Robinhood 的 GameStop 决策：为何发生，如何避免

Speaker 1 (00:00:00): I'm going all in. Wake your beak. Wake your beak. Wet your beak. David Sacks (00:00:11): The weather winner implied. Speaker 1 (00:00:13): Rainman, David Saffens. David Sacks (00:00:18): open source it to the fans and they discover the reason. Jason Calacanis (00:00:26): Hey, everybody. Welcome to the all in podcast. It was a slow news week, so we decided we'd give you a special episode, we're gonna go around the horn with our special picks. We're each gonna pick 3 picks, everybody. We're gonna pick our favorite recipe, our favorite new hobby and our favorite streaming guilty pleasure because there was no news. With us today, the dictator Chamath Palihapitiya Brainman David Sachs with his new track from young Spielberg just ripping across the charts Young Friedberg added again, this time with a a track focused on the Raymond himself and the queen of Kinois who everybody says we should upgrade to the king of Kinois. Speaker 4 (00:01:08): That's so Chamath Palihapitiya (00:01:08): sexist. Why why is that an upgrade? The queen of Kinois. But -- I Jason Calacanis (00:01:11): I don't know. People just felt I was being I don't know how people could say that anointing him as queen would be derogatory. I think these people are not woke and they need to be canceled. David Sacks (00:01:26): Jason, here you go again making a lot of assumptions about people's pronouns. Speaker 6 (00:01:30): Yeah. That's right. They Jason Calacanis (00:01:33): they queen of Quinoa. Speaker 4 (00:01:34): They -- I David Friedberg (00:01:34): take a Speaker 6 (00:01:35): I have no offense. David Friedberg (00:01:36): I take no offense. Your insults to me. And -- Yes. Speaker 1 (00:01:38): -- David Friedberg (00:01:39): today, I am having the emotion of excitement, and I am ready for the conversation. Jason Calacanis (00:01:43): Good. We got the firmware upgraded. Alright. So I think we might as well start with I don't know if you guys caught this, but there's a red sub Reddit called Wall Street bets. And what they do on Wall Street bets is they find angles and a thesis, and then they bet on a stock. The stock they picked for the past couple of months has been GameStop. And Boy today. Chamath Palihapitiya (00:02:06): Jason, hold on a second. Jason Calacanis (00:02:08): Ram and James. Chamath Palihapitiya (00:02:09): That's that's that's not true. So do you I had actually a a guy on my team put together Speaker 1 (00:02:16): 2 Chamath Palihapitiya (00:02:17): really important documents, and I'm just gonna read them because it's full of so much interesting shit And then we can talk about Speaker 1 (00:02:25): -- Chamath Palihapitiya (00:02:26): Where are Jason Calacanis (00:02:26): these doctors from? You say from the Wall Street bets? David Friedberg (00:02:29): No. No. No. No. Chamath Palihapitiya (00:02:30): I I had a guy go in one of my team members, one of my colleagues, and go and summarize the entire saga from the beginning. And then we can talk about the the corporative scumbags at Robinhood and other fucking people over So let's let's do that on that one. Okay? David Friedberg (00:02:44): This is why they call him the dictator. Chamath Palihapitiya (00:02:47): Let's let's Speaker 1 (00:02:48): start with Jason Calacanis (00:02:48): the -- -- read your bias and -- No. Chamath Palihapitiya (00:02:50): No. No. Shut up. Jason Calacanis (00:02:51): Boring a document. Go. Chamath Palihapitiya (00:02:53): You're you're an idiot because you you just wanted to offend people because you blindly stumbled into a fucking trade that actually made a little money. Low and behold, you actually invested in a company that literally they got on television yesterday and they fucking lied to Americans right to their face. This is a company that was insolvent because now let's just put a pin in the following data point which I believe to be true. I know more about this than you do because I live in these markets. Okay? So I understand what it means to be putting on trades to being short to being gamma squeezed, to have longs, to do all of this risk management. You're an early stage investor. So I know the intricacies of this stuff and what's happening in here. This company was insolvent. They did not have the capital requirements to post the margin that was being asked of them by their partners. And so this was a platform level decision to ban and block people from trading securities. It cost individuals Hundreds of 1,000,000, probably 1,000,000,000, maybe even tens of 1,000,000,000, and these motherfuckers should go to jail. Now let me give you the timeline before we get into that. June Speaker 1 (00:04:00): 2019, Chamath Palihapitiya (00:04:02): in June of 2019, a Wall Street bets username deep fucking value began buying long dated January 21 calls. What that means is in June of 19, this person was betting that the stock would go up by January of 2021. He spent Speaker 1 (00:04:18): $50,000, Chamath Palihapitiya (00:04:20): which, by the way, today is worth about Speaker 1 (00:04:22): $25,000,000. David Friedberg (00:04:23): By the way, Shabbat, you we should just highlight that there are forums where individuals that are trading stocks talk to each other and share tips and promote things to one another. That's where this was taking place. Chamath Palihapitiya (00:04:33): Yeah. And by the way, those forums exist in the professional organized world too amongst Hedge Funds, you know, I've been invited to idea dinners where we all get together and we talk about the ideas that we have and we're all expected to do fundamental analysis, but some of those ideas are actually momentum driven ideas and a lot of the biggest dislocations in the market just as a setup here have been because of momentum driven trading by organized Okay? So we've we've been stuck with this for a while. So so this guy deep fucking value posts this and every month since, he's posted a screenshot of his position and he's titled it GME Yolo Update. August Speaker 1 (00:05:12): 22 2019, Michael Murray, who is this guy famous Chamath Palihapitiya (00:05:14): from The Big Short, who's the guy that caught the mortgage thing, he discloses a 3% position in the company, and he highlights that Speaker 1 (00:05:25): 90% 90% Chamath Palihapitiya (00:05:26): of game stops Speaker 1 (00:05:27): 57100 Chamath Palihapitiya (00:05:29): stores are free cash flow positive. That's, like, pretty good. He urges a buyback, and he notes that the company was trading at or near net cash levels. So he's making a deep value oriented fundamental thesis as well. David Friedberg (00:05:44): Shamal, I think, also, it's worth saying what GameStop is because even my wife asked me what the hell is GameStop last night. GameStop is a retail store where people buy video games, used to go to the mall all the time -- And consoles. Speaker 1 (00:05:53): -- David Friedberg (00:05:54): games there. And consoles and headphones and other stuff. Jason Calacanis (00:05:56): And they'll buy back your old games. David Friedberg (00:05:57): And so the stock got beat up over the last couple years as people stop going to malls, stop buying stuff in stores, and everyone thought this the company was gonna die. And so these guys observed that maybe there's real value in this company and it's making money. Jason Calacanis (00:06:08): Digital downloads are are the standard. David Friedberg (00:06:11): no one buys d DVD runs anymore or anything like that. So Speaker 1 (00:06:13): -- David Sacks (00:06:14): And and the Chewy founder who is very successful at ecommerce came in to run the company. Yeah. That's that's that's David Friedberg (00:06:21): that's the best part of the story. Chamath Palihapitiya (00:06:23): So June 19 was the original post August 22nd 19, Michael Murray comes in and says I'm long, then a year later August 31 2020, Ryan Cohen, who's the founder Chui takes an almost 10% position in GameStop. About Speaker 1 (00:06:40): 2 Chamath Palihapitiya (00:06:41): or 3 weeks later on September 19th last year, a member of Wall Street Bets writes a post on GameStop, and he notes that GameStop has a 120% short interest. which I'll get to in a second so hold on. What what does that mean? A 120% short interest. And he defends the company as a result of a few things. He says number 1, There's a new console cycle coming just as Jason mentioned. Number 2, consoles are are not going all digital immediately. GameStop loyalty programs have 55,000,000 users. They have a strong balance sheet. Ryan Cohen just bought a stake, and the shorts were underwater and would be forced to cover if the stock ran up. He predicted the convergence of all these factors would lead to a big squeeze. Now November Speaker 1 (00:07:27): 16 2020. Chamath Palihapitiya (00:07:29): Ryan Cohen writes a letter to the GameStop Board, and he urges the company to conduct a strategic review and share a credible plan to capture market share in the gaming industry. He said that they need to evolve into a technology company that delights gamers and delivers digital digital experiences. I'm just quoting here. Not remain a video game retailer that over prioritizes its brick and mortar footprint and stumbles around the online ecosystem. November of 2020, someone in Wall Street Betts highlights that a hedge fund called Melvin Capital was going long, GameStop puts. What does that mean? That they are synthetically shorting the stock by buying the right to sell it. at a different price in the future. Okay? And that they had been long that position for more than 4 years So all the way going back to Speaker 1 (00:08:22): 2016. Chamath Palihapitiya (00:08:24): Fast forward to now 2021 of this year. January of 2021, games top strikes an agreement with Ryan Cohen and adds him to the board of directors and gives 2 of his affiliates his former COO and CFO of Chewy also Two Board seats. They collectively, you know, bring their experience in e commerce, online marketing, finance and strap planning. The stock goes up 13% on that day and closes it about 20 bucks a share. One day later, And then over the next day after that, so for January 12th Speaker 1 (00:08:57): 13 2021, Chamath Palihapitiya (00:08:59): there's a ton of activity around GameStop in Wall Street bets. and now in Discord and in Stocktwits, claiming that Brian Cohen is gonna be the savior. And then by January 14th so 3 days later, the stock closes at 40 bucks. So now it's up a Speaker 1 (00:09:17): 125%. Chamath Palihapitiya (00:09:19): So now comes the setup, the pros versus the Joe's. From January 12th to today, there has basically been a battle by institutional investors on one side, shorting GameStop, and retail investors on the other buying the stock and also buying the right to buy the stock or what's called call options. And this is what has created this crazy nonsense we've seen. So on the institutional side, after, you know, retail drives a stock up, the institutional guys are like, hey, wait a minute, you know, Ryan Cohen's an idiot. You know, this company is fucked. Fuck these guys. They have too many, you know, cyclical and secular tailwinds. and they become so massively short that the infrastructure that's supposed to even count all the shares can't keep up And now they are short more than the actual number of shares that actually exist. So now they're a 140% short. The Joe's retail They start to aggressively purchase all these Cobble options, and on January 13th 14th, this price keeps ticking up. Then a bunch of quant funds and momentum hedge funds notice all this activity, and they also participate on the long side. And then over the past 7 trading days, we have traded over Speaker 1 (00:10:38): $100,000,000,000 Chamath Palihapitiya (00:10:40): of stock and game stock, which is well in excess of what retail can support. So here's what's crazy to realize. A bunch of value oriented, non computerized, non quantitative hedge funds short, Retail notices a dislocation initially fundamentally, but then momentum oriented buys. Other hedge funds realize also buy And this is what's created this massive short squeeze. On January 19th, Citroen Research, a research firm that basically tries to you know, find shorts in the market, announces that they were short GameStop, and they gave 5 reasons why it should go to 20 bucks. The stock was at 35.50 on January 19th. Then over the next 2 days, game stop calls hit an all time high and it runs a 2 day rally of almost 70%. And this is what really starts what's called a gamma squeeze, okay, which is what we saw in the 1st part of this week. So January 25th, Ken Griffin, Stevie Cohen, they inject almost $3,000,000,000 into Melvin Capital, the firm that was short. 2,000,000,000 from Citadel and 750 from from Stevie Cohen. Stevie Cohen had a 1,000,000,000 in it from before. And then now all of a sudden, the squeeze keeps happening. The squeeze keeps happening. And then it starts to spill over to the rest of the market. Now all these hedge funds, these original hedge funds, They are getting called by the bank saying, hey. Wait a minute. You've run over your collateral limits. You need to post more collateral. We need more money in your bank accounts. So now not only do they have to cover GameStop, they have to cover all their other shorts, so those go crazy, and they have to sell their wongs. So now they're selling, you know, Facebook, Netflix, Alibaba, and so those things are going down. That accordion is what's been happening in the market in the last couple of days. And then the coup de grace what happened on January Speaker 1 (00:12:32): 28 2021. Chamath Palihapitiya (00:12:34): Brokerage firms and this is where Jason, we should talk about this. like Robinhood and Interactive Brokers because in fairness, it wasn't just Robinhood, prevented their users from buying GameStop and a handful of other stocks. They were only able to sell, which resulted in such a one way pressure it caused the 44% sell off yesterday. Now that's been reversed today. And so what it speaks to is a bunch of questions. There are questions as to whether or not this was mandated by the platforms or the regulators. Given the fact that it didn't impact all the brokerage accounts, it was a platform level decision. So some organizations like Robin Hood banned it, some organizations did not. And it could be that some of these platforms that band it is likely because and this is where we get to the insolvency question, didn't have enough margin. And so they knew that if they opened the doors, there would be a run on the bank, and there would be a run on Robinhood. And that's why they basically, I believe, had to stop allowing people to trade. And it just shows how how fragile Speaker 4 (00:13:45): The whole system is the last Chamath Palihapitiya (00:13:47): thing I'll say and then we can talk about this is, how does Robinhood make money, which I think is also important to understand at this? Robinhood makes money through a mechanism that's called payment for order flow. So they don't make money from consumers. Right? What they do is They watch and monitor your orders. They create a data file about that, and they give it to these prime brokerage, prime brokerage institutions like Citadel, milliseconds before you do the trade. What that allows Citadel to do is if they see a lot of people buying milliseconds before you buy, they can buy. And that allows them to make money. So to be clear, Citadel is responsible for 47 percent of all the payment for order flow volume. they paid Robinhood almost $60,000,000 in the third quarter. Okay? Plus another, I think, you know, 7 and a half 1000000 for S and P 500 stocks and 31,000,000 for non S and P 500 stocks. They paid them almost a 100,000,000 in the quarter or Speaker 1 (00:14:51): $400,000,000 Chamath Palihapitiya (00:14:53): run rate. So if we had to summarize all of this in a nutshell, that's what we know. We know that it started out as people debating the true fundamental value of GameStop, and it morphed into a momentum trade where a bunch of folks got dogmatic about a short, a bunch of folks got dogmatic about being long and belongs one. And in the middle, What happened was a bunch of firms basically decided at some point to gate the ability for people to transact in all of this which I think caused a lot of economic disruption and that was because they didn't have the margin requirements and I think it's because they were insolvent. i. e. Robinhood. Jason, over to you. Jason Calacanis (00:15:39): Okay. I think we probably agree on a lot of things here. Thank you for the concise overview. We agree that Wall Street bets and retail investors are incredibly powerful now. and we agree that that's a good thing. We also probably agree that there are shenanigans going on with shorting of stocks, i. e. a Speaker 1 (00:15:59): 120% Jason Calacanis (00:16:00): or a 130% short. And we agree, I think that some of these hedge funds do manipulate the markets with these. We all also agree that it's unfortunate that in order to stay solvent, Robin Hood apparently, if this is the information we don't have complete information right now. So the thing I do think that you're being tremendously unfair about and I'll try not to make it personal, Jamap, is that you've been uncouth and you're attacking people without with partial information. I'll let you respond to that in a minute. And I think we agree that Robinhood is responsible. Robinhood is responsible for this revolution in retail trading. they created the platform, and they created the innovation that got millennials to en masse embrace trading stocks. How did they do it? They figured out a clever innovation of how to make it free and friction free. They did that because they did this selling of the data of the order flow. Okay. We can debate whether that is fair or not. But Facebook did the same thing. They created a data business. They provided amazing and services that you yourself built for 5 years and made a $1,000,000,000 off of in order to make it free for consumers. Now There are unintended consequences of any company at scale, whether it's Uber, Robinhood, Tesla, etcetera, and they will all have to weather these storms. And I think that there are pieces of information that you do not have Chamath, and for you to say that they're criminal, and for you to say they're scumbags, and to act this way is I think unprofessional, does you a disservice and does your argument a disservice. And you did this as well with Uber, another one of my investments, and that company, whether the storm and they've done great things in the world. And they and I'm very proud David Friedberg (00:17:40): of that. No. No. No. No. No. No. Jason Calacanis (00:17:41): And I will be very proud of what Uber believe that Speaker 1 (00:17:44): -- -- Chamath Palihapitiya (00:17:45): their CEO, and they brought Indara who cleaned it Jason Calacanis (00:17:48): Oh, agreed. Agreed. But they got there. And so I believe Chamath Palihapitiya (00:17:52): What happens? So what do you know that I don't know? Jason Calacanis (00:17:55): Well, I I I haven't talked to Vlad. I saw what he said. Who cares Chamath Palihapitiya (00:17:58): about Vlad? He lied on public he lied on television. I don't believe Speaker 1 (00:18:01): he lied. Chamath Palihapitiya (00:18:02): He liked it. He lied on Fox. Where did he not lie? Jason Calacanis (00:18:05): What is the lie? David Sacks (00:18:06): Well, Jason, let me -- Jason, Chamath Palihapitiya (00:18:07): he was confronted he was confronted about whether there was a liquidity crisis, and he said to their face, no. That is not true. Jason Calacanis (00:18:15): I think this is being misinterpreted, and there'll be a clarification of that a car. I think because they were able to draw down 600,000,000 and because they were able to take down a $1,000,000,000 investment from the top investors in the world that they resolved their liquidity problem. Nobody in history has ever created this many retail investors than Robin Hood. They are responsible for the movement. When they pitched me the company, they wanted to create this revolution. It is paradoxical that they are now the enemies of the revolution because they actually created and enabled this, and I and they have been number 1 in the App Store since this whole fiasco started. Chamath Palihapitiya (00:18:59): Nothing you're saying in consensus me. This is they are the Lehman Brothers or Bear Stearns of 2008 to me. Jason Calacanis (00:19:06): They will not be. They will get through this. And there has this is unprecedented black swan event, I think we would all agree. Nobody has Speaker 1 (00:19:13): -- -- Chamath Palihapitiya (00:19:14): exactly what Lehman and Bear said. That is exactly what they said. Jason Calacanis (00:19:18): And this and they will, I believe, Robinhood will write it out because they throttle the number of people coming to platform. Las Vegas is not designed for everybody in America to come to Las Vegas in the same weekend, and that's what's happened. Chamath Palihapitiya (00:19:31): Will you admit that a that the tens of millions of people that had their hard earned money inside of Robinhood was prevented from participating in trades that could have been executed other places because of an arbitrary decision by Robinhood that they edited Jason Calacanis (00:19:47): It was an arbitrary. They had to stay insolvent. How is that how is that Speaker 1 (00:19:51): -- Chamath Palihapitiya (00:19:51): Jason, they Jason Calacanis (00:19:52): did -- -- decision. Do you even say why to make that decision? Chamath Palihapitiya (00:19:55): Jason, that's me telling you that they were involved That's not them saying. This is what I'm saying right now. Jason Calacanis (00:19:59): The communication was not perfect. I'll agree. The communication was not perfect. They should've just said, we had no choice but to or we would have been insolvent. We cannot take this many trades. Chamath Palihapitiya (00:20:07): Is that but is that what we call lies when people's money gets fucked over? Just it's inconvenient. David Friedberg (00:20:12): Let me just say one thing. I'm gonna interject your your your vigorous debate. The the important thing I think to note is Robinhood makes money effectively, as Chamath pointed out, through arbitrage of pricing in the markets and by providing leverage to their clients. So the clients can trade beyond their means. I used to be an investor in a Forex trading company. It was the largest Forex trading platform in the world for retail investors. and 60% of those accounts went bankrupt over time. So there was a lifetime value on an account because the the customer would come in. They'd trade foreign exchange rates up and down, they would ultimately just get burnt up, and that was it. Robinhood makes money when the market is nonvolatile, when there isn't a lot of swings. suddenly, when there is a swing and that's how they're able to provide their free pricing to people. They're making a a spread. But suddenly, when there is a swing and the spreads start to widen, they are actually exposed to losing money. So, Jason, it's true what Chemab is saying. Like, they did face a liquidity crisis to some extent. That's why they hadn't drawn out an additional capital. Yeah. But it was a function of their business model. Right? Their business model provides great benefit and value in some extent during good times. But when times get bad, it's like, oh, shit, things are at risk. And that's very similar to kind of the Lehman and and, you know -- I I Jason Calacanis (00:21:30): don't disagree. I don't disagree. I I I think this is an unprecedented situation with a number of participants. It reminds me of surge pricing with Uber during snowstorms, and That also was an unintended thing that, you know, who knew that it would go up to $400 to take a ride. And that's something that companies will be faced with, and they will have to then adjust and then make it work. And I think, you know, in the case of Robin or they should've just came up on Wednesday and said, we can't take any more orders We can't take any more new customers. We're we're pausing sign ups. You'll be on a wait list because we will be insolvent if you guys make any more trades. And that would have I don't know if you believe that would have I Chamath Palihapitiya (00:22:08): agree with that. So, Jason, let me just explain what Speaker 4 (00:22:10): I can Speaker 1 (00:22:10): -- -- Chamath Palihapitiya (00:22:10): communication for the rookie pattern. Jason, it's beyond poor communication. people were blocked out of their accounts. Like, there was 100 of 1000000 calculable amounts of economic loss I don't Jason Calacanis (00:22:22): know if that's gonna wind up being true because all these trades are occurring now, and the stock is rock is a rocket ship. Who's to say that? David Sacks (00:22:29): No. I mean, look. I mean, Jason Speaker 1 (00:22:31): -- Jason Calacanis (00:22:31): Are the shorts all covered by now? That's what they would say at CNBC? No. There are still people how do you know how many people are short right now? How many shares? Chamath Palihapitiya (00:22:39): because it's the primes put the data together, and they send it to us. Jason Calacanis (00:22:42): Do you have it handy? Because I've been looking for it online, and they said ten times the number of shares short I've traded hands in the last 10 days. or 5 years. Chamath Palihapitiya (00:22:48): I mean, Jason, I don't have facts. I don't have it literally in front of me, but I could get it in the Jason Calacanis (00:22:52): next -- Well, yeah, just text one of your people. You got all these researchers there. Go ahead, Zach. David Sacks (00:22:57): Okay. Look. I'm gonna try and thread the needle here. I think Jay Kal is right that we shouldn't impugn people's motives without having all the information. And furthermore, you know, building these rapidly scaling startups is really tough and it could have just been, you know, a function of, you know, not knowing how to deal with unprecedented growing pains. So I don't think I don't wanna be too judgmental Chamath Palihapitiya (00:23:22): Can I Speaker 6 (00:23:22): just stop you there? David Sacks (00:23:24): Yeah. Yeah. Chamath Palihapitiya (00:23:24): No. But that's not no. But, David, that's not can but you guys are not being accurate. They have known for decade for years. Sorry. Deers. How this business work when somebody buys a call option They are legally obligated. When they send that order through, they have to post margin on behalf of that person. So they saw this building This happened in March of 2020. They went through this liquidity crisis. They've had to draw credit lines before. They saw it building in the system. So this was nothing except negligence. David Sacks (00:23:57): Yeah. So so I was about to that yeah. I hadn't got to the point where I was about to agree with you. Chamath mean, look. All I'm saying is even if it was negligence, I'm not sure I would impugn all the motives to them. That that's all I'm saying. I'm trying to find some common ground with Jake on that point. But where I totally agree with Youchomoth is with respect to the effects of their decision I mean, the effects of that decision they made to stop trading And, specifically, they didn't stop people from selling. They only stopped people from buying. So they shut down one side of the trade And the effect of that was we had these hedge funds from Wall Street. They were on the ropes. Right? I mean, let's discuss who these guys are. These are the Apex predators of Wall Street. They are in the business of shorting companies to destroy them. I mean, that is their business model. And they are not academic traders, okay, who are just speculating on outcome. They engineer the outcome. Right? look at their tactics. Just watch the show billions. Right? They hire PR people. They hire private investigators. They're purchasing on these message boards spreading disinformation. look at the the year of hell that Elon went went through. Right? They tried to destroy -- It's Speaker 6 (00:25:05): like 5 years. Yeah. David Sacks (00:25:07): Yeah. Exactly. They tried to destroy companies to engineer that outcome, they create nothing. They're in the business of of of destruction. Now the beautiful thing is you had these Reddit kids, these pirates who published this manifesto, right, on Reddit. Basically, being the heirs to occupy Wall Street, they recognize, look, Occupying like a like a physical space does nothing to these guys. We are gonna hurt them where accounts in their pocketbook. We are gonna get together And we're gonna basically create a trade mob that's even bigger than their cartel. And they did. They got 2,700,000 people taking the other side of this trade. And then when the hedge funds doubled down, they said, fuck you. We're gonna double we're gonna triple down. And the guy on Reddit said, listen. He paraphrasing John Maynard Cain said, we can be retarded longer than you can be solvent. And they were Speaker 6 (00:25:56): winning that David Sacks (00:25:57): was what they said. Right? And they were winning the trade. Okay? And Melvin was dead busted, and Citron was on its way to being dead busted, and they had to go to Big Papa Stevie Cohn. Okay? and Ken Griffin to get to get their revise to buy their revise to get back into the game. Okay? And then they had these guys on the ropes. They had them felted. Okay? And then what happens? Just at the moment where they're gonna, like, basically bust them out of the game for good. Robinhood shuts down the buy side of the trade. And so what does that do? It gives these hedge funds time to regroup to unspool the trade, to reposition, and save themselves, and to get out of the trade if they wanna get out of the trade. You can never take that 24 hour time period back. no matter what Robinhood does now. And so I agree with Chamath. This was like Speaker 1 (00:26:46): -- Jason Calacanis (00:26:46): Don't you think -- -- was tremendous Speaker 1 (00:26:48): -- -- Jason Calacanis (00:26:48): on that point. I think it's I I am in agreement that the hedge funds deserve to get their asses kicked 100%. I also, as I said, we don't have complete information of why you know, Robinhood had to pause trading and the other platforms. And it was, like, 5 platforms, by the way, that had to stop or else they would be insolvent because nothing like this has ever happened before. this is a run that nobody's ever seen, and now we're back in the game, and don't you think all this attention then drives more people to buy GameStop, which is what's happening today, and that they're still gonna get crushed because they're still gonna have to cover. I mean -- Yeah. Speaker 1 (00:27:22): -- David Sacks (00:27:22): we don't -- Look. I I I don't like like I said, look, where where I agree with you is I think the consequences of this decision by Robinhood were I mean, they were really bad. Right? I mean, we finally had these short on the ropes where they deserve to be. Finally, they're getting a taste of their own medicine. Jason Calacanis (00:27:38): Yes. David Sacks (00:27:38): And it was really bad to pull the plug on on the the -- I Jason Calacanis (00:27:41): wish they they wish they didn't have to, I'm sure. David Sacks (00:27:43): Okay. Exactly. And I don't know what went into that decision. But here's the thing that I think kinda stinks about it is the point that Chamath is making about who is doing the the trade execution for Robinhood? Those trades are flowing to Citadel. Speaker 4 (00:28:01): Well, that part David Sacks (00:28:02): who is that's part of it, but 40 47%, but who is now on the short side of the trade? Citadel went in and bailed out Melvin and Citron. And so they're on both sides of this trade. Now how does that make sense? David Friedberg (00:28:14): Well, Citadel yeah. But, I mean Speaker 1 (00:28:16): -- David Sacks (00:28:17): What what what I what I would like to know specifically, okay, is did anybody from Citadel reach out and touch Robinhood? Did anybody at Citadel, put in the fix and say in Robinhood Speaker 1 (00:28:30): -- Speaker 6 (00:28:31): Of course, David Sacks (00:28:31): that's a valid question. Jason Calacanis (00:28:32): Valid -- We're David Sacks (00:28:32): gonna we're we're gonna cut you off you know, unless you freeze out the buy side. Now look, 99% chance that didn't happen. I don't know. But that is a legitimate question we Chamath Palihapitiya (00:28:41): need to read. Actually, can I can I just tell you the the question is important. But the way that you phrase it is you call them and you basically say, listen. You need to post $500,000,000 of margin. Why? Oh, well, these trades, you know what? We're gonna arbitrarily change the margin requirements. Okay. Oh, wait. You need to raise a you need to post so then what they did was they pulled all the credit lines. Okay? They post margin. Trade is still happening like crazy. Right? All these people are buying GameStop calls. They have to go because look. When you buy a call, when you as a user, when David Friedberg, Quinoa buys a call, Robinhood becomes synthetically shorted. Right? Robinhood doesn't have the share to sell you, but it's giving it to you. So they're technically short. They gotta go buy it. Okay? So this is what creates this dynamic where Robinhood knew. They knew every second of every moment what was happening, and more importantly, what could happen. At a minimum, it's negligence, and at a maximum, it's the fix. Well, it was -- And in Speaker 1 (00:29:43): -- David Friedberg (00:29:43): It was it was fine to do it before the market started to swing volatile. Right? And and so when the market wasn't high volume and when it wasn't volatile, it didn't matter because they had appropriate levels of surplus capital or statutory capital or whatever the definition is in this market to be able to cover the quote, unquote, VAR or the value at risk of their portfolio of their customer's worst case outcome. But as soon as that spiked as soon as the VAR spiked they have to go get more capital. And so what do you do if you're the manager of Robinhood in that situation where your clients who've been making you a bunch of money by trading stocks over the last couple of years, suddenly, they all get themselves in a bind where the VAR on the portfolio is more than the cash Robin Hood has declared, assuming all these people go bankrupt, that's where Robin Hood had to scramble. And so in that circumstance, they drew down debt they had to go get a $1,000,000,000 of equity. But if you guys were running that business and I'm not speaking for Robinhood's I'm not making the case for Robinhood. But what would you guys have done in that circumstance? you know, suddenly all your and and by the way, I'm saying they they created the problem for themselves because they allowed people to trade on margin with low bank with low account balances and volatile stocks prior to this it got away from them in this way. Chamath Palihapitiya (00:30:57): You cannot run a business like that and be selective and arbitrary. You can't say some stocks on certain days, some talks on other days, some options over here, some puts over there, that means you're a fucking moron. Speaker 4 (00:31:09): And -- But what do you do David Friedberg (00:31:10): on Tuesday or day when all of a sudden you're exposure. Chamath Palihapitiya (00:31:14): Wednesday. This if you were a reasonable manager of a business like this, this conversation would have been happening at a board meeting I quarters ago. Hold on a second. Let me finish, please. Okay? It it needs to happen quarters ago. And in quarters ago, what they would have said is, hey, guys. We've run some scenario analyses. We've done some sensitivity analysis. Here's what happens if all of these things can go against us. That's a typical stress test that a bank has to do. Right? When you're a structurally important bank, you have legislation that forces you to be under these conditions where you have to make sure that that you can understand some of these scenarios. And then you have to David Friedberg (00:31:50): have -- Any any trading entity or insurance company, they all have to have that analysis of what's the worst case scenario and how do you plan for it. Chamath Palihapitiya (00:31:56): And you have to you and by the way, coming out of 2008, we actually legislated that we needed to have these 2 and 3 Sigma you know, event scenario planning and you needed to have proper credit. So here's what happened really. Number 1, it was under equitized. Right? At a minimum, the business was massively unlikely. David Friedberg (00:32:13): Relative to what they were letting their customers do. Exactly. And that that's really important because the point is they let people trade with high margin and they let people trade in volatile stocks, and it was working until volatile Speaker 1 (00:32:24): -- Chamath Palihapitiya (00:32:24): Not just stocks, but options, David Friedberg (00:32:26): which Speaker 4 (00:32:26): is Chamath Palihapitiya (00:32:26): what which is what creates the real spin up. David Friedberg (00:32:28): The the feedback loop that blows this whole thing up. Chamath Palihapitiya (00:32:31): And then and then number 2 is they don't know what they're doing. David Friedberg (00:32:36): I think one thing that that's really important I I just wanna say this. we should stop pretending that trading in stocks is investing in businesses. And this is something we've said for a long time on Wall rate, but stocks, shorting, margin, and derivatives. Those those four things no longer look like what the capital markets were originally set up for, which was to help capitalize businesses and allow people to exit their investment in helping to capitalize business to another investor that wants to come along, it has effectively become a synthetic casino or a synthetic gambling model that lets people trade things up and down. And this has been the mainstay of Wall Street for the last couple of decades. And as you pointed out, Sax, it really is a leech on the system because the amount of money that trading firms and traders it in actual businesses that could drive job growth, drive economic prosperity, drive innovation. And the volatility that I think we've seen is the ultimate feedback loop that emerges from when you allow a casino to operate that sits under the guise of being business capital and investing in businesses. It's not. I'll give you guys a statistic. I downloaded the data from CBOE that analyzes how much volume was traded across all the equity markets last year in the US. Stocks traded a total volume last year. Are you guys ready for this? Speaker 1 (00:34:08): $121,000,000,000,000 David Friedberg (00:34:09): of Notional across two point Speaker 1 (00:34:14): 7,000,000,000,000 David Friedberg (00:34:14): trades. Do you think that a $121,000,000,000,000 of notional equity value trading provided capital to businesses anywhere close to 1% of that total amount of trading volume, it really is a synthetic instrument that allows people to participate in I bet that something is gonna go up, and I bet that something is gonna go down with other people of a of a similar ilk And one person makes money and one person loses money. And at the end of the day, the underlying business entity doesn't benefit whatsoever. And you see it when shorts go against businesses like happened with Elon and Tess and you see it when derivatives like CDOs blow up the fucking housing market where people basically trade these derivatives that sit on top of housing, and that capital did not find its way into homes to help people buy homes. It ultimately led to the collapse of the Speaker 1 (00:35:02): -- Chamath Palihapitiya (00:35:02): The only the only reason that Lehman and Bear Stearns was shut down was in 2007 and 8 when they were in a crunch in the same thing, and they basically had all these trades blowing up against them, and they couldn't collateralize them was that the people on the other side were hedge funds. And that's why, you know, they were put into the fed, and that's why we were able to basically, like, you know, come out relatively unscathed. And what I mean by relatively unscathed, like a global calamity. The the the tragedy of this is that this is the tragedy of the commons. It's like, You know, there is no organization of people that can say, hey, listen. I'm really rich and wealthy and what happened here was wrong even though it's probably on the same scale. And so everybody that was a participant in it is in in my opinion, I think is guilty of all of this. They were they were complicit in the robbing of America. David Friedberg (00:35:52): Do you think calls and puts should and shorting should be allowed? Should those markets exist? Chamath Palihapitiya (00:35:57): I I I do have a sense of common sense solutions, and let me Let me kinda give you them, and then you can tell me what you think. So the first is we need to use modern technology. Let's just start with that. Right? To ensure that, you know, one share of stock, right, isn't loaned out multiple times so that you can't have a scenario where you have more than a 100% shortage. Speaker 1 (00:36:17): -- Jason Calacanis (00:36:17): no brainer. Right? Chamath Palihapitiya (00:36:17): That's a no brainer. David Friedberg (00:36:18): So you still support shorting them up. Speaker 4 (00:36:20): Yeah. Let let me let me Chamath Palihapitiya (00:36:21): just go through the list, and then you can tell me what you think. If if high frequency firms can trade tens of 1,000,000 of shares per day, there's no reason why we can't reconcile who the beneficial owner of every share is. So maybe that's a you know, now maybe we found the first obvious use case for a blockchain. Right? Like, you can't borrow a share unless you can prove beneficial ownership in a in a in a, you know, nanosecond, which can only be done a, you know, decentralized ledger. But the point is, number 1, is we need to rebuild this infrastructure. You can't have a 130 percent of a company be short. That makes no sense. The second, what we've learned is that, again, the it's like, are we gonna basically have these blow ups every 10 years before we actually address the elephant in the room, which is leverage. Like, you need to have leverage limits. So for example, banks coming out of 08 have super strict oversight and leverage limit. because they're dubbed systematically important. We don't do that for hedge funds, and I think we need to. And I think that we need to have the ability to realize that these these guys can cause systemic risks. Right? So just on this example, I don't know if you guys have ever heard about long term capital management LTCM to Sky John Mary Weather? David Friedberg (00:37:33): The Asian currency crisis, the whole thing collapsed. There's a good there's a good book on it. Chamath Palihapitiya (00:37:38): Well, so it's it's funny. But if you guys think this is the 2nd financial calamity, it's not the fur it's the 3rd because the first one happened in 1998. So in Speaker 1 (00:37:46): 1998 -- Jason Calacanis (00:37:47): Yeah. That was a firm call -- It Speaker 4 (00:37:48): was it David Friedberg (00:37:48): was the whole the whole economic system was gonna collapse if the bailouts didn't happen. Chamath Palihapitiya (00:37:53): So listen to what these guys did. long term capital management borrowed, they had $4,800,000,000 of capital that limited partners and investors gave them. Okay? These fucking crooks were able to then borrow Speaker 1 (00:38:08): $125,000,000,000. 125,000,000,000 Chamath Palihapitiya (00:38:14): on the 4,800,000,000 of notional, so they were able to lever themselves up 26 times. David Friedberg (00:38:19): By the way, synthetic margin. Right? No actual capital was allocated to these to to this transaction set. It was all synthetic. Like, no no money moved accounts when Speaker 1 (00:38:27): -- Chamath Palihapitiya (00:38:27): These money moved accounts. David Friedberg (00:38:28): So it was literally just writing stuff against debt that couldn't have existed? Chamath Palihapitiya (00:38:33): Yeah. So they so they built Speaker 1 (00:38:35): 60,000 Chamath Palihapitiya (00:38:36): trading positions, and those individual positions represent again, 1,400,000,000,000 -- Right. -- US dollars. So you took These guys in a room took Speaker 1 (00:38:50): 4,800,000,000, Chamath Palihapitiya (00:38:53): got knucklehead over here to give them 125 and then got these knuckleheads to sell them positions, and all of a sudden, 4,800,000,000 equaled Speaker 1 (00:39:02): 1,400,000,000,000 Chamath Palihapitiya (00:39:04): And so then US US regulators had to step in. They had to orchestrate a bailout from a consortium of banks because they were concerned that if if LTCM collapsed, the whole system would collapse because they didn't understand so -- Right. -- so we have to we have to put leverage limits on top of hedge funds. The third is we need to improve disclosure. The the rules at the SEC right now is to discourage disclosure. That doesn't make any sense. We should force everybody to publish what they own on a weekly or monthly basis You have the ability to do it. The technology is simple. So you need to imp improve disclosure because then watchdogs and other people can basically be looking at it all day and identifying these risks faster, not slower. The third is we need to do something around open trading. Like why is it that you're you know, people are allowed to go to casinos. Why can you you know, buy lottery tickets. But all of a sudden, like, we're gonna decide who's financially literate. A platform like Robinhood can decide what's bought and what's sold. I don't think that's fair. And then the the last thing is I think that we should have a short term trading tax. We tried to pass 1 in 2018, 10 basis points. If you had passed this 10 basis point tax in 2018 on short term trading, it would have created a $1,000,000,000,000 almost. David Friedberg (00:40:27): I did the math on this because I actually the reason I ran all the equity numbers was to figure this number out. So in the US, we generated a $160,000,000,000 in capital gains tax last year. And if you look at the volume I described earlier in terms of notional traded of equities and number of shares traded, if you charge point 1 percent every time someone sold a share on the value of the share they sold, it would equal the capital gains tax. So what you could do is you could charge point 1 percent on every trade It would reduce all of this high frequency nonsense where people trade in and out of stocks. It would force people to trade for the longer term or basically invest in companies. and you could get rid of the capital gains tax. Think about that. If we didn't have to pay capital gains tax and we were only taxed when we traded out of a stock point 1 percent, you could see an incredible amount of capital making its way into businesses. And this would fuel economic growth and jobs and prosperity. And so I think if you could pull that off put the 2 together a point 1 percent sales tax on every share sold and get rid of capital gains tax Speaker 1 (00:41:29): -- Chamath Palihapitiya (00:41:29): Yeah. The lobby is Speaker 1 (00:41:30): -- -- David Friedberg (00:41:30): incredibly powerful. Chamath Palihapitiya (00:41:31): The lobby has got to that bill, but that 10 basis point tax on high frequency trading, it just means, like, look. If you're gonna trade a whole bunch of shit every 8 seconds, You just have to pay 10 basis points in and out, Speaker 1 (00:41:42): $777,000,000,000 Chamath Palihapitiya (00:41:44): of incremental revenue to the federal government. And it was lobbied out. And I agree with you. And by the way, the -- More more money David Friedberg (00:41:50): goes in. More money makes its way into companies. Right? And that's the bet. Chamath Palihapitiya (00:41:53): It's -- Yeah. Speaker 1 (00:41:53): -- David Friedberg (00:41:53): you you stop all the nonsense where people are based basically trading to bet that something will go up in the short term, and you get people to make investments in the business as opposed to the momentum. Chamath Palihapitiya (00:42:02): The lowering the capital gains rate is genius because I think that If you if you are a retail investor and you could for every year you hold, if you can decrease your cap gains rate by 20%, by the 5th year, Now all of a sudden, retail folks aren't necessarily gambling their owning and their cap gains rate would be 0 after 5 years. That would be amazing. Jason Calacanis (00:42:21): I I have a a a basic question. I'm interested in your position, Saxx, and maybe even around the horn. what happens to the if the short positions get covered, which they're going to be at some point in GameStop, I would think, or some large amount of when the short squeeze is off, What happens to the people who are buying in, you know, to the meme stock as a retail investor, let's say, over the next 10 days? Are they gonna be left holding the bags? Is there any way this company could be worth 20,000,000,000 or 25,000,000,000? Because as Friedberg points out, there people are not buying GameStop. They're they're trying to destroy a hedge fund who made a stupid manipulative bet. Great. We all love the the Robin Hood story of that. not Robinhood, TM, but the generic term Robinhood. What what happens to those people? Are they gonna be the last people holding the bag? David Sacks (00:43:10): Probably, this is not gonna end well. There's no question about that. I totally agree with you that people engaging in this kind of speculation and buying at these prices, it's not gonna end well. Now I do think that the editors actually had a brilliant strategy. Right? When they noticed that these hedge funds were over short, over exposed, and they seized on that vulnerability, they did to the hedge funds. What the hedge funds usually do to everybody else, which is find the Achilles heel, right, and pile in. So I think the strategy started brilliant. Now anyone who's piling into it, I'd be real careful because I think the hedge funds have regrouped. You know? And, you know, the the idea that you're gonna beat beat them at their own game, you know, when look. I mean, Citadel is executing your trades. I mean, right, that the trades are the order flow is going from Robin Hood to Citadel. They're not gonna be caught flat footed. They're on the other side of this trade. And so, you know, I I just think the house always wins. I'd be real careful about getting into it at this point. Jason Calacanis (00:44:08): I think I could Chamath Palihapitiya (00:44:08): just see what you guys really Robin Hood just tweeted that now the the list of restricted names is now up to almost 35 or 40. I think it's worth They're randomly picking companies, guys. RLX. What is RLX? I think that's Ralph Lauren. Nope. You're not allowed to trade that. SNDL. I don't know what that is, but you can only buy 10 shares. Jason Calacanis (00:44:31): Would a better solution Shamoff be for them if they can't handle this and they have the risk of ruin? to just say we're not adding any more accounts until we can digest all this and raise enough capital to float all this? And do you think there's a chance the SEC is telling them You gotta pump the brakes on this because we can't have a market crash. Two questions tomorrow. Chamath Palihapitiya (00:44:50): I I I think that the the the issue isn't Robinhood's ability to grow, it's that they don't have their ability to run their business. And so their incompetence is gonna cause them to, I think, have to deal Jason Calacanis (00:45:02): If they had 20 well, if they had $20,000,000,000 in cash right now, this would not be an issue. Right? I think you're right. Okay. So assuming they can line that up, because that's probably what's going on right now is a $10,000,000,000 investment is gonna go into this company pre IPO so that they can actually take advantage of this situation and grow. So despite the fact that you have an axe to grind with them because you have soFi a competitor that's very far behind them that had its own colossal problems, let's put that aside for a second. You're talking your own book without even mentioning it, do you think that if they had that 10,000,000,000, they would just open up all the doors, or do you think maybe they should say, hey. We're not gonna add anybody else? Chamath Palihapitiya (00:45:38): I think that what's gonna happen is they're gonna get sued into oblivion. I think that the class action lawsuits here when people talk about the implied losses that that they that they had over the last 24 hours. David Sacks is right. You can't undo it. The thing is Like, what in all of these other situations like in the Uber fiasco, you know, you can't claim much damage. Right? Because you can't measure it. You could have taken a bus. You could have taken a You know? You could have taken a lift. Maybe you could have walked. Who knows what it is? But the point is that the the economic impacts I think we're much less than maybe the psychological impact, right, like you are angry. Here it's the exact opposite, which is that you prevented people from trans in an open market. And when people signed up to use the service, that's what they thought they were signing up for, and they thought that that the risk on the back end would be managed You have to remember, it's not that the individuals did anything wrong by buying or selling. It's that Robinhood did something wrong by not being able to manage their business accurately. and then that then impacted the users to the tune of tens of 1,000,000,000 of dollars. That has to get adjudicated. And so, yeah, I think the right thing to do is to stop the business, hit the pause button, allow people to elegantly transfer their money out. Do we have to remember? On the back end of this, Whenever that you have one of these market failures, the clearing houses are allowed to instantaneously Close your account and transfer it to another broker. Instantaneously, you have that right. And so the market does understand the systemic risk at some level. They just didn't push it all the way through to the end of retail. And so We're gonna have to unwind this and unscramble this egg because it's a really it's a really big problem. Jason Calacanis (00:47:19): Yeah. You you imagine me? Chamath Palihapitiya (00:47:21): Growing willy nilly because everybody's infatuated with valuations and blah blah blah. and and you move into a regulated market where you needed to understand capital constraints. You needed to understand modeling. You needed to understand 34 Sigma events. It just means you're under prepared which means at a minimum you can't be doing business until you get that shit under control. Jason Calacanis (00:47:42): Yeah. I I The I actually think we're almost in sync on this, you have a little bit of an axe to grind because of your other portfolio company, I think, that you still won't recognize that you have Speaker 1 (00:47:52): a -- No. Chamath Palihapitiya (00:47:52): Wait. Let's talk about Speaker 1 (00:47:52): -- -- Jason Calacanis (00:47:53): worse in the race. Wait. Speaker 1 (00:47:53): Let's -- Jason Calacanis (00:47:54): So I just did they did they finish resolving all of their harassment lawsuits? Is that all resolved now, or is that still open? Chamath Palihapitiya (00:48:02): Yeah. We And then you Jason Calacanis (00:48:03): took them public. So did did you work all that out before you took them public? Chamath Palihapitiya (00:48:06): Yeah. Jason, we we transitioned the CEO. We've completely hired a new team. I mean, It's incredible. Jason Calacanis (00:48:13): So so your company that you took public can resolve issues, and you can give them time, and then you can, in fact, become their mentor, and you can become their savior to get them public and save that company. David Friedberg (00:48:25): Jason, you should Jason Calacanis (00:48:25): rob -- -- Robinhood Kent. -- Robinhood Kent, David Friedberg (00:48:28): Jamat can't talk about his company that's going public right now. So just as his lawyer, I'm gonna step in and -- Okay. Jason Calacanis (00:48:33): No no problem. I just wanna point out -- Make Speaker 6 (00:48:35): sure you don't go in with David Friedberg (00:48:36): the saying something Jason Calacanis (00:48:36): he should've said. -- companies. all of our companies, and I don't mean to create a lot of collateral damage here. But Saks had a company that had challenges. Tremats had companies that challenge. We all had companies that had challenges. And I think focusing on what is the role of an investor when your company faces challenges, I think the role of the investor should be And I take UMBbridge to you, Chamath, trying to dunk on me because I'm supporting an investment. I think it's a low blow, and I take it personally, I'll be totally honest. I am trying to work with the company to help them resolve the issues, and I need to be loyal to my founders. And I need to say, hey. how do we resolve this? How do we get here and work with them? And I'm sorry that I'm right or die, but that's how I approach this is I should be trying to be helpful as a shareholder. Speaker 6 (00:49:19): Could you make the argument? -- to be too. David Friedberg (00:49:20): But could you make the argument that someone dunking on your company is the equivalent of a hedge fund shorting a company? Jason Calacanis (00:49:26): I'm talking about my personal relationship with Chamath, which, you know, it's different than, you know, the the public markets. Right? I but David Friedberg (00:49:32): I I what I'm saying is, like, I think the private markets, we hear a lot about venture investors, you know, often speaking good about their own companies where people really get irritated is when venture investors speak bad about other companies. It's the equivalent of the hedge fund short. And -- Yeah. Chamath Palihapitiya (00:49:48): I mean, Speaker 6 (00:49:49): it is giant. David Sacks (00:49:51): Jacob on I mean, Chamath may be dunking on Robinhood. I don't hear them dunking on you. I mean, Chamath Palihapitiya (00:49:55): not really. Speaker 1 (00:49:56): -- Jason Calacanis (00:49:56): I stumbled into the investment at the opening. David Sacks (00:49:58): Well, you stumbled into Vlad in a bar. I mean, you Chamath Palihapitiya (00:50:01): know -- You told you so, Jason, you told the story. Jason, you told the story. Speaker 1 (00:50:05): -- Jason Calacanis (00:50:05): recognized to me in a bar Chamath Palihapitiya (00:50:07): and came up and visited Jason, but you told the story openly on television that you ran into Antonio's nut house. Speaker 1 (00:50:13): What do Chamath Palihapitiya (00:50:13): you want us to think? You didn't tell a hey, listen. I had I had systematic scouts reach out based on traffic growth. I sat down. That's not my Jason Calacanis (00:50:20): that's not how I get deal flow. Chamath Palihapitiya (00:50:21): I get Jason Calacanis (00:50:22): deal flow by doing a pocket David Sacks (00:50:23): So, Jason, and Chamath Palihapitiya (00:50:24): then Jacob, if you want me to apologize for saying Your Speaker 6 (00:50:26): snowplow is through the podcast. Chamath Palihapitiya (00:50:27): But, Jason, if I Speaker 4 (00:50:28): if you want me Chamath Palihapitiya (00:50:28): to apologize for saying that you stumbled into it based on your public description on television, then I'm sorry. Yeah. But it doesn't but it doesn't take away from what we have I I think the investor's responsibility, this is what I think is fundamentally wrong with Silicon Valley. We are people that basically do this like hero worship around founders, and it's stupid. I think we have a job as fiduciaries to the users and to the employees and to everybody else that doesn't have a voice, and most investors are incapable of actually pushing people to do the right thing. Okay? I'm pushing to do Jason Calacanis (00:51:01): the right thing, and I always Chamath Palihapitiya (00:51:02): have learned the hard way. And in this example, what I'm saying is this problem should have been solved 3 and 4 quarters ago. And that's a government sale. David Sacks (00:51:10): I mean, look. Yeah. You so, Shamal, you're you're right about that. But, I mean, just to give Jacob little support here. I mean, the reality is, you know, we've all been on the inside of these hyper growth companies. And, you know, like, mistakes happen. all the time because you're moving so fast. And, yes, it should've it should've been fixed. You know? But but, you know, stuff happens. Now the question is when best stuff happens, is it an integrity issue or is it negligence or is it just people running too fast? And I don't think we know that this was an integrity problem. I mean, it could have just been people running too fast. Chamath Palihapitiya (00:51:43): But David what I mean. You knew what the rules were. Meaning, I I don't think I think it is an integrity issue. The rules were not, like, all of a sudden in a crystal ball and all there's a magic eight ball that spits out a rule. When you do a deal with DTCC, when you did a deal with your holding company for clearing, you signed contracts. Those contracts should have been modelable. This is an Excel problem. This is not David Sacks (00:52:07): I I I I I hear what you're saying and I'm saying, I don't completely know. I wanna to the bottom of the relationship between Citadel and Robinhood, and I wanna understand if there is any undue influence there. Okay? Or whether this was just a case of hyper growth catching a company by surprise. I'm not defending them. I'm just saying I don't know therefore, I think it's a little bit premature to be talking about giving this company Jason Calacanis (00:52:29): that comes up. That's all. Is there even a possibility that this has ever happened the history of the stock market or the modern stock market, that 10,000,000 new in well, hold on. I didn't even say what it is. Speaker 1 (00:52:39): 10,000,000 Jason Calacanis (00:52:40): new retail investors came into a stock you know, were millions of them a day and that the stock traded hand center. I don't think that we've ever had social media collide with finance like this, and it's very reminiscent of our discussions with democracy and journalism, censorship -- By Speaker 6 (00:52:54): the way, I Speaker 1 (00:52:55): -- Jason Calacanis (00:52:55): And and politics, we we're having weird behaviors because of virality. And that means it's gonna David Friedberg (00:53:02): be -- This is the most important learning from this experience. Forget about the fiduciary and the governance responsibility of companies, whether they were good or bad will be resolved over the next couple of weeks months, I'm sure, as more information comes to light. But what's super interesting about what happened this week and I think is the most impactful societally over time is that we're seeing this phenomena where individuals in aggregate can believe something to be true and make it true. And we saw this with Tesla, and I I don't think Tesla got this level of notoriety because it was such a a longer play out cycle. But Elon, you know, was not hitting numbers that people thought he was gonna hit, margins, production volume, etcetera. People were shorting the stock, but enough people believed in the story that Elon told about what he wanted the future to look like, that they bought the stock And that gave him the ability to do shelf offerings, raise additional capital, and ultimately build the business and make it manifest in reality that he said would happen. And the same is true of Bitcoin. And the same is true of Trump and the same is true of storming the capital. In all of these cases, there was a belief in something and there was an aggregation of individuals using social media as a mechanism for sharing and talking and engaging and creating a collective outcome that wouldn't have happened through a centralized system or a centralized process and wouldn't have happened in the traditional way where history defines the future. And I think that is what's so powerful about what's happening right now, and we're seeing it in financial markets, but we're also seeing it play out politics, and we're seeing it play out in the real world in a in a remarkable way. And it goes back to this notion that, like, a stock is worth the underlying value of the company, and that that's not true. People can dream a stock to be anything as they did with Tesla. At the time that people were buying Tesla stock, the historical performance of that business was not what Hedge Funds considered to be a, you know, a profitable good business. It shouldn't be worth anything. But the belief in what it could be is what drove the value of that stock, and, ultimately, that value enabled that business to become true. David Friedberg (00:55:11): And it's just it's it's amazing to see it happening. And I think the the counter, which is really what makes this so striking, is centralized institutions that are trying to block this from happening. And the shutting down of Parler and the shutting down of Robinhood trading are are equivalent from my point of view or at least equivalent, I think, will be perceived to be equivalent broadly, which is if a group of people get together and try and use an online service to make a change in the world by sharing and talking with one another and communicating a belief, a collective belief, and that gets yanked away from them that institution that has the ability to yank it away from them is evil, and it will force people to decentralize, and it will enable new ways of trading, new ways of communicating, new ways of building. And and that's the profound change that I think this decade is gonna realize, and we're just seeing it start now. David Sacks (00:56:00): I agree that Parler or Wall Street bets is parlor 2.0. Right? And and what happened? As soon as Wall Street bets started which is the the the the Reddit kids, They started threatening, and they wounded these powerful insiders, these rich, you know, hedge fund magnates. What happened? They started getting banned. off of Discord. They got Discord as a tech company to kick them off. How did that happen? They've been talking on there for months And all of a sudden, just magically write the critical moment where they're also not allowed to trade, their free speech gets cut off. That's a that that that was deliberate. And I'll and I'll tell you how it happens. is I guarantee you what these hedge funds did is they went through the Discord room, and they screenshotted, you know, any post that they could plausibly characterize as, you know, hate speech or what have you. And, you know and and by the way, I mean, those there's a lot of raunchiness in these rooms, but it's not hate speech, and it's not organized for the purpose of hate. It's organized for the purpose of trades. But what they do is they weaponize the censorship rules and they go in and they screenshot and then they give it to Discord, and they get these guys kicked off. And this is exactly what I've been talking about with censorship. It starts with something you like and then becomes something you don't. How many of the people who support these, you know, Reddick Kids were in favor of deplatforming Trump and parlor. And now they can see where it goes. This is slippery slope, and we've only had to 3 weeks to see where it goes. It goes to the same place, which is when the people in power get threatened, they use these rules. They weaponize these rules to shut down the outsiders and the upstarts. That is a problem with censorship. That is why you cannot let the beast get started. Chamath Palihapitiya (00:57:41): I completely agree, and I think this is exactly why how I think where we came out was, you know, the deplatforming of Trump made no sense. I think the the economic censorship of Robinhood makes no sense. David Friedberg (00:57:55): Yeah. And you can argue it's the right thing to do with a narrow context. But when you take the broader point of view of the implications, that's where the becomes really shaky and really scary. And I think really enables a decentralized movement that is gonna be a lot broader then then folks are really realizing at this point. You know, folks don't wanna be trading on a system that tells them how to trade, and folks don't wanna be communicating on a system that tells them how to communicate. Jason Calacanis (00:58:20): If I gave if I was running Robinhood, And I said, we're gonna have 2 options. There's gonna be a Robin Hood Diamond membership, and you pay by the trade and you know, you get these special features. And then the Robinhood free, you know, you you get your data is sold or however it works. Would that be a possible solution, I think, to the optics issue here where consumers could basically pick just like if Facebook or Instagram woke up one day and said, for 9 95 a month, you can have none of your data, no advertising, ad free, like Hulu does. You get Hulu or Hulu Premium. Chamath Palihapitiya (00:58:55): I would so here's the thing, Jake, out. I I hope your Robinhood investment is successful. I just think that there are now 3 moments in Robinhood's life. There is pre this week, and it is what it is. It's an $11,000,000,000 unicorn. God bless them. Then there was this week where we have to frankly hold people accountable for the economic damage that they created this week because it is measurable. Okay. It's not that it's not like missing, you know, It's it's it's not like, you know, surge pricing in Uber. It's not, you know, Facebook growing too fast and allowing, you know, pictures of breasts getting posted, and I'll have to catch up. It's not that. Okay. It's not a bunch of, like, disinformation that we can't really judge. This is very discreetly judgeable. And so in this week, Robinhood existed as a different company, and I think that there is an implication for that. Then to your point, honestly, I agree with you. It's what happens from here. And I and they should survive, but they have to learn. And I think what they have to learn is you have to stop the account growth You have to massively shore up the balance sheet, take the dilution, get the capital you need because let's be honest. I'm sorry, but nobody's gonna show up $5,000,000,000 or $10,000,000,000 pre. They'll show up to 5 or $10,000,000,000 at Speaker 1 (01:00:07): 3,000,000,000 Chamath Palihapitiya (01:00:08): pre, and they should take the money, and then they should allow the platform to work as intended or at least as perceived it to be intended to their users, and then they should reopen to everybody. Jason Calacanis (01:00:18): would you do, David? If you were in charge, and then let's move on to our next topic. David Sacks (01:00:21): Well, I I mean, I I I I feel like we probably talked about Robinhood enough, and I kinda wanna back go back to the point that Friedberg was making just kinda up leveling this a minute, which is I I definitely think this is part of this ongoing populism versus the elites war. And social media is now the tool that the people use to organize themselves against these powerful leads It's why we cannot allow censorship because it always comes down to benefit the powerful of the elites against the people who are trying to organize against them. That was, to me, one of the biggest takeaways from this week. And and, look, the reason why people are organizing is they're asking the question, what is the societal benefit of these big hedge funds in relation to the enormous sun sums of money they make every year. You go to, like, the Forbes rich list or whatever, And every year, these guys are taking down the most money. They're not creating companies. You know? And and Shamatha's right. We can't have founder worship because they make mistakes But at least founders are creating things. Right? They're taking big risks that they're not providing risk capital like what we do. Okay? We're investors, but we're funding people's you know, we're we're we're we're we're taking the risk of writing checks to to start the guy who's got nothing. Right? So we're or gal Speaker 1 (01:01:39): -- Speaker 4 (01:01:39): Yep. -- you David Sacks (01:01:39): know, they they them. So all good. Jason Calacanis (01:01:41): All of them. David Sacks (01:01:43): All of them. So So but -- Try to keep Speaker 6 (01:01:46): you from getting canceled here. David Sacks (01:01:47): But but but but but but what what exactly is the societal value of these hedge funds? Now I know that they provide some price discovery, and they provide greater liquidity to markets. But is that really worth them really being the richest players in the game? It doesn't make any sense. And then when they lose, like, in 2008, they get bailed out. Chamath Palihapitiya (01:02:05): It makes David Sacks (01:02:06): no sense. Something is wrong here. Now is this a right wing view, a left wing view? It feels to me like there's a political realignment happening here where the left and the right, we're all getting on board with this idea, and it's gotta get fixed. Jason Calacanis (01:02:20): Yeah. This this might be the legacy of Trumpidway, Sachs, that he created so much disruption over those 4 years that now we're actually finding out where the actual breaking points are in society, and this is one of them. And the health care system is one of them, and freedom of speech is one of them. And we need to address each of these and they're complex, but there is common ground. I mean, when AOC and Ted Cruz are both agreeing on the same issue with something's going on here, like, I think we have to fight the real enemy. Tremont and I should not be fighting over this because I can tell you if Tremont did the series a in this, he would be backing up Robinhood like this. to the end of the end of the earth, and that's totally fine. And I agree with Speaker 1 (01:02:58): -- Chamath Palihapitiya (01:02:58): Jason, I just I just want you to know, number 1, I love you with all my heart, and I and I hope you make I hope you I hope you make Ditto. A 100100 of 1,000,000 of dollars. But there's a it's just like, you know, you were you just got upset with me because you thought I was kind of saying that you stumbled into it. I didn't mean it that way. I was just repeating the way that I heard the story. But something that touches me equally ferociously is this idea of, like, the little guy getting run over by some, like, you know, objective thing over here that makes a decision that's arbitrary. Speaker 6 (01:03:28): I'm in Jason Calacanis (01:03:28): a 100% agree with you. Chamath Palihapitiya (01:03:29): And so, like, the idea that, like, you know, somebody who's on an app, all of a sudden, gets censored. Somebody that, you know, makes a post gets canceled. somebody that all tries to make a trade can't. Jason Calacanis (01:03:41): It feels unfair. Chamath Palihapitiya (01:03:42): It feels that each individual is suffering some pretty deep inequity. Jason Calacanis (01:03:47): Yes. Agreed. Chamath Palihapitiya (01:03:48): And I can't I just can't stand that. It really just touches me in a way that tilts me, and I get very Jason Calacanis (01:03:54): I and you know what? It's interesting. I think The reason I made the Robinhood investment is because my belief in the underdog and my belief in people's ability to come up from being poor middle class to middle class or affluent. Friedberg, you haven't chimed in yet. As we wrap here and then move on to our second topic Speaker 1 (01:04:10): -- David Friedberg (01:04:10): I think Speaker 1 (01:04:11): -- -- David Sacks (01:04:11): we're Jason Calacanis (01:04:11): at an hour. David Friedberg (01:04:12): So it's so I just wanna say, you know, we talked about decentralization, and you know, we all feel the emotional response to the little guy getting screwed by the big guy that controls the system, and we wanna fight the system. That's the basis of every great movie. The the it's worth highlighting, though, that decentralization and what I would kinda characterized as swarming behavior, uncontrolled swarming behavior, can actually have negative consequences, and there's a reason systems exist. You know, when you put a bunch of people in a room, let's say you put a hundred people in a room and every time and someone says the word door. And every time you hear the word door, you're supposed to repeat it. Within thirty seconds, the entire room will be, like, deafening with everyone screaming door. Door. Door. And suddenly, everyone will be screaming That's a feedback loop that occurs in an uncontrolled social system. And that's what's occurred with GameStop, and it's what occurred with with with Bitcoin. So there are, as we've seen, Remarkable outcomes when you allow systems to operate without centralized control Jason Calacanis (01:05:13): and without centralized break David Friedberg (01:05:13): pads that that kind slow them down or or put in place some rules and some obligations to how that system operates. The problem with decentralization and this swarming approach to to resolution where lots of people basically work together individually is you end up with things like cancel culture where Before a judge and jury determines whether or not someone did something wrong, the community decides that person should be punished chuts them down in the real world and their career and their life is ended and ruined. And we saw the same and we saw the same with the capital riots. you know, people basically died because of the swarm that occurred where this idea that the there was fraud in the election became an echoing deafening noise for these people, and they swarmed and killed people. And the system by which you can actually have vigorous debate And the system by which you can actually have controls and processes and judges and juries and trials is what needs to be improved for this to work. Otherwise, people will go to decentralization, and you will have a lord of the flies moment that engulfs civil society because the tools are there today. And so centralized systems can work, Chamath Palihapitiya (01:06:24): but they have to adapt and adapt David Friedberg (01:06:30): quickly to be fair and to enable and to not discriminate. Otherwise, we're gonna see Lord of the flies, and we're gonna see decentralization being the solution to getting out of the system that's inhibiting us, and we're gonna end up having really fucking ugly outcomes. Jason Calacanis (01:06:43): There's a psychological term for what you're describing. It's the diffusion of responsibility. and also known as mob behavior. When a group of people collectively do something, their individual morality can evaporate. And the larger the group and the more intense the behavior, the less responsibility each person takes for it. So five people on the steps of the capital, you know, one person breaks a window, maybe somebody breaks it. But once you 500 or 5000 in one person breaks a window. Now you got a much higher percentage of people who start breaking windows, and that's when tragedies happen, of course, world war 2 was the diffusion of responsibility. With the team, Chamath Palihapitiya (01:07:17): they agree. Yeah. You're totally right. Yeah. You're totally your Speaker 1 (01:07:20): -- David Sacks (01:07:20): Just just one just one quick point, and then we can just move on. Jason Calacanis (01:07:23): Yeah. So I David Sacks (01:07:23): think these, like, viral tools, these social networks, they enable Speaker 1 (01:07:26): 2 David Sacks (01:07:26): things. They enable mobs, but they also enable movements. I think the mobs are bad and the movements are good or they can be good depending on what their manifesto and what their mission And so I think we wanna enable the movements, but we wanna be really careful about the mobs. And, you know, one of the things that's kinda disturbing about Twitter is I generally find that, like, the tweet set seem to go the most viral or the ones that are full of rage and anger. And the ones that are trying to make more nuanced points just kinda get lost And so there there is something a little bit disturbing about the mob behavior. But but the movement the enabling of these new movements, I think, is really powerful. And that's what Wall Street Pets was, at least in the early stage, and they do not deserve to get shut down like that. David Friedberg (01:08:06): Social social networks are a collective amygdala. they are not a collective cerebral cortex. And I think if someone can solve that problem and get people to think about the rational objective outcomes in a social way, in its engaging a fashion as it is to kind of be excited by the negative ship that excites the amygdala, you know, it could be really powerful, but that's probably Speaker 1 (01:08:27): -- Jason Calacanis (01:08:27): We're gonna need politicians who -- Yeah. Speaker 1 (01:08:28): -- Jason Calacanis (01:08:28): we're gonna need some level of politician who has some integrity and some expertise if only Well, Chamath Palihapitiya (01:08:34): don't you think don't you think take Speaker 6 (01:08:36): out -- -- making a making a transition for all these ideas. Speaker 4 (01:08:39): Wait. I was gonna say, don't Chamath Palihapitiya (01:08:40): you guys think that what this means is that entrepreneurs now can really think about decentralization as the key feature. Like, in many of these markets or these systems, where we have decentralized authority, we have to move to a much more decentralized democratized way of doing things, whether it's stock trading or whether it's health care records or whether it's you know, education systems and degrees and accreditation, there there has to be a way where you David Friedberg (01:09:06): can't be tested. Yeah. But with morally and ethically inclined, and or legally inclined systems that ensure that the behavior of that system doesn't run amok. And, you know, that's really where things can can go can go awry as we've seen lately. But it's a hard problem to solve. I I I don't think we're gonna solve it here today. Jason Calacanis (01:09:26): Just a a final update. 5th I don't know if this is exactly correct, but I just asked on Twitter how many shares of GameStop are still short. Apparently, there's still 55,000,000,000 shares are so short of the 70,000,000 or so share total shares and 47,000,000 in the float. So something very bad could still happen here. I mean, the these shorts have not been covered. So this is going to be an ongoing saga where I think every single platform, if if consumers keep buying these shares, what is the end does anybody have an idea or a prediction on the end game here and then we'll move on? What is the end game If another 5,000,000 people buy the shares or 10,000,000 people buy it and it goes to a 1000 or 2000, what happens if gamestop is worth a Speaker 1 (01:10:08): $100,000,000,000? Chamath Palihapitiya (01:10:10): It's such a great it's a great question. What's happened? Well, can I tell you, Jason, what that means? There's a great article in the information which Sam Lesson wrote. I don't know if you guys read it. but it basically said why did Tesla win? Now this is not accurate, but I think his framing is relatively accurate, which is people were buying Elon like they would buy a trading card. Speaker 1 (01:10:29): That's right. Chamath Palihapitiya (01:10:30): That's right. And Tesla is a manifestation of Elon. David Friedberg (01:10:33): That's right. Chamath Palihapitiya (01:10:34): And it actually is so visually it makes a ton of sense to me, like, then I think, you know, why have, like, Richard Branson's businesses worked? Or why is the Jordan brand work? Or Shamalff. All the you know, in a in a smaller level, yeah, at a smaller level because we're brands and we have these values and people can imbue their their collective decision making and support to the person versus the institution. David Friedberg (01:10:57): It's a belief. It's a belief in what that person represents too. You know, I can why did MBS buy that freaking painting that wasn't even a Leonardo painting for a Speaker 1 (01:11:08): $1,000,000,000? David Friedberg (01:11:09): You know, there was some belief there you know, is it really worth a $1,000,000,000? It doesn't matter. At the end of the day, most assets are most assets are purchased under the premise that I believe the price will be higher tomorrow than it is today. And if we all believe that, then we will all buy it today, and we will all find more people buying it tomorrow. That's what Bitcoin is. Jason Calacanis (01:11:29): Do we all agree, though, that GameStop is not Tesla? David Friedberg (01:11:32): I don't agree with your premise. I don't think that stocks necessarily need to be reflective of the underlying business. And that's what's so but but no. Just think about it. That's that's what's so shocking about this week because we've all been taught in these freaking economics books and these financial analysis books oh, the stock is worth x dollars, discounted cash flow. What company has ever paid out dividends that equal the amount that you paid to buy the freaking stock unless you lived in 1926. It hasn't happened. So everything we've been taught about DCF's and future cash flows and everything is nonsense. At the end of the day, every stock trades based on the assumption that someone will pay more for it than I am paying for it today. That is it. That is entirely what a stock is. And so if everyone's belief is completely uncoupled from the underlying asset that that stock is meant to represent, it doesn't freaking matter. And it highlights what's really going on. trading stocks is not investing in businesses. Chamath Palihapitiya (01:12:25): And it is -- Can I say can I say something else on top of this, Jason? What was the name of the remember when we were talking about censorship, what was the name of the the the the left podcast that got canceled on Twitter? Jason Calacanis (01:12:35): Red scare. Chamath Palihapitiya (01:12:37): Red scare. Red scare. Is GameStop, Red scare or at the real Donald Trump? And my point is who the hell are we to decide? Jason Calacanis (01:12:46): Right. Chamath Palihapitiya (01:12:47): How does it outline? -- got canceled. All three got canceled. Jason Calacanis (01:12:51): Sacks, what's your prediction? We're sitting here a year from now, full year out. What does GameStop January 2022 look like? What does the stock price look like? What does the business look like? What how does this all resolve itself? David Sacks (01:13:03): You know, I'm I'm not a public stock market trader. I'm just not I I I just feel like it's I'm not a day trader. I don't I don't buy public stocks. It's just kind of, like, to me, it's a distraction. Jason Calacanis (01:13:14): What do you borrow this end? I David Sacks (01:13:16): you know, just buy Vanguard funds. Like, guys, if you're listening to this program and you're wondering where to put your money, just buy Vanguard funds and stop worrying about it. Jason Calacanis (01:13:24): Index. Low fees. David Sacks (01:13:25): Index. Yeah. Low fees. Yeah. Jason Calacanis (01:13:27): Yeah. I mean, if you want to bet specific companies because you get enjoyment out of it, do it. But, yeah, Okay. So nobody has any idea what happens if it hits a 100,000,000,000 or how this ends. So that I think that's that's illustrative of my point is that for somewhat intelligent people who have some degree of expertise in this area, we have no idea how this ends. David Friedberg (01:13:46): But this Chamath Palihapitiya (01:13:46): is the -- It's the Speaker 1 (01:13:47): -- This is David Friedberg (01:13:47): the -- This is the point. It is a it is a collective Ouija board moment. Everyone's got their hand on the Ouija board, and they're gonna craft the sentence. Any one of us individually cannot predict what a collective group of 3,000,000 plus people are going to do. And we've you know, we we try and struggle and think about the underlying value of a business, which is what these hedge funds have done historically. But at the end of the day, this thing is gonna be worth what the market tells you it's worth. And what the market chooses to do, we wouldn't know because we are not the collective Speaker 1 (01:14:13): 3,000,000. David Sacks (01:14:15): Jason, yeah. Yeah. Let me so so look, Jason. There's two questions. Right? There's always this question of, like, what should the price be, and then who gets to the side? And look. Do I personally think GameStop is overvalued? Yes. Of course. I think it's gonna end very badly. But the question is who gets it aside? And is the game gonna be rigged by powerful insiders against outsiders. Just it's just like the same question with Parler. Okay? Which is who gets it's not about which look. We we can say that there are certain views that are bad. Okay? But the question is who gets the power to decide that? And it's and and that's what that's the thing we have to ask is that second order question of who has the power to decide. Chamath Palihapitiya (01:14:54): Is there any out Amazon got to decide and Robinhood got to decide, and the victims were parlor and GameStop. 100%. Okay. Jason Calacanis (01:15:02): So this would be a good segue to move on. apparently, we had a discussion on the last episode about running for Governor. And I bought the domain name, governor.com. I had governor jason.com. I got Governor Sacks andgovernor Friedberg, and I redirected him. And you guys own them, and they're they're redirected to your Twitter handles. And lo and behold, we wake up one day. And Shamalff 4 CA is live. Shamov, everybody wants to know. David Friedberg (01:15:33): Jump the gun. We were gonna have a vigorous debate and decide which one Speaker 6 (01:15:35): of them. David Friedberg (01:15:36): Who was yeah. Jason Calacanis (01:15:37): Who was gonna run? But somebody jumped in And I'm not saying other besties might not jump in. Other besties could jump in. They have domains. David Friedberg (01:15:44): Anita, stay tuned. Stay tuned. David Sacks (01:15:46): No. Jason, we we do not wanna split the bestie vote. I think we got all the besties. -- clock in. Okay. This is this is the 4 Musketeers. We're all behind Chamath now. We do not wanna split the bestie vote. So Kamas is on you. Tell us what's gonna happen now. Jason Calacanis (01:16:01): What's gonna happen? Speaker 6 (01:16:07): Yes. We are actually Speaker 1 (01:16:08): -- Chamath Palihapitiya (01:16:08): Actually, this is we are going to do an emergency pod and talk about exactly that. So if folks wanna know, they're gonna have to tune in mid week. Jason Calacanis (01:16:17): But Speaker 1 (01:16:17): -- David Friedberg (01:16:17): Mid week, I'm a right now. Jason Calacanis (01:16:19): Well, let's talk about the website Chamath Palihapitiya (01:16:20): you put out. Speaker 1 (01:16:21): -- Chamath Palihapitiya (01:16:21): coming up. Jason Calacanis (01:16:22): With the well, we'll wrap on this, the website. you put out a platform. What's the action been? And no. These -- The reaction's been positive Chamath Palihapitiya (01:16:27): enough to do it anyway. -- guys. Mid week. Speaker 4 (01:16:29): I wanna Chamath Palihapitiya (01:16:29): be I wanna be very clear. Mid week. Mid week. But I'll just tell the quick stories. three young people these 3 amazing guys just built they built it, and I just retweeted it. I can say the tens of thousands of people have signed up for updates. I know that much. All these three guys, though, here's the can I just see if I can tell a shout out to these guys. Ronald Samir and Aman. All these three guys, they don't live in California. 2 did but had to leave. One wants to move but can't because he can't afford it. And it's just such a microcosm of, like, how Beautiful California as a place is and just what people think about when they think about this state is just so it's so lovely. So another time. But anyway, shout out to those guys for building the website. Thank you. Jason Calacanis (01:17:19): So essentially, the entire market has now been driven by a group of all in of the all in army built a website. You retweeted it. And that's what this is all about. So there has been no paperwork filed. There is no action committee. However, it has traction. So it makes one wonder. Chamath Palihapitiya (01:17:39): You know, I mean, there may be a shadow cabinet meeting. Maybe there Jason Calacanis (01:17:42): may be Chamath Palihapitiya (01:17:43): a shadow cabinet meeting. What is the chances? David Sacks (01:17:47): Well, I think Shamov by publishing that website just went down the escalator. Chamath Palihapitiya (01:17:54): I mean -- Oh, it Speaker 1 (01:17:55): was a golden Jason Calacanis (01:17:55): escalator? Golden Escalator. David Sacks (01:17:58): He's gone down the escalator, and who knows what could happen now? I'll tell you this. I went on I'll I'll do a plug. I went on Bloomberg, Chamath Palihapitiya (01:18:05): Amazing. Amazing hit. Great amazing hit. David Sacks (01:18:08): It's on YouTube. We can put the link Jason Calacanis (01:18:10): to the David Sacks (01:18:10): show notes. Yep. Put put the link in the show notes, Nick. People need to watch that. I went through all the the the ways in which California is hurting. Newsom hasn't done a very good job, and I made my case for Chamath. that's a prelude to what we'll talk about on the next pod. But the the the amazing thing is the outpouring. I mean, the number people who Chamath Palihapitiya (01:18:30): have text David Sacks (01:18:30): me, email me, and Chamath and all of us, like, there's a ground swell happening now. A 100%. So, you know, I would say all the fans of pod who are now behind this, you guys are making it real. Chamath Palihapitiya (01:18:43): Freeberg. That's pretty crazy. Jason Calacanis (01:18:44): Matifast's destiny here. What's going on? Is this another wisdom of the crowds or a mob or a movement. David Friedberg (01:18:52): Who am I to say? Chamath Palihapitiya (01:18:54): Are you are you all Jason Calacanis (01:18:56): in there as chief science officer? Will you be our doctor Fauci? David Friedberg (01:19:00): You know, here I I think we should have a good debate on our next pod and hear the platform and discuss the platform and, you know, make sure that we all feel like this is this is where we should be. And I think this is gonna take a little bit of time to to build. And I think, you know, the more we kind of build towards it, the more likely we are to have that groundswell that we're gonna need. Speaker 6 (01:19:25): Well, let's give you all that -- -- sure. But I will David Friedberg (01:19:27): I will tell you, it seems pretty likely that this recall effort is gonna get the signatures it needs so we can kinda put that in the sand that it's very likely we're gonna end up seeing a recall election. Jason Calacanis (01:19:40): k. So if people want to participate in recall Gavin Newsom, what do they do? Because that is the first step -- Yes. Speaker 1 (01:19:46): -- Jason Calacanis (01:19:46): towards a Shamoff governorship. David Sacks (01:19:48): You gotta go you gotta go to rescuecalifornia.org. rescuecalifornia.org. Go to that website sign the petition. That is the first step. We are very we only need a few 100,000 more signatures. We have 1,200,000. We need 1,500,000. Go there sign up, and then go to Chamath website, which is chamath4ca.com. And so I'm Speaker 1 (01:20:10): outside first mailing list. David Friedberg (01:20:11): Jason, I'll make one more point. And I think and I made this the other day on clubhouse that Saxon and I did. I think we I made it before you joined. If you think about the difference between a leader and a manager, a manager is someone who typically delegates responsibility and authority. A leader is effective at sympathizing multiple people's points of view and creates an opportunity defines a vision, defines an objective that is the synthesis of all the people that that report to him, and and for which for whom he is responsible or chief. And I think what we've seen in California and particular and and, really, across leadership positions or or governing positions across the country during this pandemic is a failure of leadership. Because when times are predictable, if a then b, it is easy to manage and it is easy to look successful. I delegate down to the person who knows best, and they are responsible for the outcome, and they do it well. Great. All I'm doing is pointing to the right person to run something. The pandemic is difficult and it is unpredictable. It requires a synthesis of economic information, social information, and health information. And more often than not, a person who typically acts like a manager points to the person they think should be in charge under the circumstance to make a decision And that person is not equipped to synthesize the economic and social ramifications of the decision. So what we have seen during the pandemic is most often People in a governing position have pointed to the health officer or the medical person and said you make the decision. And that person does not necessarily account for the social and economic ramifications of the decision they're making. A health person knows how to save lives. The best way to save lives is shut everything down. And so the the test of leadership during this pandemic has been a test of synthesis and recommending an action that's associated with the understanding of the social economic and health implications of what's going on. And that's really where so many governing bodies and individuals have fallen apart during this pandemic is an inability to do that effectively. And I think that is what is needed going forward. David Friedberg (01:22:21): It is a it is a moment of test. It is a it is a moment of truth about the difference between a manager and a leader, and we're seeing across the nation who is what. And I think it is highlighting why some folks may not be best suited to do this. The second thing I'll say and I know I'm I'm on a little bit of a diatribe, but the second thing I'll say, It's career poll -- We've Jason Calacanis (01:22:40): been waiting for your diatribe, by the way. I took 19 episodes. Go. David Friedberg (01:22:43): Career career career politicians, I think, simply should not exist. If you go back to the origins of this country, Right? Having your place in government and we talked about this over email. Having your place in government was meant to be something that everyone was supposed to take their turn doing. And the people that were sitting in political seats, it was supposed to be the merchant and the local farmer and the banker, and we were all supposed to take our turn representing our communities, representing our people in government. And what we've seen is people who have made a career out of being a politician. And the result of that is that their job depends on them getting reelected. In order to remain in their career, they have to get reelected. and they ultimately end up making trade offs that don't necessarily represent the best long term interest of their community. And this is broadly true across nations, across centuries. but it's particularly acute in the United States where we've seen such wealth creation over the last 250 years. And what's happened is when you have career politicians sitting in these seats for so long in an environment of severe wealth creation, you end up having governments that are ineffective and creating systems that fail us. and here we are. And what we need is to have someone go in that's not dependent on the traditional folks that get people elected and fund elections and result in reelections, we need someone that can go in as an outsider and make a change. And so my advocacy for what's needed in California And I think, nationally, and that's a longer conversation, is to find those types of folks to come in and lead and be politicians that can take a leadership role synthesize information and not be worried about the reelection cycle and not have anything to lose related to a career in politics. David Friedberg (01:24:16): So I'm -- On on that note, Chamath Palihapitiya (01:24:19): I wanna say I love all of you, and let's do our emergency pod on Tuesday. Do you guys wanna play poker tonight? I Speaker 6 (01:24:30): I'm still in town. I was playing I was playing that original graduation. You you guys come out? sit David Friedberg (01:24:34): down. My mom's in town. You Chamath Palihapitiya (01:24:35): can't go. Jason Calacanis (01:24:36): My parents got vaccinated. Speaker 4 (01:24:37): Saksipuk. Saksipuk. Saksipuk. My parents got vaccinated. David Sacks (01:24:40): Yeah. I can play. I can play. Jason Calacanis (01:24:41): Oh, here we go. Oh, maybe a little -- -- guys that Chamath Palihapitiya (01:24:44): wants to play. He just -- Oh, yeah. Speaker 1 (01:24:45): Yeah. So Jason Calacanis (01:24:46): just one note. One note. If you do fill out if you take if you go to rescuecalifornia.org, is that the name set? Speaker 6 (01:24:52): Yes. If you go there, Jason Calacanis (01:24:53): you print out the petition, and you hold it up and take a selfie with your signature on it, and you act the besties, we will like it possibly retweet it, and possibly follow you. So go ahead and take a picture of your printout with your name on it, and that proves that you're part of the all in army, and we will like it, We might follow you, and we might even retweet you. You could be even 4 besties. Love you, and we'll Speaker 4 (01:25:16): see you all next time on the all in podcast. Jason Calacanis (01:25:16): All in podcast. See, Ed couples there, Pietroboro. David Sacks (01:25:23): Hey, everyone. Hey, everyone. Welcome to the all in part. Speaker 1 (01:25:26): Hey, man. On the rain, man. On the Raymond, the wet marbie. And the moon is. Catcrasies. Yeah. David Sacks (01:25:33): A 1,000,000,000 here. A 1,000,000,000, they're pretty you're talking about real money. Speaker 1 (01:25:37): Rainy, the wet might be mounted. Don't quote their TV then. Jason Calacanis (01:25:42): Now let me, Saxx. Speaker 1 (01:25:42): Damian, I'm the rain man. David Sacks (01:25:45): These are really big numbers. This spread, the opportunity that that technology represents. Speaker 1 (01:25:56): We're probably gonna have 4 David Sacks (01:25:58): Kardashians on there, so Speaker 1 (01:25:59): far, like, 4 David Sacks (01:26:00): besties on there.