the totem pole. And that is why they are so listen to it. This is why average working class Americans are very upset about the border. It's also security issue. And there's drugs pouring across as well, you know, the fentanyl crisis that we see, but it creates a lot of wage pressure for Americans who are at the lowest end of the the ladder. Yeah. I mean, what's wrong with just paying them a little bit more? You know? David Friedberg (01:08:54): So so here's some statistics for you guys. The total population of unauthorized immigrants in the US peaked in in 2007 has declined slightly since. California felt it first from 2010 to 2018. The unauthorized immigrant population in the state declined by 10% to 2,600,000, mostly impacting the farm economy. So the state California state reports that from 2010 to 2020, the average number of workers hired by California farms for crop production declined to a 150,000 from a 170,000. I talked with a lot of people in the farm economy, as you guys know, and this is an endemic problem in California agriculture. Is that the lack of a labor force that, allows the farms to be profitable is really impacting folks' ability to operate and to grow. And, you know, that ultimately translates into consumer prices and so on. David Sacks (01:09:44): So there are huge consequences as to having effectively an open border policy that go beyond just, you know, farms or, you know, vineyards not being able to hire enough cheap labor. I mean, look at what's going on in France right now. Yeah. You've basically got riots. You've got a civil war going on. There's a large unassimilated poor immigrant population in that country. That's where open borders gets you. That's the end result. So there are huge consequences to allowing in huge numbers of low skilled immigrants. Yeah. Especially illegal ones. Brad Gersner (01:10:17): I I don't think there's a lot. This is where we get to. You know, last week, we had the Canada H1B and announcement about their tech nomadic visa program, and I sent it to 2 members of congress. I sent a tweet that Sorry. David Friedberg (01:10:30): Just just re re re re cap for us what happened, Brett. Brad Gersner (01:10:32): Okay. So in Canada last week, you know, the government announced an aggressive push to recruit, technology workers from around the world to Canada. So they made it easier for, tech workers to get what they are calling a digital nomad visa So you can now go and work, you know, in Canada, if you have a job offer. And then they also, in in kind of a gangster move, said if you already have an H1B visa in the United States and it's starting to run out, just bring you and your family to Canada, and work from here. Right? So it was, like, we've been talking about. We need H1B visa reform. We need to recruit the world's best and brightest in intelligence, etcetera, to the United States. And they were, you know, they were doing it quite aggressively. Now the point is I sent that to 2 members of Congress. A Democrat member of the house, a Republican mem member of the Senate. And I got back nearly identical answers from both of them. They said no chance that happens here, debt on arrival, because nothing's going to move until we have a comprehensive immigration, policy in this country. And then I said, well, why why isn't that happening? They said elections. Right? Show me the incentives and I'll show you the outcome. The problem is all four of us agree. We should have, you know, we should have sealed borders. But at the same time, immigration is what makes this country great. We wanna treat people humanely. We need migrant work is like, this is not that hard a problem, to solve in this country, but there's not even a conversation. The forest that is Washington, DC on this topic, is there's not even an honest conversation or attempt to get to an to to get to a solution here. So with a presidential election, you know, less than, you know, uh-uh, a year and a half away, we're just back to the same old tribal war that we've had before. Now I understand Saks Point is like, listen, nothing happens until we have closed borders. Brad Gersner (01:12:32): And maybe sequentially, that's what we have to do. But it doesn't stop there. I think we all agree that what makes this country special is that we, you know, 4th July. You know, we throw open the doors, and we welcome, you know, folks from around the world to contribute to this great experiment. Some of them are on a path citizenship, and some of them are not. What doesn't sit right with anybody is breaking the rules and skipping the line. I understand the desperation and the motivation of some people to do that, but that is not ever going to be a system that works for the majority. David Friedberg (01:13:08): So it sounds like David Sacks (01:13:09): the Why is it happening? Well, the David Friedberg (01:13:10): the reason that's happening is let David Sacks (01:13:12): me tell you right. David Friedberg (01:13:13): Right? Right? Text? David Sacks (01:13:13): It's Yes. Yes. The way I interpret listen. When when you say that, we can't do anything, until we have comprehensive immigration reform. By the way, I heard future Democratic nominee Gavinousum say the same thing on handity. What the party in power is doing is holding the country hostage and saying that we're not gonna close the border. We're gonna use the the border as a bargaining chip until you give us the immigration package that we want, but that really be allowed because, really, it's the obligation of the federal government to have a secure border. That's not something you trade. That's something that we should already have. Chamath Palihapitiya (01:13:50): That's what we pay for. David Sacks (01:13:51): That's what he paid for. So that when they talk about comprehensive immigration form, that's basically what they're saying is we're not gonna give you a secure border until you give us enough policies that we want. Chamath Palihapitiya (01:14:01): Just to give you guys the and and Friedberg and Saks are immigrants, but you guys got your citizenship through your parents. I actually did the process myself as an ATN visa holder who then went to an H1B to have in, I think went to e b 1. So, you know, I've had to go through this, and I've literally had to wait in line And you, you can't I can't describe to you the anxiety you have when, you know, you know, your visa's running out. You're waiting for, customs and integration to basically give you the meeting so that they can actually approve or, tell you that your H1B is approved or your EB 1 is approved. And you go to this website, it's r arcane. You refresh it every day. You do it for 6 months straight every day a few times a day. You go into the forums where all these other immigrants are talking about how frustrated they are and how scared they are, but we all stood in line. And I think what people don't understand who think that the southern border should be totally open is is the anxiety that those of us who actually played by the rules went through for months. And in some cases, if you come from countries like India and China, years David Friedberg (01:15:19): Right. By by the way, what you're saying Chamath Palihapitiya (01:15:21): not fair. David Friedberg (01:15:22): What you're saying is exactly why the Hispanic populations Hispanic citizens of the United States are increasingly voting Republican because they have gone through the process. They have suffered the the rigmarole, and they don't wanna see an open border policy that, you know, isn't fair and doesn't feel right. David Sacks (01:15:41): You know, we're 1st generation Americans. And I remember when my parents went through the process, but I think my dad got a green card based on being a doctor before we came here. And then after 5 5 years became citizens. It seemed a lot more orderly back then, by the way. Totally. The process just seemed to work. Now I've seen all the statistics showing the insane percentage of Silicon Valley startups that had at least 1 immigrant cofounder. It's something like 40 to 50% David Friedberg (01:16:07): Gotta be high. David Sacks (01:16:08): Of Unicorn of Unicorn Companies in Silicon Valley. Have at least one co founder who's 1st generation American or or an immigrant. So I understand full well the benefits to the country and our economy by being able to have immigrants come to America. But generally speaking, those are high skill immigrants. And we should be able to have that as a feature of our system without having an open border. And the problem is all these things get conflated right And I think what's happening is it shouldn't be so hard to get extensions to h one bs. It is really crazy that we're giving Canada this opportunity and that we're potentially driving out really talented high school workers. But the problem right now is that the southern border is such a mess that the African American doesn't wanna hear anything. About H1bs or David Friedberg (01:16:55): Any of it. David Sacks (01:16:56): Bring it. They don't hear about any of it. They're just, like, shut Chamath Palihapitiya (01:16:58): the whole thing down. Encourage people to to listen to that RFK clip where he describes You know, and he's one of the rare presidential candidates that has taken the time and gone down there, and he just describes it very plainly. Irrespective of what you think of him, listen to it because it's pretty factual, and it's very scary. Brad Gersner (01:17:18): This seems to be to be of such sick significant strategic national interest similar to the national debt, that there really should be a commission of centrist folks you know, appointed by whatever president, this president, the next president, that tries to craft something we can pass, break it down into 2 or 3 bills. But it it, you know, this is really undermining our ability to compete in the world. And we need to solve this problem. And I think we've been discussing this, you know, for as long as, you know, we've been in Silicon Valley, but certainly it's become incredible problem in the age of ai, etcetera. And, you know, you know, having the tit for tat of what's going on, these news articles shipping off, you know, illegal immigrants to, to Martha's Vineyard. You know, I happen to be on Martha's Vineyard right now. I think they sent 49 you know, folks here, Venezuelan, most of them Central American. And I'll tell you this island is made better because of, you know, it has a tremendous number of Portuguese and Central American workers, you know, who are active members of the community, go to the school here, etcetera. So maybe that is part of the solution, Saks, that that know, when we do have, you know, people want immigrant, you know, immigrate to this competent country, the burden is not just on the border states. But the, you know, folks, have an opportunity to locate anywhere in the in the country. David Sacks (01:18:50): Yeah. And what happened with the Martha's Vineyard thing is I have seen some articles like the New York Times says articles saying how wonderfully it's all worked out. But when it first happened, the people living in Martha's Vineyard were up in arms There were a bunch of angry press conferences, and they were, you know, almost hysterical that DeSantis had sent them there. But what that did is it exposed the hypocrisy. Because there's a lot of people in the country who are just fine with having an open border when they don't think it affects them. Chamath Palihapitiya (01:19:17): Totally. David Sacks (01:19:18): But when it does affect them, then all of a sudden, they're holding press conferences denouncing it. Chamath Palihapitiya (01:19:22): So tit for tat never works. Tit for tat never works. You can have me at tit. You don't need to have. David Sacks (01:19:29): Can we can we Okay. Speaking of David Friedberg (01:19:30): By the Chamath Palihapitiya (01:19:30): way, sorry. Wait. Wait. Wait. Hold on. Lightning down. Who left the cocaine in the white house? David Friedberg (01:19:35): What's the answer, Chima? Chamath Palihapitiya (01:19:37): I I actually don't think it was a 100 button. I think it was probably like some young kid who has working, like, long hours and was like, I need a little upper here to stay up and was like, I need a bump. And so the kid brought some nose candy to her. I mean, well, how stupid is this kid? David Friedberg (01:19:52): And, by Chamath Palihapitiya (01:19:52): the way, they said that there's no security for It David Friedberg (01:19:55): was in a it was in a cubby. It was in a cubby. He put it in the cubby. Whoever did it. Unbelievable. Chamath Palihapitiya (01:19:59): Which is which David Friedberg (01:19:59): is so stupid. Why would you take it off your off your person? Chamath Palihapitiya (01:20:03): Yeah. I mean yeah. Brad Gersner (01:20:05): It's clearly clearly a conservative reporter who snuck in there to frame honor. David Friedberg (01:20:10): And by the way, it was in the cubby where you're supposed to put your cell phone when you go into classified meetings. Brad Gersner (01:20:16): Sachs, have you been to the White House lately? David Sacks (01:20:19): No. Have you had any of you guys David Friedberg (01:20:20): been in the Oval Office? Chamath Palihapitiya (01:20:22): I have. Yeah. I'll I'll tell you a very funny story about my my meeting in the in the it was in the Roosevelt room. Where I had a funny meeting where it was like me andresen me andresen can't remember who else was. This was, like, years ago, a decade ago. This is during Obama's administration. And something like we're we're meeting with, like, I don't know, the the chairman of the joint chiefs and all all these big muckity mucks. And I remember the military guys because there was 4 of them. And at the time, it was there was, like, my god. No. This is right when the first Ukraine thing was going on. Okay. So what was that? Saks 2014, maybe? 2013 2014? The first UK the Ukraine thing we're taking. David Sacks (01:21:08): Anyways Oh, yeah. 2014. Yeah. Chamath Palihapitiya (01:21:09): 2014. Okay. So we're we're there and they're talking about we're talking about new technologies, whatever. And I said, guys, I mean, this is insane. Like, why are you not are you guys not dropping you know, small sats so that you can get internet service into places like the Ukraine so that people can get the message up. Whatever's happening. And I said, these things are really small. Like, you can bring them anywhere. And I said, you know, I could have smuggled one in here right now. One of the guys says, No. We've been watching you since you got here already. Oh, wow. This was so very funny. David Friedberg (01:21:46): I thought it was hilarious. Yeah. David Sacks (01:21:48): Well, speaking of, political forces. David Friedberg (01:21:52): Here we go. David Sacks (01:21:52): And, no, it's not red meat. I mean, I wanna do just do a quick recap on the whole Chinese spy balloon thing. I actually think there's a serious statement here about how our political system works. But do you you wanna see the sub Friedberg, or do you want David Friedberg (01:22:08): me to get Go for it. Yeah. Lead in. Yeah. Go for it. David Sacks (01:22:10): Alright. So basically, you guys remember a few months ago that we had this whole Chinese spyballoon thing that went on for a week. I mean, we had 247 wall to wall cable and use coverage of this thing. And the administration was accused of being soft on China and and allowing the Spy balloon to traverse across the United States, and people are posting photos and videos of the landline. Yeah. Then finally, the the White House deployed some F Sixteens to shoot down some $16 hobbyist balloons with $400,000 Sidewinder missiles to show that they were really tough. Anyway, it was this whole farce. Now it turns out that the Pentagon just released a statement. So Pentagon Presbyterian Brigadier General rider said the balloon not only did not transmit data back to China and never collected any. And he said we're aware that it had an Peligence collection capabilities, but it has been our assessment now that it did not collect while it was transiting the United States. So if it wasn't collecting any data. It wasn't transmitting back to China. And then I've also heard that it didn't contain any special equipment at all. It just I've read articles saying that was just standard equipment that you could buy. How is it still a spy balloon? David Friedberg (01:23:29): Yeah. David Sacks (01:23:29): And I remember I got worked up about this thing that turned out to be a big But Chamath Palihapitiya (01:23:33): is it Chinese? Was it actually Chinese? David Sacks (01:23:36): I think it was Chinese. David Friedberg (01:23:37): With American Technology. So so now all David Sacks (01:23:39): the reports David Friedberg (01:23:41): yeah. Like, now all the reporting's covering the fact that it had, quote, American technology on it. Like Saks's point is you could just buy the stuff off the shelf. And if you guys remember around the time that it was discovered, we talked about this but it wasn't widely covered in the media that there was an upgrade to the, domestic radar system where they increased the resolution and the frequency capture of these radar images. So they were starting to pick up more fine tuned smaller objects that were otherwise being missed, including things like little you know, whether balloons or, you know, stuff that that otherwise wasn't getting paid attention to. And that this, you know, balloon may have been the sort of thing that could have been a blip and ignored in the prior system, but then when they upgraded the system, it became a thing. And to Saks's point, what's interesting is how it got spun into a, you know, domestic threat by the Chinese. David Sacks (01:24:32): Well, we had this debate on the pod months ago where I was like, look, this is just this cannot be true. It's just it makes no sense. I mean, the Chinese have spy satellites. So if they want to spy on us, they would just use imaging from space. So then people started speculating, well, this this Fibiloon must have new kinds of equipment, you know, new sensors or sound, maybe. They're trying to collect sound patterns, make recordings. David Friedberg (01:24:59): Yeah. David Sacks (01:25:00): So in other words, David Friedberg (01:25:00): there's farm land, over Northern Canada, and then farmland. And, yeah, Like, there's a lot of interesting stuff to pick up there. David Sacks (01:25:07): Instead of recognizing that the story was completely far fetched, they had to invent a narrative about why it made sense. And then, you know, if you basically raise any questions whatsoever about this narrative, they you were looked on as if you were, like, Chinese spoke man, like a spy or something. David Friedberg (01:25:24): This this Pentagon statement came right after Tony Blinken's visit to China. Right? He just got back from China. And there was a lot of closed door meetings, and then they gave the usual hoopla about what was discussed. And there was nothing new that was introduced in the public statement about what was discussed behind the closed doors, but do you think that maybe there was something that was negotiated behind closed doors where they said, are this balloon was not a domestic threat. You guys made it out to be. You need to make a statement to correct the record. David Sacks (01:25:52): Yes. I actually think that's exactly what happened is we know Lincoln went to China. He had 7 hours of meeting meetings. The the, readout from those meetings said that they were very candid conversations. That's usually diplomatic code for a a robot. David Friedberg (01:26:08): Yes. Exactly. Exactly. David Sacks (01:26:09): And I think I think the Chinese were very upset that the story was relentlessly pump for days days that they were spying on America. And and I think they demanded a correction. And I think that that is exactly what the Pentagon did as they put out this press they put out the statement. But the way that the media covered it, it's like the back page correction of a front page story. I mean, this Chinese spy balloon story went on for days days days and the correction gets no coverage. Now look, it's also possible that that somehow the statement is not true now. I mean, look, Either they were hoaxing us to them or they're hoaxing us now because the statement they're saying now is incompatible with what they were saying 3 months ago. But I believe the statement now and not what they're saying 3 months ago because it just makes a lot more sense. But, you know, remember, a few months ago, we had, you know, mids on Twitter. Here, let's just David Friedberg (01:27:02): It's on Twitter's become a thing. It's on Twitter. David Sacks (01:27:07): Remember remember when Mid's on Twitter, you know, when Chamath Palihapitiya (01:27:09): I arrived that. I came up with that. David Sacks (01:27:12): My take was errant balloon major provocation could incite war blown up pipeline referring to Nord Stream, which I'll step blown up around. In that time. Not a provocation, can never in site work, get it straight. And then the mids on Twitter were, you know, I think it was eric, really. And he learned a new vocabulary word. But in in his view, Aaron was not a strong enough were to describe this unprecedented national security threat. David Friedberg (01:27:40): By the way, for those of you listening, the the mid that responded to Saks was Jason Calacanis. Formally of the all in part. Yeah. Oh my god. So funny. Chamath Palihapitiya (01:27:50): I gotta go because David Sacks (01:27:51): farcical our our political system is because, you know, I here's where I think actually happened. Is that you you the story just picked up steam because it it just it was it's too good not to. Right? So cable news starts picking it up and Everyone's always trying to pump up the threat that China represents because they're a central global competitor now. And the White House, I think, very early on, had a decision to make, which is do you try and fight the story, or do you just roll with it? And I think they just decided to roll with it because they would be seen as being soft on China if they try to fight it and say it wasn't true. And so then you had this whole force of them shooting down all these balloons and so forth. David Friedberg (01:28:31): This is the whole course and trajectory right now of, the United States, Democrats, and Republicans, both sides of the aisle. Have this vested belief that we are on a collision course with China and, you know, whoever kind of steps it up first ends up having the better footing. And so every opportunity that exists, whether it's on chips or Taiwan or human rights, or the the spy balloon is gonna be levered and amplified in some way to paint China as this conflicting force against the United States in some way. And it it's not gonna get toned down anytime soon. Clearly, this is part of a a a a continuous escalation cycle that may take, years, may take a decade or 2, but ultimately, there's gonna be a point where this all comes to a head. And it's really unfortunate to see that rather than have this, you know, deeply cooperative relationship, and Sorry. Chamath Palihapitiya (01:29:27): You think you think this thing with China is gonna come to a head? David Friedberg (01:29:31): At some point, I think we're just gonna continue to escalate the tension. Chamath Palihapitiya (01:29:33): I'll take the other side of that too. You mean? David Friedberg (01:29:36): Like, do you think anything's gonna be peace and and prosperity forever? Chamath Palihapitiya (01:29:39): No. I mean, I I I think I've talked about this a little bit, but I think China has just got so many internal issues. They're not gonna be fighting wars. Uh-uh. They're not gonna be No. Look. I mean, David Friedberg (01:29:47): I might might might might might sorry. Chime off Chime off. Hold on. My point is more around the orientation. The the, politicians. And the orientation is we have this escalating force in China, and we need to kind of be ahead of the game. Chamath Palihapitiya (01:30:00): I think now I'm not sure I'm not sure who's doing that. And I don't I don't have a period. David Sacks (01:30:04): Well, I think the the point Friedberg making is that the domestic politics. The politics inside the United States, leads to a a cycle of Republicans Democrats constantly trying to one up each other in terms of who's more hawkish towards China. David Friedberg (01:30:21): Right. Exactly. David Sacks (01:30:22): That that's why I think it's going on. Regardless, what happens on the Chinese side. And by the way, I mean, their domestic politics probably have the same tendencies. I'm sure that she's got hardliners and walks around him who don't wanna back down. And so I think Chamath Palihapitiya (01:30:37): in I think in a few years from now, we won't be talking about this. We talked about Japan for 8, 9 years. We were worried. They were the boogeyman. They turned out not to be, and we all moved on. David Friedberg (01:30:47): Yeah. It's a good data point. David Sacks (01:30:49): So, yeah, I mean, you're referring to a period. I think it was, like, the 19 eighties where Japan was seen as a giant. Chamath Palihapitiya (01:30:55): Yeah. 80 to the 88. Yeah. David Sacks (01:30:57): Yeah. But it was never seen as a security threat to the United States. And China is a different kind geopolitical competitor. Right? There's a very vigorous security competition. David Friedberg (01:31:07): Kevin, you clear arsenal. Kevin, you clear arsenal. K. More people. David Sacks (01:31:11): We have military bases in Japan. It was it's it's a client in the United States. It was never a security threat to the United States. That was resolved. Chamath Palihapitiya (01:31:17): No. I I think that that's fair. I just think that, dollars to lead these things. And I think that in, the next 5 to 6 years, 5 to 10 years, we're not gonna be talking about China the same way we are today. David Friedberg (01:31:29): Okay. Prediction made. We'll come back. I episode 8 hun 1247. Chamath Palihapitiya (01:31:36): Brad, do our outro. I think it's I gotta find 3 hours. I'm Oh, no. No. Brad's gonna David Friedberg (01:31:40): do Brad's gonna do a really quick Chamath Palihapitiya (01:31:41): I gotta go. David Friedberg (01:31:42): Fun. Have a great time. Brad's gonna do a quick science corner for us, and then we're gonna wrap Brad. Go ahead. Brad Gersner (01:31:48): Well, you know, one of the things I love about this pause is we cover everything's from science to politics and and Chamath last year. You know, in his biohacking series, told us all to get pre nivo scans, which I did, which is interesting. And I think I don't know, Timoff, maybe ten people have have sent you notes and said, hey. You helped me discuss a tumor, you know, really amazing. Well, so this year, and I did that. You know, this year, you've been talking a lot about heart flow. So I said to my general practitioner at my annual checkup, hey, I wanna do this heart flow. She said, oh, you don't need to do a heart flow. Your LDLs, all your stuff looks Chamath Palihapitiya (01:32:23): really good. Wait. Wait. Wait. Wait. Wait. You have a female GP? Brad Gersner (01:32:27): She's fantastic. Fantastic. Stanford educated, really terrific. Chamath Palihapitiya (01:32:32): I don't care where she went. But who does the prostate test? He does? Brad Gersner (01:32:36): Hey. Listen. It's, you know, the the perks that come Chamath Palihapitiya (01:32:39): on with details again. I'm see I mean, no, but seriously, you have it, really? Brad Gersner (01:32:44): I do. I do. Chamath Palihapitiya (01:32:44): That's a level of intimacy I didn't expect from you. Wow. Brad Gersner (01:32:47): And so, you know, but what I found interesting is when I suggested I get the heart flow, said, oh, you don't need it, etcetera. Your LDLs are low. You're you're very fit. And she said, but on second, you know, maybe you could go get this calcium score test. Right? I didn't know anything about this, but I, you know, I did a little quick research. It turns out a big Chamath study in 1017, over 50% of men and women over the age of forty carry plaque. Plaque's the number one killer. It's a source of heart. Disease and and heart attacks. And as Chamath been talking about, there's, you know, a a prophylactic called statin, which is basically like a supplement very little downside, no long term downside effects, but immediately starts cutting down the amount of fatty cells and and and plaque that's carried in your blood. So I thought it was interesting. I went and I had Chamath, as you know, the core the coronary calcium scan. It takes 5 minutes. It costs between a $104100. The fact that we don't have every person taking this over 40 is crazy. And frontline doctors should all be prescribing it, but particularly if there's family history. Chamath Palihapitiya (01:33:55): Sorry, but did you also do a contrast CT with heart flow? Brad Gersner (01:33:58): Yeah. So I I started with a calcium score 150 bucks over at Stanford took 5 minutes. And, you know, it told me, you know, which wasn't terribly surprising. I was 1 of the 50% that did carry some level of calcium. So it was called a non zero score. And then what they suggest is because you have a non zero score, you get this, you you know, Chamath, you told me, go do the contrast CT. Which then will image what this looks like actually in your arteries. So this past week in Boston, I did the contrast CT. Again, This took 10 minutes non invasive, like, you know, it's just they run you into a tent with it. Chamath Palihapitiya (01:34:36): Invasive because you have to put the dye in Brad Gersner (01:34:38): your house. So they put the yes. The the so so a tiny bit, I I suppose they they shoot a little dye into you, but, you know, didn't feel like anything. I was in and out of the of the place in 40 minutes. And what it found is, you know, fortunately, that very little of this calcium had turned into what they call stenosis, any narrowing of of the arteries. Okay? But then it gave you just a very clear picture that if you are 1 of the 50% who carry plaque over the age of forty, you should be on a prophylactic statin So as Chamath knows, I signed up to 10 milligrams of Crestar, which I'm taking daily, has had 0, you know, 0 adverse consequences And in 2 or 3 months, they'll test the amount of, you know, we'll revisit this calcium score. But when I talked to the head of cardiology, what was so interesting is that every one of his friends over the age of forty, he has them do this calcium coronary scan. It's so cheap. And if there's zero, on their calcium reading, then that's the end of the line. But if they have a non zero reading, then he'll do the the CT coronary scan, which is, again, very cheap more expensive than the calcium test, but very cheap. And when you think about the costs of the patients in this country, right, in our health care system due to heart disease. And when you think about the needless lives cut short, I was shocked. How easy all of this was and how empowered I feel by the data and how fortunate I feel that I'm actually taking a supplement. I caught a supplement instead of statins because I think statin has some spooky name. It sounds to me like a better supplement than any vitamins I can take. And, you know, it's reducing the LDLs or these fatties in your, you know, in your blood. And I'll keep you posted, but I was very grateful. And, you know, as you know, I posted it in our thread, And I think all the besties, you know, we saw responses out of a bunch of folks in the thread this week are gonna go get their calcium, you know, coronary scan. And I I I think it should be common sense on the front lines for people over 40, particularly if there's any family history, you'll get this calcium test done this summer while you have a extra time. David Friedberg (01:36:51): There you have it, folks. 100 to $400 could save your life. Calcium coronary scanned. Brad Gersonner, thanks so much for science corner this week. This has been great. How did you guys enjoy the show with our new foursome? Zach? Love it. Love it? Chamath Palihapitiya (01:37:10): I gotta go boys. I really love you guys. Okay. I'll go David Sacks (01:37:12): to Vegas. Brad Gersner (01:37:13): Stuff your face with some truffles. No. No truffles until the ball. Speaker 4 (01:37:16): Thank you. David Friedberg (01:37:17): Alright. Bye bye. Chamath Palihapitiya (01:37:18): Love you guys. David Sacks (01:37:21): Love you guys. We'll let your winners ride. Speaker 4 (01:37:26): David Sachs. We open source it to the fans, and they've just gone crazy with it. David Sacks (01:37:42): Besties are Speaker 4 (01:37:53): You should all just get a room and just have one big huge order because they're always used to it. It's like this, like, sexual tension that we just need to release them out. Brad Gersner (01:38:01): You're the that's gonna be good. Where did you get murdered?