AI 精神病、美国社会结构崩解、特朗普接管华盛顿警局、风投失灵了吗

David Sacks (00:00:00): Where are you at, Jama? Jason Calacanis (00:00:01): Look at those cabinets. I know exactly where he is. I'm here. I can tell by the cabinets. David Sacks (00:00:05): We'll beep that out. David Friedberg (00:00:06): Tomorrow, I leave for Chamath Palihapitiya (00:00:08): and then I come home a week from Friday. Jason Calacanis (00:00:10): So that means you're gonna be leaving this week, so it's open next week. So David Sacks (00:00:16): I think you're about to get a house guest. Speaker 5 (00:00:17): Wait a second. The house is open? I like late season. David Sacks (00:00:22): Kato Kaelin's about to make an appearance. Chamath Palihapitiya (00:00:23): Kato Kaelin's about to bless the home. Speaker 5 (00:00:25): Oh, I'm gonna bless that house. Jason Calacanis (00:00:27): You could be sure. I'm going for Speaker 5 (00:00:28): a little Indian supper off the Italian music area. Jason Calacanis (00:00:49): All right, everybody. Welcome back to the number one podcast in the world, the All In podcast. We're back, And you got your original crew. Some people were wondering, are people losing their commitment to excellence? Are people out gallivanting? Would we ever see the core four back? August 14, we're taping. You'll be listening on August 15. But, gentlemen, we're back. How are you doing, Chamathi? You look well rested. David Sacks (00:01:16): The core four. Jason Calacanis (00:01:17): The core four. David Sacks (00:01:18): That's new. Jason Calacanis (00:01:19): Who could ask for anything more? David Sacks (00:01:20): Would you say that the core four could be fantastic? Jason Calacanis (00:01:25): I think on their best days, I would say they are exceptional, perhaps even tipping into fantastic. Did you see it yet, Sax? David Sacks (00:01:33): Yeah. Jason Calacanis (00:01:33): It's pretty great. I think they did a great job. Yeah. Was pretty good. Yeah. It's it's like one of those weird, you know, superhero groups that is like a real throwback. And I don't think a lot of people get the aesthetic or what they're trying to do there. But I I think you're gonna love it, Friedberg. You didn't see it yet? Fantastic Four? No. Gonna love for the science. It's it's really got like a real throwback to the fifties, sixties science kind of aesthetic. Wrapping up summer months here. In a couple of weeks, we'll be in LA for the All In Summit. Couple of tickets still available. Allin.com/eventsor/ yada yada yada for the JCAL discount. Free break. How's your summer going? You doing okay over there, buddy? You showed up last week. David Sacks (00:02:15): I show up. Jason Calacanis (00:02:16): You showed up last week. No weeks off for you. David Friedberg (00:02:18): Had a beautiful mountain bike ride Chamath Palihapitiya (00:02:20): yesterday with Xander. We ended up Jason Calacanis (00:02:22): Oh, how nice. David Friedberg (00:02:23): Going on for quite a while. Having a birthday dinner with Jason Kuhn tonight. Happy birthday Chamath Palihapitiya (00:02:27): to you. David Friedberg (00:02:28): Birthday, Jason Jason Calacanis (00:02:28): Kuhn. Happy birthday to Jason Kuhn. I mean, what a privilege for us to play with a professional poker player so regularly like Jason Kuhn in the home game. We've always wanted to. We've been playing this home game for two decades, and we never had a pro there. We never had somebody who truly had achieved excellence in the field. And so it's like getting to be on the court with Michael Jordan or something. It's like a real thrill for David Friedberg (00:02:52): Phil Hellmuth is really excited too. Jason Calacanis (00:02:54): Yeah. Yeah. Phil, did Phil get a salping with him or an autograph? Speaker 5 (00:02:57): Then Cut it out. Phil's gonna get mad. Oh, no. We're gonna have to do another apology. Do another apology letter. Do the apology pre apology. Pre apology. Pre apologize. I'd like to pre apologize to Beep. Lucky. Mark Zuckerberg. Jason Calacanis (00:03:16): Sassy poo, how are you? Are you are you you got a little rest and a little rest and relaxation for you? David Sacks (00:03:22): Yeah. We just got back from Diego's birthday party in The UK. Jason Calacanis (00:03:26): Oh, very nice. David Sacks (00:03:27): Little one the destination birthdays. Speaker 5 (00:03:31): Mean, so many of these destinations. God. Yeah. It's like just three Jason Calacanis (00:03:35): of summer, retirement parties. John Haring's having a retirement party. I don't know what kind of flex that is. The kid's like 31 years old. He's like, ah, David Sacks (00:03:43): I got Jason Calacanis (00:03:43): into SpaceX. I retired. David Sacks (00:03:45): I was Jason Calacanis (00:03:45): like, I'm in Uber. I'm David Sacks (00:03:46): still working. Speaker 5 (00:03:48): What are you gonna do for the next sixty years? Our lifespans are going double. Jason Calacanis (00:03:53): You gotta keep busy, folks. Alright. Listen. What a stacked lineup we have. Oh my god. Alex Carr from Palantir is coming. You got Alex Carr? David Friedberg (00:04:03): Yes. Jason Calacanis (00:04:03): Freeburg? Oh, I like that guy. David Sacks (00:04:05): Did you get any of the people on my list? Jason Calacanis (00:04:07): You had some good names at the last minute. Yeah. Thanks for coming in eight days. David Friedberg (00:04:10): When we send you notes months and months in advance of the summit, when we actually invite people and plan the event and you don't respond, we move forward. And then eight days before the event, you're like, oh, here's my list of who I'd like to invite to Speaker 5 (00:04:22): the summit. Can you guys figure out David Friedberg (00:04:23): how get them there? Jason Calacanis (00:04:24): Oh, YouTube CEO Neil, is coming. That's great. David Friedberg (00:04:28): Neil Mohan. His name is Mohan. Chamath Palihapitiya (00:04:30): Get his name, David Friedberg (00:04:31): Just so you know. Chamath Palihapitiya (00:04:32): Say hi to up Jason Calacanis (00:04:33): his name. I know his name's Neil, but I didn't know his last name. Neil Mohan. Oh, and my oh, look at that. Energy secretary Chris Wright is back for round two with J Cal. I love it. What a great lineup. Alright, let's get started, folks. I think the story of the week is this AI psychosis. This is a crazy story. People call it chat GPT psychosis as well. We'll get into that. But if you're an ex user, you've seen this discussion over and over again. It's called being one shotted. Okay? That's like you get sniped in a video game or something. People are starting to have delusions that are being triggered by or enhanced by AI chatbots. The core of the issue seems to be that these chatbots, as you know, are sycophantic. They confirm your beliefs, they agree with you, they're refusive in their praise. And it's so believable that now people are starting to believe they're in a relationship with AI, okay? And OpenAI saw this becoming an issue and they made some healthy use updates to ChatGPT. It's no longer gonna tell you whether or not to break up with your boyfriend, to leave your spouse, it prompts you to take a break after long sessions. And they also admitted that their four point zero model had been creating some of these psychosis scenarios. Quote, There have been instances where our four point zero model fell short in recognizing signs of delusion or emotional dependency. Psychology Today had a story, just recently, the emergent problem of AI psychosis. Man, people are falling into romantic relationships. They have godlike delusions, and a prominent investor, you may have seen this, seems to be undergoing some AI psychosis according to people who may be even near it. I'm not gonna say his name, but it's pretty clear who it is. But he released a video where he started talking about recursion, all this crazy stuff. You may have even witnessed a little bit of this when Travis was on the program a couple of weeks ago. Jason Calacanis (00:06:25): And he said he was like spending his time on the fringes or the edges of Quantum physics. Yeah. And like hitting like, it really can take you down the rabbit hole. There's a really interesting subreddit So are you David Friedberg (00:06:38): saying Travis is suffering from AI psychosis? Jason Calacanis (00:06:41): I'm saying we may need to do a health check. We may need to do a health check because smart people can get involved with these AIs. So we may have to do a little welfare check on our boy T. Chamath Palihapitiya (00:06:52): Can just tee this up and hand it off so that the rest of us can talk, please? Jason Calacanis (00:06:56): I'm about to do that. I'm about to do that. Okay, Chamath, you seem to be raring to go with this AI psychosis issue. Speaker 5 (00:07:04): Go Jason Calacanis (00:07:05): ahead. Enlighten us with your hot tape. Go ahead. Speaker 5 (00:07:10): I miss Jason Calacanis (00:07:10): you too. Speaker 5 (00:07:11): I miss you too. Chamath Palihapitiya (00:07:12): You're the best. Hold on. Wait. My phone's ringing. Jason Calacanis (00:07:14): Oh, great. Chamath Palihapitiya (00:07:15): Hey. Listen, Sandra. I was I'm gonna send you a link to a Zoom chat. I'm just hoping you'll Jason Calacanis (00:07:20): talk about Chamath Palihapitiya (00:07:21): it for free. Jason Calacanis (00:07:21): Yeah. Make me an offer. Sure. I'm in. Yeah. They just these idiots just paid me $50,000,000 to come join your podcast and make it higher rated than yours. Okay. Great. Yep. Okay. I'll see you on Speaker 5 (00:07:30): your boat. David Sacks (00:07:31): It's like in the major leagues when, like, a double trade happens. So we get Andrew Ross Sorkin, and then Can you Jason Calacanis (00:07:38): do that? David Sacks (00:07:38): And Girly get Calcanas. That'd be really interesting. Jason Calacanis (00:07:41): It's a three team deal. It's a three team deal. You're also getting Let David Sacks (00:07:44): us know in the comments if you would like to see that trade. Jason Calacanis (00:07:50): Okay. Chamath, you got any thoughts on this? You seem to be raring to go on this issue. Chamath Palihapitiya (00:07:55): I don't really have much thoughts on this AI psychosis issue per se, but I do think that it's part of a bigger trend, meaning these things aren't created overnight and out of nowhere. I think we've known for a while that what does Scott Galloway calls it the loneliness epidemic, is that it? Which I tend to agree with. I mean, I think that there is a profound shift in how young people connect with each other and with the world at large. And I think that they are becoming more isolated. And I think the dangerous part of AI is that it can replace whatever flimsy connection that people have left to their real world community. So if you think about like how much influence is shaped and generated in places like Instagram by real people, and then go to the limit of a very useful AI that replaces those people with fake people and fake pictures you can't discern, but they're willing to be responsive to you and engage with you and talk with you. On the one hand, it's incredibly interesting. On the other hand, that person is ultimately not real. Yeah. And so I think whatever it is that people are going through right now, and you can see it in all kinds of data, right? You see it in marriage rates, you see it in household formation rates, you see it in childbearing rates. Something is broken. It has been for a while in society. I think all these tools have exacerbated it. I think this is just yet another step in that direction. Jason Calacanis (00:09:32): Freiberg, what's your take here? Chamath Palihapitiya (00:09:34): Sorry, I apologize. I'll say one more thing. I was talking to somebody about this and he mentioned it, he framed it this way and I thought it was really interesting. If you look at online services, their primary mechanism of action is via dopamine. And they're trying to find mechanisms to trigger the release of dopamine. And that's what gives you that stimulative sensation, right? But if you think about real world relationships, having a wife, having a long term girlfriend, those are fundamentally about serotonin, not dopamine. The dopamine wears off very quickly and what are you left You're left with establishing a long term structural relationship with somebody and the ups and downs of that. And it's not always peachy keen. That's the same thing with friends. And so I think the other thing that's really interesting to note is that we are sort of all in on dopamine, dopamine, dopamine, and young people, particularly the ones that are the most susceptible this, I'm gonna guess, have not had enough structural interactions in the kinds of relationships that actually create these long term serotonin like behaviors so that you can actually balance this stuff out. And so I suspect that this thing is gonna catch on like wildfire in part because it's taking advantage of a trend, I think. Jason Calacanis (00:10:43): Yeah. It's a it's a quick hit as opposed to the long term gain of of deep friendship. Freebright, what are your thoughts? David Friedberg (00:10:49): I was in the college dorms in 1996. There was this woman who was in the room next to me, and she was on AOLIM. And she Speaker 5 (00:10:59): got stuck on David Friedberg (00:10:59): AOLIM, like, twenty four hours a day. She failed out of college. She was completely addicted to it. She, like, disappeared into this rabbit hole of doing IMing with random people online. It was the craziest thing. I don't think that chat is necessarily revealing. I think it's just at a much larger scale, this challenge with this psychosis where you get drawn into these holes. There was a study by researcher called Julian Holt Lundstedt, who took a 148 other studies, psychological studies, to identify the relationship between social interaction and mortality. And strong social relationships increased survival odds in humans by fifty percent, which is equivalent to quitting smoking more impactful than obesity or physical inactivity. I think that there's a real struggle that people have with loneliness that manifest in a bunch of different ways. But psych studies have shown that some of the key motivators for going online to engage with social interaction systems is self expression, recognition, curiosity, emotional regulation. You can test ideas, you can engage cognitively in ways that you can't, or you don't have access to in real life. So there's a whole lot of motivating factors for people to go deep in social engagement online. And there's never been an infinite social engagement system until AI came along, these chat interfaces came along. Right. So rather than have to go find someone on the AOL I'm network or find someone in a chat group or find someone on a bulletin board, you have this infinite personality you can engage with. So I actually asked chat GPT, like, this morning. Jason Calacanis (00:12:32): Would you be my friend? And it was like, Speaker 5 (00:12:34): yeah, I'll ask. I think David Friedberg (00:12:35): I think the challenge is once you end up in these deep rabbit holes with a chat interface, there are things that happen with the way LLMs operate that can drive you into this warped reality because you're now so fully engaged, you're fully captivated by this reality with the chat interface, but the chat is not a human. So it doesn't have the same wiring, the same triggers as a human might have to realize it's going down a wrong place. So when I asked ChatGPT, what drives some of the psychotic breaks that happen in people that overuse chat and end up in these deep rabbit holes? Number one, said feedback loops in training or operation. So if the AI is trained in its own outputs without safeguards, then small inaccuracies in the training system can actually compound. And so over time, this causes responses that it says spiral away from factual grounding, similar to a human stuck in a self reinforcing delusional loop. So suddenly the AI becomes delusional and you become delusional with it because you get taken on it. And the second is this product Jason Calacanis (00:13:31): What that that called? Folly adieu? Is that the term for the second Joker movie where like the psychological phenomenon of two crazy people reinforcing it and spiraling out of control? David Friedberg (00:13:41): It may be, but I think this is just like the AI can take you on this journey on, like, a one-sided basis because you as a user just get you you know, the AI is compounding away from reality. Jason Calacanis (00:13:50): It's David Friedberg (00:13:50): crazy. And the second is what's called context poisoning where long conversations or poorly controlled inputs in those conversations can actually push the model's internal representation away from its starting state. And so this causes, like, off track reasoning. But you if you're deeply in it, you're sixteen hours, eighty hours into a dialogue with the AI, you're you go with it. And so I think that these are these things that are causing these breaks, but I don't think that the motive for human social contact is new. I don't think that digital interface is new, but I do think that there are two things that are new, which is the infinite engagement you get with a chat interface. And second is the way that the LLMs operate that can actually cause these breaks to take people with them. And I have personally seen it. This is not some, like, New York Times report. I've actually personally seen it with people I know that have got caught in these loops that get broken mentally. It's it's really sad. And so it's definitely an issue, and I think they're gonna need to put safeguard. Jason Calacanis (00:14:41): Sachs, you have any advice for these losers Speaker 5 (00:14:43): and folks who are creating relationships with their LGBT? Could you could you just break the ridiculousness of this, please, with some Saks wisdom? David Sacks (00:14:55): Well, yeah. I mean, look. This whole idea of AI psychosis, I think I've gotta call bullshit on the whole concept. I mean, what are we talking about here? People are doing too much research? Mean, they're stuck in a loop doing 12 of research on on AI. Okay. Look, this feels just like the moral panic that was created over social media but updated for AI. Yes. And the media is gonna love it because they're afraid that AI is gonna do to them on the creative side what social media did on the distribution side, which is replace them. So media is gonna love this concept and promote it. And then the trial lawyers are gonna love it because it gives them a new basis for suing all these companies. And then there's gonna be individuals out there who are like, oh, I have that. And they're gonna glom onto this message, and you're gonna see more and more people claiming they have this because it's gonna draw attention to them. But the reality is that if you look at that Time Magazine story, which is trying to brand this concept of AI psychosis, the game is given away by this doctor who says, I don't think using a chatbot itself is likely to induce psychosis if there's no other genetic, social, or other risk factors at play. This was Doctor. John Torres, a psychiatrist at Beth Israel Medical Center. Okay. So what he's saying there is that if you don't already have a predisposition to some psychosis and you're not suffering from extreme isolation or loneliness, then you're not gonna get this. Right? So in other words, this is just a manifestation or outlet for preexisting problems. And I I think it's fair to say that we're in the midst of a mental health crisis in this country. But if you look at the charts on this, it began long before CHAT GPT kicked off the AI race at the 2022. And you can see that the mental health decline is affecting all ages, but it's most acute among the young. So, Nick, if you could pull up those Feet charts, what you'll see is that there's been a big drop in conscientiousness among young people, a big increase in neuroticism, big decrease in extroversion, for example. David Sacks (00:17:01): But where this really took off was starting around 2020. Jason Calacanis (00:17:05): Oh, what happened then? David Sacks (00:17:07): Right. So correlating with COVID and the lockdowns and that whole huge societal disruption that we now wanna kind of forget and paper over, that's what seems to have triggered a lot of these mental health declines, which kind of makes sense that if people couldn't go to school for a couple of years and they were in these lockdowns and it disrupted social formation and the development of young people, obviously, that's gonna have a bigger impact. So I think this AI psychosis thing, it's gonna get a lot of play. The media's gonna love it. There's a lot of other groups that are gonna love it because they're gonna hope to profit from it in some way. But ultimately, I think that it's if the only thing that's happening is that people are just going on chatbots and researching to their heart's content, it's probably a relatively benign outlet for preexisting conditions that were there in society. Jason Calacanis (00:17:59): Well, and you did mention the social media psychosis. There's a lot of people who have social media psychosis, and they spend $20.30, $40.50 Twitter posts a day. And that's probably three of the four of us here on this program, who are super engaged with that platform. It may not be as much of a psychosis, but it is an addiction, sure. David Sacks (00:18:20): Well, think the whole moral panic over social media was also overblown. But I do think that if you compare David Friedberg (00:18:26): And there was video games before that and David Sacks (00:18:28): it was violent movies before that. Jason Calacanis (00:18:30): Chat rooms on AOL. David Sacks (00:18:31): Violent movies before that. And, you know, there's all these holograms. Duck in the d and d. Chamath Palihapitiya (00:18:36): Rap lyrics. David Friedberg (00:18:37): Yeah. Yeah. Rap lyrics. David Sacks (00:18:39): Yeah. Yeah. Or what was the the lyrics where they were accused of being demonic? Judas Priest. Chamath Palihapitiya (00:18:43): Twisted sister. Yeah. Judas Priest or Twisted sister. David Friedberg (00:18:45): Marilyn Manson. All of them. David Sacks (00:18:47): Yeah. There's all there's always something. But but but I will say Even that David Friedberg (00:18:50): the beat the Beatles were outlandish, and they were a threat to societal fabrics back in the day. David Sacks (00:18:55): But but even just comparing AI psychosis to the moral panic over social media, I I do think that it's probably undeniable that social media has had an influence on society because what happens is you get on Instagram, people are posting this best version of their lives, and so it creates maybe a distorted sense of reality, and people can sort of buy into that. David Friedberg (00:19:19): They get sad. David Sacks (00:19:20): You know? And and there is something to x being addictive. And Jason Calacanis (00:19:25): And blue sky now because people spend too much time on it. Right? David Sacks (00:19:28): Yeah. So look. I'm not I'm not saying that these things don't have any negative consequences. I just think that the panic about them is overblown. But but if you just compare this so called AI psychosis to the effects of social media, again, I think it's relatively benign because it's something that people are doing to inform themselves about things. And they can go down rabbit holes, but it doesn't really trigger feelings of envy or inadequateness in the same way that social media can, I think? Jason Calacanis (00:19:55): It seems to be hitting like two groups of people. It's the same group of people who get catfished, like lonely people who are looking for a connection. And then it's like the conspiracy theorist, delusion of grandeur. Maybe they're like on the borderline with mental illness seem to be the two groups that are getting sucked into this. But it is related, you know, you were talking about the social fabric sham off, maybe in our group chat earlier, and you had some thoughts on that. And maybe we'll just pivot into the social fabric story. So here, this went viral estimated percentage of 30 year olds who are both married and homeowners. So two of the American dreams, dare I say, getting married and starting a family, having kids. And in the 50s, that was, you know, half of 30 year olds already were married and already had homes. And now we're down to twelve percent. There's a lot of factors here, obviously, Chamov. But your thoughts generally on this, you were sort of Chamath Palihapitiya (00:20:53): I started to do some research on this and it's really sad actually what's happening right now. So I think if I had to kind of frame this, that chart that you showed is more of the outcome. And so you have to go all the way back and try to explore what are the potential root causes that causes this kind of an outcome. And there are a bunch of them. I think one of the first ones that we have to look at is what has happened to young men. And I think what's happened to young men is a little concerning. So I don't think it's our generation, but I do think if you talk to people 30 and under, you start to hear a consistent theme from guys, which is one, it's they don't really have the social skills to really talk to girls. It starts with that. And so what happens is they go to these different outlets. They go to video games. They kind of communicate more online. As a result, they tend to have brittle or fragile emotional relationships and social relationships. They don't date the same way that they used to. Then a lot of guys just feel like they also don't wanna get caught into being perceived, you know, post the Me Too movement in any way, shape or form as being untoward. You take all of these factors and you put it together and there's a lot of guys that have just opted out. And they just kind of move in a direction of parasocial relationships instead. Then I started to look at like the data on porn usage. It's out of control, I had no idea. But do you guys know what the average age now of a porn watching male is? Jason Calacanis (00:22:43): That's scary to think. David Friedberg (00:22:44): The average age? Yeah. Jason Calacanis (00:22:48): Would it be the average age of an American man or does it skew younger? I would assume skew younger. Chamath Palihapitiya (00:22:52): It's gone from 20 down to 16. There are more than fifty percent of 12 year old boys now that watch porn. I was shocked, I was like, what are you even talking about? I was a teenager, late teenager, I think when I, like, I mean, we had like, you found a magazine here or there, whatever. Jason Calacanis (00:23:12): Yeah, got a girly magazine, yeah. Chamath Palihapitiya (00:23:13): But can you imagine what it does to a 12 year old boy when they start to get instant gratification and you compound that all through high school and they don't have quote unquote, what we would call game, right? The ability to just talk and just kind of like carry on a conversation. What do you think happens? And then you go into the dating pool and what are these dating sites optimized for? These dating sites are optimized to keep people there, not for you to find a relationship and for you to churn, right? And so the gamification and dynamics of those systems are where many young men and women now look to to find a relationship. And so you have lonely young men, that creates lonely young women, a small cohort of very eligible men and women that everybody's chasing and fighting over, everybody else kind of left on the sideline. And so what do you think happens over fifteen or twenty years of this activity? It's what you see in this data. People aren't coupling up, they're not having long term committed relationships. So obviously as a byproduct, they're not getting married more. Obviously as a byproduct of that, then you're not combining two incomes, you're still with one income. At the same time, Nick, I just pulled this data, you can show it. What has happened to the underlying things that people would look to as satisfying markers of progress in life? A home, a good education, those are way out of reach. Right? So if you look at this chart, the price to income ratio of a home from 1980 to now has effectively made it so that you have to make an enormous amount of money as a single individual to afford a home today. And then if you only have a small percentage of people actually getting married and bringing two incomes together, you see what you're seeing today in that chart. So I don't know. I think that we have an issue in the American fabric we need to figure out. Chamath Palihapitiya (00:25:07): I don't exactly know what the solution is, but it's taken me this long and maybe this is what all these young people have been screaming about and I have ignored, so I apologize for not really understanding the gravity of it. But I think that this is a big problem and I think we need to start talking about it a lot more. Jason Calacanis (00:25:25): And here's a manifestation of it if you look past year prevalence of major depressive episodes, US adults, 2021, pretty recent data. And that eighteen to twenty five spike, look at that Shema, and then twenty six to forty nine, and then the older generations maybe not having these massive depression episodes. Friedberg, any thoughts on the American dream changing and young men? David Friedberg (00:25:49): Yeah. I think there's a lot of conflated factors here. They can certainly be related, but there's just a lot to unpack and all that. Chamath Palihapitiya (00:25:57): Yeah. I mean, I can I David Friedberg (00:25:58): I can comment on the one piece? I I think we talked a little bit about, you know, getting lost online. I mentioned when I was in college that year, 1996, when that that woman got lost in AOLIM, we had dial up Internet. It was, you know, a very different world where we're all connected twenty four seven on our phones. I'm sure we all have average phone usage of seven hours a day today. So there's a lot more rabbit holes to fall into that reinforce this isolation. It doesn't actually solve your isolation or loneliness problem when you get stuck on a phone or stuck on the Internet. It actually magnifies it and makes it worse because you start to see all the things you don't have, and you start to feel worse about yourself. And that leads to all of these kind of, I would say, difficult social, context that Shalom's talking about. With respect to affordability, as you know, I think that that's a distinct point, which is related to our expectation that the government can and should always solve our problems for us. And as a result, we created the federal home loan program much like we created the federal student loan program, both of which I believe created bubbles in those markets. We created this concept that every American family should be able to afford a home, and our solution was to pump a bunch of money into homes through the federal home loan program. And that ultimately led to bubbles of unaffordability for for homes. If we really wanna solve this today, besides solving the government spending problem and inflation problem and dollar devaluation problem, which obviously require cutting spending, I think it's gonna need to be some sort of set of rules around making sure that homes are not being bought up by institutions. Like, that that's one that I think is gonna be a pretty popular point that's gonna come up in the next year or two, particularly in the next election cycle. David Friedberg (00:27:39): So, you know, there's two sides to that to that one. Jason Calacanis (00:27:42): I think you you're kinda dancing around the the issue there, and I think it's very real, which is the financial piece of this, Friedberg. Boomers have just absolutely this this couple of generations, if you look at the cost of homes, like you mentioned the cost of education. And then you just look at real wage growth. Don't know if I sent you a chart, Nick, if you can take a look at this. You know, the big problem in The United States is wages have not grown, except for people who have a lot of money already. And so if you wanted to start a family, and you're in $100,000 in debt for your student loans, and homes have doubled, tripled, quadrupled in price when compared to your income, and we don't have real wage growth. That's an issue. And I think this will become the issue of the next election. We see Mundamy and the socialist movement. We talked about it last week. If you really wanna make a compelling argument for the next election cycle, I think it's real wage growth. And if you look at something like minimum wage and this disparity between what top earners make and minimum wage, here's a chart of where minimum wage is in The United States versus other developed countries. There's a real argument here, even though we might all be free market. Well, there's a Speaker 5 (00:28:49): very visual approach. Chamath Palihapitiya (00:28:50): There's a very different approach to higher education in literally all of those countries except for ours. Jason Calacanis (00:28:56): It's affordable, yeah. Chamath Palihapitiya (00:28:57): Well, yeah. And I think that we have to call a spade a spade. There was an entire generation, if not two generations of young men and women younger than us, right? So not in their late 40s, early 50s, who were told that they must, not should, not it's nice to, they must go to university. And these folks took out an enormous amount of financial support to do so. And part of the underlying reason was that they were told, and it sounds very credible, technology is coming and there's gonna be so much automation of all of the other kinds of jobs that you may do in a trade school, you should go to university and protect yourself. Well, lo and behold, it's turned out to be the exact opposite. So could you imagine where, you know, you could have gone to trade school, been an electrician, been a plumber, done something, welder, Made a couple $100, married somebody, you know, she does a good job. Now all of a sudden she also makes 150, 200,000 a year, you're making $400,000 and you have no debt. That is the key, you have no debt. When you make 400 ks and have no debt, I'm sorry, but that is probably actually better than being the doctor making a million bucks. And then there are all of these other jobs that aren't a doctor where you're still saddled with the 300,000 and you have no way of paying it back. So I think that that's also a really important issue that we have to figure out at some point. There was a framing of the issue for an entire generation that was probably wrong. If I had to bet, I would bet that engineers are more likely to have their jobs replaced in the short term than welders and plumbers. Jason Calacanis (00:30:38): Okay, Saks. I mean, we're talking here just about the American dream. Is it broken for these next generations, low wages, high debt, no ability to buy a home. And, this came out in New York this week. Pull up that chart, slow gains in jobs in New York City for the 2025. Feels like something's happening here with jobs. We talked to vice president JD Vance about this. He had some concerns about, jobs for recent grads. This is New York City. Only about a thousand jobs were added in the first half of this year. Don't know if that's specific to New York, but we had two months of, data revised. We clearly have some issues with jobs here and young people are clearly having a problem economically. They might be upside down. What are your thoughts here, Sachs? Possible David Sacks (00:31:31): different things here. I'm not sure how a specific data point around a few months of job supports in New York City is really relevant to a trend that started in 1950. I mean, are we talking about this? I mean, this is the chart that went viral on X over the weekend, and a lot of a lot of people are commenting on why this is, which is starting in the 1950s, you had about fifty percent of 30 year olds were both married and homeowners. And by the early 2020s, that number is about ten percent. So that's that's the big societal change that's happened over, especially the last thirty years, and the question is why? And I think there's both economic factors and social factors, and I think you guys touched on some of the big economic factors. I mean, one is the affordability of housing, which I think is mostly due to the fact that we're not building enough, and that's due to the fact that in large urban areas, I mean, in these blue cities, you can't build anything because the cities have tied everything up in legal and regulatory red tape, and that's the whole point of Ezra Klein's book on abundance is to try and get liberals to change their point of view on that. So you've kinda got the affordability of of housing, and then you've also got the college scam, which is you've got these kids graduating from college with, I don't know, 200,000, dollars 300,000 of debt because the cost of college has skyrocketed over the last few decades, which, you know, that was not true thirty or forty years ago. You could get a decent college education without graduating so mired in debt that obviously there's no way you're gonna be able to buy a house and start a family and that whole thing. So I think there are these important economic factors, but at the same time, there are a lot of these social factors that you're talking about. It does seem like young men are less self sufficient. I mean, you've got these data points around isolation and loneliness, but you've also got these data points around lack of self sufficiency. If you could put up the Feet charts where they talk about the ability of of people to make plans and follow through. Exactly. David Sacks (00:33:41): I mean, so there's been a big change among the 16 to 39 year olds in their ability to make plans and follow through, in their perseverance, in how easily distracted they are, how careless they are. And so I I do think that there is there is a sense that a lot of these young people just aren't ready to be the head of a household, to own their own homes, to start a family. And I think there's some good questions about why this is, and I wouldn't rule out the effect of woke poison running through the school system here for the last twenty or thirty years. I mean, if you raise white males since kindergarten to believe that there's something wrong with them, they're the evil group in this morality tale of woke that's been told, they're gonna internalize that in some way. And David Friedberg (00:34:29): Maybe check Jason Calacanis (00:34:30): out. Maybe opt out. David Sacks (00:34:31): I think it plays out in a lot of different ways. Jason Calacanis (00:34:33): And they opt out. David Sacks (00:34:33): But but I wouldn't I wouldn't rule that out either. But it's hard to say exactly. You know, look. I think that Jamathi mentioned the online dating sites. I mean, I think there is something to that where the dating sites have made the dating market more efficient in a way and more globalizable. But is that a good thing? I mean, you used to have a lot of hyper local dating markets, so maybe it was inefficient, but maybe that was more conducive to average people hooking up whereas Yeah. David Friedberg (00:34:57): I mean, another thing. Chamath Palihapitiya (00:34:59): Remember, think of the number of people you guys know that met either a long term boyfriend or girlfriend or a spouse at work. Yep. But if you ask young people today, is that even allowed? That is so verboten. It is like so off the- Jason Calacanis (00:35:13): Too risky. Chamath Palihapitiya (00:35:14): It's not allowed. You're not allowed to do any of that because of this latent fear sacks, as you said, there could be an accusation. How do I defend myself? And so there's a fear that has, I think, seized a large part of our youth. Jason Calacanis (00:35:27): Yeah. What a great platform this is for either party or a new party to pick up, just double the minimum wage, take out all these regulations, build more homes and make a college affordable. Those three things are such a winning platform. Chamath Palihapitiya (00:35:40): Friedberg, think that we should What do you do with the mortgage market? David Friedberg (00:35:45): God, it's so difficult. I don't know. Chamath Palihapitiya (00:35:47): Do you just basically privatize Freddie and Fannie and let them underwrite? David Friedberg (00:35:51): I a 100% think you gotta privatize Freddie and Fannie as a And first Chamath Palihapitiya (00:35:55): then you have to stop underwriting student debt so that you don't underwrite the $200,000 degrees. David Friedberg (00:36:00): I believe a 100% in ending the federal student loan program. And I think that it will force a restructuring of the of the entire higher education system in The United States, which no one wants to hear, no one wants to do, and everyone's against, but I think it is the only path forward. We have the chancellor of UC Berkeley and the president of Dartmouth coming to the all in summit to talk about the future of higher education. I think this is probably, in my book, one of the top three most important issues we should be discussing right now. We have to get rid of the federal student loan program, and we have to force a rightsizing of higher education and a restructuring of higher education such that the access to education becomes more ubiquitous. It's not this $300,000 debt load that everyone is forced to take on, And it enables a more fair market and a more free market where people get what they pay for. And ultimately, people are going to have to make decisions about what majors they're getting and whether or not to pay for these colleges Chamath Palihapitiya (00:36:54): Or whether they get a major all. Whether they Speaker 5 (00:36:57): get a major at all. Chamath Palihapitiya (00:36:57): Social have the social acceptability to to not do that. Jason Calacanis (00:37:01): And and another tactical thing, Freeberg, is to just this accreditation scam where only certain people can give college degrees. If you allowed, entrepreneurs to create schools like Joe Lonsdale is doing here, he had to buy an accredited university to kind of back into it. But if you asked a bunch of entrepreneurs, hey, lower the cost of this degree from $2.50 ks to 50 ks, they would figure out a way to do it. And it's already happening. People are now using ChatGPT, using online tools to get their education and doing that around the existing system. So, you know, life finds a way. These young people are finding a way. They're finding I'll ways Chamath Palihapitiya (00:37:38): be honest. I really like Trump's attack on Columbia, UCLA, and Harvard because I think that those were these sacred cows that were always left alone. They were meant to be these signaling mechanisms of elitism and quality and future prospects, and those institutions ran totally amok. Jason Calacanis (00:38:01): Totally amok. Chamath Palihapitiya (00:38:01): They started to do things that just made absolutely no sense. David Friedberg (00:38:04): To your point, there was a a really good article. I think it was in the Atlantic this weekend about how the humanities captured science. So, basically, these universities get a large amount of their federal funding by getting research grants allocated to the university, and then they get an administrative topper on top of the research grant. Historically, at Harvard, that administrative topper is 60%. So if a if a researcher gets a $3,000,000 grant at Harvard to work on cancer research, $1,800,000 of administrative fees are paid to Harvard University. Jason Calacanis (00:38:34): Ridiculous. So a David Friedberg (00:38:35): lot of the universities use those fees to expand and grow out their administrative staffing and also to expand and grow out their humanities. These aren't bad programs per se, but it basically meant that the science funding was being used to kind of create what some people are now calling social engineering that these universities then engaged in over a several year period. One of the other key questions about the future of higher education is should science and engineering be coupled with the humanities from a funding perspective, or should those institutions be Chamath Palihapitiya (00:39:06): split Thiel has a very funny saying about this, which is anytime you have a a concept that you wanna fund that has the word science after it, it's not a science. So just kick it to the curb. Yeah. Physics, physics, social science. When you're a political science or social science. Yeah. What is that? David Friedberg (00:39:23): Yeah. In China, in Germany, in Russia, there are science and engineering institutions that are separated from universities where you can go and learn the humanities. And I'm not discrediting the value of learning the humanities. If you can afford it, if you think that there's value in doing that for yourself and your career, yada yada, go for it, good luck, etcetera. If you're wealthy and you wanna engage in that because that's something you wanna pursue, society needs that, we value it, great, go for it. But the problem is the research being separated from the humanities is critical. Jason Calacanis (00:39:53): Saxe, if you want federal funding, shouldn't we put And you want nonprofit status for your giant endowment, why not require these schools to increase the number of Americans that they're educating and to lower the price of the education? Now, if you want to do it privately, fine. But if you want federal funding, if you want taxpayers to underwrite these incredible institutions, double the number of people you're teaching, triple the number of Americans you're teaching and lower the cost 10% a year till more people can afford it. Like we we do have to hold them to some standard here for increasing the number of Americans who are educated, because those institutions now are global institutions. There's very few Americans going to them. David Sacks (00:40:32): Listen, we've seen with all sorts of, goods and products that when the government is paying the bill, the price always rises. You always get inflation because the government is relatively insensitive to cost. Whereas if you look at technology products, the price keeps going down over time. There's a really good chart on this, right, where like all the sectors of the economy that are experiencing massive inflation, they're all funded by the government. Jason Calacanis (00:40:54): Yeah, healthcare, housing, education, there it is, yeah. David Sacks (00:40:57): So look, that's what's going on with higher education. But I wanna bring one other thing into this, which is, you know, we spend a lot of time talking about higher education. We don't really spend that much time talking about the quality of k through 12 education. And my sense on this is that over the past thirty years or so, there's been a shocking decline in the quality of American elementary and high school I think it's so bad. Chamath Palihapitiya (00:41:21): So bad. David Sacks (00:41:22): If you look at the performance of standardized tests, the extent they even do testing anymore, you see pretty sharp declines in the quality of education. But there's a lot of places now where they're trying to abolish testing, they're abolishing gifted programs, math programs. This is like a big issue in California. San Francisco, they tried to get rid of those gifted schools because of so called equity. In other words, they wanna define the standards down to the lowest because it would be supposedly unfair for some kids to experience the advancement of being in a gifted program. And then of course, you get into the behavioral standards. I mean, we've all seen these viral videos of fights happening in schools where, you know, sometimes the teachers are in the fight, sometimes the kids are in the fights. This has been a total decline of behavioral standards in schools. Know, You I remember back in the 1990s, Bill Clinton got a standing ovation in the State of the Union because he said that they should have school uniforms. And there was a sense that you should have discipline in schools and high standards. And now, I mean, I actually think that's a good idea. Mean, I actually think that Jason Calacanis (00:42:25): 100%. Uniforms and no and have phone lockers. No phones in the school. You you you check your devices. There's a David Sacks (00:42:31): lot of things that could be to to raise the bar. Jason Calacanis (00:42:34): What is this? New York fighting in Brooklyn in a school? David Friedberg (00:42:37): This is what goes on in China. Jason Calacanis (00:42:40): Oh, look at that, teamwork. Teamwork. We should do that at the summit. The four of us should bounce basketballs and show that we're a team, so we could team building exercise for the all in retreat. David Sacks (00:42:50): Remember, you know, the schools are in America, the public schools are not run for the benefit of the kids, they're run for the benefit of the teachers' unions. And we saw this during COVID where Randy Weingarten insisted that the schools stay locked down and closed far longer than was necessary when everybody else had already realized that these lockdowns did not make sense, that putting the desks five feet apart was absurd. It was a placebo Who at David Friedberg (00:43:17): who made that statement, Saxx? Because I remember this happening. I remember the union guys fought against reopening the schools. David Sacks (00:43:24): Absolutely. David Friedberg (00:43:25): Who like, there was a guy you David Sacks (00:43:27): met with. Was Randy Weingarten and the teachers' unions that were fighting the school reopening, and they kept it closed for a year longer than necessary. I mean, in California, it was closed for roughly two years. You know? There's absolutely no justification for that second year, even if there was for the first one, which is highly questionable. And then the way they were having, you know, five year olds wear masks to school. Yeah. I mean, even in our schools. No. Mean, five year old was like, they're trying to like put this like mask on him. Speaker 5 (00:43:58): It's so sad. Then, Jason Calacanis (00:43:59): mean, was absurd. David Sacks (00:44:01): Mean, was falling off and- Jason Calacanis (00:44:03): They never wore it David Sacks (00:44:04): to me again. It was always Jason Calacanis (00:44:05): like the nose was out, and you're like, okay, so this is so Speaker 5 (00:44:07): performative. I And was was David Sacks (00:44:09): caught in any way. It was Jason Calacanis (00:44:11): We so talked about this during COVID, like what is the damage gonna be to these kids? And we're seeing it now in a range of things. I remember when I got rid of the masks, my nine year old who was maybe five, maybe six years old at time, she refused to take it off and she was scared. She's like, No doubt, I can't take this mask off. I don't wanna die. And I'm like, What are they telling you at school? You're not gonna die. Nobody's wearing a mask anymore unless you're at like the socialism twenty twenty five conference where everybody's I don't Speaker 5 (00:44:38): know if you saw that. Socialism twenty twenty five. They're literally, like, after they do their land acknowledgments, they mask up. So it's a panel of people in 2025 wearing masks. David Friedberg (00:44:50): Wait. Is it really a socialism twenty twenty Speaker 5 (00:44:52): five concert? We have to go next year. I think Jason Calacanis (00:44:54): we should host an all in panel at this. We should definitely Speaker 5 (00:44:56): do some programming at the twenty twenty six socialism. It's amazing. Jason Calacanis (00:45:01): It's like the democratic socialist part. It's incredible. David Friedberg (00:45:04): It's incredible. I might register for the party to get the invite. Jason Calacanis (00:45:07): We should totally go undercover. We should wear like we should get goatees and suspenders and go as baristas, and just talk about how we're gonna seize the memes of Come on. David Friedberg (00:45:16): Here's it Speaker 5 (00:45:18): would be so great. All in undercover. If you look Jason Calacanis (00:45:21): at the red bar here, just in current dollars, the average tuition fees. You know, when we went to school, it was 2 to 3,000 a year on average. And then now it's at 10. And that's an inflation of dollars. If you put entrepreneurs on this and just said, the David Friedberg (00:45:38): is the socialist mindset is that the way to solve that is to get the government to do more and make it more free. And the reality is that the reason this happened is because the government began to provide student loans unlimited to everyone that got a Jason Calacanis (00:45:49): Who's running education in the administration? Let's talk to them about accreditation and cracking that open. That's crack we could invest in a company to There do David Friedberg (00:46:00): was plenty of bullshit private universities and private schools out there. The problem is they all get access to the capital. It's not about accreditation. It's sure, like, make make accreditation more easy, but at the end of the day, you need to make capital, more efficient. You need to get the government out of the role of allocating capital to education. Jason Calacanis (00:46:16): That's it. David Sacks (00:46:17): There's there's actually a really simple fix to this. Chamath Palihapitiya (00:46:19): Somebody needs to close the loop so that when you say you wanna go and get an art history degree, the answer is you could do it, but you need to pay for it. David Sacks (00:46:28): And no loans. In other words, what what you're saying is there needs to be a restoration of underwriting criteria Speaker 5 (00:46:34): Correct. David Sacks (00:46:34): For this type of Yes. David Friedberg (00:46:36): I've said this forever. That's right. Jason Calacanis (00:46:37): Exactly right. But also, I mean, if you do the next prize, you said, what's the least amount of money you could spend to educate somebody to be a lawyer? You would get entrepreneurs. You'd like, oh, that's a great business. Entrepreneurs don't go after this because the accreditation process is decades long. It's impossible to do because of regulation. Civil servant David Sacks, let's put this on your short David Friedberg (00:46:59): list. AI is gonna be an accelerant here, David, because I do think that with AI, it's a great equalizer. There was a company I was talking to the other day that does AI education, and they are having an absolute lift off in their business in South America and in South Asia. And in these markets, there's a dearth of qualified teachers to stand in front of a class and teach folks. And so by using AI, these kids are now getting ahead of American kids. David Sacks (00:47:25): So other words, think of advancing through AI psychosis because they're spending twelve hours a day on AI. David Friedberg (00:47:30): Right. Well, probably two hours a day. David Sacks (00:47:32): I mean, that's probably what's gonna happen is AI is a great leveler because you can basically get all the world's information at your fingertips in a way that's fully interactive. Yeah. David Friedberg (00:47:41): Personalized education. That's personalized. Jason Calacanis (00:47:43): That's it. David Sacks (00:47:44): I think some trial lawyer's gonna end your ability to get that because they're gonna call that AI psychosis. Jason Calacanis (00:47:48): The technical term is adaptive learning. And I don't know if you guys drive your own cars anymore, but in the Tesla, they just added Grok to the dashboard. If you long hold the, like, Siri version in there, it turns into Grok. And I did a thing where I said, Hey, test my vocabulary. And it started giving me words. It would ask for my definition. I give it the definition and say, You're closed. This is a better definition. And on my rides to and from the office now, I'm doing like vocabulary tests and it's increasing my vocabulary and testing me on higher and higher. David Friedberg (00:48:18): So you're now like third or fourth grader? Like what? I mean, my vocabulary Jason Calacanis (00:48:21): has already been off the charts. I guarantee my verbal score would be higher than the three of you. Guaranteed. Guaranteed. David Sacks (00:48:28): What does what does AI say about the correct way to pronounce monetization? Jason Calacanis (00:48:33): Well, I've been working on that. And you know what? I'm it's I'm I'm correcting that. Do you but but make fun of me because of my J. Dyslexia. I need a combination. David Friedberg (00:48:42): I I actually personally I prefer J. Cal's version. I like it a lot better. Monetization is, like, time. Monetization. Jason Calacanis (00:48:47): Lean into it, folks. Alright. Listen. Let's give some red meat to Saxe. He took the time to show up. Trump sent the National Guard into DC. Folks seem to be generally in support of it. Two weeks ago, Doge staffer big balls was badly beaten by a group of eight to 10 teenagers in an attempted carjacking. And he truly has big balls because he tried to protect his woman, and just fought hard. Trump posted a bloody picture of him on Truth Social saying in DC that crime is totally out of control. And he decided if DC, this is what he said, if DC doesn't get its act together and quickly, we will have no choice but to take federal control of the city and run this city how it should be run and put criminals on notice that they're not gonna get away with it anymore. Well, he did just that on Monday. Trump invoked section seven forty of the DC Home Rule Act of 1973, allows the president to take control of the District Of Columbia and for up to thirty days. So daddy's home, and 800 National Guard troops are in the city. I mean, if you told me you could send 800 National Guard to the Tenderloin and get rid of the fentanyl dealers, I'd be, like, all for it. Sachs, thoughts on, this move. I obviously, some media elites or people are hand wringing, oh, this is Trump trying to be emperor king, but he's legally in the right. Right? He has the right to do this in DC specifically. What are your thoughts generally? Is he gonna go roll into New York, San Francisco, and LA next? That seems to be the hand ringing, or is this an isolated kinda DC specific? David Sacks (00:50:23): Well, no. The the federal government has the right to run DC, and I think they it did until the nineteen sixties, and then you had this experiment in home rule. And I think you'd have to say that the experiment has not worked out that well. So last year, Washington DC had the fourth highest homicide rate in The US. Its homicide rate was nearly six times higher than New York City, which wasn't great. The homicide rate exceeded Atlanta, Chicago, and Compton. It also has one of the highest robbery and murder rates among US cities, and there's been numerous assaults and robberies on congressional staffers and members of congress. In May, you had two embassy staffers were murdered. In June, a congressional intern was fatally shot just a short distance from the White House. And then, of course, just, a week or two ago, you had that, attack on the the Doge staffer. I think his real name is, Edward Constantine, aka Big Balls, who was mercifully beaten by a group of I think teens, and that's been a big issue is that juvenile crime is a huge issue in DC because there's just no punishment. I mean, they're caught and then they're released. DC's had a policy of zero bail, which we've seen in many cities, but what that basically does is create a revolving door at the jail. As soon as someone's caught, they're released. And then you've also got vehicle theft in the districts over three times the national average, again, because even when they catch someone, they just let them go. You've got repeated armed carjackings and violence, again, by teenage gangs. And the liberal media's favorite talking point on this is that somehow violent crime is down in DC, which is the exact same thing we heard about San Francisco. Remember when Chase Boudin implemented the zero bail policy and crime was going through the roof, and CVS and Target were shutting down, all the stores were basically locking up the toothpaste. I mean, people could feel the crime, but no one was reporting it because they just knew that nothing would happen. So I think this is the typical gaslighting we've seen before, and no one really can trust these stats. David Sacks (00:52:22): I think they they all have stories about about crime. There's a bunch of commentators on CNN and MSNBC who've been trying to make this argument about the crime being fictitious, and they've been bringing DC residents on the air as guests, and every time they try to Speaker 5 (00:52:41): Do man on the street, it blows up in their lap. David Sacks (00:52:43): Yeah. They they try to get these, DC residents to support this this crime is down narrative, and then every time the the DC residents start telling stories about them or their their friends being victimized, Jason Calacanis (00:52:54): it's David Sacks (00:52:54): like, oh, yeah. I know. This friend of mine got shot or this person got carjacked. Chamath Palihapitiya (00:52:58): Oh, we can't. David Sacks (00:52:59): And it's become comical now. And a lot of these videos are Jason Calacanis (00:53:02): going What's good about the murder statistic is that you can't make that one up. David Sacks (00:53:07): Murders are That one's harder too. Right. Jason Calacanis (00:53:08): Yeah. Exactly. You can't cover up somebody getting shot. We had the same exact thing that happened in New York. My brother was a cop in the nineties. We had stop question frisk. People call it stop frisk. People were overwhelming in favor of this. Now listen, people shouldn't be randomly stopped and and we we all have concerns about that. But crime was so bad in the eighties in New York when I grew up there that in the nineties, people are like, yes. Stop question and frisk anybody hopping a turnstile. And that's how we got all the guns off the street, then New York became incredibly safe under Giuliani David Friedberg (00:53:42): one and point Bloomberg. And carry Jason Calacanis (00:53:44): on until we got Dinkins two point o, De Blasio. David Sacks (00:53:48): So if you remember the theory back in the nineties of how you reduce crime was the the broken windows theory. Yeah. Which is that you get rid of the entry level crimes, and you get rid of the visible manifestations of lawlessness and chaos. Because when you create an environment in which it appears that those things are tolerated, then you will end up getting more of it, especially I think by by juveniles. So that was the theory in the nineties and absolutely worked, and what you've got in DC is the opposite of it. And I think what president Trump has said is, look, first of all, we're gonna get rid of the homeless encampments. So that's being removed. You're gonna get rid of the graffiti. We're gonna stop the zero bail. So once people get locked up, they're gonna stay in jail. And we're gonna start treating these, teenage criminals as, you know, we're gonna punish them. We're not gonna let them off the hook. If they're committing adult crimes, there's gonna be adult punishments. I mean, this is the right direction to go if you wanna reverse this lawlessness in DC. And I think it's gonna have an impact very, very quickly. I think it's gonna work very quickly. And I think that Democrats who are denouncing this are falling into this trap that I think we saw on the border as well where they appear to be supporting criminals and gang members just like they did on, you know, with the deportations where they start resisting the deportations of MS-thirteen gang members. They fell into a trap there. I think they're gonna fall into a similar trap here in DC because I think this is gonna work, and I think it's gonna provide Republicans with a very important counterpoint. Because I think one of the problems with crime is that it is a local problem, and the truth is that it's been very bad in blue cities, and Republicans just haven't had power there in order to effectuate a change that they could point to as a solution. David Sacks (00:55:37): And I think that DC provides that opportunity. If Trump's plan works, I think it'll show that Republicans have the solution on on crime, and it'll hopefully help provide an alternative in these deep blue cities. Jason Calacanis (00:55:50): And here's a chart just to put some numbers behind it. This is gun assault rates in Washington DC. You can see it spiked under Biden, went up a bit. 2024 came down at the end of his term, and then it's lower this year in 2025. That black bar is the first half. So it is trending in the right direction, but it's still not acceptable. Sachs, I guess the question David Sacks (00:56:14): is don't know if we can believe all these statistics. So just last month, there was a DC police commander was suspended for manipulating crime data to make it seem lower than it actually is. And the DC police union says its practice is widespread. In the TV show The Wire, remember they called this, juking the stats? Yep. So first of all, you got the people in charge. The way that lieutenants become colonels is by manipulating the crime data. Then you've got the learned helplessness that we saw in San Francisco, which is once people realize that the jails are a revolving door and nothing's gonna happen, they stop reporting this stuff. Yeah. Now you're right that the murders, I think, are hard to cover up. I think those probably accurate, but the things like carjackings or assaults, things like that, or shoplifting or theft, I think a lot of that stuff just goes unreported. Jason Calacanis (00:57:01): It has become a partisan issue. And if you look at the partisan stats, every time it flips, just like the economy, Republicans think it's a disaster, Democrats think it's fine. And then when a democrat's in office, it flips. But I guess the question Sacks is that, I think people have a reasonable argument here. Is this going to be a strategy by the Trump administration to go into New York City next, LA next, San Francisco next? And would you agree with that or not? David Sacks (00:57:30): The question is what would the legal basis for doing that I mean, in the case of DC, this is a long standing situation where the federal government has the right to run DC and did run DC for many, many decades. And it was only more recently that this changed to this experiment in home rule. So there's clear federal authority for president Trump to do what he's doing, but I don't know if it would be the same for New York and LA. So I tend to think that whole issue is is a red herring. Jason Calacanis (00:57:58): Yeah. I agree. Speaker 5 (00:58:00): Yeah. I agree. Jason Calacanis (00:58:01): Here's the gallop. Freyberg, I'll let you comment on this, but this is partisan perceptions of local crime as you see. You can see Trump's term in pink and then Biden's in blue and then before that Obama's. And, Republicans think under Biden, it was like a massive issue crime and Democrats thought it was no issue. And then you go to Trump's, it reverses. Slightly more Democrats think crime is an issue under Trump. Republicans think crime is gone under Trump. Then you go to Obama. Republicans think that crime is a disaster under Obama. Democrats think it's you just have to look at the raw numbers. But the fact is homelessness is a major issue here, Freiberg. So I'm curious what you think about what should our policy be on, you know, let's call it what it is junkies. It's not home. It's not a homeless issue. These are people addicted to super drugs. Should they be allowed to be on the street? Should they be round up and put either in a mental hospital, in jail, or just generally not allowed to be on the streets in a major city like San Francisco? What do you think, St. Bert? David Friedberg (00:59:03): I don't think that we should allow people to live on the streets because it's community property. It's not for individual use. And, you know, I can't leave my stuff on my sidewalk. The city will come and clear it away. Why can someone choose to live on the sidewalk? I think, you know, that's just the rule of law is just, you know, enforce it. Jason Calacanis (00:59:22): What should happen to those people addicted to fentanyl when they get picked up? What should happen next? David Friedberg (00:59:28): There was a case that led to shutting down many of the mental hospitals in The United States. Jason Calacanis (00:59:32): Yes. That people were being abused in them. So then we had people And David Friedberg (00:59:36): so the response was get rid of the mental hospitals. But unfortunately, like the mental health crisis is real. We talked about it. The drug addiction crisis is real. And I do think that for the sake of the community and the sake of the social fabric, that is a very good way to spend taxpayer dollars is to create treatment centers and mental health facilities to take care of people in need, in that particular context. I think that it is a heartless thing to leave people living on the street like that, and they should be cared for. So I would be all in favor of I don't use the term round them up, Jason, but I would say provide, like, access to care and effectively move them. If they're not gonna move voluntarily, move them into those care facilities to create recovery for them. I don't think that we should have homelessness on the streets. Jason Calacanis (01:00:17): I'm a 100% agree with you. It's totally compassionate to take them off the street and not subject them to life on the street. Now they are not in a mental state to make their own decision is the key issue, Chamath. So if you had, God forbid, a family member who is on the street doing fentanyl, you yourself, I I think all of us would say, yeah. Pick the person up. Don't let them live on the street. And if they Chamath Palihapitiya (01:00:39): won't go Jason Calacanis (01:00:40): to the facility, then they have to go to jail. Like, mean, it's just the nature Chamath Palihapitiya (01:00:43): Somebody knows this but somebody in my family has struggled with mental health pretty severely has been in Yes. You can't do anything. You can't force them to take their anti psychotics. Can't do anything. Yeah. So unless the rules change, you know, these things are like, but for our ability to intervene, this person would be on the street is my guess. Jason Calacanis (01:01:11): Yeah. David Sacks (01:01:12): Well, I mean, I agree with what Friedberg said about this, and just another case is city of Austin, which is a deep blue city within a very red state, but they had a very permissive policy towards letting people camp out on the sidewalks, and it ruined the downtown. And then they passed a ballot initiative there, and they moved the, I guess you call them homeless people, to a campground. So yeah, I mean the best solution would be to move them into treatment or some sort of mental institution. But if they won't go to that and they insist on living outside, then at least if they're gonna insist on camping, put them in a campground. You don't put them in the middle of the sidewalk in public places where it's extremely disruptive and threatening to the safety of everyone else. I mean, obviously, having people camping outside our national monuments has to be the worst possible place for these people to be. Jason Calacanis (01:02:08): I They have been relocating homeless people to campsites, and there's plenty of land theater to do that. Does the Chamath Palihapitiya (01:02:18): national be Jason Calacanis (01:02:19): in DC? They're there. Chamath Palihapitiya (01:02:22): Oh, this is perfect because I have to be there in September. Nick, I sent you a picture of what I'm David Sacks (01:02:25): gonna wear. Chamath Palihapitiya (01:02:27): This is what I intend to wear in DC when I go. That's what I'll be wearing. Speaker 5 (01:02:34): I'm gonna wear his gold chains again. You feel safe enough to to bust out the bling? You look good in that photo. I like the mustache. Jason Calacanis (01:02:41): Don't know why you shaved it. Speaker 5 (01:02:43): I was all in favor of it, my friend. Chamath Palihapitiya (01:02:45): Anyways, I'm gonna break this out in September. David Sacks (01:02:49): Well, here here's the thing is if you actually spend time in DC, then you're very happy about these changes. You're very happy about the National Guard coming in and making it safer. You're happy about the homeless being moved out. And this is why mayor Bowser, who's the DC mayor, is playing it very carefully. I mean, she's a democrat, so, of course, she's denouncing the takeover as authoritarian. That's not a surprise, but she's also acknowledging the legality of this by the Trump administration, and she's been pledging to cooperate. So she knows that cleaning up DC is gonna be popular with the residents even if it offends the groups. So I I think that's pretty interesting Chamath Palihapitiya (01:03:27): Yeah. David Sacks (01:03:27): That she sees that this is gonna be pop it's popular enough that she has to play it carefully. And I think that, just politically speaking, that if Democrats keep opposing this, I think they're falling into a trap that Trump has laid for them. Jason Calacanis (01:03:41): A 100%. I mean, if you asked and I tried to find some statistic like this. It'd be great if somebody would do this one. But if you ask people with families, let's say, who live in DC, are you in favor of this or not? People who actually have to live under these conditions, I'm guessing 90% are like, absolutely, this has to end. And if this is the quickest way to end it, sure. Send in the National Guard, it'll be a good deterrent and get a little extra support. I don't understand why the Democrats don't do anything other than say, yeah, the situation is untenable. We'll take all the support you can give us. That's the right answer. David Sacks (01:04:14): Well, the Democrats, you know, one of the problems here is that the the DC Metro Police Department is one of the most dysfunctional in the country, a big part of the reason why is because of DEI. The person who leads the department, the chief of the Metro Police, she had spent twenty three years on the US Park Police Force and then spent one year as DC Metro's chief equity officer, and then was promoted to being the whole chief of police. So basically they promoted the DEI person to being the chief of police for the whole department. And when she was asked about what the implications would be for the chain of command, she didn't know what chain of command meant. Jason Calacanis (01:04:55): Oh, yeah. That was a weird moment. David Sacks (01:04:57): This isn't an interview that's going Speaker 5 (01:04:58): viral It's right Karen Jason Calacanis (01:05:00): Bass kind of moment. Yeah. Like, maybe this person isn't up for the job, let's say. Alright, listen. It feels like a bit of a distraction of an issue. It feels like just good policing. Yeah, if the place David Sacks (01:05:15): is Why at is it a distraction? I think it's core. I mean, look, Jason Calacanis (01:05:18): No. I'm saying the media reaction to it with like, oh my god. Trump's gonna be a god king and he's gonna go into every city and do martial law. I think that piece is the distraction. I think this is probably just good policy. If he has the right to do it and the place is out of control, clean it up. Let's go on to our next topic. We got a one or two more topics we want to hit here unless anybody has something they have to get to. Chamath, you wanted to talk about VC returns versus public markets. I know, Friedberg, you brought this up on a previous issue that you could just set it and forget it on the mag seven back in the day. So we're going to revisit this topic. Public markets. Here we go. They've been on a tear 2023, up twenty four percent twenty twenty four, twenty three percent twenty twenty five, or a 10% so far. Here's just a chart of it, we had one down year, obviously 2022. And it's been on a tear. And it's only happened one other time before that the we've had three straight years of this kind of 15% performance, very rare, you see we highlighted them there on the chart. The .com bubble in the late 90s. And then before and after like peak ZERP and then now. Now you can compare that to the private markets venture capital. And here's a chart from 2032. And the reason I'm going to show these is when you looked at venture as a category versus say the S and P or a couple of lines up from that you see the NASDAQ venture was extremely, extremely attractive according to Cambridge Associates, which tracks us. They have the best data because they've been doing it the longest. Then we go and we look at the same chart in 2018. Hey, look, the Nasdaq's doing pretty well when compared to venture, in large part because we had some of these mega hits, the Google's and Facebook's and Amazon worlds, you know, coming to fruition and just going on a tear. Jason Calacanis (01:07:04): And then here we are in 2018, public markets really start to rip, same chart, just different time period. Here's 2020. And maybe venture isn't doing as good when you look at it compared to the markets. Of course, you can't do this for the last five years or six years of venture because they're in the J curve. When you do venture investing, you're expecting it to pay off seven, eight, nine years. But the trend here, think, Sharma, that you were pointing out is public markets, liquid, no fees, low fees, minuscule fees when compared to venture, and maybe a better bet for investors, and that's challenged the venture industry. Was that your sort of point in bringing this up, I take? Chamath Palihapitiya (01:07:47): I think the venture model is broken, but it's broken for two different reasons, not not totally correlated to each other. The the first is purely mathematical, which is when the public markets provide a consistent rate of return. It doesn't matter what that is, but let's just say, you know, you average it out. It's 15%. The question is what does a private investment have to give you so that it's worth putting it into an illiquid instrument where you don't get your money back for some number of years? Now, problem number one is it used to be that you could get your money back in six or seven years and the fund would liquidate after ten. Now you don't typically start to see returns until year ten and oftentimes year twelve or year thirteen, which means that they don't really pay out until year sixteen or seventeen. What the math of that would tell you is that you need to generate somewhere between six to 10% more in terms of the gross return so that on an apples to apples basis, you're being compensated for all of that illiquidity, Right? God forbid something happens or you wanna buy a house and you need the money. In the stock market, you just sell it instantaneously. In a venture investment, you're gonna call somebody. They're gonna probably haircut you by 30 to 50%, and you're gonna sell it because it's illiquid. So if the public markets are giving you 15%, the reality is that you need to get 25% plus. So then the question is, what venture investors generate 25% plus IRRs over a seventeen year period or a fifteen year cycle? And it turns out that every fund has a very low statistical probability of doing it. Every fund manager, if you're in the top, you know, handful, we all know who they are, they'll always at least have one that doesn't. So the problem is you have one that doesn't, then the next one that doesn't, then the next one that's even worse, then maybe one that comes close. And so there is no systematic approach to the return stream. So how should you look at venture capital, I guess is one question. And I think the way that one should look at it is, look, in a portfolio where you have a lot of liquid assets, it's a small piece that essentially is a mechanism to learn about the future and to understand how your other assets are going to perform. Chamath Palihapitiya (01:10:15): I think it makes a ton of sense. But if you're trying to crush it, I think the only people that will really make money in venture capital are the GPs building a fee generating business around it. Yep. Now that then gets to the second question, which is then, okay, so if you do invest in venture, what's the next big problem? The next big problem is in a world of AI. Do you just see the amount of money that's required to build a really big success shrink? And if that happens, then, you know, how much money can you actually really get working? So if you look at companies like Midjourney, that's a great example of a business where these guys are like, you know, forty, fifty, 60 person team generating hundreds of millions of revenue, very profitable. They're not gonna be raising an enormous amount of money. So I think that these two things, I think, are very complicated for venture. Doesn't mean that people will stop investing. Jason Calacanis (01:11:08): Freiburg, you wanna chime in on this, I think? Yeah. David Friedberg (01:11:11): Yeah. So I I pulled some data together. Nick, if you could pull up the basics. I know we talk about this a lot, but I thought it'd be good to show the difference between kind of a normal distribution and a power law distribution like venture returns, or I don't like to call it venture return. But I do think the returns generally in free markets create value creation in a power law distribution, which means that a few of the many account for the vast majority of capital appreciation of the the value creation. And that's because of the power of compounding. If you build a better engine of technology, a better business engine, you will compound. And that means that over time, you will accumulate more and more of the market in an outsized way. As you accumulate more of the market, you actually move faster in accumulating more of the market. And eventually it becomes a runaway flywheel. No one can catch up. That's the key return profile in free markets, generally speaking. And a manifestation of that is that is also the return profile in venture, in technology venture investing. Because when you find that one or two great hit, the Uber that has a great network effect or the Airbnb or the Google, it has a runaway effect in the market and it accumulates all the capital and becomes really valuable. And you can see this in the returns. If you just pull up, this is the latest Carta data. So this shows what the IRR by the vintage that the fund was raised and then also by the size of the fund and by how the fund has performed on a percentile basis. Look just at the twenty seventeen row. So the top decile funds are doing, call it 30% versus, you know, the median fund They're not. Hold on. They're not. Chamath Palihapitiya (01:12:52): These are all markups, paper marks. Speaker 5 (01:12:53): These are Chamath Palihapitiya (01:12:53): not These all bullshit numbers. David Friedberg (01:12:56): Okay. Fair enough. But I'll make your case in a second here. And and these are not DPI. So it's not distribution and cash out. This is just marked up value. And this is eight years old. This is the 2017 vintage. But just the difference between, you know, call it a 30% IRR and a 10% IRR, that compounds over ten years. So the multiple difference at the end you should expect is the difference of making 14 times your money or 2.6 times your money. The difference between 1030%. And that's kind of what this shows roughly is that the difference between a fifteenth percentile and a Jason Calacanis (01:13:27): The problem with this data though is this is Carta's product is used by a small number of people for a small number of years. That's why the other data we showed from Cambridge is much better because the 2018 forward are still in the J curve. So they, and to Tramath's point, they're paper So so I knew I knew we were major cap out there. Yeah. David Friedberg (01:13:47): Okay. I knew we would go down this rabbit hole, I shouldn't have shown that. But, like No. Jason Calacanis (01:13:49): That's okay. David Friedberg (01:13:50): There are two key points I wanted to make and just pull it up again, Nick. The first key point I wanted to make is because of the power law, the job of investing is to find the power law winners. It is not to buy the index. If you buy the index, you are losing to the market even if these mark even if these numbers are correct, which they're not as we've talked about. You're losing to the index if you're just buying the venture index, and it's probably way worse than this. You have to get the winners. And so what this does show, though, is that the smaller the fund, the less diversified it is, which means the more they're likely to capture the winners. And you can actually see that the smaller funds generally have better performance than the bigger funds. Jason Calacanis (01:14:28): For sure they do because they're getting in earlier as Welfreiberg and they're paying less value lower valuation. So that's that's the all thing. David Friedberg (01:14:36): They're they're not getting diluted away by the index. And the index generally is gonna return negative. It's gonna be a negative returner. I think I told you guys, I went to an LP conference years ago, one of the biggest venture funds, and they showed that 45% of their capital went into flat or down rounds, and they had a negative net return on that allocation of capital across 13 funds. And if they had put that if they had never invested in flat or down rounds, then they would have doubled their IRR overall as a as a fund. Really important point that the the power law matters, which is your job is to just find the winners. Absolutely. Find the winners, they're gonna compound. So how does that translate? So so go to the next slide, Nick. So this is the one that I shared in 2023 that Gokul Rajaram published on Twitter, and that's where I first saw this, which is if you buy just the top 10 companies in the Nasdaq and you just held it, you would have made a 24 x multiple over a twenty four year period versus if you had just bought the the the Nasdaq. So just owning the best companies in the Nasdaq is by far the best way to drive multiple of return. Over a ten year period, you made a nine x multiple. Nine x just by owning the top 10 companies in the Nasdaq, and this was through roughly the 2023. So now let's pull this up. I pulled this analysis together this morning for our conversation, and this shows that the venture returns don't stop when you stop being a private company. That the real return, and this highlights the point, that most of the value when you find that power law winner, most of the value is created when they are a public company. So Palantir went public after seventeen years and their market cap was 16,000,000,000. So they created 16,000,000,000 of equity value over a seventeen year period. Since they've been public in five years, they're now worth $436,000,000,000. David Friedberg (01:16:22): So they've created another $420,000,000,000 of equity market value in just the last five years, probably eclipsing all venture returns that have been made during that same period of time. Airbnb went public after twelve years worth 47,000,000,000. In just five years, they added another, call it roughly 30,000,000,000. Uber went public 75,000,000,000 after nine years as a private company, and now they're worth a 190,000,000,000. So they've added a 120,000,000,000 of value in just six years since being public. And Spotify, another good example, 27,000,000,000 market cap when they went public after being private for ten years. And then they added another 120,000,000,000 of value in the seven years they've been public. And I've got the whole list here. This is all these companies that have a 100,000,000,000 plus market cap. And when you find the power law winner, the value continues to accrete, it continues to compound, and you're better off just buying the public stocks. And I think that this was my my big kind of conclusion as I went through all this data. Like, Chamath is exactly right. When you're in the venture market, you learn a lot. And ultimately, I think you probably wanna learn a lot to then allocate your capital more wisely. Jason Calacanis (01:17:27): Now get David Friedberg (01:17:28): to what you've identified are the power law winners where most of the value continues to accumulate, whether they are private or public. And having an IPO is just a transitionary event for these companies. Their their compounding engine will continue as a public company if you've identified them. Facebook's such a great example. Eight years as a private company, 100,000,000,000 market cap at IPO, added another 2 plus trillion dollars in the year since. Jason Calacanis (01:17:49): Yeah. I think you But David Sacks (01:17:50): Friedberg, you've cherry picked all the winners in hindsight, the biggest winners for that list. What if you were just to create a list of every IPO? Tech IPO and how it's fared afterwards. David Friedberg (01:18:00): Right. No, it's a fair point. David Sacks (01:18:01): There'd be a lot of stinkers in there that you haven't included. David Friedberg (01:18:03): But my point, Sax, is just find the power law winners and then that's where all the value accrues. I think, yeah. David Sacks (01:18:08): Well, I mean, that's hard too. Jason Calacanis (01:18:10): And here's the I think you have to look at how we got here. I started doing this just, you know, in my second decade. And companies decided to stay private longer. That was the big trend. And then there was a lot of reactions to that secondary transaction started occurring. And then you just couldn't get DPI, you had to hold it forever. And now the industry is responding to this. So now we have something called strip sales, we have people creating continuation funds, ways to take those early investors and get them out into a new vehicle, or to create some liquidity. And Shammat's point is really important because you do get so much intelligence. And what I learned having been an investor in Uber and Robinhood when they were 5,000,000 and 20,000,000 companies, I was my first investor into those companies, when they crashed in the market, when Uber hit $30 I bought up a bunch of it as a public investor, even though I had a ton from when I was an angel investor. And I did the same for Robin who had $12 because I knew the management, I knew Vlad, I knew Travis, I knew Dara, and I had that understanding of the market. And the same thing I did with Facebook, having listened to Chamath talk about it all these years and Brad Gershorn talk about all these years. I backed into it when it was $92. So what's happening now is what Ruloff did with his continuation fund and holding the private ones is in the theme song of this podcast. Famously, when Sax said, let your winners ride. That is the overarching thing here. The industry, the venture industry in massive transition, it's going start looking a little bit like private equity, and a little bit like Gavin or Brad, where they're private and public market investors. And you're seeing buyouts occur. So people are saying, hey, this SaaS company is undervalued, we're just gonna buy the company. We'll start operating it. Jason Calacanis (01:19:55): So venture is in a massive transition. But I think what comes out on the other side is something that looks a lot more like public private investing like Roloff pioneered at Sequoia. We're gonna talk to him about that the summit. David Friedberg (01:20:07): I'll just respond to your last comment. And, J. Cal, I appreciate you saying that because, yeah, Roloff is coming to the summit to talk exactly about this, which is gonna be great. But that is the job of being an investor. To your point, you're like, hey. You know, you cherry pick the winners, but I think that's the point. The point is that the returns accrue to these power law winners, and the job of being an investor shouldn't be to index a market. Anyone can index a market. The job of being a great investor is to find those winners. If you can do that David Sacks (01:20:32): how how hard that is or easy it is. And I think your list makes it sound like, oh, all you have to do is wait for these companies to go public. No. Sorry. That wasn't David Friedberg (01:20:42): my point. Yeah. Sorry. That wasn't my Well, kinda came across that way. Yeah. Yeah. Yeah. Sorry. I was just saying that the power law winners continue to accrue. In fact, not only do they accrue as private companies, and then you if you get one of them, you you have these 14 x funds. But as a public company, they continue to accrue. And so, you know, this isn't just limited to being a venture investor. Pretty much anyone has access to the public markets and can make the decision that they've made a bet on a power law winner. There were a lot of people who were very vocal supporters of Palantir, very vocal supporters of Uber, of Spotify when these companies went public. And a lot people said, no, they're Chamath Palihapitiya (01:21:16): worth value. They're naysayers. I think the problem that you would have had trying to implement this strategy is it would not have been clear what you would have been underwriting. What would you have been underwriting at NVIDIA for, you know, not the last five years, but the many years before then. You would have been underwriting video games. Jason Calacanis (01:21:33): Video games. Yeah. Chamath Palihapitiya (01:21:34): And you would have had this, like, very odd data center business that didn't make sense that, you know, Jensen took a lot of heat for that he had to defend. And it it didn't actually make a lot of financial sense. So I I'm not sure Speaker 5 (01:21:47): I will give you David Friedberg (01:21:47): a counter to that and I'll I'll call him out and I'll make fun of him now. My cofounder at Climate Corp, his name is Suraj. He's probably listening right now. He bought NVIDIA years ago on the thesis that these GPU chips would eventually be used for AI models because he did all his work at Stanford and distributed computing. He did early work in AI. He was very close with But Chamath Palihapitiya (01:22:04): that's different than what you were saying before. I get it. He's a smart guy who made a huge winner, but I'm Jason Calacanis (01:22:09): saying David Friedberg (01:22:09): But no. The problem was he sold NVIDIA too soon because he's oh, they're not actually Okay. But I'm Chamath Palihapitiya (01:22:13): just saying like, there was probably a person that was the smartest Suraj and bought Intel. Then there was another person that bought AMD. Like, I don't I'm not sure what the point is. Here's the point about venture that I think is worth noting. It's an exceptional market that gives the practitioners an incredible edge if you build a business around the information asymmetry that accrues. Yes. That you can monetize. After that, the only business model is building an asset gathering machine to generate fees because even the consistency of being able to generate these power law distributions in successive funds doesn't exist. And you can look at all of the data. Cambridge has done this. A lot of these guys have done this. All the big LP fund of funds like Horsey Bridge have done this. Having a killer fund has zero correlation with your ability to then have a next killer fund. As an LP, and I showed these returns on screen, although we blanked out the names, and I'm in all of them, it is really hard Jason Calacanis (01:23:13): to be consistent. It's hard, but I David Sacks (01:23:15): think Let me make two points about this. Jason Calacanis (01:23:17): And then I got one closing point. Okay. David Sacks (01:23:20): First of all, Jamath is right that if you look at the data, the recent data, say over the last decade or so, you don't wanna be the average venture fund. You'd be a lot better off just being in the Nasdaq or in some other, public stock market index because, a, your returns would be higher, and b, you don't have the illiquidity, so you can always trade out of it if you want. So it's true that you don't wanna be the average venture fund. As an asset class, the average is not great. This goes to Freiberg's point about the power law. You really wanna be a top quartile fund or even better top decile, and that's what LPs are looking for when they're underwriting VCs is they wanna be in top quartile, not the average. So I I agree with that point. But the second point is that things can change very quickly in this asset class precisely because of the power law and how spiky it is. So just to give, like, one micro example, take Figma. You know, we talked about on this pod was a year or two ago when the government held up their acquisition by Adobe for $20,000,000,000, and everyone thought that was a disaster because people thought that was a huge premium to the actual valuation. And if eventually they now had to go public as a result, they might IPO at 10,000,000,000. And so it was a big haircut for all the VCs. Well, a couple years later, they just IPO ed that a huge pop on the first day has come down somewhat, but the public market valuation is now 35,000,000,000. And there's three or four VC funds that have made $56,000,000,000, 7,000,000,000 Yeah. And those three or four funds are now 10x funds. So just boom, in the blink of an eye with one outcome like that, it totally changed the performance of those funds, and then that's gonna trickle down to the performance of the asset class as a whole. My guess is that we're in a pretty good time for VC because of AI and the disruption it's causing and the potential for value creation it's creating. It's sort of restocking the pond, with opportunities for many more, big companies to be created. And I think ultimately that'll be very good for the asset class. I mean, just look at OpenAI. David Sacks (01:25:27): I mean, look, we're a long way off from OpenAI being liquid, and, you know, you don't wanna count your chickens before they hatch. But just two years ago, on the heels of Chateap Tea launching, the company raised money at a $30,000,000,000 valuation. Everyone thought that was crazy at the time. Now they're at a $300,000,000,000 valuation, and there's news reports that they're gonna raise at 500,000,000,000. So if this keeps running, and again, there's lot of ifs there, I mean, could still lose. Could get Jason Calacanis (01:25:55): Sell 20% is my best advice. David Sacks (01:25:57): They could still lose to some other company or whatever, but it just shows you how fast things can change. I mean, they could be a trillion dollar company in a couple years if the trend continues. So my point is just because of the power law, it only takes a few big winners to change the economics greatly for particular funds, and then that eventually trickles down to the mean. But again, you're right. You don't wanna be in the mean. You wanna be top quartile. Jason Calacanis (01:26:23): There's just two quick points I wanna make as we wrap on this and great episode, gentlemen. The first is also the wrath of Lina Khan occurred for four years. So DPI and exits were muted. So that also plays into a lot of these statistics. And now since President Trump number 47, David, we have had a tear of M and A and a ton of IPOs, right? That's actually going to be probably a big, you know, factor in all of this hand wringing around venture. But I just want to give two anecdotes here. You know, when you have the inside information, Shmoop, it's worth I think being a venture investor, because of that deity again. And I was just always perplexed when I would hear, you know, people on CNBC talking about Uber and Robinhood specifically, because they would be talking, oh my god, they're losing so much money. They lost a billion dollars this quarter. They lost $5,000,000,000 last year. And we all knew that there would be no difference in consumption of an Uber if it was $13 or $15 And that at any point, you could just turn the dial and slow growth and show profitability. And what happened? That's exactly what they did. And I made that call and I said this on CNBC, is anybody not taking an Uber for a $1 or $2 difference per ride? It's like 2% of people might stop taking it. Sure enough, they did that. Then fast forward Robinhood, everybody's like, Oh my God, this company is like, it's sideways, the market's corrected, people are no longer trading stocks. And I was like, But they keep releasing exceptional products over and over again. And that was always Vlad's key perspective was we're just going to keep adding every product five twenty nine, four zero one ks's, margin loans, crypto, we're just going to keep adding products every six months and then we will be the default place where all your finances exist. Jason Calacanis (01:28:04): And when it was at $12 I was like, Oh, well, this obviously is undervalued. I'm just going to buy more. And now it's at $120 It's like one of the best is a 12 bagger in the public markets. So that reason alone, if you just have enough surface area and enough patience, you're going to hit Robinhood, Uber like I did, when they're tiny companies. And then you're gonna get to have all that intelligence into the public markets, which is why I started doing public market investing because I could just see all these very clear opportunities where things were obviously undervalued. It was just like so obvious. Well, when David Sacks (01:28:34): you talk about service area, what you're talking about is diversification. Yes. Right. But the way Freiberg just showed us the winners. Speaker 5 (01:28:42): It's cherry picking. Yeah. David Sacks (01:28:44): And that's that's kind of my point is it looks really easy when you just look back over the last ten years and pluck out the winning companies and the winning funds and the winning asset classes. The question is ex ante, how do you create enough diversification to get exposure to that? And that is why venture is still a popular asset class is because it is very spiky, and you do wanna be in those power law funds and power law companies. Jason Calacanis (01:29:07): And it might be a percentage. Like, the percentage might change. Maybe, you know, Yale wanted to get to 25% or whatever, and maybe the right number is 15. It could change over time based on your own individual needs. I still think it's magical asset class. Shamaki, you wanna wrap this up? Chamath Palihapitiya (01:29:21): I did that job for seven, eight years with outside capital and now the last seven to eight have been entirely my own. The differences I would say is that it's much, much harder to run a very successful venture firm in my experience. Much easier actually to be concentrated and to use the information asymmetry in your favor. It is an exceptionally difficult job to be a successful fund manager. Like what you guys do, I think is extremely, extremely hard and to be of that quality. Jason Calacanis (01:29:53): Well, we both started our own firms. Chamath Palihapitiya (01:29:56): That just Jason Calacanis (01:29:57): increases the degree of difficulty because you have to build a team, you have to build an LP advantage. Chamath Palihapitiya (01:30:02): So if I could own pieces of the GP of both of you, I would. But as a person today, I would not start my own fund. It's just very difficult. David Sacks (01:30:11): It's a very competitive industry and there is a lot of capital. Jason Calacanis (01:30:13): Very competitive. It's super competitive. David Sacks (01:30:15): But I would also say that that's the supply of capital. If you look at demand for capital, I do think that there is more legitimate demand for capital now than there has been in a long time because there's this new you know, you've got this incredible opportunity. Jason Calacanis (01:30:31): Wanna be funded. I agree David Sacks (01:30:32): with that. Well, there there was a I think there was a feeling, you know, five years ago, let's say, where all the big platforms were getting a little bit long in the tooth, you know, social, mobile, cloud, SaaS. It felt like, again, that the the pond had been fished out a little bit. Jason Calacanis (01:30:47): Yeah. Yeah. David Sacks (01:30:48): And you need a big you need a big disruption to to again to restock the pond. And I just think that AI is the mother of all disruptions, and it's creating a lot of opportunity. Jason Calacanis (01:30:58): Alright, everybody. This has been another amazing episode of the All In podcast for your Sultan of Science, David Friedberg. Your czar, David Sacks, civil servant, David Sacks doing the work for the American people. And for our chairman dictator, I am the world's greatest moderate. Speaker 5 (01:31:16): Jason Cockens. You're seeing the world's greatest moderate. Chamath Palihapitiya (01:31:20): Love you guys. We should all just get a room and just have one big huge orgy because they're all just useless. It's like this, like, sexual tension that they just need to release somehow.