三战风险、与伊朗开战？4.9% 的 GDP、创业公司倒闭潮、新议长

David Friedberg (00:00:00): Are the next steps in your interview process for your cabinet position? Secretary of treasury, Chamath, secretary of state, Sacks, J-Cal, how? Press secretary, obviously. Press secretary. Oh my god. Press secretary. Jason Calacanis (00:00:14): Can you imagine me in the press briefing room? Chamath Palihapitiya (00:00:17): Whoever wins the presidency, I just want you guys to know, I would I would be a great secretary of sweaters. I will source incredible. David Sacks (00:00:24): Only cashmere. Chamath Palihapitiya (00:00:26): I will redesign the outfits of the entire military industrial complex. Jason Calacanis (00:00:33): Navy Seals will be in Loro Piana from head to toe. They're gonna go whack Osama bin Laden next time with Loro Piana 45. French shoes. David Friedberg (00:00:41): Could you imagine seal team 6 where Chamath Palihapitiya (00:00:43): it's included. Jason Calacanis (00:00:45): Absolutely. It's gonna be great. Chamath Palihapitiya (00:00:46): It's it can show you Jason Calacanis (00:00:47): those Apache's in the blackhawks. It's just you're you're gonna want, like, a Pashmina or something. Chamath Palihapitiya (00:00:53): Oh my gosh. Geez. I have. Have you been Jason Calacanis (00:00:55): to Afghanistan at night? It's your face. David Sacks (00:01:01): The weather winner's pride. Rainman, Jason Calacanis (00:01:04): David Sachs. We David Sacks (00:01:09): open. Jason Calacanis (00:01:16): Alright, everybody. Welcome to episode 151 of the All in podcast. With me again today. The sultan of science, the queen of Kinwad, the principal panic attacks, David Friedberg, the dictator himself, Chamapalihapatiya, and your crazy, angry history, uncle David Sachs is here. Welcome to the program, everybody. We got a very full docket I guess we'll start it off with how the war and the conflict in the Middle East is going here. Sacks, you hosted a Twitter space, with Vivek, and Elon on preventing World War III. What was the premise and the reason for setting up this, trio to talk about World War III. David Sacks (00:02:03): Well, I think Vivek actually had the idea to do it. We had a couple other folks on the panel as well. We had, Colonel Daniel Davis who has a podcast called deep dive. He's a military Burt, we had Alexander Mercuris from the Duran, which is the top geopolitics podcast. And so we were talking about the risk of a series of chain reactions that could happen in the next few weeks here over what's happening in the middle east. Elon wanted to do it because of what he said, which is that he's talking to a lot of world leaders. He's talking to a lot of different people, and they tell him that the risk of some major war happening or some greater catastrophe is higher than they've ever seen. So he was quite concerned about that. And, you know, I think a few things came out of it. The first is, and I think Elon took this position most strongly. We really need to end the war in Ukraine. It the combination of having a war in Ukraine that involves the United States and then a war in the Middle East that could also involve the United States and Russia has troops in Syria, there's a lot of ways for this to spiral out of control. There's a lot of room for unintended consequences. His view was, look, we've just had 5 months of counteroffensive here. It didn't go anywhere on net. The Ukrainians didn't take back any territory. In fact, the Russian slightly gained territory. So this war is going nowhere. It has failed. It is time for the administration to work towards a ceasefire and a resolution because having well, the Ukrainians have not taken back. They had a completely failed counteroffensive. Jason Calacanis (00:03:41): Okay. But you said the worst failed. So I'm just curious which Sorry. David Sacks (00:03:44): The counter offensive has failed. Jason Calacanis (00:03:45): Okay. Got it. Chamath Palihapitiya (00:03:47): We're now David Sacks (00:03:47): the counter defensive started on June 4th or 5th. It's now October 26. And if you look at the map that the New York Times provided, Ukraine has not taken back any meaningful amount of territory. In fact, Russia on net has gained territory even when it was supposed to be Ukraine on offense. So there is no prospect of Ukraine achieving its objective of evicting Russia from their territory. So what does the point of concern Jason Calacanis (00:04:13): have for? Defended themselves from an invasion from Putin. Yeah. You would say that? David Sacks (00:04:18): They've ended up Successfully. 100 what's successful about it? Several 100,000. They didn't Jason Calacanis (00:04:24): get taken over as a country when they were invading by Russia. David Sacks (00:04:26): That assumed that was that was Russia's goal. Jason Calacanis (00:04:29): Okay. So when they sent the troops in there, their goal wasn't to invade? What was our goal then? David Sacks (00:04:36): Honestly, you don't really understand the history of the conflict. Jason Calacanis (00:04:39): No. No. I mean, we've we've talked about history commonly. I'm just saying the way you're framing it is that Ukraine found. It seems to me they've also the argument could be that they defended themselves successfully. David Sacks (00:04:47): If you look at what's happened this year, So let's just put a pin in what happened last year because I think there's different ways of interpreting it. But if you look at what's happened this year and certainly over the last 5 months, Ukraine has made no progress in evicting the Russians nor is there any prospect of them evicting the Russians? So the continuation of that war doesn't achieve anything except kill the flower of Ukrainian youth and continue to the Ukrainians are dying in much higher numbers. And Russia is a much bigger country. They've got something like five times the population. So moreover, with this new conflict in the Middle East, you create all these unattended consequences and all this risk of installation being an proxy war with Russia. So that was the first thing to come out of the the Twitter space was a consensus among the people who are there that it's time to resolve this conflict with Russia. The United States does not need to be an proxy war with Russia. We need to normalize relations. It's way too dangerous to be continuing this with what's going on in the Middle East. The second half of the the Twitter space, I think, was about the scenarios here for what could come in the Middle East. And just briefly, I think that there's 3 scenarios here for what could happen, assuming Israel goes into Gaza. This is what everyone's waiting for is. Will there be a ground invasion of Gaza. Netanyahu says they're gonna do it. The theory on why they haven't right now is the US is actually moving a bunch of assets into military assets into place they're putting air defense batteries around military bases in the Middle East. So there's been a lot of reporting that the US has told Israel to wait until the US military is ready. For any blowback that could happen. But Netanyahu has been very clear that they are going in no matter what anybody else says. 3 scenarios could arise from that. David Sacks (00:06:32): Number 1 is what Israel, and I think the administration 1, which is that they have, a successful military operation and the US is threats deter his Bala or Iran from getting in. So that would be like scenario number 1. Serial number 2 would be that the Israelis go in. It's guerilla fighting. It's much tougher than anybody expects. They start to take casualties. At the same time, you get massive public uproar. You get a lot of protests. The Arab street erupts. More and more leaders across the world denounce Israel. And so you kinda muddle your way eventually towards the ceasefire in a couple of months. So that would be scenario number 2. Scenario number 3 is that this thing spirals out of control very quickly where you get Hezbollah in the north invade. So you have a second front. The West Bank could erupt in protests that could potentially create a third front. Iran could get involved either because they feel the need to defend Hezbollah or because you have people like Lindsey Graham who are basically already calling for war. With Iran. So either side could basically escalate into that. So Jason Calacanis (00:07:36): I think there's What happened with Lindsey Graham? Because he was telling them if Iran, if they got involved, that we would strike back. Yeah? Yeah. But I He wasn't saying invader. David Sacks (00:07:46): I don't know what that is. I think he's saying pretty clearly that if Hezbollah gets involved, we're blaming Iran for that. Jason Calacanis (00:07:52): Got it. Okay. David Sacks (00:07:52): So he's trumping at the bit to to basically invade Iran. Now how could that happen? Well Jason Calacanis (00:07:58): You're saying you think he's shopping at the bit to invade Iran? David Sacks (00:08:01): -Oh, yeah, he just, Jason Calacanis (00:08:01): he gave them the warning to not. David Sacks (00:08:03): -This is about the neo con agenda. Jason Calacanis (00:08:04): -So I'm curious about that point. Yeah. Explain that piece. David Sacks (00:08:07): This has been on the NeoCon agenda for a long time. They wanted to have a war with Iran. They basically see the Iranian regime as an enemy, and they wanna knock it off. Even if you go back to 2003, the beginning of the Iraq war, there was serious conversation about whether Iraq was the right country to invade. A lot of people thought that we should go after Iran, not Iraq. And the Bush administration's view on that was, don't worry. We're gonna get them all. The questions is which one to do first. We're gonna knock off Saddam first. In fact, what's gonna happen is we're gonna be greeted as liberators. The invasion's gonna be so successful that the rest of these tyrannical beliefs or regimes are just gonna throw up their arms, and they're gonna basically, you know, surrender and become democracies. That this was the Bush administration's claim back in 2003. Obviously, it didn't work out like that. But there has been a desire to go into a lot of these countries for a long time, and I think there are a lot of these neo cons who see Iran as unfinished business. And if they get the chance to do that, they will. Jason Calacanis (00:09:09): So, yeah, so that and see, that's the piece of your analysis there that I thought was most interesting. You think Lindsey Graham wants to invade Iran. When he gave that warning in his speech, which I think came out today or did it come out yesterday? You think when he gave him the warning, hey, don't get involved gonna be the 3rd front. You'd actually think it's he wants to invade. The United States has that agenda. David Sacks (00:09:30): I think there's a lot of neo cons who have that agenda. And you see this in the Wall Street Journal, which is sort of the lead leading Neocon publication. Jason Calacanis (00:09:38): Got it. Okay. So let's explain then what the wall the Wall Street Journal obviously has been talking about Hamas militants being trained in Iran a few weeks before the 10 7 attacks. And it says about 500 militants from Hamas. David Sacks (00:09:52): Even when 107 happened, remember there was that Wall Street Journal story claiming that Iran had directed the whole thing. Yeah. And then that was knocked down by Israeli officials who said we haven't seen evidence of that as well as Washington officials, you know, kind of the usual unnamed knock that down. So the Wall Street Journal has been kind of pushing the the edge here trying to, I'd say, rattle the saber and gin up some sort of action against Iran. The latest thing was a story claiming that 500 militants had just been trained by Iran. So they keep trying to put this idea in play that we need a war against Iran is my point. Okay. Jason Calacanis (00:10:32): So just let me reflect that back to you. You're saying Lindsey Graham wants to invade Iran, and he's part of the neocon agenda. And the Wall Street Journal is not just straight reporting this. The Wall Street Journal is in trying to incite an incident here and start a war with Iran. David Sacks (00:10:48): Well, the the Wall Street Journal reflects the agenda of the people who own it and then the people who are their sources. And clearly, somebody is leaking these stories to the journal. Somebody leaked the idea on day 1 of this crisis that Iran was secretly directing the whole thing, even though Israel itself, so that was not true. So, yeah, look, they have an agenda. Live an agenda. Jason Calacanis (00:11:11): So the Wall Street Journal's agenda is to Sabirato and incite a global war with Iran. Or are you saying that they're just useful idiots and that they're being manipulated by the military global complex and the neo cons. David Sacks (00:11:26): I'm just saying just the Wall Jason Calacanis (00:11:28): Street journal Sabre rattling. So that's as if the Wall Street Journal wants to start a conflict. David Sacks (00:11:32): The the Wall Street Journal is beating the drum support. That's what's going on. Jason Calacanis (00:11:37): Okay. So you believe the journalists at the Wall Street Journal are trying to start a war with Iran. David Sacks (00:11:41): They are beating the drums of war. Chamath Palihapitiya (00:11:44): That's what Jason Calacanis (00:11:44): being drums of war means to you. Okay. Chamath Frebraig, you think that the Wall Street Journal here is trying to start a war with Iran? Chamath Palihapitiya (00:11:50): I'll give you a little bit of history here. I'm gonna presume you know it's it'll be repetitive, but it used to be that of economic growth and cultural vitality, right? But if you go even further back, there was a a duly elected prime minister that was overthrown Muhammad Mossade. Because he tried to nationalize the oil industry in the fifties in Iran. And that, which was run by the army, was sponsored by the UK and US government. So we've had a long kind of sorted history. With Iran for a very long time post World War II. A lot of it has been intertwined with petrodollars and oil So, you know, we had the Shaw, then there was this duly elected prime minister. He tried to nationalize the oil industry He was overthrown in the coup d'etat supported by America and Britain. They brought back the foreign oil companies, including American oil companies, then the shah ran for 30 years, but then he was overthrown for a whole bunch of cultural issues. And so it's gone back and forth and back and So I think it's important to keep in mind that a lot of that generation, it's not clear to me where their views come from. And what I mean by that generation is folks of Lindsey, Graham's generation, and older have this multilayered view of Iran because they've seen 2 or 3 of regime changes. And they've seen the changing incentives that America has had towards dealing with them. So instead of just kind of, kind of putting it out there We just want to go to war. I think it's important to remember that these guys have a historical context that younger folks may not. Okay. That's number one. Number 2, I think it's David is right that there are certain publications that are beating the drums of war the first time that the Wall Street Journal did it, it was that Iran was the one that essentially was the trigger puller on the October 7th attacks. And that was immediately refuted, interestingly, not by Iran, which did it later, but actually by the United States and Israel. So I do think that there is some questionable incentives that drove the publication of that article at a very critical point at the beginning of this Israel, Chamath, Gaza Jason Calacanis (00:14:15): or an idea of what that incentive would be? Chamath Palihapitiya (00:14:18): No. I don't, I don't know, except to say that the facts are that there was an article that pointed the finger It was written as an exclusive. It was written in a moment where things were very heightened and little was known and that these governments had to come out and explicitly disavow and and deescalate it. And so I think that's just an important thing to observe. Now we're in this second wave where there's a second attempt to now point the finger directly back to Iran as having trained these Hamas terrorists has now engaging in, and it's not to say that they're not, but it's just that this escalation is definitely happening on a continuous basis. And so it's important to frankly understand the historical context and deescalate so that we don't. I think Elon is right. This is how you sleep walking toward. Is you read a headline, you believe it, and then you run with it. And the opposite of sleepwalking is underwriting from first principles, I think it's important to go and read the historical context of how we've been engaged in Iran since World War II, particularly the back and forth. The complicated issue of all the petrol dollars. And then you can view Lindsey Graham's comments in 2 veins, I think, vein number 1 is he was there with a bipartisan delegation of, I think it was 10 centers. 5 of each. 5 Republicans. 5 Democrats. Jason Calacanis (00:15:44): So I Chamath Palihapitiya (00:15:44): think it's fair to say that he is not just speaking off the top of his head, I think that there's some understanding of what he intended to say. And so I do think that this is sort of a back channel way of getting on the record that they really need to deescalate. If they're given an opportunity to engage, they should not. I think that's the the way you're talking about. Jason Calacanis (00:16:04): Yeah. Iranian De Escalette. Yeah. Chamath Palihapitiya (00:16:07): And frankly, hopefully, they listen and they do and they do it. Jason Calacanis (00:16:10): Lindsey Graham's quote, just to, to put it out there, when he was visiting Tel Aviv, we are here today to tell Iran We're watching you. If this war grows, it's coming to your back your the idea that this happened without Iranian involvement is laughable. Friedberg, what what are your thoughts? Do you think the journalists at the Wall Street Journal are complicit in trying to incite something here. Do you think they're just reporting the facts straight? What's your take on this? David Sacks (00:16:39): Can can I answer that? Cause I've I actually have a data point. Jason Calacanis (00:16:41): Yeah. No. I've I mean, the and the reason I'm pushing you on it, Saks, you're David Sacks (00:16:44): using the language of sperity, like complicit, to make it sound like I'm leveling an accusation at them when what I'm saying is this is their editorial policy. And you can see that by actually reading their editorial. So, therefore, look at an op ed that came from their editorial board 2 days ago. Called Biden's red line moment with Iran. And what it says is here that Secretary State Anthony Blinken warned Tuesday that the US would respond swiftly to any attack on American forces from Iran or its proxies. And then it says, that's a welcome message aimed at to turning the moles into Iran and their agents but will the president force the red line? He appears to be drawn. He hasn't so far. So in other words, the journal editorial board is saying that Biden has not been enough on Iran. Okay? Now go to the last paragraph. It also says here, Iran is using his proxies to test US resolve. The more they attack without Iran paying a price, the more likely that Iran will raise the stakes. The paradox, Mister Biden, has to appreciate the most stabilizing move for the region will be restoring America as a deterrent power. So what does that mean? You take these things together. They're saying that in order to stabilize the region, we need to deter her on, but they say that just making threats of deterrence is not enough. You actually have to do something. So in other words, like attacking Iran is the stabilizing move, which is war is peace. It's right out of Georgia Orwell. So this is what I mean beating the drum support. Jason Calacanis (00:18:11): And by the way, the reason I'm not saying your conspiracy there's your there are there is editorials then there's news and then there's your in precise language that I'm just challenging you on because I want you to be precise here. If you're saying the journalists are trying to provoke a war here or, you know, in the banging the drum and saber rattling. David Friedberg (00:18:29): I'm not being precise. David Sacks (00:18:31): I think you're Jason Calacanis (00:18:31): Well, saber rattling and banging the drums are a bit imprecise. David Sacks (00:18:34): Going down a weird rabbit hole of what what the Wall Street Journal believes. I think it's pretty clear that their referral policy is they are super hawkish on Iran. They don't think Biden's been tough enough on Iran. They also have published two stories that have been either knocked down or questioned since October 7th that clearly wanna play all the blame for this on Iran. And so they are ginning up both in their news and their electoral pages. They're beating the drums of war. They're trying to basically prime the administration to go to war. Jason Calacanis (00:19:06): Got it. They're trying to go the administration, trying to incite them. I don't understand David Sacks (00:19:11): why, honestly, I feel like we're going down a rabbit hole. Look, No. Jason Calacanis (00:19:15): I'm just trying to understand your position. And if you're talking about the editorial page or you're talking about the reporting, that's all. I'm just trying to get you to be more precise. That's David Sacks (00:19:22): I think both in this case. Remember, if you go back to the reporting on the Ukraine war and I followed a lot of it by all the major publications, in my opinion, The Wall Street Journal's news coverage of Ukraine was some of the most biased and inaccurate of any publication, any major western publication. I'll just give you one example here, which is on August 31st, the Wall Street Journal claimed that Ukraine had a major success in its counteroffensive claiming that it had pierced the main Russian defensive line. K? We are now, what is it, basically 2 months since then, and it's very clear that that did not happen. Okay? That was all nonsense. And, again, read the first paragraphs here. Not only do they claim to penetrate the main Russian defensive line, It said it raised hopes of a breakthrough that would reinvigorate the slow moving counteroffensive. Was there a subsequent breakthrough? Did hopes get raised? No. This was total nonsense. Chamath Palihapitiya (00:20:22): So your position here is Jason Calacanis (00:20:23): the the journalists who wrote this story are in some way trying to benefit the neo cons in the, military industrial conference. I just wanted to be clear about it. Using these Wall Street Journal as a you know, an active participant in this as a reporters, it's just kind of an explosive, it's not kind of it is. It's an explosive claim. And so I'm just trying to be David Sacks (00:20:45): I'm just saying that their reporting on Ukraine was highly inaccurate, and it was all inaccurate in the same way which is it always overstated the Ukrainian successes in this war. So I call that bias. I think it's easy to prove. I think they have a similar bias, which is stated explicitly by their editorial board, which is they don't think that Biden and DC has been hawkish enough on Iran, and they would like to see they think the stabilizing move is for Biden to basically take action against Iran, whatever that means. David Friedberg (00:21:22): Yeah. Okay. Jason Calacanis (00:21:25): Friedberg, any thoughts on this while we before we move on to the next stop? Nothing on the war on the situation? David Friedberg (00:21:32): No. I'm I mean, we can pivot off of the pain that No. I wanna hear what you're David Sacks (00:21:36): saying. Chamath Palihapitiya (00:21:36): Yeah. Jason Calacanis (00:21:37): Yeah. That's why I'm bringing him in. I David Friedberg (00:21:38): mean, I David Sacks (00:21:38): feel I feel like we're debating the wrong thing, which is you're you're actually questioning whether there are wardrums beating for Iran when I think it's like abundantly clear on what we should be discussing is whether that's a wise move for the US. Chamath Palihapitiya (00:21:54): I think it's clear that these drums are being beaten. I think the question is why why would we allow that to be the default plan of action. David Friedberg (00:22:02): My concern, it's everyone's gonna think it's crazy, but it's that there's A very, very low probability, but now probably much higher than it was that the world marches towards using a nuclear weapon for the first time in a long time. And the reason is, as Saks has pointed out so many times, there's significant material and industrial production shortages, not just in the US, but around the world to support rising conventional wars that seem to be scaling all over and there's gonna be multiple fronts and to feed those wars with conventional weaponry There's there's a breaking point. Our cost of weaponry is 10x Russia's cost of weaponry supposedly. I mean, I'm just quoting sacks on this point. But if all that is true, at some point, these conflicts become really difficult to maintain. And if we're in the midst of a conflict, You may not be able to simply retreat or recede. At some point, the question is, well, how do we gain superiority again. And whether that's us or Russia backed into a corner or Israel backed into a corner who also has a a nuclear arsenal There's a a couple of scenarios. There's like a 1,000,000 scenarios from here. There's a million realities we could live in from here, from today. But there's some number of them. That end up with someone saying, I gotta press the button. And there's remember, not all nuclear weapons are these things that wipe out a million people instantly. Some of them are small load tactical weapons that is still very low probability, but much higher than it was a few weeks ago, that we find ourselves walking because of the fact that we're gonna have multiple conflicts and burn through all this conventional weaponry, not have industrial production systems, to support all these conflicts. But every, the bunch of countries that have a trump card. David Friedberg (00:23:57): And once you start talking about it, it'll seem scary at first, then it'll get normalized. And then it'll become a question of when and where and how. And then all of a sudden, it's like, holy shit, this is a different world we're living in. That's a scary place I don't wanna be in. Anything we can do to eliminate those paths from being walked, I'm in favor of, even if that means seeding strategic advantages today. I just don't think that that's a place we wanna go. Jason Calacanis (00:24:22): There's like, 9 nuclear powers. Who do who do you think is going to be the one who would actually use a nuclear bomb freeburn. Yeah. You have some speculation there. You just think everybody runs out of bullets and tanks and missiles, and then they go to nuclear because they have nothing left. David Friedberg (00:24:37): I don't know. Look, I I I tend to think in terms of, like, there are multiple parallel scenarios that can play out. So I don't have a point of view. I'm not gonna say determine I think this thing is gonna happen. Again, I think this is very low probability. Chamath Palihapitiya (00:24:49): But I David Friedberg (00:24:49): could see a bunch of scenarios emerging. Like, let's say that Russia's got their back against the wall and Putin's feeling lost and desperate, and he needs to use a tactical weapon to, you know, get some regional victory Again, these tactical nuclear weapons, they're they're not necessarily the kinds of things that you would use to level Manhattan. Those exist, but there are other weapons in the arsenal that I, that get worried that someone says, we're back in a corner. We have nowhere else to go. We can't win this thing conventionally and we cannot lose. And that's the moment when someone says, this is the let's start talking about this. And that conversation happens before it gets used, then that conversation becomes normalized. And then suddenly it's not this thing. We all grew up in a world where this was never a real threat or risk or conversation. There was the cold war and the dismantling, and we were kinda headed in a good direction for the last 40 some odd years. But now it's like, I don't see it going in that good direction anymore. So I'm just really nervous about Chamath Palihapitiya (00:25:49): Yeah. David Sacks (00:25:49): I think you should be nervous about that. Let me give you a couple of examples. So so first of all, I agree with Friedberg point that humans who are convinced of the righteousness their cause have a tremendous ability to wave away or justify any sort of tactical implications. So, for example, we did use 2 atomic bombs to end World War 2, That wasn't the only time it was advocated. If you go back to, I think it was around 1950, MacArthur wanted to win the Korean war by using 20 to 30 atomic bombs. And his plan was to so thoroughly irradiate the border between China and North Korea that China would never be able to invade through, invading army for something like 50 years Truman had to fire him because Truman didn't agree with the strategy. And by the way, MacArthur was not some crazy, you know, he was not some, like, wacko. He was the most respected man in America in 1950, and Truman paid a huge political price for having to fire him. It was one of the reasons why Truman couldn't run for reelection again. So this idea that, like, rational people would never use these things is not true. The generals in 1962 during the Cuban Missile Crisis were already to take the nukes off the chain if the Soviets were willing to break the the naval blockade. So, you know, it's not just foreign powers who have rattled the saber on nukes. We've done it at various points through our history too. Let me give you a more mundane example. Just earlier, this year, Biden said that we were out of a 155 millimeter artillery ammunition. And so we had to give Ukraine cluster bombs. Remember this? Just a year before, that same administration has said the use of cluster bombs was a war crime. So in other words, they were able to change their morality on the use of cluster bombs because tactically, they were out of the type of of ammunition they want to use, they had nothing left. So, you know, I think this kind of reinforces Frederic's point. David Sacks (00:27:48): Now, look at our inventory replacement times for key systems. This was a report by CSIS. That is a a military think tank in Washington. What they show is that our industrial capacity is so hollowed out that it's gonna take us 5 plus years to replace our stockpiles of artillery ammunition, of javelins, of stingers, of gimblers, as another type of rocket system. And so we are like dangerously low on key types of ammunition. And yet, Remember when 60 minutes to that interview with Biden, they said to him, well, gee, if we're in a war, both on behalf of Ukraine and about half of Israel, doesn't that pose any trade offs? And Biden's response was no. We're the most powerful nation in the world. For good measure, he said, we're the most powerful nation in the history of the world. So he doesn't see any trade offs. He doesn't see any limits on American power. Quite frankly, I think this is why he's dangerous is because still thinks that the US is living in 1991. He's been in Washington for 50 years, and he only remembers the unipolar moment. All of his instincts and experience have been shaped by that period of time when the US was the only superpower that we were the global hedging on. We're no longer in that position anymore. You know, first of all, Russia and China are strong. They are great powers too. And Iran is much stronger than Iraq. Iran is four times the size of California and has roughly 90,000,000 people, and they got a lot of engineers. And even if we did wanna attack them, it's not exactly clear how you would stage that attack. Just getting to Iran would require flying over some very dangerous territory. It's not clear we have the, we have the bases or the air clearance rights from allies be able to even get to Iran. Moreover, Iran apparently has a very strong missile program. So they may even have the ability to fire missiles or hypersonic missiles at our aircraft carriers. That are sitting in the Mediterranean Sea. David Sacks (00:29:51): So if we get an award, Iran, it's no joke. This is not gonna be shock and awe. This could be a very, very dangerous situation for the United States, which is why when people are just kinda making these idle threats, They should be very careful about that because Iran is hearing that too, and they're getting ready. And and one last point on that, thanks to our destabilizing the Middle East with the Iraq war and the Syria regime change operation, Iran now has proxies in both Iraq and Syria. They've got, Iraqi Hezbollah. They also have proxies in Yemen with the Houthis, And all of those groups could stage attacks on American military bases there. Jason Calacanis (00:30:33): We've, gone down the worst case scenario here. Use of a nuclear bomb the United States invading Iran, here's just a list of the 9 countries that are nuclear powered and that have nuclear bombs rather than nuclear powered. And as you could see, Russia, US, China, France, UK, Pakistan, India, Israel, and North Korea, Israel denies they actually have them. And Pakistan has been The one who has been pro proliferating pro proliferating them, getting bombs to North Korea and helping Iran with their program. Iran obviously does not yet have a nuclear bomb, but we don't know how far they Chamath Palihapitiya (00:31:07): are because intelligence is Jason Calacanis (00:31:12): sparse on that topic based on my cursory research. Chamath Palihapitiya (00:31:16): What's the best case scenario David Sacks (00:31:18): here? Sorry, Jacob. I just wanna be clear. I just wanna be clear that I don't see nuclear use as likely? Yes. Jason Calacanis (00:31:23): That was Friedberg point. Yeah. David Friedberg (00:31:25): I I sorry. I did not say it was likely at all either. Not at all. Jason Calacanis (00:31:28): No. No. You said it's a small possibility, and we just spent 10 minutes talking about that small David Friedberg (00:31:32): I just just want everyone like, let's say something goes from 2% chance to 8% chance. It's now 4 x in the next 20 years. That's Chamath Palihapitiya (00:31:42): Right. David Friedberg (00:31:42): A significant shift in risk. And I I think there have been others like Ray Dahlio, I think, or Warren Buffett people have said that the chance of us using a nuclear weapon over a long enough period of time approximates 50 to a 100%. It starts to get very high because, you know, at some point, These things proliferate the intelligence, the capabilities proliferate. They get into the wrong hands, and there's all these different scenarios that emerge ability might be low on any given period of time, but over a long enough period of time, these things become a real kind of concern. The nukes that were dropped on Hiroshima Nagasaki or 20 kilic time yields. I mean, we have massive, massive, massive warhead, multi warhead missiles that have many, many, many megatons of yield, but there are sub 20 sub-ten kiloton yield nukes that can be deployed in a conventional in what people would call a tactical setting. So you're not trying Jason Calacanis (00:32:36): to be the suitcase new, and they're they're not literally suitcases. They're on trucks, but tactical nukes are have been produced by Russia, China, and the United States are the known tactical nuclear powers. David Friedberg (00:32:48): Well, it they're they're also they're they're they're in different forms of delivery, but they're not, you know, you don't take a bomber up and put it over a city and blast the whole city drive the city in Jason Calacanis (00:32:56): the van is the idea. Yeah. David Friedberg (00:32:58): No. It's not necessarily about being on a van. It's like they can be on short range tactical systems. So the point is, like, yeah, you're caught in a corner, you have nowhere to go and you can't lose. And if you have one of these things, I mean, just take all human history aside at all convention aside. If you've got this thing, your tech trapped in a corner, you got nowhere to go, and you can press this button and win, You might press the button. Chamath Palihapitiya (00:33:26): And that's Jason Calacanis (00:33:26): So let's see the other side. What's the best case scenario here? Obviously, we haven't had the ground invasion. We've had Qatar and Saudi in a number in the United States, obviously, doing some pretty hardcore diplomacy And we've had some hostages released. So, you know, I've been and I've been spending some time here in the Middle East. There is a theory that people have brought up multiple times here that there's a deal going on right now to get the hostages a larger number of them and that the ground may not occur. This is just a theory that a number of people have been talking here, and maybe they're just optimists. But is there an optimistic scenario here, Shamoff? Is there a, Golden Bridge out of here, is there a possible path to, you know, the peace process getting back on track, or does it all just seem hopeless? And if there is and if there is a possible path, what would that look like? Let let's just see if we can come up with, any optimistic framing or or or theory here. Why it's just as bad as the other side. Okay. So you don't see one. Yeah. Chamath Palihapitiya (00:34:29): How about we just look at the facts on the ground? The facts are that we have this long simmering war between Russia and Ukraine that doesn't seem to have an end. And there doesn't seem to be a loss of life at which They're willing to stop or whether the international community is willing to force a ceasefire. And then now you have this one, which is in thousands and will escalate into the tens of thousands, but it seems like it's on a path to be slow and simmering. So I don't know what to say except that it does not seem to be escalating. And the reason it isn't escalating is that there is enough emotional impact That's causing people to understand that the stakes are high. And so when the actual actions are relatively deescalatory. I find that the rhetoric ratchets up, right? It's almost inversely proportional. You know, it's kind of like, what was the the the phrase and World War 2 about Churchill iron fist wrapped in a velvet glove. Is that is that the phrase? Something like that. But the idea is that when you act decisively, you say little, and when you have no plan of really escalating, you say a lot. So I think that right now, we're saying a lot, which actually counterintuitively to me says we're not planning to do much of anything. And I think that that's good. So I'm all for Lindsey Graham, braying as long as we don't take it too seriously and and sleep walk into some escalation. Jason Calacanis (00:36:07): Sachs, any chance that this, gets deescalated and what might that look like? David Sacks (00:36:12): Sure. I think there's a chance. I think like Jamache Jason Calacanis (00:36:15): like. Yeah. David Sacks (00:36:17): Well, what it looks like, I think, is that the ground invasion keeps getting paused either because the US needs more time to get its military in place or because the Israeli military realizes this is gonna be a very difficult operation and they need more time to plan. And while that's happening, there's a serious diplomatic effort going on. And while that's happening, there's also more pressure being brought to bear against Israel to not go in. So for example, you saw Erdogan this week, make some statements. I actually thought they were pretty outrageous where you described how is basically being freedom fighters, but warning Israel not to go in. There were much more reasonable remarks by King Abella of Jordan basically at least recognizing the atrocity that had taken place against Israel, but also trying to advocate for the lives of Palestinian civilians in Gaza and telling them that it would be a mistake to go in. So you're seeing, like, a wide range of opinions across I'd say major players in the middle east, but all of it, the gist of it is basically telling the Israelis not to go in. So you've got all these delays and pressures going on. And and so maybe there's some chance it could deescalate. I personally think that that's still unlikely And the main reason for that is I think Israel is determined to go in. I think Netanyahu has made that clear. I think from the Israeli, point of view, they don't feel like they have a choice. They've suffered the biggest massacre of of Jews since the Holocaust. And they can't be perceived as simply standing by and doing nothing. That would make them look extremely weak in a region of the world where you don't wanna look weak. Jason Calacanis (00:38:02): They have to annihilate Hamas, I guess, is the the thinking. David Sacks (00:38:06): Well, they say that their objective is to destroy Hamas, but I think that probably from their standpoint that considered a success if they could significantly degrade Hamas, set them back 10 years destroy the hostages back. Yeah. Destroy their capability to wage war against Israel to undermine their tunnel networks and so forth. So I think Israel still feels like this is something they have to do. And so I kinda think that the most realistic good case scenario is that if they do go in that the military operation for various reasons is not a long one, and eventually a ceasefire can be agreed to before this can escalate out of control. And so there's a bunch of, like, very delicate red lines there for a lot of different players. And so in order for that scenario to work out, I think it's gonna take some very depth behind the scenes diplomacy from the Biden administration, really, and I'm not sure they're capable. I'm not sure they're up to that task. So this is why I think it's such a dangerous situation. But can Jason Calacanis (00:39:05): I ask you a question? By the way, is this Graham speaking on behalf of the United States officially with the president's approval? He can't possibly be freelancing that. I I didn't have any I I tried to research it online. I couldn't find any well, why don't Chamath Palihapitiya (00:39:22): you feel like that Jason Calacanis (00:39:23): was sanctioned or not? Chamath Palihapitiya (00:39:25): Well, Jason, think about this. David texted this into the group chat and then tweeted it as well. Do you think mom had been saw on his meeting with a group of 10 senators that's just off on the an adventure? Jason Calacanis (00:39:39): No. Okay. Well, there's your answer. Yeah. Yeah. No. No. I I'm just David Sacks (00:39:42): Look at this photo. I think this the picture says a 1000 words. So you have a a delegation of senators. They're kinda about 10 senators there. David Friedberg (00:39:51): There's 10 of them David Sacks (00:39:52): on the list. Yeah. Yeah. They're meeting with MobAdvance Salmon. David Friedberg (00:39:55): 5 Republicans and 5 Democrats. David Sacks (00:39:57): And who has the seat of honor right next to MBS in the front of the room? So I personally would like to believe that Lindsey Graham is an outlier and he doesn't speak for anybody, but, unfortunately, this delegation saw fit to put him in the front of the room. I consider that very scary. Chamath Palihapitiya (00:40:13): Well, I think it's also fair to say that the Office of MBS would have coordinated that decision with the White House before receiving them. That's that's typical political protocol. Jason Calacanis (00:40:23): Yeah. It just it was never explicitly said he didn't say on behalf of the president or the president has sent us here. It just seemed like a disjoint. I I hadn't never seen that before. Alright. I guess we'll move on to some business issues here. The macro picture is, quite confounding GDP, as we were talking about in our group chat, grew 4.9% year over year in Q3. Higher than the 4.3 percent expectations are much higher than the 2.1% growth in q 2. Highest year over year GDP since q4 2021, and we thought we were going into a recession. We have a couple of quarters of, contraction that hasn't happened CPI in September was 3.7. Slightly above the 3.6 estimates. And, Chamath, what do you take from all of this this crazy high growth GDP? Is this because of stimulus? Government spending? What is this, confounding, you know, inflation coming down and getting somewhat under control? And then crazy GDP growth. Chamath Palihapitiya (00:41:25): I don't know. I don't think anybody knows. But it's really confounding for the markets. I think it's really bad for markets in general. It's probably the worst for private companies because you have this effect now where everybody's been wanting to price in a recession, right? Everybody wants to see that shoe drop where they say, oh, okay. Here it is. Something softening. Demand is softening. And then when you see a print like this where the economy is expanding, you're kind of confused and you're like, well, where where is the softening gonna come from? And so what happens people become very overreactive to small amounts of data. And that actually started to come out I think basically since August, and what's been happening since August is that every time a company reports The sector that's gotten the most attention has been fintechs, and the reason is that fintechs tend to be on the bleeding edge of capturing consumer demand. And if consumer demand shrinks, that's probably the first sign that there's going to be a recession, right? Cause consumption is about almost 70% of the US economy. And so since August, what you've seen are the large leading edge public fintech companies just get absolutely murdered. And yesterday was an even worse day because what happened yesterday was a company was basically World Line started to report softness in spending. Now that spending was not even in America. That spending actually happened to be within a segment of their customer base in Germany. And that was enough to just literally sink the stock, I think, 60% in a day. So we have on the surface, a healthy growing economy. But underneath the surface, what we what we are betting on increasingly is that consumer demand has basically stopped So you can see here, Adient is down 50% since the beginning of the year. But again, most of this was since August. Block is down another 35%. PayPal is down 30%. So So that's one thing, which is this is a big bet that consumption is slowing and shrinking. Chamath Palihapitiya (00:43:41): The economy will be in a recession over these net 2 or 3 quarters, which will give the fed the motivation and the justification to lower rates starting in the middle of next year. That's the big bet in the market. But separately, if you take a different lens and look at this data, We all have a bigger problem in Silicon Valley Land, which is how do the capital markets take companies public when this is happening. And the reason why this data is so important is we've said this a thousand times, there are only 2 companies that can structurally open the capital markets for all startups. 1 is SpaceX Starlink, but that's on its own path and not going public soon. And the other is Stripe. And Jason Calacanis (00:44:28): You could probably take Talk to that as well. Yeah. Chamath Palihapitiya (00:44:30): No. Because that a Chinese company with all kinds of overhang. So, no, I would Jason Calacanis (00:44:34): disagree with that. But with 30 or 40% US owners, Chamath Palihapitiya (00:44:36): I would disagree with that. Jason Calacanis (00:44:37): But no, Chamath Palihapitiya (00:44:38): So I think it's Star Lincoln Stripe. And the, the problem now for Stripe is that The public comps dollar for dollar are off 50%, which from the beginning of the year, which then says that if you apply that ratably to its valuation, they did around at 55,000,000,000, then the market clearing trade may be 25 to 30,000,000,000 now. Now 25 to 30,000,000,000 for Stripe, you're incinerating $70,000,000,000 of equity value, right, and about $5,000,000,000 to $10,000,000,000 of actually paid in capital. So what does that do for Silicon Valley and for VCs? I think it's going to put a lot of pressure on companies and valuations. So Yeah. We're in for a real slog. So on the surface for the real economy, I think it's generally decent news. For startup land, I think it's not good. And then specifically within startup land, sectors like fintech are in pretty bad trouble, I think. Jason Calacanis (00:45:38): And the late stage, obviously, is still very much in trouble. Friedberg and your thoughts on the startup economy, you had some thoughts on the setting too. David Friedberg (00:45:45): I'd like to hear your guys' experiences, but there's definitely been a big hold in series BCD later rounds because so much of the market questioning is you know, when when is the next round gonna get done, which is based on when can the companies potentially go public? And ultimately, if you don't see a path to a window opening up, you don't fund the pre IPO round. You don't fund the late stage round. The growth stage round. Everything gets held up. And a lot of rounds that are getting done lately have been these kind of convert or bridge rounds where existing investors are funding the company to give it another year or 2 of runway That was definitely the case for most of this year coming out of 22. I think post the summer, it seems like a lot of folks I'm talking to are starting to wake up. There's even more series b at lower prices, and everyone's kinda capitulating and accepting that there are still great businesses out there. It's just that they got overpriced in their a or their b. And let's price them at a lower valuation and and rounds are sort of starting to get done in the fall here. Jason Calacanis (00:46:47): I'll have you react to this data, Saks. Carta, manages cap tables for folks, but they have produced this chart. And this is Carta Companies only. So this is a subsection who knows Carta may power the cap tables of 10%, 20%. Silicon Valley, the rest are done on other pieces of software or even in Google Sheets are, literally in an Excel sheet by an attorney who is, working with the company. If you look at this chart in 20202021, you had about 70 start shutting down recorder. In 2022, you see that number double. And we start seeing 129, a141, a quarter. And then in 2023, this last quarter, Q3, rocketing up to 2020. So roughly three times what we see in the boom markets, Sachs, and any thoughts on this data? I have a couple of observations, but I want to go to you first. David Sacks (00:47:43): Well, this is not surprising to me at all. This is the bubble of 2021 working its way through the system. We know that there were these gigantic rounds that were funded in 2021, especially in the second half, where you had this asset super bubble. It wasn't just in tech. It was like all gross stocks, crypto, everything. And so there were a lot of startups that raised huge funding rounds at the peak of the market, and they haven't had to raise for a couple of years. Well, now they're starting to run out of cash. And they do have to raise. They're finally being forced to go back into market. And a lot of them are either burning too much money or they don't have the numbers to justify another round. Or if they do, it's a structured round, a down round, or again, they just are unable to raise. They have a broken process, and they eventually start winding down. So I think you're gonna see this dynamic for the next 18 months or so, but this is not a new dynamic. This is the lagging indicator of what we've been talking about since the regime change of the first half of twenty twenty two is that the markets started looking for different things instead of growth at all costs. It's been about growth with unique economics and efficiency. And the valuations went way down, and there's a lot of companies that no longer qualify, and they're getting needed out. So this is just a delayed reaction to things we already knew. Jason Calacanis (00:49:03): That's the key part. The delayed reaction as well. I'll just note when a company does shut down, That process typically takes 2 or 3 quarters and for a founder to accept the shutdown that might take 1, 2, 3 quarters as well. So anything you're seeing in 2023, that might be a shutdown where the employees were all laid off in late 2022. Chamath Palihapitiya (00:49:22): I have a question for you guys. What, what turns this around? Jason Calacanis (00:49:24): I'll tell you what I'm seeing in the early stage. We are seeing many companies come to found a university and 2 or 3 people who wanna build a company who can't get jobs at Google or Shripe, they're not hiring. So we'll see 2 or 3 developer teams working on a project and then raising 250, 500 k at a 5 to $12,000,000 valuation. And then very quickly getting to 10 to 50 k monthly revenue. Chamath Palihapitiya (00:49:49): But what about all this money that we need to return so that we can recycle and keep doing this job? What, what needs to happen, Saks, Friedberg? What do you guys think needs to happen to get to crack? Cause like the 3 IPOs we've had, have not fared particularly well, and the market just seems to get harder and harder for Tech Companies, even profitable ones. Right? David Friedberg (00:50:13): So, I mean, I think I think profitability is key. I think that's the great evolutionary forcing function here. It's like tale of 2 world of 2 startups. The one startup needs cash for a long period of time, and the other one's path to profitability. The one that's down to path to profitability, they have an infinite number of options available to them. It might take longer to get public or whatever. But they can wait it out because they don't need money. The one that needs cash continuously and will for a long period of time, it's really screwed. Chamath Palihapitiya (00:50:41): What about the multiple of these profitable companies? That seems to have changed materially Jason Calacanis (00:50:45): as well. I'd say something that's starting to happen as well, Shamoff, is the public markets are looking at their stocks if they're undervalued. And then Dara, Uber is reportedly planning, like, buying back upwards of 20 percent of the Uber shares in the next 5 years. And then you look at a company like Snap, which is majority controlled with super voting shares, they're still losing 3 or 400 1,000,000 a quarter. So I think Friedberg exactly right. Tell it to cities. Some people refuse. And then if the stock is so cheap, people start buying it back, and and the the freezing of employees and the expenses going down while revenue goes up and earnings increase, I think that's the setup. If you're looking for the setup, think it's the public market company showing the path of profitability, buying back stock, and then these small companies are not getting big. Chamath Palihapitiya (00:51:29): How does that, how does that help private companies go public? Jason Calacanis (00:51:32): If the private companies follow suit and they're profitable and they control costs and they people get greedy looking at how profitable they are as opposed to their 50% growth rate. They start looking at their increasing earnings and how much cash they're throwing off. And I think that's starting to trickle down through the startup ecosystem trying to get to profit of profitability quickly. I don't know. I I if they do, that's what it's gonna be is profitability. David Sacks (00:51:58): I mean, I think you guys are kinda talking about 2 different things. Sure. Any particular company can still get its house in order and create a great business, and they'll eventually get you know, liquidity, they'll go public. The question is, I think what Chamath is getting at is that the exit comps have changed. If you were a tech investor, or let's say a real estate investor, before the regime changed, you were underwriting to completely different exit comp And now those exit comps have totally changed. And so it's gonna be very hard for those investors to make a good return. Jason Calacanis (00:52:29): So they're gonna lose their money like Instacart. Chamath Palihapitiya (00:52:31): Yeah. I'll give you a mathematical example just to illustrate what David just said. If you have a company with 300,000,000 of ARR, You are in a rare group of, say, 30 or 40 companies period. Okay? So very, very, very few companies get to that level of scale. But if you are at a 100 percent net dollar retention, okay, which means that you're kind of treading water essentially, Your customers may grow, but the value of each customer isn't particularly growing. So you, you know, you have you have pretty nominal growth That company now comps to roughly 3 to 5 times ARR. Now, the problem is if you go and look back through Crunchbase or any of these other server pitch book, the number of companies that traded above $1,500,000,000 valuation as a SaaS business, there's like 70 of them, but there's only 7 of them that 300,000,000 of hours. So what do you what happens, guys? Like, the jig is up. Okay. What's going on here? Consolidation, Jason Calacanis (00:53:41): I guess, and and some of them will flame out. I mean, look at Instacart, the la the people who were the last four rounds. They, they either lost money or broke even. So, and that means time adjusted versus what they could have made in the markets. They lost money. So what happens if Stripe is only worth 30? I mean, how much, has been invested into that company? What's the total paid in Chamath Palihapitiya (00:54:02): I I think we all want Stripe to be worth a 100. We want it to be worth 200,000,000,000 because it would help frankly, it is the rising tide that lifts all boats. But if if unit level profitability is scrutinized and then comped appropriately to the public markets, as Saks said, We're gonna have to take that signal and apply it to our entire portfolio. And so it goes all the way back to eventually the seed in the series a as well, which is really good, Jason, as you've said, many times, just getting the inflation under control and in check but it will mean not just changing valuations, but it will mean changing salaries, right? It will mean totally different equity packages. Jason Calacanis (00:54:45): A lot of hard work. Chamath Palihapitiya (00:54:46): I almost think that maybe none of the hard work has actually yet started. So I don't know. I'm just putting that out there, guys. Do you think that we've all just kind of been hoping maybe that all of this would pass? And now we're getting more and more signals that we actually have to do a pretty hard valuation reset. David Sacks (00:55:05): Yeah. I mean, if you look at the altimeter charts that on balls put out. I mean, valuation levels are returning to, let's call it, the pre COVID mean. In fact, they're slightly below the pre COVID mean because the tenure Treasury has a higher rate. So, yeah, we're going back to something that was more like, I don't know, 2015 levels of valuation. And maybe even slightly worse again because long term rates are higher. So cost of capital and hurdle rate are higher. Jason Calacanis (00:55:35): That's what I'm saying. I'm seeing 2012. Valuations, valuation of Uber when I invest was 5,000,000. You know? Yeah. David Sacks (00:55:41): Let me just tell you, it's a lot harder for people to make money when the money supply is shrinking. Than when the money supply is growing. Yeah. For obvious reasons, when the money supply is shrinking, it's like you're playing a game of musical chairs. And you're just hoping that you still have a seat, whereas when the pie is increasing, it's a lot easier to get, like, a piece of it. But when the pie Jason Calacanis (00:56:01): is shrinking, it's not hard David Sacks (00:56:02): to get a piece. Jason Calacanis (00:56:03): Musical chairs as you described it is what you're it's literally the description of the Venture Capital Industry and GPs right now. A lot of people are losing their seats. David Sacks (00:56:12): Yeah. And I think a lot Jason Calacanis (00:56:13): of shutdowns of venture firms. I think a lot of venture firms are gonna shut down this could be zombie funds. David Friedberg (00:56:19): I think we gotta believe the extraordinary outcomes make up the bulk of returns and venture from, you know, the singular companies. And there's a few of them. Right? There's 15 $1,000,000,000 exits created every year. I don't know if it's unicorns as valued in private markets or actual exits, but As we know, every couple of years, there's a company that comes along that's worth 10,000,000,000. And every once a decade, there's a company that comes along that ends up being worth a 100,000,000,000. And the bulk of the returns in the entire venture landscape comes from those handful of companies. I think we end up focusing a lot on market metrics as the performance driver for venture returns, but the truth is it's the performance driver for the mid tier of venture returns. And that mid tier of venture returns is skating along at 2x. Multiple after 10 years or 3 x after 10, 2 to 2 to 2a half x after 10 years. That's the top quartile. Right. And so whatever as 1.8x, and now those guys are all underwater. So instead of being 1.8x, they're all gonna return point 7 x or point 5 x, and they're gonna lose money. Chamath Palihapitiya (00:57:28): No. I think the I think the 50th percentile returns money. David Friedberg (00:57:31): Okay. But the truth is so then now they're gonna lose money. But the truth is whichever funds get the tiger by the tail, whoever gets the Uber at 5,000,000, whoever gets the slack at whatever you got in at, whoever gets the SpaceX or whatever Saks got in at, you're gonna be fine because, like, the multiples in markets don't matter as much if you're generating 4000 x. I Chamath Palihapitiya (00:57:54): don't think that's true. I don't think that's true because if it happens in a fund, and that all of those deals, picks up SpaceX, happened in a different valuation framework where rates were 0. So I think the question, the more intellectually honest question is what would slack and Uber have gone public at today with a 5% tenure? And I think the answer, if you're going to be intellectually honest, is a very different valuation than when it went out when the 10 year was 0. David Sacks (00:58:21): It's going to be hard to make outsized returns unless and until the entry price is completely correct. And I think they've partially corrected, but they may not have fully corrected because people I think, always wanna believe that there's gonna be a bounce back. Yeah. And it takes time to kill that hope. David Friedberg (00:58:38): I think that I think that might be the capitulation capitulation is Yeah. Chamath Palihapitiya (00:58:43): No. I David Friedberg (00:58:43): think that I think I think that capitulation is starting to happen, to be honest. I mean, that that that was my observation. I I feel like everything was so shut down last year, the start of this year through the summer. And then in the fall, Like, just the last couple of months, it feels like there's this capitulation where it's like, okay. We're worth 80% less, but we need money. Let's do the deal. Okay. We'll put money in. Chamath Palihapitiya (00:59:07): I don't think the reset can happen until Stripe goes public. I'll be very specific. I think that is the company that sets the cascading valuation framework for every other company. So I think all of this is a bunch of people, us blathering on and making stuff up. I think the true numerical forcing function, the clearing event happens when they go public because it will it will be you won't be able to hide. Like, I think we all say it's the best front company that's private. It's the most technical. It's gotten the most people. It's gotten the most pristine cap table. Raised the most money at the Like it's done everything right. It's the gold standard. Yes. And what their valuation is is then what you can expect if you are of that caliber, or you can expect a lower valuation if you are not of their caliber. And I think that until we know what that is, we're all gonna be hoping, and but we know that hope isn't a strategy. So my my takeaway from all of this is just more that people have to really rightsize the portfolio, sell what you can find liquidity where there are people that wanna buy at different entry prices. They may not be the price that you thought originally, but you know, makes sense for them and their risk profile in this moment in time. All of this stuff has to happen to actively manage to exits, I think. Jason Calacanis (01:00:27): Well, and there's a new phenomenon that's going on. That I've been seeing a lot of. I've I've been approached by a number of people who are doing buying strips of, GP interests and strips of LP interests in venture funds. From the last 10 years I got offered for a 5 x on paper fund, like 3 point whatever x. You know, and you could clear out, like you're saying, some of your shares. I got offered, you know, half price basically by some people who I think I don't wanna say the bottom feeders, but I think they're maybe optimistic about certain names. And, yeah. David Sacks (01:00:58): I've noticed that the amount of activity from secondary brokers seems to have increased And, yeah, and and specifically that the emails that I get that are interesting are the ones where they're asking me to sell shares. So when someone's offering you, that doesn't mean anything because it there may not be any transactions clearing. But when they have definite buyer interests at a certain price, that tells you that the market now has found or is in the process of finding the market clearing Jason Calacanis (01:01:26): price? Yeah. David Sacks (01:01:27): Yeah. So I think I think we do actually know from the secondary market kinda where a lot of these unicorns are at. My guess And would Jason Calacanis (01:01:37): you say on average, half David Sacks (01:01:39): Yeah. I'd say there's, yeah, a lot more price. Jason Calacanis (01:01:41): That's what I see. I see a lot of half price action. Chamath Palihapitiya (01:01:43): That is to me. I'm not trying to be a web blanket guys, but the average SaaS company that's public is down 75%. If you look at the fintech space, these companies are down 80 to 90%. So how can half be reasonable? Jason Calacanis (01:01:55): Just for certain names. Yeah. David Sacks (01:01:57): Because I think the the really bad names don't get any liquidity. Like, there's just no buyers. So you're talking about names where there's already a buyer. So that's gonna bias it towards the better companies. Chamath Palihapitiya (01:02:07): No. No. I'm saying when Square and OddGen, these are great companies, right, that are down 80, 90%. How can a private liquid company be only down 50%? David Sacks (01:02:17): Maybe it's not priced correctly, but maybe also there's been 2 or 3 years of growth since that last private evaluation. So maybe there's some selection bias. Maybe it's there's 20, 30% growth Chamath Palihapitiya (01:02:29): Yeah. But, but Adjane and Stripe have, I mean, Square have also grown by 50%. I mean, Jason Calacanis (01:02:34): you also have, let me, we, we have a comp on this, which is Instacart, 39,000,000,000 peak profit market valuation is trading at, like, 6 and a half 1,000,000,000, which I think is exactly what you said, Chamath, when we were pricing it, we we looked at that 800,000,000. Remember? Chamath Palihapitiya (01:02:49): I think Jason Calacanis (01:02:49): we're not not, but I I had said 800,000,000 and I just put it at like there was 800,000,000 in advertising revenue. And I said, okay, you know, 7, 8, 9 times that, that top line. Or if if I said if it was, if it was 50% margin, you could give it 20x. So I think that's how I came up with my number. And I think we came up with 8 based on that. And you're sure enough, that's basically where it's trading 6,800,000,000 David Sacks (01:03:12): right now. Yeah. That's amazing. It's down 26% since it IPOed. Now I will say that Instacart is an example of a company that has historically had very high burn and it's a very capital intensive business relatively, whereas a good software business like, take a Clavio, for example, is much more capital efficient and should be doing better. Clavio is down 16% since this IPO Yeah. Market cap out 7,000,000,000. So, yeah, it's an ugly story. I mean, even for the names that just IPO ed, it's not looking too good. Jason Calacanis (01:03:43): Yeah. I mean, revenue profits that, that clears it out. I do think there's gonna be a lot of GPs who are David Sacks (01:03:50): Arm down 21% since the cycle. Jason Calacanis (01:03:54): That's a lot of money. Yeah. David Sacks (01:03:55): Look, I think the market is turned very negative very recently, it comes back to this GDP report. You know, when I saw the 4.9% number, I mean, the thing that occurred to me, the the larger theme is that there's such a divergence right now between Main Street and Wall Street. Jason Calacanis (01:04:11): He's plain why the GDP is so strong right now And that would indicate that the economy is strong. Therefore, stocks should go up. Right? Why why is that not happening? I think this is the next maybe confusing for people. David Sacks (01:04:24): Well, I mean, I'm not sure I can fully explain it because I think there's a lot of contradictory data, but if you look at Main Street, you're seeing whatever, 4.9% GDP growth. You're seeing pretty robust employment numbers. The consumer seems to be holding up. But if you look at Wall Street and the investment side of things, it's pretty miserable. The whole stock market this year is being held up by 7 stocks. The so called magnificent 7. It's the top 7 tech names in the S and P 500. If you look at the overall S and P 500, excluding those names, it's flat for the year, and it's basically giving back all the gains. And now those 7 names are starting to crack. So just in the last Jason Calacanis (01:05:05): Google and Tesla went down a bit. Yeah. David Sacks (01:05:07): Yeah. We're seeing them go down. Chamath Palihapitiya (01:05:08): Had Facebook. Yeah. David Sacks (01:05:10): And Facebook. So We're seeing and then, you know, Microsoft had a great quarter, but it's now down. It's giving back that that pop. So you're seeing that on the investment side of things, it's still pretty grim out there because people are now pricing in higher rates for longer. That's basically what's happening. And the thing I wonder about. I mean, here's the disconnect is that Ultimately, what happens on Wall Street affects the consumer, there are 401 ks go down in value, the value of their houses go down because now you can't if you if you sell your house, you lose your 3% mortgage. Now you have to get a new one at 8%. So everyone's stopped trying to sell their house, the number of real estate transactions gone down a lot. That's gradually working its way through the system. So at some point, the consumer realizes that they're just not as wealthy as a thought they were. That's the wealth effect, and they just stopped spending it freely. And we already know that credit card debt and especially credit card servicing costs, are at all time highs because of these high interest rates. So at some point, you just wonder if the consumer is like wylie Coyote and has gone off a cliff, but just hasn't looked down yet. Jason Calacanis (01:06:23): Yeah. And just like the country, just like our government. It's like we're just Everybody's just spending, and, and nobody's actually paying attention to the balance sheet, whether it's the government or individuals, apparently, because credit card debts now are dishonest, And people are still yellow. I don't mean, is because, the only possible explanation with the consumer is that consumers wages and the unemployment, the low unemployment, persistent low unemployment, the number of jobs available is just making everybody super confident, but that's gotta end at some point, right? Doesn't think so. The companies keep cutting their belts? David Sacks (01:06:56): I don't think Wall Street And Main Street can be disconnected forever. I think it's got a reconcile one way or another. Jason Calacanis (01:07:02): Yeah. I agree. David Sacks (01:07:03): So I would describe our economic situation as as fragile. I mean, I think most commentators like Bill Ackman still thinks that things are gonna turn south at this this GDP number is sort of a peak number. I don't know. I mean, it's just things still seem kinda shaky to me. And not exactly the not exactly the recipe that you want when you have this massive geopolitical instability. Jason Calacanis (01:07:27): Yeah. Exactly. That that that double Emmy and then plus the election coming up and and the chaos that that could cost in the country. It's kinda like that quote about going bankrupt, how did it happen slowly and then all at once? I think that's kind of what we're heading towards. This has, this has been happening slowly. And then Everybody's going to wake up with a heck of a credit card bill at 15 or 20%, and they're not going to be able to pay it. Well, the government, the government Chamath Palihapitiya (01:07:51): will have to intervene. They're, they're they can't be in a situation where David Friedberg (01:07:56): I agree with Shamoff. Chamath Palihapitiya (01:07:57): A large percentage of the US consumers just can't. David Friedberg (01:08:00): This is my point of view on, yeah, on consumer and all this commercial real estate and the bank loans. Eventually, the Fed monetizes all this stuff. It's the only path, which, by the way, will inflate a lot of financial assets. And if that happens And David Sacks (01:08:15): actually, you you bring up another data point we haven't discussed, which is there's a major storm cloud out there, which is major US banks are facing large, unrealized losses. So Bank of America had unrealized losses of a 131,000,000,000 on securities in Q3. JP Morgan Chase had a realized loss of 40,000,000,000, and it's, held to maturity portfolio in Q3. And Citigroup did not disclose its losses for q 3, but it had 24,000,000,000 of losses at the end of q 2. So remember this dynamic that we had with SVB and all these banks back in, was it, like, March where all these regional banks were basically had these large and realized losses and then It created a run on a few of them. Well, now the biggest banks are starting to face that unrealized losses problem. Now I don't think like Bank of America, JP Morgan, or Citigroup are gonna have a run on the bank, but they're clearly not doing that great. And at some point, there's gonna have to be a reconciliation of that. Jason Calacanis (01:09:12): Unless they hold it to maturity, I guess. We should do just a quick hit here on this cruise follow-up story. We had talked earlier about The cruise accident and and self driving. Well, a lot of news has come out about this gentleman. That is, potentially explosive. As you we all know, just to catch everybody up on October 2nd, there was a hit and run accident and This tangentially, included that cruise vehicle, the cruise vehicle, a woman tragically got hit by a car, driven by a human, that that car ran off. The woman got knocked into, in front of a cruise self driving car. Which then it ran her over. Okay. California's DMV has suspended crews, and their permit because allegedly, the company withheld footage of the incident. If you remember, we had a little discussion here about the taxi had rolled over the person. And then we talked about, hey, you know, you're not supposed to move off of the person when we we did our whole joke about, EMT JAKow. Well, it turns out after the AV collision, the cruise vehicle apparently pulled the woman for 20 feet And this has been confirmed now by cruise, but when cruise gave that information to the regulatory agency, the California DMV, they didn't show that footage. In other words, they showed just the first half of the footage. And that has gotten their license suspended. So we have or we're left to interpret why did cruise not tell the full truth to the DMV? And now, Friedberg, to your point, about society taking risk. Now we have allegedly cruise I don't know what the most generous way to say this is, but they either omitted or they straight up lied to the California D, DMV, DMV. David Sacks (01:11:07): I mean, Jake, if it's true that they lied and were deceptive about the video, then, yeah, that's like do not pass go go directly to jail time. I mean, that's really bad. Jason Calacanis (01:11:17): Yeah. David Sacks (01:11:18): One point I made last time was that I didn't think crews was sophisticated enough tech or really GM, who's their backer, was sophisticated enough technologically to get this right. And I still maintain that. And so if on top of that, they were deceptive about what happened, then That's like the kill shot. One question I have, Jake Hall, is there was an NBC reporter who was on the scene, just happened to be on the scene. And I remember her reporting that cruise was not responsible. So I'm just wondering, like, where the disconnect here is between all these various reports. Jason Calacanis (01:11:53): I have a theory. Yeah. I have a theory, which is not responsible for the accident, but then responsible potentially for the subsequent the dragging of the, the body. So I think that's the, the issue here is that they may be able to claim, Hey, we had nothing to do with the accident. But then in what happened after the accident, yes, the the technology failed apparently. Or maybe the technology never took into account, what happens if you run somebody over that was rocketed under your car. And maybe that's just a free accident that we have to get used to that possibility happening. And that could happen with, obviously, a human driver. So it's just a possibility that that can happen? Chamath Palihapitiya (01:12:29): You don't think that that edge case is hard coded? Jason Calacanis (01:12:35): I mean, The edge case of how would the car know there's a person underneath it? I I don't know about the car. Chamath Palihapitiya (01:12:40): You're you're bringing up something so obvious as to be comical, which is like of course, there has to be some emergency cutoff when there's, like, some obstruction. Anyway, let's let all the facts Jason Calacanis (01:12:54): about that. Chamath Palihapitiya (01:12:54): And I Jason Calacanis (01:12:54): think we'll wait for the rest of the facts to come out. We've got, I think, 80% of them here, 90% of them, but Friedberg, you had told us, in the group Chamath that Hurricane Otis would, potentially be disastrous for Mexico and, Turns out you are correct. 27 people are dead in Mexico. And maybe you could explain to us why this storm is unique and why if you think this that we're seeing more of these, or are we seeing more of these, or is the coverage in the media Yeah. You know, in reaction to it, getting distorted. David Friedberg (01:13:29): I don't know about the media coverage. The big story with hurricane otis is that it went from being kind of a tropical storm to being a category 5 hurricane in about 6 hours, and then it made landfall in Acapulco at a category 5 hurricane, and no hurricane forecasting models had predicted this. And hurricane forecasting models are what are, you know, typically run off of ensemble models, meaning that there are multiple things that may happen. And that those simulations are run on very compute intensive systems. And there are many, many simulations being run all the time. Every 6 hours, these simulation runs are done. And then you look at these and you create a probability of things that may happen. And none of the forecasts had any probability associated with this event happening. It was so out of the bounds of anything we have seen historically that none of the models had any chance ascribed to this tropical storm suddenly evolving into a category 5 hurricane in 6 hours. And then making landfall on a city with a million people. We can look at pictures if you guys want and what happened in Acapulco. It's obviously pretty devastating there's apparently no power line standing in the entire region. Here's some photos. I mean, look at this, like, wow. 100 and 65 mile an hour sustained winds, The eyewall went through the the town. So a million people, by the way, many of whom live in not concrete reinforced buildings up against the mountain there. And so the devastation is really extraordinary, but the the shocking thing is that there was no prep. There was no warnings. There was no alerts. There were a ton of tourists sitting in these hotels. Look at the, I don't know if you have any of the hotel photos, Nick, but it's insane. There are zero windows left in any of the hotels, any of the condos, any of the resorts. They are gone. So imagine you're, you're, like, in Acapulco, you're drinking beer and tequila, and then you go to sleep, and this thing hits at 1 am as a category 5 hurricane, and destroys everything. There's no power. David Friedberg (01:15:24): There's nothing. So if you pull up the first chart, most of the energy that that is absorbed from the sun ends up in our oceans. So, you know, we talk about atmospheric carbon increasing energy retention. And people can debate that all they want, where the carbon comes from, etcetera, etcetera. At the end of the day, there is energy coming into the earth from the sun, and that energy is being retained. The vast majority of that energy is retained by the oceans So the first couple hundred meters of the oceans, retained north of 90% of the energy, absorbed by Earth. If you go to the next slide, So that results in water temperatures going up. So if you look at, this is compared to the the, 1955 to 2006 average, and you can measure ocean heat content. But ocean heat content has risen fairly linearly since the nineties, and you can kinda see you know, how much excess is that heat Chamath Palihapitiya (01:16:20): related to temperature perfectly or no? David Friedberg (01:16:22): So this is ocean temperatures over time. So here you can see 2023. And so this shows you, the average sea surface temperature. So 2023 has been such an outlier, and this is also because of these, El Nino phenomena, but There's obviously over time. If you were to look at the average sea surface temperature trend, it's rising linearly with heat content over time. And in particular in 2023, there's an extraordinary rise in temperature. So off the coast of Acapulco, the sea surface temperature was 88 Degrees Fahrenheit. I mean, it was so hot, but water, like, imagine in the 80 that's like a David Sac swimming pool. It's so warm. You know, going down many meters in the ocean. So when a storm goes over that level of heat, it takes heat out of the ocean, and that heat coming out of the ocean increases the wind speed. And then if the wind speed pulls more heat out of the ocean, and that's how these things become escalatory until they hit something cold like a mountain or the the the land, the land is much cooler. And then these things start to dissipate and break apart. And that's why these things form over the ocean. So the point is no models predicted this. And that's because we've never seen this level of energy stored in the oceans before, and the model of training has never really accounted for this sort of extreme condition. This extreme condition obviously is is what some folks are arguing is becoming more frequent. So it brings into question, you know, the, this, this, ability for us to actually forecast the, the rise in the temperature over time is driving this And then, from an economic perspective, this is, but one of the key points I wanted to make. When an event like this happens, There's a market called the reinsurance market, and the reinsurance market sets the price for covering insurance companies against a big loss where you can lose a ton of stuff at once. Insurance companies like to write insurance policies like car insurance is a great business because there's never one big event causes everyone to get an accident on the same day. David Friedberg (01:18:16): But with property insurance, a hurricane can cause everyone to lose on the same day. So insurance companies need to buy reinsurance. And then there's these big reinsurance companies, and they have pools of capital, and there's capital markets involved in bonds that are sold. To protect reinsurance. So there's, you know, 100 of 1,000,000,000 of of dollars, $1,000,000,000,000 plus in reinsurance. When an event like this happens, those reinsurance markets take a loss. And the loss causes them to raise rates significantly, and it's and when that happens, the reinsurance markets harden is what they say. And then rates go up next year for reinsurance. And then the insurance companies pass those rates on to consumers. And to property developers and to the people that have mortgages. And the more of these events happen, even though it just happened in Acapulco, It impacts insurance rates everywhere. So as we see the events like what happened in Maui, what happened in Acapulco, what happened in Miami, You can start to see more of these things start to happen at the same time. The cough for ensuring property goes up. And that starts to make this whole system very difficult to maintain because if the cost for insurance doubles or triples and people can't really afford it, but the mortgages require that they have it in all of these high risk coastal cities and coastal areas, That's where an economic hit either has to be absorbed by the federal government or We individually a mask Jason Calacanis (01:19:34): or or we can't match insurance. Right? David Friedberg (01:19:36): Or we take a massive economic loss. And so I just wanna say, like, this seems like an outlier event, and, oh my gosh, we should be sorry and sad, but the truth is, The frequency of these events and the risk factors, which is this ocean heat temperature rising continuously for a long period of time, are gonna drive that frequency of events And there's gonna be a real economic cost to bear on the order of several $1,000,000,000,000 over time because someone has to underwrite that real estate and not someone has to underwrite the insurance to support that real rate. So it may seem like a one off and all, you know, this won't be a big deal, but it actually translates economically through the reinsurance and insurance markets into the real estate markets fairly quickly. And so I just wanted to kind of point out one of the the the second order consequences of just an article Chamath Palihapitiya (01:20:16): in the Wall Street Journal a few weeks ago, Nick, you can probably find it about this exact issue where they profiled the handful of homeowners. I think it was in Palm Beach or West Palm Beach. And they essentially had to sell and leave because they couldn't afford the home insurance. Or for those that own their home outright, they just stopped insuring it because they realized the land value would be fine. And so they said if a storm, there it is. If a storm hits you know, West Palm and and destroys my home, you know, hopefully I'll be fine, and then I'll just leave and I'll just sell it for the dirt. But to your point, it's become economically untenable in a lot of places for these folks to be able to ensure ensure their home. Look at this. On this example, a 100, and $21,000 a year for home insurance. What? How's it possible? David Friedberg (01:21:06): By the way, add up the value. Well, that's because there's a 1 in 10 chance that a hurricane's gonna hit them on any given year, right, and then they lose their whole value. So do the math on what the total real estate value in that region is, and think about what it gets written gets written down to as everyone starts to sell. And then you do that across all these regions where there's now high risk and lack of insurance available And you have a real economic question on who's gonna step in to support and buoy those asset values. Chamath Palihapitiya (01:21:32): Now, but aren't there state actors now that step in and act as a reinsurer? David Friedberg (01:21:37): Great question. In Florida, they have a reinsurance pool that is largely assumed to be completely underfunded. And so everyone says like Florida's got this reinsurance pool to write your stuff. But if Florida, if people if you ask people in the reinsurance industry, they're This thing's basically bankrupt. It's completely insolvent. This isn't real. So the federal government's gonna be asked to step in and cover that thing at some point. And then someone's gotta write a $1,000,000,000,000 check. I mean, you know, you wanna complain about sending a $100,000,000,000 to Ukraine and Israel. Wait until most of the country has to underwrite coastal communities real estate values. Chamath Palihapitiya (01:22:06): So Silicon Valley actually needs to be pro climate change so that you can reinflate the money supply. Wow. I Jason Calacanis (01:22:15): mean, and then the other, the other David Friedberg (01:22:16): I mean, the second one is, Chamath Palihapitiya (01:22:18): I'm I'm I'm being facetious, but I'm kind of not. It's really crazy that so many industries, it, it, I think Sac said it really, really quite perfectly. When the money supply is shrinking, there's just a lot less money to go around. When the money supply is growing, it much easier for all of us to grab a share of it. And now that it's shrinking, you have this weird effect where you actually want government intervention, which unfortunately only happens in acute tragedies and calamities. And so what are we hoping for now as a society? That's a very scary idea. Jason Calacanis (01:22:49): The second who who's gonna buy these homes if they can't be insured, right? It's not gonna crash home prices for a burg? David Friedberg (01:22:54): That's my point is that these assets aren't worth what they're currently marked at And if you add up all of the real estate assets in all of these different regions that, you know, everyone assumes are worth x, But the only reason they're worth x is because they're insured. And if they're not insured, people are gonna have to start to sell them. And if they can't afford the insurance, they're gonna have to start some, then the real value starts to come these sorts of events like acapulco are catalyzing events for forcing the market to rewrite this. Chamath Palihapitiya (01:23:21): That's that's David Friedberg (01:23:21): this is the beginning of a cascading effect. Chamath Palihapitiya (01:23:23): I saw a really interesting study about the the the risk of the rising oceans and just the the salinity of the oceans to all the real estate in Malibu. And the reason is that, you know, if you look at the Malibu coastline, there's a small number of homes, but they trade at an extreme amount of economic value. But what underpins all of that stuff are that these homes are viable and that you can live in them and that you don't have to replace them and that if you can sufficiently drill far into the bedrock. You can keep these homes safe. And this study was just talking about how the corrosive effects of the ocean are such now that you can't actually do that to the same rate when you when you actually initially buy these homes. So now you have these $50,000,000 $100,000,000 homes that are really at risk of just corroading and falling into the seat. Interesting. Jason Calacanis (01:24:10): Yeah. That's always been an issue there. And you're right on the PCH Highway. And there's a small amount of land between you and the water. So if it starts rising or it's corrosive, you know, I've rented those homes before, friends of ours have as well. And the water just goes right underneath the homes. And every year, that goes a little bit further under the home. Chamath Palihapitiya (01:24:28): Right. Yeah. Jason Calacanis (01:24:29): And you can't in some of the homes now, when they, when they rent them to you for the summer, they say, Hey, listen. During high tides, you can't get to the beach safely. You can, like, jump off your back porch and up into a wave, but at, you know, low tide, you can get down and and use the beach. If not, you have to walk down the street and go down, like, you know, another person's alley Chamath Palihapitiya (01:24:46): to get to the water. Check out where are you now? Jason Calacanis (01:24:48): So I have been in the Middle East. I got to go to Riyadh for the first time. I'm in UAE for the second time. Don't have any business interests here, but I have, been taking a bunch of meetings. And the reason I went is I'm actually, and, I'll pre announce it here. I'm gonna be bringing this week in startups. I'm gonna do a series from the Middle East and feature the capital allocators and the startups that are growing here. The startup scene here is extraordinary. And I'm gonna bring my founder university to the region as well, and I'm gonna start teaching entrepreneurs here in the region, Egypt, Saudi, UAE, Qatar, anybody, Jordan, who wants to learn how to build a company, I'm going to be teaching startups in the region. And so pretty exciting. And I think startups, you know, at their core is hope and, personal freedom to change the world. And I think if we build deep relationships between these important countries that are playing a bigger and bigger role in the global stage and we we build companies together, that's going to be great for America. Chamath Palihapitiya (01:25:46): What the Jason Calacanis (01:25:47): American interest So that's what I'm seeing here since people have been asking you. Chamath Palihapitiya (01:25:50): What if anything has changed between what you thought of the Middle East versus what you think of it now has anything changed? Did you have a different view of Saudi? Let's take Saudi, for example. What did you think of Saudi and MBS before you went and what do you think now after you've been there? Jason Calacanis (01:26:04): Well, there there was very little change in that society over the last 30 or 40 years. And based on what they've told me, you know, spending a lot of time with a lot of people there. I maybe had, I don't know, 30 individual meetings, or coffees, dinners. Literally 30 different people. And, they've told me everything's changed. So personal freedoms have changed radically, economic freedoms have changed radically. The the political political system hasn't changed. Nor do I think that's gonna change radically? But, yes, my opinion of it the reality of it is it's changed massively. And then, you know, on top of that, yeah, I I have learned a lot. I've I've never been there. The entrepreneurial excitement in the region? Do you Chamath Palihapitiya (01:26:49): think you were do you think you were too judgmental before? Jason Calacanis (01:26:54): I have some core principles that I believe in. And what I will say is from doing this podcast with the 3 of you. And then being thrust into like geopolitics, which, you know, I I really haven't been in my life. I felt I needed to get more educated. I feel I am more educated now after doing all these meetings. And I think the big education is the people here are are not much different than the folks, in our country. And they all want peace, prosperity, personal freedoms. They wanna have a great life for their family. So to that extent, I think and and each of the countries is very different, you know. And so you you can't paint with a wide brush. Now, of course, I know that, but there's no substitute for being here and spending time with people. So So Chamath Palihapitiya (01:27:38): do you think that you just had a misconception, or do you think you just fell for what the media tried to portray these countries when There were incidents. Like, how do you how do you reconcile that as you change your mind about them? Jason Calacanis (01:27:52): Well, I, I think things have actually changed here more than I've changed my mind. I, I still feel the same way I feel about human rights and you know, personal freedoms and everything like that, but what I've learned is that this area is changing so quickly and that change is hard. And in David said something really important, you know, is like you need strong people to make these changes here. And they're gonna make the changes on their time. So the other thing, I think if there's anything that has influenced me. It's probably what what David said, you know, is like the the this is gonna be hard to make the changes here. And another thing you said, you know, there was one point you said on this pod, like, Hey. Do you think they care what you think? Right? They actually do care. They listen to the pod. But the truth is the changes are gonna occur here, Chymov, whether we're involved or not. And so I think as Americans, what we have to decide, and as business leaders, how involved do we want to be in that change? And how deep of those relationships do we want to build? Because if we don't build those relationships, there are other people who would like to forge relationships, right? Russia, China, etcetera. So I think just in terms of, the chessboard that we see playing out right now, the more America can engage with this region, build companies with them. I think it's gonna be better for humanity and society. But I think if you look at China, we disengaged. And how's that going for us? Yeah. It's going terrible. So I wanna build companies here. And that's the other thing is people are having big talks about all of these issues, human rights, changes, and so I the thing I wanna make sure people understand is I wanna see positive change in the world, including our country here everywhere. And so, you know, it's it's never coming from a place of trying to be preachy, to people. Jason Calacanis (01:29:34): I just wanna see positive change in the world. And, you know, now with this podcast being so popular, people have expectations of us. And one of the expectations is we, we know what we're talking about. And I did not know what I was talking about in this region because I never spent time here. Just like Saks has never been to Ukraine. What does he know about Ukraine or Russia? He's never been to So, you know, just like Saks is gonna go to Russia and Ukraine and get educated, you know, I came here to get educated so that I can represent the pod better. David Sacks (01:29:58): I've been to the United States. And so I know that the US shouldn't be involved there. Jason Calacanis (01:30:03): I'm joking with you, my friend. I'm joking, but we, you know, I think we should go you know, do more travel. And it's really inspiring to see what's going on here. On a very pragmatic basis, I will say This is gonna be the number 2 re region in venture capital. And it's gonna be that in 10 years because I've met with a lot of the family offices. And the family offices here are extraordinary. Like, they built these businesses, like, really hard fought businesses 50 years ago. Chamath Palihapitiya (01:30:27): Welcome to being a capitalist, Jason. I love it. The waters warm in this bathtub join us? Jason Calacanis (01:30:32): Well, no. I the the thing with these, these individuals is they're they're coming to the United States to invest in companies here. They're they're not just like the dumb money at Chamath Palihapitiya (01:30:40): the table. Of course, they are. Of course, because there's smart business people. We're all smart business people. We've always wanted to be in business Nobody it's what you said. Nobody was sitting here wanting to be some preachy know at all. Jason Calacanis (01:30:51): Yeah. So anyway, I I'm learning a lot. I'm having a great time here. I don't currently have any business interest here, but I would say, you know, a year from now, there'll be, you know, a 12 episode run of this week in startups featuring here. And then founding University would be here building companies with people in the region. So I'll be investing in some companies here and helping founders start companies. Alright. Socks. I I Chamath Palihapitiya (01:31:12): Yeah. Tell us about the speaker socks. Who is this? Who is this? Who? And Well, let's not call it. Because he's third in chart. He's 3rd in line for the presidency. So Saks, who is he? David Sacks (01:31:21): Okay. His name is Mike Johnson. He's from Louisiana's 4th district. He's been in Congress for since 2016. It's his 4th term He is in relative terms of back venture. Apparently, he's never met with Mitch McConnell. That may be a good thing, but several members had to Google him to find out who he was. David Friedberg (01:31:38): Really? Yeah. Jason Calacanis (01:31:39): Here we are. David Sacks (01:31:41): The good news in my view is that he did vote against more funding for Ukraine However, as much as I like him on that issue, there are other issues where I think his previously stated views could be problematic for the Republican caucus. So he's very socially conservative. He voted to ban abortion at the federal level He's called gay marriage, a dark harbinger of chaos and sexual anarchy that could doom even the strongest Republic. On the issue of entitlements, he has expressed support for cutting Medicare and social security. I think Trump has rightly figured out that that would be death to the Republican party. Where he is aligned with Trump is that he bought into the elections and IL theories And particularly, he bought into the Dominion scam that was pushed by Cindy Powell. Jason Calacanis (01:32:29): Shout out Cindy Powell who, is pleading guilty this week. Yeah. David Sacks (01:32:33): The Kraken. Yeah. The Kraken. Jason Calacanis (01:32:34): Yeah. So was lunatic too? You did have a word to describe this guy? Sucks. Would you say, or would David Sacks (01:32:42): I don't think he I wouldn't say. Chamath Palihapitiya (01:32:43): Sorry, David, David, how did he get elected? Cause I thought there was like more moderates that were, like, Emma's and even scalise is more to the left of this guy. So how how did how did is it that all of that ended up with the the far, far, far right person getting elected? David Sacks (01:32:59): This is the crazy thing is that they had better choices. And so, for example, Jim Jordan is the guy who I think should have gotten it, Jim Jordan is always supremely prepared for any hearing. He's one of the only Republicans who knows how to ask tough questions. I think he would've run the house with tremendous discipline. This is a case where you're plucking a guy out of obscurity. He may not even have the experience to run the house with the necessary discipline. Moreover, he's somebody who the Democrats are gonna be able to write campaign ads against very easily. Now you asked a question how did this happen? I think that the GOP just kinda ran out of gas. I mean, they went through so many candidates that they exhausted all the options, and there were 3 weeks of chaos And the New York Times summed up the feelings of the GOP caucus by saying they view Johnson as someone who's sufficiently conservative who they do not personally despise. So that's really the reason at the end of the day is they just perceive as a nice guy. But as you know, nice guys don't always get the job done. I think they they what is happening. They kinda ran out of candidates, and and they they chose this guy because he's a nice guy. Now Jim Jordan Jason Calacanis (01:34:06): This guy's a nice guy? David Sacks (01:34:08): He's a nice guy. He's he's very angel. Jason Calacanis (01:34:10): Believes gay people are evil? Chamath Palihapitiya (01:34:13): I David Sacks (01:34:13): don't I certainly don't approve of that message, but it comes from his Religious views. Jason Calacanis (01:34:18): Well done. Republican party. David Sacks (01:34:20): But look. Jim Jordan was the right guy here, but Jim Jordan sometimes has sharp elbows, and so he's rubbed people the wrong way. Mike Johnson on a personal level has not rubbed people the wrong way, but I agree that the campaign ads are gonna write themselves here? Chamath Palihapitiya (01:34:37): He, he apparently hasn't rubbed anyone. David Sacks (01:34:42): And then the crazy thing is that the one social issue It David Friedberg (01:34:45): gets crazier. David Sacks (01:34:46): It get well, from my point of view, the one social issue or cultural issue where he's not that conservative, apparently, is on CRT. He said a bunch of things that indicate that he views the US as being systemically racist and doesn't think Republicans should should be attacking CRT, which I think is the one cultural issue where Republicans should be on offense. They should be opposing the woke mind virus. I would like to see them go after that issue and not be trying to re litigate gay marriage or abortion at the federal level. So in my view, this this guy is the the wrong mix of of cultural issues. And then, of course, has used on entitlements or a surefire loser for the Republicans. So the Republicans were all like slapping each other's backs and sucking each other's so we're getting this done. They're also happy. But I think it's a disaster in making David Friedberg (01:35:40): Woah. Yeah. It's a disaster. Jason Calacanis (01:35:42): How long does this last? How many days? Give me how many mochis? How many Sacoochis were just guidelines? Yeah. You give them 7? David Sacks (01:35:51): Well, again, the Republicans now are so burned by the chaos. They just went through that I don't think they won to go back into it too easily. Jason Calacanis (01:35:59): Wow. David Sacks (01:36:00): So it could last. It I look, you're right. I I don't think I don't think he's gonna last long term, but, but it it may be more than a few Scaramucci's. Jason Calacanis (01:36:09): Yeah. Yeah. Scamucci David Sacks (01:36:11): only lasted 11 days. So the Yeah. Jason Calacanis (01:36:13): That's what I'm saying. 100 days. David Sacks (01:36:15): The the Scaramucci is a is a unit that equals 11 days. Jason Calacanis (01:36:19): Yes. So you think like tan Scaram? David Sacks (01:36:21): She's No. Chamath Palihapitiya (01:36:22): But why don't you think you could get to you if you have to get to, like, January 20th 2025, which is the inauguration, what are you talking about? 3 65 days. Right? Plus another. Jason Calacanis (01:36:33): Yeah. We're we're talking like 70 days here. Chamath Palihapitiya (01:36:36): No. We're talking about 41 Scaramucci's to get to Jan 20th. Jason Calacanis (01:36:40): I mean, 40 Scaramucci is a 20 25. 40 in a wake up. Oh my lord. David Sacks (01:36:47): So what you're gonna see is now that the media, this already started. There's gonna be a drip drip drip of all the things that he's ever said when he was kind of a back venture and Noah's paying attention. All these sermons that he's given and so forth, they're gonna be, you know, writing stories about that, and they're gonna make the guy seem like a wacko. Jason Calacanis (01:37:05): Or expose that he is a wacko. I mean David Sacks (01:37:07): Well, I I think that, I would say that he's just somebody who's got very socially conservative views based on being evangelical. And Jason Calacanis (01:37:17): Might be wildly out of touch with Americans. Yeah. Chamath Palihapitiya (01:37:20): I don't David Sacks (01:37:20): wanna, like, offend people in that group by saying he's a wacko, but I think you are right that it is not in tune with Most voters. Let's say that. Jason Calacanis (01:37:31): Hey. Before we go, it's actually gonna ask you, about the, about the trump cases. I mean, as a lawyer, what what do you think is gonna happen here? I guess all of the crack and people have to explain David Sacks (01:37:43): to the audience what happened. Jason Calacanis (01:37:44): Well, I mean, I I think everybody's following a Jenna Alice Kenneth Cheesbro. It's spelled cheeseburger, but it's Chesbro and Sydney Powell have all now pleaded guilty. Some of them for a felonies in fact, but the others, Mr. Miners, and they're all really apologetic about, basically this fake elector. Scam they were running to try to overturn the election. And they say there's 6 more of these nineteen people in the Rico case. We're gonna flip next week. At the same time, Trump was doing his, case in New York and was fined 10 K for violating this, the, the gag order the second time third time, they think he's gonna actually potentially be put in jail, which seems to be something he's trying to do. So what what's your day here, Zach? Is it all a deep space cons deep deep state conspiracy still, January 6th stuff, or were these lunatics actually trying to overthrow the government? David Sacks (01:38:39): To be honest, when you mentioned the name Jenna Ellis, all I can really think of is that, election hearing in Michigan where she made a face because Rudy Giuliani audibly forwarded. And then it turned out that, that she got COVID a few days later, and that we think that Julianni had it at the hearing, so he may have farted the COVID into her. Jason Calacanis (01:39:00): That's what we've learned after all of this with COVID is that it's not it's actually It's just you could space. You could Chamath Palihapitiya (01:39:08): you could fart COVID onto somebody. Friedberg. David Friedberg (01:39:14): We need Chamath Palihapitiya (01:39:14): an emergency side squareder. Can you fart COVID into somebody's face, please? Free Jason Calacanis (01:39:19): bird. Don't decide, buddy. Chamath Palihapitiya (01:39:21): Friedberg is a serious question. It come out your bum Jason Calacanis (01:39:25): as well as your mouth? Come on. Should we have put masks or diapers when we were on airplanes to block the COVID from We should have masked him. We were masking in the wrong place. Yes? Friedberg? I got him to smile. He almost left. David Sacks (01:39:39): Hold on. Put the put this on the screen. Jason Calacanis (01:39:47): Somebody called Joe Rogan. David Friedberg (01:39:48): No. But she Chamath Palihapitiya (01:39:49): said she says the TLTR is unlikely, but that's not a no. Jason Calacanis (01:39:53): It's not a no. David Sacks (01:39:54): That's not the same as impossible. Jason Calacanis (01:39:56): Yeah. I mean, I would can we get Fauci to come back? Where shout out? Anthony Fauci, he he's got the answer for us. In all seriousness, this is, they're they're gonna flip all these folks. I mean, this is like the end of, Goodfellas here. Everybody's getting pinched. You think Julie Ronnie's gonna get get go to jail here? What do you think? How does this end, Zack? David Sacks (01:40:18): I think what's likely happening is that they're flipping these lower level figures in order to flip the next higher level, which would be Giuliani and John Eastman, because I I don't think these people have anything on Trump. So they're gonna try and, you know, use Jenna Ellis to flip Rudy, and then they're gonna try and see if Rudy will flip on Trump. But this all begs the question of, like, was there ever a crime here Jason Calacanis (01:40:45): Oh, well, yeah. I mean, they they admit. Yeah. David Sacks (01:40:49): Who who's admitted to it? Jason Calacanis (01:40:51): The the three people who pleaded guilty. And the corporations, David Sacks (01:40:55): they don't have their lives ruined by spending their lives in criminal prosecutions that could send them to jail. So obviously, they're gonna cut a deal. But that doesn't initially mean that, like, they're gonna get the big eye here on some on some crime. And in fact, I remember when the TDS crowd was orgasmic over Trump's CFO flipping. Remember when Wesselheim? Jason Calacanis (01:41:17): He's gonna jail for 6 months. Yeah. David Sacks (01:41:19): Yeah. But remember when he supposedly flipped on Trump, and it turned out to be a big nothing burger. They couldn't get trump. You you keep trying to never Trump Jason Calacanis (01:41:26): knows how to say stuff. He's just like, hey. Maybe you guys could do something over here with the election. David Friedberg (01:41:31): Sex, I read that he walked out of the courthouse yesterday you got like a $10,000 fine for violating a gag order by threatening a quarter of a reporter. It's so incredible. This whole thing. David Sacks (01:41:40): How does that president of the United States, he's running again for president. I have the right to say what he wants. That's crazy to me. Jason Calacanis (01:41:45): Well, no, they he sent us the security of these individuals. He's going after, like, the, like, court reporter. Like, he's going in from, like, the second person. David Friedberg (01:41:52): What happens? David Sacks (01:41:53): What happens David Friedberg (01:41:54): if he gets, convicted? Does he miss the election? Is there some rule that says he can't run? What is the, the law? Jason Calacanis (01:42:01): They don't know. That literally is unknown territory. Chamath Palihapitiya (01:42:04): We're an uncharted territory. Jason Calacanis (01:42:05): Uncharted territory. Just like the foreign. David Friedberg (01:42:07): Okay, everybody. Just like the hot water and the ocean. David Sacks (01:42:09): I think all I need to know is gonna get paid back on Rudy for that fart. That COVID. Chamath Palihapitiya (01:42:13): Absolutely. She flipped. Jason Calacanis (01:42:15): She flipped it into the fog. Yeah. That's it. Alright, everybody. God. I mean, at least there's something to laugh about in this horrible, terrible end of 2023. It's so depressing right now. I mean, it's just so depressing everywhere, isn't it? Let's pray for peace and, listen. This has been another amazing episode of the online podcast episode 151. David Sacks (01:42:42): We'll let your winners ride. Jason Calacanis (01:42:45): Rainman David Sachs. David Sacks (01:42:49): We open source it to the fans, and they've just gone crazy with it. This line. White white air winter's line. Besties are gone. Jason Calacanis (01:43:04): That is my dog thinking, and I was driveway checks. Chamath Palihapitiya (01:43:12): We should all just get a room and just have a think you, George, because they're all just useless. It's like this, like, sexual tension, and they just need to release her mouth. Jason Calacanis (01:43:26): Where did you get Murphy's artifact?