商业地产动荡、WeWork 破产、拜登 AI 行政令、乌克兰的「克朗凯特时刻」

David Friedberg (00:00:00): Hey, everybody. Welcome to another episode of the All in Pod. The threesome is here doing the show. So yeah. Threesome. Thruple. Chamath Palihapitiya (00:00:09): It's a thruple. It's David Friedberg (00:00:10): a thruple. We have a thruple. David Sacks (00:00:12): I think it's more like a cuddle puddle. David Friedberg (00:00:14): Okay. The dictator Chamath Palihapitiya, Rain-man, David Sacks, Sultan of Science, Dave Friedberg. Happy to be here with you guys today. We are absent Jake Hall taking the week off. Any other housekeeping? Let's do it. Let's jump into it. David Sacks (00:00:30): Well, you announced that we're gonna hire a CEO. Right? Chamath Palihapitiya (00:00:33): Oh, let's not go with that. How's it going? Friedberg in our, CEO search? David Friedberg (00:00:37): Okay. I gotta admit. I've had a few conversations, but I gotta get through the list. There are 240 applicants so far. Wow. And there's some really, like, great people in there. So we need to figure out how we're gonna manage this, but I think we're pretty excited. I can't David Sacks (00:00:54): believe so many people wanna work for David Friedberg (00:00:56): us. David Sacks (00:00:57): That's insane. David Friedberg (00:00:58): There's some really great folks. I think the Chamath, you posted it people were pretty positive, right? Generally positive. Not at Chamath Palihapitiya (00:01:03): all, but generally positive. Yeah. I mean, I I think that people were very excited about the fact that we were gonna try to kind of, like, professionalize this a little bit more. David Friedberg (00:01:14): So let's just talk about that. We did the all in summit In September, we thought it went really well. Folks really enjoyed it. The survey data, the folks that attended, was really positive. So we we wanna do that and do more of that live in person stuff. We all have full time jobs and other things to do. So we need someone to come and run this as a business and organize it and carry it forward a little bit for us. And so we're really excited to hopefully get someone that can scale this No ads ever. No subscription fees. Nothing's gonna change about the pod. David Sacks (00:01:49): So it's a media and events business, and it might become a CPG business as well. Meaning, was it CPG's consumer package goods? Chamath Palihapitiya (00:01:57): That's right, Saks. You're you're that is the correct use of the acronym, David. Congratulations. David Friedberg (00:02:04): Your first product, would be what tequila? David Sacks (00:02:07): I would do, like, a tequila or like, a hard self serve, something like that. That seems to be a big growth category. Or we could figure out something very orthogonal. I mean, Mister Beast did candy bars, and we found out that the all in summit that he's doing something like 250,000,000 a year in revenue growing very fast. Chamath Palihapitiya (00:02:24): Yeah. We could do socks nuts. David Sacks (00:02:27): The sax nuts be too big to eat. You wouldn't be able to fit them in your mouth. That's your mouth. Chamath Palihapitiya (00:02:31): They just be old and salty. Speaker 4 (00:02:37): We'll let your winter ride. Rainman, David Sachs. Speaker 5 (00:02:44): We open source it to the fans and make discoveries. Speaker 4 (00:02:52): Well, I think the other Chamath Palihapitiya (00:02:53): thing that's worth figuring out is this idea of, like, what is what is the community really look like? I think that's the biggest That's the biggest upside for the CEO is like, is it physical places like 0 bond, or is it virtual sort of like community oriented things? Is it some combination of the 2? I'm really interested in trying to figure that and what answer they come up with. Then the other thing that I would really like to experiment with quite honestly is if we could do a little bit of a tour, I just think it would be super fun. To kind of go to, like, 5 or 10 cities and just kind of, like, crash those places and have, like, a big get together and talk to people and do a bit of Q and A. I think the thing that is really fun is just the interactive Q and A just because it allows everybody to get involved. And then to be able to do dinners with each other and, like, There's just a really amazing community. So that person should be able to figure this out. I I don't know the answer to it, but I I I'm hoping they figure that out. David Sacks (00:03:49): We should give a shout out to the guy who did the interview video or submitted. Do you see that? It's like a 4 minute video that somebody submitted his application by video on On X? David Friedberg (00:04:02): I think I was on his podcast, Sean. David Sacks (00:04:04): He were? David Friedberg (00:04:05): I was on his podcast, like, a year and a half ago, I think. David Sacks (00:04:08): Could we pull it up? Welcome. Welcome to my 5 minute job application to become CEO of the all in podcast. This is the American dream, baby. Chamath Palihapitiya (00:04:18): That's great. David Friedberg (00:04:19): Well, he posted a tweet the day before saying if it gets a 1000 likes, he'll submit an application and instantly got a 1000 likes, and then he put that video together. So great job, Sean. I will be calling you later for your 2nd run interview. I think you're well qualified after that submission, but I do remember, like, at the all in summit, I've never been to a conference where I'd say, like, 95% of the audience was actually in the theater for the entire content session. Like, they really sat through it. They was really engaging. So I think that's the sort of product that I'd love to bring bring out more, which is some of these important conversations with people that can provide a perspective that folks might not be getting elsewhere. Umath, you also mentioned on Twitter that you're doing more content, like your you called it learn with me. What is that? Chamath Palihapitiya (00:05:09): Yeah. I mean, well, I've been doing this for a while, but I just wanted to wrap it up and kind of make it into a clean kind of productized service. So, you know, I have this newsletter that I've been using weekly to just kind of share everything that I read, but then I thought, okay. Why don't I actually, like, really invest just a little bit of time every week to curate that even a little bit more. And then write little summaries of probably the 3 most important news topics of the week, And I just kind of give an insight into my process. So when I read all of this stuff, usually two to three times a month, but the average is around twice a month. I end up writing an essay. And it's like 1 or 2 pages really quick, and I just keep them for myself. And it's like, right now, I'm just I just finished 1. What is the Federal Reserve? And the reason I did that was because Druck and Miller was on TV, and he was talking about all this stuff. And I just wanted to remind myself about why the Federal Reserve exists the way it does. But basically what happens is from these quick essays and from what I read, I typically start every month a deep dive where my team and I We probably allocate at least a month to a month and a half where we figure out something in really excruciating detail and we generate a slide deck and a write up. And then we take that and we go and we ask a bunch of experts what they think. And then we only keep it within ourselves, but then I thought, you know what? Why don't we just sharing it. So the reason I'm doing this is really to keep myself accountable to keep learning because I feel like in the last few years, the thing that I lost most when things were going crazy was just the incentive to learn. And I thought if there are other people around me that are also relying on this, I'll be more accountable. And obviously, to the extent that this thing can actually be self funding then I can take some of that revenue, reinvest it in more research associates, maybe publish more content. But it's kind of like all the information I wish I had so that I could make better decisions. Chamath Palihapitiya (00:07:09): I'm just going to kind of take what I have, share with everybody, and kind of go from there. So we'll see. David Friedberg (00:07:15): So you're charging for the kind of higher end part of it. Chamath Palihapitiya (00:07:18): At the end of it, like, it's a kind of like, I would say most of it is free. The Twitter spaces, obviously, is not because the point of these or these x spaces is we just don't want a bunch of bots and trolls, but there's a bunch of people that signed up to be a subscriber. So we'll do Q and As monthly for subscribers. And then once a month, I'll publish a deck. And like I said, if you want the full one, then you can be part of like a paying community. Otherwise, you'll get some portion of it for free. And David Friedberg (00:07:45): then you'll have cash to reinvest in doing more content. Is that fair? Chamath Palihapitiya (00:07:49): Like, right now, I have a couple of research instance that really helped me. And we have a pool of experts that we use, but if this thing picks up some steam and we can have enough revenue to hire 3 or 4 more RAs, maybe at some point, instead of monthly, we can go biweekly. I don't know. But the idea is just to focus on sort of what I think is interesting so that I can have a general view of of things so that I can make better decisions. And like I said, to the extent people are interested now, they can follow along at any level. David Friedberg (00:08:17): There you have, it's go to your Twitter to see it. Right? Chamath Palihapitiya (00:08:19): Yeah. Okay. By the way, the other thing is it's kinda cool to be in this, like, content creator economy. You know, that's the other thing is, like, I don't know about you guys, but I feel like I'm on the sidelines looking in at trends now whereas before I was in the middle of them, like web 2.0, social, I was right in the heart of it. And I was like, okay. This is amazing. And then as an investor in SAS and deep tech, I was kind of in the middle of those as well. That felt great. But this last push in AI, I'm like, wow. I'm really on the sidelines looking in, or This content creator stuff. So I think it's it's a good forcing function for me to kind of learn as well. To David Friedberg (00:08:59): be active in the content creator economy, basically, to to understand about it. Chamath Palihapitiya (00:09:02): Yeah. I don't know how else I'll ever learn how to, because, like, I I could read all the stuff I want. David Friedberg (00:09:06): Just so you know, you do a podcast that a lot of people listen to. Chamath Palihapitiya (00:09:10): Yeah. But I think that that's like a it's the lowest order bit quite honestly. You know, when you see, like, what Jimmy Donaldson does, or even like Kim Kardashian, what they do as content creators, it's just an intense process that then creates all this upside. So even if what I want to have a more informed view of where all in needs to go, I wanna be a little bit more on the ground and actually in the engine room doing it for myself. David Friedberg (00:09:38): Yeah. Since we started doing the pod, Saks has been creating a ton of content too. I mean, Saks you wrote a piece this week. Didn't you in on Ukraine? Or, like, the the time article in Ukraine didn't you? David Sacks (00:09:49): Yeah. Yeah. David Friedberg (00:09:50): Like, you weren't doing a lot of content before we started doing the pod. Right? Chamath Palihapitiya (00:09:54): No. He was. He was writing a like a lot of blog posts on SAS. Those are He David Friedberg (00:09:57): had, like, an occasional blog post, but he's, like, super active now, particularly on Twitter now. Like, has that changed a lot? David Sacks (00:10:05): Well, what basically happened is I would express political views on the pod, you know, on a weekly basis. Yeah. I wasn't really tweeting much about politics, but then it all kind of bled together. I mean, once you start talking politics on a pot, people were clipping it. They were putting it on Twitter, and then I have to respond to it, maybe correct, misinterpretations, or respond to attacks or whatever. So it all the politics and business stuff just kinda bled together on Twitter. It'd be nice if I just had two accounts and people could just follow me for what they wanted to follow. My sub stack is just business. And then I'll occasionally write an op ed on the political stuff. So I've written a few on free speech, and then I've written a few on Ukraine, And so I wrote a piece for responsible statecraft this week on Ukraine, which was based on a Time magazine story that came out. And then I did a version of it. On acts kind of a long post, which I called the Ukraine wars Cronkite moment. Which described the the kronkite moment in the Vietnam War was that Walter Cronkite, who was the top newscaster, America's most trusted man, in the 19 sixties. He went on a fact finding mission for himself to Vietnam, and he came back, and he said the war is basically unwinnable. And that's when the public sentiment really turned against the Vietnam war. It still took us 5 years to get out of it. But what Cronkite said, there's a great quote from Cronkite, which I've included at the end, where Cronkite says it is increasing clear to the supporter that the only rational way out will be to negotiate not as victors, but as an honorable people who lived up their pledge to defend democracy and did the best they could. So that that's basically what happened in 1968. What happened this week is that Tyme Magazine wrote a cover story on Zelensky, where the main sources for the story were all of Zelensky's aids and advisors And what they told the time reporter was effectively this war is unwinnable. And moreover, Zelensky is delusional. David Sacks (00:12:06): That was a word they used. Dilutional in in not confronting the battlefield realities that the Ukrainian army had been decimated and delusional in the sense that he refuses to engage in peace negotiations with the Russians. He's utterly unmovable on this idea that Ukraine's gonna somehow prevail. And the troops in the field are basically saying that they cannot follow the orders they're being given. They literally they they can't advance or being ordered to advance. And the officers in the field, the frontline commanders are rejecting the orders because they've been decimated so badly, and they they consider the order to be impossible. So I consider this to be the kronkite moment of the war when Zelensky's own inner circle is saying that the war is lost. And the only question is when are we gonna realize that and start negotiating? Are we going to continue until the very end here, whiskey, in this psychological bunker that he's created. Or are we gonna recognize reality the way that Cronkite urged the nation to in 1968? David Friedberg (00:13:13): Do you think these aids to Zelensky Proactively reached out to the journalists to try and get this story published. How does a story like this come about that provides this kind of revealing insight on the supposedly inner chamber in Zelensky's operations that can shed so much light on the challenges and with him and with the operation. I think Chamath Palihapitiya (00:13:36): it's a David Sacks (00:13:36): really interesting question, and I think the starting point for understanding that is that this writer, Simon Shuster of Time Magazine wrote the in-depth profile of Zelensky for times, person of the year, at the end of 2022. So this reporter cannot be accused of unfavorable coverage. This is the David Friedberg (00:13:54): per this is the person that profiled Zelensky person of the Chamath Palihapitiya (00:13:57): year? David Sacks (00:13:57): Yes. Yes. Exactly. David Friedberg (00:13:58): Oh, wow. So they so they so through that, he probably had contacts in Zelensky's inner circle in doing his preparatory work for that article. David Sacks (00:14:07): Absolutely. Yeah. David Friedberg (00:14:08): And maintain those relationships and has a back channel now to be able to get this sort of insight. David Sacks (00:14:13): Well, he was physically there. I mean, I think he he was physically there to write the person that your profile. And he was physically gonna write the profile. David Friedberg (00:14:19): This isn't some, like, weirdly planted. This is like a legit source. David Sacks (00:14:23): Well, that's why David Friedberg (00:14:23): my whole point is David Sacks (00:14:24): that this this reporter is and and time magazine obviously is mainstream media, and this writer has given favorable cover to Zelisky in the past. Speaker 4 (00:14:33): And I David Sacks (00:14:33): believe that's what led to him having this kind of access to Zelensky's inner circle. So you have to take all of that into account. David Friedberg (00:14:40): The key question, Saks, is does this change anything? So does this article change the sentiment of political leaders in the US, or is nothing really different that we still need to defeat Putin continue to feed the war machine, continue to support the effort against Putin, or does this start to beg the question? Hey. Maybe we need to look at this tactically and and make a Is anything actually gonna change from, and you have any reason to think that? David Sacks (00:15:05): In in a certain sense, this article isn't saying anything that's new. I mean, the article basically says the same things that I've been saying, the same thing, the same kinds of things that Professor Mirzheimer's been saying, Professor Jeffrey Sacks, that all the critics of this war have been saying these things for a number of months, which is the Russians are winning. There is no feasible way for the Ukrainians to evict the Russians from their territory. We are out of artillery and other types of ammunition to give them. Effectively the wars unwinnable and we should negotiate. So a lot of people have been saying that for a long time, but what's different now is that if you believe this publication in this writer, which I do because of his access, it's Zelensky's own inner circle are now saying those same things. So in other words, the so called Putin talking points that we're always accused of are coming from inside the house. Yeah. And to me, that's what makes this a Cronkite moment. Now will policy makers in Washington change their tune or change their perspective on this? Probably not. The UN Party of both Republicans and Democrats still seems to be a majority who want to fund another 61,000,000,000 for Ukraine. So is this penetrating the blob? I don't think so. I mean, but, again, think about Walter Cronkite in 1968. The country basically came around to his point of view after that, but it still took 5 years. To get out of the Vietnam war. So I think that this week was a watershed in terms of the way that public perception is gonna evolve over the next few months, but it seems like the policy makers in Washington are the last ones to get them out. David Friedberg (00:16:39): Well, let's see what happens. I mean, I've shared my point of view for a couple years now. I think the US is in a, call it, subconscious conflict, escalatory state that would continue to drive us into these sorts of it's great for Mark Convin. Seems to be Chamath Palihapitiya (00:16:57): great for markets. David Friedberg (00:16:57): Conflict is great for markets, you're saying. Chamath Palihapitiya (00:16:59): No. No. No. No. The the fact that it seems like There's a terminal outcome, and all we're debating is whether the Zelensky sees it is actually very rear sharing for the market. David Friedberg (00:17:13): Oh, you guys, the market's pot you think the market's recognizing that there may be an end to the Ukraine conflict? Well, I I Chamath Palihapitiya (00:17:19): do think I do I do think in part, I don't think it explains up necessarily today. I think that's more because I think I mentioned this before, but the end of the fiscal year for mutual funds was October 31st. And so there was a lot selling going into October 31 just to capitalize tax losses and tax loss harvest, but that leaves them with a lot of cash. And so starting November 1st, which is day 1 of the new fiscal year of mutual funds are not allowed to really own cash. That's not why you pay them. And so they're going to be active buyers. So that's why in the term the market is up. But if you think about the overhang of risk that we've had, right? You had 1 forever war And now the beginning of what potentially could be another forever war, that's definitely a dampener on market demand, right, and, and, and sentiment and investor confidence But if a story like this is true, it actually takes one of those big risks off the table, which is this idea that now It's like every other kind of a thing, which is it's the reason we spend money there is not to win something that's winnable. It's just graph. It's just typical corruption. David Sacks (00:18:27): And the article says that quoted Ukrainian officials saying that people are feeling like there's no tomorrow. Chamath Palihapitiya (00:18:33): Right. Right. So that, that the US unfortunately enables in many places. That's not new. And so to the extent that that's now more of the status quo, that's reassuring for investors because we're not talking about a war. We're just talking about bleeding more money, which I'm not saying is right, but it's morally more acceptable than the alternative. So there you have it. It's generally good for markets. Now that leaves, I think, Israel Gaza has a risk. And I think people, and I think the market still view that as a potential war. And the longer that goes on, I think that there's a very good chance that we derisk that as well as, again, not a war, but part of that cycle between Israel and Palestine, which is conflict time out conflict time out conflict time out. And so if what we think is now, this is just the version of conflict time out and the market derisks that, then it's actually pretty positive for equities, for startups because now the Fed has a reason to actually say, okay. The economy is cooled off. Inflation is calm. It looks like the markets are stable. Let's cut rates. Right? Let's Let's reintroduce some demand into the market. It's generally a good thing. And if there's no reason to be risked off, people will use that as a reason to be risk on. David Friedberg (00:20:05): Yeah. Well, treasure yields 3rd the 30 year Cracks. Yeah. It's down, Correct. 14 bps. 2 days. 40 bps in, like, 2 or 3 days. Yeah. So the David Sacks (00:20:15): Do you think this is because the forecast or the outlook for q 4 or q 1 next year, it's starting to go down quite a bit. The people are starting to see more recessionary indicators. You had this, like, peak 4.9% growth rate. And then inflation seems to be tamed quite a bit too. Chamath Palihapitiya (00:20:32): I think, to be honest, the look through on q 1 looks also pretty good, and q Four looks healthy as well. So for example, Shopify, their read through on GDP, was actually pretty healthy. Harley was on I think it was CNBC I saw this morning basically saying he thinks consumer spending is still strong and it's still there. So I think in terms of just like economic strength, I think it's pretty decent, actually. I think what changed for the market was the Fed's rhetoric. And I think that they were holding on to this option that they were gonna show up out of nowhere with another 25 or 50 basis point increase. And I think that that's fundamentally now off the table. And I think that that's really heartening for the market. That's good for the market. David Sacks (00:21:15): Gross stocks are ripping a emergency are up 20% today. Chamath Palihapitiya (00:21:20): Ripping. Ripping. Ripping. Open door, ripping, DoorDash, ripping, All these companies are up 20 25 30%. It's crazy. David Sacks (00:21:28): Yep. David Friedberg (00:21:29): So are we calling bottomsecks? David Sacks (00:21:31): Well, maybe. I mean, I I don't know. It's so hard to predict the markets, but if you believe that there's more upside to rates than downside, meaning that the odds of a rate decrease are much greater than the odds of a rate increase from here. Then there is upside to valuations, particularly for growth stocks, also for distressed real estate, because all these things get more valuable when rates are lower. So if you believe that we're gonna be in our in a cycle of rate decreases and that whole thing has played its way out, then everything's gonna rally. David Friedberg (00:22:05): Well, let's talk about real estate because I think that's one of the biggest overhangs right now that hasn't fully been accounted for. There's, you know, $3,000,000,000,000 of commercial real estate loans sitting out on commercial bank's balance sheets in the US today, 3,000,000,000,000, an insane number. And we were all talking over text the other day as you guys know, about this building that's being shopped and got some attention on Twitter. I think the ad it's 115 Samsung. You guys know this building. I've lived in San Francisco for 20 How long have I lived there? 20 some odd years now. So I know this building, and it's a 125,000 square foot building. Gonna likely be fully vacant and call it 2 to 3 years. So the guy puts it up for sale, the equity owner. He puts the building up for sale, and he's basically, like, running an auction on it. And the brokers are all saying, hey. It's currently at a 199 bucks a square foot, which translates to $25,000,000. It'll probably get down to 300 bucks a square foot, which is about $38,000,000 for the building. The problem is if you look at the debt on the building, there's 53,000,000 of debt. B of A owns that note. So Bank of America in 2016 issued a $54,000,000 note on this building, if this deal closes, at $39,000,000, the equity owner who's running this auction to sell the building makes $0. All that happens is that money pays down the debt and the debt only gets 70¢ on the dollar. And BofA has to take a write down on the rest. So there's a rumor that in this particular case, what's happening is the equity owner of the building is putting it up for auction to show the bank, hey, this thing's only worth 70¢ on the dollar for you on your debt, you should restructure my debt. So apparently there have been a lot of building owners that have been going to their banks and saying, Hey, I wanna restructure my note. Wanna have longer payment terms. I wanna keep the rates lower for longer. I wanna have some of the debt forgiven. Anything they can do to get the cost of the debt down because the overhang of the debt on all these buildings is so significant. David Friedberg (00:24:11): These buildings cannot make money, and the owners will never make money. So they're like, why am I even wasting my time? So they have one option, which is to hand the keys back to the bank and say, here you go. You auction it and sell it. Good luck. And the other option is to go to the bank and say, hey. Restructure my debt. Let's figure out a deal. Here's the problem. The $3,000,000,000,000 of debt that we just mentioned that's sitting on all the bank's balance sheets is all being held at par. They're not discounting it at all, and they're not marking it as being impaired in any way. So as soon as they have to start writing this stuff down, the bank's balance sheets all get impaired. And so there's a real risk in the market that I don't think has been fully accounted for that we're starting to see the cracks. And to Chamath point, this might accelerate either fed action, or as I've mentioned in the past, I think the federal government steps in and starts to issue programs to support commercial real estate developers and owners. Sacks, I know you've been following this quite a bit. You know, maybe you could share your point of view. And if I'm off on this in terms of how significant of a problem, this is, you know, how much of the 3,000,000,000,000 of debt really is impaired and by how much should it be impaired do we think? David Sacks (00:25:13): Massively. I think it's a huge problem. If you talk to any body, any of these, commercial real estate, developers, sponsors. They'll tell you, many of them are just kinda hanging on by their fingernails. I mean, it's really ugly. And you know how distressed things are when you actually look at some of these sales, the same account on Twitter that you posted. He's got, like, a tweetstorm here showing about half a dozen of these sales that have happened in the last few months. And buildings are now selling for 2 to $300 a Square Foot in San Francisco. These are buildings that could have sold for a thousand bucks a foot, you know, a couple of years ago. And now they're selling for 2 to 300. The replacement cost, if you were to try and recreate these buildings from scratch, given how expensive it is to build in San Francisco, and how complicated the entitlement process is, probably be 1200 plus a foot. So these buildings are selling for 10 to 20% of their replacement cost. These are fire sales. David Friedberg (00:26:11): If you look at the loans in the in the San Fran commercial real estate market, do you think that the loan value is probably impaired by 40%? Cause that's roughly what it would say on that 115 Samsung Building? Is BofA would probably have to take a 30, 40% markdown on their debt. Do you think that's the right way to think about the numbers? 30 to 40% of debts? David Sacks (00:26:28): You could figure it out this way. A typical commercial real state deal is about 1 third equity and 2 thirds debt. So if somebody bought a building, call it a $1000 a foot, they would have had to have put in call it, 333 of equity 666 of debt. David Friedberg (00:26:43): Yeah. David Sacks (00:26:43): Now if that building's only worth I don't know, 200, 250 a foot. There's $750 of loss per foot, right, and only 333, roughly half of it is equity. So the debt is taking a huge haircut there too. David Friedberg (00:27:00): Yeah. That's about 40, 50%. David Sacks (00:27:02): Right? Yeah. Yeah. And no one to recognize that loss, the equity holders certainly don't because they get wiped out. And even the banks are reluctant to recognize that loss because who knows what that could trigger when their balance sheets are so impaired. So what everyone's trying to Chamath Palihapitiya (00:27:17): people gonna come from socks, where they where, like, this is my this is my big problem with this argument is I I think that numerically, you're right, that there is this bottoming, or there is just like a lot of value to be had. Right? The the problem is, and I'll get and I'll give you an example of a company that I own. So it's not even a company that I'm just a minority investor in. We used to be in San Francisco. And we went virtual. Now all the salaries are pegged to San Francisco salaries, but now everybody's sort of like everywhere throughout the country. We don't have an office space. And I'm really struggling trying to figure out how to actually bring everybody together. And my choices were I thought, okay, well, let me find what it would cost to actually run this place in San Francisco, and my my OpEx would have gone up 15, 20% just for the building. So then I'm like, okay. Well, where else can I go? And it's like, well, I could go to a place like Las Vegas, and I could put the people there. It's an hour, so it's close by. We can fly there whenever we need to. It's got no tax, so maybe that's an advantage for the employees. And so I'm in this constant hamster wheel as an owner of a business. I can't get people into the office if I do bring them into the office at super expensive, and it bloats my opex. So I'm just trying to figure out how does that get resolved for people like me so that we wanna go back to San Francisco and rent those building that are so cheap. David Friedberg (00:28:45): Those buildings are gonna have to get written down first. So I set up my company in 2006, and I was paying $22 a square foot for my first office in 06. And then we ended up getting a really nice office, and I think we ended up paying, like, 35 to 40 bucks a square foot by the time we moved to a super nice office around 20 10. But around that time, which was also when GFC happened, the global financial crisis in a 809, and that's when rates dropped to 0. And that's also when all startups and tech companies said, Hey. Let's start setting up in San Francisco because it's mostly young people that are engineers now. They mostly wanna live in the city. They mostly wanna be single and have a good life here rather than go live in Suburban Silicon Valley. And so real estate shot up because rates were 0, All the tech companies were sending out. I mean, Sachs, you had, Yammer in San Francisco, didn't you? Were you in the peninsula? Yeah. Yeah. And that was like the place to have your company was in the city And so I would argue, like, if you go back to the 0 809 era, that's really when San Francisco started to take off. And it was almost like, a bit of an outlier of a bubble that started all the way back then. And then, you know, as the zirp environment kept things moving up and up and up over the years that followed, I do think that this, like, this Market will likely normalize back to pre-twenty 10, pre-09, and that's when rates were like in the 25 to 35 bucks a square foot range. For, you know But are you saying Chamath Palihapitiya (00:30:06): that I will move back to that building? And I'm and I'll move my company back there. David Friedberg (00:30:10): When it gets repriced, yes. I do think so. Chamath Palihapitiya (00:30:13): Are you sure? David Friedberg (00:30:13): I don't see how I I don't see how the market stays where it is. Yeah. David Sacks (00:30:16): Jamassa argument is basically on the demand side, basically saying where is all this demand gonna come from? Chamath Palihapitiya (00:30:21): I think you could give it to me for 0 and I wouldn't bring my team back there. I'm just asking, like, again, the math all makes sense on a spreadsheet, but The big issue is as an owner of a company, why would I ever bring my team back to that place? And I'm struggling even at, like, David Friedberg (00:30:35): you mean because it's a nasty city? Because it's all messed up. The city's messed up. Correct. Chamath Palihapitiya (00:30:38): Well, what if you're if you're asking me to blow up my OpEx 10, 20%, the answer is absolutely not. Will I do that? Then if you're saying, well, tomorrow, how about at 0? Let's just go to 0. Right? It's free. Take the building. Yeah. I still wouldn't do it because then these people have to move from all around the country, come back here, and all of a sudden just live in a slimy dungeon. Yeah. So how does that get solved? And so that building should be 0. David Friedberg (00:31:02): Sachs, you own buildings in San Francisco. What's your answer as a landlord? David Sacks (00:31:06): Yeah. I only own buildings in Jackson Square, which is like the one decent part remaining of San Francisco, which is actually where people wanna be, and we've seen pretty good leasing activity there because it's, as people get driven out of Market Street and out of Soma, they actually they substitute to Jackson Square. Look, I think Chamath makes a good point, which is the demand picture for San Cisco is really unclear. There's something like, call it, 30% vacancy. So there's an enormous number of these zombie buildings, and it's really hard to understand where the demand is gonna come back to fill them. Now Right. The counterargument to that is, yeah, but it's so cheap I mean, these buildings are so cheap. They're basically selling for almost land value. David Friedberg (00:31:47): That's Chima's point. It's like it goes to 0. Yeah. David Sacks (00:31:49): So if there's a recovery, then it's very symmetric. Right? I mean, you could get 3 or 4 x upside in your money very, very quickly. Rates come down over the next couple of years. You could refi your equity out. So that's the kind of argument is, yeah, we're not exactly sure where the demands comes from, but if you are willing to have a long term outlook, like 5 or 10 years, then there's a pretty good chance that I'll come back somehow. I think one of the things that has to happen in order to foster that demand is for there to be some fundamental changes in the politics of the city. And the question is, how does that happen? And I think one of the ways it could happen is the city starts facing huge budget shortfalls, which are coming. Is a there's gonna be a huge budget shortfall over the next year and next couple of years because there's no activity. I mean, a third of the economic activity that the city has just dried up Chamath Palihapitiya (00:32:39): And what about the rest of the country? So tell me, like, if if this is what's happening in San Francisco, what's happening in Boston, Dallas, New York City? David Sacks (00:32:47): Well, I don't think those areas are as impaired. They don't have the vacancy rates that San Francisco does. I mean David Friedberg (00:32:52): So if if you look at the post David Sacks (00:32:53): market is 30%. David Friedberg (00:32:54): So just coming back to my prior question, if you were to assume San Francisco commercial real estate debt is impaired on the order of 30%, what do you think the debt load for the for all commercial real estate around the country is impaired. Is it 10%, 15%, 20%? David Sacks (00:33:10): I don't know. I mean, it No. I I think that You probably for San Francisco, I'd say probably half the debt should be written off. I don't know what it is for the rest of the country. There's already half a dozen of these buildings have traded in the range that we're talking about, and there'll be about 20 more that are coming to market that'll trade in the next year. It's gonna be fire sale after fire sale. And you you have to clear out all of this bad equity. And then you've gotta clear out all of this bad debt, and then the market can reset itself. Look, Jamal has the has asked the, you know, $64,000 question here, which is when will the demand come back and what will it consist of? And that is the leap of faith here that you have to make just to finish the point I was making. The city, the politicians are gonna be under extraordinary stress because there's not too many budgets. So what are they gonna do? Are they going to lay off half the city employees, reform pensions, and salaries, or are they gonna start to realize that all of their crazy transfer taxes, all of their crazy regulations, and entitlement seats be stripped away, to start fostering real activity in the city? Are they gonna start investing in police again? Are they gonna start cleaning up the city? Are they gonna act as a partner to business. I mean, that's where the incentives are gonna be. It's for them to start acting like a partner again. And, again, that's a huge leap of faith given how crazy left wing in the politics of San Francisco have been, but they may not have a choice because it's gonna come down to, do we fire half the government employees or do we start working with business instead of driving them out of the city? David Friedberg (00:34:41): I don't wanna get too caught up in San Francisco politics and San Francisco as a region. I think, you know, we've we've had that one out. But the bigger question is if there's this impairment on $3,000,000,000,000 of commercial real estate debt across the country, Who eats the loss? So who owns all the equity in these buildings? And where does that ultimately flow through to? What are the 2nd order effects? And who owns the debt? And where does that all flow through to? And we know the debt sits on the commercial banks. Do the bank's stocks get beat up? The market's been cognizant of this. Folks have been shorting and selling regional bank stocks. And then Bill Gross, the well known bond trader used to run PIMCO came out this week, and said, Hey, I've been tracking all these regional bank stocks. They're down so much. It's insane. They're they're trading at a huge discount to book. I'm gonna start buying. And then this morning, he put out a tweet saying I'm buying these stocks, and he listed the names of the bank stocks. He's like the bottom's been hit. Do you buy that? I mean, is has this already been priced into the market? That this debt's gonna be written off at some point and all these balance sheets are impaired because these are banks are trading at a big discount to book value. David Sacks (00:35:42): So it David Friedberg (00:35:42): will book, Chamath Palihapitiya (00:35:43): you know, David Friedberg (00:35:43): might have, Chamath Palihapitiya (00:35:43): well, book value is a term that you need to put in quotes. So my question would be, what are the rules around the real mark to market? Because I think that when we talked about the banking crisis, The biggest problem was these guys were playing fast and loose with valuations. And so are these things actually valued to market? And do they have to? David Friedberg (00:36:01): They're not. Yeah. No. That's the point. That's why they're trying to avoid these transactions. These book values are in a shipment. Yeah. And that's why they're trading at a discount, but Bill Gross is now saying they're trading at such a discount to whatever the accounting is that they're like, now, well, maybe show the fair value. David Sacks (00:36:16): That's right. For our San Francisco real estate. I mean, sorry. The at least for these fire sales that are happening. David Friedberg (00:36:21): Yeah. Well, Saks, let me ask you one more question. So I mentioned the biden program. Biden announced this program him, which is, effectively $45,000,000,000 in federal money to convert commercial buildings into condos and residential buildings He basically relies on a 1998 transportation and infrastructure bill that provides authority to the federal government to issue low interest loans for specific infrastructure projects. If you're a developer, isn't realistic that this money is gonna unlock potential for increasing affordable housing density in urban centers by converting office buildings into residential buildings. David Sacks (00:36:59): People talk a lot about these office to residential conversions. The problem is it's easy to say and much harder to do. Most commercial office buildings don't meet the structural apartments or architecturally, they're not really suitable. If you think about most commercial office buildings, they've got really big floor plates and if you think about, like, restructuring them into apartments, there's not proper window coverage, there's not proper utilities. So it's a lot harder than it sounds. And I'd say most office buildings don't meet a lot of the requirements for this, but I think what's good about this executive order even though I don't really believe this is a great use of 45,000,000,000 is that it's sending a signal to all of these cities, all these local governments that we need to get with the program here. In other words, you've got, you know, a blue executive sending a message to all these blue cities and states, that commercial real estate is in distress and you need to loosen up your entitlements. You need to loosen up your regulations. It's sending a message to the city of San Francisco and all these other cities that you guys need to start doing positive things. And this is my point about will San Francisco start acting like a partner for real estate development, which is how you make real estate work, or will they continue to drive all of these crazy regulations. So I I mostly see this Biden program as symbolic. David Friedberg (00:38:25): I see. David Sacks (00:38:25): But the question is whether the symbolism will actually drive better behavior by these blue cities. David Friedberg (00:38:31): I personally think they're just trying to find more ways to pump money and take supporting commercial real estate markets because of the issues we just highlighted. And I think this is the first of what will likely be several programs to support framed as things like affordable housing, but really designed to support the economic loss impairment that's gonna be inevitable at some point. David Sacks (00:38:49): Right. But but, you know, you can't you can't convert a, an office building to a residential building without resuming, typically. Totally. David Friedberg (00:38:56): Yeah. David Sacks (00:38:56): And this is where you need action by these city governments. They've gotta rezone. They've gotta reduce the regulations. They've gotta eliminate these transfer taxes. They have to make these project. Yeah. Exactly. They have to make these projects economically viable? Chamath Palihapitiya (00:39:09): I think that we'll be able to look back and San Francisco will be an incredibly measurable experiment on the return on invested capital on the on the return on invested capital of progressive left ideology. And it will be a great case study. Now if it works, it will prove that all of these ideas that were kind of talked about in kind of like high intellectual circles has some value. And if it fails, which it looks like it's failing, it'll never be tried again for a very long time. Either way, you're gonna have a very clear answer. And the good news is we're we're probably another 5 or 10 years away from that bottoming. David Sacks (00:39:58): Well, actually, because ask you a quick question, Chamath. So there was a article here saying that the city controller's office for San Francisco has released it's projected budget shortfalls for the coming years. It's almost half a 1,000,000,000 for 2024, 25, reaching 1,300,000,000 in 2728. So what do they do about this? I mean, David Friedberg (00:40:21): they don't David Sacks (00:40:22): have the money. Chamath Palihapitiya (00:40:23): They'll borrow money. And you can look at all of these other municipalities around the country as examples, but counties and municipalities and cities that are in much worse fiscal shape than San Francisco was able to stay incompetent for a lot longer. And so that dealt to t of incompetence tends to be about 5 to 10 years. I would say the midpoint is 8. So if we're starting now, you'll probably see some rationality by 2030 to 2033. David Sacks (00:40:52): Right. Chamath Palihapitiya (00:40:53): That's how much borrowing, David. I think you can tap in the, in the muni market. Because, you know, again, this is sort of the, the double edged sword, right? Like when you're a triple tax advantaged borrower, you can paint the case for being in San Francisco, which is part of California, etcetera, etcetera, etcetera, and your alternative is to own something in a state that's not nearly as economically vibrant. It's a pretty easy case to make to be able to borrow the money, I think. And so the problem is that it'll take like I said, another probably 8 years, 10 years. So before the the spigot gets turned off and may have to make some harsh changes. So they'll keep running the experiment for at least. I think if you want to be conservative for at least a decade, another decade. David Sacks (00:41:34): So those pile on the debt until David Friedberg (00:41:36): it just breaks. Absolutely. I don't want to keep parking on San Francisco. Let's let's move on to WeWork because WeWork feeds into this real estate piece. I don't know if you guys saw this article that, Wall Street Journal reported that WeWork gonna file for chapter 11 as early as next week. They have a significant debt burden owed to SoftBank Vision Fund as part of their go public. They've signed leases in office buildings in San Francisco and elsewhere around the country, $10,000,000,000 in total lease obligations due starting in the second half of twenty twenty three. Through the end of 27. And after that, an additional $15,000,000,000 starting in 2028. And as of June, WeWork had 70,777 locations including 229 in the US in major cities. The business made about, call it, 840,000,000 bucks in revenue last quarter. So that works out to call it a 3 and a half $1,000,000,000 revenue run rate with, you know, $10,000,000,000 of lease obligations starting next year. So the business is just drowning in these lease obligations and to restructure 777 lease obligations in this environment that we're talking about while doing what Shamoff is saying, lowering rents to attract employers to show up and actually rent space from them is obviously causing the business model to distort even worse than it has been historically. Chamath Palihapitiya (00:42:53): They burned $8,000,000,000 of free cash flow in since Q4 of 2019. $8,000,000,000 of free cash David Sacks (00:43:02): there's no question that that we work has been a capital destruction machine. That being said, I actually think that some private equity player is gonna buy this out of bankruptcy and make a 4 Chamath Palihapitiya (00:43:12): I agree with that too. David Sacks (00:43:14): Because out of those 777 locations, a lot of them are good locations and have good tenancy. They probably generate good revenue, but the problem is that the leases are just bad. And bankruptcy gives you the power to break those leases. Or renegotiate them. So a really smart private equity player will come in here and say, okay. We're gonna take these locations. We're gonna divide them into 3 buckets. Bucket number 1 is we're gonna get rid of them because they're just bad locations. We don't want them. There's just no occupancy. Bucket number 2 is we're gonna go to the landlord and say that Sorry. Like, this lease doesn't work for us. We will be willing to work for you as an operator of the space. And you'll pay us a fee and a rev share on whatever it makes, but we can't pay you a guaranteed rent. So that's bucket number 2. And then bucket 3, which will be the best locations, they'll go back to the landlord and say, here's 60¢ on the dollar. We're willing to pay you this in in rent. That's it. If that's not good enough for you, we're breaking the lease route. And those landlords are gonna have to accept it because who they're gonna get? Who's any better? And they don't even have the TIs. They don't have the capital to put some new tenant in there. And even if they could put someone in there, it's not gonna be at a rent that's much higher than 60¢ in the dollar, because we work made a lot of these top end market leases. So I think the landlord will take the bird in the hand. So think about it. Some private equity player goes in there, renegotiates all these leases, sheds the bad ones, and all of a sudden, the business is gonna make a lot of money. And the reason why it's gonna make money is because we work poured all of this, capital into renovating these spaces and making them really nice. I mean, if you go into a WeWork, They are really nice spaces. And the reason for that is because we work spent 1,000,000,000 of TI dollars making these things incredibly nice. David Sacks (00:45:03): Was that a wise investment? No. It was a terrible investment, but that money has been spent and already lost. That that capital has been wiped out. So whoever buys this thing out of bankruptcy now is gonna be the beneficiary of all of those as absurd TI dollars that were spent When Adam Newman Chamath Palihapitiya (00:45:20): Oh my god. You just convinced me. Speaker 4 (00:45:21): Let's go buy it. Let's put it in. Chamath Palihapitiya (00:45:24): Is it filed? Is it filed? David Sacks (00:45:26): The brilliance of Adam Newman was somehow convincing. Chamath Palihapitiya (00:45:29): Wow. David Sacks (00:45:29): All these investors to put in 1,000,000,000 of dollars into TI money on the theory that it was a software business. This was never a software business. It's a real estate development company. Chamath Palihapitiya (00:45:41): It was Regis. David Sacks (00:45:42): It was reintroduced. Chamath Palihapitiya (00:45:43): It was. So so David Friedberg (00:45:44): I got SoftBank put in a total of $16,900,000,000 in equity and debt Oh my gosh. Not incredible. David Sacks (00:45:53): Who does? Chamath Palihapitiya (00:45:53): Oh my gosh. Topic, David Friedberg (00:45:55): which is mostly through the Vision Fund, which is, as you guys know, 45 percent Saudi Money. David Sacks (00:45:59): Was regis by much better design, but that design came at a huge expense, which was, again, this over investment in in TI dollars. Combined with the fact that they had no discipline around signing leases, and they have so many top of market lease deals. Yeah. But, again, that's all fixable for someone who comes in. Old saying in real estate, that is the 3rd owner who makes all the money, like, the first owner who does all the ground up, they lose a fortune and they get blown out, then the second guy comes in and thinks that they're gonna make it work. Chamath Palihapitiya (00:46:30): But they David Sacks (00:46:31): can't make it work either so then they get blown out. And it's finally the 3rd person who comes in who makes all the money, and that's gonna happen here too. Chamath Palihapitiya (00:46:38): Oh my god. That's just fantastic. This is a story of the ages. David Friedberg (00:46:42): Let's transition from one bubble to the most recent bubble. So AI regulation given the frenzy and frothiness and fear mongering on AI destroying the world, which I would personally argue is largely fear porn. The Biden administration took it upon themselves to try and be leaders in regulating AI and published an executive order on October 30th. This long anticipated executive order covers a very broad range of matters in a 111 page order document. Covers very specific actions in very detailed terms. It uses technical terms of art, and I think it creates as much confusion as it does provide clarity. It's an executive order, so it's not legislation. And there's much in here that some would argue needs to be legislated As an executive order, it can be overturned very quickly and easily by the next administration. It largely demands voluntary action from technology companies, to submit their models, infrastructure, and tools for review, for proof of safety. Chamath Palihapitiya (00:47:46): Don't forget the equity and inclusion. David Friedberg (00:47:48): There's an equity inclusion component, which is that your models have to account for Chamath Palihapitiya (00:47:51): diversity, equity, and inclusion David Friedberg (00:47:53): diversity, equity, inclusion. There's a phrase from the executive order. The term dual use foundational model means an AI model that is trained on broad data generally uses self supervision, contains at least tens of billions of parameters is applicable across a wide range of contexts and that exhibits high levels of performance at tasks that pose serious risk to security, national economic security, public safety, or any combination of those matters, none of which ultimately describes endpoints, none of which describes loss for applications. To me, this is the biggest problem I see with the executive order and with the approach to AI regulation broadly particularly with what's being developed and has been leaked in what's in terms of what's being developed out of the EU, which is that many of these government agencies, government actors are trying to define and regulate systems and methods rather than regulate outcomes and applications. For example, if you were to say you cannot commit fraud and falsely impersonate someone using software, you can rightly say that it follows the rule of law, and we should be able to adjudicate that cleanly in courts. Instead, to have government agencies and have what this executive order describes as a chief AI officer in every federal agency responsible for regulating the systems and methods, of all the actors and all the private companies that are building software to say this is the scale that your software can get to. You can have a certain number of parameters. If you're bigger than this number of parameters, we have to come in and check your software, creates an outlandish standard. And one that makes absolutely no sense, particularly in the context of the pace of AI's progression. Remember, the paper that was foundational to transformer model development which is what a lot of people call AI today, which has developed these LOMs and so on, came out in 2017 and wasn't really widely adopted until 2018 as a standard. David Friedberg (00:49:47): We're 5 years into this. So the way that we're making models, the types of models we're building, the scale of the models, the number of parameters being used, The pace at which these things is changing is staggering. We are only in the first inning. And so to come out and say, here are the standards by which we wanna now regulate you This is the size that the model can be. These are the types of models. It's gonna look like medieval literature in 3 years. None of the stuff's even gonna apply anymore. I'm just really of the point of view, as you guys know, that the market needs to be allowed to develop. If we don't allow our market to develop in the United States, India, and China and Singapore and other markets will get well ahead of us in terms of their model development and their capabilities as a nation and their capabilities as an industry. And the more our government actors step in and try and tell us what systems and methods we are allowed to use to build stuff, the more at risk we are falling behind. That's my general statement on the matter. I'll pass the the the mic. I mean, Tamac, you were advocating for AI regs a couple months ago, I think. Right? I mean, Where does this fall with respect to what you were advocating for and what you were concerned about? Chamath Palihapitiya (00:50:53): Well, I had a very specific lens that I viewed this stuff through, and they didn't really address it. I think that this was a little bit of a Kitchen sync EO. And I think what probably happened was depending on look. I I mean, I think the thing is, like, look, they When this process first started, it started in the senate and it started with the majority leader Chuck Schumer. And I met with Chuck, and then I met with Chuck's team. And then it morphed into this much bigger thing. And I think it morphed into a lot of people trying to do the right thing, meeting with a lot of very important and very famous people. And I think somewhere along the way, It just became this convoluted and confused document because, I do agree with you that it's not super coherent There's a lot of arbitrary requirements. You know? Like, there's like I think there's a requirement here that as a certain number parameters, you have to, like, self report yourself to the government, which is like, what does that even mean? Why why is that even important? So it's it's just a lot of random stuff. So it just seems like anybody who had the ear of the people writing this had a chance to write something in. So it's a little confusing. It's not going to do the job, and I think that you're right. And or 3 years we're gonna look back, and this is gonna look medieval. David Friedberg (00:52:21): I'll just say I'll point out another point, just one of many that I could highlight in this document. I read most of it. They say, you know, there's gotta be legislation on watermarking AI content. Think about that for a second. What is AI content? We've been using Adobe Photoshop for 30 years to change photographs and change documents. We've been using various tools for doing audio generation and music. I mean, there's no music that doesn't run through a digital processor of some sort. There's no video There's no movies that don't have some degree of CGI elements or some degree of post production digital rendering integrated into the video itself. What makes something AI? Is it the fact that a 100% of the pixels are generated by software? What if it's only 98% is Pixar ai because all of Pixar is made on computers is the auto tune hip hop artist ai because his voice isn't coming through on the audio track. So what is AI in this definition? The fact that any piece of content needs to be watermarked if it's AI I think is one of the most outlandish infringements on First Amendment rights I've seen and doesn't really understand any set, in any sense, how software is generally used in the world today, which is frankly everywhere. And to say that now there is a certain definition of a certain type of software that we're gonna arbitrarily call AI, we wanna watermark this stuff and we wanna get a stamp on that content so the government can track it and audit it, I think, is absurd. Sachs, over to you. David Sacks (00:53:58): Yeah. Okay. 33 quick points here. Number 1, AI has been convicted of a pre crime. This e this CEO, Speaker 5 (00:54:06): it describes it describes its liberty of horrible, David Sacks (00:54:10): the sprayed of marbles that's gonna happen unless, you know, the wise people in the central government like Joe Biden and Kamala Harris guide its development. That's what the EO says. It's gonna do is guide the development of this technology. Because if we don't, it's gonna result in all these horrible things happening. Steven Sanovsky who was a key executive at Microsoft and the, I think, going back to the eighties wrote a really interesting blog post about this where he he was there at the beginning of the PC revolution with the dawn of the microprocessor in the seventies eighties. David Friedberg (00:54:40): Yep. David Sacks (00:54:40): And he pulled a bunch of books off his bookshelf from that time period which were sort of these sci fi books, like forecasting doom infringement on privacy. 1 was called the assault on privacy. Another one's called the electronic nightmare. Another one was called the rise of the computer state and so on. And so it was also predicting all these horrible things that would come from the birth of the computer. And it would put all these people out of work and so David Friedberg (00:55:04): on. Totally. David Sacks (00:55:06): But nobody allowed these fears to guide the development of the industry. There was no executive order at that time saying that we're gonna guide the development of the microprocessor to avoid all of these arms. That haven't occurred yet. And instead, we're taking a a different approach here. And he makes the point that if the industry had been guided in that way, then it never would have achieved the potential that it ultimately achieved. And furthermore, he makes the point that a company like IBM would have been more than happy to work with the regulators to say, yeah. Let's define a bunch of these rules to make sure that it doesn't go in this dark direction that everyone thinks it's gonna go in. Chamath Palihapitiya (00:55:44): And it David Sacks (00:55:44): would have gotten very extreme regulatory capture. Chamath Palihapitiya (00:55:46): Can I precog one of the crazy lines David Friedberg (00:55:48): in this thing? Chamath Palihapitiya (00:55:50): Here are the precogs. And why here's one. When a foreign person transacts with an infrastructure as a service provider. So Azure, Google Cloud, Chamath. To train a large AI model with potential cape- with potential capabilities that could be used in malicious cyber enabled activity, they propose regulation that requires that I asked provider to submit a report. So if you you have to know you have to know. It's a foreigner is using your API, so AWS, and then file a TPS report. Oh, what's going on? I have a clarifying question. What happens if you're a foreigner that's on an h one b at Facebook or, you know, Microsoft? Take a question. David Sacks (00:56:37): Well, and David Friedberg (00:56:37): then Chamath technically a foreigner. David Sacks (00:56:39): Right. And then Shamaz meanwhile, remember when SpaceX is now being sued by the DOJ because they haven't employed enough foreigners. Speaker 5 (00:56:45): So it's like David Sacks (00:56:49): they outlawed both sides of it. Yeah. So that you you're you're in non compliance just by thing. Right? You ex Chamath Palihapitiya (00:56:57): you know what I mean? Like is by death. David Sacks (00:57:00): If you, employee foreigners in the creation of these very sophisticated technologies you're creating a national security threat. If you exclude them, you're violating their civil rights. And these are regulations that are promulgated by 2 different parts of the government. So the the the government is basically getting to a point where no matter which side of the regulation you choose, you're gonna be a non compliance somewhere. And this is just a recipe for the government to basically take action. Against anybody who they don't like politically. David Friedberg (00:57:28): Yeah. David Sacks (00:57:29): Now on this pre crime point, you know, one of the crazier stories that came out I think this is in variety, is that Biden grew more concerned about AI after screening the most recent mission impossible movie. In which the villain is Ascension AI that's seen as control of the world's intelligence apparatus. Chamath Palihapitiya (00:57:47): Is that true? That's not true. David Sacks (00:57:49): Well, that's what the story said. David Friedberg (00:57:51): Getting the press reporter asked the press secretary of this, and this was the response. Who said this? David Sacks (00:57:57): The warehouse chief of staff, I guess. David Friedberg (00:57:59): Said Reed said Reed who yeah. Wow. David Sacks (00:58:01): The the crazy thing is I think the reason they're putting out this story is they don't wanna admit how their EO really happened, which is a bunch of lobbyists came in. And like you said, a lot of powerful people from Big Tech They're all clamoring for regulatory capture. They're all clamoring to define the regulation so that they can benefit themselves and keep out new entrants. Because one of the big targets here is gonna be open source software. So if you are, for example, OpenAI, which is no longer open as closed source, The number one thing you wanna do is pull up the ladder before open source software can get a lot of momentum. And a big part of the regulation here does apply to open source software. I think one of the most problematic things about this, just to move on to the next point, is the way that it's not just this 110 page EO that's being promulgated. The directive is for all these other parts of the federal government to start creating their own regulations. So it says here that the National Institute of Standards And Technology will develop standards for red team testing of these models. It directs the Department of Commerce to develop standards for like you said, Friedberg labeling AI generated content? Chamath Palihapitiya (00:59:09): It directs explicitly the FTC to use existing leg regulation to go and legislate. It re it requires the FCC to think about spectrum licensing rules through this lens. You're absolutely right. It activates every agency of the government to create more bureaucracy. David Friedberg (00:59:26): It create no. More importantly, it creates authority for agencies of the government to go into private servers and run audits you're allowing the government for the first time ever to have access to private information, private computing infrastructure rather than do what the job of the government should be, which is to regulate the outputs. To regulate the outcomes, to regulate illegal and illicit activities rather than, regulate systems and methods that, as Saks point out, are pre convicted of a crime, there is no crime until a crime is committed. And so this idea that the government can come in and regulate and keep a crime from being committed by auditing and managing all the systems and methods that software companies are using puts the United States as at an extraordinary and unfair disadvantage on a global stage, by the way, and by the way, Lauma 2 is out there. Hardware is out there. All the cooling is out there. Others to start to get well ahead. Chamath Palihapitiya (01:00:18): Good news about the immigration thing. There is they actually on the other side do streamline the immigration process for people with AI or other critical technologies. So on the one hand, we should be able to hire them, but then on the back end, we'll have to file a TPS report about what they do. David Sacks (01:00:35): Me just finish my point about David Friedberg (01:00:37): all David Sacks (01:00:37): these different agencies being directed now to promulgate Regulations. And by the way, there's some new committee or council that's being created of 20 9 different parts of the federal government that are now gonna coordinate on this AI stuff. So it's gonna be a Brussels style bureaucracy. What's gonna happen is that with all of these different bodies issuing new regulations, it's gonna get more and more burdensome on technology companies until the point where they cry out for some sort of rationalization of this regime. They're gonna say, listen. We can't keep up with FCC And Department of Commerce and this NIT Standards board. Just give us one agency to deal with. And so the industry itself is eventually gonna cry uncle and say, like, please, just give us one. And you're already here, people like Sam Altman and so forth calling for the equivalent of Atomic Energy Commission for AI. This is how we're gonna end up with a federal software commission, just like Chamath Palihapitiya (01:01:35): we have a David Sacks (01:01:35): FCC to run, big communications, and we have a FDA to run big pharma, we're gonna end up with a federal software commission to run software, big software. And the thing to realize about AI is that functionally, there's no way to really say what the difference is between AI and software in general. Every single technology company, it's Silicon Valley, has AI on its roadmap. It's a new computing paradigm. Everybody is incorporating it. Everyone is using some elements of AI. So this wave of AI is just becoming software. So we're gonna take the one part of our economy that has been free market and relatively unregulated, which is software. It's like the last bastion of true entrepreneurial Calacanis, and we're gonna create a new federal agency to manage it. That's where we're all headed here. And we're gonna end up as an industry in the same place that farm has ended up or David Friedberg (01:02:38): No. It's a David Sacks (01:02:38): good time. Has ended up. Which is you go for permission to Washington. Chamath Palihapitiya (01:02:43): No. I Nick, can you just put this up? So I I did, you know, write a blog post sort of asking for this AI regulation. And and I do think like the model of the FDA is probably the best one where in certain use cases, I do think that you can create a sandbox where these things can be tested, and I think can be evaluated The problem is that this legislation or this executive order doesn't really do that. So the way that I wrote this was Well, what are the arguments against what I'm proposing? And unfortunately, I have to say every single one of those arguments is now valid. So I I think that we should have gone in the direction of like a simplifying assumption, which is that most of this stuff is just software and there are going to be some very specific kinds of businesses that before you take it to market, you should do something that's equivalent to sticking it in a sand letting people see it. And and I think it's easy to define what those are actually. And the fact that we didn't do that, and we have this overly generalized approach is gonna create more chaos and people will not know whether they're in violation or they're in support. They're gonna be sort of pre guilty. As you said, Saks of a pre crime, And it's just gonna it's just gonna be chaos. So I think But David Sacks (01:04:00): this is a sport sport for politicians because everyone's gonna be lobbying them. To try and shape the regulations the way they want. Chamath Palihapitiya (01:04:07): I think it's gonna be a smorgasbord for lawyers. David Sacks (01:04:11): Yeah. I mean, everyone's gonna hire lawyers and lobbyists and policy people to try and shape these regulations. Chamath Palihapitiya (01:04:16): It's a David Friedberg (01:04:16): good time to bet on India. Thank god for Mark Mark Zuckerberg and the open sourcing of the Lamaque model. Chamath Palihapitiya (01:04:23): It's not entirely open source. Right? I mean, I think the biggest thing with Lambda too that I find problematic is that it it has these arbitrary arbitrary thresholds on the number of users one can have. David Friedberg (01:04:32): Yes. Yes. Before you have to go back to Facebook. Yeah. It's 700,000,000, I think. Right? Yeah. Yeah. Before I gave all Chamath Palihapitiya (01:04:38): the credit to Facebook, I'd rather say that I think there are a lot of open source alternatives, including Mistral, that I think are much better. Yeah. And, free and open and in the clear where you can have unencumbered growth, not dependent on anybody else. David Friedberg (01:04:54): Yeah. Yeah. David Sacks (01:04:54): But I think that your your larger point about US versus India versus China. I think this could have a major impact on our global competitiveness. David Friedberg (01:05:03): Of course. David Sacks (01:05:03): Because as you look around the what's happening in the American there are so many things going wrong. Right? Our fiscal situation is untenable. We're mired in massive debt. We have tremendous internal division in the country many of our cities arrive with crime. You just look at the number of people living on the streets. It's not good. I mean, you know, there's a lot of indicators that Americans in decline were involved in way too many. Foreign wars. So there's a lot of bad things happening. However, the one bright spot that America has had going for it now, I think, for decades, is that we've always been the leader in new technology development. I mean, we're the ones who pioneered the internet. We're the place where mobile took off. We're the place where the cloud took off. Everyone else has been playing catch up with that. And I think we are in the lead in terms of AI development. I mean, other countries are doing it too, but I think that we are in the lead, and it's not because of the involvement of government. It's because we have this vibrant private sector that's willing to invest risk capital where you know that 9 out of 10 checks that you write are going to 0, but that one check, that 1 out of 10, hopefully could be a huge outcome. So we've had this incredible ecosystem of software development that is free and unregulated that is clustered around Silicon Valley, but it, you know, radiates out to many other places. And the only reason that ecosystem has thrived and survived is the reason that Bill Gurley stated at all in Summit, which is what is it? 22100 miles away from Washington, and Washington has generally kept its mitz off. And now we are headed to a place where not just AI, but basically all software companies are headed for regulation. And like I said, right now, it's 29 different agencies promulgating the regulations. But where this is gonna end up is that the industry is eventually gonna beg for its own agency just to rationalize all the spaghetti of different regulations. We are eventually gonna beg for our federal agency overlord just to rationalize this whole mess. David Sacks (01:07:05): And sadly, I think that's where we're gonna end up. And a lot of what is special about our industry, which is that 2 guys in the garage really can get started in a completely permissionless way, think that's gonna be jeopardized. Chamath Palihapitiya (01:07:16): If that's the end game, that's genius. David Sacks (01:07:18): I think that is the end game. Chamath Palihapitiya (01:07:20): I mean, do you think that they wrote this thing in a way just to create enough confusion where we all just cry on call and say, just regulate us. Give us one David Sacks (01:07:27): of you. Yeah. Look, I don't know if it's that conscious. I think what it is is there's a lot of politicians in Washington. And Biden and Harris definitely fought this category who just think that central planning or the central guiding of the economy or aspects of the economy to avoid certain problems that they think they can do this. They think that they are wise enough to do this, or maybe they're cynical and they just know this, a pathway to campaign contributions. But either way, they kind of believe in this approach, and they threw the kitchen sink at this, 110 pages, every agency is now gonna be writing thousands of pages. And I think where it's gonna end up is with a new agency to manage software. David Friedberg (01:08:07): So I think, Zach, it's a The point you're making is one that some folks in Silicon Valley have felt for a while, which that is that a lot of the freedom an opportunity that the United States offers pioneers and entrepreneurs has been realized and born out in Silicon Valley. That's feeling like it's been stymied in a number of ways. But the events in Israel, a couple weeks ago, in my opinion, seems to have shocked a lot of people that are traditionally very liberal democrats into being red pilled. I have had a number of calls with individuals over the last few weeks that have historically been very die hard blue liberal democrats have spent their their time with NGOs, with nonprofits, with various efforts to promote liberal causes. And these are folks who may or may not be Jewish, but who have been so shocked by what's happened in Israel and how many liberal organizations have created this narrative around being pro Palestinian in a way that is being deemed and is coming across as highly. And in many cases, is very much anti Semitic. And so I've had folks say, I'm giving up everything else I'm doing, and all I'm gonna do is change the causes I'm working on now. And I have just been red pilled. Do you guys and and Chamath, you shared your story on our show a couple of weeks ago, the clip of you saying that when viral on how you kind of recognized that maybe Trump was a good president in the context of what you're experiencing with the Biden administration now or seeing with the Biden administration now, you seem to be, like, the case study that I'm now hearing more from Silicon Valley folks, yeah, about this, the shift. Chamath Palihapitiya (01:10:02): I think that over the last 3 or 4 years, my political positions really haven't changed that much. But I think what's happened is that the the political party that I've historically been affiliated with has just kept lurching further and further to the left. And so it leaves me looking for a new home, I think. And I think that there are a lot of people that thought they were signing up for a set of beliefs around free speech around being pro reproductive rights around being supportive of lgbtq issues, but also supportive of a rational approach to the border and reasonable fiscal discipline These are all seem to just be totally out the window. So I understand because I've I've actually talked to a lot of my friends and my friends Some of them have been huge donors to both elite colleges and the Democratic Party, and they've paused all of it. And it's definitely given me pause, and I'm just trying to figure out Where to go from here? Because I think the reality is that this is a really crazy situation. So I think that there's just a lot of people that are in the center that don't really belong anymore the way that the Democrats represent themselves. So there's clearly something going on that we just need to get to the bottom of here because I think it's not probably the Democratic party that a lot of people thought that they belonged to. David Friedberg (01:11:39): Do you have other friends and folks that you know that have traditionally been Democrat donors in Silicon Valley Chamath? That you see are now maybe considering shifting where they're giving money to Republican party candidates. Calacanis this? Chamath Palihapitiya (01:11:54): I think it's easy to say that amongst my friends, it's in the 1,000,000,000 of dollars that's been paused. That's insane. That's a lot of money. David Friedberg (01:12:03): You you used to be part of a niche in Silicon Valley Silicon Valley Republican niche. Is your niche growing? David Sacks (01:12:11): I think so. I actually made a list of, I think, 8 issues that have driven the shift. And when you say there's been a shift right, I wouldn't say that there's been a shift all the way to the right, but I think there's been a shift from the left to the center. David Friedberg (01:12:25): By the way, that statement is consistent with what I've heard personally from a lot of folks. Which as I consider myself as centrist now that I see that some of these liberal causes are so they're extreme from my point of view. David Sacks (01:12:37): Right. So let me rat along what I think the key drivers are. Number 1, reckless fiscal and monetary policies coming out of Washington. As Druka Miller says, we've been spending like drunken sailors. Number 2, the dismal state of San Francisco because of crime, drugs, homelessness, and so on. And we all know that's an extreme one party government Number 3, the ruinous COVID policies. They botched the science. They harmed the education development of kids. And they also harmed work culture by making employees feel permanently entitled to work from home. So that's number 3. Number 4, this long con of reg regulatory capture in both Washington and Sacramento that we just talked about with AI. People are waking up to that. Number 5, the betrayal of true liberal values like free speech and open inquiry Number 6, the way that tech visionaries, like Elon, have been targeted for harassment by left wing politicians. Remember Biden said we need to look into this guy, The Lorraine Gonzalez was even less subtle. She said simply Elon Musk. Number 7, the growing awareness that wokeness has gone way off the rails. We saw this even before the Israel Hamas war, but now I would say number 8 is this war. It's really thrown gasoline on the fire by showing that wokeness leads to the simplistic breaking up of the world into oppressor and oppressed categories And what we're seeing is that there's a lot of people in the woke left who are basically cheering for a terrorist organization and they're able to rationalize atrocities because of the simplistic woke dichotomy. That being said, I do think it's possible to support the desire for a Palestinian state and a 2 state solution without falling into that bucket. I wanna be clear about that. But I think that there's been way too many people on the woke left who have blindly disregarded the atrocities and were basically cheering for Hamas from day 1 on this thing. And I think that has woken up a lot of liberals, both Jews and non Jews who saw Jews as allies on the left. And when they see Jews being attacked this way, That has led them to really, I think, question their their priors on this. David Friedberg (01:14:41): What did you think of the Kamala Harris announcement yesterday that they're launching a program to combat Islamophobia in the US at a time when my understanding is many of their Jewish donors are up in arms about their lack of action on anti Semitism. I mean, it just David Sacks (01:15:00): seems like like I mean, look, I have not seen In this particular case, I don't think I've really seen outpourings of Islamophobia. To be clear, I'm against Islamophobia. I'm against hatred towards any particular group, including Muslims or Jews, to me, you know, any outpouring of hate towards a particular group is is bad. But, yeah, this seems like a a problem that we really haven't seen. So it seems a little bit toned deaf and, look, this administration's been kind of stumbling around on on this whole issue. It seems like they don't really know what to do. David Friedberg (01:15:30): I don't know how to quantify it. I just think it's an anecdote. What do you think? No. I I like I'm saying, I I don't know how to quantify it, but I think the the anecdote is A lot of folks. Chamath Palihapitiya (01:15:41): No. No. What what do you think? What do you feel? What do David Friedberg (01:15:45): I feel? Chamath Palihapitiya (01:15:45): Yeah. I David Friedberg (01:15:47): mean, I'm not a party guy taking a step back. This is getting a gonna get a little esoteric, but I think humans organizing to social systems. 1 social system as a family, 1 as a company, and I think that the government is a social system. The point of a social system is to get influence to achieve the things you want to achieve by aggregating together, by creating a tribe, by creating a system. And that's what a government is. It lets a lot of people pool resources to get things done as a group that you wouldn't otherwise be able to get done individually. Same with the company, same with the Chamath, to support each other, etcetera. And I think that the problem with, democratically elected governments or all governments for that matter, frankly, is like any other system, they and I've said this in the past. They have a natural incentive to grow. I met with a government person the other day, well known government person, and I was struck by the the tone. I I've been struck by the tone on multiple people I've met from the government. On here's all the next things I'm gonna get done and here's how we're gonna grow and do more and be bigger. Just like if you're running a company, that's your incentive. That's your model of thinking. And like with your family, you wanna grow the balance sheet for your family, you wanna have another home, you wanna take care you wanna build security, etcetera. So governments as an organizing system are no different And so, I I think that in a democracy, over time, There is, as Saks points out, a group of folks who get elected, and as a result, like a philosophy, that endears in that system, that is all about overcoming the power that is, that we all view there to be powers that are keep us from doing the things we wanna do. And I think that this is the ultimate manifestation of what happens is that you push the government to be as big as possible with no end, and you push the government to destroy any system of power that gets in the way of those who are able to vote these folks in, And now a lot of folks who thought that they were supporting liberal causes to help those in need are realizing that you're actually repressing minorities. In the process that there are minorities that are viewed to be powerful, like choose, that there are minorities that are viewed to be unfairly advantaged like those in the tech industry, that there are minorities who were viewed to be unfairly advantaged like billionaires. And I know that the sounds insane to say that, those terms But that's the objective is to destroy any system of power, any individual of power that has any form of leverage over us. David Friedberg (01:18:22): It's also why I think we've generally been techno pessimistic in the west since the late 19 sixties early seventies is because technology has been viewed as this point of leverage for creating a power system for a minority. Of the people. So I I generally view this as part of a longer arc and a natural kind of conclusion to this stuff. And, you know, I I'm I'm not trying to be super pessimistic. About where things are going because I do see that the a lot of folks are now waking up to this reality and they're like So my anecdote is I've had a lot of folks tell me in the last couple of weeks we have to be thoughtful about how we elect and how we govern so that we create a more balanced. Chamath Palihapitiya (01:18:59): What's the end game in your framework? David Friedberg (01:19:01): My end game is socialism. I think that's where things go, ultimately long term. I think that there's a recapturing and a redistribution of power and value. I think that there's some degradation of the system that erodes to looking like something like France. It's not like a nasty, and it's like a a slow whimpering, like, you end up looking like France or something. And so that's my my end game in that framework. And I I I believe strongly this is why we talked about this with Dahlio that there are political actions, decisions, voting, mechanisms that, that hopefully we can put into place to stall out and to stop that from happening. Because I do think that human progress is critical for the minor for the majority of people that are disadvantaged, so we need to enable it. Chamath Palihapitiya (01:19:41): Okay. So I'm guessing you're on the, I don't want to be France side. David Friedberg (01:19:46): 100%. That's right. Okay. Chamath Palihapitiya (01:19:47): So and so what is the David Friedberg (01:19:48): I wanna be the Wild West. I wanna be the 19 the early 19th century. Chamath Palihapitiya (01:19:53): What do you think that we should do in America right now? David Friedberg (01:19:55): I think we should unwind a lot of laws, and then I think we should have as a mandate, the objective is how do we get more of our economy and more of our people in this country to be supported by and progressed through private industry rather than public support. The federal government and the role that the federal government has in funding industry and hiring individuals and pumping dollars into markets, I think has gotten so far beyond the tell that we, as we know, are being sloshed back and forth based on the decisions being made by the Federal Reserve. That should have never been the case. The free market should have always been allowed to operate. Progress should have always been allowed. The government should have stopped people from being hurt. Should stop negative outcomes. But the idea that the government should come in and start to run things and employ people and get to the scale that it's gotten to, this is the largest organization in human history, the federal US federal government. It has got the highest dollar spend, the highest budget of any organization in human history. Even accounting for the Roman Empire, there should be accountability standards for every law, which is how do I know that this thing did what it was supposed to do and how do I measure if it did And by the way, if it doesn't and the dollars aren't returned to me, it's a multiple. We shut that law down. We shut that department down. We move on. There should be an accountability standard for every dollar that's spent, but We don't describe any outcomes. We don't say here's the standard of measure, and here's the accountability. And if this doesn't work, And if there's this dollars in return to us, we don't spend it anymore. And we don't keep doing this thing over and over again and then layer something else on top and layer something else on top. And then you've got 10 layers of nothing accountable to anything, and that then costs ten times as much to do half as much. Chamath Palihapitiya (01:21:35): I David Friedberg (01:21:35): am optimistic still. I'm always an optimist. Chamath Palihapitiya (01:21:38): Oh, make sure you put in that caveat. Good. Yeah. David Sacks (01:21:42): Well, what's going right in your view? I feel like we just killed the last good thing. Chamath Palihapitiya (01:21:47): Yeah. What what is going writing you? David Friedberg (01:21:48): Well, the AI thing is what really pisses me off, man. I mean, this whole idea that we're gonna in and tell people how to run businesses now. Chamath Palihapitiya (01:21:54): I hear you. David Friedberg (01:21:54): Go just go back to it. Chamath Palihapitiya (01:21:55): But do you think AI is going well right now? We have nothing to really show for it yet, so it's hard to say that. It's it's cute and it's cool, but there's there's nothing really David Friedberg (01:22:05): subject to. Yeah. I don't get the term. When I started my company, I had people called math people and statisticians, then they was called data science, then it was called big data, then it was called ML. Now it's called AI. At the end of the day, It's software based algorithms that use 3 things, data software and statistics, and the statistical tools and the approach to the software algorithm development have changed with the transformer model that was paper that was described. But it's the same thing we've been doing since the 1960s, which is creating packages of software that make predictions. And that do things for us. And all that's happened in the last 2 years is we've seen a piece of software that can communicate well with us based on these LOMs, and we're like, oh, intelligence is here. You know, the first time a computer in the 1960 said hello world, everyone was like, oh my god. We have AI now. AI is the sentient. It just said hello, world. David Sacks (01:22:54): Well, the same thing happened when when Big Blue, which was a big IBM mainframe beat Kasparov and chess, People are like, oh my god. AI is just about a year because at one time, being great at chess was considered to be only a human capability. And if a computer could ever get that good, the theory was that it would have to be an AI, but we actually found out that computers could do chess but I didn't make them an AI. It just meant that they could acquire that one narrow capability. I think kind of what you're saying is that computers now thinks the language models have some ability to interface with us using language and to understand language by itself. That is not artificial intelligence in the way that is portrayed in science fiction movies. David Friedberg (01:23:37): There's 2 key things that are happening. 1 is a new a new modality in human computer interaction to a chat, which is incredible. And opens up lots of new software applications and markets, which I think can be transformative and worth trillions of dollars. No fucking doubt. And then the other one is in generative tooling where you can make art and you can make video and audio and all this other sort of stuff. So you're you're creating digital outputs that are not necessarily text. But other forms that also start to represent the expectation that you might otherwise have. And so that is really powerful and opens up all these new models for media. Content, exploring new business models, etcetera. So both of those are really important new software capabilities that have emerged. But this this notion that I think people confuse AI as being this, like, we've now got humans in software that can do things is almost like back in the sixties when the computer said hello world, And they said the same thing. Chamath Palihapitiya (01:24:27): I think that what people are odd by right now is that a computer's ability to statistically guess has gotten several origins of magnitude better than it ever was before. And so these guesses seem human and life like. But you'll find the edge case where this stuff fails, and we'll be asking ourselves yet again in a few years. What the next leap is, but The thing that is different is that there is a level of investment multiplied. And, Nick, I I tweeted this so you can just show the math there's a level of investment multiplied by a level of improvement in the underlying hardware multiplied by a level of improvement in the underlying models. That's creating a 400 x improvement from the baseline every year. And so the thing that I think is different is that we are taking this statistical guessing, if you want to just call it that. And we're getting exponentially good at it. So there is an efficient frontier at which point you're like, oh my gosh, this is as good as certain humans, you know, maybe not the smartest of the smart humans, but certain humans. And I think that that's what's really, really crazy and intense right now. So I can understand why people are like, we need to get a handle on this. But it may kill the golden goose although I would just say there is no golden goose yet. There's just a lot of really interesting stuff that people can say is novel and It's inspiring to see, but by no means has there been just a proven use case that is 10 x in productivity. Yeah. That hasn't happened yet. David Sacks (01:26:07): That's the reason to wait is this whole thing just seems very premature. Let the technology develop a little bit. Let the problem become a little bit clear, more manifest. Let the way Let David Friedberg (01:26:17): the cake bake. David Sacks (01:26:18): Let the cake bake. Let the problems emerge in a way Instead of what we're guessing about, then we can actually see them and also allow there to be time for solutions to be developed by the industry on its own. Mhmm. Now we don't need Kamala Harris' help or guidance to do that. David Friedberg (01:26:39): Okay. There you have it, folks. Thank you for joining us for another episode of the All in Pod. We hope that you all away with the utmost of optimism, enthusiasm for the world around us. There's awe and wonder outside. Go take a walk and enjoy it. There's so much more than what is on Twitter. I leave everyone with No. There is. Blessings and love. Gentlemen, anything else? Final words? David, you better fucking be there. David Sacks (01:27:06): Oh, for poker. Yeah. I will. I will. I'm coming. David Friedberg (01:27:08): Last week, Saks RSVP is a poker. Then texts. He's supposed to be at dinner at 7 o'clock, texts at 7:30. I'm on my way. 11 o'clock rolls around. No sacks. No idea what happened to you. You disappear into, like, the Bermuda Triangle of the Bay Area. I don't know where you go, but Chamath Palihapitiya (01:27:25): you just disappear. He gets in an Uber. He has him parked in the airport, and he just plays chess. He gets out of the house. Hard points. Bye bye. Bye bye. Bye bye. Speaker 4 (01:27:39): We'll let your winter slide. Rain David Sachs. Speaker 5 (01:27:46): And it said We open source it to the fans, and they've just gone crazy lately. Chamath Palihapitiya (01:27:52): Besties Speaker 4 (01:27:55): are gone. My name is Gogs. Thank you, man. I wish you your drive. What are you saying? Oh, man. Oh, man. Chamath Palihapitiya (01:28:07): I might have a casual meet Speaker 4 (01:28:09): the athletes. We should all just get a room and have one big huge order because they're all just useless. It's like it's like sexual tension, but they just need to release them out. We need to get murky.