美联储是否击碎了 VC 模式？IPO、并购与独角兽重估

Chamath Palihapitiya (00:00:00): Did you just finish a good cry? Cause you have this wetness right here on your eye. Jason Calacanis (00:00:04): Oh, sorry. I just got out of my coal plunge and my sauna because, you know, I hit a new record low weight 169 this week. Oh, hold on. I get out of my list. Chamath Palihapitiya (00:00:11): What's your temperature on? David Sacks (00:00:13): I Jason Calacanis (00:00:13): don't wanna say it's embarrassing. It's embarrassing. I don't wanna say. No. What is I've been doing, like, 56, 58, but it's great. It's okay. I mean, I all these lunatics, like, I don't know. They're 45 degrees, 48 degrees. I think it's unnecessary. You get the same value. I think a 50. Chamath Palihapitiya (00:00:28): My two year old is 56. It's good. It's really impressive. David Sacks (00:00:32): I consider an 80 degree pool to be a cold plunge. I don't get it unless it's, like, 85. Jason Calacanis (00:00:39): That's actually I'm into the parties at Saks's house. There's no difference between No. Chamath Palihapitiya (00:00:44): It's a schmitz. It's a schmitz. It's a schmitz. David Sacks (00:00:48): It's not the temperature of mouth Jason Calacanis (00:00:49): water, I don't get it. Chamath Palihapitiya (00:00:56): David Sachs. Yeah. It's a sketch fits. It's crazy. Jason Calacanis (00:01:10): And then I went in my infrared saunice and I've been going in You Chamath Palihapitiya (00:01:13): do the cold, then the warm. I think you're supposed to do warm than cold. No? Jason Calacanis (00:01:17): They say end on, cold. And so I've been ending on that. Yeah. Yeah. But I just do it like So you Chamath Palihapitiya (00:01:22): do cold, warm, cold. Jason Calacanis (00:01:24): Cold, warm, cold. Yes. Chamath Palihapitiya (00:01:25): And what do you do? Like, 2 minutes, 10 minutes, 2 minutes, or what do you do? Jason Calacanis (00:01:29): Yeah. Exactly. Like, 1 or 2 minutes, cold plunge. 4 minutes, you warm up, you get back to it, and then you jump back in. You know, it works pretty good. You know, I have to say my energy level goes way up. David Friedberg (00:01:39): Have you been tracking your blood pressure? Jason Calacanis (00:01:42): I have not. But I have this, executive health coach that I'm using. And so that's where I got those ridiculous glasses, the blue lights on my sleep better. I got some I'm taking some supplements. I'm eating David Sacks (00:01:56): estrogen. David Friedberg (00:02:00): Are you taking more estrogen, bro? Jason Calacanis (00:02:03): No. As your sniffles are at an all time high for hanging out with you guys. It just oozes odd to me. No. It turns out, you know, even at 52. My testosterone is very high. Chamath Palihapitiya (00:02:12): That's because you're a free testosterone. Jason Calacanis (00:02:14): I don't have the number here, but they said it's the the high end of normal. So I was like, should I be shooting up testosterone? They're like, no. You're good. You're good. Just we'll send it over to Friedberg. I said, alright. Great. Send it over to Freightberg. It's all good. Chamath Palihapitiya (00:02:26): A lot of people take testosterone in their fifties and sixties, and I've had a couple of my friends in their early sixties start h is it hGH? Jason Calacanis (00:02:36): Human grow. Chamath Palihapitiya (00:02:36): Yeah. Is is that right? Not a good idea. Jason Calacanis (00:02:39): Seems like a really bad idea. That off menu stuff, I don't think it's a good idea. I think you gotta be careful with the off menu items. Chamath Palihapitiya (00:02:46): I think you can get a prescription for it. Jason Calacanis (00:02:48): Is that right? Yeah. I know there's a lot off menu items available to affluent people. With the right doctors, and I don't think it's a good idea. Chamath Palihapitiya (00:02:56): I mean, you guys see Bezos. He's jacked. Jason Calacanis (00:02:59): I didn't bring up anybody specifically, but He looks great. I think that's just all weights. David Friedberg (00:03:05): Is he gonna be president? Jason Calacanis (00:03:08): I mean, If you had your choice right now between Bezos and Chamath Palihapitiya (00:03:12): Bob Biker, who would you be with Ben Biden? Jason Calacanis (00:03:15): I think we know who you'd pick. I mean, listen, I was talking to some affluent people, and they everybody's going to some affluent people. I don't wanna say who, but Vivek is Now people are starting to talk Vivek. I David Friedberg (00:03:29): think he's hitting the right chords, man. Chamath Palihapitiya (00:03:30): Vivek is about to pass DeSantis. He will be, I think, if you look at the polling right now, New Hampshire. He'll be the clear number 2 in about 4 between 4 8 weeks from now. That's crazy. That's crazy. And so I think if he becomes a clear number too, the the think of this. It's like then all of a sudden, all these MAGA supporters are given trump and then trump with some small feature improvements that are actually pretty meaningful. David Friedberg (00:04:01): Right. Chamath Palihapitiya (00:04:02): And then they're like, well, do I want the eighty year old trump, or do I want the thirty eight Jason Calacanis (00:04:07): year old trump, right? Chamath Palihapitiya (00:04:08): With, like, the super features, you know, David Friedberg (00:04:10): I can forgive all of his other issues when he tells me that he's gonna cut the government, the federal government by 75%. 75%. Chamath Palihapitiya (00:04:17): My gosh. David Friedberg (00:04:18): Sold. Chamath Palihapitiya (00:04:19): So you're on so you're on team Vivek. David Friedberg (00:04:20): I wanna continue to gather a little data. There's no rush to make a declaration right now. Give me a little bit of time. Are you with Vivek? Yes. Chamath Palihapitiya (00:04:27): I and and the reason is I would love for it to be RfK and bidenina debate and then Trump and Vivek in a debate so that I could really figure out between RFK and Vivek who I would like to vote for. But I think it's been pretty clear that the Democrats have chosen to railroad RFK's candidacy. It's unfortunate because I don't think we're given a real fair shake and really being able to evaluate him. Yeah. Even the the tractors like Friedberg, you have some pretty significant things that you dislike about RFK, which I think are fair They're never gonna get a chance to get aired out because you're never gonna get a chance to be put on a national platform where there will be really enough debate. And I think that's where America loses. So, yeah, in that context, I would say that Vivek has done more in the last month to convince me that he is fiscally responsible and that he has some intuitions that I think RfK and trump, and a lot of people in America share, which is just about the usefulness of the blob, And, you know, that there maybe needs to be a grand experiment where we deconstruct the blob. And, for that experiment, to be totally honest with you to see what happens. David Friedberg (00:05:46): Zach, where are you at? Jason Calacanis (00:05:48): He's unhappy. What I David Sacks (00:05:49): would say, I think it's too early in the us to say definitively, okay, this person has to be the person. For me, I'm viewing candidates as either being acceptable or unacceptable. And Vivek is acceptable to me. I think DeSantis is too. The ones who are unacceptable to me are the ones who would escalate this Ukraine war. Because I think that avoiding World War 3 is, to me, the central issue of the campaign. So for me, it's a litmus test issue. I can only support a candidate who would work to end this war, not one who had escalated. David Friedberg (00:06:19): Where does our fiscal emergency sit for you in terms of priorities? So no no world war 3 priority 1 is the fiscal emergency that we're facing priority 2, or is it overstated by media bank or others? David Sacks (00:06:30): No. I I think it's important, but the problem is this. Is that in order to do something about that problem, you really need bipartisan support. Yeah. Because it would be suicide for one party to try and do all the heavy lifting without the sport or the other. And I just don't see in the near to mid term that you're gonna get that kind of bipartisan sport no matter who is precedent, whether it's a Democrat or a Republican, the only issue that, for sure, the American president has unilateral discretion over is our foreign policy. And so for me, making sure that the next president pursues a foreign policy that doesn't result in the destruction of the United States. That to me is the overwhelming issue. It doesn't mean these other issues aren't important look Jason Calacanis (00:07:14): at how sending these numbers are. Let me show you this poll for a second. Just so we level set with the audience. Poll ending September 18 2023 for those who are not watching on YouTube Trump, 38 9% is that or 38? Then the Vic, 13% Haley, 12% Christie, 11% DeSantis, 10% That is a stunning turn or David Sacks (00:07:35): yeah. That's probably because it's New Hampshire, Jake Hall. But Jason Calacanis (00:07:37): You know, no. I know. It's just but that's a very critical state. Right? I mean, David Friedberg (00:07:40): Sam, what do you think about what Dahlio said on stage about the need to have a Manhattan project style effort here that is bipartisan comes to the center and tries to resolve this as that scale of an emergency. Is that realistic to kind of frame this as We are in a fiscal emergency. We have to get a Manhattan project style effort underway to try and engineer a solution. David Sacks (00:08:03): Well, for let's back up. First of all, I think you asked the right question to him, which is, is our decline a matter of physics, you know, due to forces we can't control, or is it something we still have control over? And I think that that's a really good framing. I think if you're in the bucket that we can do something about it, I mean, I believe that we can. The question is how And I think his view was that somehow you get all these elites together and you get them on the same page, I don't think that's how our system works. I think what happens is you have elections, people compete against each other, and then voters decide who's right. And so one side has to defeat the other. And I think until we get some clarity from voters on the direction they wanna go, I don't think there's gonna be a resolution. David Friedberg (00:08:46): But to your point, there's no solution without bipartisan bipartisanship here. So what is the path to bipartisanship when it comes to the fiscal crisis? David Sacks (00:08:54): I'm not sure. Jason Calacanis (00:08:55): Wouldn't the obvious thing be if one party wins with that as part of their platform, then it becomes part of the winning platform and the winning formula, or are we just saying that's not even possible because it's too unpopular to tell people that they don't give free money. David Sacks (00:09:07): I think it's political suicide for one party to engage in deep cuts deep government cuts, deep cuts of programs, especially popular programs. You probably cut the unpopular ones at the margins, but political suicide to cut anything important without having the other party on board. There's been a couple of times where we've been able to have this type of consensus I mean, the one that always gets mentioned is when Reagan and tip O'Neil cut a deal, and they were able to reform entitlements and make some changes to those programs, and they kinda did it arm and arm. And that worked. And then the other time where it kinda happened not through agreement, but almost through lack of agreement was when we had the sequester. Remember when Obama was president? And what happened is the Democrats and the Republicans worked out a deal where if they couldn't agree, you would get equal cut cuts in both military spending and social spending. The idea being that Republicans, what are the military spending, that Democrats wanted the social spending. And that's ultimately what happened is that they couldn't agree. And so you got the sequester, and we had some spending straight for a short period of time. The problem now is that both Republicans and Democrats want more military spending. I don't hear anybody really argue for cutting military spending, except for maybe Rokana at our event, but The Democrats are completely on board with war now. And then on the social spending, I don't think either party really wants to cut social spending either or do entitlement reform. So there is no constituency out there for reining in the biggest sectors of government spending. So I don't see how it's gonna happen no matter who the president is? David Friedberg (00:10:45): Well, the forcing function will be the debt service costs, which is just crossed a $1,000,000,000,000 a year just to pay the interest, and it's mounting. Right, 30% of our debt, I think, is coming up for refinancing in the next 12 months, and that's gonna refinance at a 5% rate because that's where the markets are Jason Calacanis (00:10:59): just like consumers can ignore Friedberg put their fingers in their ears and say, I don't have to worry about my payments, then the payment show up, and you gotta worry about it. Same thing's gonna happen here in Chamath Palihapitiya (00:11:09): the US. Right? David Friedberg (00:11:10): The federal budget will get naturally constrained at some point here. Jason Calacanis (00:11:12): But, yeah. David Sacks (00:11:13): As the economist herbstein once said, if something can't go on forever, it won't. So I think I think you're right, Friedberg, that this will not go on. It's not Yodie Barra. It's a dessert side, I think. Yeah. If somebody can't go on forever, it won't. I think that that's where we're headed is we're gonna have restraint imposed on us from the outside. It's not gonna come from Jason Calacanis (00:11:33): People stop buying. People stop buying treasuries. David Sacks (00:11:36): Interest rates just have to go up to Jason Calacanis (00:11:37): a point on that. In Japan. Right? I mean, their bond auctions have, been very, Lukewarm. And supposedly, a lot of the money in Japan is coming west looking for opportunities to get alpha. So we have an example that we can look to. Alright. Let's get we can get started here. We get so much to talk about. I think we gotta give some flowers here. Last year, the sultan of science, the prince of panic attacks. The queen of Kinois was an absolute terror when I did the all in summit 2022. And then this year, he was an absolute all star in delight. What an amazing job you did on the content. People are saying the content And all in sum in 2023 is the best conference ever had. Bill Gurley on a 4 minute Ovation, and that talk is on YouTube, Elon Musk Star LinkedIn from, 40000 feet. He crushed it. Toby was fantastic. Ray Dahlio, Larry Summers, Mister Beeth, Beast, Weneth Paltrow, the Bow Test sisters, which we did a pretty good showing. You have to say a great job to Saks and Friedberg, who who held the line with the boat test sisters in our group chess. Brian Armstrong? Who am I missing here? I mean, what an incredible lineup? Chamath Palihapitiya (00:12:55): Rob Henderson. David Friedberg (00:12:56): Jenny Juff, Rob Henderson. Jason Calacanis (00:12:58): I mean, extraordinary. Let me just go around the horn. Shamak, your what what what, discussion or moment. Pick pick your choice there. For you was the most intellectually engaging and important at the summit. You can mention 2 or 3 if you like. Chamath Palihapitiya (00:13:17): I thought number 1 were my outfits. Jason Calacanis (00:13:21): Pretty great. I mean, you did do an alpha change Twice a day. So congrats on that. I like this part. You did Chamath Palihapitiya (00:13:26): a really good job with that. Jason Calacanis (00:13:27): I do agree. I agree. David Sacks (00:13:29): Did you guys get the special shoes from Laura Piana? Chamath Palihapitiya (00:13:32): Oh, god. The king's Cashmere Lovers? Yeah. Those are ridiculous. I'm wearing them as we speak, actually. Jason Calacanis (00:13:37): I wore them. They're incredible. Night. And I can't wear Chamath Palihapitiya (00:13:40): them yet, Saks? David Sacks (00:13:41): Yeah. Yeah. Chamath Palihapitiya (00:13:42): They are the most incredible shoes. Clouds. They're David Sacks (00:13:45): the most competitive place. 10 pairs or something. And Jason Calacanis (00:13:48): Yeah. And we got 4. David Sacks (00:13:49): Special for us. Yeah. Jason Calacanis (00:13:50): Then I get back to the Beverly Hills Hotel, the suite that Friedberg booked me a beautiful suite. Thank you, Freiberg. And there is a Laura Piedmont box. Chamath Palihapitiya (00:13:59): Drafted me on my room. What? What? Jason Calacanis (00:14:02): Yeah. I gotta put you by the garage. Chamath Palihapitiya (00:14:04): No. I got a room that was Well, it's very appropriate that these rooms exist, but it's handicap accessible, which totally fine, except the problem is the the closet and everything is set for wheelchair height. David Friedberg (00:14:17): Why didn't you change your room, dude? Chamath Palihapitiya (00:14:19): And so all my and then so I thought, oh, he just me on purpose. He just tried to he trolled you. Little passive aggressive name check. So Alright. You guys got some work Jason Calacanis (00:14:26): to do in the group therapy. Chamath Palihapitiya (00:14:29): I would never do that to you guys. Don't worry. When I when I organize a summit, I'll make sure these details are perfect. David Friedberg (00:14:33): I fly on Timoff's plane. He has gluten free, nutella crepe, handmade in the morning, and I stick him in a handicapped accessible room where he can't even put his bag in the house. Chamath Palihapitiya (00:14:41): I mean, and I can't put my clothes except without it touching the ground. So then I had lay them on the bed, and then I have to lay them on the Well, this is our first Jason Calacanis (00:14:48): world problems. Yeah. I the audience right now is just triggered by the suffering that you went through Chamath Palihapitiya (00:14:54): at the Beverly Hills Hotel. Honest reaction was I thought the content was really inspiring. I guess it's kind of like, I knew what I was gonna get up front with so many of the folks because I knew them But then where I still came away where they exceeded my expectations, number 1, probably was Graham Allison. I could literally talk to him for 8 hours a day, I feel like. And I don't know him well. So I felt like I was scratching the surface of the things that he knew. I could do an entire dinner, I think, where he could just walk through the Cuban Missile Crisis, and I could just sit there listening. So I I thought he was unbelievably intellectually stimulating for me. Every time I sit down with Toby, I'm just, like, in awe of how smart and different Toby Lude key is. Mhmm. And so I always kind of like walk away thinking This is really one of the very special entrepreneurs of our generation just in terms of his mindset. Underrated. I thought Larry had the line of the summit. Larry Summers Bori said, self esteem should come from achievement and not the opposite, which is that achievement should come from self esteem. And he was talking about wokeism and sort of like, the entire philosophy around that stuff right now. And I thought that that was really insightful. Those are probably the three moments. I thought Girly's obviously presentation was superb. But again, it's kind of like saying the obvious because it was just so master class. But the, the, from what I expected to what I got, those were the 3 that I thought were the most inspiring and net new positive for me. Fantastic. Sachs. Jason Calacanis (00:16:32): Did you have any moments, aside from Grenith Powell saying she was your favorite Besty, other than that being the clear number 1 for you and crushing soul crushing for us. David Sacks (00:16:42): Well, if I remember even heard that, because the, Zoom issues. We had technical issues during her interview, and it got really hard to hear her at various points. And I don't think you guys heard that either. Right? Jason Calacanis (00:16:55): I heard it. I tried to ignore it. I tried to block it out. David Sacks (00:16:57): I couldn't I couldn't hear it, so I didn't know that. Chamath Palihapitiya (00:16:59): Yeah. Well, congratulations. David Sacks (00:17:00): Of that? Do we, Jason Calacanis (00:17:02): pull that up right here? No. We're not doing victory laps on the pod. We talked about this on the chat. No I mean, that's awesome. Go go for it. I don't wanna hear it. Speaker 5 (00:17:09): You're all my small husband, but we have a little bonus contention as he thinks everything with David Sachs. Hope you're playing here. It's a it's it's a match. Chamath Palihapitiya (00:17:18): Oh my gosh. She says she's in love with David Sachs. No. It's that his her husband thinks that she is not. Speaker 5 (00:17:24): No husband, but we were little on bonus contention as she thinks I'm doing wrong publicly. Exactly. But he's letting you know, so it's Chamath Palihapitiya (00:17:33): this Jason Calacanis (00:17:33): is not good. David Friedberg (00:17:34): Uh-uh. David is incredible. Jason Calacanis (00:17:36): Oh, the husband's jealous, and that's not a good situation for you, Sags. After that, what did you like, Sachs? To be honest, you I I wanna also give credit to David Sachs who, showed up for every talk. And Friedberg said, Jake out have an issue. I said, what what anything I can help? He said, oh, well, actually, the issue is I asked David Sachs to show up at 8:45 for the run through, and he, he won't respond to me. Can you can you get in touch with him? I said, let me tell you what's gonna happen with David Sachs. Programs just start at 9. He'll be here at 8:56. And if you get him on stage for 2 out of 3 talks, you did better than I did. And Friedberg team, which god bless the production work team. They did an amazing job. These wolverines are incredible. Shout out to Laura. Rachel and everybody on the team, you know, they did a fantastic job. And sure enough, Sac shows up at 8 56, goes on stage, and he crashes it. So Great job, getting him on stage, but congrats on showing up for us. David Sacks (00:18:34): Well, they wanted me. I mean, I asked when's the first speaker going on stage? Yeah. Actually, I think it was 10 AM. Right? Jason Calacanis (00:18:40): 10 AM. Sorry. 10 AM. David Sacks (00:18:41): 10. So I'm like, okay. In my head, I'm thinking, okay. I'll be there in 9 59. And I'm like, what time do you yeah. And then they're like And Jason Calacanis (00:18:47): you went there 9:55 and how soon are they gonna come across? David Sacks (00:18:49): They're at 8:30 for a sound check. And I'm like, Jason Calacanis (00:18:53): Does this Jagger come from the sound chunks? What? I'm sorry. David Sacks (00:18:55): Does Jimmy Page like Jason Calacanis (00:19:00): Jagger? I'm not talking about here. Chamath Palihapitiya (00:19:03): Does my data come check? Okay. Let's start. Can we start the show? Jason Calacanis (00:19:06): Can we have your Chamath Palihapitiya (00:19:06): cell phone? They're very, very verandaise in our David Sacks (00:19:08): cell phone. Look, I thought the conference was amazing. It exceeded expectations. Your conference exceeded my expectations too, Jake, but I think Frebert took it to another level. And it exceeded my my already high expectations. David Friedberg (00:19:20): Yeah. David Sacks (00:19:20): You know, highlights. I mean, I think starting with Ray Dahlio as the first speaker was really interesting. I think we only got to go for, what, 30, 40 minutes with him. I felt like we could have gone for 2 hours. I'll have to bring it back on the pod and, you know, drill into that topic more. Jason Calacanis (00:19:35): 2 hours or Dahlio would be amazing. David Sacks (00:19:37): I think what's really interesting is the way that he's looking at the grand sweep of history. Right? He's thinking about not just a 10 year business cycle or a 75 year debt cycle, He's looking at a 250 year empire cycle. I think this is really interesting that he thinks in that really big way. I agree, Graham Allison. Really interesting. We could have spent 2 hours with him. Larry Summers. These are all people I think should bring back on the pod for a long form conversation. I agree that Bill Gurley's talk was one of those great Ted style talks that I think should go viral. I think Jason Calacanis (00:20:11): It has David Sacks (00:20:11): You know, mainly people should watch that. Jason Calacanis (00:20:13): Yeah. I mean, the people retweeting it are incredible, and I was at a dinner party last night, and everybody was talking about it. So It's it's spread into our industry, and it's starting to tip over into other industries already. David Sacks (00:20:24): The chest was really fun. I am a game day player that way. You know, I I brought it and managed to win the game. What else? I know there were a lot of great moments. I'm sure forgetting about things. Chamath Palihapitiya (00:20:36): Love that. I love that. Yeah. Jason Calacanis (00:20:38): The parties were incredible. David Sacks (00:20:40): The party came right now. Chamath Palihapitiya (00:20:42): The parties were absolutely incredible. David Friedberg (00:20:43): We missed both of you guys at the Grimes DJ set. That was amazing, by the way. Jason Calacanis (00:20:47): I think Shamato was there for that. Weren't you there? Chamath Palihapitiya (00:20:49): No. I I left right at 10 to fly back to the bay early early night. Yeah. Jason Calacanis (00:20:54): Got it. Yeah. She grimes. Thank you to gr Grimes for doing that for me. Personal favor. The audience lost their minds. Sent them off. David Friedberg (00:21:02): She's such a performer. It's incredible. Jason Calacanis (00:21:04): Yeah. People were losing their minds. For you, Friedberg, best moments, on stage? David Friedberg (00:21:09): It was just great to be with everyone and go through it. I mean, honestly, I didn't source all these speakers you guys did. And so I don't want to take credit for that. I think it was what I had hoped. You know, I went to Ted 12 years. I started going to Ted, I think, 2007, and I felt pretty disappointed over the, the last couple of years. And I actually spoke to the CEO of Ted and said, I'm not gonna go anymore. Because so much of this, the talks became kind of social justice type talks Jason Calacanis (00:21:35): that Chamath Palihapitiya (00:21:36): that Jason Calacanis (00:21:36): I I David Friedberg (00:21:37): wouldn't I don't wanna use that term. Because I do think it's all very well intention. And I think it just became overwhelming that you would go to Ted and you would basically feel bad about yourself. And that it kinda missed the element of the world is an amazing place. We should have a great degree of optimism with technology and where it's taking us. We should observe the greater cycle and the bigger perspective of things that are happening in the world, not kind of go into a who done it and who's to blame and us versus them kind of mentality, which I think so much of this stuff turned into at Ted. And I was really hoping we could capture some of that. And so I'm really glad we got a lot of the speakers we did and and had a couple hours to be able to, to share, you know, those sorts of perspectives. So it was fun. I really enjoyed it. Jason Calacanis (00:22:21): What you what you did with the conference in terms of the the editorial direction was great. You leveled it up certainly from last year. As Tremont pointed out correctly. And it had a great amount of optimism, realism, and we didn't talk about superfluous virtue signaling. Social justice woke nonsense that really is should not be at the top of the agenda in my mind. I'm not saying that these issues are not important to some people. But I think prioritizing what's important in the world is what I got out of the conference. You know, when when you have people on this level, speaking for for, you know, very long periods and not long enough, but, you know, Larry Summers and and and, you know, Ray Dhalla I mean, it's on these talks. They they really gave you a sense of this is what's important in the world right now. This is the priority. And and I came away from it. So intellectually stimulated that maybe just say, hey, you know, I wanna travel more. I wanna read more. I wanna have more conversations. And I have been basking in that, like, afterglow. So I just wanna say, you know, once again, what an extraordinary, amount of teamwork just as the moderator, of our quartet, felt everybody did a great job moving the ball around. I think everybody was on their game. Everybody, you know, I'm talking about the 3 of you guys. Very focused on just knowing exactly when to insert a great question. So I felt like we were playing basketball like the warriors when they play Prime basketball, ball moved really well. Great questions. People picking up on themes, threading themes from one talk to the other, and it just made me really excited for next year. So I just wanna say a great job to each of you. Thank you. No. I gotcha. Listen. We could talk about ourselves all day, but people hate that. Let's talk about what's going on in the markets. David Friedberg (00:24:08): Yeah. We only did it for 40 minutes. Perfect. Okay. Jason Calacanis (00:24:11): Yeah. Exactly. IPOs and I M and A on fire. We've had a ridiculous week. Six quarters of down market has suddenly turned into a bunch of green shoots on the M and A front. Cisco announced it requires Splunk for $20,000,000,000 in an all cash deal if the notes are correct here. It's about 10% of Cisco's market value. Somebody did a trade where they they bought a bunch of options. And, so that looked a little fogicy. Congratulations to Nancy Pelosi on that trade, possibly. And then David Sacks (00:24:46): Don't forget your favorite word allegedly. Jason Calacanis (00:24:49): Allegedly. Allegedly. Perhaps. I don't know. She's good at trades. So if somebody's gonna make money on that trade or if somebody's go to jail so congrats to Srelli, Instacart, Klaviyo, and Arm, all IPO ed in the past week. And, you know, they've fallen back to earth. Just crazy stat. 21 months since the last significant venture backed company went public. I'll leave out, like, the, Middle Eastern food company. Was that Kava that went public? And then the vacuum company that went public. But that's just in the past 7 days. So we talked about this on the program. We discussed hey, we'll know when the markets are back if some of these companies are forced to walk the plank slash get public you know, and and fix their cap tables and sure enough Instacart really kind of represents that most most of the late stage investors in Instacart are underwater. The early stage folks absolutely crushed it. Chamath. Listen, you're you're, a market expert here. You've taken a lot of companies public. What do you think the last week means for the greater technology industry? Chamath Palihapitiya (00:25:56): I don't think that this was the great reopening that we all we're hoping for. I think it's important to understand the dynamics of bank led traditional IPOs in America. And the best way to understand them is to contrast and compare to how that same company would go public in Europe or Asia. Because it'll explain what what happened. And I think, unfortunately, what has happened is not good for the market. So typically what happens is when you construct an IPO, you're selling 15 to 20 percent of the company. And when you do that, you go and you call hedge funds and you call these mutual funds, but what are called long only. Right? Meaning, they don't short. They just go long. These big mutual fund companies. And you try to find a handful of people to anchor the IPO, so they take a huge piece of that 15 to 20%. And in Europe and Asia, the securities law says that when you get such a big allocation, you have to hold it for 6 months, which means you're treated exactly the same as the employees who are typically locked up in an IPO for at least 6 months. And so what happens is these firms do all kinds of diligence. And when they buy something, it's because they really believe in it. And then they go long it for, you know, what is at least half a year. So it's a it's a nontrivial amount of time. So that's what happens in Europe and Asia. 15 to 20 percent of the company is sold, a handful of people anchor, and you're locked up for 6 months. Now, you need to look at how American IPOs are done. Which is why people have experimented with direct listings. We've experimented with specs. It's because the fundamental architecture of IPOs are broken. They're set up in a dynamic where it's a heads I win, tails you lose situation for the bankers that run the IPO. Now what happened in these 3 IPOs? Chamath Palihapitiya (00:27:52): Number 1, it was less than 10% of the float. So highly, highly, highly concentrated small amount of the of the company was made available for sale. Number 2, there really weren't anchors. What happened was the allocation of that less than 10% was smeared across 50 or 60 different organizations. And then number 3, there was no lockup, which meant that people could sell right away. And so what you saw with all of these companies was the exact same dynamic, which was it opened. Because there was such a small amount of supply, it traded up, and the minute that retail typically tends to be late to the game because they don't have access to these things. Right? When they started buying, what was unique this time around is all of the mutual funds just dumped everything. And the hedge funds were like, well, we don't have a real allocation. Our friends sit in the group chat he got a 5 or $10,000,000 allocation in these IPOs. These are $20,030,000,000 hedge funds. 5 and $10,000,000 allocations don't move the needle. So the hedge fund sold right away and got on the sidelines and said, I don't care about this. The long old lease bought just enough to make the stock go up, because of such a small supply, then when retail stepped in, they just dumped it all. And so, unfortunately, what's happened is all three IPOs within a few days have breached their issue price. Now they're at the same issue price may be slightly higher, but that is an unsuccessful dynamic. What could have been different? The banks could have forced these companies to sell up to 20%. The banks could have found a few anchor buyers. The banks could have created a lockup structure for these anchor buyers. They did none of it. And so the result is a lot of downward pressure in a moment where the overhang of rates has have come back and are forcing all of us to realize, and we'll talk about it in a second that these rates are going to be higher for longer, which completely changes how you value these tech companies. So net net, very poor IPO construction by the banks And the the grand reopening was a grand closing, Jason Calacanis (00:30:03): I think. Okay. So just to put some numbers on that, Instacart's float was 6.7% and Klaviyo's float 7.6. Arms load almost hit the 10% 9.4, but certainly less than the 20% that you would expect. So then I guess the follow-up question here, Saks is, Why did these companies go out? And do will we see the the other big ones go out? The stripes and some of the other backed up inventory. What's what's the back channel in our industry about the viability of other IPOs? Is this gonna push a lot more people out to get liquidity? Even at discounted prices, even with the the headwinds that Shamont points out, or it's just gonna have a chilling effect, and people are gonna say, you know what? Let me wait till 2020 David Sacks (00:30:43): I think they went out because investors and others need liquidity. And there's no point holding on and waiting for evaluation that's never gonna come back. I mean, so you take Instacart, for example, their last private round was at 39,000,000,000. What's the market cap now? Around 10. 9. 9. So it's great that they got out. I I think that was Jason Calacanis (00:31:03): at 8 today. David Sacks (00:31:04): It's at 8. I mean, that, look, it's sort of a green shoot that they got out, but we're never going back to the valuation level. So we had a couple of years ago during a giant zirp created asset bubble. So I just think there's no reason to weigh and you look at SoftBank. They needed the liquidity from the ARM IPO. Yeah. So I think that's why these companies are going out is it's we're we're kinda getting back to as usual, just to broaden out the question a little bit, what I think is interesting is that for the past year or so, we've been in a software recession. It really started in the first half of twenty twenty two. The market's creator, especially for growth stocks. There's a huge correction evaluations that happened in especially the first half of twenty twenty two. But then about a year ago, starting in mid 22 and continuing through Q2 of this year, you saw a reduction in growth forecast. Everybody started forecasting down. There wasn't a single board meeting that I was in, in private companies that wasn't missing their numbers and reforecasting down. And you saw it in the public companies as well. I think German Ball's substAC showed that the average Growth forecast for SaaS companies for next 12 months have been cut roughly in half. So for the last year, year and a half, we've been in a software recession. You could say a b to b recession. We saw companies like Meta, Google, and so on, cut thousands of jobs, get very tens of thousands of jobs, you know, get much more efficient Jason Calacanis (00:32:33): Yeah. David Sacks (00:32:33): Each. That meant they were buying a lot less software on a per seat basis. So I think we've been through, call it, a b to b or enterprise recession. But the thing that's held up stronger than I think people might have expected over the past year has been the consumer. Consumer spending has kept the economy afloat. So the b to c part of the economy has been strong, whereas b to b has been very weak. What I wonder about next is whether that's gonna flip. I wonder if the consumer is on their last legs here. You see that credit card debt is at an all time high. Interest payments on credit card debt, all time high. Mortgages, the rate now is approaching 8%. So no one can afford to sell their house which has a 3% mortgage and then buy a new one at 8%. So real estate transactions have cratered the commercial real estate industry is, you know, on his last legs. I think they're starting to throw the keys back to the bank and start forfeiting buildings because they can't refi at a attractive rate. So I just wonder if the consumer now is about to go through the type of pain and restructuring of their personal balance sheets the way that the enterprise segment of the economy over the past year. Jason Calacanis (00:33:44): Friedberg, your thoughts on what we're seeing here in terms of the IPO window companies getting out. And and the impact that'll have maybe on how limited partners look at venture funds. That's been frozen for 18 months, limited partners, and I'm raising a fund right now publicly under 5060 so I can talk about it. And it's going great, but man, it's a lot of meetings. And I'd say 2 thirds of the meetings I'm having, people are saying we're not adding managers We're cutting managers and we're cutting commitments to managers. But we'd love to meet, you know, just to start the relationship, you know. So what what do you think this means overall for the limited partner GPs and the startup market. Start of a turnaround or maybe just sideways for more. David Friedberg (00:34:31): I guess we should just put the volume in context if you look at the slide. This is from Ernst and Young showing the, IPO activity by year, and this was through June 30th. So if you assume kind of a steady state You probably are gonna come in at a volume that's less than 22 and and perhaps even less than going back all the way to 2019. With less than 1200 IPOs during the year compared to the peak of 24100, which happened in 2021. If you go to the next slide and just look at the total dollar volume raised so that IPO proceeds thus far through June 30th of this year, it's just around 60,000,000,000. Compare that to a total of about a 180,000,000,000 all of last year, 450,000,000,000 in 2021. And the IPOs we're talking about today, Instacart, Clavio, Arm, in total raised about $5,500,000,000. So, you know, that kinda doesn't have a huge consequence on this dollar volume for the year And then if you look at what's in the pipeline right now in terms of what's publicly filed as S Ones, there's basically nothing right now. So I think everyone's kinda sitting around waiting to see how these transactions go before they decide to put other stuff. I think the big mistake is that we continue to treat IPOs as this big yardstick. The real yardstick for a business is the performance of the business. And the valuation you get when you raise capital at some point in time is largely driven by market conditions, not necessarily by the of the business and the value of the business over time, the market will do its job and rightly value that company. We've talked length about how much value has accrued as a public company for Apple, for Microsoft, for Google, 99.9 percent of their total market value, with realized post IPO. So that the IPO transaction, I think, gets a little too much weight and gets a little too much attention. In terms of determining success or failure of a business and success or failure of the investors in that business. David Friedberg (00:36:42): So I really hate this whole thing about does the IPO price go up on a day? It's this really weirdly engineered thing that they try and do to drive psychology and marketing. By banks to go out and, the bay the banks to try and get people to give them more capital or to give give them more deals in the future. Chamath Palihapitiya (00:36:58): Do you think that the IPO market would be better served if banks were forced to be locked or the the allocations were forced to be 6 month locked, like the employees. Of course. Jason Calacanis (00:37:09): Maybe longer. What if they what if they were a lock for 7? What do you think? David Friedberg (00:37:13): Well, where would the float come from on day 1? Chamath Palihapitiya (00:37:17): But why do you need a flip? David Friedberg (00:37:18): Yeah. I mean, that's that's a good point. I I believe the direct listing should be the way that you do this, and then you do a, a follow on offering once your chair is operating. Chamath Palihapitiya (00:37:26): The problem with the direct listing, as I've found as a seller, Because I went through a handful of direct listings. I went through Slack and I went through Coinbase. Coinbase. Right. Yeah. And in the Slack direct listing, I only sold a small portion on day 1, and it turned out to be a a mistake. And the reason was because the pricing of a direct listing forces you to find the absolute highest price at the open. Now I we learn that so then going into the Coinbase IPO, what all the venture investors did was distributed literally the day before and the day of the direct listing David Friedberg (00:38:07): Right. Chamath Palihapitiya (00:38:07): So that you would get delivered your stock at the highest price so that you could sell. I'm not sure that that serves anybody any better. You know what I mean? Because then you get a lot of price volatility and the price just goes straight down. So I don't exactly know what the answer is. I suspect though that getting companies to float at least 15 to 20% and doing a better job of allocation so that you're right, David, removing the psychology of, like, it has to go up a 100% on day one is success is the thing that actually catches these companies off guard. Now we haven't even talked for a minute about whether any of us thinks the quality of Instacart and Clavio and armor good businesses. And this is part of it as David Friedberg (00:38:53): well. Exactly. Chamath Palihapitiya (00:38:54): You just spent 15 or 20 minutes debating the stock price that is completely divorced from the reality of these businesses, and that's a bunch of distraction that the banks create as well that that is totally unnecessary. I mean, what do you guys think about these? Yeah. Let's just David Friedberg (00:39:07): let me just respond to the direct listing point. I I just wanna also point out Spotify went public via direct listing. The stock actually traded up after the direct listing. It went down a little bit after, but it continued to trade up, you know, into the 2021 era. And today, it's trading at or above what it was trading at during the direct listing. So can I tell you why, though? The performance of that business fundamentally drove interest from investors. Chamath Palihapitiya (00:39:30): The thing with the Spotify IPO was that it was still a very new vehicle. And so that direct listing was we were all learning as we went along. And at the end of the day, there was one bank that kind of not cornered the market, but really became an expert on it, and they use Spotify as the example. So by the time Slack and then Coinbase came along, the playbook was so tight that everybody knew how to play the game, So I think a lot of the Spotify post IPO behavior was a bunch of people figuring out what a direct listing meant. By the time that we actually deeled slack and specifically when we deeled Coinbase, the bank was so sophisticated in telling us, here's what's gonna happen. Here's what you should do. What do you want to do? And, obviously, we wanted to do the thing that maximized returns for our LPs. So I'm not sure that the Spotify example will ever repeat in a direct listing. I think that the slack and Point based particularly will be the example going forward. You'll top tick day 1, and then the thing will spear down, find a bottom, and then David Friedberg (00:40:31): you go. Why does is isn't it ultimately about finding the real market value for the company? Your price doesn't matter. It doesn't matter that the price goes down or goes up that ultimately the buyers that wanna pay a certain will step in and buy. And the folks that wanna sell because they think the price is higher than their mark will wanna sell. Chamath Palihapitiya (00:40:45): I agree with you. I do think that it's really about business fundamentals, but there's a lot of people that get caught up in the price as what the quality of the business is. Now those people maybe not the most sophisticated people in the world, but they make a lot of noise for not knowing what's going on. And so they can be a real distraction to a CEO trying to run a business. David Friedberg (00:41:06): I remember in 2008, I think I've told you guys this story. It was like November of 2008 Expedia with trading down to 7 bucks. And I saw Dara at some event in March. Yeah. March. And he said, hey. Our stocks at 7 bucks. I can't believe it. I mean, like, everyone should be buying our stock. And that was well off of the price that it had been trading at in 03, 04, 5. And sure enough, If you had bought that stock, you know, you would have made 15 x from there to where we sit today. And even more, if you sold at the top take in 2021, So, you know, he's, yeah, that's a that's a good chart. So look at where Expedia was in in March of 9. It was right around 7 bucks. And I think that that was, for me, like the first example where I really understood that the price where the market trades a stock shouldn't matter as much as the fundamental value of the business if you're willing to be a long term holder. If you're willing to say, you know what? Chamath Palihapitiya (00:42:05): Most people are not willing to do the work. They wanna look at a price and then they want to imbue all of their own psychological desires into it versus what are the actual ones and zeros of a spreadsheet tell you? David Friedberg (00:42:17): Yeah. But I'm like a pure efficient market guy. I feel like the, you know, whatever it shares should be people wanna sell, they should be able to sell whatever people wanna buy should buy. The market and if the stock gets too cheap, there's plenty of capital out there to step in and buy the stock. If they think that it's too cheap and the market will find itself. Jason Calacanis (00:42:32): So let's do the underwriting of Instacart then. Were any David Friedberg (00:42:35): of you guys investors in Instacart? No. For any I Jason Calacanis (00:42:38): am in a fund that's an Instacart from the seed round. So I will do, I think, very well because of that. Let's bleep that out. Thank you. That's that will be a that'll be a yum yum for Jake out. Let's just talk about revenue. Yeah. David Sacks (00:42:55): But we'll actually check out when when it trickles down all the way to you as an LP, what's the real multiple? Jason Calacanis (00:43:01): I guess, you know, if you take out the carry, 25 or 30% less than, what looks like to be I'll take it again. David Sacks (00:43:09): The whole fun first. So Jason Calacanis (00:43:11): Yeah. That that fund's been paid back many times over already. So that Do David Friedberg (00:43:14): you know what the multiple is on that fund for you? Jason Calacanis (00:43:16): Yeah. It'll it was 8,000,000 invested And, No. David Sacks (00:43:21): That's their investment. That's not your investment. David Friedberg (00:43:24): Yeah. What if, you Jason Calacanis (00:43:24): know, if you look at your if David Friedberg (00:43:25): you look at your investment, what what we're Jason Calacanis (00:43:27): looking at is that investment's gonna be 200 x, a 100 or 200 x, somewhere somewhere in that range. I'll I'll I will report back, but I think the seed round investors David Friedberg (00:43:36): are gonna David Sacks (00:43:36): be Hold on. So so you're saying 8,000,000 will become one point 1,000,000,000. Jason Calacanis (00:43:40): I think it's over a 1,000,000,000. We we can actually have a chart here. Let's take a look at David Sacks (00:43:44): Let's let's assume it's a 1,000,000,000. 1.6 seems a little high. Let's say a 1,000,000,000. Mhmm. But let's say the fund was, what, 5,600,000,000? Jason Calacanis (00:43:50): So for the LP, David Sacks (00:43:50): it's like a 2 x. I'm just saying that, yeah, for the fund, it was a 100 x, but for the LP, it's a 2 x. Jason Calacanis (00:44:00): I think that's a big David Sacks (00:44:01): difference. Right? Jason Calacanis (00:44:01): Funds already in the black. So mitigating factors. David Sacks (00:44:04): Yeah. So it's 2 extra turns of your investment. Chamath Palihapitiya (00:44:08): Meaning if it was a 4 x, Jason, he's saying that it'll become a 6 x. Jason Calacanis (00:44:11): Yeah. Yeah. Something like that. Yeah. David Sacks (00:44:14): I mean, it's a good fund. I'm not disparaging it, but I just I'm just trying to set things some put things in proportion. Jason Calacanis (00:44:19): I think I think at this point, that funds at 21 x right now. Something in that range. So it's a pretty great fund in in tow in terms of total resource. David Friedberg (00:44:28): To 23x. Jason Calacanis (00:44:29): Something to that effect. Yes. It's gonna be pretty amazing. David Sacks (00:44:33): What else was in there? Jason Calacanis (00:44:39): Coram and WhatsApp were also in the fund either before it or with it. So there were That's David Friedberg (00:44:44): a pretty good fund. Jason Calacanis (00:44:45): There were 2 funds, I wouldn't say which firm this is. What 1224 x. I I believe is the last time I checked the numbers. David Sacks (00:44:53): WhatsApp was a monster. That was a really Jason Calacanis (00:44:55): Well, everybody learned from WhatsApp, and, you know, shout out to the Sequoia team, Doug Leone, I think. And, they did every round. Jim gets to them on you. They did every round. So it was an internal round for, I think, 4 rounds in a row. So they just may preemptive offers. David Sacks (00:45:13): The reason what's up was a home run is because it was so capital efficient. They didn't burn that much. They didn't raise that much. So there's very little dilution Yep. For everybody. Chamath Palihapitiya (00:45:24): I mean, and that is David Sacks (00:45:24): And I think that's what an Instacart is. How many billions do they have to raise? Jason Calacanis (00:45:28): Let's pull up this, chart here. This is super telling to pull up you know, who made money. And I think this shows you what happens in a CERP environment when people do not look at entry price. The Series C underwater No. Seriously not underwater. Everybody from F on is kind of underwater, and everybody from the Series C is underwater compared to the S and P 500 to your point free, free Friedberg Chamath Palihapitiya (00:45:52): that just broke David Sacks (00:45:53): even, and then everybody who invested in 20202021 actually lost money. Jason Calacanis (00:45:58): General Catalyst DST, D 1, T. Rowe, Fidelity, all the late stage folks, even Sequoia was in that late stage, that series I in 2021, it was worth 39,000,000,000. So David Sacks (00:46:09): but let's say the not only was it bad for all the late stage investors who invested at too higher price. I would argue that it was bad for the companies and even their early stage investors because these companies got so inefficient. Jason Calacanis (00:46:22): The dilution is ridiculous. Yeah. Hello. This is Alicia with Ridiculous. Chamath Palihapitiya (00:46:26): I also think you have to think about this in the context of what your alternative returns are. I think that We always look at these numbers, and we think we try to make judgments. But if you put yourself into the mindset of a of an investor, It's actually the alternative of what you could have gotten, and it's the spread between the 2 that's really important. So, Nick, do you wanna just throw up this image that I just sent you? This is an example that I saw in Axios. I thought that this visualization, by the way, I I wanna try to use this visualization in the future. Because it tries to really it it just paints a very Oh, this is wonderful. Let's let's, sports kids here. Shows is a sense actually, and this uses Instacart as an example, but you could use it for any company, but it just basically shows you at every point in which you could have invested money in Instacart. What would the equivalent return have been had you just invested that same amount of money in the S and P 500? And the difference between that is what you would call the alpha. Right? Because the S and P 500 is the beta, meaning it is what the market's gonna do. It'll be up 10%. It'll be down 4%. Whatever. And so by owning the market, you get that. If you decide to not own the market and make an explicit decision, like owning Instacart, then you get a different return stream. And if you compare the 2, you know how much better or worse you would have been. So what this chart shows, for example, is the series F investor in 2018, if you had taken a dollar and put it into Instacart, it would have gotten 13%. But if you had put a dollar into the S and P 500, you would have gotten 68%. In the Series C in 2015 had you invested a dollar in Instacart, you would have made a 153% But the S and P would have returned 121. The difference means that the Series C investor generated about 32% alpha. Now then the decision you have to make is that 32% of incremental gain over the last 7 years or 8 years, was it worth it? You you're not liquid. Chamath Palihapitiya (00:48:29): And because you have to then solve for illiquidity and other things. And this is the math that I think all of the LPs will be engaged in. They'll be doing these calculations It just goes back to what Saksis Point said, which is our business, frankly, did very well in moments where we had 0 interest rates. Our business now when prevailing rates are at 5 or 6%, and you can own those things or you can own structured credit for 11 to 13%, our business, unfortunately, does not look so good. And when people do the calculations on what the true alpha of venture capital is they're going to come back with answers like this, which is it's not that great. And I do think it will impact how limited partners have an appetite to give all of us or you guys folks that are, that are accepting Alpeaches more money because the alternative universe is more liquid. It's less volatile, and it has roughly the same amount of return. Jason Calacanis (00:49:27): I can tell you what they're saying. Because I'm doing about a dozen LP meetings a week. And I've got 50 more on the calendar to the end of the year. So I'm gonna hit 100 of these meetings. They're really saying 2 things. 1, we wanna go earlier. We don't wanna go later as that chart proves. They're suddenly fascinated with the seed in series a rounds. And they're looking for distinctly different strategies. They're looking for some sort of edge. So the first two questions are, how earlier are you getting in and securing a 10% position in this company? And then what's your edge? And literally the start of my pitch deck now, when I walk people through it is I have 2 podcasts. 1 of them gets 50,000,000 listens a year. The other one gets over 50,000,000 listens a year. Those 100,000,000 listens result in 20,000 applications. I have larger deal flow than anybody with the only exception being Y Combinator. And that resonates with folks. But if you're somebody who's got a new fund and you're like, what's your what's your edge? Yeah. I go to you know, some demo days. That's not an edge. You have to have a massive competitive edge and a a different you have to be differentiated in some very credible, believable way. And they're telling me the same thing. They're cutting 2 funds out of their 20, and then they're cutting their commitments to the weaker ones of the other 18. Chamath Palihapitiya (00:50:44): I have a question for all of you guys. You had a wonderful question which we never touched, guys. What do you guys think about the arm business model or the Clavio business model. Jason Calacanis (00:50:52): Let's David Friedberg (00:50:52): go to Instacart First. Jason Calacanis (00:50:53): Do you Chamath Palihapitiya (00:50:53): guys had a chance to look at any of those companies and think about that? Jason Calacanis (00:50:56): Yeah. Let me tee up the facts and then you guys respond. The revenue is up 15% year over year of 716,000,000. Add revenue is 206,000,000. That's on pace to make up 28% of their revenue. This is just the last quarter. I'm talking about it right here, ended June 30th, net income, a 114,000,000. They have 600,000 Instacart shoppers. Those are like, the drivers. You can give them, like, DoorDash or Uber drivers, 7,700,000 monthly active orders. The red flags is that their gross transaction volume, which is the value of all of the groceries in the in the bags, is flat, but ad revenue is growing. This means ad revenue isn't just a massively larger percentage of the total revenue. They think they can you know, they're on track for 800,000,000 in ad revenue. So this is starting to look not like a ecommerce business, but more like a And advertising business, your thoughts, Friedberg or Saks on the actual car business? David Sacks (00:51:47): Amazon, by the way, has that dynamic too now. Have you seen the chart showing advertising on Amazon compared to the entire internet. Chamath Palihapitiya (00:51:54): Yes. Right. It's huge. Jason Calacanis (00:51:55): And also Uber's blown past Chamath Palihapitiya (00:51:57): a billion, I believe. Here's what we know. We know that advertising multiples broadly speaking have contracted. Right? So I think that the market in general doesn't love that revenue quality because it's too levered to interest rates in the economy. So when the economy does more companies advertise when the economy doesn't do well, companies advertise less. That's number 1. And number 2, the ones that can thematically drive advertising more broadly, the Facebooks and the Googles of the world tend to get an increasing share. So advertising as a revenue stream, I think, is is good and complimentary. Unfortunately, the markets don't necessarily love it. And then the second thing, generally speaking, for these businesses that drive huge GTVs, transaction values is, I think most people when they try to find what they're worth are very sensitive to the take rate, And what they typically do is they assume a falling take rate, which means what percentage of the transaction can you get? And the reason why most people do that is that history has shown that these kinds of businesses cannot defend take rate for a very long period of time. Whether it's for competitive pressure or whether it's because their suppliers actually develop more pricing power, Take rate tends to decay. So said in, you know, in grocery land, I think it's because Walmart and Amazon will try to do it for much, much cheaper and or charge just be more aggressive in how much they they want to keep, which means it's less that you can maybe necessarily pass through. I don't know the Instacart business at all, but if I were starting to look at it, that's where I would focus is. What are the assumptions on take rate? And if the take rate is going up, had it would be a little bit of a head scratcher. I think that you have to model the health of the business with a declining team rate in growing share. Jason Calacanis (00:53:51): I can actually build on that pretty easily. I haven't spent a long time in the advertising market. If this was very profitable advertising, Chamath, it would get a 25 x, multiple on earnings. So let's take that 800,000,000. You put it at 400,000,000 in profits. Like, if the other business didn't exist, you have 400,000,000 in profits of advertising times that by 20, you get 8,000,000,000. That's exactly their market cap. So it perhaps what you're saying is exactly what the market is is actually penciling out, Google, which obviously has a lot of other technologies. I think a 28 x PE and Facebook is crushed at, like, a 35 p, but these are much different scale and scale matters. This is not 1 or 2,000,000,000 in, you know, little extra revenue on top of your business. That's the entirety. 90 95% of that is running. Chamath Palihapitiya (00:54:42): I think what's working in favor of Instacart is that if you compare it to probably Uber and DoorDash or Airbnb at least, Airbnb dash, I'm gonna guess that it looks pretty cheap. Now I think of all the three businesses, dash probably has the biggest upside quite just like, again, parm's length. I don't I don't know in any of these two stocks. I'm just saying business model quality dash seems infinitely scalable. Airbnb, I think, probably has long term issues with take because of this exact reason, because just competitive dynamics and pressure regulatory capture, you're seeing that in New York Fair BNB. And then the question is, what is the business outside the United States look like for Instacart I don't know. But the if if I had to figure out what to pay for it, that's how I would kinda try to break the problem down. Jason Calacanis (00:55:32): Sachs, any of your thoughts on the on the actual business here, or did you wanna jump over to Klaviyo? David Sacks (00:55:36): Yeah. I think, Klaviyo is the really interesting one, at least from my standpoint. Because it's a software business. I think Jason Levkin had the take here. He said that Claudio's IPO will be the ultimate yardstick for SAS in 2324. Top growth, top margins, top founders gonna cruise past a 1,000,000,000 in ARR, whatever multiple they end up trading at, you're home is certainly worth less. I think it's trading at about 12 times forward revenue. So Revenue Jason Calacanis (00:56:04): or AR. Last quarter, they did a 165,000,000,000 a $165,000,000. Sorry. David Sacks (00:56:09): Yeah. So they're at 650,000,000 in ARR growing 56%. That's amazing. Jason Calacanis (00:56:15): What year over year? 51% year over year? David Sacks (00:56:18): So, you know, project that forward, they're probably gonna be at a 1,000,000,000 in ARR next year. 119% NRR, which is very good, especially considering that it's from SMB. Jason Calacanis (00:56:28): Folks. Yeah. David Sacks (00:56:29): Isn't that revenue retention? It's the way to think about that is if you just look at your existing customers, going into next year, what percent of that subscription base is gonna be there. And if it was 80%, it would would mean 20% of your customers are churning away. If it's a 119%, it means you have expansion from your customer base. In other words, your customers are buying more. And there there will be some who churn, but the ones who are expanding more than make up for that And then they've been very capital efficient. Apparently, they've only burned 15,000,000 today. That does not mean they've only raised 15,000,000. They've raised several 100,000,000 in various growth rounds, but they still got that money in the bank. So I assume they raised it as a cushion in case they missed their forecast or something like that. Jason Calacanis (00:57:15): Yeah. It seems like a pretty strong business. David Sacks (00:57:17): But I think his point is right is that they're kind of the ceiling, you know, So I think founders still have maybe unrealistic expectations from the days when Saskuses were being valued at a hundred times ARR. Jason Calacanis (00:57:29): Have you had this conversation, Zach, with folks coming in for funding who have great businesses or let's call them good to great businesses. Somewhere in that zone, there's 7, 8, 9 businesses. But their valuations are way off. And do you do you bring up, hey, here's what your your company would be worth publicly? This is what your round is and then trying to negotiate in between those two numbers because it does seem like founders are bringing that up proactively in some meetings with me. They're they're actually aware of public comms now, and and Yeah. They're kind of admitting Hey. I get it kind of situation. David Sacks (00:58:04): Yeah. I think founder expectations have have adjusted on this. Jason Calacanis (00:58:06): Yeah. Which it is healthy. Yeah. David Sacks (00:58:08): When you're in a hot market, there's definitely a lot of sharing among founders of what's happening and where valuations are at. And I think the same thing is probably happening in the down market as well. So I think everyone's getting more realistic. Yeah. Chamath Palihapitiya (00:58:21): Just to finish on Klabin, I just wanna give a shout out to Toby Lukey. The best thing that I saw about that was that Shopify actually owns like 11% of this company, which I think, like, if you look at the corporations again, just doing an incredible job of building an ecosystem, not only does Toby support these companies, but Shopify ends up owning a huge nontrivial portion. I think Shopify owned, like, 11 or 12% of Clavio, they I think with the sale of the Flexport delivered back to Flexport, they own 13 or 14% of it, I suspect they probably own a non trivial share of Stripe. I say it's incredible. David Sacks (00:58:57): You're right. Chamath Palihapitiya (00:58:58): And actually If you do with some of the parts on on Shopify, Their cash and cash and then cash equivalents are only valued at, like, 2 or 3,000,000,000. So I feel like there's a ton of upside there just for free. Again, I don't own it. I haven't done the work, but I'm just saying it seems like Seems like the same thing, Jason Calacanis (00:59:12): derapists. Yeah. So I David Sacks (00:59:13): think that brings up a really interesting point, which is the only vulnerability or negative, I think, about Claudio's business, is the fact that 70% of it is on Shopify. So that's a platform dependency. And whenever 70% of your business is on one platform, you always have to be afraid of getting the rug pulled out from under you. By the way, that was PayPal's problem back in the day 20 years ago. 70% of our business was on eBay. EBay had a competitor. We're constantly worried that they were gonna pull the rug out from under us. If we could have made a business deal with eBay, we would never have had to sell the company. It would have been ideal. I think Klaviyo was really smart, creating alignment with Shopify, by letting them invest, giving them equity, doing a rev share agreement, and they would be smart to continue that rev share agreement into the future to take this risk off the table because investors do not like existential risk. You could have a perfect business, but if there's some hard to quantify risk of the whole thing basically getting rug pulled, then how do you discount that? Chamath Palihapitiya (01:00:11): David, as an investor, you look at that and you're like, okay. I then price this company as a function of Shopify. David Sacks (01:00:18): That's a good point. I mean, 70% of the business is Shopify. The way I would look at it is I would price it as a SAS business, because Shopify is more of a transact. Well, they're a transactional slash SaaS business. Clavius is a pure SaaS business. I had prices as a SaaS business, but I would have to create some sort of discount for the chance that, you know, that the yeah. Jason Calacanis (01:00:39): Well, the Shopify adds the features. David Sacks (01:00:41): Do you figure that out? That's a really complicated thing to figure out. Chamath Palihapitiya (01:00:44): Hey. I agree. David Sacks (01:00:46): But I think that Claudio mitigates the risks since they do this, like, rev share agreement. Jason Calacanis (01:00:49): So really savvy move for people who have insights into the market to own pieces of emerging companies and lock in that partnership. This was Emil Michael, shout out at Uber and Travis did this with all of the grabs, dd's, etcetera. And then Dara just slowly sold those positions, and they were incredible cash accretive to that stock and and to running that business. Let's talk about Caretable for a second. This also trended on Twitter with a tweet storm. If you don't know what Airtable is, it's kind of like, what is it? It's like Excel meets a database and it's more programmable. So if you wanted to have a bunch of data, a lot of small businesses use it medium sized businesses, and they use it to, let's say, instead of hiring somebody to build a database system, or David Friedberg (01:01:37): It's like Google sheets on steroids. It's actually a really sick product. And I've Jason Calacanis (01:01:40): seen it used sick product. Yeah. David Friedberg (01:01:42): I've seen it used, like, 10 different ways. Some people use it for tracking, product feature requests, and, you know, task lists. Some people use it contact database. Some people use it for complex project management. It's super extensible, super easy to use, and a great collaborative tool. David Sacks (01:01:59): You think about it. Like, it's like a spreadsheet for words instead of numbers. Jason Calacanis (01:02:03): Yeah. Yeah. But you could also do numbers. So Yeah. David Friedberg (01:02:05): With a lot of features that you can do really dynamic things within the spreadsheet. Jason Calacanis (01:02:09): Do you guys Chamath Palihapitiya (01:02:10): believe in this Swiss army knife approach of building the kinds of things, or do you believe that it's just cheaper and simpler to build best in class versions of each of those use cases, Friedberg brew, that you just mentioned? David Friedberg (01:02:20): Allows certain businesses to have a very specific specific, tunable version of what they need from, call it, a project management tool. So if you use a traditional project management tool, it may be too overbuilt or it may be too specific, whereas this tool allows you to build something unique for your platform. So that's where I've seen a lot of teams use it instead of other tools like era or whatever for tracking. Chamath Palihapitiya (01:02:42): Well, that's the point. I just wonder that you get these small, non scale able use cases because then if a company is successful, don't they then just migrate to Jira, for example? No. I view David Friedberg (01:02:55): it a lot like spreadsheets. Basically, the reason people use spreadsheets for so many different things is because everyone's got their own representation of data and utilization of a spreadsheet. And I think this is just an extension of that. It's a cult. Think about it as a more feature rich spreadsheet tool. David Sacks (01:03:08): I actually think that Shamal's question is is an excellent one. I I tweeted many years ago that the way I saw Excel was the long tail of use cases that hadn't moved into a dedicated SAS app yet. And that the way that if you want it to be a SAS founder, you're trying to come up with ideas, find some really complicated Excel spreadsheet that's used across many different businesses. Yeah. And just figure out if you can move that into a SaaS app. So for example, think about Harda. You know, before cardup, he'll just use a spreadsheet for the cap table and every company. Chamath Palihapitiya (01:03:41): Totally. David Sacks (01:03:41): At a cap table spreadsheet. Totally. But they just move that into a specific SaaS app. So I think there's a lot of that. And so David Friedberg (01:03:48): And all a spreadsheet is it's a it's a visual representation of a database with some relational logic that you build into the the cells of the spreadsheet. Jason Calacanis (01:03:55): And this this pattern of breaking apart, breaking apart a major product was the playbook for Craigslist. People looked at Craigslist and said, oh, There's couch surfing, make that Airbnb. Oh, there's a ride sharing. I'm going to LA. I have two extra seats. That became like Uber. So people this playbook has David Sacks (01:04:12): a visual of that too. Where every category on Craigslist Jason Calacanis (01:04:15): became its David Sacks (01:04:15): own dedicated Jason Calacanis (01:04:17): marketplace. Yeah. A tax rate was 1. Well, you know, everybody uses Yeah. Free break. Everybody uses prices. I think different. That's interesting when it comes to you. David Friedberg (01:04:26): That's the one that goes first. Price was a huge dating product before dating apps came in. Jason Calacanis (01:04:30): It was casual encounters or missed, what was it called? Misconnections. Misconnection is just hilarious to read. It's like me, you, the number 4 train. Chamath Palihapitiya (01:04:39): I think the point though, the question that I was asking is exactly this, which is you have these beefed up workflow things that happen in Excel, but then eventually you go to these systems of record that our purpose built to solve the use case. And if the use case is important enough, it just seems like that's what's happened. I don't have a view because I've never used the product, but I wonder whether part of this valuation reset doesn't reflect that dynamic. Jason Calacanis (01:05:07): It is a dynamic. The 2 companies or Yeah. 2 or 3 companies that represent it best is there's a product called CUDA, which is part Wiki, part Airtable, part database, and it's programmable, and notion and now people are making templates in Notion, and then they're adding things like project management. So I asked my team to do project management events. And they tried Basecamp. They were looking at Asana. And then somebody was like, you know what? I just added it to Notion is good enough. It's not as good as those other two products, but it's good enough. And we don't have to and the reason they wanna do is not because we're cheap. I don't wanna spend money on another SaaS product. We don't wanna have to teach everybody a new SaaS product. We don't have to wanna do the logins for that. So I think it is a, an, a natural tension, and people are doing both, Some people like the best of breed, but I you're also seeing it. I don't know if you saw this, past week slack added, I think, during Dreamforce, the ability to give you an AI summary of everything you missed. And then zoom added AI summaries of calls. So that feature that, I guess Otter and some other people were doing That feature is now built into zoom. You, you get, you get a transcript from zoom for free, and now you get a summary of the call for free. That is work that was done by somebody on the meeting, right? Somebody was responsible for being the notetaker. Sometimes somebody was so those are jobs that are gone I think it speaks to the bigger economy. I had the CEO of kayak on this week in startups this week. It'll come out next week. He's really great. And I asked him hiring and the the size of the company said I'm not hiring anybody in the next year or 2 because all my developers are 30 or 40% better. I got junior developers that are acting like senior developers. I got senior developers. Are turning into 10 x developers. We're not hiring. We're just gonna have increased margin. Jason Calacanis (01:06:52): So what happened to Airtable? Airtable had a massive valuation. Here's the tweet storm. That's somebody from CB Insights, this guy, Anand, who I've I think I followed him. Oh, so does Chamath Palihapitiya (01:07:03): did something happen or nothing happened? Jason Calacanis (01:07:05): Well, they're most recently valued at 11,700,000,000 in December, their 2021 series F. His thesis, not only is Airtable worth, less than 11,700,000,000, it's likely worth less than the 1,400,000,000 in funding it has raised to free birds from bringing this point up over and over about the over funding and cash in is less than the valuation. David Friedberg (01:07:24): I think most Most of these unicorns are worth less than their total press stack. And this is a good example. I've just been through this this week. I went I saw there's a company I was an investor in that I saw this happen. Jason Calacanis (01:07:34): Currently on track to do. David Sacks (01:07:36): Their big problem is that, I mean, they're doing over a 100,000,000 of ARR. It's just it's a it's a great product and a 150,000,000 of ARR. That's no small feat. The problem is the growth rate. I think it's only 15%. David Friedberg (01:07:47): What do you do with the founders, Saks? Cause this was my point earlier, is in these circumstances, it's still a good business. Investors are gonna wanna own these shares at some price. Someone will buy new shares at some price. But to do this transaction, given that the preference in the company which is effectively debt is greater than the value of the company. The founders and the employees get their ownership stakes wiped out. So if you wanna David Sacks (01:08:09): take the employee, you know, think their only hope is to go public because that wipes out the prefstack, and everyone basically just owns their percentage of the company. If they don't go public, And if the David Friedberg (01:08:18): founder private investor do that? Why would a preferred investor allow that to happen? David Sacks (01:08:22): Well, this is gonna be the huge tension on the board is that if you're commonholder or if you're one of the early investors of the company, you wanna go public. If you're a late stage investor, you don't wanna give up your preference. Jason Calacanis (01:08:33): But those late stage people, Sachs did not have blocker rights in many cases because the market market was so hot. They just put the money in Chamath Palihapitiya (01:08:40): without a problem. David Sacks (01:08:41): I mean, unless they had a ratchet into the IPO, but yeah. David Friedberg (01:08:43): Yeah. But in many cases, but that's not a universal truth. Right? It it in almost in in the majority of these cases, The preferred shareholders do have significant representation on the board. They do have the ability to influence whether or not the company is gonna go public, and there's likely some middle ground that every company ends up having to meet at, which is we're gonna recap the company in a way that we're gonna give some shares newly issued shares of founders. Jason Calacanis (01:09:07): DoorDash, they got dragged out. They didn't have a choice. The my understanding of some of these late rounds during peak zerp 2020, 2021 from talking to Bill Gurley was people did not negotiate those rights. Those rights, the blocker rights weren't available, and with the majority common says we're going public, you're going public. And that's the that's the end of the story. Here's here's the punch line to the air table. If you look at the, Ford, price to sales multiple, 78 x for an $11,700,000,000 valuation at a 150,000,000 ARR. And you compare it to the trailing price to sales multiples. In the project management space, Mondays at 12, X Plus, Asana 6.6x, and Smartsheets at just around 8x. So it's a challenge. David Sacks (01:09:53): Yeah. Well, to Freight's point, one of the downsides of taking all this excessive capital at these ridiculous valuations is that it produces a dynamic in your boardroom where your board members are at war with each other. The late stage investors are gonna be at war with the early stage investors and the founders. And who knows who comes out on top of Jason Calacanis (01:10:12): that figure? David Sacks (01:10:12): That's not a healthy dynamic. David Friedberg (01:10:14): I don't know if you guys have, but I've got, like, so many anecdotes over the last couple of months on this exact scenario playing out Chamath Palihapitiya (01:10:20): multiple times. Jason Calacanis (01:10:23): You know, without talking about specific ones, but, you know, you can make total automation. What is the dynamic and how does it work itself out? David Friedberg (01:10:29): Investor invested a multi $1,000,000,000 valuation The company is now worth 20 percent of that valuation, and the investors have more money in the company than it is worth. And the company needs more cash. They can't go public at this rate because the markets are shut down. No one's gonna buy new shares. They can't raise cash by going public, so they have to raise cash in the private markets. So then the tough question is, okay. What's the value of the company? In almost all of these cases, the CEO has been replaced. Or they're with some professional CEO. So there's a new option pool created equal to 10 to 15% of the company. New options are issued. And a round is done at a significant discount under the huge recap and a pay to play and all this other sort of stuff starts to play out that the original founders in the company get wiped most of the management team leaves because their options are now worthless. And the investors who historically have been totally passive late stage investors have had to step in and try and take action in rebuilding a management team, which guess what? They're not necessarily good at. And so it ends up becoming this really nasty unwinding of the business because everyone thinks, oh, well, I deserve to get a fair deal because I put money in and I have a preference in this company. Founders don't wanna see their ownership go down from 20% to 2%. Like, why would I keep working for 2%. I'm fully vested? I'm gonna leave. The management team's like, wait a second. I'm getting offers left and right to go join other companies. And so it's a real kind of nasty unwinding. I think that's the scary scenario that's likely gonna play out. Not all, but a good chunk of these companies that are that are still businesses. They have decent value to their business. David Friedberg (01:11:59): But they just raised too much capital relative to the valuation of the business today. Chamath Palihapitiya (01:12:02): If you looked at it on a blank piece of paper, these businesses look incredible at whatever the true valuation as today. But if you have the psychological hindsight bias of what the price was 2 years ago, You just can't see that too. David Friedberg (01:12:17): Get it. Totally. Can't get it. And by the way, I will send David Sacks (01:12:20): you structure, there's, like, legacy structure in the cap table from Yeah. Yeah. Meaning, there's like this pressure stack. David Friedberg (01:12:26): I will say that the terms are so crazy good for the recap. That investors are clawing their way into the recap route. Well, that means Oh my gosh. Jason Calacanis (01:12:36): Nature markets are healing. That means we're in the end game. Right? David Sacks (01:12:39): Because it means That's part of what's happening. Part of what's happening is it's totally predatory. Jason Calacanis (01:12:44): It's totally predatory. Chamath Palihapitiya (01:12:44): It's totally Jason Calacanis (01:12:44): predatory. Yeah. That means David Sacks (01:12:47): when when you are gonna Jason Calacanis (01:12:48): be able to go public again, David Sacks (01:12:49): I think that when there's a recap and the founder is still running the company, there's a chance of it being fair. But when they bring in a new CEO, who then does a recap. Jason Calacanis (01:12:59): Oh, yeah. No. They don't care. David Sacks (01:13:00): They don't care. They don't care. They don't care. Exactly. And all these recaps turn into a disaster. Jason Calacanis (01:13:06): Yeah. Well, it's recap or the you're gonna go out of business. So, I mean, it's this is a force and function, and everybody party too hard. I think it's time for Everybody's favorite part of the show, which is to give Chamath his flowers. Here we go. Chumath, the, fed spoke this week, and it's time. For Chamath to take his victory lap. Here he goes, everybody. Chamath. Is this Palihapitiya. This is Vangelis. Yes. Mangelis doing chariots of fire. This week, the Fed said to quote Chamath. Chamath Palihapitiya (01:13:53): Well, there's a look at Peter. This is this is but Interest rates make connections to the deep state for longer. There he is. There's Shamal leading the pack. I sent my I sent my talking points from 6 months ago to my deeps up to our friend, deep state. Deep state. Sent. The note. And Dean State sent it to the Fed, and the Fed just cut and pasted it into the Mhmm. Jason Calacanis (01:14:15): Press release. Will stay Tiger. For longer. You're gonna get a chance? David Sacks (01:14:19): You're right Jason Calacanis (01:14:19): on this? Chamath Palihapitiya (01:14:20): We're not gonna move. We don't care. Jason Calacanis (01:14:21): We don't care. We care. David Sacks (01:14:22): So I don't think anyone understands what it is that Shamas said they sign a victory lap on He Jason Calacanis (01:14:26): said that rates will stay higher for longer. And now he takes his victory lap. Alright. Enough of this shenanigans. Chamath said rates will stay higher for longer. The Fed said rates will stay higher for longer. The end. Congratulations, Chamath. You got it right. Thanks. Okay. Well, that's every week we're gonna give our chariots a fire. Dope. Chamath Palihapitiya (01:14:48): Shamalphy receiving a medal. Jason Calacanis (01:14:50): Here he is. Chamath Palihapitiya (01:14:52): Sell them Jason Calacanis (01:14:52): at only in the group chat. David Friedberg (01:14:54): This is Obama. Chamath Palihapitiya (01:14:56): This is Obama. Who is Obama giving the medal to? What's the real picture here? It's Obama? Is he giving it to Biden? David Sacks (01:15:02): To Obama. David Friedberg (01:15:03): Divided. I think he's giving Chamath Palihapitiya (01:15:04): it to Obama. Divided. It was so Jason Calacanis (01:15:08): Oh, it's Shamab giving a medal to Shamab. Chamath Palihapitiya (01:15:11): So I think what happened this week is actually pretty important because I think the markets were really trying to force your own Powell to start the cutting cycle. And now they had to move the date at which they could expect cuts out by a year. And I think that we're only starting to see the reverberations of that, you're gonna have to reprice a lot of risk assets. So If you put it all together, oil is creeping back up, so commodity prices essentially are trending up I don't think that's gonna have a big impact on inflation because of the way that owner equivalent rents and core CPI is calculated because it's calculated on the 6 month lag, this dumb nonsense of just how arcane our system works, but That's gonna spike down. So basically, the Fed's like saying, we know all of this is happening. We're sitting on our hands. But the problem is that if you add another 100 basis points to your discount rate for an unprofitable SaaS company my gosh, guys, you're taking like another turn and a half of market cap out of the business. Like, if you thought it was worth 8 times, it's now worth 6 a half, six times. So, unfortunately, that's gonna hurt everything that's not the top 7 tech companies. And everything else is just gonna just kind of meander along for a much longer time. So It's really good for the magnificent 7. I think it's really bad for everything else. And we're gonna be in a holding pattern for a while. Jason Calacanis (01:16:58): Crude oil, is at, let's see. $89 a barrel. Yeah. It's it's getting back up there. Chamath Palihapitiya (01:17:06): I told remember remember this conversation, I told my CEOs, guys. Let's get enough cash to last through the middle of 25. Jason Calacanis (01:17:13): Sure. Chamath Palihapitiya (01:17:13): Remember? I was pretty clear about that to folks. I mean, get to get to default to live, but if you can't, please have enough money to the mid of 25. I think that that was wrong. I think now you gotta be q 1 of 26 and maybe even mid 26. So now I have to go back to all these CEOs and redo an entire justification for why they need to cut even more people, cut even more expense, cut more burn I don't know where we're gonna find another year of burn in most of these businesses. So I was wrong by at least a year, Jason, because of this. I think I got the words right, but I got the timing wrong. David Sacks (01:17:52): Yeah. Just to just to further translate this. Okay. So the markets right now are definitely taking a bath. The growth stocks are off significantly. Chamath Palihapitiya (01:18:01): Expect them to be off more. David Sacks (01:18:02): Yeah. And the reason is because the market had started to price in rate cuts next year. And now the Fed is saying that because inflation ticked up a little bit, it's not towing down as much. We have higher energy prices. We may not get those rate cuts. I think the the Fed still maintains that we'll get 50 basis points of rate cuts next year, but the market was pricing in more. And I think people are starting to wonder if we'll even get the 50. So as a result of that, interest rates are gonna stay higher longer, which means that risk capital will be less available. So valuations are gonna go down, or at least they're not gonna be racing back up like they used to. Chamath Palihapitiya (01:18:38): When I was saying mid 25, Sacs. That was because the forward curves started showing cuts in early 23. You know what I mean? So I was like, okay, let's assume they're wrong by 18 months. It turns out that that initial data point in early 2022, my god, we were wrong by 3 years. It's not a year and a half. It's brutal. David Sacks (01:19:00): And I think the X factor here is that we're running almost $2,000,000,000,000 deficits in peacetime. Well, I mean, we're not in a direct war. We're in a proxy war, but in relative peace time and in a relatively decent economy. So what happens if either of those things change and what happens to long term rates as all of these debt issuances have to get raised as the Fed has to keep selling more treasuries to fund our deficit and debt. At these higher rates, do long term rates keep going up based on the debt financing needs of the federal government. Chamath Palihapitiya (01:19:36): And and this is again where you know, we made a huge mistake by politicizing this idea of raising money beyond 30 years. We made that mistake under the Trump presidency because people reacted Trump saying it, but it was the smartest thing we could have done to give our kids and our grandkids a reasonable economy And Friedberg has been right all along about just like our spending is just going up and up and up, and now short term rates are really high, maybe we'll have enough political will to just get out of the Fed's way and the fed can actually look at raising in durations past 30 years. Because if you believe that we're gonna start an aggressive cutting cycle at some point, And you believe we'll get back to, like, a 2% terminal rate. You could theoretically justify 50, 60 year bonds at at much lower than the 30 year, but I don't I don't see it happening. Jason Calacanis (01:20:32): Here's a really good way to Look at this. There are prediction markets. This one, Kashi is the one I use KAL SHI. Chances of a rate cut by May of 2024. 29% chance. And these are people actually making bets on these things. And so it has gotten pushed out. And I guess 74% chance by the fourth quarter, 3rd fourth quarter of next year, people think they'll be a rate cut. So we're a year away from a rate cut. Everybody needs to just take that off the table, which means the translation for founders for GPs his performance has to go up. You gotta beat 5, 6, 7% or or whatever people are gonna get on those other instruments. Corporate debt, you know, 10, 11, 12%. You got a really hard bogey to beat here. David Friedberg (01:21:21): The alternative to that statement is that total capital has to go down. In order for the capital remaining to have its return multiple increased given that there's a generally set number of companies that are gonna generally create a certain amount of value over the next couple of years. Jason Calacanis (01:21:40): And the way to create that value David Friedberg (01:21:41): is So if that's true, well, I'm saying if there's a bunch of startups that are gonna make a $100,000,000,000 of market value over the next 5 to 7 years, you need to have less capital going into those companies in order for that capital Chamath Palihapitiya (01:21:52): to generate a higher return. Jason Calacanis (01:21:53): Which on your day to day basis means what framework? Explain on a day to day basis. David Friedberg (01:21:57): A database basis, it means there's gonna be less companies that are gonna get funded, but more importantly, it's gonna be less LP money going into venture. And there's gonna be less capital available to fund startups in aggregate. By a significant amount. Jason Calacanis (01:22:08): On a daily basis, you need to do more with less as a founder. You need to delight customers with less resource spend less money on marketing, spend less money on teams Yeah. And get to profitability. You've gotta be a stronger founder. I'm seeing it cross the board in the seed stage, 2, 3, 4 founders raising 250,000,000 instead of raising 3 to 5. Chamath Palihapitiya (01:22:29): I gotta be honest, Shaquille. I thought it was much easier to kind of say the sky was falling this time last year. Shown right now. And I think that people are a little bit, again, exhausted about hearing this message constantly of like cup more. It's like, I think that they're exhausted. And I see a lot of founders that are exhausted. And Jason Calacanis (01:22:51): And giving up. There's a lot of giving up Chamath Palihapitiya (01:22:53): They're like, they're like, I, I can't cut anymore. And Now I do think we have to go back to them and say if we're doing our jobs, right? Okay. Even at the look hour now, our strategic view was right, but the timescale of our analysis was wrong. And I think now you got a plan to mid 26. I don't even know where to start, to be honest with that conversation. Jason Calacanis (01:23:17): Actually, the way I'm seeing is people are merging companies and M and A is picking up because, hey, you got 2 companies doing 5,000,000 each, but they're burning 2,000,000 each a year. Cut half the team, put one team with the other, and I think you're gonna just see some of that portfolio consolidation happen. Go ahead, 6. David Sacks (01:23:33): I think one way to put it is that we've had a regime change. Those are the words that we've been using for a while. And specifically, we've gone from a regime of capital abundance to a regime of capital scarcity. And I think a lot of people were holding out hope that there was gonna be a quick bounce back because we'd cut these interest rates and capital would start flowing again in a big way. And I think that the Fed here has dumped a bucket of cold water on the market, Stacy's saying we're not bouncing back to capital abundance anytime soon, we're gonna be in this environment of more capital scarcity. And that's what I think dis founders of VCs now have to take into account is this shift could be permanent, or it could it could last a while. Jason Calacanis (01:24:16): Could last 5, 10 years. Sure. I I we're seeing a lot of David Sacks (01:24:19): question I have is just do you guys think is gonna happen to the consumer? Because I I actually think that even though founders in many cases could cut more and they could have acted faster, I actually think that the B2B economy has kinda taken its licks. I mean, for the last year, we've been in this software recession, companies have been sharpening their pencils. They've been cutting costs and getting more efficient. Yes. You could say maybe they haven't done enough, but the consumer has still been strong. But what is the consumer gonna do now that credit card rates and interest payments are at all time highs? Jason Calacanis (01:24:49): They're going to. They David Sacks (01:24:50): can't sell their house. Jason Calacanis (01:24:51): No. Here's what they're gonna do. They're gonna skip an iPhone cycle. Instead of going from, you know, 13 to 14 or 14 to 15, they're gonna go 13 to 16, 14 to 17. They'll just skip, which which I did for the first time. I don't need to skip it, but I was just like, ah, this thirteen's good enough. They're gonna skip upgrading their car. You're gonna keep your car for an extra 2 or 3 years. And, if you were thinking about moving your house, you're gonna say, you know what? I'm gonna make this house work. We're gonna put 2 of the kids mature Chamath Palihapitiya (01:25:18): a 100% right. Jason Calacanis (01:25:19): I think Chamath Palihapitiya (01:25:19): that is, that is a, I think that's a very, I think that's very well said. And, and the, the other side of it is that some of these industries where you have these large ticket purchases that drive consumer consumption, their backs are against the wall. Look at the automakers. That the deals that's that the unions have proposed to the automakers will cause them from I thought I saw an out an analysis of Ford where Ford would go, if you just did a pro form a and went back the last couple of years, they would have gone from like, you know, 30,000,000,000 profits to minus 17,000,000,000 of losses. So that's a $47,000,000,000 swing in the Ford P and L. The only way they overcome that is with more expense cars, which, Jason, to your point, means that those cars are not going to get sold. I do think that you're going to just have a little bit of belt tightening in the, in the consumer David Sacks (01:26:07): think this is interesting. I think, you know, Tremothi, you're right that at the same time that the auto companies are facing what you'd expect to be reduced demand because no one can afford a car payment at these higher interest rates, the unions are going on strike demanding. Chamath Palihapitiya (01:26:22): Oh, I think this is existential. David Sacks (01:26:23): Higher wages Yeah. For a 4 day work week Chamath Palihapitiya (01:26:26): How does this work? I think that, the labor deal is an existential risk to the unionized auto industry in America. And I'm not opining on whether this deal should or should not happen. I'm just making an observation. If the deal as announced happens and you sensitize Stellantis, GM, and Ford's P and L to these new terms. And then you compare that against nonunionized, highly automated organizations like Tesla and Rivian. It's gonna be very difficult for the established auto industry to survive. Alright. And then if you'd layer on top of it, 7, 8, 9 percent consumer lending rates for new cars, forget about it. And yet, the fed David Sacks (01:27:12): forecast at the same meeting they were being hawkish about rates. They also said that they were expecting unemployment next year to be 4.1% down from their previous expectation of 4.5%, and they forecast that economic growth would be higher. So I just don't understand how these countervailing forces are gonna create so much stress in the economy that something breaks. Jason Calacanis (01:27:33): And these, idiot unions, honestly, timing is so dumb. Whether it's the ones, you know, in Hollywood or this car strike, while they're, Chamath Palihapitiya (01:27:43): shutting down great plans. I mean, it's giving Tesla the entire US auto market. Jason Calacanis (01:27:47): Yeah. Tesla is lowering the price. When I bought my model y long range, I think I paid 72 for it. The old price on this chart says 66. That car is now 53. That's down 20% a third 1000, I'll say, is the model y long range, I think, is the greatest vehicle ever made. Chamath Palihapitiya (01:28:07): I paid 57, I think, for my model y long range. David Sacks (01:28:10): Uh-huh. Chamath Palihapitiya (01:28:11): Oh, no. No. I think I sorry. I I paid 57. I paid this price for the model y performance. David Sacks (01:28:16): Uh-huh. Chamath Palihapitiya (01:28:16): The best car. And, yeah, that'll be a $40,000 car in the next 3 years. Jason Calacanis (01:28:20): Well, you know, when I looked at it and I speaking of austerity measures, I I was like, I have a model x. Do I get another model x? I think I'll just go with the model y. Because the model x is, I don't know, 50% more, and I I just prefer the model. I think Chamath Palihapitiya (01:28:33): I think this labor deal is gonna put tremendous pressure on these established auto OEMs. Jason Calacanis (01:28:38): China is now the world's largest exporter from what I understand. That just happened. They work I looked it up 58 to 64 hours a week factory workers. The US factor workers wanna work 32 hours a week. They want a 4 day work week. I mean, I I don't understand the timing of these unions. I mean, they they're just gonna move these factories to Mexico? Or Chamath Palihapitiya (01:28:59): I think it's reasonable for the unions to ask for as much as possible on behalf of their members. That's, like, obvious and good because meaning if you're collecting fees from those folks and you're doing a good job on their behalf, your job is to ask for as much as possible. I get that. Where I see the breakdown is that it just doesn't seem like there's enough numerous between them and the companies that they're negotiating against to really sit down and look at what the impact of this is because you may get a short term labor deal that you can celebrate, but it may actually destroy that union member's pension. Jason Calacanis (01:29:35): Yes. May destroy the company. Chamath Palihapitiya (01:29:37): And this is my concern is that then that has to get bailed up by by the US taxpayer. And once it happens in one industry, gonna be very difficult to actually not do it in in other industries. And the thing that needs to be understood is the risk that it puts on those kinds of tail out comes. And I think that that's not well discussed. Nobody in the media is really talking about it. They make it a a moral issue of, like, what is the CEO pay versus what is the ratio of the CEO? Yeah. Sure. That's an important issue at some level. But if you if for example, like you have US senators blathering on about how they'll wear a suit and not look like a homeless bum, if this deal happens in that. And it's like, well, that's not what you should be saying. What you should be saying is my team has done a financial analysis and here's what it shows. David Sacks (01:30:27): Right. Chamath Palihapitiya (01:30:27): They're not saying that. This is crazy. David Sacks (01:30:29): What you're saying is that the negotiation and also the political dimension of this have become completely untethered from economic realities? Jason Calacanis (01:30:38): Yes. They are negotiating in the review mirror. They basically talked about whatever 1,000,000,000 of dollars the company's previously had during the CERP environment during the hay day. And, yeah, it's just timing's off. David Sacks (01:30:50): Just add it to the list of latent problems in this economy. Just feels to me like something's about to break, but who knows? Jason Calacanis (01:30:57): I mean, if the should your point stacks you, you keep bringing up, like, what happens with the consumer. I think they just slow their role. You know, staycation instead of your communication. David Sacks (01:31:07): Larry Summers said at the summit. He said that soft landings are like second marriages, the triumph of hope over experience. Yes. Meaning, everyone's talking about a soft landing. Everyone's banking on a soft landing. The soft landings are actually exceedingly rare. When you have very fast rate tightening cycles, it generally has a very predictable effect on the economy. There's a lag, but the effect is very predictable, which is it causes recessions. Jason Calacanis (01:31:33): And then I David Sacks (01:31:34): would argue we've already been in a b to b to recession. We're starting to come out of that. But I think the consumer has been hit yet. And maybe that has to do with with all the stimulus they push through. Yeah. And that created some amount of cushion for the consumer. But I just wonder if that cushions run out now. We're about to enter a new phase. Jason Calacanis (01:31:54): And it it would would all of these strikes you if you overplay your hand, Shamoff, is automation. So this happened in New York. Just over 10 years ago, the fast food workers wanted, you know, I think it was 15, 20 bucks an hour. Okay. Seems reasonable. And they replaced every cashier. You go to McDonald's now, you're ordering on the app or you're ordering on a kiosk in space. And we have, an investment in a company called Hellomater. What this company does is pretty simple. They just study what's going on inside fast restaurants, and then they just increase the speed at which people are getting served, and they're crushing it. Why? People can hire people. There's not enough immigrants in the country anymore. We we have an anti immigration thing going on here. So unemployment's too low. And the the the salaries are too high. It's not working. A lot of restaurants are breaking because a 30 or $40 dishwasher is the difference between a comp you know, a restaurant being profitable or not. Alright. Listen. There's apparently some potential major breakthrough in autoimmune disease treatment with this new inverse vaccine. Let's go to our science correspondence, the sultan of science himself for science corner. David Friedberg (01:33:07): Did Saks Jason Calacanis (01:33:07): and Saks just turns his camp up. Chamath Palihapitiya (01:33:11): Come blow. Sacks? Wow. Jason Calacanis (01:33:13): Sacks is gonna take a dump. He'll Chamath Palihapitiya (01:33:15): be back. Oh, he's back. David Sacks (01:33:16): I'm here. I'm here. Jeez. You wouldn't even let me get away with that. Chamath Palihapitiya (01:33:20): Nope. We were trying to go back. We were Zoom shaming. You do not leave. Can do something. Sides. David Friedberg (01:33:27): I just Jason Calacanis (01:33:30): wanna give Chamath Palihapitiya (01:33:30): you a Jason Calacanis (01:33:31): shout out. My supergun, I just have my super gut chocolate. So good. I just got my super protein, and, the weight loss continues. David Friedberg (01:33:39): Health boosting. Jason Calacanis (01:33:40): My my gut is so good. David Friedberg (01:33:43): There was a paper published in the journal Nature this week, which I thought was worth highlighting, sex. You're gonna be quizzed afterwards on exactly what I say during this this and the implications for it. We've all heard of and no folks that have autoimmune conditions, and some of us may suffer from them. An autoimmune condition is when our immune system mounts an attack against a protein that exists in our body that is natively part of our body. Immune system kind of mistakes that protein for being a foreign antigen. So the term antigen refers to proteins that the immune system view that's invading and it needs to go in and attack. So when the immune system messes up and it sees a protein in our body as being a foreign antigen and starts attacking it, you get these autoimmune conditions. And autoimmune conditions, as you know, are very debilitating costs on the health system on people's lives. The top 10 autoimmune diseases, it's like lupus prones, Chamath Palihapitiya (01:34:33): rheumatoid arthritis. David Friedberg (01:34:35): Even type 1 diabetes, multiple sclerosis, irritable bowel, sjogren's, Hashimoto's, thyroiditis. These are all pretty in different ways damaging diseases. So this team at University of Chicago in 2019 published a paper, where they actually took an antigen and glycosylated it. So basically attached some sugar molecules and carbohydrate molecules to it. And presented it in the liver. So they put it into the blood and it showed up in the liver, and they were able to cough type 1 diabetes to not develop in an animal model that was supposed to get type 1 diabetes. So they did an extension of that work, and the team has gotten broader, and they just published this week, a much more substantive paper that highlights a pretty incredible technique that may potentially address A long list of autoimmune conditions. So they take the antigen, the protein, that is Jason Calacanis (01:35:30): Are you saying sorry, Chamath Palihapitiya (01:35:31): in the type 1 example, are you saying, like, the beta cells didn't get destroyed? Like, it just stopped it just stopped everything on a dime. David Friedberg (01:35:37): Yeah. So the immune system has a bunch of ways for self regulating. There are T cells in our body called Treg cells, the regulatory T cells. Their job is to go find the T cells and the antibodies that are attacking our own protein. That's their job. And when they don't do their job, the antibodies and the T cells go and attack our own body. So Treg cells kind of when they're turned off, they're not doing their job. So it turns out that when a protein is presented in the liver and this this particular part of the liver, The immune system recognizes that protein as being a safe protein, and there's a regulatory process that gets kicked off that causes the immune system To start to see that protein as being safe, it should not be attacked, and Treg cells start to develop and other systems start to develop that tell the whole immune system stop attacking this protein. This is a safe protein. This is our body. Jason Calacanis (01:36:31): This should David Friedberg (01:36:32): not be attacking us. Jason Calacanis (01:36:33): This is like friendly fire. Right? Like, do not It's David Friedberg (01:36:35): like friendly fire. Do not attack this protein. So what they did is they took several antigens, proteins, and glycosylated them, meaning they put some, you know, molecules on them, put them in the, in the blood, just with an IV hookup, they go into the liver. And once they're in the liver, the immune system sees them and is like, woah, these are totally safe now. And they found by analyzing all the different T cells, the regulatory pathway that emerged that caused the body to stop attacking that protein. And they were able to end MS using this induced system in animals. So basically that we have a known model for making multiple sclerosis show up in animals, and they were able to stop MS in the animals by taking this particular protein that they use for MS, and they put it in the in the liver. IV. They did the same with an egg allergy and they did the same with several other antigens. This represents a very novel and seemingly super impactful and powerful way to think about eliminating autoimmune disease going forward is that we can take the antigen, and we now know the antigen or the protein that causes almost all of these autoimmune conditions from thyroiditis, to lupus, to RA, to MS, and we can take that protein glycosylated, put it in an IV, ends up in our liver gets presented and our immune system realizes I shouldn't be attacking this anymore and resolves it. So it opens up a whole new category of therapeutic, pathways for addressing all autoimmune conditions. It's a totally new modality. It's a very interesting approach. It'll be studied more deeply folks will take this paper and try and start to develop very specific therapeutics for very specific autoimmune conditions using this approach. And hopefully over the next couple of years, we see some of these things have success gained traction and go to market. Jason Calacanis (01:38:19): These autoimmune diseases are typically some combination of genetic David Friedberg (01:38:31): today. The first one is by presenting the antigen to the immune system before you develop autoimmunity. This is like, you know, when they give little bits of peanuts to kids and that that's how you present prevent peanut allergies in most autoimmune conditions were past that point. The the immune system has already developed T cells and antibodies to go and attack. So that doesn't work. The second way is immune suppression, and that's terrible. Globally suppressing, meaning on the whole body turning off the immune system, is not healthy in a lot of ways. And that's the current, you know, kind of best in class data we address automated condition. So this is a new approach, which is we can actually re regulate the immune system to not attack itself, to not attack our own proteins by introducing that protein with a with what's called glycosylation, getting it into the liver, and boom, this magic starts to happen. And we'll see what the side effects are as they start to try this on humans. We see we'll see what conditions are more effective than Jason Calacanis (01:39:24): Sorry for the stupid basic question, but how is the, how how is it different when we put these into, say, like, you said these were monkeys or chimpanzees? So how are their anuses different than Uranus. What? Sorry. Anyway, let's keep going here. Great science corner. David Sacks (01:39:41): I'm laughing at how contorted that Jason Calacanis (01:39:45): You you punch it up. You're not gonna be work shops. I I'm just work shopping. Chamath Palihapitiya (01:39:49): You know? David Sacks (01:39:49): Let me let me work on Jason Calacanis (01:39:50): work on punching it up. We'll try to get a better uranium share. David Friedberg (01:39:53): Anyway, it's super cool. Autoimmune conditions, Jason Calacanis (01:39:56): muted. The world's getting better. David Friedberg (01:39:58): The term of refers to refers to an approach to a therapeutic, and this modality is is a new modality. So it's a super exciting new kind of universe to be explored now on how we might be able to treat autoimmune conditions ranging from time to time. David Sacks (01:40:11): Okay. Let me try. Hold on. What freeway, what part of the body do you think is gonna be most impacted by these discoveries? David Friedberg (01:40:21): No. The immune system. Chamath Palihapitiya (01:40:23): No. No. No. That's not good. Jason Calacanis (01:40:25): Let me try. Chamath Palihapitiya (01:40:26): Let me try. Let me fucking try. Jason Calacanis (01:40:27): Here we go. Chamath Palihapitiya (01:40:27): Take us away. David Friedberg (01:40:28): You guys Chamath Palihapitiya (01:40:28): you guys are just so dumb about science. Jason Calacanis (01:40:31): Okay. Alright. Here we go. Okay. Here we go. Chamath Palihapitiya (01:40:34): Friedberg, I thought the only solution to MS was, fecal transplantation through Uranus. Jason Calacanis (01:40:42): They're sure. I like a fecal transplant because you kinda did a little, a misdirection there with the fecal transplant. See, and then we threw your retainers. That would be the way to to get that done. We're gonna wrap here. Hey. Thanks to everybody who came. Brian Armstrong also did a great job. Elon did a great job. Thanks to everybody who showed up for us. And if you wanna watch all the talks, all the talks are being released exclusively on YouTube and x. So Go to x and look at the all in, podcast Twitter handle and type all in podcast on YouTube and you get to see all these talks, available now. And Ray from the unofficial all in podcast meetups is doing a 150th, meetup for the fans in all different cities around the world. So just do a Google search for that. For the sultan of science and the world's greatest conference producer, the dictator in the arena, making it happen. And 4, When it helps her. Favorite bestie. David Sacks. Help me. Penny, let's just moderate your seat next time. Bye bye. Your winter's ride. Rainman, David Sachs. And it said we open source it to the fans and they've just gone crazy. David Sacks (01:42:01): What airliners ride. Jason Calacanis (01:42:08): I'm have one big huge, George, because they're always useless. It's like this, like, sexual tension, but we just need to release them out. Where did you get Murphy's our