美国空袭胡塞武装、市场动荡、一季度降息存疑、Carta 重大失误与 DEI 之争

Jason Calacanis (00:00:00): Nick, can you cue the tape? Chamath Palihapitiya (00:00:01): This is now the worst form of a oh Jason Calacanis (00:00:04): my god. Oh. I mean, the fact that he hit the rip is a miracle. Chamath Palihapitiya (00:00:10): The most un what is oh, god. Jason Calacanis (00:00:13): I have to I wish we could get slow motion on that. It's like a ball. David Friedberg (00:00:18): The ball's a slow mo. Chamath Palihapitiya (00:00:19): Now look at his hand. Look at the right hand. David Friedberg (00:00:21): Look at Chamath Palihapitiya (00:00:21): the right hand. Look at Jason Calacanis (00:00:22): the right hand. What is that about? David Sacks (00:00:25): One hand was Chamath Palihapitiya (00:00:27): It's Jason Calacanis (00:00:27): I mean, that has nothing to do with basketball. It was the most unnatural, basketball slash athletic movement I've seen. David Friedberg (00:00:35): Come on. Wasn't that bad? Jason Calacanis (00:00:39): I mean, the lean forward to Chamath Palihapitiya (00:00:41): the lean forward, the kind of, like, sassy jump You know, it's the Jason Calacanis (00:00:45): sassy jump. He's a little sacshade. Chamath Palihapitiya (00:00:47): He loves a sacshade on the side of it. Nice. Jason Calacanis (00:00:53): To let your winter ride. Rainman, David Sachs. And I said open. Alright, everybody. Welcome to the all in podcast. With me again, the chairman dictator, Shamalff Polyhapatiya, David Friedberg, the Sultan of Science. And the rainman himself named Sacks. Our first topic will go to our war correspondent. The US and its allies have struck Houthi targets in Yemen. Sacks? David Sacks (00:01:28): Well, we talked about this 2 weeks ago on the show, and we talked about it as a asulatory risk in the Middle East back then. And I think that that is playing out now. We fired, I don't know, maybe a 100 rockets and missiles. Yemen, last night, The purpose of the strike is to restore deterrence and, I guess, try and prevent the Houthis from attacking commercial shipping and the red sea, but that deterrence is not working. I mean, there's already a new attack by the Houthis this morning of a commercial ship in the Red Sea. So I don't think this is gonna have any impact other than to escalate the conflict in the Middle East and put us on a path to war with Iran, which is really where the deal cons wanna take us. You've heard, obviously, the warmongers like Lindsey Graham are calling for that, but even speaker Mike Jason is talking about that. I think that's where this is all headed is a larger war in the Middle East that features the US and Israel going to war with Iran. I think we should all be very concerned about that, actually. Chamath Palihapitiya (00:02:34): But, yeah, I mean, you have to be fair. It's not just it's not just the US. Right? It's now the US, the UK, Israel, qatar, UAE, and Saudi against the Houthi rebels. That's a big alliance, and you've gotta think that Iran We'll think very carefully about how close they wanna get to the Houthis in the middle of all of this because that's a that's a huge Armada, if you will, of countries that I don't think you really wanna cross as a group. David Sacks (00:03:04): Well, I think Saudi Arabia and UAE are are playing this very carefully, I think. They did not participate in the strikes. They did allow the US to fly overhead. Or to use its territory, but they release a statement calling for restraint and de escalation. So I think they're very nervous about this blowing up into a wider regional war. I don't think they want that. The allies who participated in the the campaign of air strikes were UK, Australia, Canada, Netherlands, and Bahrain, but I don't think they actually did anything. I don't think they contributed any assets. They just provided their names to this operation and provide some diplomatic cover. David Friedberg (00:03:45): Free bearing any thoughts? Well, Sacks, you posted a comment on Twitter, which I wanted to respond to, where you said China has the largest shipping volume through the red sea, and they're staying out of this conflict letting the US do do the dirty work. But the Houthis didn't attack Chinese ships they specifically attacked Western ships. Isn't that correct? I mean, this is a very targeted, disruptive event that the Houthis have been undertaking for some time now. And they're using these very interesting tactics with drones that can be very destructive and very hard to block and doing it not at Chinese ships, but at a very targeted enemy. David Sacks (00:04:22): Right. Well, what the hoodies have said is that they're only attacking ships that are either Israeli or going to Israel. But Right. In reality, they've David Friedberg (00:04:30): they've attached it David Sacks (00:04:31): they've attacked a much wider range than that. David Friedberg (00:04:33): But not Chinese. David Sacks (00:04:34): It may be true that they have an attacked ships that are declaring themselves to be Chinese ships or Russian ships. However, there are more Chinese shipping containers on all of the ships are going through the Red Sea and the Suez Canal than any other country. So there's no question that if we're talking about the disruption of global trade, this is gonna have a big impact on Chinese trade, whether it's on Chinese ships or not. Jason Calacanis (00:05:01): Or it could David Friedberg (00:05:01): benefit them because they can get through that shipping lane and the rest of the truck. David Sacks (00:05:05): Can get through, but foreign ships, European ships that have Chinese shipping containers on them are not getting through. Yeah. So their trade is still getting disrupted And they do that. They don't feel the need to engage in this militaristic response or participate in that. David Friedberg (00:05:21): In terms of understanding implications, of the escalation in this conflict. Let's just quickly talk about number 1. I'm assuming shipping prices are gonna go up. Freight prices are gonna go up. Chamath Palihapitiya (00:05:32): But hold on a second. We talked about this with Ryan. Remember the question that I asked him? This is really an issue for Europe. It's not an issue for the United States. Because there are alternative routes. You can go through the Pacific and you can go down through the bottom of of Africa. Right? And all that does is add, like, a 5 or 10% increase. So what we're really debating is what is the risk of inflation and a backup of goods and shipping rates into Europe. And this is why I don't understand why America needs to even get involved. I understand why the Netherlands and the UK and France and all these folks need send resources to unclog this. That makes a lot of sense, but I don't see why the US needs to be in other than providing moral support or logistical support, what what is the point? David Sacks (00:06:17): Which about this is exactly my point. Is the number one type of trade that's going through the Red Sea are shipping containers from China going to European ports. Jason Calacanis (00:06:28): Right. David Sacks (00:06:29): And as a result of what the hoodies are doing, it's having to go around the horn of Africa. It's adding 2 or 3 weeks to the trip and is raising the cost of a shipping container from China from, say, $1500 to Okay. $3000. As Europe and China were impacted the most, but for some reason, it's the US that decides it has to take the lead in doing this. And the problem is that, first of all, the action is futile. I mean, the Houthis have been, war on and off with the Saudis for a decade, and the Saudis have been backed by Western Weapons. And we have not been able to defeat the Houthis. So this missile strike last night is not gonna deter them. It's not gonna stop them. They're very determined, very tough fighters. 2nd, they are gonna be looking for retaliation. They're gonna be looking for blowback and to to to your point, not gonna be looking for retaliation against China or Europe. They're gonna be looking at it against the United States. So we're incurring this cost and risk onto ourselves. Chamath Palihapitiya (00:07:28): So let let me put this question to you then. We have no obvious economic incentive to get involved because we can sustain our economy through different shipping ports that at best raise rates 5 or 10%, right? We can absorb that in the economy. A 100% which could drive inflation is a European problem. So there's no economic incentive necessarily to get involved, so What is the incentive? It feels like not to play conspiracy theorists, but like a wag the dog moment. Another distraction to add to the plate. What do you think about that line of thinking? David Sacks (00:08:05): I tweeted something just like that. This does feel it's a wag the dog in the sense that the Biden administration was Do you Chamath Palihapitiya (00:08:13): wanna explain the reference Jason Calacanis (00:08:14): for folks that may have. David Sacks (00:08:15): Yeah. This movie called wag the dog that came out the early nineties where the president is up for reelection, and there's a horrible scandal that's about to come out, like a Monica Lewinsky type scandal. This was before Monica Lewinsky, by the way. It really was sort of one of those movies that kind of predicted the future. But in any event, the president's trying to avoid this Monica Lewinsky type scandal. And so the political aids and advisors decide the way to do that is to start a war. But they don't start a real war. They basically manufacture a fake war on a soundstage and then in a movie studio, and it's pretty hilarious how they keep the whole thing going. David Chamath, who's a brilliant brilliant writer, wrote that script. But this movie came out right around the time of the Lewinsky scandal with Clinton, And so, therefore, it took on this larger political and cultural significance. David Friedberg (00:09:06): Yeah. It's been used. So, yeah, David Sacks (00:09:07): so wag the dog is, you know, you basically start a war because of the political benefits as opposed to the real necessity of going to war. And I think you can make that accusation here, Jamal, because I think that the Biden administration was looking impotent. I mean, they were basically telling the Houthis to stop. They're pleading with them to stop interfering with international shipping. The Houthis weren't listening. By the way, the reason why the hoodies are doing this is they're doing an in solidarity with the Palestinians in Gaza. They've demanded that the Israeli invasion of Gaza stop and humanitarian aid be let in, and they're not gonna stop interfering with global trade until that happens. So that's the Houthique's position. The Biden administration has been telling him to stop And I think that they were looking increasingly feckless and impotent, and that's why they did this strike. Chamath Palihapitiya (00:09:55): Well, is it is Jason Calacanis (00:09:56): it that? David Sacks (00:09:57): Is that the strike's not gonna have any impact. And so so what what what's the point? Chamath Palihapitiya (00:10:02): Well, is it that, or is it that think if you take the wag, the dog analogy to the limit, I think maybe a different interpretation. I'm not saying that they did this, but a different interpretation of that analogy would be that they are struggling domestically. And I think Jay Cal tweeted this, but if you look at the polls and you look at Dean Phillips, all of a sudden, and you look at what's happening on the Republican side, There's so much activity and momentum, frankly, for non Biden candidates, all all across the board that that would be the most bag of the dog explanation, in my opinion, which is like to distract folks from the domestic malaise by pointing some place far away and saying, we're doing something very righteous here. Let's all get on the same page and support us. Jason Calacanis (00:10:49): How does that logically make sense, Chamath, if the US is against wars and people are tired of wars. Like, what would be the this is the only problem I have with the logic of the Wagner Dogs Theory. Is David Sacks (00:11:00): Is is the Americans against wars? Jason Calacanis (00:11:02): Who's against wars, Jason? Are the American people that have been very much against starting farm wars. We've talked about it here. Chamath Palihapitiya (00:11:09): So let's talk about the people that run the country. So what Jason Calacanis (00:11:12): if you're saying they're doing it The logic here is wag the dog is to curry favor. It's actually said they're rallying this is to rally the American people around like a patriotic cause. But this isn't like a, you know, nineeleven situation where Bush got a lot of credibility for saying, Hey, we're gonna go get these terrorists. Americans don't want more wars right now. The polling is very specific on that. So then, I guess, Sacks, what is the the logic there? To wag the dog if this is something American people don't want. David Sacks (00:11:43): Well, I I think you're right, Jason, in the sense that the American people are exhausted by wars as especially Middle Eastern wars. We've just gotten out of 2 decades of endless forever wars in the Middle East, and I don't think the majority of the American people wanna get back in. So I think you're right on that level. And it's true that if you were to pull the American people and ask them, are you in favor of getting in more wars? You would say no. The problem is that with every war, the mainstream media starts propagandising for the wars, and they'll basically demonize whoever it is that we're gonna go to war with. And explaining why they're a huge threat. They'll engage in threat inflation. And so the American people end up supporting it. So we're against war in the abstract, but in every particular case, we end up supporting it. If that's what happened with Ukraine, it's even happening right now. If you look at polling, for this hoodie conflict. I think most Americans believe it's a good thing to strike the hoodies. So, yeah, there are against it in the abstract, but in each particular case, the media is able to manufacture consent for the US involvement. Jason Calacanis (00:12:48): So just to challenge that Yeah. As well. So now our theory is or your theory is the media plus the Biden administration are in Kahoots to wag the dog, create this support of a war in order to distract from domestic issues in order to curry favor with the American public that doesn't really want more wars. That's where I'm saying. Like, I think Wag the dog might have been something 20 years ago, like you're saying, that could work as a technique, but I I can't imagine anybody would want to do more military action at this point in time when the American public is exhausted from it. Which is what you said from the last 6 months on this podcast. David Sacks (00:13:32): Yeah. Look, I I I tweeted exactly that sentiment is that I don't think wagging the dog is gonna work. I think there'll be a short term rally around the flag effect, but I think that overall, if this conflict is still going on in November, is gonna weaken Biden by making him look like a president who's lost control of events. So I I agree with you that ultimately the perpetuation of this conflict is not ultimately imbibed as interest. Now, nonetheless, it may factor into their political calculation that in the short term, they think this makes them look good. Jason Calacanis (00:14:06): That would seem super incompetent as like a a a political strategy to me, but I'm a political expert. David Sacks (00:14:11): I mean, despite the fact that this administration claimed to be the the foreign policy grown ups, they haven't shown a lot of competence. They couldn't even find Lloyd Austin who's a secretary of defense for 5 days. He's no one knew where Jason Calacanis (00:14:22): he was. Chamath Palihapitiya (00:14:22): There's no one happened to David Sacks (00:14:24): No. He checked into the hospital for a procedure, and no one could find them for several days. And there was an article, I think, on CNN talking about how he was managing this Houthi strike from his hospital bed. Jason Calacanis (00:14:36): And that was weird. David Sacks (00:14:37): I hope I hope the man's okay. I don't want, you know, 5 Chamath Palihapitiya (00:14:40): He's got prostate cancer. David Sacks (00:14:41): Yeah. I know. I it's it's that sound. And he Chamath Palihapitiya (00:14:43): had a UTI. He had a UTI. That's why he was in the hospital. David Sacks (00:14:45): But fair enough, but no one in the White House. The White House couldn't find him for a couple of days. Jason Calacanis (00:14:50): Is that true they couldn't find him? Yes. I mean, having a UTI is Chamath Palihapitiya (00:14:53): a very benign Well, he had he had a prostatectomy, and then he got discharged from the hospital. And somewhere along the way, He got a UTI with his severe, apparently. Oh. Went back to Walter Reed. And, yeah, in those 3 or 4 days, the handoff of power to his deputy happened. She was on vacation on a beach somewhere. So you're right. The And the problem was that the other person, the chief of staff, had the flu, so they couldn't escalate to the white. So it was like a comedy of errors, but I I don't think there's anything. David Sacks (00:15:30): But anyways, I mean, imagine if you were like a a C level executive at a company, and you're gonna be out of the office for a few days and unreachable. You would set up a clear chain of command. You'd have a deputy who the CEO could get a hold of if necessary. In this case, you've got the secretary of defense who if the United States was attacked in some way, is part of the chain of command. The president would need that person in the situation room. So the fact that they couldn't find him for a couple of days is really, I think, unforgivable. How does that even happened. Jason Calacanis (00:16:02): Is that really true that they couldn't find him? Like, they literally They didn't know who it was for a David Sacks (00:16:06): couple of days. This was widely reported. Jason Calacanis (00:16:08): They but they couldn't call him on his cell phone or his chief of staff or the Nobody knew where David Sacks (00:16:13): he was. Jason Calacanis (00:16:15): Wow. Yeah. Okay. David Friedberg (00:16:18): Alright. Very good. Jason Calacanis (00:16:20): Having kept up on on on the details of his UTI and his cancer, I hope he's okay. So, segue into markets The likelihood of a q 1 rate cut is not looking good. We had a slightly hotter than expected December CPI interest rates hit a 22 year high in July as everybody knows when the Fed raised their range from 5.25to5.5, but they've left rates unchanged if you haven't been following it, as inflation has cooled. But in December, the CPI rose 3.4% from a year earlier. That was just a slight tick above. And, of course, markets are wondering, is this gonna be a a glide path into a soft landing, or could it be choppy going forward, Friedberg, higher for longer, interest rates, You think that's still gonna be the case? And and what are your thoughts going into the new year? David Friedberg (00:17:14): Well, Larry Summers put out a note saying that he thinks that the rates are gonna stay higher than the market is predicting based on the yield curve right now. So I think the market's currently saying no cuts in March and high probability of cuts in June, but some folks like Larry are saying might be longer because inflation is very sticky. And if you look at the breakdown on the drivers of inflation, you start to think about what's the underlying business activity that's going on, like car insurance went up by 20%, which was one of the key drivers. And car insurance has always been this lagging indicator, but it does ultimately drive costs up later. The reason car insurance rates go up is because the cost to Hara Car goes up and the cost for medical care goes up. When that happens, the insurance companies actually have to file with state regulators to get approval to raise their rates. And it can take over a year for the regulators to then approve those raising of rates. So by the time the rates get raised, the other factors have maybe leveled out, but you're still going to have some elements of, costs that are going to continue to climb for some period time after you get the core engine tuned down. So these are the sorts of things that I think we're seeing in the the current CPI data is that there are some of these lagging effects of an overheated economy or overstimulated economy that are now starting to play through And so there's a number of these. It's not just car insurance, but there's a lot of things that are gonna linger for a while, and they're gonna be very hard to work their way through the system very quickly. And as a result, it may be the case that rates are gonna need to stay higher for longer. Chamath Palihapitiya (00:18:58): I think the thing with inflation that is worth noting is that A couple of things are true at the same time, which I think is interesting. I think we were the ones in May of 21, that started getting very antsy around inflation, and we started to look at the 5 and 10 year breakevens. Do you guys remember that? We would like Mhmm. Look at that chart a lot. And I think it was very predictive. We also used to look at the future oil curve, you know, not that we're macro economists, but I think it's It's useful if average everyday people can have a few things to look at. If you look at those things today, It tells you the same picture, which is inflation has cooled. We're going through the last kind of like throws of some of the random variables still being a little sticky, but the broad trend is down. I think it's indisputable. At the same time, even with the conflagrations in the Middle East, if you look at what people think about the future price of oil, it's also down. Oil futures are, I think, about 5 to 10 percent. Future prices are about 5 to 10% lower than spot right now for whatever that's worth. But the third thing which I think is important is we've now started to see folks come back from the new year and start to affect some pretty big layoffs and they're across industries. Right? Citibank today just announced 20,000 layoffs. That's a huge amount of people that are gonna lose their jobs. So what does all of this mean? It's that I think that people expect that as inflation contracts, the money supply will expand, but demand has yet to reset properly. So that's the last thing. And I think Friedberg mentioned this a bunch. Consumer spending has always been crazy. People living on credit, all of this stuff. That is now finally, I think, the last thing that has to get sorted out. So in the absence of demand, back to the way you started, Jason, companies will cut expenses in order to maintain profitability because they don't really wanna cut prices unless their product really sucks. Jason Calacanis (00:21:06): Yeah. And just to note that Citigroup as your Mentioned 20,000 cuts by 2026. Google also laid off hundreds of people, Amazon, hundreds of people, discord laid off 17% and there's a viral video going around of a woman laid off by cloud flare, you know, who is only on the team for, like, 6 months or something or 5 months And it does seem like, yeah, you're firing people before the holidays laying them off is considered, yeah, you don't do it in the fourth quarter. So maybe there was some some, backed up layoffs that people decided to do into this year, but it certainly feels like Sacks people are and you said this, I think, in the predictions episode or the recap episode, hey, you know, maybe it's still gonna be a little bit of turbulence and the soft landing isn't guaranteed maybe you could expand on that. David Sacks (00:21:53): Yeah. My prediction for the year was bumpy landing. My thought soft landing was a little too and I also thought that this big stock market rally that we had in November, December was too much too soon. The market starting in November started pricing in about 1a half percent of rate cuts this year, believing that the inflation problem had been licked. And now what we're seeing is, 1st of all, you had a slightly hotter than expected inflation report And now we have this escalating situation in Yemen, where this war in the Middle East might expand. And just so you understand, I mean, the Houthis have already said that if the United States attacks them, and uses Saudi or UAE airspace to do it, that they will consider themselves at war with Saudi Arabia and UAE and that they will try to do things like light the Saudi oil fields on fire. I don't think they have the capability to do that necessarily, but it's an indication that things are very volatile. Another thing I think we're likely to see in the Middle East is continued attacks on US military bases in Iraq and Syria. So that whole region is a powder keg. And if it develops into a wider regional war, then I think you can see an oil shock And if there's an oil shock, I think you can kiss the rate cuts goodbye because that's gonna percolate through the whole economy and have a big impact on inflation. So I just think that there's a lot of downside to these very optimistic projections that we're gonna get these huge rate cuts. It might happen, but but I just see a lot of risk. Jason Calacanis (00:23:27): Yeah. Friedberg, do you think these oil shocks are here for the long term or a possibility. You've been talking a lot about alternative energy, nuclear, obviously, Yeah. So is is and the US has become a net exporter of oil. So do you think this risk of oil disruption from the middle leases with us for the long term, or do you think that's waning now? David Friedberg (00:23:52): There's definitely structural risk because you have a supply chain that can get disrupted in a number of ways and limited alternative options If you look at the chart I just shared, it's the US strategic petroleum reserve. So we have about 350,000,000 barrels in the, strategic petroleum reserve today. That's down from call it early 21 when we were at 650,000,000 barrels. And, you know, it was pretty much at that level for decades. After the buildup leading up to 1990, we haven't been at a level this low in the strategic petroleum reserves since 1983. And so there's not a lot of levers for the government to intervene, to support the supply as there may have been in the last couple of years in the case of some supply shock because of a conflict that arises in a major oil producing region. Jason Calacanis (00:24:54): It's a really interesting chart, isn't it? Because that was after the oil crisis of the seventies. And you look at how long it took to build it and how large we built it. It's a really fast. I've never seen that chart before, but if you look at the, you know, I I don't know if you guys remember the oil lines. Did you have them in Canada, Chima? Where in I remember in Brooklyn, you had an even number or odd number license plate thing. If you wanted to get gas, you know, some days was the even number, some days was the odd number. I remember my getting online for gas and waiting for 2 hours or 3 hours to get gas. David Friedberg (00:25:24): Yeah. By the way, I'll say this is not a real cost today that we're experiencing, but Sacks Saks is pointing out, there's a number of ways that this can become a real cost. I was in Austin this week, and the thing that shocked me the most was how cheap gas was in the gas station. You can get gas for, like, $2.25 a gallon. It's pretty awesome. Jason Calacanis (00:25:43): It's like $6 when you're in Lake Lake Tahoe. Yeah. David Sacks (00:25:46): Just so everyone understands how the SPR got depleted last year when inflation was the top story you know, on the front page of every newspaper and gas prices were hitting, what, 7 or $8, the administration started releasing crude from the SPR to try and bring the price down. And they did that for about a year, and they were basically subsidizing the price of oil. Now that's why our stockpile is low. And that was a really great political strategy, but if we end up in a real crisis, we're gonna have less dry powder to deal with it. So, you know, we could have a perfect storm of things coming together here, where at precisely the time we end up getting involved in a big war in the Middle East are tools to mitigate the oil shock that would create have been reduced by what the administration's done over the past year. Now I don't know that that's gonna happen. I mean, I still think we're several steps away from a regional war, but you look at how many fronts now we have conflict in the Middle East. There's about 5 different fronts where there's conflict. You've obviously got Israel's war in Gaza. You've got Hezbollah in the north, basically firing rockets. You've got US bases in Syria and Iraq coming under attack. And now we have the US striking Yemen. So there's just so many ways that this could spiral out of control. Jason Calacanis (00:27:12): Isn't the SPR designed so that when we have an economic crisis like this to use it? Like, I mean, Chamath Palihapitiya (00:27:16): it's Yeah. You're like, the the Biden administration does a lot to dip it. By the way, you have give credit to the Biden administration in one in one form. It's not necessarily skilled per se, but when you look at the SBR depletion, they were selling at incredible moments in the market. And the energy department, I actually I think they They just announced that they're buying another, you know, $48,000,000,000, to replenish the SPR. So they'll be doing that now. But they were selling if you look at these price points, you'd they were selling when prices were $80.90 a barrel and now they're buying it back at 70. So At least the United States can take some solace in the fact that we arved out a few $1,000,000,000 for treasure. Jason Calacanis (00:27:59): I wonder how the SPR relates to consumption. You know, we see this chart, but it's in the number of barrels, right, 350,000,000 barrels or something like that. Is that what the chart says? And then peaked at Sacks or 700,000. I wonder what it needs to be Chamath or Friedberg on a as a percentage of our consumption as more EVs hit the market. Right? And as the number of miles per gallon goes up. So I I couldn't find a chart for that. I tried to find if anybody in the audience knows The SPR in relation to consumption, that would be a very important chart. No. Chamath Palihapitiya (00:28:31): I think they're pretty independent, Jason. How so? Like, we just build it up independent of what we need? No. The the strategic petroleum reserve is is essentially that. It's it's not meant to be something that's that's meant to book and usage. You know, if in a highly functioning market, there's theoretically an infinite amount of oil that's available. And so if there's more consumption, you'll be able to find more oil. You'll just have to pay a different price for it. This SBR is meant to be used in very different kinds of situations. This is interesting. Yeah, right? Jason Calacanis (00:29:04): Like when there's a disruption when there's acute disruption. David Sacks (00:29:07): It's supposed to be break glass in case of emergency. Chamath Palihapitiya (00:29:09): Yeah. Exactly. But how many days is this supposed Jason Calacanis (00:29:11): to last is what I'm sort of getting out. Like, I that's what I wonder because over time, are we consuming more oil? Now as a country, or are we consuming less? I would think consuming less. Chamath Palihapitiya (00:29:20): But but the thing you have to keep in mind is that even in an acute shock, what you can't just look at the SBR because we have now domestic oil capability. Right. And a lot of that developed under 2 presidents, Obama, and Trump. And both of them deserve a lot of credit because we have a capability now to be self sufficient, and we are a net order because of the work that happened Natgas. During that time. Yeah. Natgas. Oh my gosh. Do you guys see all of this, Michigan with Carta this week? Crazy. Jason Calacanis (00:29:51): Absolutely. Actually, it's on the docket. So those of you who don't know Carta is cap table software. If you don't know what the cap and cap table is, which many of you might not, stands for capitalization. What is it? It's a Google or an Excel sheet says who owns the number of shares in a company? This gets very complex in private companies, and they've made quite a business out of it. Wait. Wait. Wait. Can I pause you? Chamath Palihapitiya (00:30:12): There there there was a lot of comments that said exactly that. It gets very complicated. I apologize. I've I've owned equity in companies for 20 years. What the hell is exactly complicated? I don't understand that statement. I'm not I'm not directing it to you, Jason. Jason Calacanis (00:30:26): Yeah. Yeah. But I want I could tell you. Yeah. Chamath Palihapitiya (00:30:28): Wait. Because I I feel like that is, like, some BS statement. Jason Calacanis (00:30:32): Yeah. It's not. The thing is you as acting as a price round individual in a lot of these Jason, it was very simple to do a price round. But when you inserted safes into this, you know, a simple agreement for future equity that Y Combinator created and you put capital, convertible notes into this, founders started doing, like, dozens of these, Chamath, and at the early stages, the cleanup work and understanding how many shares people owned, especially with Yeah. Chamath Palihapitiya (00:31:01): But Jason, what I'm saying is what like okay. Tell me let me stop. Let me ask you a different Jason Calacanis (00:31:06): Yeah. Sure. Chamath Palihapitiya (00:31:07): We did this with spreadsheets. David Friedberg (00:31:09): Let me answer your question. Chamath Palihapitiya (00:31:10): Okay. David Friedberg (00:31:11): So in a private company, let's say a company issues options to an employee and they don't have a good to that. The employee executes the options. They now believe that they own shares. Unlike in a public company where there's a broker of record, Every share is registered in a public company. You know who owns the shares, you know, what broker is holding those shares, and every share is created through a public exchange, So there's a record of every transaction that takes place with every share in a public company. In a private company, there's no independent legal regulator that tracks all the shares. So you could issue options to an employee and forget that you did that, put the document in a in a drawer, and the employee shows up 5 years later. And they're like, wait. Or I get it. That's not. Experiences. I've had advisors show up. You're like, look. Here's my advisor I was given up just Chamath Palihapitiya (00:31:58): final search. I'm asking a different question. You're you're saying something. Great. I get that. I'll David Sacks (00:32:02): tell you what I think the killer Chamath Palihapitiya (00:32:04): feature was. Is that complicated to implement in software. Jason Calacanis (00:32:07): I don't understand. David Sacks (00:32:08): I I think the killer feature for Carta, it was called Eshares back then, was getting the shareholder to sign for their stock certificates. So to Freightberg's point in the old world where it was all done by email and a spreadsheet, they would literally have to send you a paper a document that you put in a false status. David Friedberg (00:32:24): If you lost it, you have to sign the documents that with with a lawyer saying, oh, I lost my my certificate. I promise you I lost it. David Sacks (00:32:31): I think the killer feature was digitizing the stock certificates, and then you would sign for them using, like, a esignature you know, on Carta, and they would just keep it for you. Jason Calacanis (00:32:42): I get it. Chamath Palihapitiya (00:32:42): I'm not saying that it's I'm not I'm not debating the value for you guys. David Friedberg (00:32:47): Yeah. Why is this offering? This is not complicated. Nothing. You guys have said it's complicated. David Sacks (00:32:51): But but what happened was because I remember when, like, the market tipped, right, is I got 1 email from a company that was using Eshares back then. And I would just do the digital signature, and I start getting a few more and a few more. Pretty soon there was a network effect. Like, I don't wanna have to wonder where my digital stock certificates are. I just know that they're all at Carta. That's very convenient for me as an investor. I think it's very convenient for the company to be able to manage all this stuff digitally. So, look, I mean, DocuSign, is not a complicated technology either, and that is what a multibillion dollar company, because there's a very strong network effect. You don't wanna have to have all of your signatures at a whole bunch of different companies. So I think that's how it kind of got off to the races. And then since then, they've been able to add more workflows. They've been able to add fund management They've been able to add a number of things to make it stickier and more feature rich, and it's not that expensive. It's like check around Chamath Palihapitiya (00:33:48): a year David Sacks (00:33:48): or something like that? Jason Calacanis (00:33:49): It's kind of getting very expensive for startups. Chamath Palihapitiya (00:33:52): We're talking. David Sacks (00:33:52): $10 a year is is expensive? Jason Calacanis (00:33:54): I mean, for a seat stay startup, it's a lot. And then we invested in a company called cake equity that's doing it for, like, a $1000 a year. To Chamath point, you tweeted, why can't this be a $1000 a year? Put a cake equity. You'll see. Well, can Chamath Palihapitiya (00:34:05): we can we just go to my tweet? Like, I was confused by all of this stuff. Jason Calacanis (00:34:09): I haven't even gotten to the story yet. Chamath Palihapitiya (00:34:11): So just sorry. Jason Go ahead. Yeah. Yeah. Sorry. Jason Calacanis (00:34:12): So anyway, what you're hearing is this software is very integrated into startup culture. We all have a lot of opinions on it because the cap table is where all the value is recorded. The cap tables have gotten much more complicated, but this is not like building the tiktok algorithm or chat GPT. To be clear to Chemach's point, this is not really hard software to build. So correct on that. And Sacks, correct, to your point, it's super convenient if everybody uses the same platform. And for a series a, b, c company spending $10,000 a year on this is not that big of a deal, although there are cheaper options. David Friedberg (00:34:48): But VCs and investors use it too to Sacks their portfolios. Jason Calacanis (00:34:52): Absolutely. And so David Sacks (00:34:53): It grew from one to the other. Just to be clear, so, I mean, first, companies started using it for their cap tables, then they got into the fund management business. So if you were fund, you are receiving all of your stock certificates, then you start using it to communicate with your LPs. So we start doing that. And it's very convenient for David Friedberg (00:35:09): it's a real it's more of a network effect business than a hard software business. I think is such a point. I just this this business has benefited from the network effects. Jason Calacanis (00:35:18): So they had such strong network effects. Here's the the Donnybrook that came up, this past week. Donnybrook. So you can look it up. I like that word. David Friedberg (00:35:30): Yeah. Yeah. Jason Calacanis (00:35:32): So the company David Sacks (00:35:34): I bet you knew a lot of Donny's in Brooklyn. Jason Calacanis (00:35:36): We we I was involved in a couple of rugs, if I'm being honest, and they they they escalated from Bruhaja's, typically. Not unlike an average episode of this podcast. And so David Sacks (00:35:47): There are probably some Donnie Brooks involving guys named Donnie. Jason Calacanis (00:35:50): That Donny was typically the guy who started. David Friedberg (00:35:52): This episode is Jason Calacanis (00:35:53): gonna be David Friedberg (00:35:53): named Donnybrook episode, please. Jason Calacanis (00:35:55): So, the company had a massive violation of trust as they were expanding to figure out other businesses to come into. They got into what's called the secondary those of you who don't know what the secondary market is, people like to trade stocks of private companies. You may have heard people buying and selling Stripe or Sacks. And so employees, early investors might sell their shares to other people. Now this is not happening as a primary offering from the company where they raise money and and issue new shares. This is people who have shares. Carter was in a great position to do this because they had the cap table. Now on your cap table might be a 100 investors 30 of them might be your friends, family, very quiet. You know, it could be Jeff Bezos, who is a seed investor in Google, Some folks at Carta who were in the secondary business violated the trust and the privacy of companies who had angel investors or early stage investors on their cap table and started contacting them directly saying, hey. Do you wanna sell your shares in company a to this person. We're trying to create a market for it. They got called out publicly the CEO, Henry Ward, who is a unique individual as, as many CEOs are, tried to do some comms. It was a disaster of comms. For a couple of days while they Friedberg to explain basically breaking their own terms of service, and it all ended up with them selling the secondary business, which I understand was a tiny business for them. Overall, your thoughts, gentlemen. I don't know if anybody Why did you say David Friedberg (00:37:27): he was an interesting individual? Jeremy? Jason Calacanis (00:37:30): He communicates directly Chamath Palihapitiya (00:37:32): Uh-huh. Jason Calacanis (00:37:33): In a very effervescent candid way. Like some founders do. Chamath Palihapitiya (00:37:39): Effort Vescent. Wow. That's a nice. Yeah. Jason Calacanis (00:37:41): Nice effort. I mean, I'm just trying to David Sacks (00:37:44): he's she's sparkling. Jason Calacanis (00:37:46): I think he is bad at PR, but entertaining to listen to. Right? Like, I think maybe they should have had a little bit of a slightly more thoughtful approach to this, but it all happened in real time. So it's very difficult to deal with the crisis in real time, I think. Chamath Palihapitiya (00:38:00): I have 2 comments. Go ahead. The first is I actually disagree with David Sachs. I I think that there's literally no concept of network effects in this business, and it makes no sense here. And the reason is that when you look at the public markets, which are infinitely larger, we have a vibrant public stock market that has no concept of this, and it works. Where you have companies like computer shares. You have companies like SSNC. There's just a plethora of providers that do fund administration. And frankly, I'm glad that there's a plethora of providers. I use some of them, and I trade one against the other to get a constantly cheaper price. We use the distribution agents And depending on which bank I'm working with on whatever deal, I have shares at multiple different agents. And they also cost virtually nothing. And I don't see a world where that deflationary cost reduction doesn't come to this market either because I don't see this as a as a defensible area of software. I think it's a necessary piece of software. So I kind of, like, randomly tweeted out just kind of like, oh, because I was just watching from the sidelines. Now in full disclosure, I was a part of investor. I sold all my equity in a secondary transaction speaking of secondary transactions. Jason Calacanis (00:39:18): Was that a good thread? Chamath Palihapitiya (00:39:19): Yeah. I sold it all two and a half years ago. So I, I have no opinion one way or the other on this company. I understand automation. But I don't think process automation is defensible. So if you build software around process automation, you will be competing in a race to the bottom on price. That is and I have not seen a single example of a company that's proven this otherwise. There are different companies that create real lock in because of what they build. That isn't 1. So I tweeted this out. Some person sent me this, and Jason, to your point, the 2 most prevalent competitors that they showed me were mantle. And Jason Calacanis (00:39:57): I Chamath Palihapitiya (00:39:57): think one is a YC company and and one is not, but Mantle and Foley, I think, were the 2 that that came up the most often. And, Jason, to your point, what they both told me was Cara's, like, 10 k a year, 12 k a year, and these guys are 90% discounted at a tenth of the price, which again proves there is not a lot of super compelling software walk in here. It's useful stuff, but that useful stuff is eventually gonna get as close to free as possible. These guys are proving it. And then last night while we were at poker, I got this thing. Somebody in 2 days. Jason Calacanis (00:40:32): Oh, built an open source competitor and just put the code out there Chamath Palihapitiya (00:40:36): and said, here you go. Dakota. Isn't that incredible? David Friedberg (00:40:39): Exactly. Chamath Palihapitiya (00:40:40): Guys, that happened that happened in 2 days from that tweet. David Friedberg (00:40:44): Right. David Sacks (00:40:46): I don't know. If I got Chamath Palihapitiya (00:40:47): How crazy is that? David Sacks (00:40:48): If I got a stock certificate from what's the name of this thing? Jason Calacanis (00:40:52): Open source clone. David Sacks (00:40:54): Bibicarta.com. I'd like groan. I'd be like, oh, here we go. I've got, like, Okay. Chamath Palihapitiya (00:40:59): First of all, that's totally not true. David Sacks (00:41:01): In, like, 5 different Sacks, and this thing's probably gonna go out of business in 6 months. Chamath Palihapitiya (00:41:05): Oh, man. That's not true. And you know even know it. You don't know where the certs are. Jason Calacanis (00:41:08): I can actually care. David Sacks (00:41:09): Be seriously annoying type Jason Calacanis (00:41:11): of deal. I can actually tell you what's happening in the market with startups. Startups are looking at the alternatives. They wanna save money. The bigger companies are probably not as price sensitive, Chamath, you know, spending $20,000 as a Series B company, nobody cares. But for the startups, they tend to find the most efficient software and But you're exactly right. Shamoff on that. Chamath Palihapitiya (00:41:32): Yeah. My comment is less about Carta itself and its price My observation is twofold. 1 is software that doesn't have a fundamental lock in. Yeah. Does not have pricing power, number 1, and number 2, we are almost at the tipping point of a set of tools that will allow competitors in a matter of days to compete with an 80% feature complete solution at a fraction of the price. That's my that's my generalized observation as manifested in this Carta example in less than a week. Jason Calacanis (00:42:05): Well, what do you do with some observation like this? If you have this 80% observation, is there 80%? So then I was like, Chamath Palihapitiya (00:42:10): well, you know I'm just gonna go for it. So I'm just teeing it up for you here. So I I'm starting this thing. And I've been working on this idea for a little bit, but And I've been experimenting with it with some of my companies, but then I was like, you know what? We should just do this. So the concept here is we're gonna build this incubator. It's called 8090. I have a team. Have a bunch of developers offshore, and we are going to basically create a hit list of software that we think is relatively straightforward and mispriced and could be built much more efficiently in 2024 using all of these co pilots and tools. And our our boundary conditions will be, can we deliver 80% of the functionality at 10% of the price. So at a 90% discount. Jason Calacanis (00:42:57): So 80.90 is what is what the Chamath Palihapitiya (00:43:00): name of the incubator is. And what was interesting is when I tweeted this out, we had 1200 people essentially give us a product road map. They told us the software that they would want They told us the features that they need. They told us the things that they don't need. And so the idea here, Jason, I think is I'm just gonna build this in the in the wild. I'll create the list of companies We'll publish that out, let people vote on it. Jason Calacanis (00:43:22): Okay. Chamath Palihapitiya (00:43:22): Then we'll publish the PRDs of what the 80% version is, and we're gonna work backwards with my team in South Asia to try to build these things at a 10% price point. Jason Calacanis (00:43:35): So Sacks, your thoughts, your Sacks investor, it's, your vertical Your thoughts on Jamat's plan to be the most hated person in Silicon Valley. I under pricing every piece of Sacks software by 90%. In real time. Well Can he do it in your estimation? Well, I David Sacks (00:43:52): think there probably are categories where you could do that. But in general, what I would say is that it always looks easier from the outside than from the inside, meaning that you look at any particular Sacks category leader, and you're like, this is easy. Like, I could do this. And then when you actually get into it, you realize that, okay, the product I'm seeing is kind of an iceberg. I'm just seeing the tip of the iceberg below the waterline is all the business logic that's been written into the system. There's like a much deeper and longer list of features, not in every category. You might be right then in some categories. You don't need the product depth. But in many other categories, there's just a lot of subtle features, usability issues have been figured out integrations, you know, with other ongoing support. Ongoing support. Jason Calacanis (00:44:40): Training. And then David Sacks (00:44:40): you have the whole sales and marketing component to it. So what ends up happening is you attack a category saying oh, this is gonna be easy, you know, a year or 2 into it, you're like, wow. Like, the category leader, we're not even close to, where it is in terms of table stakes here, and it ends up being more of a slog than you thought. And then you find out the market doesn't necessarily have as much of an incentive to switch. I'm not saying it can't be done. There are categories where I think the category leaders become stagnant and has stopped innovating, and I think those are ripe for disruption. I mean, look, I'm kind of trying it in a way. We're gonna be launching my circular soon. I feel a lot better about that because I got acquired doesn't hasn't really innovated in a a few years. Jason Calacanis (00:45:24): And Salesforce, by the way, just announced 0 hiring in 2024, and the Sacks teams were like, what how are we supposed to hit our road map without more people? Like, what's going on here? So there is there is David Sacks (00:45:34): that one. I definitely think it can be done, but I don't know. I think you gotta choose carefully the categories where the iceberg isn't bigger than you think, basically. David Friedberg (00:45:45): I want do you think that there's a shift in the business model for Sacks companies that emerges from what Shamat was talking about? I think right now Sacks and marketing costs as a percent of revenue on average for a scaling enterprise software company around 55 percent of revenue or something in that range. Does that number get compressed by bringing price down? So you bring price down, but you need fewer people to go in and do the selling. Fewer. David Sacks (00:46:10): I don't think so. That that has not been the pattern. I mean, look, everyone was saying things like this when enterprise software shifted from on prem to the cloud. You know, when we went from Oracle and Seebolt to salesforce.com, people would say, oh, it's gonna fundamentally change the business. Sacks won't become that important. Products gonna be all important. It was true to some degree. I mean, I do think that to Jason Calacanis (00:46:32): do it. That what you pioneered at Yammer. You you try to do bottom up. Yeah. David Sacks (00:46:35): So there was product led growth became a thing. Jason Calacanis (00:46:38): You know, David Sacks (00:46:38): and a very important thing. And I still think that's the best way to build a SaaS company is you let the users just try it on a freemium basis as opposed to having sales knock on the CIO's door and let the employees pull the product into the company, then go close the deal. So it did make important changes, but it did not get rid of sale. I mean, you know, what I believe doing this stuff way back in 2008 is we'd be able to get rid of sales and just make enterprise product completely self distributing. That never happened. People have been predicting the the death of sales for a long time, and it's never happened. Chamath Palihapitiya (00:47:11): I think your vision is absolutely right. And I think this in a world of auto GPTs, it's going to happen. And I think the way that it's roughly gonna happen is as follows. I think what happens is that And Zoho is a is another good example of how you can do this, which is what you need are a small set of tools that provide useful capability for a company that work elegantly together. Now when you work elegantly together, there's a bunch of things that you need. You need security. You need handoffs and handshakes. You need different ways of handling exceptions. You need a a common kind of data model. All of those things can actually be configured on the fly dynamically, buy in between 2 sets of software if you let the AI actually run an auto configure itself. And so I think the experimentation is as follows. You have product a and product B, you want to adopt them both. They have elements of an agent that can go and auto configure themselves to each other. Separately, I think what the CFO or the CEO does is allocate a budget, and that budget is an agent And what that agent does is it works with these other agents to say, okay. Great. I can spend money on these features. That is the thing we've not explored. We've always taken software that we build, and all of a sudden, pause automation and hand it over to people to run it through a relatively archaic go to market process. And I think what's worth trying to figure out in 2024 and beyond is how to use these pools to automate all of the low level negotiation that happens before you can adopt software. I just think it's totally unnecessary. And I think that this is where software can do a very powerful job on behalf of the salesperson. Does it mean the salesperson is totally out of the loop? No. But I do think that if these tools are lightweight enough, especially the young nimble companies, will actually say, great. My procurement person is actually an AI agent with a budget. Chamath Palihapitiya (00:49:07): And it's the products that then figure out how to negotiate for the share of that budget and then configure how to work amongst itself. That is the key innovation that I think someone will figure out. That is the Zoho 2.0. Right? That is the Salesforce 2.0. It's sort of this app app store common data bus kind of an idea that that I think somebody will build. I would like to try to help. Jason Calacanis (00:49:30): Well, people have started building Inchimov because you're starting to see the features overlap in many programs. You're seeing HubSpot, Salesforce, Zendesk. They're obviously getting into each other's David Friedberg (00:49:40): business. Those are Chamath Palihapitiya (00:49:41): that's a great observation, but those are all closed products. What I mean is like there is like a totally open protocol and set of standards for how day integrates and interacts with product B on many levels, right, from security to data model and everything in between. And I think that that is what needs to get figured out and be very much an open source idea. Jason Calacanis (00:50:04): The great part about this is this is gonna be massive competition to a lower price is it'll add features and, the the the team over at 37 signals is doing something similar. If you look at once.com, They are also gonna go after slack, Sacks, and they're gonna just charge one time for the software. I think I may have mentioned it on a previous one, but their concept is Yeah. Just My gosh. Chamath Palihapitiya (00:50:26): Can we can we take a moment, actually, Nick, can you throw up my tweet? Can you take a moment to just say thank you? To Stewart Butterfield and what he pulled off. Thank you. As a series a investor, I thank you. David Sacks (00:50:38): Yeah. 20 7 times ARR is looking like a pretty great exit multiple. Chamath Palihapitiya (00:50:44): Oh, there's my reply. Oh, yeah. Look at my reply. Yeah. I mean, my gosh. What a deal? Jason Calacanis (00:50:51): And at the time, it was they were public and people were wondering, like, with just a good deal or not should they have stayed independent, but the product velocity, cybersecurity, get going. Chamath Palihapitiya (00:51:02): How are you Thinking about what the critical go to market MVP capability is for slack. So this year's what I'm curious about. There's Chamath, right? But the problem with chat in my opinion is that Slack has become totally overrun where you could be a five person company and all of a sudden you have 500 channels. So there's no scarcity, and that scarcity is, in my opinion, what makes what makes all corporate chats in this modern version, teams included, totally unusable, so much noise and distraction. So How are you thinking about that product problem? Yeah. David Sacks (00:51:40): I totally agree with that. What you hear from every single company that has more than, I don't know, 50 employees is that Sacks doesn't scale. Because what happens is you have a channel get created, and there's a whole bunch of conversations in there that are kind of munched together. And if anybody in the company wants to participate in any one of those conversations, they have to join that entire channel. And as a result, every single employee ends up in every single Chamath. And it's just a giant mess, and there's way too much noise. So I think that the channel model was beautiful in terms of letting people get started really easily. You just jump into a channel and start posting. That's why it took off, but it's not particular enough in terms of of addressing conversations to the right people. So that's basically one of the problems that we're fixing. The other thing I've heard from people is that we love chat, but we also really like the feed that Yammer had as a way to quickly scroll through new stuff. Jason Calacanis (00:52:37): You have top level corporate feed. People forget that. There was like this, hey, if you wanna get the pulse of the entire organization, go to this one corporate. Right? David Sacks (00:52:44): The first ones to figure out that, like, a feed should be used inside of an enterprise, not just in a consumer social network. So in any event, I I'd say those are, like, 2 of the main concepts is combining feed and chat in a way that actually makes sense and solving the noise, the signal of noise problem. Do Chamath Palihapitiya (00:53:01): you have a name for it yet? David Sacks (00:53:03): Yeah. It's gonna be called glue. Chamath Palihapitiya (00:53:05): Oh, I love that. Can I remind you? Can I can I remind you that as a as a humble investor, sir, I I I think I was part of Yammer and Sacks I'm not I can add allocation? Jason Calacanis (00:53:16): I can add value. David Sacks (00:53:17): You're in. You're in. There's just one requirement for the early investor You guys actually have to use it. You gotta do a rip and replace on your Sacks and Jason Calacanis (00:53:25): What? Sure. Sure. David Sacks (00:53:26): If I'm willing to do that, you're in. Chamath Palihapitiya (00:53:28): Perfect. I'm in. Jason Calacanis (00:53:29): I'll take 2, Donnie. 500 k. Yeah. Lock me in for a slice. I'll take 5. Yeah. I mean, David Sacks (00:53:34): so I think what we're gonna do is before launch, we'll do, like, a seed round Jason Calacanis (00:53:38): Nice. Right now, David Sacks (00:53:38): it's all been incubated by craft. So we'll do a seed round. Jason Calacanis (00:53:41): I'll try to get it around for infosys. So, like, David Friedberg (00:53:43): 56,000,000 Sacks, 6 posts. I'll put a 50 in at Sacks pre. Chamath Palihapitiya (00:53:50): Sacks post. How about that? David Sacks (00:53:51): Cheap, but it won't be it won't be a super expensive round because what we wanna do is incentivize you know, influencers to, like, support the products, switch to the product. So it really is gonna be Do Chamath Palihapitiya (00:54:02): you have glue.com? David Sacks (00:54:04): We have glue.ai. Chamath Palihapitiya (00:54:06): Oh, wow. Nice. I was gonna get 8090.ai, but then I didn't like it. You know what I got instead? Tell me if you like this. 8090.inc. So it's just 8090 inc. Jason Calacanis (00:54:18): Yeah. It's fine. It doesn't matter. Everybody searches. I mean, eventually, You fake it till you make it. If the 80, 90 domain happens, you get it, or you put get or go 80, 90 dot com. So do that before the show gets published. Chamath Palihapitiya (00:54:29): What is it get or go? Jason Calacanis (00:54:30): Like, if people have an 80, 90, get 80, 90, or go 80, 90. So, you know, if it's a service, you say go 80, 90. And if it's whatever, you say get if it's an app or something. Right? Like, you're just gonna go get it here at the domain name. It's just easier to remember. Chamath Palihapitiya (00:54:44): I also got vcsascoboom.com. Jason Calacanis (00:54:47): Oh, excellent. Well, I have wet your people don't remember. It's for a callback. I have wet your beak dot com. I think it just throws it to what your beak dot com just goes to our website. So the that was the basic scandal. Sacks, they let the sales team doing secondary, apparently, or somebody broke a rule. Aren't exactly clear with it. It sounded to me like, you know, they didn't want to throw anybody under the bus. Exactly. But how big of a violation is it to let people go sell into the cap table secondary shares without the CEO or your customer even knowing that you access that data, where would you put that on a a violation of trust scale? I think David Sacks (00:55:28): it was a huge issue for them because the only reason it starts to give their data to Carta is because they trust them to keep it private. Yes. And I think a big part of the problem with the car division of creating the secondary marketplace is that founders don't want it. Fundamentally, that's the problem. I mean, Carta is in the perfect position to rationalize and make liquid the secondary market. The vision was correct in that sense. And the reason for that is because Parta not only has the cap table and they know who all the investors are. They also have all the documents. They got all of your corporate documents, the bylaws, all that kind of stuff. They can very easily execute these transactions. So Carter was in a great position to replace all these secondary brokers who were running around creating books on their own. The problem they have is that at the end of the day, founders don't really want secondary markets to take place in their company's shares. And I think there's a few reasons for that. One is price discovery I think a lot of these startups now, if their shares were to be freely traded, will be trading below. Jason Calacanis (00:56:32): Bad timing. David Sacks (00:56:34): Below the last rounds mark. So they don't want it. 2nd, the founders don't necessarily want their investors getting out and then getting new investors on the cap table that they don't know. So founders are somewhat particular about who their shareholders are. It's different than public companies in that way. I mean, Apple doesn't really care who our shareholders are. Private companies do care. Chamath Palihapitiya (00:56:54): Do you think that that's sustainable in a world where companies take 14 or 15 years and they're trying to retain talent? David Sacks (00:57:00): Well, I think it would be better for everybody if there was more organized liquidity. Jason Calacanis (00:57:04): I mean, David Sacks (00:57:04): I one of the things I love that SpaceX has done Perfect. Is that for the last number of years now? They've had a tender offer every year. And Chamath Palihapitiya (00:57:12): Not even every year. Like, almost every quarter. Right? Jason Calacanis (00:57:14): It's every 6 months. I thing was what my understanding of it is. But, yeah, I mean, it would be But David Sacks (00:57:18): let's think about that example. So with SpaceX, it's been up and to the right on a pretty consistent basis. So every tender round has been a bump. Sometimes it's been a small bump. Sometimes it's been a larger bump. The company I don't think has gotten greedy So they haven't tried to shoot the moon and raise evaluation too much. So they've been able to keep a very organized process, and they've they've had at you from the beginning of letting their employees and investors get liquidity when they need to. So it's been great, but that's very different. By the way, the the that sort of organized tender process is very different than the secondary market that Carta was organizing, right, because Carta was trying to do what all these secondary brokers are doing, which is they hit up people 1 at a time and just say, are you looking to buy or sell and they're trying to organize secondary transactions that are not part of an official process. And I think that's a huge part of the problem here. Jason Calacanis (00:58:11): Frederick, did you have thoughts on it? David Friedberg (00:58:12): Yeah. Well, I mean, just an element of Secondary transactions and private companies that are unstructured generally being a problem, the issue with Carta was was there a violation of trust with respect to the parent y onto the cap table that they have access to because they have all the data in their systems. And when I was at Google in 4 or so, Sergei was kind of throwing around the idea, why don't we start a hedge fund? Because we have all this data about what people are searching for, and we see all of this consumer behavior, and we could trade on that and have a huge data advantage in the marketplace. Jason, ultimately, whether or not there was an impropriety of the use of data. And even if we excluded personal data and search data, just using internet based traffic and internet data, the perception of the problem would have damaged Google's brand so much. First of all, is there an actual conflict where you're taking people's what they consider to be private data and using that to make money from their data without their permission or acknowledgement or explicit consent And secondly, even if you are doing this in a way that doesn't use their data because you just generally have knowledge about who buyers and sellers are in the market, outside of your software, the view that you may be using the the data in conflict can damage your brand and damage your customer relationships so much. So it seems in hindsight a little silly, but I think to Shamoff's point earlier, it may indicate the necessity for them to think about building another business on top of this core software business that is a more true marketplace driven business so they can make, you know, over time more money. And that's probably where this all came from. They saw a need to build something that was more than just monthly subscription fees. Jason Calacanis (00:59:54): They weren't making money from it, and they shut it down. David Sacks (00:59:57): It's true that Carta is trying to become a multi product business. They started with you know, start cap tables and they added fund management and they added this broker business. But if you read Henry's last blog, the secondary market is what he originally wanted to disrupt is he always wanted to create the secondary market, and he created the cap table business SaaS software as a way to get to that. Chamath Palihapitiya (01:00:22): Yeah. David Sacks (01:00:22): I think what he's realized is that the real value is in the SaaS software, and this marketplace is not that valuable. I mean, the The SaaS business is doing something like 250,000,000 a year of revenue, and the broker business was only doing a few 1,000,000. Yeah. 3,000,000 So I think the value has turned out to be in the Sacks. And moreover, this broker business was compromising the trust and safety or or the perception of trust that the company has from customers. Chamath Palihapitiya (01:00:48): The problem with that SaaS revenue is if you look at mantle and pulley, that 250,000,000 could be 25,000,000. End cake? Jason Calacanis (01:00:57): My investment. Yeah. Chamath Palihapitiya (01:00:58): End cake. Sorry. Yeah. Yeah. End cake. But but the point is The fact that there are there are many competitors, I think, is a sign of the of a low barrier to entry and a lack of a true fundamental walk in. David Sacks (01:01:11): Let's say you are an investor and you're looking at pulley or mantle. Why would you even think that's an attractive company to invest in if success looks like you're compressing a $250,000,000 market down to 25,000,000. Like, what's the point? Chamath Palihapitiya (01:01:24): Well, I think Jason Calacanis (01:01:25): I I think David Sacks (01:01:26): a lot of these competitors got funded during the whole zerp era where everything got funded. I mean, if you were to if you were to look at that market today, why would you even fund a disruptor? Chamath Palihapitiya (01:01:34): Well, so look, I think man there Jason Calacanis (01:01:36): are other strategies to, you know, there's other strategies you could add on to this and adjacencies. Chamath Palihapitiya (01:01:41): My understanding is mantle and fully raised in the Low single digit millions, that gives them a lot of room to run a $25,050,000,000 business profitably and never raise any more money. The problem is on the opposite side, if you raise money at 8 or 9 or $10,000,000,000 when companies trade at 20 times, and now companies trade at Sacks times, now all of a sudden, you have to have $1,300,000,000 of revenue a year to break even. And I think that's the real problem. So it's not that Henry hasn't built a great company. I think he deserves a lot of credit. The question is entry point and the question is upside, and the upside is governed by the difficulty of the things that you're doing and how much pricing power you have for those difficult things. And so I think what we're realizing is that there are few difficult things in software. Few. And it's just like it's just true. And as a result, every product, this is not a card of thing. Every product We'll see a ton of competitors. So the only thing that you can do is have an extremely leveraged OpEx and an extremely low cost to serve. That is the only protective protective mechanism one has. It seems to me on the outside looking in Jason Calacanis (01:02:52): network effects are also important. Chamath Palihapitiya (01:02:54): Unless you have an Instagram. You're right. That product is infinitely better with everybody. Or a TikTok. Great. Now you can just you can spend as much money as wire being made. Jason Calacanis (01:03:04): Yeah. But that's what I Chamath Palihapitiya (01:03:06): think procedural software is. David Sacks (01:03:10): Yeah. I don't know. I mean, look, we're we're gonna have to just have to agree to disagree. I think there is some pricing risks to Carta from these competitors, but my guess is it ends up being stickier than that. But in any event, I mean, I do think that Henry at the end of the day pulled off a nice save by just getting rid of the business. Jason Calacanis (01:03:26): I agree with that. David Sacks (01:03:27): Altogether. I think that was a smart way to respond. Clearly, the first response didn't work. Jason Calacanis (01:03:32): No. The first response was what I've raised people. David Sacks (01:03:35): Yeah. Yeah. It was a very confusing denial where he's he said this isn't our policy, but And he also blamed Jason Calacanis (01:03:41): he also got into it and blamed the person who called him out on and was like, why why are you calling us out on this? And then, like, every founder was like, because you violated our trust, and they was like, oh, yeah. Sorry. Yeah. Well, also people are David Sacks (01:03:53): showing, like, email campaigns that have been going on for months and it seemed much more organized and it was very hard to believe that this was just an accident instead of a deliberate strategy. And you could see the whole start community was of was, you know, evaluating its options in real time on x. Yeah. And that's when he came out and hit the whole thing with a sledgehammer to say we're gonna get out of this business. Jason Calacanis (01:04:13): Smart. And I David Sacks (01:04:14): think it was really smart to do that. It's kinda called the crisis. Like I said, I don't think this is a business that start up founders want their cap table software to be engaged in? Jason Calacanis (01:04:26): No. Definitely not. And and David Sacks (01:04:27): just by the way, just a third point on that. You know, one reason was price discovery. Another reason was having undesirable shareholders. The the third reason is just founders don't wanna create a competing fundraising process to primary financing. Chamath Palihapitiya (01:04:39): Yeah. David Sacks (01:04:40): I think this is actually a really important point. The reason why founders don't want there to be a secondary market is because their company may need to raise money Jason Calacanis (01:04:47): Yeah. You wanna go through the front door David Sacks (01:04:49): to the Jason Calacanis (01:04:50): CEO and the board, not the side door to get a get some, you know, exposure to the company. David Sacks (01:04:55): Well, I think I think in the zirp era where there was all this excess funding flying around, then it kinda made sense to let secondary happen, but in a world in which funding is scarce, you want that money to go into the company, not into the pockets of the early shareholders. And so I think like the timing of this whole thing is like really off it all feels like kind of a function of zerp in its own way. Jason Calacanis (01:05:16): Agree. Alright. It's actually we're, in the group chat talking about this viral clip about Star Wars. You wanted to chime in on it. Maybe you could, chew it up. Yeah. David Sacks (01:05:25): I mean, as you may recall, my pick for business loser of 2023 was Disney. And it seems like they haven't learned anything from the horrible year they've just had. Speaker 5 (01:05:34): What is the balance of activating a force for change, but also trying to permeate that patriarchy, that power structure, and is that a part of the calculation of your art as well, and and what's been the reaction to that? Jason Calacanis (01:05:54): Oh, absolutely. I like to make men uncomfortable. I enjoy making men uncomfortable. David Sacks (01:06:04): This is the new director of Star Wars. Jason Calacanis (01:06:06): Alright. Your thoughts, sir. David Sacks (01:06:07): Well, I saw the comment on that tweet was this is gonna be the biggest Disney flop yet. Isn't that what it said? I mean, look, I I don't know what Bob Eiger is doing. He seems to wanna burn Star Wars to the ground like the rest of the Disney brands by playing politics. This director doesn't seem to have had a lifelong fandom for the franchise that she didn't really talk about, how she had grown up marinating in this universe, loving its characters, Her background is in documentary filmmaking and there's nothing wrong with that, but there's no indication from her that she truly loves Star Wars. And in fact, the comments that she's making right now are indicating that she's gonna politicize it. The patriarchy is not why anybody is a fan of Star Wars that goes to see its movies. So nobody wants to see that movie. Chamath Palihapitiya (01:06:56): It's the opposite. David Sacks (01:06:56): It's the opposite. They wanna avoid it. They don't go to Star Wars movies for the politics. And She's also trying to solve a problem that doesn't really exist. I mean, science fiction may skew mail in its fan base, but it's not because sci fi franchises don't like strong female characters. I mean, just stepping out to the larger world for a second, you've got Ripley in aliens. You've got Sarah Connor in the Terminator movies. You've got David Friedberg (01:07:22): Princess Leah. David Sacks (01:07:24): Training in the matrix, you got Princess Leah, Pad May, Ahsoka in Star Wars. Jason Calacanis (01:07:30): You seem to know a lot of these female characters. You're you're deep in Star Wars. You got some Chamath Palihapitiya (01:07:36): good policy. Yeah. So Jason Calacanis (01:07:37): it's not David Sacks (01:07:37): this idea that there aren't feet strong female characters in Star Wars is that's just kind of a myth. Right? And Yeah. So it's not it's not like the universe needs to be reset in this Jason, and you could just see the whole fan community kinda groaned at this comment because they're just like, oh, here we go again. Star Wars is gonna ruin another franchise by playing politics. Jason the amazing thing is that is that, you know, Eiger just doesn't seem to learn from this at all. David Friedberg (01:08:05): But there's nothing wrong with having a female director either. Right, Sacks? I mean, you're not saying that you're saying that a particular person who has a political agenda in how they wanna shape the story of Star Wars of the issue. Right. Of course. I'll also Sacks, I think one of the core driving narratives, emotional narratives of Star Wars is the oppressor oppressed Jason Calacanis (01:08:25): It's a highly political. It's a highly political story. Yeah. I've I've David Friedberg (01:08:29): always David, I think Star Wars has been, like, the most anti technology effector in society since the seventies because Star Wars is all about the I I've said this before, but the Sacks destroying the death star and, like, the no tech overcoming the oppressor big tech. And so we have to destroy big tech and anyone who has the better technology is very likely the oppressor and, they have all the wealth and they have all the power and they have all the control. And so those who do not have the do not have the wealth, do not have the control, do not have the technology, have to go and destroy that whether it's the empire or that, you know, kind of evil force. And that's the core narrative of Star Wars. So I do think that at its part, Star Wars in and of itself is an oppressor, oppressed, storyline that relates very deeply to technology and wealth and has helped shape the Western psyche for a couple of decades in a very meaningful way or has really reflected maybe perhaps the western psyche. What did you think of the Pandora? David Sacks (01:09:27): I think you're super imposing current day terminology on a movie that was created in the first one in the 19 seventies when intersectionality did not exist. Yes. There are political overtone Star Wars, you've got the rebel alliance against the empire. That is not diversity politics. Sorry. It's about David Friedberg (01:09:48): I'm not saying diversity politics. David Sacks (01:09:49): I I It's really about the corruption of power. I mean, you know, the famous phrase by lord Acton, which is power corrupts and absolute power corrupts, absolutely. To me, those are the political overtones of Star Wars. It's not Yeah. David Friedberg (01:10:02): So you always have David Sacks (01:10:03): to destroy your pet hair. Intersectional categories. Jason Calacanis (01:10:06): It was about war. Mean, let's be honest. It was Lucas was a child of the Vietnam war era, and he was highly influenced as well as Francis Porcupola. And, Yeah. David Friedberg (01:10:14): The America with all this wealth and power came into the jungle to try and destroy a peasant nation and and cause death at a pot of peasant Jason, and the peasant Jason survived and won. And there was a narrative to that that I think is reflected in this and is reflected very deeply in a lot of the stories that have come since. And I'm not saying DEI is as a solution was the storyline out of the original Star Wars, but the original Star Wars was very much driven by the leverage that technology provides to those in power. That gives them, you know, extraordinary influence over those who don't have power. David Sacks (01:10:45): Well, if there were a political overtones to the original 2 trilogies, Jason, actually, I I think there were some really interesting themes, especially in that second one where public I mean, David Friedberg (01:10:53): not even not even poll by by the way, not even political. Let me let me just be clear. Social. Right? So social systems, which David Sacks (01:11:00): I understand. Yeah. But my point is that Lucas didn't hit anybody over. They head with those themes. And his goal certainly wasn't to make anyone feel uncomfortable. His goal was to entertain. And whatever political or social overturns there were were very much in the background because that's what good art does. One of the reasons why Hollywood produces so few really interesting movies these days is because the political overtones are really in the forefront, and they really hit you over the head with them. And so, therefore, they're just not very entertaining. It's just not very good art. And I think that's why the fan community was like, here we go again. Jason Calacanis (01:11:40): Let me just make sure people understand this is a nine year old clip. And for contacts, this is probably during, like, the, you know, early days of the DEI movement just so we're clear on that, but you you had another point to make David go ahead. David Friedberg (01:11:51): But, Sacks, I think that Hollywood has imposed upon itself certain degrees of restriction on the artistry of the artists in the community because the standards now to be nominated for best picture define a number of a DEI representation and inclusion standards, and they're listed here. So in order to and I if you guys will remember it at our summit, in LA. I asked Gwyneth Paltrow about this, and she wasn't familiar with these changes that had been put in place. But in order to qualify for a best picture nomination, you have to meet some of these standards. And these standards include on screen representation, beams, and narratives that relate to having at least one of the lead characters or significant sporting actors come from minority background, including ethnic background Chamath Palihapitiya (01:12:40): or Oh my god. David Friedberg (01:12:41): Or by gender. Chamath Palihapitiya (01:12:42): Could get nominated for an Oscar. Look. David Sacks (01:12:44): I'm still up Chamath Palihapitiya (01:12:45): there. South Asian. Jason Calacanis (01:12:47): Look. I'm in the Chamath Palihapitiya (01:12:48): province here. David Friedberg (01:12:49): Or at least 30 or 30 percent of the actors in a secondary cat in the secondary group have to be women, racial or I think group lgbtq plus or people with cognitive or physical disabilities or who are deaf or hard of hearing, the main storyline theme or narrative of the film is centered on an unrepresented group, either women, racial or ethnic group, or lgbtq. Positive, they can meet the criteria If the creative leadership team has at least 2 of the following creative leadership positions met by 1 of the under underrepresented groups and so on and so forth, if you're an artist, a filmmaker, and you wanted to make a film a World War 2 biopic, which, was on the front lines in World War 2 and was entirely white males. Would you have been able be nominated for best picture, or would you have had to go and, you know, take some actions that have would have affected your artistry and your freedom of expression in making that film. And as a big fan of film, and you guys, I think all of us are probably in the same boat, at least a couple of Jason Calacanis (01:13:47): us are. 3 of us are. David Friedberg (01:13:48): 3 of us are would have limited a lot of the best pictures of all time, I would say. If you had to impose standards on what the artists were allowed to do or how they were allowed to make their film. And that's really what's taken over Hollywood. So I Sacks would say it's not just a Bob Eiger Disney thing, but this has become a standard in Hollywood. That the the DEI movement has so deeply affected the intentionality of what has historically been a truly creative Jason Calacanis (01:14:13): I agree. But if you talk David Sacks (01:14:14): to Hollywood riders, if you talk to Hollywood riders, they'll tell you that things have become extremely politicized and it's a mess. I agree has been a little bit contradictory about this. In April of last year, there was this article saying that I agree was doubling down on inclusivity and diversity, and he described that as shareholders' meeting. By November, he was saying that Disney Movie become too focused on messaging. So it seemed like he was finally getting it that after the horrible year they had, but then we had the Star Wars news, and it seems to suggest that they were hiring a director who really wasn't right for the material. So we'll just have to see. My sense is that they have not made the course correction they need. Jason Calacanis (01:14:55): If you wanna see the peak of this, There was a a bunch of blowback on Dunkirk and absolutely toward the force of a film if you haven't seen it. Especially go see it in Sacks, just extraordinary, Christopher Nolan film, that it lacked, diversity and gender diversity. It's a war film, historically, kinda hard to make it about anything else if it was just on narrowly focused on a couple of battles. And so, yeah, this is this has gotten to the point of Yeah. A little bit of absurdity. David Friedberg (01:15:24): I I relate this very much to the point that we made a couple months ago about stand up comics being restricted and canceled based on the things that they say that are offensive to the the narratives of social inclusion and DEI. These are artists who should have freedom of expression, creative freedom, unlimited creative Friedberg. If we wanna have a different set of standards for how we value the art that comes out of it, fine, but I don't think that it ends up being true So what the peer group would otherwise recognize and say, you know, is the greatest art of the year is the the most impressive achievement of the year in some particular artistic discipline. It's really sad. There's also been this change in live, performances in symphonies used to be that to avoid discrimination in auditions for Symphony Orchestra's auditions were conducted behind a curtain. So the director and those who were making the election on who would get to join the orchestra would Jason, and they wouldn't see the person performing because they were behind a curtain. Recently that trend has changed, and now those artists are required to perform not behind the curtain, but in front of the curtain so that we can judge them not on their musicianship and their artistry, but on their race, on their gender, and on some other standards. So I think this is obviously part of a very broad narrative, but it's very deeply effective. Chamath Palihapitiya (01:16:44): Can I ask a question? David Friedberg (01:16:45): Yeah. Community of Arts. Yeah. Chamath Palihapitiya (01:16:49): Is listenership of the symphony gone up or down? Jason Calacanis (01:16:52): It's a load of going down for a long time, but I would assume it's similar David Friedberg (01:16:56): to the world. They're seeing decline in audience, but it's it happened before the changes. Yeah. It's been happening. Chamath Palihapitiya (01:17:01): Yeah. Has it accelerated, or has it slowed the negative decay to 0? David Friedberg (01:17:06): I'm not sure. I'm not sure. It's named insurance. Jason Calacanis (01:17:08): Yeah. Yeah. David Friedberg (01:17:09): To be honest. Chamath Palihapitiya (01:17:09): Well, if it hasn't if it hasn't made a difference, then you're then it hasn't made a difference. Jason Calacanis (01:17:13): I mean, I think this is part of a wider discussion of DEI. Yeah. David Friedberg (01:17:17): Sorry. Of some of, some forms of art like these live performing arts may not necessarily be audience growth. The goal may be, you know, finding the best. Chamath Palihapitiya (01:17:27): But I suspected it should be to sustain itself indefinitely. Jason Calacanis (01:17:30): I mean, that was by David Friedberg (01:17:31): the way, that's that's a big point. I've had it, which I had the availability of roads. Chamath Palihapitiya (01:17:35): As the quality of roads, fewer people will care because there are other options that you can go to that are high quality, and then these things will die off. And, you know, maybe that's what it's supposed to happen. Jason Calacanis (01:17:45): I mean, this is part of a wider discussion about, I think, DEI facing the reality of whether it's, like, I guess this whole pilot thing with Boeing and who's getting hired to be pilots and training. And what should the focus of a company board be? What should the cope focus of hiring me. Chamath Palihapitiya (01:18:03): The problem, I think, with the argument you guys are having, in my opinion, is that it's a little too premature. And the reason is that there are other people who will make semi credible claims while you guys make semi credible claims and no progress is made on this whole DEI discussion as it touch a cinema in Hollywood or music. What's much easier if you wanna dismantle DEI, which will eventually come in cleanse Hollywood and the symphony is if you go to the jobs where it's irrefutable, where even the most ardent defender of DEI says, you know what? I can't take that risk with my own family or with my own life and the lives of my family. And I think that we're we would be better off if we just focus in a really disciplined way on those and get the criteria to be entirely based on skill. And then eventually, it'll come back in Hollywood and the symphony will also get cleansed. So doctors, pilots, I mean, I I would say certain doctors. I would just say pilots for sure. I would say surgeons. I would say that you could probably go through. I haven't thought enough about it to know, but you could go through and Sacks, systematically, what are the categories in the professional world that we interact with every day where skill can be the only criteria must be because otherwise, innocent lives will be lost. That's an important question. David Sacks (01:19:34): I I agree with you that the phenomenal choice that we have society is whether skills is gonna be the determinant of success, skills, and merit, or whether it's gonna be about something else. You know, and as soon as you tell somebody that they can't get the job even though they're the most qualified because of their race or gender, then I think that is racism or sexism. So it's doubly bad. Jason Calacanis (01:19:56): I agree. David Sacks (01:19:56): I think the I think the reason why this happens is because people don't really have the right skin in the game. So the reason why the the recent discussions about pilots and whether cockpits should have this sort of DEI program is that everyone can relate. Everyone has skin in the game. If your kids are gonna fly on a plane, the only determinant you want for who the pilot is is skill, obviously, because you have real skin in the game. The problem is people will will falsify their preferences when they're discussing other people flying on the plane. So people will start saying, well, you know, we need to have DEI programs. You know, in other words, when it doesn't affect me, you're willing to basically virtue signal and genuflect towards these programs. And I think that that's the fundamental problem is that people will pretend to support something other than skill in all these contexts where they're not directly affected. But as a society, we are. Chamath Palihapitiya (01:20:56): With respect to aviation specifically, my thought is that this is a very easy skill to determine who is high quality versus not because you have such sophisticated Training apparatus and skiing simulators simulators and all of this stuff, it's easy to know how to rank people from one through n And I think that as a society, if you wanted an efficient transportation infrastructure and aviation infrastructure where the consequences are really bad, if things go wrong, you just want the best period end of story. However, I think it's also fair to say that then the government owes the people a responsibility to advance the technology if they actually want to have a multifaceted hiring criteria. So what do I mean? We can have a lot more automation in the cockpit. The reason we don't is because of how certain lobbies are able to affect rules inside the federal transportation infrastructure. And we know this because our friend has been trying to our friend SkyDayton, wonderful pilot. Has been trying to improve airline safety. And he's talked about this a lot, and these things get blocked by the pilots union and otherwise because they don't want to get disintermediate. Okay. Fair enough. That's the game. Well, if that's the game, at some point, we need to have a conversation as a as a society that says, okay. Look. If we're gonna hire on a multifaceted basis for pilots. Let's also tell Boeing And Airbus, you need to build even better, more automated plates. That's a fair trade off. Jason Calacanis (01:22:33): The great irony of all this Sacks is it's illegal to hire based upon gender, race, etcetera. And then at the same time, people are trying to hold this contract of, hey, we want more diversity. We want more inclusion at the same time in their heads, and we're seeing lawsuits happen. So they're you know, want tech companies to report on their diversity. They want venture firms to report on, you know, either diversity and investment, but it's illegal, and you can be sued if you were to give investment dollars based on race, gender, etcetera, and fierce founders, I believe, is the name of the firm that's being sued for only investing in a certain demographic of women. David Friedberg (01:23:13): Yeah. We're to ask people their sexual preference. You're not allowed to ask in an employment application. Jason Calacanis (01:23:18): I've I've always had a problem with how do you keep these 2 things in your mind in our own venture firm? And I just said to folks, David Friedberg (01:23:24): just and this is considered a diversity target and now to hire people, whether it's on a Hollywood film set or in your company, you've gotta go ask them what their sexual preference is. I that's Jason Calacanis (01:23:34): I mean, it's crazy that we're being asked to do that. And what I did in in our company was I said, hey. If we if we don't feel we're getting enough, applicants for the programs, found in university, the accelerator, we could have, you know, efforts to increase the number of applicants But we can't make investment decisions based on anything other than the merit of the company, or we will get sued. And so this is, I think, the problem in corporate America with these issues is how do I try to help this problem if we think there is a diversity problem in our particular industry, which is noble and thoughtful and wouldn't criticize anybody for that. But then the rubber meets the road legal and then performance, right, and and and it's very hard for, I think, leaders to to manage those 2 dichotomous I could see Chamath Palihapitiya (01:24:16): a case for why barbers and priests should be multifaceted, good bedside manner, Sacks jokes, be able to Jason. Relatability. Jason Calacanis (01:24:28): Push Sacks. Chamath Palihapitiya (01:24:28): Pilot, but the first time like, the the thing is now this thing is so on the front burner of people's minds that haven't forbid. If there is an incident or a near incident, You're gonna see lawsuits that are gonna focus on this issue. Show me the training records of the pilots and show me show me how they fared relative to alternative folks that you either did hire or didn't hire. And, you know, why was this selection? It's gonna be a mess. Might have seen that with Harvard in their selection of their president. Jason Calacanis (01:25:02): Like, why was this person selected as president? Right? Chamath Palihapitiya (01:25:04): And did we check there the new one? Jason Calacanis (01:25:06): The past one? Like, was there did we know about the plagiarism stuff? You know, did we not know about it? And and this is, I think, the race to nowhere when you get into identity politics. Jason and and I think this is why everybody and I think Coleman Hughes said it really brilliantly when he was on this pod talking about his TED talk, like, we we at least want the aspiration of having a color blind society. I think what Coleman said that was really, I think, profound was what what where can we actually affect change that will be important? And I think that's early education. It could be providing pre k. It could be providing you know, support for people with childcare. So that, you know, they could they could get into, you know, more job training, etcetera. So, like, where do we where do we put our efforts if we do want to see a more inclusive diverse just world? Is I think the question? David Sacks (01:25:55): Backing up a second, I think there's a fundamental dishonesty about the DEI movement that's really coming to the fore right now. On the one hand, the de activists will explicitly say that their goal is to engineer job categories, to explicit population numbers. But like you said, that's actually illegal to do. So when they get in a lawsuit, like the Harvard affirmative action case that went this from court, they'll deny that they're discriminating against Asian Americans. So when they're preaching for what they wanna do, when they talk about, say, Kennedy style anti racism, they will say that the explicit goal here is proportional representation. But then when that results in discrimination against groups that are basically selected against, they'll deny that that's what they're doing. And I think it's gotten to the point now where they just can't maintain both things being true. And we I think we saw this in the dust up that just happened between Elon and Mark Cuban, where Elon was saying, look, we should be a colorblind meritorious society, we just shouldn't discriminate for or against anybody on the base of Jason. And then human jumps in no. That's not what DI is doing. DI's is trying to expand the pool of applicants, and it's just not true. I mean, I don't know if he's being disingenuous. I don't know if for 2 signaling. Jason Calacanis (01:27:13): I think they were talking through each other. I mean, you do wanna expand the pool if you're not getting a a pool of diverse applicants. There's nothing wrong with that in expanding the pool. But what you are correct, it was a DEI GRIFF that occurred. I think that's kinda what you're alluding to. And I can tell you the I think that if you David Sacks (01:27:28): look at the DI movement, it goes way way beyond just expanding the pool of applicants. It it explicitly puts its thumb on the scale in terms of what it's looking for in terms of hiring and promotion. Jason Calacanis (01:27:42): It turned into a graft. And I can tell you the inside story on this, and it's gonna come out eventually, but there was a I don't know if you experienced this in any of your companies, or if anybody's willing to talk about it, but company has lack of diversity in their company. Then diversity activists, and and this is, I think, where it really started to build up resentment. Diversity activist comes in, says, hey. You have problems call them out on social media. There's a there was a, you know, a Twitter brigade comes in. Oh my god. Look how horrible this company is. People go, oh, I'm sorry. We didn't wanna be horrible. And then they say, oh, well, hire us. And we'll teach you how to do DEI. And let's build the DEI group, and we wanna be consultants, pay us to come in, pay us to speak at your organization, to tell you what you're doing wrong and then rally a reverse support of it after you've gotten paid for solving the problem for them. And I saw the shake down occur, and I had people ask me for advice on, like, hey. What do we do here? And you can just imagine, you know, your a person of good faith who wants to do the right thing, and then these DI folks come in and then try to, brigades you basically, publicly shame you in order to get like rich DEI contracts. And and we saw this with like the size of DEI groups at companies that you're wondering, well, what are these people actually doing? Are they just what what does a DI department actually do inside of a company that is accretive or valuable? David Sacks (01:29:05): It creates more bureaucracy to do more DEI. Right. Exactly. And that's why I keep saying bigger picture. Jason Calacanis (01:29:11): Did you Chamath Palihapitiya (01:29:11): guys see the size of the Michigan DEI group? Did you see that suite? Jason Calacanis (01:29:14): So that was a I thought this was a Babylon B story when I first saw it because there are 250 people working with DI Chamath Palihapitiya (01:29:23): Five hundred people at Michigan. Jason Calacanis (01:29:24): What? I I don't Chamath Palihapitiya (01:29:29): know, but they're spending $30,000,000 on payroll. Yeah. Jason Calacanis (01:29:31): If it's I mean, I David Sacks (01:29:33): mean, look, big companies can kind of afford this stuff, but startups cannot. I mean, this is really the kiss of death for startups. You just can't afford to have these large bureaucracies. Jason Calacanis (01:29:44): And then also, you know, when you're a startup founder, if you have 6 months of runway, 12 months of runway, you might not have the luxury to be looking at your statistics and saying, you know what? We've got ten people who are of this demographic. Statistically, we should have this. So the next hire we need to make our sales numbers has to be of this composure. And I I've had seen people do this. Actually, you've probably seen it too on boards or whatever. Hey, we need to hire more of this type of person in this profile and, you know, then hiring gets slowed and, you know, yeah, it's it's challenging. And it's also illegal. So I don't know how you win in this thing other than have a color blind society as a goal, at least. You know? And to your efforts. David Sacks (01:30:31): Are you familiar with, a Motte and Bailey tactic? Jason Calacanis (01:30:36): No, Tom. Chamath Palihapitiya (01:30:36): Have you David Sacks (01:30:36): heard of this? This is a No. A rhetorical technique or fallacy? Jason Calacanis (01:30:41): No. I haven't heard this one. Yeah. I I I love a good David Sacks (01:30:44): So this comes from medieval times. The modern Bailey was a type of castle where the the the Bailey was this wider area that was just defended by a wind wall. So it's not that secure. Jason Calacanis (01:30:54): The David Sacks (01:30:54): plot was basically the you know, stone fortress on the hill. So a modern Bailey tactic is when you go out and stake out a very aggressive position. You take the Bailey, basically. But then when you challenged, you retreat into the mod and pretend like you never took the Bailey position. The the Bailey position is basically the Kendi style anti racism where you say, look, we have to achieve proportional representation in every job category. And that is what the the DI movement in the main advocates for. But then when they get challenged, by somebody like Elon or by somebody like the Supreme Court, they retreat into the mod and to say, no. No. We weren't trying to do that. We're just trying to expand the the pool of of qualified applicants because who could be against that? And they'll claim that they were never doing Jason Calacanis (01:31:42): the David Sacks (01:31:42): whole proportional representation thing. And then on top of it, they'll say, well, listen. Obviously, increasing the the pool of qualified applicants is so unobjectionable that if you're against that, then you must be racist. And then You get all the accusations. And so this is basically the rhetorical technique that the movement uses to defend itself. Yeah. But eventually, when this stuff gets litigated, as it just did at the Supreme Court, you start to pick this apart and you see that there's a lot of evidence that they are actually engaged in overt discrimination against certain groups like Asian Americans. Jason Calacanis (01:32:18): No easy answers here, but Chamath Palihapitiya (01:32:20): I, for one, think that that's bad. Jason Calacanis (01:32:22): Yeah. There was something really nice about a merit based society if There was fairness at the starting line, but every you know, that's that's the thing I've learned is not everybody starts at the same place. And so if you just look at I I it seems to me, and Jason, I'm no expert, But the starting line seems to matter most. So if we could focus on making it as equal and fair and just when it comes to education, That seems to me to be, like, the quickest solution to feeling better about all this. I I I just think we should have 7 day, Sacks day a year school available. Public school available, competitive schools available to to to to make the world more just to give people more opportunity. Right? Skills training, etcetera. Chamath Palihapitiya (01:33:03): Why do you think that having school 3 Sacks days a year will make the world more just? Jason Calacanis (01:33:09): Well, because I do think that if you had more competition in schools and you had parents, who care or student who care and they could get more education and that was more available, then you could say, well, how many days a week did you go to school? How much effort did you put in? And there was just more high quality school available. And if you look at public schools right now, there's just it's very unjust how poor the schools are and how poorly run they are and what the teachers unions have done to these schools in disadvantaged communities. And and if I look back, on my life and I look at people who did well, they had engaged parents and they had, opportunities in education that other people didn't. And that seems Chamath Palihapitiya (01:33:50): How does keeping the school open all year around change that? Jason Calacanis (01:33:54): Here you think about parents who maybe don't have coverage for their kids after 2:30 or 3 o'clock, and then those kids you know, we we called them we were called latchkey kids, I think, in the eighties nineties. You're having the ability for them to do more enriching to be in chess club, to be in take 1 do club, to to do a little extra math, whatever it is. That could be something society could do a very low cost or skills training even. Right? Hey. This is a a culinary school after school. This is a culinary school on the weekends. This is a coding school on the weekends. It doesn't have to be just them. It could be welding. It could be, like I said, you know, it could be designed, whatever it is, more opportunities for people to learn more skills, without, you know, having the benchmark be, my parents can afford Kuman. My parents can afford a chess tutor. Right? We we live in a time of incredible privilege, and all of us have unlimited resources. And many of the people who listen to this podcast have a lot of resources to hire tutors for their kids and give them more opportunity. I didn't have that opportunity. You know, and if I had that opportunity, I would have learned chess faster, right? I would, I would have had more opportunity for you. It just wasn't available to me. And then there's a lot of people who started behind me. Who who certainly didn't have it available. Single parent, you know, in in a worse school environment than Brooklyn where I grew grew up. So I don't know. Do you disagree tomorrow? Would you have a better idea of how to make the world more fair and just than education and skills training? David Friedberg (01:35:15): I think Chamath Palihapitiya (01:35:15): I think I think education is the probably the most important. I do think that we need to find it fashionable again to have nuclear families. I think that if you look at the marriage rates of twenty and thirty year olds, it's meaningfully depressed relative to older cohorts, including hours, we're the last generation where it's a structural part of our identity is being married. And I think that that has long term implications because And when you look at the success rates of how to grow kids, poverty matters a lot less than having a structural nuclear family, meaning a 2 parent household, And so I think that there's a lot of there's a lot of work we need to do to figure out how to re incentivize. Folks to wanna commit to a single person, not this rampant promiscuity, but just kinda lock down and find somebody and build a long term partnership them. I think that that's really crucial for a functioning society. Giving tax incentives is Jason Calacanis (01:36:15): the way to do that or just cultural norms Chamath Palihapitiya (01:36:19): I I haven't studied the problem to have a Jason Calacanis (01:36:20): little idea. If I've heard this before, I just don't know how that gets implemented in society. Right? And I and I can think of ways that tutoring and having more education available vouchers, etcetera. I mean, if you gave every parent under a certain dollar amount of income a year, a voucher to hire tutors, man, that could that could change the world, right? It could change a lot of people's faith. Chamath Palihapitiya (01:36:42): We need more 2 parent households. Jason Calacanis (01:36:45): That would certainly help more. Alright. Well, we got we we really got into it here in the end when what a what what a great episode. Alright. For the rainman, David Sacks. With a tight haircut now, the dream is over. I mean, it's just It's a new year. I don't know who got to you. It's a new year. It's an election year. It's a it's a big year for you. David Sacks (01:37:05): Clean it up clean it up for Jason Calacanis (01:37:07): I think it's just a huge critical mistake. I think you were, you were going to a certain iconic look, and I think you've blown it. I, I, I'm gonna take the other side of that bet. And for David Friedberg, the CEO of Ojalo. And Tremoth Palihapitiya, the founder of the new 8090 incubator, and the chairman dictator of the all in LLC. I am the world's greatest moderator Yes. You are. And age or investor. And we'll see you on it. Bye bye. Chamath Palihapitiya (01:37:36): Love you, boys. Jason Calacanis (01:37:40): To let your winners ride. David Sacks (01:37:48): Open source it to the fans and they've just gone crazy. Jason Calacanis (01:37:57): What airliners ride. David Sacks (01:38:04): I wish you to Jason Calacanis (01:38:10): drive away. Have one big huge order because they're always useless. It's like it's like sexual tension, but we just need to release them out. What?