公开与私募市场现状、Archegos 爆仓、美国债务问题与财富税

Speaker 1 (00:00:00): My name is Dave at Sacks, and I have a broomstick in my that is why my voice is so deep. I had never had friends in my life. Somebody be my friend who I don't pay. Jason Calacanis (00:00:17): What a mood we're in today. David Friedberg (00:00:20): What a vibe. Going all of Jason Calacanis (00:00:23): you. When winter of pride. Rainman, David Sachs. David Sacks (00:00:30): And I said, open source it to the fans and they discover reason. Jason Calacanis (00:00:40): Hey, everybody. Hey, everybody. Welcome to another episode of the all in podcast with us today, the rotating cast of characters that, you've come to know and love and follow on the Twitter, the queen of Kinois David Friedberg is here. And the rainman, David Sachs calling in from one remote location that is undisclosed and the dictator. Chamath Palihapitiya with us again. Gentlemen, how's everybody doing? Chamath Palihapitiya (00:01:09): I'm punchy. You punchy? I'm punchy. David Friedberg (00:01:13): Shamoff isn't a mood. Jason Calacanis (00:01:15): Is he in a mood? I mean, what's happening, Shamoff? Chamath Palihapitiya (00:01:17): Nothing. I just I just finished a workout, so I think I'm high on endorphins. David Sacks (00:01:21): Oh, okay. How much money did you lose in the market today? Jason Calacanis (00:01:25): Wow. something. It's just a flagrant foul of the first play in the game. No. He he said he David Sacks (00:01:31): said he wasn't happy. So I was just it's just hypothesizing Chamath Palihapitiya (00:01:35): on what -- No. No. I am happy. I am happy. No. No. I am happy. I'm about to go on Easter vacation, so I'm happy about that. Jason Calacanis (00:01:41): After you fix that, please? Chamath Palihapitiya (00:01:42): Nope. I mean, can I just tell you, March March 2nd or whatever that day it was was an absolutely ludicrous day We've kind of clotted all back. We're doing pretty decently for the year again. And but I gotta say, my gosh. Like, I've really learned to to to to deal with drawdowns in the last 30 days. It's been an amazing learning process. I'm I'm a better person for it. David Sacks (00:02:06): You did look pretty a shell shocked that episode. Chamath Palihapitiya (00:02:08): Dude, I I also I mean, I I'd lost more money than I ever thought I would make. I could bail out a small country. You know? And it just it just it just It just vanished. It just evaporated in a day. It was incredible. Then it came back and then -- It David Sacks (00:02:22): came back. Jason Calacanis (00:02:23): That's okay. Well, what do we what do we think is happening in the markets right now in terms of retail investor participation and the number of specs that are coming into the market. I saw a statistic today that in q 1, there were 245 specs raised in q Speaker 1 (00:02:39): 1 Jason Calacanis (00:02:43): or 250, that's on top of the 250 that were raised last year. David Friedberg (00:02:47): More capital was raised in q1 than 2020, 2019, and 2018 combined in specs. Chamath Palihapitiya (00:02:54): Just to Speaker 1 (00:02:54): -- Speaker 6 (00:02:54): And just in q Speaker 1 (00:02:55): 1. Chamath Palihapitiya (00:02:56): Just to put some put some further color on this, you had all these folks raise money. you had some really questionable sponsors to be completely honest with you. I'm not gonna call any of these guys out because I don't wanna give him any airtime. But, like, You literally had people who ran companies into the ground, people who were kicked out of their companies for, you know, sexual impropriety. It didn't matter. Any random dog and cat was able to raise us back in q 1. And now on the back end, you're going to start seeing some real difficulty. So deals are getting retraded constantly, which means that, you know, IPOs that should have been done at at at price x is getting discounted by 20 30 percent to get the deal done. There are all kinds of side deals getting cut left and right. And this is just the beginning. And the reason is because that Friedberg coverage, you say Speaker 1 (00:03:49): 265? David Friedberg (00:03:51): A 100 bit there was there was about a Speaker 1 (00:03:52): 110,000,000,000 David Friedberg (00:03:53): raised in q 1. looks Jason Calacanis (00:03:54): like -- How Chamath Palihapitiya (00:03:55): many deals? 200 and 60 deals? Speaker 1 (00:03:57): 298. David Friedberg (00:03:57): Yeah. We're ready to Q7. Chamath Palihapitiya (00:03:59): So those Speaker 1 (00:03:59): 300 248 Jason Calacanis (00:04:01): in 2020. Just Chamath Palihapitiya (00:04:02): so we're we're still first inning. Right? If you think about it, these these facts have 2 years to put the money to work. So we're only max 90 days in to a a 2 year shock clock, a 700 day shock clock. And so you're gonna see some really crazy behavior I predict in November of 2022. Right? Like, the last 6 months leading into the expiration of all these facts. And between now and then, I think the market is really gonna hold people accountable. So, like, when we see a a pipe opportunity now, we're incredibly firm on, like, hey. Listen. the 2025 projections, we're gonna back off of those. We wanna see 2023 numbers. We're gonna price it to that. We're gonna price it with the margin of of safety. And so these people come back and recap the deals constantly, you know, there is a situation where this one deal retraded three times before a price cut. Done. And it was ended up being 35, 40% below where they started. David Friedberg (00:04:54): I sent Chamath note I got this morning from my friend who works at one of the banks and one of the bulge brackets, and they said there was, like, 50 pipes in the market last week. And they think only 5 of them are gonna get done. 50. And, like, you know, chum up what, like, a quarter or 2 ago, like, a 100% were getting done or 80% were getting done. Right? I mean, Yeah. Chamath Palihapitiya (00:05:11): And and all quite honestly, they were meaningfully oversubscribed. And now we're demanding the people that look at these pipes, I I'm one of them, but So I I've talked to some other people who do it and we're all in the same situation because we're demanding much better terms. And so it's gonna it's gonna the pressure is gonna come on not the founders and the companies, but it's gonna come on sponsors because I think sponsors will really have to put up a lot of their money to get these deals done. And this is where you're gonna separate the wheat from the chaff because most of these sponsors are doing it for a quick buck. And you'll see without debating who you think it is, when you see people unable to post the money to get a deal done and that deal go away, that is the Charlatan. David Friedberg (00:05:54): Right. Chamath, it seems like there's also a deleveraging happening with the funds that bought a lot of these specs and these back listings in the aftermarket. Right? Which which kinda creates a bit of a logjam on the back end for a lot of these? Chamath Palihapitiya (00:06:05): So, you know, it's for those that are interested in some of these market dynamics, one thing that I have learned in the last little while is that depending on your who you are, risk is managed really differently. So for example, like there's There's a a friend gave me this language, and I'm gonna repeat it because I think the way he said it was very elegant. There's what's called inception to date risk And then there's year to date risk. So what is the difference? If you're a hedge fund, you're really in the year to date business, meaning am I doing in this current moment in time? Because your compensation is driven from that. And so you're very much forced to manage short term volatility in your portfolio. And a lot of it is very parametric when, you know, something goes down by x percent then you have to sell. And then if something goes down by y%, you sell more. And if something goes by down by, you know, z percent, you have to shut the position out. And those are extremely codified. And so when you have a lot of hedge funds who are parametrically running year to date risk, And you have, you know, all of a sudden, you know, the threat of inflation, bond yields go up, factor rotation out of tech, it's a running to the exits. Then you have other people who manage what's called inception to date risk. I would say Buffet is in that category. You know? For us, for the most part, we are inception to date risk because we don't have external LPs. And so you can manage these different risk buckets differently But you have to appreciate that a lot of this volatility is a lot of year to date risk. Now then you layer on top of it these exogenous events like what happened this week with Arcegos and it's just absolutely incredible because it just further amplifies all these people who would otherwise have made very rational decisions made forced to make irrational year to date risk management decisions. And that's what causes these massive swings in all these malaise in the market. Jason Calacanis (00:07:58): Sachs, what are we seeing on in private company valuations? I know that while we're seeing the retreat in Chamad's part of the world and people buckling down and maybe some more guardrails, if we will, or maybe a a tighter screening process for these companies going public. You didn't say Fisker, Chamath, but that was the one that had me like, what? Fisker didn't they fell twice already? What are you seeing on the private market sex in valuations? David Sacks (00:08:28): Yeah. It's a very frothy time, to be honest. I think valuation levels are I mean, they're probably the highest I've seen. I'm seeing c deals now, hot c deals, not every c deal, get done in the high twenties. Jason Calacanis (00:08:42): Same. David Sacks (00:08:43): This is free revenue. Yeah. Pre revenue. It used to be that, like, you know, I remember when, you know, pre revenue see deals were more a 5 to 10 cap, and then, like, for that a little bit of revenue, it might be a 15 cap, and, like, the hottest company out of IC. Just explain David Friedberg (00:08:57): what that means, sex. David Sacks (00:08:59): the hottest company out of out David Friedberg (00:09:00): of the home. A cap cap. Jason Calacanis (00:09:02): I mean, David Sacks (00:09:02): he say -- The cap is his evaluation. It's a $15,000,000 valuation effectively. It's just done on a convertible note called a safe. So It's but and and it for all practical purposes, it's evaluation. So it used to be, you know, pre revenue seed deals used to be in the 5 to 10 $1,000,000 valuation range, then, you know, a little bit of revenue would be 15. The hottest YC deal might be an 18 to $20,000,000 valuation. Now we're seeing hot pre revenue, see deals going for, like, 27 to Speaker 1 (00:09:32): 30. Jason Calacanis (00:09:33): And what percent what amount of capital is going into that round? David Sacks (00:09:37): It's usually like a 10 to 20 percent dilution event. So it's -- 3000000 to Speaker 1 (00:09:41): 6000000. David Sacks (00:09:42): Yeah. Exactly. Jason Calacanis (00:09:43): And they're not calling this the series a. They're still going to secede round. David Sacks (00:09:47): It's the first money in the company, so it's still a seed. And, I mean, just to we also do obviously a and b and and increasingly some growth investments. Every the the price levels are basically double where they were just, I would say, like, a year ago. You know? These same seed deals Jason Calacanis (00:10:03): Same thing I'm seeing. And it's making me think as a private market investor that maybe the right thing to do is to stop investing in some as many new companies and work with the existing portfolio to raise capital. So I told my team, let's go through the portfolio. Let's see who needs capital and let's help them shore up their balance sheet when the market's hot and valuations are high as opposed to going and trying to get into every deal. So I think I'm gonna do maybe 30% less deals and redeploy my time at getting the current portfolio cashed up, and it's working. What do you think of this strategy Chamath or Saks or Friedberg? Chamath Palihapitiya (00:10:43): I I personally like it. I think that venture investors are typically trained. I was trained this way early on. which is to invest through the cycle. Right? Just to think about this as a constant pattern of of capital. And to be honest with you, I have issues with doing that, Jason. And And so I more agree with what you're saying, which is that I think like active risk management, especially, I guess, if it's your own capital. But I just think active risk management is important. It's important to acknowledge that the incremental SaaS company may not be that great as it is. And so at 30 pre maybe really stretching the bounds of reality. Whereas to your point, you know, what Sequoia has proven more than anything else to me is the value of doubling down and backing up your winners. And so to the extent that money isn't infinite, which it isn't for all of us, that's when I do think it's worthwhile saying, well, I have a certain amount of money in my fund If I think comm can 10 x from here, then I'd rather put in a big check there and that's better than putting A bunch of c checks in the companies will still have a 90% failure rate at very, very high prices where I don't own that much. So I do I do think active risk management makes sense in moments like this. David Sacks (00:11:52): I mean, I guess my philosophy is a little different, Jay Cal. I mean, so I my my philosophy as a VC is that the the market sets the price of the deals. but I'm ultimately a price taker. And my only decision really is which deals I wanna be in. Like, I don't really get to set prices. It's too easy for entrepreneurs to run a process and get competing bids. So all I can really do is decide which deals I wanna be in. And I think the more you that you try to chase value as a VC, I think the more you end up investing in companies that aren't really that great. Like, you're trying to You're trying to find things that are mispriced as opposed to just investing in the best companies. So now look. Does do price levels affect my returns. I think, yes, I'm sure the vintages do matter to some degree, but the the most important thing is just to be in the right in the right companies. Chamath Palihapitiya (00:12:43): can I just can I just I'll give you the counterfactual to what you just said. You know, if I if I look at my 3 big private funds, Fund 1 was health care education, fintech, and some deep tech. Fund 2 was a if over indexation into SaaS. And then Fund 3 was a return to our knitting and a bunch of deep tech stuff. And a lot of fund 3's decisions was basically me saying enough of this sass. And the reason was because I didn't like the valuations, David. And I thought on the margin, if I'm going to invest $10,000,000,000, I'd rather get a 3 d printing spaceship company off the ground than the n plus for a SaaS business. And it's turned out to have been in that cohort the right decision. So I don't know. I think it's I think that can also be true, which is like chasing what was the hottest thing was not Speaker 1 (00:13:34): -- Chamath Palihapitiya (00:13:34): I haven't -- -- in 2016 was not a good idea. Jason Calacanis (00:13:37): So so just let me just respond to David Sacks (00:13:39): it real quick, Jason. because so so I I do like SAS investing, but I was doing it before it hot. You know? It's just that's kind of my area. And I wanna build a franchise in that area because that's where my expertise are. And so I can't, like, very well just say, hey. The store is closed this year because price levels are high. Otherwise, like, founders won't come straight up. Chamath Palihapitiya (00:13:58): You're doing best through this. David Sacks (00:13:59): Yeah. Exactly. So I'm I'm trying to create, like, a very specific franchise in being the leading VC and bottom up SaaS. And look, sometimes the price levels will be favorable. During COVID, there was like a 4 month period where the markets were what? 50% everyone like, it felt like we had the market to ourselves, the VC market, I mean. Nobody else was investing. We did more deals during that 4 month period than I think any other Speaker 1 (00:14:21): 4 David Sacks (00:14:21): month period. So, like, sometimes the price levels can bounce in your favor, but You know, my view on it is I just wanna invest the best companies and kinda the the price levels that has worked themselves out. Jason Calacanis (00:14:31): The counter I would have to your counter, David, was If there are other startups who are of equal value, which pool you decide to go fishing in matters. So you know, this $30,000,000 deal if I was to put $3,000,000 into it, that could equal me putting with our accelerator, which not everybody runs and accelerated. It's arduous. It's painful. It takes a ton of work. But that equals, for me, 30 deals at a 100 k each So I'm looking at it going, do I get one bet in this YC overpriced company with 50, you know, tier 3 venture capitalists and dentists backing up the truck and now family offices who don't know anything are now competing against the people they or LPs in their funds? Or do I just say, you know what? If everybody's fighting in the market for the apples, I'm gonna plant more apple trees, and I'm gonna run a better orchard. And that's what I decided to do is maybe I'll just move up to the orchard a little bit. But I guess there there's multiple ways to win in what we do. But if David Sacks (00:15:31): you -- You guys are broader in your strategy than I am. Right? Like, you guys actually do invest lots of different kinds of companies. I've kinda gravitated away from that because I'd rather just focus on my specialty, which I feel like is big enough for me to be successful. Right? Jason Calacanis (00:15:45): Yeah. But what if there's a new category that comes out like on demand and something like Uber comes along or Airbnb and it doesn't fit the framework? David Sacks (00:15:53): Well, I invest in those companies, but so marketplace is David Friedberg (00:15:56): definitely -- -- do Jason Calacanis (00:15:57): it now? Or would your team say, you know what? Don't bring this to David. He's gonna say no. Well, a Speaker 1 (00:16:01): 100%. Jason Calacanis (00:16:01): Your team is doing the 1st round interviews. Right? David Sacks (00:16:04): Yeah. But but we do marketplaces, and my partner, Jeff. Jason Calacanis (00:16:07): It didn't look like marketplaces originally, though. Those will not considered like eBay or crisis. David Sacks (00:16:11): I invest in them because I thought there are marketplaces. So, you know, so look. We we do marketplaces and we do SaaS. That's a huge part of the market. We're never gonna suffer for for deal flow focusing on those things. But look, will I do chips? No? Will I do pharma? No? I don't know anything about those things. Jason Calacanis (00:16:26): Yeah. No. No. Those are too detailed. David Sacks (00:16:27): Or quantum computing or something like that. The you know, these more esoteric hard tech subjects that I kinda make fun of Friedberg for. or at least, you know, when he starts giving his cubit lecture. Jason Calacanis (00:16:39): Yeah. Well, actually, nobody's nobody's a big one. I I actually think we need to really rethink our investment strategy here. I forgot to tell you guys. David Friedberg (00:16:46): I'm gonna start investing in laundromats. Jason Calacanis (00:16:48): Very simple. I wanna yeah. not a bad idea. I mean, our one of our mutual friend one of our besties, who's who's a a stealth bestie, was really into the Domino's chains. And, boy, was he right about that? That stock went crazy. I wanna get into this. Is it Art Chagos? Chamath Palihapitiya (00:17:05): Art Chagos. Yeah. Jason Calacanis (00:17:06): Chagos? Machego. Jeez. I wanna get this Archieagos thing. But I also wanna point out 2 things from just housekeeping. Number Speaker 1 (00:17:16): 1, Jason Calacanis (00:17:18): I redirected Wet Your Beak to a type form for people to pitch the besties. Guess how many Pitches came in in the 1st week. How many? Over 1000. I now have 3 researchers going through it and categorizing it. They're gonna share a Google Sheet back with y'all by stage where they are to start going through them. But it's pretty amazing. I think there is some I think there is some magic that's gonna happen here where we're gonna find a deal where all four best can be in deal because we got 2 besties in pipe. We're both in Cabana, Saxonai and a couple of other companies, but we gotta get a 4. We need to get 4 of a kind. We've never had 4 of a kind. We've had we've hit sets. We've hit a pair, but we've never hit that. Go ahead, Saxx. What do you wanna do? You wanna talk about me spelling your deal flow? David Sacks (00:18:06): Yeah. Exactly. I just want you to put out a I need to put out a little PSA. So if you're a founder out there listening and you a SaaS deal that's post revenue, send it to me at Craft Ventures. And if it's everything else, you can send it to Jason on his little is Jason Calacanis (00:18:22): about -- I know. I there there were a lot of SaaS companies, actually. And so what we should do is I can set the type form up if you want. If you give me an email address, anybody who picks SaaS, I could have it email you or, you know, Kevin or whoever on your team you want to, and I could just redirect it in real time. but that could wind up being 100 of emails. But I think that's what you want. Alright. Well, no. It's actually well, no. Jason, you should you David Sacks (00:18:45): should divvy up Jason, you should divvy up all these pictures by subject matter and send it to the bestie who it's most relevant for. Jason Calacanis (00:18:52): Alright. Sounds great. We'll do that. Sure. And then second on the housekeeping front. People who are really interested in this longevity discussion. Chamath Palihapitiya (00:19:02): Oh, read the thing. Read the thing. I think I wanna because I wanna talk about it again. Jason Calacanis (00:19:05): So Ben sent this in to the all in Twitter handle, which is, I think, the all in pod. And it's got 70 do you guys know we have 70,000 followers on that Twitter handle? It's crazy. Hey. Just wanted to reach out with a positive message after listening to the podcast from 2 Fridays ago. If you could pass the message along to the besties, I think that's us. After Tremont's recommendation regarding longevity, I suggested to my dad, age fifty six in perfect health. So he's ten years younger than Saks. Looks to go get a calcium diet test. It turns out he scored well above any safe number, and a critical heart failure was inevitable. Now he's taking proactive steps with a cardiologist. It's hard to even fathom what would have happened if Chamath had impassionately recommended this action Thank you guys so much for providing value. Weekend, weekend. David Friedberg (00:19:54): I guess I I wanna Shamad's saving lives. Jason Calacanis (00:19:56): Shamad's saving lives and making billions. Chamath Palihapitiya (00:20:00): No. Don't don't joke around this stupid on this topic. I I really wanna say this again. If anybody hasn't done it after the age of forty, You can get CT angiogram. Most health services provide it. I would really ask your primary care physician if they say no Tell them to go fuck themselves and find somebody who will give it to you. But this is one of these things where if your calcium score is greater than 0, It doubles every year and there's a certain score right above several 1000 where you are guaranteed to have some meaningful cardiac issue. And so whether it's for you or your parents, Just ask the question, have you had a contrast CT engine done? And if not, go and find a doctor who will prescribe it to them and get it done. It's just a no brainer. I -- Kim, it's a no brainer. Jason Calacanis (00:20:46): It's a no brainer. And I I had my yearly physical, and I got the -- Harshlow. No. I just did my physical, but I I'm gonna do that full body scan you recommended. Chamath Palihapitiya (00:20:58): Pre pre newvo. Jason Calacanis (00:20:59): Pre newvo I'm doing. And then I got on the Nat Plus Booster, the true NIAGEN that Speaker 1 (00:21:04): -- Jason Calacanis (00:21:04): Yeah. -- I think -- Friedberg suggested. Speaker 1 (00:21:06): -- Jason Calacanis (00:21:06): that Friedberg suggested an I'm taking it seriously, and I started with my personal trainer 2 Tuesdays ago, and I changed my entire diet. And I'm just really taking it seriously now because I Chamath Palihapitiya (00:21:16): hit 50. So let me let me tell you about Arcegos. So here's a guy. This is incredible. So this guy ran Asia Pac for Julian Robertson. Julian Robertson is a legend of Finance And Capital Markets and was the founder of Tiger Tiger Management. By the way, I heard this incredible story. Why did Julian name it Tiger Management? Apparently, he had a he was incredibly bad with names. And so he would just call everybody Tiger. Like, hey, Tiger. How are you doing Tiger? Tiger Tiger Tiger. And so when he started this fun, I think his son apparently told him, dad, you're not gonna remember anybody's name. You're not even gonna remember the name of the company. solid Tiger Management, and you'll remember it. Anyways, Julian is famous for having attracted an incredible roster of people to work for him. It's what the PayPal mafia would look like if it were disguised as a hedge fund. All these amazing people worked for Julian went off and did these other incredible things. And one of these guy one of these guys was this guy Bill Huang who ran Asia Pac for Tiger. He leaves. He starts his own fund And somewhere in 2011, he gets pinched by the feds for insider trading some Chinese bank stocks. He pays a $60,000,000 criminal and civil penalty, and forced to give back all of his outside money, and so now he's a family office. Then he takes however much money he had, and he runs it up to somewhere between $5,101,000,000,000 So this is a guy who managed to just hit the ball out of the park. And then what he does is he goes to these banks, and he says, you know what, guys? I'm gonna make a bunch of concentrated bets in a bunch of Chinese Internet companies and media companies like Viacom And Discovery. So what he does is he does an equity swap. And what an equity swap is to to to get through all the noise is just a very simple way for you to bet on the appreciation of a stock relative to an index and hedge it against an index. And what it synthetically allows you to do is take big risk own huge positions and not be listed in disclosures. David Friedberg (00:23:18): So that's without buying the stock. Chamath Palihapitiya (00:23:20): Yeah. So if you don't wanna know Speaker 1 (00:23:21): -- Jason Calacanis (00:23:21): So the word synthetic just so I'm confused. Synthetic means you're not actually buying the stock. You're doing this in the ether. Chamath Palihapitiya (00:23:28): If you went and bought 4.9% of Viacom, nothing would happen. The minute you got to 5%, you'd have a a regulatory filing obligation that would say Jason Calacanis owns 5% of Viacom. Then at 9.9%, nothing else would happen, but then at 10%, there's another incremental thing. So this was a way of him accumulating to 9.9 or 10 percent of these positions without having to disclose because he's not actually buying the stock. He's having Morgan Stanley, Goldman Sachs, Nomura, Deutsche Bank, Credit Suisse, buy the stock for him using these over the counter derivatives. David Friedberg (00:24:05): But they're not he they they didn't, in some cases, didn't even buy the stock. It was, like, a forward purchase agreement almost. Right? Like, these these were these were contracts for difference. they didn't even have to buy the stock in a lot of cases. Right? Chamath Palihapitiya (00:24:16): Right. And then I think it was hedged by the S and P. Right? So they basically hedged it out with the S and P, and it was, like, factor weighted. Anyways, long story short, what happens is that the guy starts to get stopped out on a trade And then they have to close out all these positions. And so all of a sudden, they realize, oh my gosh. We actually each of us gave this guy 5 or 10 times leverage. So instead of a 5 or $10,000,000,000 hedge fund, it was $50,000,000,000 of notional exposure. And so in one day, you had Viacom go down Speaker 1 (00:24:46): 30%, Jason Calacanis (00:24:47): Discovery went down 30% and we were playing cards looking Chamath Palihapitiya (00:24:51): at the market saying, what's going on? What's going on? Yeah. So weird. But another another example of, like, asymmetric information and a lack of transparency in financial. David Friedberg (00:25:01): There there were 2 drivers of this number one is the guy traded via the swap these these over the counter transactions, so he didn't actually have to go buy the stock on the market. And number 2 is they the guy relied on a number of exemptions as a family office. Right? Timato, he didn't have a lot of reporting requirements that say, you know, a lot of other funds might might might have to disclose. And so there was a kind of opacity to the transactions that were going on. So, ultimately, when when everyone kinda looked under the hood, it was like, uh-oh. This is a lot like that long term capital management fiasco that happened in 1997. I think we talked about it on one of the the shows, but they had a book with, like, 60,000 derivative contracts with over a $1,000,000,000,000 of notional exposure on a $5,000,000,000 book of business. So if the, you know, if the overall portfolio that they held moved by whatever it is, you know, half a percent the whole thing collapses, and that's effectively what happened when stocks got volatile in 1997 during that currency crisis. And then all the banks looked under the hood, and they're like, oh, wait. I need more collateral. There was no collateral to post because everything was levered up, and then everyone's struggling to get a piece of the pie. You know? Of the cash that's left, everyone was fighting to get a piece of it, because if everyone had to sell off, the whole portfolio would collapse and everything starts to spiral out of control. And that's sort of what happened on Friday. Right? because as they started to sell off these positions via big block trades, the stock went down and made it even harder, and then everyone piles on and starts shorting the stock, and it becomes this Uncontrollable fiasco. Jason Calacanis (00:26:29): I I have a really dumb question. For the why are people giving this amount of leverage and letting people make these trades? Is it because they have no responsibility? The brokerage 1000 or whoever's clearing David Friedberg (00:26:38): these bills. They're gonna lose money. I mean, I think JPMorgan, Nomura, these guys are all gonna lose 1,000,000,000 of dollars because there's not enough cash in this guy's actual account to cover all the losses now. Jason Calacanis (00:26:48): Why would they let him do this? Is my really simple, stupid question to somebody who Chamath Palihapitiya (00:26:53): doesn't know. David Friedberg (00:26:53): because they make money. Chamath Palihapitiya (00:26:54): They make money. David Friedberg (00:26:55): I mean, if you're making 5 look I mean, think about it this way. It's sort of like an insurance deal. Right? Like, if I can make 5¢ by taking a dollar of exposure with you, but that exposure only pays out if something terrible happens that's very unlikely in my assessment. I'll take that 5¢ all day long. You know, I'm I'm collecting nickels. But once it once in a while, something really bad happens, and then they gotta pay out a dollar. Jason Calacanis (00:27:17): How many more Manciergo's are out there? Chamath Palihapitiya (00:27:22): Well, I think I think it depends on how you define the problem. But if you say that leverage Everybody's levered. I think the question is by how much? I think it's pretty rare at this point. that you're not levered. We don't run leverage, but it's tantalizing. I gotta tell you because, like, you know, I could run, I don't know, $100,000,000,000 of And then all of a sudden, you know, you only have to return, you know, 1 or Speaker 1 (00:27:46): 2% Chamath Palihapitiya (00:27:47): to make a ton of money. Yeah. David Friedberg (00:27:48): ChipBox, what would your margin interest rate be if you were to run your your book levered? Chamath Palihapitiya (00:27:52): I I could run it ten times and pay Speaker 1 (00:27:56): 1%, 2%. David Friedberg (00:27:57): Right. That's crazy. Right? So with ten times leverage on your money, you you basically just have to beat one point or 2 point a return, and you make money. That that's why it's so attractive right now. Jason Calacanis (00:28:07): That's why David Friedberg (00:28:07): it's so attractive. Chamath Palihapitiya (00:28:08): And that's what that's what what a lot of these other organizations do. The business model that they've perfected, which I think is very reasonable, by the way, says, again, back to sort of like you know, managing year to date risk. Right? They manage extremely small movements in stocks because instead of saying to if the 4 of us were running a hedge fund, hey, each of you do your best, then we're gonna run one times notional. It's much better to say I'm gonna severely constrain the parameters in which you guys can take risk. And on the back end, I'm gonna lever the whole thing up ten times. My only goal is for you guys to make me 1% a year Right? Because if I lever it up ten times, now I've made 10% and that 1% a year now all of a sudden divided by 12 months of the year, means you're general you know, you only have to do 80 basis so all of a sudden, the math starts to work in your favor where everybody says, wow. Let's raise as much money as possible. Let's make sure there's extremely tight risk parameters. Let's just tell David Friedberg and Jason Calacanis and David Sox just give me 80 basis points. And on the back end, I lever up. That's the whole business bottle of most hedge funds. And then, you know, you have some folks at the edges. As Friedberg says, you know, the insurance policy rarely pays out. But then every now and then, you have this cataclysmic set of events and the long tail hits, and you're wiped out. And that's what happened David Friedberg (00:29:26): And by the way, you know, there are stress tests against the banks to and where they basically look at scenarios of, you know, how bad can the overall portfolio get that the banks are exposed to, you know, all these clients that they have as counterparty risks. because remember, like, when they signed a contract with this hedge fund, they're not actually taking a position. what they're doing is they're taking they're they're creating an obligation where this hedge fund has to pay them in the future. Now if the hedge fund effectively goes bankrupt, then they're not gonna get paid. On the mean on the back end, they're expecting to get paid $2,000,000,000 or whatever the amount might be to cover the the, you know, the trade that they put in place with the guy. So this whole thing basically becomes a loss that they get exposed to, and so the stress tests are meant to kind of expose how bad can the loss be to make sure that the bank doesn't ultimately go bankrupt if a really bad scenario were to take place. Now there's a lot of debate about whether those stress test methodologies actually work and whether they adequately reflect the true risk in the markets and the true risk that these banks take on, and that has always been a debate. The problem is if you make the stress tests too limiting, the cost of capital goes up and it's very hard to trade and liquidity goes down in the market. That's the the counterargument to why you wouldn't wanna be kind of more regulatory on this front. And so it's a it's an ongoing kind of fluid debate about what's the right way to stress test banks and make sure that they have adequate capital reserves while still creating low cost capital and and having liquidity in the markets. Jason Calacanis (00:30:45): But you add the risk of ruin. So -- It's a yeah. David Friedberg (00:30:48): It's it's really hard to balance. Jason Calacanis (00:30:49): You're playing with your entire net worth on the poker team You're not just buying in with 1% of it or 10% of it. Well, the David Sacks (00:30:55): the yeah. Whenever you read a story about some rich person going broke, it's all there's always debt involved. Right? Because Speaker 1 (00:31:01): -- Jason Calacanis (00:31:02): Yeah. Speaker 1 (00:31:02): -- David Sacks (00:31:02): like, let's say let's say you got, like, I don't know, like, a big number, like, a $100,000,000. Right? And and let's say you're fully invested, the market goes down 50%. you still got 50,000,000 bucks. You're still, like, a very Jason Calacanis (00:31:13): rich person. Yeah. David Sacks (00:31:14): Yeah. But now let's say that you took that 100,000,000 and you levered it up to, I don't know, whatever Speaker 1 (00:31:20): -- David Sacks (00:31:20): Per 1,000,000. -- a a 1,000,000,000. And then the market goes down 50%. You're worth 0. Yeah. Right. David Friedberg (00:31:26): Or the or in that case, the market could go down 10%, Saks, and that's what happens here. Right? David Sacks (00:31:30): Like -- Only 10%. Right. Exactly. David Friedberg (00:31:31): The guy levered it up, and this is what always this is what happened with LTCM. In LTCM's case, the the the trades they had, the whole portfolio only moved, like, 5%, but it caused the cataclysmic collapse of a 100 of Speaker 1 (00:31:42): 1,000,000,000 David Friedberg (00:31:42): of dollars of notional exposure. And that that's sort of like what happened with this guy. He was so levered up. It's so weird. You Jason Calacanis (00:31:49): know, I I searched for this guy on YouTube just to kinda figure out who he was on Saturday. Chamath Palihapitiya (00:31:53): Oh, the the Christian YouTube thing, you said? Jason Calacanis (00:31:55): I sent it to the group, but there's, like, all these videos of him talking about Jesus, and it was just a I'm fine with him being deep into Jesus, especially right you know, on the way to Easter. God bless you, praise Jesus, but it was very weird. This person has a very unique philosophy clearly. And Nomura, the prime broker a Monday warned of significant losses, losses estimated at Speaker 1 (00:32:20): 2,000,000,000 Jason Calacanis (00:32:22): from the unwinding of these trades. Can let me ask let me ask David Sacks (00:32:26): a question to you guys. If if we all agree, it's a really bad idea for individuals to get over levered like this. How bad an idea is it that the US government is getting so over levered? We now have a Speaker 1 (00:32:39): 130% David Sacks (00:32:41): of our GDP, we are now in debt. It's the first I mean, we're I think it only recently crossed a 100%. So we we have now borrowed as a country more than our higher GDP. And -- Yeah. But we're I Jason Calacanis (00:32:54): mean, if you look at that by country, there are other countries that are way over that. David Sacks (00:32:59): Like Japan, just about there aren't that many there aren't that many. And Japan's had a horrible decade partly because of all that debt. Jason Calacanis (00:33:05): Italy, poor ago Greece and Japan. Yeah. Yeah. David Sacks (00:33:07): Not not Chamath Palihapitiya (00:33:08): a club David Sacks (00:33:08): you wanna be part of. David Friedberg (00:33:09): Not a Jason Calacanis (00:33:09): club you wanna be part of. Chamath Palihapitiya (00:33:11): I I I I I think that I'm more sympathetic to governments being over levered because I think because governments effectively are, at this point, still, that may not be the case in the future. The the only form of too big to fail that I think we can tolerate. I have a much bigger issue with private market participants being over levered because I think that is a level of greed and risk that shouldn't exist -- Unnatural. -- in large part because the governments themselves are so levered on the way in. So maybe that's the way to think about it, which is If we have to isolate risk and we know we can't tell governments to stop spending, then I think we should probably make sure that risk is better managed at the individual level, you know, people and companies. David Sacks (00:33:54): Why can't we why can't we tell government stuff spread? Jason Calacanis (00:33:56): I was about to say it. Like, I think we can't tell them that because we vote them in. But, I mean, this Chamath Palihapitiya (00:34:01): I I wanna -- People vote in spenders. People don't vote in Speaker 1 (00:34:04): -- Jason Calacanis (00:34:04): Well, this is the thing. You know, the Republicans were supposed to be the spendthriffs. David Friedberg (00:34:07): Yeah. No one ever gets elected saying I'm not gonna do anything. Right? I mean, Donald Trump may be the 1st president to have ever actually said that and, you know, actually do something in that vein when he put a bunch of guys in charge of, like, the CDC and the Department of Energy and they just cut heads. But, you know, you always go in and you say, I'm gonna do x that isn't being done today. And as a result, over generations, it adds up. And all of a sudden, you wake up, and the United States is two hundred and fifty years old, and we have debt equal to a 130 percent of our and we're struggling to maintain the growth rates needed to fund that debt. And you're like, uh-oh. That's the biggest challenge with democracy in keeping it alive is is the fact that alt ultimately, everyone wants more. And so over time, you vote for more, and over time, it gets more expensive. And over time, it becomes really difficult to maintain David Sacks (00:34:55): Can I can I just count up the bill for just this year? So as we know, Byron already passed, it won't well yeah. So the the bill so far for this year. First of all, the government is is is running like a 4 and a half $1,000,000,000,000 deficit. A lot of that is, you know, COVID related, but In any event, Biden's already passed a Speaker 1 (00:35:12): $1,900,000,000,000 David Sacks (00:35:14): COVID bill. They're now about to pass a at least $3,000,000,000,000 infrastructure bill. Speaker 1 (00:35:21): 22. Speaker 6 (00:35:22): The proposal came out. Chamath Palihapitiya (00:35:23): It's 2. No? Yeah. David Sacks (00:35:25): Well okay. Sorry. It's it's Speaker 1 (00:35:26): 2 David Sacks (00:35:26): for the infrastructure plan, but then there's a other 1 to 2,000,000,000 that they're talking about doing sorry, trillion, that they're they're planning as a second package called the American families plan that they're calling infrastructure, but it's it's not. It's more like social programs. They're kinda relabeling that as social infrastructure or human infrastructure. And they're trying to figure out whether they can do them as 2 separate bills. This is issue with reconciliation, and they need They need a ruling from the senate parliamentarian on whether they can do the second bill through through reconciliation. If they can, they may have to combine it into one bill. Otherwise, they'll do just 2 separate bills. But you're looking at total, like, 4 about 4,000,000,000,000 across those two bills. you know, in addition to the 1.9 we've already passed. So we're looking at like Speaker 1 (00:36:15): 6,000,000,000,000 David Sacks (00:36:16): of spending this year. I think we had about 6,000,000,000,000 of COVID emergency spending last year. And so the numbers are getting really big really fast. Jason Calacanis (00:36:25): This reminds me of our last trip. This reminds me of our last Vegas trip, which Cipriani, and then your markers. That's what I think we're we may need to have some austerity measures. might need Speaker 7 (00:36:36): to go to Olive Garden instead of shipperoni. Chamath Palihapitiya (00:36:39): Part of David Friedberg (00:36:40): the issue, Saxes, you know, I think if you guys remember on election night, I told you the thing I was most concerned about was this Georgia runoff. And if the senate takes if the Democrats take the senate, you have no balance of negotiation in this process of of passing these bills and finding a point of fiscal responsibility versus social necessity or what might be deemed necessity by some, but but you know, exuberance by others. And and it's it's it's frightening because, you know, with a with a single party system, right, or a single party legislative branch or right now, we have a real issue with the the fact that any bill can kinda be come up can kinda be defined by one party, by a small group of people. They can get it passed. They can get it signed. And, you know, it's gonna be a challenge for for us to all kind of support this level of debt for generations to come. And it's it's not gonna stop anytime soon. I mean, you know, before the midterms, we've got another year and a half of Speaker 1 (00:37:39): 100%, David Sacks (00:37:39): and that's why I was rooting in the the the last election for gridlock as well. And and we we almost had it. I mean, it was supposed to be a divided senate. Purdue won that Senate seat, and then he lost her in Jason Calacanis (00:37:51): the runoff. Speaker 1 (00:37:52): -- Jason Calacanis (00:37:52): decided to burn the entire Republican party on the way out. Congratulations, David. You've destroyed the Republican party. Look. You you you you Jake, how you David Sacks (00:38:03): have a little bit of a point there because the reality is, as of Election night, supposed to be a divided senate. Jason Calacanis (00:38:08): And -- Yeah. Speaker 1 (00:38:08): -- David Sacks (00:38:08): then what happened in the 2 months that followed turned voters against those senate candidates. So You have a you definitely have a point there. But but the the price tag for that one senate seat is gonna be about Speaker 1 (00:38:20): $6,000,000,000,000. Jason Calacanis (00:38:21): Yep. It's pretty disturbing that our our debt to GDP ratio is now worse than Spain and Portugal. Speaker 7 (00:38:28): I mean Speaker 1 (00:38:29): -- Jason Calacanis (00:38:29): And and here here here's -- -- Italy and Greece. David Friedberg (00:38:31): Well, think it's worth just explaining to people why that matters. Right, Saks? I mean, like, when when you when you issue debt Speaker 1 (00:38:38): -- Jason Calacanis (00:38:38): You have to pay the -- Well, David Sacks (00:38:39): here here's the thing. here here's the thing. Everyone's been everyone's been lulled into a false sense of security because the interest rates are so low so that debt service has actually been relatively small. But if interest rates ever go back up, say, because of inflation, like the debt service will be one of the biggest chunks of federal spending. We won't have money left for all the programs that we need, you know, including entitlements, including defense, including everything else, you know, that the country wants to do. And so it's very dangerous. And and and the the the real problem I have with it right now is Everybody can see the economy is getting better. Right? It's it looks like we're about to have the roaring twenties. The economy looks like it's rebounding. It's about to boom. Goldman Sachs, we says we're gonna be down to, like, 3% unemployment by the end of the year. It's coming back really fast. COVID is gonna be over in May. I mean, everything is trending the right way. And we're acting like, you know, like, there's an emergency happening still. I mean, I understand the 60000000000 last year during the middle of COVID to prevent a depression. But what is the rationale today when the economy is already coming back for this level? Reelection. Chamath Palihapitiya (00:39:47): David reelection. to consolidate democratic power and to get reelected. David Sacks (00:39:51): Right. Pump the prime the pump. But, you know, we're we're we're breaking the glass in case of emergency when there is no emergency. what happens if there is another emergency? Chamath Palihapitiya (00:39:59): We'll go to a 150%. Look. David Friedberg (00:40:01): I I don't think it says as intentional as getting reelected. I do think that the politicians and the people involved and the legislative process have very good intentions and think they're doing the right thing. And they got elected, and they spent their whole lives and their whole careers dreaming of a day when they could create these programs using government money, dreaming of a day, when they could make these opportunities real. And here's a moment in time where they can And where these visions for what they believe to be a better society and a better government and a better country for all its citizens, they have this moment now and they are and and so I'm not criticizing anyone. I think it's just it's I think it's look. You yeah. No. You could totally disagree with the point, and and and I think in many cases, I agree with you. But I I do think that there isn't like this this kind of evil incentive or this evil reason for folks doing it. I think, you know, a lot of people that work in government or or politicians they spend a lot of time thinking about doing what's best for their, you know, their their their kind of people that they represent. And here's this moment where I can create all these programs and create all these jobs and spend all this government money to give my people locally, all these all the support that I always thought that I or I always told them I would give them one day. And it's a moment where everyone's kinda rushing. And because there's a single party system right now, everything's getting done, and it's all getting piled on top of pile. It's like leading eating cupcakes and then cake and then pancakes and then, you know, ice cream and then having a milkshake. You know? It's it's it's gonna have a really nasty stomachache at the end. David Sacks (00:41:24): Yeah. I I agree. It's it's we're we may have a sugar rush over the next year or 2. Maybe maybe Biden gets reelected based on this. But, you know, Eventually, I I like I like your term stomach ache. Biden seems to me a little bit miscast. It's like he's cast from a different era. And, you know, this is not 1933. We don't need this massive amount of pump priming by the federal government. We're not in a depression We're not even in a recession right now. We're coming back really strongly. And so it just feels like we're passing all this anachronistic pork barrel Speaker 1 (00:41:56): -- David Friedberg (00:41:56): Right. Speaker 1 (00:41:57): -- David Sacks (00:41:57): spending. You know? Like, for why? It's like almost like it's just habitual as opposed to having a real need. Chamath Palihapitiya (00:42:02): I think that's a more nuanced take, which I agree with, which is, like, if you actually see what that $2,000,000,000,000 infrastructure bill look like, there was a lot of stuff which did feel incredibly anachronistic where I was like, I mean, paving the fucking road. I mean, we had China trolling us because the the contents of that is so stupid. Right? It's like, I mean, it's like paving the road is this one time event that does nothing. And we're we're much we're much better off building ongoing capability of things we need. So if we're gonna, like, green the economy and, you know, we're gonna go through an energy transition, there's all kinds of ways to spend the money. And so then you think who's advising these people? Jason Calacanis (00:42:44): And then and Chamath Palihapitiya (00:42:45): then I think it comes back to lobbyists. Jason Calacanis (00:42:47): Obviously, in donors. Yeah. David Friedberg (00:42:48): Let's go through this list. Right? So of the $2,000,000,000,000, it looks like about 620,000,000,000 is going into transportation infrastructure like Chemut said, bridges, roads, public transit, etcetera. Now if you think about the benefit to society, there's the benefit of having better roads, which we can debate. Does you know, do all of these need this care, the $620,000,000,000 worth of care. I think some people would say, yes. Some people would say no. But the question of where that those dollars actually go ultimately if you kind of look at how government contract work is done, there will be a few people that own the majority of these contract service providers that will benefit heavily from this capital coming out of the government's coffers and will go into their bank accounts. And, yes, there will be some jobs, but they will be temporary jobs. And there will be temporary salary and wage support through this. A lot of that capital will go to the people that own the businesses that are doing all of the construction work in supporting this industry development. So, you know, it it's concerning when you look at how much money it's gonna get funneled into effectively corporate contracting. Chamath Palihapitiya (00:43:45): I don't care I don't care what side of the aisle you're on, but if you see Speaker 1 (00:43:49): $620,000,000,000 Chamath Palihapitiya (00:43:51): of spending that's gonna happen in the next few years for anything. If you're thinking anything other than this will be wasted and inefficient, you're being really naive. So, you know, the the good a good microcosm example of this is the one that you use Friedberg, which is How much money did California give to Anderson Consulting or, you know, to build that COVID website? It was Speaker 1 (00:44:13): -- Jason Calacanis (00:44:13): Yeah. David Friedberg (00:44:13): It was, like, a 100,000,000 bucks. like, all in with the service costs and the customer support and all the stuff that was attached to it. Chamath Palihapitiya (00:44:19): And and and and, realistically, you could have billed it for 90 bucks using Wix you know, where it's ready. Jason Calacanis (00:44:23): Use the promo code twist. Come on. Use the promo code. Chamath Palihapitiya (00:44:26): So so my so my my thought is that exactly Like, people should look at this irrespective whether you're on the left or right think, well, of that 620, how much will actually get into the hands of people in a in a thoughtful way probably like 300. How much of it will go into like lining the pockets of shareholders and folks in very specific companies who just print an enormous amount of profit over the next few years, probably another 150 or Speaker 1 (00:44:51): 200,000,000,000. Jason Calacanis (00:44:52): Wait a second. Sachs, could you Did you send my Red Pills to Chemott's house? What's going on here? Speaker 7 (00:44:58): because they're Jason Calacanis (00:44:59): my Red Chamath Palihapitiya (00:44:59): Pills. Chemott. Speaker 7 (00:45:00): What's going on here? David Friedberg (00:45:01): But let's have the counterargument. Right? The counterargument is for decades, and I'll and I'll make it. Right? So for decades, roads have been crumbling. Infrastructure in this country has been falling apart. we haven't taken care of federal highways. There's all this work that needs to be done to make sure that airports address rural communities and ports can take ships in so the economy can grow. and someone's gotta build all that stuff at some point. So, you know, rather than deal with this down the road, let's take advantage of the single party, you know, governing system we have right now and pass this bill and get it all done and and get and get America ready for the future. That would be the argument. Right? Jason Calacanis (00:45:33): I'll I'll give you the most cynical argument. The most cynical argument is Let's ratchet up spending, make everybody concerned about the debt so that the solution is raise taxes. and let's create a wealth tax, and let's create this tax. And then -- Well, David Sacks (00:45:46): Biden is raising taxes. It's raising the corporate David Friedberg (00:45:48): tax rate, the 20th percent is provided. -- individual individual. Yeah. Chamath Palihapitiya (00:45:52): Like, I think raising the corporate tax was a no brainer. We should absolutely have done that. But, David, I mean, Friedberg, back to what you said before, what I would have said is, like, look, the counter the counterargument would have been, let's take this $620,000,000,000 and plan the future. So the plan the future would be you know, why is it that, like, Elon can can bore a a, you know, a traffic bearing tunnel at a $1,000,000 a mile and the next best equivalent is 20,000,000 a mile. Okay. Maybe we should give these guys a bunch of contracts. Capitalism. Yeah. Well, just and technology, I would say, and and less graft and less waste. So let these guys build a bunch of tunnels, and maybe they can figure out a way to build bridges too. Or, you know, if you really wanna care about, like, future jobs in the national security of America, let's secure our own precious metals and minerals. and let's have an entire supply chain that's, you know, independent of China. Well, you could spend a couple $100,000,000,000 on that easily. So there's all kinds of ways to spend it. We could build high speed rail. You know? Well, they Speaker 1 (00:46:53): -- David Friedberg (00:46:54): They do have 580,000,000,000. So almost a quarter a little over a quarter of this bill going to American Manufacturing, r and d, and job training. Right? So creating the next generation of jobs for Americans and -- Yeah. Jason Calacanis (00:47:04): We like that. Speaker 1 (00:47:04): -- David Friedberg (00:47:04): you know, re redomesticating industry here. Chamath Palihapitiya (00:47:07): I I like that. -- honestly, those words sound nice. What are David Sacks (00:47:10): the pieces? Exactly. Right. Right. Jason Calacanis (00:47:11): But you David Sacks (00:47:12): like the words. You like the words. You really think Speaker 1 (00:47:13): -- David Sacks (00:47:13): Love the words. Chamath Palihapitiya (00:47:14): Love the words. Jason Calacanis (00:47:15): I mean, I like I mean, one that I think nobody can argue with this universal pre kindergarten. That's easy. And I think community college tuition being free is a great one as well if people have a certain score to get in there. So it's little bit of merit. David Sacks (00:47:27): Jason, what what are these things even what are these things even doing in an infrastructure bill? I feel like in I I think Friedberg has a point that, like, infrastructure is, like, one of the last things that people believe that the government should be spending money on. So now they're just branding anything that they wanna do as infrastructure. They're you know, it's human infrastructure. Speaker 7 (00:47:45): supposed to be bridges and road. codes. Right. Jason Calacanis (00:47:47): Not to say education and childcare and college. That's education. It should be a different bill. But didn't I mean, Obama tried to get infrastructure past he couldn't Trump David Sacks (00:47:56): He did. No. No. He did. No. No. No. No. Obama passed close to a trillion. I think it was like a $920,000,000,000 bill. Remember the shovel ready projects? It was supposed to be a $1,000,000,000,000 of shovel ready projects. They did it. Where'd that money go? Chamath Palihapitiya (00:48:09): Who knows? Well, Jason Calacanis (00:48:12): Speaking around money. Speaking about money disappearing. David Friedberg (00:48:16): Can you ever even Jason Calacanis (00:48:17): if they spell a little shrug emoji con like the I don't know. Here's my yeah. Speaker 6 (00:48:22): There's the bra here's the brown version in I in I was Jason Calacanis (00:48:25): a -- Look. Here's the white here's the pale white version, and Chamath Palihapitiya (00:48:27): then -- Here's the brown version. Speaker 7 (00:48:29): Here's the Jason Calacanis (00:48:29): brown version. Speaker 1 (00:48:29): -- Speaker 7 (00:48:29): dollars, and it looks you're Jason Calacanis (00:48:30): the tan version free break. David Friedberg (00:48:32): Do you get Jason Calacanis (00:48:32): a little sun? Yeah. A trillion dollars? Me no no. I don't know. Oh, we can all go to Vegas. and we can lose Speaker 7 (00:48:39): money into just come up to our wives and go like this. Jason Calacanis (00:48:41): Yeah. Yeah. Yeah. I I David Sacks (00:48:43): I just think, like, the government's so bad at, like, properly dispensing all this money. Like, that's the problem that, you know and then that would look. I think if you're ever gonna do infrastructure, the time to do it was in 2009 when Obama did it, the economy was in absolute, like, like, a great recession. That made that made sense. But now when the economy is doing is is rebounding so strongly. Do you really believe that these, you know, $100,000,000,000 line items are gonna be wisely spent? You know? And and most of it's borrowed money. So Chamath Palihapitiya (00:49:15): No. And and the problem is, like, by the time it gets into the details, well beyond what Biden is capable or has the time to learn about, It will be just completely misallocated. And, you know, some lobbyists will insert something that gets something that's important to some politician the money, and that and that and that's the that's the sad truth of it all. And we just have to hope that there's enough good that comes out of it. David Friedberg (00:49:37): And now taxes are coming for you. Jason Calacanis (00:49:40): Well, I mean, that's that's the next thing is the wealth tax is or where that conversation is Chamath Palihapitiya (00:49:45): What happened in that what happened in the bill? ACA Speaker 1 (00:49:48): -- Chamath Palihapitiya (00:49:48): I saw I saw the corporate tax went up from 21 to 28, but what else happened? Jason Calacanis (00:49:51): Just Speaker 1 (00:49:52): -- Jason Calacanis (00:49:52): Well, there's a wealth tax in California being discussed again. Who knows? Okay. Chamath Palihapitiya (00:49:55): But the federal level, was there anything -- No. Speaker 1 (00:49:57): -- Chamath Palihapitiya (00:49:57): the bill? Jason Calacanis (00:49:57): No. I didn't know Speaker 1 (00:49:58): about what that was. Jason Calacanis (00:49:59): I I mean, I don't know if that's possible. David Sacks (00:50:00): So the first the first bill is gonna be funded by, like you said, an increase the corporate tax from 21 to 28 percent. The second bill, the Families Act, is gonna be funded in part by personal income tax. increases, which I think will be more controversial. They're gonna bump up in well, the the campaign statement that Biden made was individuals. No one making under 400,000 would see a tax increase. So the plan was 400,000 going up to 39.6%. But here's here's where I think it could get very controversial is that the White House is already making noises that it wasn't 400,000 per individual. it was $400,000 per family, which would mean $200,000 per individual, which would be I pretty much a camp a broken campaign promise. So if that's where it ends up being, I think Biden could take a lot of heat for that. And but but the problem is if he sticks to 400,000 per individual, I'm not sure that it will raise enough the tax increase will raise enough money to pay for everything he wants to pay for. So it'll be interesting. -- see Jason Calacanis (00:51:03): I would be totally okay with this when I was thirty years old. I'm just putting that on the record. What is it? No. Chamath Palihapitiya (00:51:09): I'm sorry. Speaker 7 (00:51:09): I'm not okay with it right now. Chamath Palihapitiya (00:51:10): This may sound dumb, but what is the federal tax rate? Like, what what is it going from? David Sacks (00:51:14): I think the the top the top rate's, like, 37a half something like that. Chamath Palihapitiya (00:51:17): So so 2% increase. Jason Calacanis (00:51:18): It's not a big David Sacks (00:51:19): it's not a gigantic increase at all. Jason Calacanis (00:51:21): So it's Chamath Palihapitiya (00:51:21): a bit of big nothing burger. Okay. Jason Calacanis (00:51:23): Yeah. And and this is income tax, again, not capital gains? David Sacks (00:51:26): It'll be yeah. And then there's a bunch of questions about whether like so capital gains is still a big question mark. And -- Capital gains David Friedberg (00:51:33): will all go to income. David Sacks (00:51:34): Yeah. Well David Friedberg (00:51:35): No. There's there's a big push. Yeah. No way. That's a big push. Jason Calacanis (00:51:37): I don't think they David Sacks (00:51:38): think. But they haven't said yet. So this is gonna be part of the second bill, which they're talking about doing, I think, in October. So Yeah. Watch out. Jason Calacanis (00:51:45): Okay. Wait a second. If they go if they if the capital gains happens, then the whole idea of being a capital allocator it's gonna change everything, wouldn't it? Chamath Palihapitiya (00:51:53): I I think it's a bigger issue than that. It has less to do with that, but you have $30,000,000,000,000 sitting in 401k's and IRAs. And the idea that you'll tax all of those gains in a differentiated way, I think is gonna be a very complicated proposition. David Friedberg (00:52:07): Well, those aren't taxed. Chamath Palihapitiya (00:52:08): Well, they're taxed on the way out. Right? You still pay something on the Speaker 1 (00:52:11): -- David Friedberg (00:52:11): Not if you hold until you're Speaker 1 (00:52:12): 55. Chamath Palihapitiya (00:52:13): But, I mean, whatever, you're gonna live to a 110. So David Sacks (00:52:15): So, yeah, Axios actually had a story just today that the infrastructure bill, it, like, does not include capital gains taxes. But the big question is what they'll do in the next bill? You know? Jason Calacanis (00:52:26): Yeah. And that's and then so you combine that. Let's just say the federal government decides capital gains. We don't want to invest in companies anymore. We don't wanna treat stock gains. the same because we wanna have more equity, equality, whatever. Then you combine that with this wealth tax proposal in California, ACA is a resolution to propose. And amendment to the constitution of state, co authors have proposed a wealth tax described as a 1% surcharge for amounts over Speaker 1 (00:52:51): 50,000,001.5 Jason Calacanis (00:52:53): percent for amounts over 1,000,000,000. So if you're a billionaire, just you're gonna have to pay, you know, Speaker 1 (00:52:59): 50. David Friedberg (00:52:59): Can I make a case to you guys kind of been thinking about this, but I'd love your your feedback on it. So I feel like there's a a trade off between freedom and equality And and what I mean by that is if you if you give a market freedom, a market of people doing things, freedom, you maximize progress that that society achieves. And and the United States is the best case study of this in history. In 250 years, we went from to people living on plantations or living on small farms to a, you know, the largest economy in the world. And so the more freedom you you provide the the more innovation there is, the more entrepreneurship there is, the more of inventing new stuff there is. The problem with progress Progress takes everyone forward. But progress is always asymmetric, meaning some people end up in a greater point further ahead than everyone than a lot of other people do. Whereas, like, a socialist state with less freedom Speaker 1 (00:54:00): -- David Friedberg (00:54:00): And incentives. -- you and incentives, you take everyone forward together but you don't make as much progress. And so if you wanna have freedom, you have the most amount of progress, but you have the least amount of equality over time. even though everyone is further ahead than where they started 200 years ago or a 100 years ago or even 10 years ago, everyone's in a better position than say they were some period of time ago because we've all got better social security programs and whatnot. There are some people that get so much farther ahead like Elon Musk and Jeff Bezos, and these people that you can now look to and say, this is unfair. This person's taken so much capital, and I've only made, you know, a 10% increase in the last 10 years. And so as a result, there in a in a democracy, there is always this tension between freedom and equality. And those are the two things that cycle in terms of what voters vote for. We're coming into a cycle now where we're gonna start to vote down freedom and vote up equality, and this is sort of what the wealth tax, in my mind, represents, is this this kind of redistribution or this returning to kind of the mean or reversion to the mean in terms of, like, get everyone back on the same page. But as a result, we're gonna see much less economically, we're gonna see much less progress in terms of innovation and other places that have more freedom and enable more in innovation and infrastructure and entrepreneurship are gonna be able to kinda leap ahead and have greater progress than us. That's my kind of rant and thesis, but I'd love you guys is Speaker 1 (00:55:22): -- David Sacks (00:55:22): I I would amend your your thesis slightly to say that Friedberg produces prosperity. Chamath Palihapitiya (00:55:27): Right. David Sacks (00:55:28): And prosperity does produce some inequality because there are always people like Elon or Jeff Bezos whatever who are just gonna be like superproducers, especially in the era of technology where you can create a machine to produce goods and services, and that machine can be 1000 or or millions of times as productive as the ordinary person. So they're gonna build extraordinary wealth. But the the but look. The the the free the the basic idea of liberal society is you have a free enterprise system where people are generally free to create their companies and their businesses. And then you have a social safety net that's paid for by the largess of that system. And the thing about socialism is it can only make it we talked about this last time. It can only make everyone equally poor. It never makes everyone equally rich. You end up killing the golden goose for everybody. And and you also end up with a lot less freedom because you end up with a gigantic state that exists to level everything, and they accrue all this power for themselves. Chamath Palihapitiya (00:56:27): But is that actually true? Like, if you look at China, is that really what's happened to China? China's kicking everybody's ass, and they're basically a socialist. Jason Calacanis (00:56:34): Do yeah. This author they're authoritarian. David Sacks (00:56:37): Exactly. They're they're caught -- I mean Speaker 1 (00:56:39): -- -- David Sacks (00:56:39): they're sort of Speaker 1 (00:56:39): -- Jason Calacanis (00:56:39): Or sort of maybe Chamath Palihapitiya (00:56:40): using using Friedberg's language they don't have as much freedom or that freedom is granted by, you know Speaker 1 (00:56:46): -- Jason Calacanis (00:56:46): Authority. A central authority. Yeah. Central authority. -- by definition, which means Somebody like Jack Ma can do amazing until he can't Speaker 1 (00:56:56): -- Chamath Palihapitiya (00:56:56): But that's a perfect example. He's still doing fine. He's got 50,000,000,000. Maybe it doesn't Speaker 1 (00:56:59): -- David Friedberg (00:57:00): Well, imagine what he could do if he keep going. And and this is the point I wanted to make, which is what if you got Elizabeth Warren or Bernie Sanders proposals enacted? And Bernie Sanders has gone on TV many times and said there should be no billionaires. If Jeff Bezos stopped building Amazon when he made a $1,000,000,000 because he was forced to by the government, at that point, all the future benefit of Amazon would have been locked. It's not like someone else would have been able to step in on top of that platform and build more. And then the next guy steps in and makes the next billion. And I I just wanna remind everyone the the the benefits of Amazon are extraordinary. I mean, imagine going back 20 years and being or being a kid, and I can go on my frigging phone and I can say I want something, and it chills up at my door the next day for very little for same day for very little money. I mean, it is fucking mind blowing what Amazon has built for us, for society. It's an incredible business at the same time, and we are all willing to give that business money because the benefit of what they do for us is so extraordinary. And if you had capped Jeff Bezos's wealth or kept his ability to kind of keep elongating what that business could do at some point, it would have been an absolute travesty. And I would argue that even though Jack Ma is doing fine, there are people in China who are limited in terms of what they can do because of the way that that government limits freedom and limits flexibility. And so to me, I'm observing this tension between freedom and equality where equality is becoming such a sticking point for people now that it is far more important than freedom. And as a result, we are gonna start to see these little things creeping in like a wealth or a limit on billionaires or all this sort of stuff that ultimately limits the ability for people to kind of push their businesses and elongate progress And if you looked at the great scientific and technical discoveries of the last 30 years, so many of them came from the United States because of this this freedom not from China. And China's certainly done fine. Jason Calacanis (00:58:46): But they're great photocopy machine, and they're great at saying, hey. Here's some slate labor. Speaker 1 (00:58:50): -- David Friedberg (00:58:50): has been here. The innovation has been in the United States. David Sacks (00:58:53): Yeah. China observed what was working in the US, and they realized that they should adopt markets because markets create prosperity. They create goods. They create, you know, wealth for their people. So they've embraced markets. And then meanwhile, we're moving away from markets where we have such skepticism of markets, you've got this sort of extreme socialist sort of Bernie wing of the of the party that is kinda moving away from markets. It's it's bizarre. You know? It's just Jason Calacanis (00:59:21): and then you just look at the free market in the Amazon example. They demanded a $15 minimum wage they got the $15 minimum wage, and now they're still attacking Amazon and Jeff Bezos. And so it's never gonna be enough for them. They wanna see him That's right. Speaker 1 (00:59:37): -- Jason Calacanis (00:59:37): of all of his money. Chamath Palihapitiya (00:59:38): No. No. No. That's right. I think I think that you're saying something else, Jason, which is really important. I think people You have to think about the generation of kids that have been raised by boomers, and and that'll explain the psychology of why they think that way. You know, we had all kinds of failure modes growing up. You know, we, meaning, you know, I'm in my mid forties. If you think of our generation and older, right, we all had failure modes. You wouldn't get into the schools you wanted. You, you know, basically had a lot more freedom where after school you were a latchkey kid, you know, you would have just all kinds of like very nominal ways of growing up. didn't necessarily get to play on the school team if you didn't make it. You know? And those boundary conditions create these great stories like the Michael Jordan's of the world. And then you fast forward to how boomers felt, and I think that boomers felt an enormous amount of guilt about their stresses on the system. And what did they do to millennials and Gen Z? got they got everything they wanted. It was kindergarten soccer. Everybody gets a gold star. And now you have an entire generation of people that quite honestly are, like, wondering, like, they actually have been raised in a quasi socialist setting. You know, if you go if you go to school, there is no free speech. If you do a project and, you know, your grades aren't good, you can get a redo. Everything's a redo. Everything's a redo. Everything's a we're gonna manage to the can't lose. And you can't lose. And in that not losing, I think people have forgot what it feels like to actually win and that humans are actually in many ways. like Darwin's perfect example of winning, you know, like, why us and not another strain of chimpanzee? because we need we wanted to win more than anybody else as it turned out. And that's lost. Chamath Palihapitiya (01:01:23): We've lost that script. And so I think part of it is you have an entire generation of people who Whatever you do, it's not enough. It's because they were raised in a society where they never had to actually learn what functional winning and losing felt like. or or it's been deeply minimized. Jason Calacanis (01:01:39): Said another way that we've gotten soft, and we're about to get our asses kicked by China. If we don't start to realize that a vibrant competition of ideas and products and services is what wins Chamath Palihapitiya (01:01:52): I think we have a more dangerous thing than that, Jason. It's not that that's gone. I think it's actually more this selective idea. So for example, like, if you're a fashion designer, creating close on Shopify or fashion Nova, you're allowed to compete and win. But if you build a technology that aggregates resources and that has these crazy gross margins and profit margins, you're not allowed to win. So we've actually gotten into this very contorted period where we wanna choose how to define what winning feels like to us. And I think that's where it's dangerous because that's a very subjective thing, and it ebbs and flows. David Sacks (01:02:30): Can we go back to the wealth tax for a second? Because I think this is, like, monumentally Jason Calacanis (01:02:34): Hold on. Let me just finish the statistics on it. They claim there are a 169 billionaires in California, so this wouldn't impact a lot of people, and they estimate the wealth tax would generate over 22,000,000,000 We've already seen Elon and Speaker 1 (01:02:46): -- Jason Calacanis (01:02:46): It won't. David Sacks (01:02:47): It won't. That's a static analysis. That's there you go. stupid analysis because it's completely Well, Jason Calacanis (01:02:53): Keith's the boy left Elon Musk. David Sacks (01:02:55): They're all gonna leave. They're all gonna leave. Look. I've talked to a lot of people. I've talked to a lot of people about the the wealth tax who would be subject to it. Okay? Every single one tells me the same thing, which is if California passes this, this is a red light for me. I'll leave the state. every single one. So you're not gonna raise Jason Calacanis (01:03:11): same thing. Yeah. David Sacks (01:03:12): Yes. You're not gonna raise 22,000,000,000 from this. You're gonna raise it's actually gonna lead to a decrease in tax revenue because many of these people are gonna leave the state, and they're gonna take investment with them, their businesses with them, their job creation with them. It's gonna actually Speaker 1 (01:03:26): -- David Friedberg (01:03:26): More than half the tax at revenue in the in the state of California comes from the what is it? The top 1%? Is that the statistic? David Sacks (01:03:31): It will kill the California economy. Now here's crazy thing about it. Probably the most crazy part of that whole wealth tax proposal. And by the way, even if you support a wealth tax at the federal level, it's stupid for California to do it on its own because it's very easy for you to leave California. You just move some other part of the United States. Much, much harder to leave the United States. So the idea that, like, California can just do this on its own is, like, the height of stupidity by these by these legislators. so the stupidest part of the whole bill is that there's a 10 year look forward, which basically says that if you spend any time in California, we're gonna try and tax your wealth for the next 10 years. So that means that for all of us thinking about this concept, if we think this wealth tax might pass in the next 10 years, we might need to leave the state now. We might need to get get ahead of the curve. And I'm hearing people now debating whether they should leave the state because they think it's inevitable That's something like this passes. And the sooner they sever their nexus with the California, the less likely they are to be roped into it. So just the mere fact they're proposing the spill I don't think they're gonna get the votes in this legislature. There's 6 Democrats ready to come out against it. So I don't think it's gonna pass this year or next year. But the fact that they're even putting it on the table is making a lot of people second guess whether California is the place they wanna create their businesses. And what we really need is for the governor, Gavin Newsom, to come out right now and say, listen. Like, this is a bad idea. I will veto it. I will not, you know, support this. if I'm governor for the next, you know, 5, 6 years. And his mere failure to come out and say what he really thinks about this is hurting the state because a lot of people are already contemplating, do I need to leave now? David Friedberg (01:05:14): Zach, let me ask a philosophical question. Do you think that this kind of speaks to a broad challenge with democracy as I kind of Friedberg to point out earlier, which is, at some point, the majority can take things away from the minority by just passing a law by by voting. And when you make that vote, the majority of people aren't a directed. Therefore, they'll say, sure. Let me I mean, I I know that, you know, you you have more background in this than the rest of us. But, like, what is the political science principle here on how democracy kind of protects itself from having the majority eat the minority. When the minority, you know, in in this particular case, funds the state's budget. Right? And, like Speaker 1 (01:05:51): -- David Sacks (01:05:51): Well, there's there's a famous -- -- vote David Friedberg (01:05:52): and the voter doesn't see that. David Sacks (01:05:53): Yeah. There's a there's a famous line in political philosophy that democracy is not 2 wolves and a sheep voting on what they're gonna have for dinner. Okay? That there's a concept there's a concept in addition to democracy of rights. you know, that that you have rights, that the government can't just take away. And so part of the American founding wasn't just sort of the majoritarian machinery of government. it was a preoccupation with with the rights of individuals and minorities to be protected against what majorities would do. That's why we have the bill of rights. So, yeah, I mean, there have to be rights of individuals that are protectable on some level. And I and I think it's a real constitutional issue whether the wealth tax is even allowed. Chamath Palihapitiya (01:06:37): Well, that's I think that's I think where it's gonna get fought and lost because the the clever order in the supreme court will say, if this what comes next? Is it are we gonna go back and saying, you know, all of a sudden, the majority doesn't like certain kinds of other kinds of minorities? Jason Calacanis (01:06:54): The word Chamath Palihapitiya (01:06:54): is a lot. You can't you David Friedberg (01:06:55): can't have a certain kind of car or a house. Chamath Palihapitiya (01:06:57): you can't have a certain car. Oh, wait. I actually don't like the tone of the color of your skin. Oh, wait. Religious minorities all of a sudden. We're to the 19, you know, forties. And I just don't think this is gonna pass because it's not justifiable. At the federal level, I do think that you can just basically jack up taxation and do a bunch of other things that that make it more fair. I'll be honest with you guys. I'm a little torn on this topic and I'll tell you why. On the one hand, if I had to pay 1 a half percent a year, I'm like, okay. What is the marginal utility of that money for me? It's basically 0. So it's not as if I would feel that change of 1.5%. The thing that would upset me more is not having to pay the 1.5%, but then to see it wasted. That would drive me crazy. Because then I would think, you know, I could have bought potable water for, you know, a native Indian tribe in California. I mean, actually, here's a perfect example. I just found this out today. You guys would be shocked. There is an incredible shortage of clean water in the central valley. There are places today where you and my fellow compatriots of California live where they have to buy these huge $12 Arrowhead jugs of water because the water is completely poison. And when I heard that yesterday, I thought in California, in the United States of America, and then he said to me, Smoth, you can give for two and a half million bucks you can basically get 5000 people clean water through this thing that he's working on. So for me, the thing that would be upsetting is not paying the 1.5%, it would see it would be seeing nothing get solved from it. And then and then what it would really prove is what I said earlier, which is just a bunch of belly aching from folks that actually just don't know how to actually seek success. David Friedberg (01:08:45): But nothing, Chamath, is that you can run for the governor day to California and fix that Speaker 7 (01:08:49): fucking problem. Jason Calacanis (01:08:50): That's a we should build the website. Yeah. That is David Friedberg (01:08:53): the benefit of democracy is, you you know, you can kinda run and you can step in and you can help solve programs at the government level, but Speaker 1 (01:08:59): -- Jason Calacanis (01:08:59): We could start a podcast and try to use our influence, or we could donate to things. Chamath Palihapitiya (01:09:02): Guys, I'll say something else. I also think that these kinds of bills are actually a shot across the bow. to a handful of people that are not playing by the rules anymore. We're not towing the line and standing in line and saying, I'm clearly demarcating myself as a Democrat I'm clearly demarcating myself as a Republican. I'll play nice because think of what's really happened in in in COVID. You've had a massive explosion in d to c distribution. Right? Think of the platform that we've created out of nothing. Think of the platform that Elon Musk's has out of nothing. And if you if you take that writ large, it's extremely disruptive to people who is all about controlling the message which allows them to control power. And I think that a lot of these rules are these ways of almost like counter punching against it, but they're ineffective. I what I would encourage all of us to do is actually become completely zen and instead, continue to aggregate distribution power because that will replace the Speaker 1 (01:09:56): 1 Chamath Palihapitiya (01:09:56): a half percent tax that you have to pay. Because if you can talk to people directly and tell them your version of the truth and allow them to underwrite their version of the truth against what you said, that is modern power. and that's worth a lot more than the money that you'll pay. Now would you give David Friedberg (01:10:13): that same power to Donald Trump? because he's been cut out. Chamath Palihapitiya (01:10:17): I think you have to in that model. Jason Calacanis (01:10:20): Alright, everybody. We'll be taking next week off Because it's spring break. And you could take the week off as well. Anybody have any plugs or things they wanna promote? Why are David Sacks (01:10:29): we taking the week off? Jason Calacanis (01:10:31): Because I don't wanna take the week off. I'm fine with doing it. I think some people are gonna be on vacation in there. David Friedberg (01:10:36): Someone's gonna be somewhere really nice among clients. David Sacks (01:10:38): Can't you call in? Chamath gets Chamath Palihapitiya (01:10:41): all this. Shamath Jason Calacanis (01:10:41): is gonna be has Internet access. We'll send you a STARLINK. did you want to send your Speaker 1 (01:10:47): -- David Sacks (01:10:47): All of my all of my undisclosed locations have Internet access. Jason Calacanis (01:10:51): For those of you who don't know, Chemov David Friedberg (01:10:52): has rented the pyramids and Giza, Chamath Palihapitiya (01:10:54): and he will be staying David Friedberg (01:10:55): inside of Jason Calacanis (01:10:55): and he'll be dismantling them -- Yeah. -- and NFT ing them -- Yeah. Speaker 1 (01:10:59): -- Speaker 7 (01:10:59): and turning them to dust. Jason Calacanis (01:11:00): I'll be sleeping. Chamath Palihapitiya (01:11:01): I will be getting wrapped as a yeah. Yeah. Exactly. David Friedberg (01:11:03): As a mummy and king tut tomb. He has robotic waiters serving him the whole time he's there. He's living out a sci fi fantasy next week. So Jason Calacanis (01:11:09): enjoy it. Well, you know what? I did tweet that we're gonna do a live show after everybody gets vaccinated. We've been doing over 3,000,000 a day here in California starting tomorrow, April 1st. David Friedberg (01:11:20): Live poker Jason Calacanis (01:11:21): Live poker can occur, but we are going to be hosting, I think, Chamath. New Chamath Palihapitiya (01:11:26): York City. Jason Calacanis (01:11:26): New York City. Saks is partial to Miami because it's Alfuego. Is that right? David Sacks (01:11:33): MI? Jason Calacanis (01:11:34): I don't know. Are you? David Friedberg (01:11:36): Wait, Jason. Can we just can Chamath Palihapitiya (01:11:37): we just can we just agree then? Let's do this, guys. Let's do May We'll do it some somewhere in New York City. And then June, we can do Miami. How about that? David Sacks (01:11:48): Well, June, it's gonna be too hot. I would I would flip that. And I would because because it's gonna be too hot and -- Well, why not do why not do it 2 city tour? 2 city tour. Well, we could do both. But I also think that we should do Miami first because they're not afraid to come out to an audience. I think that people in New York and California still have they have more -- Yeah. Jason Calacanis (01:12:07): We need to know where people are the most reckless. I agree. Let's go where people have absolutely totally gone Yolo. I mean, the just to close on this, Friedberg, as the, you know, man of science here on the on the pod, at this point, these vaccines have been proven to not only keep you from dying, keeping you out of the ICU, we now found out this past week correct that you're not gonna carry it and infect other people in all likelihood. David Friedberg (01:12:35): Very true. And another interesting thing. Chamath Palihapitiya (01:12:37): Sorry. Sorry. What what what happened? David Friedberg (01:12:39): Yeah. and another interesting point was made this week by paper that was published showing that you have effectively 80% efficacy from your first shot about 2 to 3 weeks after your first shot, and then you go to 90% after your second shot. And then there's another paper that showed you're actually better off waiting over 3 months for your second shot, not getting it 3 weeks later. So you were right. Jason Calacanis (01:13:02): You said we should do one shot and then Come back David Friedberg (01:13:05): to the second. And so there's now there's now very good data that shows that that would have been a better move because we would have had double the throughput in terms of how many people we could have gotten shot in arms if we had done that. So everyone effectively gets 80, 90% protected or 80% protected after the first shot, and then it's better to wait 3 months. And so we could done the back of the year where everyone gets their kinda booster or second shot, and the front half of the year give the whole United States the first shot. But -- David, David, what's the where's Chamath Palihapitiya (01:13:30): the article? that says you don't carry it if you've gotten a vaccine. I need to know that because that's, like, the thing that's always in the back of my mind. Yeah. No. David Sacks (01:13:37): I I I tweeted it. tweeted it -- I David Friedberg (01:13:39): think Jack put it Chamath Palihapitiya (01:13:40): up too. I know. I don't David Friedberg (01:13:41): I don't follow you. Jason Calacanis (01:13:42): Expert expert say it appears. I'm reading she blocked him. Speaker 6 (01:13:47): Best block. I racehooted. I racehooted. David Sacks (01:13:50): I I see you I see you retweeting some of my ideas usually Chamath Palihapitiya (01:13:54): don't contribute David Sacks (01:13:55): them to her. Speaker 6 (01:13:55): Okay. Because I'm your friend, and I fucking love you. Jason Calacanis (01:13:57): No. Usually Speaker 1 (01:13:57): -- Chamath Palihapitiya (01:13:57): At some Jason Calacanis (01:13:57): point -- You usually Speaker 1 (01:13:58): -- -- Chamath Palihapitiya (01:13:58): say it Jason Calacanis (01:13:59): back some -- You Chamath Palihapitiya (01:13:59): will say it back at some point. I don't know what I have to do for you. Yeah. Speaker 6 (01:14:03): I mean, I mark I mark up your deals. Chamath Palihapitiya (01:14:05): I, you know, take care of your family. I mean, Jason Calacanis (01:14:07): I'm here for you. You did mark up that pipe deal. That pipe deal's gone supernova with that Chomov pixy dust on top of it. Experts say it appears COVID 19 vaccines can help reduce the transmission of the new coronavirus from person to person to say this is accomplished by reducing the viral load. in a vaccinated person's nose. Besides the statistics on this, David Friedberg (01:14:25): you know, there is no documented proof that someone was fully vaccinated and transmitted COVID to someone else out of 400,000,000 total vaccinations globally. So there's a you know, also, like, a really strong kind of point to make, which is show me the evidence that it can because, you know, everything about biology and, you know, science would would indicate, you know, in terms of how this would work, There's no reason the virus should be spreading and that you suddenly become infectious and contagious of coronavirus that you can't be infected with. David Sacks (01:14:52): This is, like, the most obvious study ever that, look, if you get the vaccine, it prevents you from getting sick. You're also not gonna transmit it to other people. But let me ask a question. Why is it that every time a politician says that the experts required it. It's always the stupidest position. You know? Because the experts on this show We had Friedberg saying this stuff. We had Bob Bob Walker from UCSF who, you know, runs UCSF saying that, you know, we should've just done the 1st dose first Get everyone through on one dose and then come back and do the second dose. Of course, like, no one in the federal government in a position of authority took that position. Fauci didn't take that position. And then we had Fauci on top of it saying that we might have to wear masks until Speaker 1 (01:15:34): 2022. David Sacks (01:15:37): But, you know, because because because of this, like, asymptomatic because you could be vaccinated and sole spread it, which has now been totally disproven. So why is it that whenever somebody says we have to listen to the experts, they're always listening to the stupidest Because Chamath Palihapitiya (01:15:51): David David We are Jason Calacanis (01:15:52): We are We are Chamath Palihapitiya (01:15:54): a culture where independent thought is not valued, where it is better to abdicate and look to an expert to tell you what to do now. That is again, I go back to we are an cultural malaise of not wanting to make Jason Calacanis (01:16:06): a road. I've been working on my doctor Fauci Sacks. Mister Sachs, that's correct. Asymptomatic David Friedberg (01:16:14): patients may Jason Calacanis (01:16:15): in fact infect other people, but we don't know yet. So it's best to wear a mask, if not two masks, and to have proper David Friedberg (01:16:22): distancing. -- the point you just made, I think, is really important because I think it also reflects what I said earlier about economic inequality and and economic progress. When you have greater economic freedom, you have greater economic progress, and then you will inevitably have economic inequality. The same is true with ideas. So when you give people the opportunity to have the greatest freedom in terms of sharing and expressing their ideas, you have the greatest progress, but you also end up with this offer this issue where people have vastly different ideas and inequality arises. And right now, we're in a mode of cancel culture, and we're in a mode of telling people that they can't say certain things, and they have to be very careful about, you know, what they're saying and what context, and it limits this ability for people to feel free to express themselves, share their ideas, and push the boundary, push the envelope, and find the truth, and find the best outcome. And so I do think that we're in this kind of rationalization kind of stage of our democracy where we're reducing our our our kind of degrees of freedom, and it it's it's playing out in terms of the ideas forum and the economic forum, and it just feels very resonant to me that both are very, very linked right now. David Sacks (01:17:26): Calacanis I try to answer my own question, actually? Yeah. Never stopped you before. Here here's here's what I just realized. Okay. Listen. If you're gonna make an argument that fundamentally makes sense, you don't need to tell people, oh, go follow the signs. You don't need to appeal to some external authority, you can just lay out your argument and it makes sense. When do you need to say to everybody, listen? You need to shut down your own brainies or shut down your own logical thought process and just follow what that person over there says. The people who need to make that argument are the people who are making arguments that don't make any sense. I mean, this idea of wearing a mask, after you've already been vaccinated, never made any sense. This idea of locking down the whole economy instead of isolating the at risk people for a whole year, it doesn't make sense. Chamath Palihapitiya (01:18:12): It's been done, David. It's been done by the left, and it's been done by the right in equal measure. Whenever you have an opportunity to grab power, people will abstract and then they will aggregate and pull it in, and they will make decisions for people by pointing to these abstract ideas. It has happened in forever. This is not a new thing. It's just that now with social media, you can distribute this power grab more efficiently than before, and then you can see it for what it is because you can debunk it And that's the thing that's happened. That's why there's more anger around it because you can debunk all this nonsense. You can actually say, well, what's the data say? And But most people don't want to do that. It's easier to abdicate responsibility. Jason Calacanis (01:18:53): Alright. We wanna thank Doctor Fauci, our great guest today. You wanna maintain social distancing. don't think for yourself. The CDC has been very clear. The Chinese report from the WHO approved by Xi Jinping says it did not come from a weapons laboratory. We take Chamath Palihapitiya (01:19:10): you to ping out his word. Speaker 6 (01:19:11): You know what you are? You're not even Fauci. You're you're that person. Chamath Palihapitiya (01:19:14): What's your what's your name, the the great the comedian from SNL. She's got blonde hair. David Sacks (01:19:19): Oh, yeah. Katie McKinnon or something? Chamath Palihapitiya (01:19:21): Yeah. Kate McKinnon doing Fauci. That's with Kate McKinnon Speaker 6 (01:19:24): or something. You're like a babush gut you're like a babushka doll with fucking tattoo listeners. Speaker 7 (01:19:29): I just love that they have Ted Cruz being done by that other woman. It's like every time they wanna turn on the Republicans, they Speaker 6 (01:19:35): Okay, guys. FreeBird's gotta go. Chamath Palihapitiya (01:19:36): He's meeting he's meeting -- and a friend. Oh, wow. Speaker 7 (01:19:41): What do you mean Be careful. Woah. It got dirty. He got ugly. Whoo. Jason Calacanis (01:19:49): Take that last part out, Nick. beat the last part out. Beep. That he's having dinner with beep and beep. Alright. We'll see everybody. Love you, guys. My wife your winter's ride. Rainman, David Sachs. David Sacks (01:20:06): And it said, open sources to the fans, and they've just gone crazy with it. Jason Calacanis (01:20:15): what airliners were in. Bestiest article. I don't think We should all just get a room into have one big huge order because they're all just useless. It's like this, like, sexual tension that we just need to release them out. What? You're the bee bee. What? You're David Sacks (01:20:40): a thief. Jason Calacanis (01:20:42): What? Good. Good. Good. Where did you get Murphy's artifact?