谷歌能否自救？废除人力资源部、AI 接管客服、Reddit IPO 拆解

David Sacks (00:00:00): Jason, where are you that? Is that a virtual background? Or Oh, it's Oh, right. That's place. I I did look architecturally familiar to Jason Calacanis (00:00:08): me. It is architecturally significant. We'll bleep out the beep's house, but, yes, I am you know, it's just like top 3 or 4 of, places I like to be a house guest. You know, I'm like, I'm in rotation right now of my house guest. Chamath Palihapitiya (00:00:20): You're Caitlining through our friend group? Jason Calacanis (00:00:22): Basically, you know, I'm just a great house guest. People like to have breakfast. With me. People like having me around, so I just find myself in mansions around the world. Chamath Palihapitiya (00:00:31): Hey, Nick, do you have an updated picture of Calacanis he still live and kicking? Jason Calacanis (00:00:35): He's alive for sure. He's gotta be seventy or something. Right? He's gotta be He was David Friedberg (00:00:39): on one of those reality TV shows with doctor Drew, I think, couple years Chamath Palihapitiya (00:00:43): What does Kato Katelyn do? Jason Calacanis (00:00:44): He's a good hang. He's he at. David Sacks (00:00:46): There's a lot of these people in LA. You know? Like, just Jason Calacanis (00:00:48): They just hang. They kinda hang. They set things up. Oh my god. Oh, Chamath Palihapitiya (00:00:55): is that current? Hiroki? David Friedberg (00:00:56): It's 64 now. Chamath Palihapitiya (00:01:00): Wow. Almighty. That's incredible. David Sacks (00:01:02): How did he survive? David Friedberg (00:01:03): He's got an Instagram account. David Sacks (00:01:05): I'll tell you how he survived. See no evil. You're no evil. David Friedberg (00:01:09): Exactly. Because I didn't see nothing. Jason Calacanis (00:01:12): All I know is, hey, listen, man. David Friedberg (00:01:13): He gave you a full house Chamath Palihapitiya (00:01:15): Snitches get stitches. Jason Calacanis (00:01:16): I didn't see anything. Chamath Palihapitiya (00:01:17): What did you see? No? Jason Calacanis (00:01:23): Rainman, David Sachs. And it said, we open source it to the fans in Chamath Palihapitiya (00:01:30): a Alright, everybody. Jason Calacanis (00:01:36): Welcome to Your favorite podcast, the all in podcast, episode 168. David Sacks, can you believe it? We've made it to a 168 episodes with me again. The Rainman, David Sachs. How you doing, buddy? David Sacks (00:01:51): Good. Jason Calacanis (00:01:52): Yeah. I heard you got a big talk coming up. Can you have another speech? Yeah? Yes. I'm giving you David Sacks (00:01:58): a talk. Yes. I'm giving you a talk. Jason Calacanis (00:01:59): Alright. Get ready for that. All of the GOP fans out there. Well, your Sacks fans, you get a big keynote coming from Saks next week. Also with me, of course, the sultan of science, formerly known as the queen of Kinois. He's got another crop. He's, growing. David Freberg. How are you doing? How's the crops? How's the fields? Chamath Palihapitiya (00:02:20): So worse. Jason Calacanis (00:02:21): How's life in the fields? David Friedberg (00:02:23): Worth cold open. Jason Calacanis (00:02:24): Not a cold open. These are intros. David Friedberg (00:02:26): Oh, intro. Jason Calacanis (00:02:27): God you're not producing. There's a reason why I'm the executive producer. Go ahead, framework. How how's your how's your crops? How's the how's life in the fields? David Friedberg (00:02:34): It's great. Got a great team making progress. Tech is awesome. Having a lot of fun. It's great. Jason Calacanis (00:02:40): Back in the CEO seat, And, of course, the chairman dictator who's becoming completely insufferable because he invested in a company 7 years ago that is absolutely crushing her right now called grok. We talked about it last week. You're back you're back Chamath. Everybody is talking about grok. You're you're on a cloud 9, it seems. David Friedberg (00:03:00): Cropper, crock, crock, crock, crock, Bitcoin, Bitcoin, Bitcoin, Bitcoin, drop, drop, Jason Calacanis (00:03:06): I mean, it is interesting how your book just literally, whatever Tremont's book is, That's his mood. It's just Bitcoin Sacks crock. David Sacks (00:03:18): Well, so the honesty level is gonna be through the roof now. Jason Calacanis (00:03:22): Oh, right. It's gonna be running for governor buying the Hamptons again. David Sacks (00:03:26): The truth bombs that Chamath is gonna drop now. Jason Calacanis (00:03:29): There is nothing, like, peek zerk trim off. I mean, are we going back? Is are we back David Sacks (00:03:35): right now? On paper, what is your steak and grok already worth? Jason Calacanis (00:03:38): That's the we're not talking. We're not talking. That's so uncooked. It's so uncooked, but he's buying the Hamptons, and he's, David Sacks (00:03:44): probably Jason Calacanis (00:03:44): gonna buy. David Sacks (00:03:47): When has it been uncouth on this podcast to talk about? Jason Calacanis (00:03:50): What wins David Sacks (00:03:51): are wins or assets? Chamath Palihapitiya (00:03:52): These are not wins. Yeah. These are not wins. David Friedberg (00:03:54): I agree with that. David Sacks (00:03:55): It's not a win. You cannot count never count your chickens before they hatch. That's absolutely right. Chamath Palihapitiya (00:03:59): I am not counting any chickens. Jason Calacanis (00:04:01): Don't book the win. Yes. Chamath Palihapitiya (00:04:02): There's a lot of hard work to do. There's a lot more people to sell products to, to build products. By the way, developers, by the way, on grok, just this past week, In the queue, the wait list tripled. Now, there's almost 10,000 developers. Jason Calacanis (00:04:20): That's a big deal. David Sacks (00:04:21): Oh, that's crazy. Jason Calacanis (00:04:22): That's a great sign. Chamath Palihapitiya (00:04:23): I think the most important Norstar metric for these developer platforms is basically that as goes the developer, so goes the platform. You can kind of count on some amount of pull through because some of those developers just statistically will land really important products. They'll consume more APIs. They'll just consume more stuff. It's just all goodness. Because if you have 9000 or 10,000 people, just again, waiting in line. Once those guys get in, somebody's gonna create something magical. Jason Calacanis (00:04:52): Mhmm. That's the great part of having a platform. Chamath Palihapitiya (00:04:54): It's simple. Beautiful. Jason Calacanis (00:04:55): Take it and They build on it while you're sleeping. Something amazing can just get built and you you get some amount of the credit for that. Nothing that's really interesting is the number of developers is increasing. And I've seen 2 or 3 founders recently, just the last couple of Sacks, who were previously idea founders who are now have taught themselves to code. So, you know, this if there's 1% of the, you know, whatever number of millions of dollars in the world, I think it's gonna, like, double or triple. So the The pool of people who are writing code, I think, is about to grow very meaningfully. Chamath Palihapitiya (00:05:27): I mean, you guys you guys saw the release from the White House where they were like, we we don't want you COVID c and c plus plus anymore. Jason Calacanis (00:05:35): Yeah. That was very interesting. I mean, they were talking about memory leaks and, like, this is, I guess, the source of most memory leaks. Therefore, Chamath Palihapitiya (00:05:41): wants you to learn to develop in memory safe languages. Jason Calacanis (00:05:44): Oh, great. Awesome. Yeah. David Sacks (00:05:46): So why are they involving themselves? Like, they got nothing better to do? Jason Calacanis (00:05:50): Yeah. I mean, Chamath Palihapitiya (00:05:51): they have an opinion on, you know, preventing security leads. Jason Calacanis (00:05:54): Alright. Jason. The top issue this week is the same issue as last week. Google's Gemini DEI, Sacks eye continues. We covered this woke AI disaster last week. It's kind of funny. I was watching CMBC, and they had a hard time describing the problem. The woman just, I guess, didn't wanna call it what it is. It's a racist AI. You type in text, and it gives you the opposite or just culturally insane responses. So if you put in, you want a picture of George Washington from Google's Gemini or Sergei brand, you might get Sacks, like, a Benetton style diversity ed with, like, George Washington being Sacks or Sergei, brand being Asian, etcetera. And so this has caused, a bit of a kerfuffle here in the industry to say the least the stock is down 5% since we talked about it last week. And, Sundar sent a memo to the Gemini team. Of course, when they write these memos to a team, it's written to the entire world because you know it's gonna get leaked. And so you're you're writing as I might as well be a press release. I'll give, 2 quick quotes here, and then I'll throw it to the besties because there's so many questions that we have to address. Quote number 1, I know that some of its responses referring to Gemini have offended our users and shown bias. To be clear, that's completely unacceptable, and we got it wrong. And to be clear, it wouldn't show white people, especially ones like George Washington or just somebody who is obviously a Caucasian. And so The next quote will be driving a clear set of actions including structural changes. To me, structural changes means we're gonna lay off a bunch of people, and we're gonna get rid of the DEI group. That's that's a new mat. That's a newfound motivational riff quote in my mind. Friedberg We'll send our survive. And is Google too broken to fix? Jason Calacanis (00:07:41): I'm just gonna ask you, since you work there, I don't wanna mean to make it uncomfortable, but What are the chances Sundar survives this? And what are the chances that Google can be fixed and produce great products quickly that the light users. David Friedberg (00:07:58): I don't know how to answer the Sundar will survive because it's kind of an idiosyncratic organization. There are a couple of founders who have super voting shares. And ultimately comes down to their decision and the direction they wanna take the company. And I have no insights into what they individually think. So, frankly, I've spoken to a lot of folks who are investors in Google over the last week, and a lot of folks are just deeply frustrated. And angry, on a number of fronts, the business Really, there's, you know, 3 businesses inside of Google. There's, you know, search and ads. There's YouTube and there's cloud, and the rest of it is kind of noise. And to give you a sense of how big these businesses are, right, YouTube did 10,000,000,000 a quarter, roughly cloud did 10,000,000,000 a quarter. They have this devices business and subscriptions business does about 10,000,000,000 a and then search does about 50,000,000,000 a quarter. And the margin on search is much higher than any of those other businesses. And so the search margin, the the ad revenue on search is, you know, probably a 100% of the true operating profit of the business. So the real threat to Google is more, are they in a position to maintain their search monopoly or maintain the chunk of profits that that drive the business under the threat of AI, are they adapting? Unless so about the anger around WOC and DEI, because most of the investors I spoke with aren't angry about the WOC DEI search engine, they're angry about the fact that such a blunder happened and that it indicates that Google may not be able to compete effectively and isn't organized to compete effectively in AI. Just from a consumer competitiveness perspective. So, you know, investors are banging the table and in the past, We saw this with Meta. I think it was, towards the end of 22, if you guys remember. And it was a similar situation. Investors were, like, are you investing in VR and AR? This is crazy. David Friedberg (00:09:58): Why do you have all these people that are getting overpaid? And everyone started to write off the stock, and the stock took a big no for a period of time, just like Google's is right now. And then the changes came. And much like Google, there's an individual with super voting shares who basically said, you know what? I am gonna step in and we're gonna make these changes, and we're gonna fix this organization, and we're gonna right size, and we're gonna focus on the product winning. And since then, Meta's stock is up a tremendous amount. Jason Calacanis (00:10:24): 5x since then. David Friedberg (00:10:26): Google shares are down about 10% over the past 2 weeks. By the way, I was one of the stupid people to sell Meta around that time. Jason Calacanis (00:10:31): And your thinking was that they just can't get out of their own way, and the god king David Friedberg (00:10:36): is it's another, yeah, it's exactly it's another one of these idiosyncratic problems. You don't know what this individual is thinking and what he is individually going to do. The point I'm making is that at Google now, something has to give because the noise is so loud. The board is hearing this left and right. Investors are banging the table, analysts are banging the table. And I'll I'll tell you a couple anecdotes internally. Employees are not banging the table. A story I a story I heard this week was that someone stood up in a meeting and said a couple of weeks ago, if I had stood up in this meeting and said, we can't show black people in the image generation at the rate that we're showing, I would have been cast a racist. And I didn't have permission to do that inside of the organization. But today, and everyone's like, you're right. You would not have been able to stand up in the organization say that. But I'll the tenor has changed inside of Google with a lot of the employees that I've spoken with who are now saying, I can stand up, and I can say that this group called Responsible AI has too much power, and it's a one-sided asynchronous problem where they get to come in and say, we need to change this. And if you step up and disagree with them, you are deemed a racist, you are deemed you know, culturally inappropriate. Jason Calacanis (00:11:49): So it's just easier to keep your head down. David Friedberg (00:11:51): It's easier to keep your head down. Jason Calacanis (00:11:52): A circumstance and and and keep collecting your RFC is. And all David Friedberg (00:11:54): of a sudden, you wake one day and you see the blunder that happened last week. Yeah. And so now internally, people are waking up and saying we need to change this. And I heard that that's made its way up to the higher ranks at Google. And they're very actively, you know, so there may be a moment here where Google stock, which currently is trading at just 17 times 2025 consensus earnings, which is cheaper than all the other big tech companies by far, and is still growing. Core business is growing. Cloud is growing 20% searches growing 15%. All these other businesses, YouTube's growing 20% a year. It's a growth business that's very profitable And, it's trading at a very cheap discount. So there's, you know, the bull case is now's a great time to buy because it's so cheap, and there could be this moment where know, you see some of the changes that are needed internally to get the AI products to where they need to be to maintain the lead that is inherent because of service. Jason Calacanis (00:12:46): So that would mean Sacks it would require because we're using Zuckerberg as an example. We could also bring Twitter and x into this. It will require founder authority to come in there and make these changes. It would require Larry and Sergei who have the super voting chairs to come in there and say, hey. This is all changing enough of this. Do you think there's any chance of that happening or is Google just too broken to fix and they're gonna just lose this opportunity and it's Microsoft under Steve Balmer, missing mobile, and cloud. David Sacks (00:13:16): Well, to quote Jefferson, the tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. And I think there's something analogous here. I mean, you have to if you're gonna refresh this company, you have to go in and you gotta go in and make major cuts not just a rank and file, but a leadership who doesn't get it. Chamath Palihapitiya (00:13:35): And David Sacks (00:13:35): that's the only way it's gonna get fixed. Do I think that Larry and Sergei, you're gonna come in and pull an Elon and go deep and figure out which 50% or 20% of the company's actually good and doing their jobs? Probably not. But is it possible that they could make a leadership change? Yeah. It's possible Jason Calacanis (00:13:56): probable? David Sacks (00:13:56): I don't know. I mean, I've heard that the company is the way it is because they like the way it is. I mean, that they're part of the problem in effect. They don't see they don't see the problem, David Friedberg (00:14:06): or at David Sacks (00:14:07): least they haven't been told now. Maybe they'll get the wake up call. Jason Calacanis (00:14:10): What do you think, Shamar? Watching while this happened. Chamath Palihapitiya (00:14:13): I think it's basically a small cadre of a thousand people that have built literally the most singular best business model and monopoly ever to be created on the internet and a whole bunch of other people that have totally transformed this organization, a Sacks David, into Ability and a platform to reflect their views. And so I don't not a shareholder of Google and outside of the tools I use. I don't think I really have much voting power, so I don't And and I have so many alternatives now. So I actually think like the I don't really care that much, I guess, is the point. I think that the employee should care and the shareholder should care, and they should come together and vote. And I think Sacks is right. I think the company is the way it is. Because they've chosen to be that way. And I think Friedberg is right, which is that there's a small group of people who have been protecting and breeding life into the single greatest business ever built ever in the history of business. But now we need to have a confrontation amongst all of these 3 different groups of people, and they need to make some decisions. David Sacks (00:15:26): Let me put a few data points in in play here. Jay Cal. And this all this all speaks to the problems being, let's say, deliberate as opposed to a glitch or an accident. So first, you have Sundar's letter to the company, which there was a very interesting tweet by Lulu Chang, Missouri who does comps at Activision, and she writes a blog called Sacks. She said, quote, the obfuscation. Jason Calacanis (00:15:55): Expert just for the audience. David Friedberg (00:15:57): She's a David Sacks (00:15:57): Combs expert. Yeah. So she kinda graded Sundar's letter, and it was scorching. She said the obfuscation lack of clarity and fundamental failure to grasp the problem are due to a failure of leadership. A poorly written email is just the means to which that failure is revealed. So that was one reaction. Mark Andreessen had a series of posts indicating that the AI was programmed to be this way. Again, it's not like a bug. It's more of a feature and that it's not an accident. This is this is happening because because companies wanna see that. They chose to be this way. And in fact, he goes further and says that these companies are lobbying as a group with great intensity. To establish their government protected cartel to lock in their shared agenda and corrupt products for decades to come. Wow. I mean, again, that's a really scorching critique here. And then, you know, the the question I would ask is, who's been fired for this? I mean, imagine if, I don't know, one of Elon's products had a launch that went this badly. Do you think no heads would roll? No heads have rolled. And so you have to kinda wonder, well David Friedberg (00:17:05): What if it's a structural issue, Sacks? I mean, I I I the the point does resonate with me that there is a group internally, and I think it's called the responsible AI team at Google. And this team's job is to enforce those principles. Remember that we brought up last week that they've defined? And so they go in and they're like, well, you know, if you just render an image of a software engineer, and all the images are just white guys in hoods, that's inappropriate because there are plenty of non white people. You need to introduce diversity so then the programmers say, okay, we'll go ahead and overweight the model and make sure that there's diversity. And you can't say no because otherwise you are deemed erasive. So Who's the individual that's responsible given that structural circumstance that exists within the organization? It's more of a cultural and structural problem to me than you know, wanna I I guess, ultimately, there's leadership that's lacking, but David Sacks (00:17:52): Actually, I I I agree with that to some degree. Let me describe how I think it it works. So what what I've heard about Google is that every meeting above a certain size has a DEI person in it. I mean, literally. Profit. So it's kinda like in the days of the Soviet Union, their military, the Red Army would have in every division or unit, there would be, you know, a commander or a lieutenant, and there'd be a commissar. Okay? And command are reported up the chain and the commissar reported to the party. And the commissar would just politely take notes and all of the meetings of the unit, And if the commissar didn't like what the lieutenant was doing, lieutenant would be Jason out in shot. Okay? Now that's kind of a dramatic example, but the point is that in every large meeting at Google, you've got this DEI commissar who's like quietly taking notes. I'll point out that at Google, the only person we can ever remember to get fired was James Daymore, who was an engineer who complained about the political bias at Google. In other words, he was a whistleblower about the very problem that's now manifested. He's the only person you can think of to get fired at Google. Google was mocked on the show of Silicon Valley. It was called Hoolley, but remember this? David Friedberg (00:19:04): Yeah. You David Sacks (00:19:04): that they saw the road. The guys were on the roof. Got fired Jason Calacanis (00:19:07): because It's a company where David Sacks (00:19:08): it's impossible to get fired unless blow the whistle on the political problem. And I think that if you're sitting in those meetings with a DEI commissar present, and you know or you have suspicions that the AI product is not working right. Are you really gonna speak up and risk the fate of a James Daymore. Of course, you're not. Right? So you're right, Friedberg, that it's a structural problem that there's probably a low grade fear that's pervasive through the organization and no one's willing to say the emperor wears no clothes. The woke emperor knows where it's not closed because they don't wanna why stick your neck out? You may not know you're gonna get fired, but you're you know, you're taking Sacks chance. Jason Calacanis (00:19:47): 3 years ago on Twitter, nobody would talk about certain topics related to DEI because it was in the aftermath of George Floyd and people just did not feel comfortable even calling out something minor. That was unfair. David Sacks (00:19:59): No. I would say they didn't feel comfortable until Bill Ackman. Broke the seal on this just, like, a month ago where he really went after DEI. I mean, because remember, there part of the reaction to Bellatin was like, wow. He's really going there. Even though everyone's saying that, like, basically agreed with him and knew that he was making a correct point, but people were still afraid to, like, again, call out this this woke emperor. Jason Calacanis (00:20:22): Yeah. And the way this works for people who are not super aware You have a language model and, you know, you write a bunch of code, but then there are guardrails put in and then there are red teams and people who test it. And so at the very least, even if you were trying to do something with great intent, as you pointed out, Friedberg, hey. You know, if we pull up a doctor, it doesn't shouldn't necessarily always be a white guy. There are other people who are doctors in the world. Somebody should have caught it in testing. David Sacks (00:20:48): They probably did, Jason, and they didn't report it. Who wants to report that problem? Jason Calacanis (00:20:52): That's an interesting rub. Yeah. Like, how you miss it was not the guts. David Sacks (00:20:56): They didn't miss it. They didn't miss it. They didn't have the guts to Jason Calacanis (00:20:59): You didn't wanna Chamath Palihapitiya (00:20:59): you have to build a somebody built a reward model or people a reward model was built for the reinforcement learning from all the humans and their feedback. So these decisions were explicit. Implicitly imposed on people and people felt a fear of pushing Sacks, or did they just agree and say this is a great decision, and these rewards make a ton of sense. And the whole point is that I think what this is highlighted is that's the truth that Google needs to figure out and they need to figure it out quickly because what is going to happen now is it's we I know I think we talked about this a year ago. All Google needs to see is 300, 500 basis points of change. And the market cap of this company is gonna get cut in half. Okay? Because there is only one way to go when you have 92% share of a market, and that is down. And so the setup for the stock is now that people are looking at this saying, okay, if I see 92% go to 91 or 90 or 89, that's all that has to happen. And people will say the trend is to 50%, and you will price this company at a fraction of what it's worth today. So I think it's really critical. This is the moment that the senior leadership that really understands business can separate it from politics and decide, is this a thing of fear where there's one row group that's run amok, or is this what we believe? Because if it's the latter, you just gotta go with There's nothing you can do because you're not gonna replace 300,000 employees or however many Google has. But if it's a former, Sacks is right, you're gonna have to some heads need to roll and they need to tell the marketplace that this was a mistake where a group of rogue employees got way out way too much power We were asleep at the job, but now we're awake. They're fired. And this is so they have 2 choices. But in in all of these choices, what I'm telling you on the the dispassionate market side is if you see perplexity or anybody else, clip off 50 basis points or 100 basis points of share and search this thing is going straight down by 50%. David Friedberg (00:23:13): By the way, unless cloud takes off, right, because the other hedge that Google has is GCP, and the tooling that they've built in GCP can enable and support and be integral to a lot of alternatives and competitors to what ultimately might be searched. So I think there's also a play here in thinking about some of the hedges that Google has implicitly built into the business. K. I'll just say one more thing on this structural point. I kind of thought about this as, when I started speaking to people internally about how this happened from a product perspective, it felt a lot like When you talk to a lawyer, as you guys know, you're making a business decision and there's some risk. I mean, think about Travis Building Uber. And the lawyer will say it is illegal. You need a medallion license to do what you're doing in the city. And Travis is like, well, you know what? I'm gonna take that risk. Brian Chesky and Airbnb. He said, you know what? I'm gonna take that risk. And the problem is that, like, a lawyer's job is to tell you what you can't do to identify all the peril of your of your action And then you as an executive or a business leader or a manager, your job is supposed to be to take that as one piece of input, one piece of data, that you then make the informed business decision about what's the right way to build this product, what's the right way to build this company, and I'll take on some risk. And I think one of the challenges structuring side of Google is that product leaders and other folks were never enabled to make the decision that there were these, as Sacks pointed out, kind of, like, policing type organizations that were allowed to come in and veto things and the vetoing or make unilateral decisions. And those vetoing on whether it's waiting or or some, you know, training data set or output, that ends up killing the opportunity for the smart business leader to say that doesn't make sense. We can this Jason Calacanis (00:24:56): is where this is where having founders in the organization every day changes everything because the founders would say, hey. We we're here to index the world's information. We're here to the world's information. We're not here to interpret it. We're not here to win hearts and minds. We're not here for a political agenda. But there's a group of people there who It's a parent think that they're there to change the world, that Google is a vehicle for them to make social changes in the world And, you know, that's art. And there's other ways to do that. And just paradoxically, like, Hamilton making the founding fathers diverse and doing art. You know, that that can win Tony's in that context. You could win tons of awards and acclaim and and make incredible beautiful art. But on this side, like, people are not looking for Google to do that. They're looking for Google to give them the answer and the data. And then these people are thinking, it's our job to actually interpret the data for you as we kind of touched on last week. So, this is David Sacks (00:25:52): Look, I think you guys are really close to the bullseye here, but I would just refine slightly what you're saying. So here's how I think it happens. I I don't think this is a rogue group. I actually think this is a highly empowered group within Google. David Friedberg (00:26:05): I do agree with you. Yeah. David Sacks (00:26:06): Yeah. I think what happens is Sundar says from the top, that we're gonna be on the forefront of diversity and inclusion because he personally believes that, and that's the way the social winds are blowing. And they think it's good for the company on some level. Okay? To implement that mantra or that platitude, really, HR hires a bunch of DEI experts. Okay. Lots of them. I think the company has, like, this huge HR department And a lot of those people are basically fanatics. I mean, they're Jason Calacanis (00:26:37): They're chosen career. David Sacks (00:26:39): Yeah. They're trained Marxist, basically. And so They're the commissars, and they're sitting in all these meetings. And, again, they're the ones taking notes, and they're the ones who push the company in a certain direction. But you have to then go back to senior leadership and say it's their fault for letting this happen because they should have made a course correction. They should have realized what was happening. They should have realized that through a combination of bias and through this sort of, like, overly empowered HR team who are pulling a legal card. I mean, Friedberg right about that. They're saying that our point of view is the law, which isn't true. But they're basically pulling the legal card and pushing the whole organization a certain direction. It was up to leadership to realize what was going on and make a correction. And the the thing that you're seeing now is that in the face of what's happened, the statement that we got really doesn't cut it. Jason Calacanis (00:27:34): Point of the use of word problematic. David Sacks (00:27:36): Yeah. Exactly. They're describing it as a glitch or a bug. It's not. It's a much deeper problem. And so, therefore, you give it gives no confidence that the solution is gonna be pursued in as comprehensive manners as necessary. Jason Calacanis (00:27:51): Yeah. I think it's just a that that memo is a tip-off that there is a 20,030,000 person rift and a reorganization, and they're just gonna keep cutting the DI group. And they've already meta and Google have cut the DI groups a bit. David Friedberg (00:28:03): I don't know if it's about as much about cutting as much as it is about empowering. If you said to the product leaders, you can make the decision. DEI and responsible AI and whatever other groups they're gonna inform you on their point of view, but they're not gonna tell you what your point of view is. David Sacks (00:28:22): The background is pulling the legal card. They're saying this is the law. They're saying that Well, I'm David Friedberg (00:28:25): saying that that's what needs to change. Right? David Sacks (00:28:27): If you don't do things the way we tell you, Google's gonna be hit with a civil rights lawsuit. That's what they're saying. David Friedberg (00:28:33): Oh, well, I mean, let's see if leadership can overcome that threat, but I think that's exactly the threat that is keeping the organization from resolving this problem or could keep the organization resolved. David Sacks (00:28:43): I think that, but I also wouldn't underestimate the bias. So, you know, everybody there not I shouldn't say everybody, but it's a very liberal culture. Right? It's a monoculture. So when you're swimming in that much bias, it's hard to see. Right? David Friedberg (00:28:56): Yeah. Yeah. David Sacks (00:28:57): When everybody is left to center, mean, just look at something like political contributions. Right? It's 90 something percent are democratic. I mean, like high nineties. So it's just a a liberal bubble, basically. And so Right. When everybody's liberal, it's very hard to see when, you know, the results are way off center as well. Jason Calacanis (00:29:17): Also, if you if you give people this job, like, how are they what are they gonna do every day, Frederic? If they've been given the job, DEI, they've been given the job to your trust and safety. They they're looking to fill their time and make it impact. You gotta, I think maybe you have less of these people. I honestly think it's about kind of people. David Friedberg (00:29:32): You know, Sean McGuire is a partner at Sequoia, and he used to be a a member of the team at Google Ventures. It's one of what's called Google Ventures. And he did a Twitter post. Do you guys see this? Yeah. Where he said when he was at Google, he was told by his manager, I'm not really supposed to tell you this. It could get me fired, but you're one of the highest performing people here. But I can't promote you right now because I have a quota. My hands are tied. You'll get the next slot. Please be patient. I'm really sorry. It ultimately led Sean to leave Google. And, you know, the rest is history. He's a partner at Sequoia now. Jason Calacanis (00:30:04): You're saying because he's a white male. David Friedberg (00:30:06): Because he's a white male. Yeah. And so the, you know I'll be honest with you. Yeah. Jason Calacanis (00:30:11): No. I had the same thing happened to me at AOL. When I was at AOL and Shamat was there at the same time, the whole organization was white men from Virginia, whatever. And they gave me an SVP title, And I said, well, I want the EVP 1. And they're like, you know what? We can't have any more white males in that position right now. We have to, like, get some more women and and people have called in that position. And they told me you'll have the same comp and bonus, but we just can't give you the title. David Friedberg (00:30:38): Chamath, do you think these, like, race and gender driven quotas Sacks sense for HR departments to try and enforce upon managers. To main to increase diversity. I mean, is that a good objective for an organization to have? This is like a topic. A lot of people I've heard kind of flipped back and forth on. Chamath Palihapitiya (00:31:00): I There is no company where I have majority control where I have an HR department. David Friedberg (00:31:04): You don't have an HR department? Jason Calacanis (00:31:06): No. Same more. Why? Chamath Palihapitiya (00:31:07): I think that it's very important. You should go to a very respected lawyer at a third party firm, someone very visible, an Eric holder type Jason, and you should work with that law firm and retain them so that you have an escape valve. If there are any kind of serious issues that that need to be escalated, so that you can get them into the hands of a dispassionate third party person who can then appropriately inform the board, the CEO, and investigate. So that that covers sort of all the bad things that can happen. Then there are buckets of, I think, good things. One one important set of things is around benefits. My perspective is that the team should build their own benefits package that they want. They should understand the P and L of the company that they work for. They should be given a budget. And in in my companies, again, what I do is I allow committees to form, and I ask those committees to be diverse. But what I mean by diverse is I want somebody who has a sick partner. I want somebody who has a family. I want somebody who's young and single so that the diversity of benefits reflects what all these people need. They go and talk to folks, they come back and they choose on behalf of the whole company and there's a voting mechanism. Then when it comes to hiring, I think what has to happen is that the person that for whom that person will end up working for, it's the head of engineering. It's the head of sales. Those are the people that should be to outsource it to HR. So when you strip all of these jobs away, HR doesn't have a wool. And what is left over is the very dark part of HR in most organizations, which is the police person, the policeman. Right? The what what is Sacks called the common sense? That is why everybody hates HR. I've never met a company where that is a successful role over long periods of time. They are this conflict creating entity inside of an organization that slows organizations down. So that allows me to empower individuals to actually design the benefits that they want, to hire the team that they want, and I let them understand the P and L in a very clear, transparent way, and the results are what the results are. Chamath Palihapitiya (00:33:28): You want more bonuses, hire better people. And then what I do is at the end of every year, I talk about this distribution of talent and I make sure we are identifying the bottom 5 or 10%, they need to be managed up or they must be fired every year. And it does not matter how big the company is. You must manage up or out those bottom 5 to 10%. And in some cases, I'm talking about one person because it's a small company. And in other cases, I'm talking about 30 or 40 people. Jason Calacanis (00:33:59): Just hire the best person for the job. Chamath Palihapitiya (00:34:01): No. You eliminate HR. Jason Calacanis (00:34:02): Yep. Chamath Palihapitiya (00:34:03): You empower the team, make the make allow them to make their own decisions. Measure it, hold them accountable. Jason Calacanis (00:34:10): Right. So if you have Yeah. A salesperson who just hires their, I don't know, 15 sorority sisters or fraternity brothers, whatever it is, and it just becomes not a diverse group. Chamath Palihapitiya (00:34:21): Well, hold on. Jason Calacanis (00:34:22): It is what it is. Chamath Palihapitiya (00:34:23): That's may be diverse. This is my point. Like, the the thing is that, like, there's different ways to sell. There's different sales motions. There's the sort of, like, elephant hunting kind of sales model, there's a dialing for dollars thing. So even those 15 sorority sisters, the way you describe it, could actually be diverse. My point is that kind of superficial marking based on immutable traits will not yield a great organization. Instead, it's you're empowered to hire whomever you want Just know that at the end of the year, we're gonna measure them. Your bonus, their bonus, the company's Jason Calacanis (00:34:53): performance performance. Chamath Palihapitiya (00:34:54): Yeah. Performance. Jason Calacanis (00:34:56): I mean, Frank Sluteman said this, and he he got barbecued at some point. He said I don't have time to do this diversity stuff. Chamath Palihapitiya (00:35:02): By the way, in in my company's for example, like when you do SOC 2 compliance, you have to generate these reports, okay, especially for some of our customers, some of our companies, that actually show the diversity of our team. And when we measure them on the immutable traits that whatever they represent as their gender, whatever they represent as other dimensions, we are incredibly incredibly diverse anyways. But the way that I David Sacks (00:35:30): seen a startup that isn't diverse, you know, it's looking at value attracts such a diverse mix of people. You know, what do we know about success factors for startups? Number 1, the ones that are successful have a culture meritocracy. Number 2, they're non bureaucratic, and they don't have too much G and a, basically overhead in the company. Now all those things are contradicted by having a large HR team or especially a DEI organization. Right? They add bureaucracy, they add overhead. And what's that? Pips performance improvement. They cut into Chamath Palihapitiya (00:36:10): Well, Pips are great. I pit people all the time. David Sacks (00:36:13): Does it work? Jason Calacanis (00:36:14): I mean, I I I know some people are just like these Pips don't work. Chamath Palihapitiya (00:36:16): An underperforming member of the team and you've been identified in the bottom 5 or 10%, we have a responsibility as management to coach you up or to get you to an organization where you're not in the bottom 5 or 10%. That's the right thing to do for people. You do that by being very transparent and running it down. You are not good at these things. You're underperforming in these things. Fix them, or you will not be here. That's a very fair thing to tell somebody. David Sacks (00:36:41): Yeah. Look. How do you wanna implement your own meritocracy? I think there's different ways for founders to do that. The point is you want these companies to be a meritocracy. You don't want advancement in the company to be based on factors other than skill, merit, hard work, things like that. Performance. We we know performance. We know that's a bad, bad path to go on. I think a lot of founders don't understand that DEI is not something they have to do. They don't have to have a DEI organization. This has somehow become a thing. It's it's not required. And I think people are realizing, like, why would you do that? Why would you create this large bureaucracy in the company that undercuts the meritocracy that adds a lot of costs and that slows you down. None of those things will help your company. What you need to have, I think Shamath laid out some really good best practices. You should have an outside law firm that I I would say is you could call it HR law, but I would just call it employment law. I would say like a non ideological partner, an expert in employment law. Who sets up your company correctly and to whom you can take a complaint. If if an HR complaint gets raised through the chain of your company, you do have to take it very seriously, and that's a proper investigation, and that's probably best handled by an outside lawyer. So get that outside lawyer, and then So by the way, Chamath Palihapitiya (00:37:58): Always, there's never a case where your coworker should know the intimate details of any of those sit, and that's what also creates this horribly rotten culture in HR where these people act like gatekeepers of secret information, salary information, bonus information, and then all of the other things, oh, you know, did you know, this person did this with it's terrible to have that inside of a company. It should go to a dispassionate third party person whose job it is to maintain confidentiality and discretion. David Friedberg (00:38:27): Yeah. Chamath Palihapitiya (00:38:28): While investigating the truth, David Sacks (00:38:29): Yeah. When HR is too powerful in a company, that's a red flag. At the end of the day, HR should be an administrative function. Their job should be to get people onboarded, sign their offer letter, and their confidentiality, and, invention assignment agreement, and set them up in payroll, and get them benefits, and that kind of stuff. It should fundamentally be an administrative function. And if it starts getting more powerful than that, it means there's been a usurpation. Chamath Palihapitiya (00:38:56): You don't even need people for that. Like, you have software that does that now, and it's all automated. You know, you send them a link. You go to your favorite David Sacks (00:39:03): Sure. Chamath Palihapitiya (00:39:03): You know, HR site. Boom. It's done. Jason Calacanis (00:39:05): Yeah. I David Sacks (00:39:05): don't think you need a lot of people doing this. Jason Calacanis (00:39:06): Anything you wanna add to this discussion, Friedberg, as we as we move on to the next topic? David Friedberg (00:39:10): I think that, unfortunately, the term diversity equity inclusion has been captured along as Chamath points out a single vector, which is this immutable trait of your racial identity or gender. And I think the more important aspect for this success of a team for the success of an organization is to find diversity in the people that comes from different backgrounds, different experiences, different ways of thinking, And so I I'm not a huge fan of race based metrics or Jason Calacanis (00:39:41): gender based metrics driving. I'm David Friedberg (00:39:46): generally more oriented around be blind to those those those variables and focus much more on the variables that can actually influence the outcome of the organization. Jason Calacanis (00:39:57): Yeah. And one of the great paradoxes of this as well is we are moving to, a much more multicultural mixed society anyway, people filling out forms. A lot of our kids, you know, are are could pick 2 or 3 of the different boxes on a DEI forms. It's not gonna make much of a difference. In the coming decades. Alright. Issue to Google Go splashy cashier's licensing deals for training data, and it's now becoming a bit of a pattern Google we talked about. I think just last week had done a deal with Reddit for $60,000,000. That's reportedly per year Today, Stack Overflow is now using its Overflow API to train Gemini. No word on the contract value, I did get some back channel that it's a multiyear non exclusive deal. According to Rhett's s 1, they have already closed 200,000,000 worth of AI licensing deals over the 2 to 3 years. So, you know, maybe it's gonna be 75,000,000 a year, a 100,000,000 a year. Who knows how big that business can get? We're gonna talk about the s one from reddit. In just a moment. And, there this is on top of all the other licensing deals that have occurred Sacks spring or in OpenAI. You remember that one? And opening eyes and talks reportedly would see it in Fox and time to license their content that comes on the heels of that blockbuster New York Times OpenAI lawsuit that we talked about, I don't know, 10 episodes ago. And OpenAI's lawyers are trying to get that one just to give you a little update on it. They're trying to get that case dismissed. Saying that the New York Times hacked at GPT to get certain results and that the New York Times took tens of thousands of tries to generate the results, yadayada, and they David, Here's the quote from the filing from OpenAI. The allegations in the Times complaint do not meet its famously rigorous journalistic standards. Both OpenAI and Google and Gemini have been furiously guardrailing their systems as we talked about as well to stop copyright infringement, like, trying to make pictures of Northvader and that kind of stuff. Shamab, you've talked a little bit about your TAC 2.0 framework. Maybe you could talk about what you see happening here with all these licensing deals and what it means for startups in the AI space. Chamath Palihapitiya (00:42:01): Well, just to maybe catch everybody up, TAC is this thing called traffic acquisition cost, and you can see it most importantly in Google's Jason Calacanis (00:42:12): quarterly releases, which Chamath Palihapitiya (00:42:12): is that what they realized very early on at the beginning of the search wars in the early 2000s is that they could pay people to offer Google search, people would use it, and then it would generate so much money that they could give them a huge rev share and it would still make money. So I remember, Jason, when you and I were at AOL, This is the first time I met Omid, we were flying back to California. We were both in Dulles at the same time in like 2003 or 2004, and That's when Omid did the first big search deal between AOL and Google, and it was it was I wanna say 100 of 1,000,000 of dollars back then. Where Google pays you up front, you have to syndicate Google search, and then they clean it up on the back end with some kind of rev share. So what's incredible is that that process has escalated to a point now where, for example, on the iPhone, it's somewhere between 18.20 odd $1,000,000,000 a year is what now Google pays Apple. So that's the traffic acquisition cost 1.0 rule, TAC 1.0. And I just said that we should call this TAC 2.0, except now what Google is doing is instead of paying for search, they're actually paying for your data and saying, give it to me so that I can train my models and make it better. And I think that that's an incredible thing. Both it's very smart for Google. But also it's great for these businesses because it's an extremely high margin thing to do when you have a really good corpus of data that is very unique. So in the case of Reddit, that $60,000,000 deal, I didn't I've I looked through the s one to try to figure out whether it was a multiyear deal or not. It wasn't totally clear. But the point is that, you know, Google's paying reddit 60,000,000 Sacks. And, Jason, you just said that they're they've done a couple more of these things. That's incredible. Chamath Palihapitiya (00:44:02): This TAC 2.0 thing is amazing. So if you're an entrepreneur building a website or building an app that has really unique training data or really unique data, you'll be able to license and sell that, and that'll be an incremental revenue stream to everything you do in the near future. That's amazing. That's what tax 2.0 is. Jason Calacanis (00:44:18): It's gonna be incredible for the entire, content and community based industries. You you think this could sustain content creation where advertising has become very difficult, Sacks? David Sacks (00:44:28): I guess my question to to some author would be, do you think this is going to be available to small websites. They'll somehow be some sort of program or because, I mean, reddit's one of the biggest sources of content on the entire web. Right? It's like a top 5 traffic site with tons and tons of user generated content. Chamath Palihapitiya (00:44:45): Do you David Sacks (00:44:45): think like a small publication would be able to make these types of deals Chamath Palihapitiya (00:44:49): Yeah. And in fact, I think like if you go back to search 1.0, that's exactly what these small companies were able to do, which was in a more automated way they were able to basically partner. And in that example, what they would say is, here, Google, why don't you just run your ads on our page? Right? And that was sort of in that web 1.0 world. So Google had solutions for the largest companies on the internet all the way to the smallest. And in this TAC 2.0 world, I do think that that it works in that way as well. The problem in the, in that world, if it's a small website, that says here's my training data, the question is how do you attribute how much incremental value a model derived from it versus something else. And so I think that that part has to get figured out. And so, you know, what Google will be able to pay you will probably be pretty de minimis small if you're small right now. So, you know, to your point, if if the upper bound is 60,000,000 for Reddit, then the average website's gonna get a few hundred bucks. But that still may be a good start. And when Google figures out how to monetize the stuff or somebody else, where then they can give you back some way to make money. I think I think that there's a real monetization here. Jason Calacanis (00:46:01): It really did. You took the other side of this. But now that you see the market based solution starting to emerge. What do you think of this market based solution? I think it's a got legs. Well, I'm not convinced that this looks David Friedberg (00:46:17): like Sacks in the traditional sense where you're basically buying a continuous stream of traffic, and then you're helping to monetize that That's effectively what Google did in the ad syndication business and does today. That business makes about 10,000,000,000 a quarter at Google. And they're paying, call it, 70 to 80¢ on every dollar back out to the owners of that traffic, the folks where that traffic is derived from. I would say that this looks a lot more like the content licensing deals to build a proprietary audience. Which is effectively what Netflix did. They they paid studios for content. Apple does this. They have proprietary content that they pay producers to make, and they put on Apple TV, Amazon does this and so on. This is a lot more like that, where there are content creators out there, whether that content is proprietary like the New York Times or user generated like Reddit, and what they're trying to do is acquire that content to build a better product on Google search. And I'm not sure how you get paid a continuous licensing stream for that content, once you've trained the model, the content gets old, it gets stale at some point in a lot of cases like news, and then eventually If you don't have a high quality, continuous stream of content, it's not worth as much anymore. To give you guys a sense, humans generate in total. Well, let me just give you some stats. There's about a 1,000,000 petabytes of data on the internet today. David humans are generating about 25100 petabytes of data, new data, per day right now. Remember I shared a couple weeks ago, YouTube's generating about 2 petabytes of data, per day. Half of all data generated is never used So this is, like, records and files and stuff that gets put Jason Calacanis (00:48:04): on files. David Friedberg (00:48:05): Log files get stored somewhere never Sacks, never used. The majority of the rest of that data is not in the public domain. It's not on the internet. So there's a lot of data out there, what some people might call dark data, to train on. And I think that as the identification of better sources of training data and the value of training Jason, Right now, we're in this kind of shotgun approach. We're trying to blast out and, you know, source lots of content, lots of data. Just like over time Netflix got better at figuring out what content to buy and what to pay for it, and they're the best at it. I think so too. Will Google and others figure out what data is actually particularly useful, what it's worth, and what to pay for it. And so there's a lot of data out there to go and identify, to mine, to pay license fees to get access to, whether those are continuous license fees or one time is still TBD. Jason Calacanis (00:48:58): That's a key issue. Yeah. So I David Friedberg (00:48:59): think we're still a little bit early to know If this is like, you know, a continuous model like attack type business or if these are sort of chunky type deals and we don't really know what the real value is yet, then that all changes over time. And remember, the the the rate of data generation is increasing. So while we're generating 25100 petabytes of data per day as a species on the internet, That number's going up every day. And so every year, all the old data becomes worth even less. So this is all changing fairly dynamically. And I think There's a lot still to be figured out on what the monetization model will be for content creators and and how that's gonna change over time. Yeah. Jason Calacanis (00:49:34): I think this is a really good point. Some things will be like the Sopranos or Seinfeld or Simpsons where that library is worth a fortune and people will pay a $1,000,000,000 a half $1,000,000,000. Some Someone's David Friedberg (00:49:44): no one's no one's paying a lot for old NFL games, you know. Chamath Palihapitiya (00:49:47): Nick founded, by the way, Reddit licensing deal was 203,000,000 over it says 2 to 3 years, so let's assume it's call it 3 just to be safe. So it's about Mhmm. You know, $60,65,000,000 a year. It doesn't say whether the deal with Google is exclusive. David Sacks (00:50:01): Wow. So they could do a they could do that same licensing deal multiple times. That's interesting. Yeah. Jason Calacanis (00:50:05): None of these are exclusive, it seems. Chamath Palihapitiya (00:50:07): This is what I don't understand. Why why don't you do head deals like with folks like Reddit where you actually do it exclusively. Like, it seems like it's more valuable to spend a multiple of this number for for one of the big 7 who have tens of 1,000,000,000 of dollars of cash anyways. David Friedberg (00:50:22): And Jason Calacanis (00:50:22): block the other players. Yeah. Chamath Palihapitiya (00:50:23): And block everybody else. That just seems David Friedberg (00:50:25): Well, then red is small. Gets I'm ready, I don't wanna do that deal. Yeah. Jason Calacanis (00:50:28): Read it. Me and I put it on the table. Yeah. David Friedberg (00:50:30): Because then my multiple is capped. Like, the the way I can monetize my content is now set, and I'm done. Yeah. It sounds like a deal. Reddit. And investors are like, oh, you're worth 5 times EBITDA. You know, that's it. Jason Calacanis (00:50:40): Right. Reddit, Chorus, Stack Overflow. They're gonna just get taken out. I think this is, I think this is gonna be the new office. David Sacks (00:50:45): Around, like, didn't Cora race, 50 to 500 recently? Jason Calacanis (00:50:48): I think they're gonna get taken out. I I I I think these businesses will become too valuable because they do have ongoing content that just keeps getting generated. David Friedberg (00:50:56): To run. You started web blogs. Right? Jason Calacanis (00:50:58): Yeah. Yeah. Yeah. Yeah. Yeah. Like blog everything. David Friedberg (00:51:00): And but think about the value of that content today. It's negligible. Like, it was very valuable at the time. And as time went on, more content was being created a hundred times a 1000 times 10,000 times more content that started to overshadow the value of that content. At the time the acquisition was done, it made a ton of sense. But all of a sudden, 2 years later, particularly with the rate at which data is growing on the Internet, it's like, does it make sense to buy any content anymore? Jason Calacanis (00:51:23): So you Well, on the other side of that is historical content could be worth a lot of money, especially. David Friedberg (00:51:28): Some some could be for sure. Jason Calacanis (00:51:29): Yeah. So if you had the Charlie Rose archive as an example, what is, you know, he's probably interviewed a kissinger 10 times, and he's interviewed a kissinger for, you know, 10 hours. I've got 2 almost 2000 episodes of podcasts I've done. With startups over 13 years. Like, this week is, yeah, this week in startup's archive is gonna be worth something at some point, right, and I don't think it's gonna be worth 61. What are David Friedberg (00:51:48): all baseball games worth? Right? Like, I mean, Jason Calacanis (00:51:50): Yeah. So they're not being watchable, and I don't think the data from them is particularly important. So I I agree on that one. But historical stuff. We don't know. But and David Friedberg (00:52:00): I just question how much of Reddit's content is actually, like, long term valuable versus, like, they're covering a topic. Talking about nursing stuff. And then It's a really excellent point. Jason Calacanis (00:52:12): Yeah. And we'll figure that out. Okay. Why I think it's David Friedberg (00:52:14): like, it's the early days of knowing how to value all this content, particularly for LOMs. And so we don't really know yet. Over the next year, this will all start to become clearer. But it's it's a good same Jason Calacanis (00:52:23): thing happened in music licensing. Yeah. David Sacks (00:52:25): Right. But if if all the content creators kinda unionize, then it might increase. Jason Calacanis (00:52:31): I don't like the cycle. David Sacks (00:52:32): Kinda like the, yeah, like music. Jason Calacanis (00:52:34): Music industry has ascap and either. David Sacks (00:52:37): Well, I'm not I'm not advocating for this, but the point I'm making is if they can't unionize, then there's a lot. There's just a huge number of vendors of content. And so models will need to buy some, but as long as they can get some, they don't need to have all And therefore, it's basically highly competitive among sup suppliers, and there's a very limited number of buyers. So that tends to be a buyer. Jason Calacanis (00:52:59): This is why the news industry should have always had a federation because they could have just said to Google, hey. We're going to deindex ourselves from the Google search engine. And so you won't have the New York Times Washington Post LA Times. You're just not gonna have any of us unless you give us x, y, and z. And they were just too stupid and not coordinated to do it. Yep. Music industry, the exact opposite. You you try to do anything with the music industry. They're gonna come down on you like a ton of bricks to this day. I see what this is. David Sacks (00:53:25): That's actually really interesting. Yeah. If all the, old school legacy newspapers and Jason Calacanis (00:53:32): Magazines. David Sacks (00:53:33): Magazine saw on have basically formed their own whatever. Transportation. Yeah. That would've been powerful. Jason Calacanis (00:53:41): Yeah. I mean, that's what Murdoch when Murdoch saw it clearly. He was like, you know, Google's the enemy here. They're gonna take all of our revenue and they're gonna get customer names, and we're not gonna even know the names of our customers. Alright. Issue 3, Connor Crushes customer careers with AI. You may have seen this trending on X and Twitter and in the press. If you don't know, Klarna, they're a Swedish mint company. They do that buy now pay later stuff. I think they were the originators of that online. And they put out a press release with some really eye popping claims. AI assistance are now doing the work of 700 full time agents at corona, they moved issue resolving times from 11 minutes with humans to 2 minutes with AI, and customer satisfaction is on par with human agents. And it said its resolutions are more accurate than humans creating a 25% drop in repeat inquiries that tracks. And so far, their AI, which they built with OpenAI, has had 2,300,000 conversations accounting for 2 thirds of Corner's customer support, service Chamath. Corner estimates its AI agent will drive. Wait for a $40,000,000 increase in profits this year. We could talk a little bit more about Kloner and their valuations, but Friedberg, what what do you think this means if we're in year this is the start of year 2 of Chamath EBT as, like, a phenomenon, let's say, What do we think year 3 looks like? David Friedberg (00:55:02): I think the tech the techno pessimist point of view is, oh my god. Look at all these jobs that are getting lost. I think the optimistic point of view is that that company has all of that excess capital now to reinvest in doing other things. That capital doesn't just become profits that flow out the door and everyone's done with that money and that money just gets put away in a Sacks. That money gets reinvested. And that money gets reinvested in higher order functioning work And that's really where there's an opportunity to move the workforce overall forward, which is what I think is super exciting and and, I'm super positive about We've seen this in every technological evolution that's happened in human history from, you know, the plow in agriculture to automobiles to computing and to now AI that, you know, humans moved from manual labor to knowledge work to now ideally and hopefully more creative work. And so I do think that it isn't just about eliminating jobs and making more money, but it's about enabling the creation of entirely new class of work. Whether that's prompt engineering or, you know, building entirely new businesses that simply can't exist today or perhaps even down scaling businesses where you no longer need to have a 10,000 person organization, smaller organizations can be stood up as start ups to start to replace large functioning organizations. So don't know. I think it's a time of great opportunity. I know that some people would view it as being highly shocking. I think it's inevitable that human knowledge labor where the job of the human is simply the ingestion of data and then communicate an output of data seems like it will eventually be replaced by computing somehow, and this is happening now in an accelerated way with these LOMs. So I think that what we should focus on and think about is what are all the new businesses, all the new jobs, all the new opportunities that are just couldn't have existed 10 years ago that are now emerging. That are very exciting as the workforce transitions. Jason Calacanis (00:56:50): Sacks by this techno utopian view of this. All these jobs that are gonna obviously be retired are going to open up the opportunity for these humans to do even better work at Klona, or do you think it's just gonna go straight to the bottom line. David Sacks (00:57:06): Well, it sounds like they're able to eliminate a lot of frontline customer support roles by using AI, which is what I would expect. Yeah. I think this is a very natural application for AI. You know, it was already the case that you could pretty much find answers to questions by searching the FAQ things like this. This this is an even better way of doing that. So so look, I I believe that this will be a big area for AI is saving on again, I use the word frontline customer support because the way that customer support is typically organized is there's level 1, level 2, level 3. The more difficult queries or cases get escalated up the chain depending on how hard they are. And I think the AI will do a really good job at eliminating level 1, It'll start to eating the level 2, but you're probably gonna need humans to deal with the more complex cases. Now the question is where do those displaced humans go? I think there's gonna be new jobs, new work. That's always been the history of technological progress, and One of the things you're already seeing is there's a whole bunch of new AI companies that are exploiting this technology, and they need to hire people. So I basically agree with Friedberg that you will elevate people's work by automating away the less interesting parts of people's jobs and then creating more productivity and more opportunity. David Friedberg (00:58:24): By the way, just to use your, just use your example, Sacks, so imagine if all the level 1 support people, some chunk of them can now do level 2 support, And so the customers are gonna get greater hands on care. More customers will get access to a higher level of service. The organization can afford to do that. They'll be more competitive in the marketplace. Because customers feel better taken care of. I just think that's how the organizations get leveled up as new technology kind of shows up like this. It's a great point. And then those folks can have a much deeper level of interaction with their customers than they are today. Well, then then the ball gets Jason Calacanis (00:58:58): more complex. Jason then people might get better at the software, and they might discover new features that you might be able to redeploy those people. If you look at coffee, like, I don't know. Was it 40 years ago? You went to order a cup of coffee. It was tea cup or regular coffee, milk, and sugar. Now so you're like, those are your 4 choices. And and now you go order coffee. I don't know if you guys have used the Starbucks app or the, you know, the I just had the sweet green CEO on the pod and Man, you can the fidelity and the and the nuance of what you wanna order is absurd, Jamath. Where do you think this is all heading? Because there is the issue of displacement, how people how quickly people can re be redeployed. And if we're seeing in year 2, customer support, and developers getting 10 x. What other categories do you think we're gonna see fall next? Chamath Palihapitiya (00:59:43): I think the truth is that as you said, the real world applicability to AI was not last year. So I think we're really in the 1st 5 or 6 weeks of 1st year. Jason Calacanis (00:59:55): So you consider that year 0. Chamath Palihapitiya (00:59:57): That's year 0. That was sort of like the, you know, where everybody was running around building toy Sacks, group of concept, This is one of the first few times where you're seeing something in production where there's measurable economic value. And the important thing to note about that is that it's not just what it means for Larna, but it what it means for everybody else. So if you'd look at everybody else, for example, here's Teleperformance, which is a a French company that runs call centers, They lost $1,700,000,000 of market cap when that fleet went out and about 20% of their market cap. So this is this is the real practical implication yes, Klarna replaced 700 people, and they saved 40,000,000 of OpEx, but Teleper 4 months while they were just doing their everyday work lost 1,800,000,000 of their market cap at the exact same moment. And so What does it mean? I think that what Klarna should do is open source what they've built. And the reason is that you wanna give companies like Teleperformance a chance to retool themselves with the best possible technology so they they they can actually preserve as many of the jobs as possible. Because at the limit, If every single company is able to implement something that is as economically efficient as what Klarna did, Teleperformance doesn't exist, and there's $10,000,000,000 335,000 employees that will not have a Jason Calacanis (01:01:22): job. Yep. Chamath Palihapitiya (01:01:23): And so for Klarna, the reason to open source it is twofold. One is They don't lose anything because you will still need to train it on your own data, and so there's no disadvantage that Klarna will have, right? They're just saying, look, I built this on top of GPT. Here's what it looks like. And that production code can be used by anybody else. Go for it, but it has to run on your own data. That's a very reasonable thing. So I think it has the benefit of both, a, setting a technical pace that can help them attract better employees and more highly qualified people who find the scope of work even more interesting. And B, I think it's on the right side of history with all this AI stuff where it's allowing everybody to sort of benefit in a way that is the least destructive. But I just wanted to show you that the destruction was quite quick and it was pretty severe And if 2 or 3 other big companies launch these kinds of tweets after real measurable results, Teleperformance will be a $1,000,000,000 company short in short David Sacks (01:02:19): There's a third reason. I I I think it's a brilliant idea for Carmen to open source this this tool because it's not their business. Right? This is just something they did as a as a productivity improvement. They get the benefit back to them of the community working to advance that technology so they don't have to put more engineers like advancing all on their customer support AI. They just re remerge in the changes that the open source community comes up with. Yep. And since they're not in the business of selling AI directly. There's no reason not to do it. Like Jamas said, so I I think it's kinda brilliant. Yeah. This is meta strategy, by the way. I mean, so I was Jason Calacanis (01:02:53): gonna say they should be building this on meta's open source products and Apple's open source products. Right, Sacks? David Sacks (01:02:58): Yeah. Well, so what what meta said, what Zack said on the last meta call is the reason we open source everything is because we don't directly sell AI. We create products that AI makes better. So by open sourcing this, we allow the community to advance the ball we get to reincorporate those changes. So it's a very smart strategy for companies that aren't directly selling the AI. Now, you know, if you're if you're like Brett Taylor's new something Sierra. Obviously, you're not gonna open source it because your whole business model is to create a proprietary solution. Jason Calacanis (01:03:30): Yeah. But then to Chamonte's, you know, 80, 90, whatever he was talking about, with his, you know, incubator concept and, you know, these things. Chamath Palihapitiya (01:03:38): It's a company. Jason Calacanis (01:03:39): It's a company? Okay. It's a David Friedberg (01:03:40): company. Is it 80, 90, Jason Calacanis (01:03:41): or 90, 80? I'm sorry. Chamath Palihapitiya (01:03:43): 8090. Yeah. David Friedberg (01:03:43): 8090. Jason Calacanis (01:03:44): Is there a third word that comes off of it or Jason just gonna call it 8090? Chamath Palihapitiya (01:03:47): Just 8090. Got it. Okay. 80 percent of the features at a 90% discount. Jason Calacanis (01:03:51): So back to that, like, what does this mean if these things are getting to framework your point about the pace and the pace of these things? Is it gonna improve 10% a year? 10% a month. If it's improving 10% a month, we're gonna get to 98% of queries done this year. If it's doing 10% a We're gonna get to 99 or 98 percent of queries in 4 years. In other words, this is happening, folks, and it's happening at a blistering pace. Chamath Palihapitiya (01:04:15): By the way, think of it's so not just Teleperformance, which is a was a $10,000,000,000 now is $7,580,000,000 USD company But think about Zendesk, right? Zendesk was a, I think, a $8,000,000,000 to $10,000,000,000 in private. Yeah. Yeah. It was a $10,000,000,000 take private in the hands of PE the entire Zendesk workflow could be replaced by a handful of these open source agents where all of a sudden people can eliminate a lot of OpEx. I think the I think the thing to keep in mind here is where the world is going has always been to try to lower cost. And the original foundational principle of SAS was that there's these line items in on prem software that are just extremely expensive over time very hard to justify. Right? And so when people moved to SAS from on prem, they were looking for cost savings. That was the initial thing. Now Yes. It's actually not cheaper anymore, but it's much more feature rich, so you get a lot more value in SAS, etcetera, etcetera. But the point of these AI agents and bots and workflows is that it'll reintroduce the concept of cash, of Jason Calacanis (01:05:21): of cost savings, of this idea that you Chamath Palihapitiya (01:05:21): can have cheaper, faster, and better And the more that that stuff is open source, my gosh, I think it just makes it very hard for companies that have point products to survive. Jason Calacanis (01:05:33): You know, we I was talking to a friend of mine, Josh Moore, who was the city head of Uber in New York. And he launched his own note taking app. He's writing it himself, and he's obsessed with this concept of building a $1,000,000,000, a unicorn company with one employee. And this is something that a lot of people have been talking about. My friend Phil Kaplan from Distrow Kid built a very large business in Distrow Kid, a unicorn, with a very, like, I think low single digit number of people. This could be the future of, you know, efficiency. You you could build if you catch fire with a really hot company that gets a million Chamath Palihapitiya (01:06:05): customers. The future. It's absolutely And Jason Calacanis (01:06:07): then if you think about our jobs in terms of capital allocation, well, how much capital does that founder need? Do they need to dilute 10%, 20%, 30%, they're not gonna need to dilute Sacks, 70, 80% Chamath Palihapitiya (01:06:17): A one person company should be able to spend less than a few $100 to get to product market fit in the next few years. Jason Calacanis (01:06:22): Yeah. I mean, that's that's kinda what we're seeing. David Sacks (01:06:24): Just a go back to your question, Jake. How? Like, where does this go next? Jason Calacanis (01:06:29): Yeah. Please. David Sacks (01:06:30): I think it's it's it's really interesting to speculate about that. So What Klarna seems to be talking about are email based customer support cases. I think where this is gonna go next is to phone. 100%. And these call centers use what are called IVRs, these interactive voice response systems, but they're very rigid. It's a lot of pre recorded messages, and it says, Push 1. If your problem is this, push 2. If your problem is this, everyone hates those things. Jason Calacanis (01:06:55): Yeah. I David Sacks (01:06:56): think where it goes next is you'll call up the call center and you'll get a a voice that sounds like a human, just talk to you. Yeah. And you won't even necessarily realize that you're talking to an AI because they're already these AI companies that can do generative voices, any language, any accent. Jason Calacanis (01:07:12): Oh, and they're fast now. David Sacks (01:07:14): And they're yeah. Jason Calacanis (01:07:14): The deadbolt. Language think about that. Just localizing them across the globe. You know, you wanna launch your product in Japan. Chamath Palihapitiya (01:07:20): By the way, did you guys see there's a meta demo, which I thought was really cool, which was it was run on Lama 70 b, but it was a real time translation tool where the person was speaking in Haakian, Chinese, and the and the other person was speaking in English, and they were able to understand each other. But Sacks to your point, when that person calls, for example, b of a, now Spanish is not a language. It's actually many dial in many, many, many different accents, right? Depending on which country you're from, like the accent that you hear in Spain is totally different than the accent in El Salvador or the accent. In Chile or Argentina, and so wouldn't it be amazing where you you call your BofA app? It picks up your accent and your tonality, and it responds with the person of that same accent and tonality, that is incredible. Jason Calacanis (01:08:07): Well, I'll take it to another level. You call and recognizes your number It knows what you're doing in the software. It knows the problem you've had. It knows the last three times you called. And how long you've been using the software And it anticipates like, okay. I know this person has a windows machine, and it's, you know, still five years old. And it's like, are you still using that same five year old windows machine? Yeah. We know it's a bug with, you know, windows, whatever. You should probably upgrade. I mean, it's gonna know the entire context of this. And so it it's gonna just get it it could be more efficient than a human could ever be. Chamath Palihapitiya (01:08:37): The best customer support interaction I had was I called JP Morgan Chase because I had an old credit card that I'd for 20 years. And I think that they had outsourced it to somewhere in the Caribbean. And this woman picked up the phone. It was so called, Chamath, what is the problem, man? And I was like, oh, this is the best. And I had this whole conversation with her for 15, 20 minutes. Nothing to do with the phone. Nothing to do with my credit card, rather. It was great. She's like, I'm here, man. You wanna cancel your card? I was like, Jason Calacanis (01:09:05): yes, please. No. But you could do celebrities best. I Yeah. David Sacks (01:09:09): Slurry voices. Yeah. Chamath Palihapitiya (01:09:10): Jay Cal, do the DJT. Okay. Let's let's role play. You're Donald Trump. Okay. And I and I am a JPMorgan. Yeah. Hi, Mister President. Jason Calacanis (01:09:20): You're huge. You've got fixed spending. I every time I go to teach them off, I go in. Amazing. Chamath Palihapitiya (01:09:26): Mister president, I would like to cancel my credit card, sir. Jason Calacanis (01:09:29): Okay. You don't wanna cancel it. We've got a great APR, 3.9%. But for Hamas, you know what? He's my Sri Lankan friend. How much do we love relonkins. Okay. Good. And That's so good. Not Jakeao. Nasty. Nasty man, Jakeao. Very nasty. David Sacks (01:09:46): Yeah. It's like a dog. It's a dog. Okay. She's a dog. Jason Calacanis (01:09:49): Some people say TDS. How much do we love our Sacks. At Marlago, I go to Sacks House, his house, a huge, huge house. Almost as big as Marlago. Not quite. I gotta work on it because I haven't done it for years. Chamath Palihapitiya (01:10:08): That's really good. It's pretty good. Jason Calacanis (01:10:10): Have you David Sacks (01:10:10): seen that guy? There's a there's a new, like, impressions guy who's amazing. He does. I've David Friedberg (01:10:15): seen him. Jason Calacanis (01:10:16): He's on Howard Cern all the time. Right? He does the Howard Cern. David Sacks (01:10:18): Yeah. He does. David Friedberg (01:10:19): This is another kid. Matt Freed, friend. Yeah. Chamath Palihapitiya (01:10:22): Yeah. Yeah. David Sacks (01:10:23): Yeah. He does Howard to Howard. It's a circle. David Friedberg (01:10:26): Yeah. It's dark. David Sacks (01:10:26): Oh, wait. That video is good too. Hold on. Speaker 5 (01:10:32): On other Trump impressions. So, like, this is what you want, Zach? There are so many people that try to do, but you see the failed Alec Baldwin. Baldwin comes out in S And L, which used to be a lot fun of you, Baker. With Chevy change, dog. But Baldwin goes like this, he goes, We've got a great show. I don't do that. I never say boo. I never say David Friedberg (01:10:53): boo. Speaker 5 (01:10:53): I never say bear. He comes out like, I know a dot, dot, dot, dot, dot, dot, dot, dot, dot, China. I don't say the, dot, dot, dot. And the last one is Jimmy failing foul, and he touched my hair like a dog. And then Jimmy Fallon goes, okay. Jason Calacanis (01:11:09): Sally likes Chamath Palihapitiya (01:11:10): a dog. Speaker 5 (01:11:11): We're rolling. Okay. I don't do these moves. They're all wrong. So that's a lot. David Friedberg (01:11:17): Yeah. That doesn't make some noise impression. Chamath Palihapitiya (01:11:19): But is it can I see him doing, Jason Calacanis (01:11:21): how are you gotta see him do heartburn? It's so next level. The other one he does, that's incredible, but subtle is, Stanley Tucci. Speaker 5 (01:11:27): How are you, by the way? Robin, you look beautiful and right. Jason Calacanis (01:11:30): Bye. Thank you. Thank you. Speaker 5 (01:11:31): Right. Is this still you are powered. It's me up. Right? Yeah. Right. Because when I start talking to Robin after you leave, I get crazy. You David Friedberg (01:11:39): know? Right. Speaker 5 (01:11:40): Can we just talk about this? Yeah. Jason Calacanis (01:11:42): Go ahead. Right. Go ahead. David Friedberg (01:11:42): Go ahead. Go ahead. Go ahead. Go ahead. Go ahead. Go ahead. Speaker 5 (01:11:44): Go ahead. Go ahead. Go ahead. Go ahead. David Friedberg (01:11:46): Go ahead. Go ahead. Go ahead. Go ahead. Go ahead. Go ahead. Go ahead. Speaker 5 (01:11:50): Go ahead. David Friedberg (01:11:51): Right. Right. Right. Right. Right. Chamath Palihapitiya (01:11:53): Right. Right. David Friedberg (01:11:53): Right. Right. Right. Chamath Palihapitiya (01:11:56): Right. Jason Calacanis (01:11:57): It's so great. He is killing it David Friedberg (01:11:59): think we have our halftime Sacks for the all in summit 2014. Oh, for sure. David Sacks (01:12:03): Oh my god. Yeah. He'd be amazing. Chamath Palihapitiya (01:12:04): I love Stanley Tuchi, by the way. David Friedberg (01:12:06): He's great. See this kid's Stanley tucci. Jason Calacanis (01:12:07): Which I do. Yeah. David Friedberg (01:12:08): I don't know. Jason Calacanis (01:12:08): Do this. Do you David Friedberg (01:12:09): do you sound Jason Calacanis (01:12:09): too cheap? Chamath Palihapitiya (01:12:10): Have you have you guys watched, the Stanley tucci on HBO where he's cooking? Jason Calacanis (01:12:15): Yeah. Where he, like, Chamath Palihapitiya (01:12:15): he goes to Italy. It's so great. Jason Calacanis (01:12:17): It's so great. He does it on TikTok too. He just randomly cooked something, and he's like, I'm gonna make for Tada. I have some leftover New Yorkie, and I'm just gonna Chamath Palihapitiya (01:12:25): I do watch him on, TikTok. Speaker 6 (01:12:27): Thanksgiving is a special time. I'm in London, celebrating. So today I'm making stan's stuffing. Good. And also, or as it's done, gravy. Now the thing about stuffing is Speaker 5 (01:12:41): you might Speaker 6 (01:12:42): use a traditional white bread But in my household, I use a homemade Filkaccia because I'm a townie on both sides and nothing tastes better than bread with a little mind, not a sauce, It's a time for gratitude and giving thanks. Enjoy your holidays, and thank you very much. Felicity, good. Chamath Palihapitiya (01:13:01): That is really good. Jason Calacanis (01:13:02): He's so good. He's so good. Alright. Listen. I don't know how we keep the show going here, but 32. Okay. Issue 4, Reddit's s 1 is kinda fund. Let's break it down, everybody. 2023 revenue, 804,000,000, up 21% year over year. They're still losing money, net loss, $91,000,000 in 2023. A 159,000,000 in 2022. So they're cutting the loss. Free cash flow is negative. Here's a chart of their quarterly revenue and cash flow. So they're kind of bouncing along the breakeven mark as you can see there in the chart. They got a wonderful gross margin because they don't pay produce the content on, like, the New York Times or Netflix. And so an 86% gross margin, up 2% year over year, Their daily active unique, 76,000,000, up 27% year over year. Average revenue per user is incredibly low, 3 bucks 42¢. And their daily active unique users. Here, you can see another chart growing nicely quarter over quarter. They got a 1,200,000,000 in cash. Most interesting, probably, and could be challenging to execute on is their direct share program. They're gonna carve out a bunch of, shares in the IPO to sell to their most active mods. Those are the moderators that people run the, different channels or sub Reddit, as they're called. Chamath Palihapitiya (01:14:19): What could go wrong? What could go wrong? Jason Calacanis (01:14:21): Wrong since we moved before. And, but they're gonna invite users to participate on it on a rolling basis. Chamath Palihapitiya (01:14:27): So Unqualified retail buyer pool does not exist in the Reddit mods, except maybe the Reddit participatory backlogs Jason Calacanis (01:14:35): what they're doing. Yeah. I think they'll buy the, I think they'll buy after the lockup comes up. But let's just get started here. I think you looked at the s one a little bit Friedberg and you had asked us to you'd asked me to put on the docket because you were you were digging into it. Anything stick out to you or thoughts on the business overall? David Friedberg (01:14:57): No. I mean, I wasn't pull pulling. I just asked if you guys had read it. Jason Calacanis (01:15:04): I think I made a funny joke, actually. Read it. I David Friedberg (01:15:11): I'll let you guys go on for a minute. Go ahead. Tell me when you're ready. Sorry. David Sacks (01:15:17): It was a good pun. Too bad it was accidental. No. It was it was intentional. I'll give David Friedberg (01:15:23): you credit. It Jason Calacanis (01:15:24): was intentional. I'll give it to you. David Friedberg (01:15:25): So I think the the thing about Reddit, if you could pull up the chart with the quarterly average daily active user data. This was a business that the last couple of years everyone was, like, had flatlined because it was only growing 5% a year. In terms of usage. And then all of a sudden in the last two quarters, so starting in late summer, early fall of 23. So just 6 months ago, the usage started to climb pretty significantly growing 15 and most in the most recent quarter, 27% year over year, absent that growth story, it's a really challenged business because a business without much growth gets valued typically on a multiple of the cash flow that they're generating. And, you know, there's less upside and all this kind of optionality goes away. That's kind of a key point. I I don't know. I think, like, for you to make an investment at a $5,000,000,000 valuation here, You've really gotta believe that the growth continues at this rate, and it doesn't revert back to the mean growth rate of the last couple of years, of basically 5%, which is roughly flatlined. The other challenge they have is that their ARPUs only in that kind of $3 range which is like less than 10% of where Facebook is at. And the data that Facebook collects on their users gives them the ability to do much better targeting on ads and therefore, monetize their audience much better than reddit has been able to do to the order of over 10 x. And then if you look at the ARPU number, how much they've been able to grow that metric It's also, you know, been a little bit flat lined. So this business, I think, is a real question mark. I mean, you could argue it's probably worth in the best best case, in the $2,000,000,000 to $3,000,000,000 kind of valuation range, and then you have to believe the bull case that the growth continues or accelerates from here and they have a plan to address the ARPU problem. They have other paths for monetizing their audience than what they're kind of doing today. David Friedberg (01:17:13): What do you guys think this thing's worth? Do you buy it if it goes out at 3,000,000,000 or 5,000,000,000? Chamath Palihapitiya (01:17:18): I think the first question which you nailed that a buy side investor will ask is what happened in the last two quarters that was different than the last fifteen quarters. That's gonna be a very important question. I think they're gonna have to have a very buttoned up answer for that. Jason Calacanis (01:17:37): Right. Chamath Palihapitiya (01:17:37): And if they can point to very specific repeatable things, I think that'll be good. The thing that they this IPO if it goes off in the next 4 weeks, they won't have to wait, but if it doesn't get off in the next 4 weeks, they'll have to update the s one probably with q 1. And so you'll see whether this thing is a trend or whether it was a one time thing. David Friedberg (01:18:02): Do you know what it is? Chamath Palihapitiya (01:18:03): Well, the growth in the logged out is probably largely because typically if you use it on the phone, it tries to force you to use the app, right, so that you can be in this logged in experience. And if you just turn that off, you can get a lot more logged up because reddit gets tremendous rank authority from Google. So if you just if you just turn that off, I think that you'll have a lot of logged out customers, then that will grow very quickly. And so maybe it's a decision that they'd rather have the top line number grow than have logged in users grow, but the logged in user growth has still been pretty healthy. Was basically doubled in the last 3 years. So but to your point, Friedberg, if they said, or our business is really only these 30 odd million logged in users, it would be worth a lot less than saying 75,000,000. I think it's I think you're right. It's kind of like in the mid, you know, kind of 2, 3, 4,000,000,000 dollar is strange. The the big problem is the ARPU because these are not users that represent sort of Facebook's bread and butter kind of a $40 ARPU lives in a good suburb in the United States and is monetized like crazy. I just don't think that's what these users are. David Friedberg (01:19:20): Mhmm. David Sacks (01:19:20): But you could see that as a challenge or an opportunity because if their ARPU is only 10% of Facebook, there's a lot of headroom there to grow it. Chamath Palihapitiya (01:19:28): If those users become economically more valuable. David Friedberg (01:19:32): ARPU is actually down 2% year over year at Saks. Jason Calacanis (01:19:35): The issue with this user Jason is they're incredibly sophisticated internet users. Who don't click on ads and are kind of anti ads as opposed to, you know, the the general population on a Facebook or a generic service. David Friedberg (01:19:47): And it's anonymous. You don't know who the user is, which is how Facebook has such incredible demographic targeting capabilities. Jason Calacanis (01:19:52): There's been a lot of conspiracy theories, long con theories that came up Sachs that we were talking about on a group chat. Maybe you could summarize this long game that was played by Sam Waltman and me. Allegedly, founders have read it to wrestle control, have read it back from their previous corporate owner, kinda nest. David Sacks (01:20:16): Well, this was a post by Yishan who was a former CEO of Reddit that was published back in, I think, 2015. And he kinda lays out what I think happened, or I mean, he says at the end, just kidding, but if he's a former CEO describing these events, he must be describing something he knows about, I would just think. But in any event, what happened is that Reddit was sold for only about $10,000,000 a year after it launched. So, like, really, really small. And I think that it kept growing, and the founders realized maybe that made a mistake or that this was actually a bigger property. And so they started scheming on how to get Connie Nas to spin it back out. And so you should lay out the steps they went through. They recruited a CEO who they kind of pre agreed on. Then they had that CEO demand options, specifically in Reddit from Condynast, which meant that Condynast had to create a separate cap table for it. And then once they had a separate cap table as a subsidiary of Omni Nast, then they could sort of pressure to have, like, an outside investor bought in, for the expertise. That just happened to be Sam Altman and his fund. Jason Calacanis (01:21:29): Mhmm. David Sacks (01:21:29): And, you know, eventually, like step by step, they worked it to the point where they got Kanye NASA spin off the company. And I guess this plan worked. Now it should be said that the largest shareholder in Reddit according to the s one is Condynas or Condynas parent company. So no one's going to benefit more from this plan if you wanna or scheme, if you wanna call it that, then Coddy asked. It was a smart thing for them to do to spin out Reddit to allow the employees to have options. And then I would say to bring back the founder, Steve Huffman, as CEO, several years ago. So Jason Calacanis (01:22:04): Yeah. He's great. It David Sacks (01:22:05): worked out for everybody. You know, who knows if it was all premeditated? Jason Calacanis (01:22:08): So they own 30% and it goes out for 5,000,000,000 They got 1,500,000,000, Chamath Palihapitiya (01:22:14): and they paid 10,000,000 for it. Jason Calacanis (01:22:16): So that's just like a web. David Friedberg (01:22:19): It's like Jason Calacanis (01:22:20): a web. 2.0.1.0. David Sacks (01:22:22): 2.0. I know it's 2 it's it launched in 2005. Jason Calacanis (01:22:24): It was a 2.0. Well, it's the same time as, like, web log sync and delicious and flicker and all that. That whole cohort of little web apps that used Ajax and other things that, you know, the web was just getting faster. And there were a lot of users. Congratulations. It was David Sacks (01:22:42): it was smart for Kanye Nest to do the spin out and give up 70% in order for have 30% of what's gonna be a multi $1,000,000,000 IPO. Jason Calacanis (01:22:49): Great outcome for everybody. Alright. Issue 5. Apple doesn't have a fast car project Titan is DBA. Dead before arrival. Appalachian now has been working on an electric vehicle for a decade, self driving as well. They've invested billions in the project according to Friedberg, and Apple was targeting a 100 k price point basically going after the model as planned with FSD. Company had 2000 employees working on this project. It was called Titan. Then they had designers from Austin Martin, Lamborghini Porsche, according to the report, most of the team will be transferred to Apple's generative AI division. We talked a little bit about Maggie, their, generative AI image, language model. There's gonna be some layoffs. So I'm clear how many. Chamath Palihapitiya (01:23:34): What does building a car have to do with building an LLS Jason Calacanis (01:23:37): Well, they were, yeah, so they weren't just building a car. They were all in on self driving and not having a steering wheel. Chamath Palihapitiya (01:23:43): So I understand. I'm just saying it may it doesn't make a lot of sense 2000 employees that were specialized in building a car, all of a sudden now become the AI team. Jason Calacanis (01:23:53): It would be more like the full self driving team is probably getting those AI jobs and the rest are probably getting laid off with incredible packages, but what do you think, Sacks? David Sacks (01:24:01): I was always skeptical that Apple was even working on a car. It's just a very different kind of product than anything else they make. And so I never really treated it that seriously that they were gonna make a car. So I'm not I mean, the the surprise to me is not that they canceled this, but that the that it was even true that they're working on in the first place. Jason Calacanis (01:24:21): Yeah. No. It was there were reports of them having test tracks and everything. It was pretty well established, and you could see that people from Tesla and other places had Chamath Palihapitiya (01:24:29): Does it say why they actually killed it? Jason Calacanis (01:24:32): No. This is just a report And I the speculation is that they're going all in on AI. They just see that as a a much better future. David Sacks (01:24:40): Well, I think it's more core to what they do. I mean, the car never seemed that core. Jason Calacanis (01:24:46): No. And, there were reports, and Elon's talked about it publicly. So we're not speaking out of school here or anything, but that Elon and Apple had and Tim Cook reportedly had talked or there have been overtures that maybe Tesla was gonna get bought Nylon. It's been pretty clear that during the model 3 rollout he was considering selling it to happen. David Sacks (01:25:07): Would have been a smart acquisition if they had done that. Jason Calacanis (01:25:09): Can you imagine all the Apple showrooms having a model estimate or something or a model y? I mean, boom. They were just sold so many of them and and having the Apple operating system on that display. Oh. David Sacks (01:25:20): Wait. Was it before the model eskimo or the model 3? Jason Calacanis (01:25:23): It was model 3 was the time. I think they were talking seriously. David Sacks (01:25:26): And remember, like, no one really believed in model 3 till it came out and started selling, like, hotcakes. Jason Calacanis (01:25:31): Like, opposite. They thought it was gonna kill the company in. David Friedberg (01:25:34): Right. Jason Calacanis (01:25:35): Alright, everybody. Spore, the rainman, David Sachs, Chamath, dictator, Tremoth, Polyh Papatiya, and Consultant of science, David Friedberg. I am the world's greatest moderator, and we'll see you next time. Bye bye. Our pack. David Sacks (01:25:53): We'll let your winners ride. Jason Calacanis (01:25:56): Rainman, David, Zach. David Sacks (01:26:00): We open source it to the fans and they've just gone crazy like that. Uh-uh. Jason Calacanis (01:26:14): I You should all just get a room and just have one big huge order because they're all just useless. It's like this, like, sexual tension, and they just need to release her mouth. You're that's David Sacks (01:26:34): a good Jason Calacanis (01:26:36): deal. Where did you get Murphy's