做多并做空大型科技股、资本配置、Zillow 失手与进步派受挫

Jason Calacanis (00:00:00): My body is a wonderland. Chamath Palihapitiya (00:00:03): If that wonderland is white, soft, and mushy. Sure. Jason Calacanis (00:00:07): And Harry too. Chamath Palihapitiya (00:00:11): You know, the worst thing about skin on skin sleeping with the newborn is that you know, sometimes she roots and she goes after the man the male nip. David Friedberg (00:00:18): I know. Chamath Palihapitiya (00:00:18): Problem is my nipples covered in hair. David Friedberg (00:00:21): It's really awkward for everybody. David Sacks (00:00:24): She'll just start yagging. Chamath Palihapitiya (00:00:25): I'll tell Tali that story when she's 18. Or at her wedding, it'll be even better. David Friedberg (00:00:30): What winter's ride. Rainman, David Sachs. David Sacks (00:00:37): And I said, open source it to the fans and they've just got a reasonable work. Chamath Palihapitiya (00:00:41): Love you guys, honey. Jason Calacanis (00:00:46): Hey, everybody. Welcome to another episode of the All in podcast. I am wearing a blue shirt. I am a pasty white, old, great man. who's balding and obnoxious. And with me today is -- David Friedberg (00:01:03): No. No. No. Chamath Palihapitiya (00:01:03): No. No. You have to you have to say your pro number. Jason Calacanis (00:01:05): m i o and my pronouns are oh, wait. Hold on my pronouns. My pronouns are beep beep, and most people just call me a jerk. With me today, of course, is my Sri Lankan Urkel Lucky -- Hello. -- wearing a furry sweater. Hello, everybody. Chamath Palihapitiya (00:01:23): My name is Chamath. I have a salt and pepper black hair, brown eyes, I am tall, 6 foot Jason Calacanis (00:01:30): 2, Chamath Palihapitiya (00:01:32): I go by the pronouns, we, king, and stud muffin. And I'm here to talk to you about Internet security protocols. Jason Calacanis (00:01:44): I look like Oracle. I think people should just come up and say, David Friedberg (00:01:47): Well, I don't look like -- -- the closest flight. Chamath Palihapitiya (00:01:49): I don't look like Ercol. David Friedberg (00:01:50): I look like a Volley Jason Calacanis (00:01:51): with -- When you put your -- -- a bomb -- It would take. You're kinda like the Sri Lankan to us. Welcome to the all in podcast. 2 out of the 4 of us are canceled. Next up for cancellation, Saks. David Sacks (00:02:02): Yes. I'm coming to you here from the floor of the New York stock exchange refers to once land that belonged to the Mohegan, the Montauk, the Oneida, the Iri, the Aracoy tribes. Oh, wrong. Chamath Palihapitiya (00:02:17): I guess it's time David Friedberg (00:02:18): in the morning. Chamath Palihapitiya (00:02:18): Right? You forgot the Irish. We owe Jason Calacanis (00:02:22): 7 Chamath Palihapitiya (00:02:23): points. Oh my god. You could really did it. You went for it, snacks. I love you. Is it important David Friedberg (00:02:28): that at any David Sacks (00:02:33): moment, So that were successful. We have to flagellate ourselves and remind ourselves that Chamath Palihapitiya (00:02:38): at one time, office land was David Sacks (00:02:42): owned by somebody else we stole it. Jason Calacanis (00:02:44): Also, the Greeks conquer the Romans and so -- Right. -- I do apologize for that. But you forgot to mention you're also wearing a -- For sure. -- further shirt that is four sizes too large. David Sacks (00:02:57): This is my slim fit. So Jason Calacanis (00:02:58): -- That slim fit? Oh, no. Here we go. Chamath Palihapitiya (00:03:00): Get that. David Friedberg (00:03:01): Zach has been upgrading the wardrobe. He's changed Chamath Palihapitiya (00:03:03): it up. Wait. Wait. Before FreeBird does the intro, Jake, you wanna tell them why we're we're doing these intros like Jason Calacanis (00:03:08): this? Yeah. I I I gotta pause before our kids. Okay. Yesterday on the Internet emerged a series of videos that were clipped of Microsoft presenting their new suite of developer tools yadayadayada, and corporate people got up. And without any explanation started describing their physical appearance, their pronouns, their ethnicity, their skin tone and their hairstyles. And the entire Internet was like, oh my god. This is crazy, wokeism. Like, what what is happening here? This No. I thought it was a skit. I thought it was a Saturday otherwise skit. And so -- David Sacks (00:03:44): And so then as soon as they got called out by the entire Internet, they claimed that they were doing this for visually impaired people. which kinda begs the question of why visually impaired people need to know what race you are. It's like it's still playing into this, like, crazy weight race consciousness. But then on top of it, it wasn't just that. We we know it's not that because then they start doing Chamath Palihapitiya (00:04:02): this one. But hold on. Yeah. Also, if you if you're blind and technically can't see, you may not even know what blue means because you will have never seen the color blue or blonde. Jason Calacanis (00:04:12): Okay. Right? David Sacks (00:04:13): Right. But they were also identifying their races which kinda begs the question of why that's important. Chamath Palihapitiya (00:04:17): But if you were born blind, you would not know David Friedberg (00:04:19): what that means either. You're literally color blind. But the putting you on the same footing as people who are not visually impaired. No. No. Chamath Palihapitiya (00:04:26): I'm saying I'm saying if you're if you're visually impaired, you're using the wrong language. That language is for the sighted people. Jason Calacanis (00:04:32): Okay. David Sacks (00:04:33): Yeah. But I I I'm just calling bullshit on their stated explanation that it has anything to do with visually impaired because then they went on to basically recite the names of 10 tribes Native American tribes and the ones I've ever heard of on on which the Microsoft Campus used to belong to. So which is why I was kinda making fun of that in my initial statement. But so look. This is just woke Capitalism. This is wokeism out of control obviously, they didn't see the election results earlier in the week. Jason Calacanis (00:05:01): It's clearly there was some level of virtue signaling. I think in their defense, They were trying to do it, I think, for the visually impaired. The problem was they didn't explain the context, and they didn't give instructions to the people on what to do. So the people David Friedberg (00:05:14): came out. But, Jake, how that video that was a clip pulled out of a broader context here. Right? So, like, apparently, this is common on campus or common there that this is happening all over. So We just saw Chamath Palihapitiya (00:05:24): it snippet. Jason Calacanis (00:05:24): -- common because I asked people online -- Well, David Friedberg (00:05:27): it was optional. It was optional. It's not general, apparently. Chamath Palihapitiya (00:05:29): To the Jason Calacanis (00:05:29): common point, I think the reason the Internet reacted the way it was was I asked every single person who came at me because the work left came at me, I just said, can you show me another clip of this on YouTube of any event where this occurred? And nobody could. So I think this was kind of a first. David Friedberg (00:05:44): When did you stop being a member of that that wolf left, Jakeow? What was the moment? Jason Calacanis (00:05:48): -- like the historical side. I've never been for Bernie. I've never been for Elizabeth. We're I've always been moderating. Mhmm. Chamath Palihapitiya (00:05:53): Always -- Wait. Can I -- -- Friedberg intro? Jason Calacanis (00:05:55): Yeah. Friedberg, can we hear yours? David Friedberg (00:05:58): My identity is illusion. Jason Calacanis (00:05:59): -- permit the fraud. David Friedberg (00:06:00): It's an illusion. Cree by the viewer, and you can call me whatever you want. I sit on the ground where during the Hadian period, There was lava and magma and nothing but CO2 and methane, and I represent those gases that are now lost. To the oxygenation and the cyanobacteria, swarmed over this earth and took everything over and led to the formation of eukaryotic life, and here we all sit today in our privileged existence. Jason Calacanis (00:06:27): Like, are you saying that you wanna -- David Sacks (00:06:29): Friedberg is just electrons hitting neurons in interesting ways. Yeah. Chamath Palihapitiya (00:06:32): You know, he's like he's like, it it He's Jason Calacanis (00:06:34): his pronunciate. His pronouns are David Friedberg (00:06:36): proton, atom, dark matter. Biochemical quantum bath. Plus, quantum foam is my pronoun. Jason Calacanis (00:06:44): So would you like to formally apologize for colonizing the dark matter during the big bang now, or would you like to I feel it was inappropriate. David Friedberg (00:06:54): It wasn't fair when the cyanobacteria took over the the face of the earth and sucked up all this year and created all the oxygen. And and for that, we all apologize. Jason Calacanis (00:07:03): for for the genocide of David Friedberg (00:07:06): the -- For the genocide of of of CO 2 and methane. I mean, those molecules were really happy. And then, you know, they had a a very kind of, like, peaceful existence on this earth. And, you know, scientists came in and ripped it away. Sorry about that, Gary. I just took it all away from And, you know, and then the offspring ended up being us. I mean, here we are. So apologies. Alright. Jason Calacanis (00:07:29): Alright. Welcome to episode 54. Everybody's canceled. Chamath Palihapitiya (00:07:33): The final episode. Everybody's horrible. More David Friedberg (00:07:37): I don't think that the Microsoft thing was bad and when you hear the broader context, it was like, you know, that's just you know, I think it's a reasonable thing that visually impaired people on the sonic configured. Chamath Palihapitiya (00:07:47): I'm still long Microsoft and Google and short the rest of big tech, so I'm fine with it. There you go. Jason Calacanis (00:07:51): Back to the stock price. Theod, I actually, I David Friedberg (00:07:53): I -- Jamath, do you think that the Google Long Netflix Short plays the play Chamath Palihapitiya (00:07:57): based on what's going David Friedberg (00:07:58): on with the -- I think Chamath Palihapitiya (00:07:59): the best rate on the Internet, the most obvious simple money making trade is long Microsoft Google short Big Tech short the rest of the Big Tech. David Friedberg (00:08:05): Short IBM, short Netflix. Chamath Palihapitiya (00:08:07): No. No. No. No. Short short no. No. No. Meaning, you can you can very comfortably short Apple, Facebook, Amazon, Netflix, and Belong Microsoft Google. So as a spread David Friedberg (00:08:16): trade -- Right. Right. Jason Calacanis (00:08:17): -- Chamath Palihapitiya (00:08:17): it's the most it's the best risk parity trade on the Internet I mean, period in the markets. Jason Calacanis (00:08:21): Can you explain the spreadsheet David Friedberg (00:08:23): trade trend? Look. Look. Chamath Palihapitiya (00:08:24): I I tweeted this a while ago, but it's like and and again, the I I I think, like, Well, let let me be constructive and say the people on Twitter that respond to these threads are not totally stupid, although I think they're kind of idiotic. I said, you know, here's how you can effectively you know, I I said something about big tech and I said, oh, I can comfortably put my short on. And I'm kind of trolling people when I do that because I'm not telling them the full trade, then the real trade whenever you put anything on in my opinion is all about managing risk. And the best thing about the Internet and the stock market is that, you know, when you're betting on Internet stocks, you don't necessarily have to be naked long or naked short, which comes with a lot more risk than if you were long one security and short another against it. So for example, Over the last 10 years, you would have made a lot of money by being long Amazon and short a basket of traditional commerce companies, offline commerce. I'm gonna make up a basket, but Macy's, JCPenney, Kmart, Sears. Right? So if you were short those in long Amazon, That's what's called a spread trade. You're you're basically playing the gap between your longs and your shorts. David Friedberg (00:09:36): It's independent of where the market generally trades. It's one of the Chamath Palihapitiya (00:09:39): key -- -- irrelevant of the market. Jason Calacanis (00:09:40): You're basically saying -- Those stocks could go up, but just not anywhere near Amazon. David Friedberg (00:09:45): Yeah. Chamath Palihapitiya (00:09:47): when you put that trade on, for example, it's oh, I'm gonna bet that if everything goes up, Amazon will go up more than Kmart, Walmart, Sears, And if the stock market goes down, Amazon won't go down that much, but these ones will go down a lot. And you you're playing the spread. So to just to just to be very explicit. You know there was a very and I talked about this last week but I that this idea wasn't mine. It's a borrowed trade from somebody who's a very well known hedge fund manager. who put it on in massive size and, you know, to be honest, not knowing much of anything I just copied it. But he's his initial trade was long Google short Facebook. And that trade basically was at parody, which meant that the long and the short canceled each other out for about the last 4 years. Until the last year, it completely blew out and it returned about 80, 85%. So if you had put a $100 in, you would have made about 85 85 bucks on this trade by being long Google short Facebook. The the bigger trade at scale is actually long Google and Microsoft and short the rest of Big Tech And there's a lot of vagaries why that this idea makes a lot of sense. But -- What Jason Calacanis (00:10:57): you're saying is they'll outperform the other basket of text. -- on a relative basis. On a relative basis. so it's not like you're saying Airbnb can't go up or Facebook can't go up. It could. It's not gonna go as David Friedberg (00:11:08): hot as much as those other too. He's he's saying that the the the the $1,000,000,000,000 market cap companies. Yeah. Not not not the Airbnb. Jason Calacanis (00:11:14): Oh, okay. Chamath Palihapitiya (00:11:15): And and the reason and the reason why focusing there makes sense is they're hyper liquid markets, they have tremendous ways in which you can have massive size on. So you could put a trade of 10,000,000,000 long versus 10,000,000,000 short. I mean, you can put mega size on on these things. If you if you have real conviction, And then the third thing is when the banks look at that kind of position, they actually from a risk management perspective treat it differently than if you were just naked long any one of these things. Or Jason Calacanis (00:11:45): -- Naked long would be just making one bet. Yeah. Or, you know, or naked short, Chamath Palihapitiya (00:11:49): which is even more dangerous. David Friedberg (00:11:50): So -- because if the market collapses by 30%, both stocks might go down 30 roughly, but one will go down 32, and the other one will go down 20 And so you're really only Jason Calacanis (00:12:00): -- David Friedberg (00:12:00): You got 2%. -- 2% as opposed to the 30% of the so all the market risk is taken out when you make trades like that. Yeah. The the reason it's possible also today to do so at such a scale, right, Chamath is interest rates are so low. So when you borrow on margin to go long, the is very low. And when you short the stock, if it's a highly liquid stock, it doesn't cost a lot to borrow to short. That's right. So your your actual, you know, carrying cost on that trade ends up being pretty low relative to the upside you'd expect. Chamath Palihapitiya (00:12:29): So just to just to give you a sense of it, my you know, when I tweeted that tweet out, to to complete the picture, I was leaving long something against my proposed short, and I put it on in in pretty meaningful leverage. And it's worked out really well because I was playing the spread. I was basically betting that, you know, the the safest company on the Internet today is Google because they're both a platform company. And to the extent that they're at risk at being an app company, the risk is to Apple, but because they pay Apple so much for search, they're inoculated. And so in many ways, Google is the safest, and it's also, as we've said before, the purest money making machine on the Internet. Jason Calacanis (00:13:08): you're referring, of course, to Google paying Apple $10,000,000,000 to be the default search in there. Chamath Palihapitiya (00:13:14): They own Android. So one platform. And on the other platform, they they pay them so much that they're going to be always protected. And the 2nd best company is Microsoft. And you we even saw it, by the way, this past week. I don't know if you guys saw, but But Microsoft decided to take a broad side attack against Notion, which is a productivity app that's been growing very well. I felt this when I was on the board of Slack when Microsoft put its gun sights on us. We always thought that they could not outcompete with us. And what it turns out is When you have a massive distribution advantage, feature parity is enough and you can actually be slightly less than good enough on the features because distribution and bundling and packaging overpower a customer's desire to adopt a product. So in the case of Slack, it was very difficult, I think, for us to compete against Microsoft's bundling of Teams with all this other software that they were selling and all the discounting that they could do made it very difficult for to compete because we had a single product. And lo and behold 18 months later, the only real long term protective solution for Slack Shareholders was to basically get bought by Salesforce so that you could be part of a bigger hole. This past week, Microsoft decided to go after Notion. And it's going to be, I think, a very similar story where once they decide to sort of go after this a product experience, they only need to be 80% is good. And then the distribution and bundling and packaging will take care of the other Jason Calacanis (00:14:37): 20%. It doesn't kill the other company, but creates headwinds that Chamath Palihapitiya (00:14:41): basically Because because a company like Notion cannot be fully valued over long periods of time simply being an SMB company. At a minimum, you'll have to move into the mid market. You may necessarily never have to go to the enterprise. but you probably have to go to the mid market and in that is a very troublesome path because Microsoft has so much you know, so many tentacles inside of those businesses. So, anyways, basically The the long Microsoft long Google is a pretty obvious kind of, like, monopolistic you know, penetrate. The question is, what are you short against it so that you can take up the market volatility and you can place spread Again, Apple has severe headwinds with respect to inflation pressures and margins and supply chain issues. Amazon has pretty meaningful headwinds now relative to pricing power and competition. Facebook has pressure with respect to regulatory oversight. I mean, Jason Calacanis (00:15:35): I just came up with 1. What about Airbnb versus the airlines? You can get your thoughts. -- about trade? Chamath Palihapitiya (00:15:40): You're talking about smaller rinky dink ideas. Jason Calacanis (00:15:43): Well, listen. I'm not playing the same chip stack issue. I wasn't there on Tuesday night, and Chamath Palihapitiya (00:15:47): I'm I'm Jason Calacanis (00:15:47): on a Thursday night. So -- No. Chamath Palihapitiya (00:15:48): No. No. -- that would be Jason Calacanis (00:15:49): a good spread for me. Chamath Palihapitiya (00:15:50): No. That's a stupid idea, and I'll tell you what. Okay. If you're gonna put these things on, go to where the deepest liquid markets are because those are the safest. Okay. Right? Like like, don't try to be different. Being the same here Well, Jason Calacanis (00:16:02): tell me why Airbnb, which is an incredible margin business incredibly well run and growing versus airlines which are horribly run and low margin, Chamath Palihapitiya (00:16:11): why wouldn't that be a Jason Calacanis (00:16:11): good spread trade? I'm just thinking about it right David Sacks (00:16:14): here. Chamath Palihapitiya (00:16:14): I think it's a very, very 2 you're picking 2 random companies out of a hat. Well, no. Jason Calacanis (00:16:20): They're both in transportation and vacation and Chamath Palihapitiya (00:16:23): are completely different businesses, with completely different motivations, with different capital pools, with different people that own the stock. There's no point try to get cute on these things. My point is, if you really wanna be hedged against market risk -- Got it. Jason Calacanis (00:16:36): -- Chamath Palihapitiya (00:16:36): code to where it's safest, find the simplest most obvious thing Don't overthink it or don't put it on. So another obvious one. Here's a here's a so obvious is within Big Tech figure out which ones you want to be long, which ones you want to be short. That's a spread trade that over the next 4 or 5 years where if you expect a lot of market volatility, it makes sense to maybe put some of this kind of stuff on. Right? A different version of this idea which makes sense is in autos, Again, 1,000,000,000,000 of dollars of market cap, and you can make a decision. Do I wanna be long? Tesla, lucid, and Rivian, and short the traditional autos, that could be a trade. You know? But trying to like, trying to go after, like, let me pick Airbnb versus United Airlines is too random for me, and I don't think they're correlated enough for it to make any sense. Jason Calacanis (00:17:28): Alright. Speaking of the stock market, Saks, you've got the background of the new Stock Exchange as your Zoom background today. What's that about? David Sacks (00:17:36): Yeah. So Bird listed on the New York Stock Exchange today. This is a company that I've been involved in pretty much since the beginning. We'd led the series a round back in 2017. It was actually the first check I wrote as a VC to lead around at Kraft. And 4 years later, a public company on the New York Stock Exchange, pretty amazing. Jason Calacanis (00:17:56): And so you're literally at the New York Stock Exchange as we speak. So the first remote bestie. David Sacks (00:18:01): Yes. And you can see behind me, That is the form of New York Stock Exchange. It's not like you know, if you've seen the movie trading places, it's not like that anymore. There are no stock brokers. There's no, like, paper flying around. Jason Calacanis (00:18:14): Got it. David Sacks (00:18:15): I'm not really sure what the purpose of all those monitors are down there. It feels to me a little bit like a movie set. Jason Calacanis (00:18:20): It is like a movie sinaxes. David Sacks (00:18:22): Yeah. And so people like us come here to record things, but but as we all know, the all the trades are really happening inside giant machines. Jason Calacanis (00:18:30): Can you turn around and just start yelling? booyah. Just take a booyah, and let's say your security comes in. David Sacks (00:18:38): No. I'm I'm I'm in I'm I'm elevated above the floor. No one could really hear me here. I'm in, like, this sort of broadcast booth. Jason Calacanis (00:18:46): So take us behind the decision to go public as a four year old company. We were expecting, you know, Airbnb, Ubers, and Lyft's took over 10 years to go public. Now here we are sitting on a four year old public company. Is, like, a good thing, a bad thing, something in between, and how does the board and the management team make that decision to go public? David Sacks (00:19:05): I think it's a good thing because the company well, the company wanted to. I think it had the opportunity too. It it grew very, very quickly before COVID. Then you had COVID was, like, sort of a huge setback. They I mean, basically, the scooter industry just stopped for at least 6 months because of lockdowns. But then coming out of COVID, they bounced back really strongly. They kinda pivoted their model to, at what's called a fleet manager model where basically they're putting a business in a box for a local operator or a local entrepreneur. to buy the scooters with financing and manage it, the fleet themselves. So it's a much more highly virtualized model. And so as a result of that, in q 2, they just did 60,000,000 in revenue in the last quarter. And I think it was the gross profit of something like 27 percent, and it was had a a loss of, like, 12,000,000. So they're very, very close to getting to profitability. And, you know, the company's only four years old. You know, it took Uber 12 years or whatever to get to be public. So It's been pretty it's been a pretty amazing ride. There have been a lot of big ups and downs, but so it's kind of a pretty sweet event. Chamath Palihapitiya (00:20:16): What Jason Calacanis (00:20:16): is it trading underwriting? I know it was switchback was, like, the back name. David Sacks (00:20:20): Right. So it's today was the 1st day start trading under the ticker symbol, b r d s. I guess all birds took b i r d, so we took b r d s. And, you know, if there's a a total number of shares standing of, I wanna say, roughly 300,000,000. So it's about a Jason Calacanis (00:20:37): 2,400,000,000 David Sacks (00:20:40): dollar market cap, you know, as it stands right now. which, you know, 1st series a investor is pretty great. Chamath Palihapitiya (00:20:45): Really happy for you, Saxon. Yeah. Yeah. Congratulations. It's great. David Friedberg (00:20:48): Congrats, Dave. Jason Calacanis (00:20:49): We heard last week Sequoia is gonna do the Sequoia fund, this evergreen fund. Keep owning shares. Now as a VC, do you distribute after 4 years of this and you made multiple investments? Or do you make the decision? Hey. We think it's undervalued. We have, you know, conviction in the company. We were going to be in it for 10 years. do you just take the quick win and give everybody their shares? David Sacks (00:21:11): Well, I've I'm gonna I've agreed to be on the board for the next year. So, you know, I'm planning to do that. And we have a traditional 6 month lockup. And so at that point, we'd have to make a decision about when or how much to distribute the shares and this is the first time you've been confronted with decision. I mean, Craft Ventures is only a four year old firm. And like I said, this is actually the first round that I led as a VC. it's the first time we've been confronted with a distribution of this magnitude. We've had some smaller distributions. So, yeah, we still have to make those decisions. We haven't decided yet what we're gonna do. Jason Calacanis (00:21:44): if you if the stock is up, let's say, meaningfully in the next 6 months and you get to that, you know, 6 months in a day and you have the ability to distribute and it's up 25% and you're looking at it, business is thriving. You're on the board. Do you consider holding for a year or 2 so that you can distribute at, 16 dollars, $25 or whatever your price target is. Maybe. I mean, David Sacks (00:22:07): we haven't got we haven't gotten to that point yet. So, yeah, I mean, I guess what I would say is that our bias would be to distribute shares to our LPs so that they can make their own decisions about whether they're told or not. As long as we think the stock is, you know, priced fairly if for some reason we thought it wasn't, then there'd be an additional reason to hold on to it and make the distribution later. Jason Calacanis (00:22:32): Shamal, what are your thoughts on this given it's come up before? and a number of us are gonna be faced with this decision and then we see Sequoia has got LP buy in for an evergreen fund. Chamath Palihapitiya (00:22:42): Well, I think an evergreen fund is different from having to figure out how to do distributions. So they're they're solving for 2 different ideas. The evergreen fund is really good because You don't have to do this continual fundraising process, and you can basically roll gains back into the next tranche of invested companies in an easier way. I like that idea. It was pretty rare at the time. I remember when I was starting social capital. The only fund that did it really well was Sutter Hill. And for a whole host of reasons I decided to not do an evergreen fund in hindsight I think for me turned out to be better because then it was easier for me to wind down and have a clear demarcation of when it was just myself and other LPs versus when it was just my capital. But there were some really good reasons to do it. The hardest thing I think that Sequoia is going to find in this new iteration is, at some point somebody's reputation will be on the line for judging public equities. and it's still not clear to me that people who live and breathe venture can context switch well enough to then live and breathe public equity. So just the best example I would say is like Tiger Global. When you look inside that organization which is incredibly well run, there are 2 superb investors that carve the universe up. Right? You have Chase Coleman that runs a public book and you have Scotch Lightford that runs a private book. What does it prove? To me, it proves that it's just very hard to find a person that can do both. And the context switching is very complicated. So maybe Sequoia finds an incredible public market strategist that can then manage these positions. Otherwise -- But, Shamoff, they've David Friedberg (00:24:25): they've they've done this for a few years. Right? They they Sukoya, I don't know if people realize this. They set up the the heritage fund, and they set it up with only GP's money. It's got billions under management, and it's been making late stage private but mostly public equity investing. Chamath Palihapitiya (00:24:41): I know, but that's a fund of funds. What I'm saying is I'll be very honest with you. If I was an l p of Sequoia, I would want the money back. And the reason is I'm not sure Sequoia can compound money in the public markets anywhere near what I could. So Jason Calacanis (00:24:56): -- David Friedberg (00:24:56): Do you buy the point that they make that, like, exiting some of these left most of the, you know, kind of value creation on the table. No. I think Chamath Palihapitiya (00:25:04): what they're saying something much more subtle, which is they exited and they have regrets for selling. You have to remember. When Sequoia distributed Google, every single partner got Google shares. Now, had they held those shares, they wouldn't be saying any of this. And, famously, I'll tell you when I Jason Calacanis (00:25:21): -- They held their shares. The well, we -- I actually do. Chamath Palihapitiya (00:25:25): Fair enough. But maybe they did. Maybe they didn't. But let's just let's just put it out there that, for example, I know explicitly when I almost merged social capital with Kleiner Perkins like 6 years ago, I spent so much time with John Dorr. The most incredible thing that I was so impressed with Dorr was he was he told me. He had never sold a single share of Amazon that was distributed to him and he had only sold a handful of shares of Google only to fund future capital requirements of at Kleiner at the time. So I just think that ultimately I think probably what Sequoia was saying is, man, I wish I had not sold my Google shares when they were distributed to me. Because otherwise, they wouldn't make that claim. Jason Calacanis (00:26:03): No. I think what they're saying is more subtle. I think they're saying you as our LPs should have held them. We are on the board of these companies from day 1 We have better insights in the 2nd decade than in the first. Production board founder, David Friedberg. How do you think about early exits distributing capital because you do have also with a startup studio structure, which you should explain to the audience how a startup studio works, because you create companies which is You know, it was a terrible place to be maybe 5 or 10 years ago, but it turns out you're in the best place because 0 to 1 is where all the values created. Explain the two things. what a start up studio is for people who don't know, and then what's your view of selling early if a company of yours goes public? David Friedberg (00:26:45): I think there's a big there's a bigger kind of framing here, which is a lot of investors, you know, professional money managers have tried to find ways to create what is called permanent capital, which is a vehicle whereby they can continuously make investments, decide when to sell those investments, and recycle the capital into new investments with the idea being that over time, they're not at risk of capital outflows, meaning investors pull their money out. and they're not at risk of, you know, needing to kinda go out and and raise more money, and they can they can share in the value creation as they grow their book value over time. Years ago, a bunch of hedge funds set up public reinsurance companies. Dan Loeb did this What's his name? Ein Einhorn did this. Chamath Palihapitiya (00:27:31): Del Achtman did it. David Friedberg (00:27:32): And basically, Del Achtman did it. What they did is they set up a public company, a reinsurer, And then they use that that reinsurer to underwrite reinsurance. And when you underwrite reinsurance, you get all this capital that you can then go invest. And then the hedge fund manage that investment. And because it's actually a public company, it's got a balance sheet, the the shareholders can't pull their money out. Right? It's just got a balance sheet. And the hedge fund was managing that balance sheet and, you know, generating good returns. And this is effectively what Warren Buffett does. And everyone looks to Berkshire Hathaway in Warren Buffett. It's kind of the you know, the the the the key kind of long term here, which is, hey. Look. If you can keep investing and keep compounding value, this thing can grow you know, exponentially over time. So, you know, the the way we set up the production board, I I had the option of raising a fund and being a fund manager. I chose to set up the production board because I was much more interested in, I think, the similar sort of vein of what Sequoia is saying, which is, like, how do you become a longer term builder and a longer term holder and where you don't have these incentives to return capital because you only get paid if and when you return capital and you know, and then you're kind of making these decisions to you know, because your shareholders are saying, well, you had a good return. Quickly give me the shares back and let me and and mark your profit and take your share. And I was also more interested in look. The fact is over time, there's always gonna be opportunities to chase with the capital. So if we have a great gain, if something works out really well, we can take the the the gain, and we can reinvest that capital in building new things. There's no shortage of opportunities to pursue for the rest of my life. David Friedberg (00:29:04): So that's why I set up the production board initially in partnership with Alphabet. And then later on, we brought in, you know, Bill Gates and other Alan and Co and other kind of investors. that have a similar sort of mindset, which is, like, let's just if we have an an exit, recycle that capital and continuously have to know that, Jason Calacanis (00:29:19): like -- -- looking a quick win. David Friedberg (00:29:20): They don't have pension payments to make. Right? They don't have a reason to distribute cash. And so same with me, like, I don't have a reason to take cash out. So the objective was just build this thing over time and grow value over time. And that's why I set it up the way I did. And I think it allows us to make, you know, really long term bets that are super risky most of what we're doing is super technical and and difficult and maybe very hard to pull off, many of which have still, after many years, in in a very early stage. Jason Calacanis (00:29:46): -- David Friedberg (00:29:47): very patient capital patient capital and also the the, you know, the preference for not trying to find exits. But I I have found this. I'll tell you one thing. I have been through a number of circumstances where I have seen businesses I've been an investor in or involved in that have traded long term value for short term opportunity meaning, there's an opportunity to make a business that you can then go raise capital against. You change your strategy to do that, then you go raise VC funding. And now the business looks like it's working. but the 10 x or a 100 x opportunity was taken off the table because you ended up going down this different path that was a sure thing that was more likely to work that created value in the short term that allowed you to mark up your investment or raise capital against that, but you gave up the big long term thing. And I I think that's something I've been trying to avoid with the structure and it certainly makes sense with some of these other folks and what they're trying to do. Jason Calacanis (00:30:36): So what we're getting at here, Saks, is decision making by capital allocators And on behalf of their LPs or letting the LPs make those decisions, inevitably the crypto world says, well, why aren't you just doing this in a DAO? and you know having some decentralized authority make the decisions. I had Vinnyling a had a conversation with our friend Vinny Langham after the Solana stuff and and and multi Queen capital. And we were talking about DAOs for early stage investing or syndicates in just brainstorming, hey, is there a way to do this? And the problem I came to every time was, should a bunch of folks be making the Cision's who are not meeting with the companies or meeting with 2000 companies a year, what are your thoughts on a DAO? representing sort of what we collectively do, but we all do it obviously in different flavors. David Sacks (00:31:30): Does this actually exist? Yep. Jason Calacanis (00:31:33): Well, there have been DAOs that have existed to vote on buying NFTs. So, yes, for collectibles. Chamath Palihapitiya (00:31:38): I mean, David Sacks (00:31:39): I kinda feel like I'll let you know when it actually gets here. Jason Calacanis (00:31:42): So open minded to it, but who knows? Chamath Palihapitiya (00:31:44): Yeah. David Sacks (00:31:44): But, I mean, we talk about these things as if they already are here and they're not quite here. I mean, technically, I know they they exist, but people haven't really figured out how to use them to, you know, to be a fund manager, for example. Chamath Palihapitiya (00:31:57): I think David's right. I think the look. I I There there are these 3 immutable features of web 3.0 that we're gonna have to figure out over the next few years. So The obvious ones are decentralization. Right? That makes sense. The second obvious one is the level of composability, which means that your plug and play with everything. But the third one is this idea of democratization and governance. Right? And that's where DAOs come in. And David's right. We don't really know what the boundaries of that feature is. I think it exists in some small level scale but we need to have many iterations of companies get built to figure out what it'll mean. So I don't know. I'm taking a pretty traditional approach, Jason, which is that, you know, it's kinda like a crawl, walk, run strategy. Right now, I'm in the crawling phase, and I'm kind of saying how did web 1.0 and web 2.0 develop? And I'm tired of just copying it. So in web Jason Calacanis (00:32:56): 1.02.0, Chamath Palihapitiya (00:32:58): you needed companies like Sun Microsystems and Cisco and, you know, all of the plumbers -- Foundational stuff. Jason Calacanis (00:33:05): -- Chamath Palihapitiya (00:33:05): to to build plumbing for the Internet to allow the thousand flowers to bloom at the application level. And, you know, we had a very good reference model, by the way, for web 1.0. For most people, if you wanna look at it, it's called the reference stack. And if you actually look at that OSI stack, you can translate that to all kinds of value creation over the first, you know, 2 arcs of the Internet over 20 years, 1,000,000,000,000 of dollars was created by just following each of those substrates. And in those transitional layers was where these great beautiful companies were built. And I think similarly we're gonna do that again, but we need a different stack to represent what Webpre is. So yeah, you know, this week we did something, which is pretty straightforward, which was this idea that if you're gonna build all these apps, you're gonna need a distributed computing structure which means you're gonna need very simple building blocks like remote procedure calls, RPC, that exists in web 2.0. It's kind of something you don't really think about. but in web 3 doesn't exist. And so it's all this AWS, you know, GCP like infrastructure that has to get built in That's what Syndica does in David Friedberg (00:34:10): I unlocked. I Jason Calacanis (00:34:11): I think that's a really very interesting observation there because everybody is trying to go to the application level and talk about the consumer experience before you even have the ability, you know, we're talking about cars before we've even made a transmission or, you know, it's heightened. Chamath Palihapitiya (00:34:28): That's exactly right. Jason Calacanis (00:34:29): This is why crypto comes across as so delusional and strange sometimes. They wrote 3000 ICO papers, none of them were about infrastructure. They were all about some sort of end game. Chamath Palihapitiya (00:34:38): But the thing is it's a very delicate balancing act. Right? You need a handful of companies that capture consumer imagination Jason Calacanis (00:34:45): -- Chamath Palihapitiya (00:34:45): Right. Jason Calacanis (00:34:45): -- Chamath Palihapitiya (00:34:45): that then incentivize all of the plumbing companies to come in and build underneath it. Right? So it's a customer. It's a very delicate balancing act. Right? So you needed CompuServe in order to enable a bunch of companies. Then you needed AOL in order to enable another set. Then you needed Yahoo, then you needed Google. And in all of that, what happened was people were pulled through. Right? You needed Amazon Commerce to justify AWS. So we're in that world where it's going to be a little back and forth where the pendulum will swing back and forth between consumer experiences that capture imagination, get to some level of scale. that then create incentives for the developer ecosystem and the technology infrastructure to catch up. Jason Calacanis (00:35:24): Zillow which we talked about previously became an iBuyer. What's an iBuyer? That means you buy a bunch of single family homes, you know, likelihood, like Opendoor and Redfin have been doing. And then you hope to flip them, maybe improve them, and maybe lower cost to the consumers by taking out real estate brokers. This has created a lot of bad feelings amongst real estate brokers, a TikTok video, trended a couple of months ago where a broker said or accused Zillow, of buying up these homes in order to do price fixing and to corner the market on homes? Well, it turns out that Zillow, which has an incredible CEO in Rich Barton and has done tremendously over the decades. According ahead of their earnings call this week, Bloomberg reported Zillow is trying to upload 7000, 7000 homes for 2,800,000,000. That's about a 400 k average per home. and Zillow shares dropped to 37 percent this week alone from a 100 to 66. Their market cap has dropped 9,000,000,000 throughout the week. And they're down 70% from a peak evaluation of 48,000,000,000 just in February about 6 months ago. Zillow is gonna reduce its workforce by 25% over the next few months. I'm assuming that's all those i buyers. Anecdotally, a lot of what I'm hearing is they bought homes indiscriminately the anecdotal stories that are breaking on Twitter and other forums with real estate brokers are, they would look at a home. They didn't know that it had a noisy neighbor or where it was near lines or whatever. The people who came in bought them indiscriminately, maybe too fast, whereas some other companies, maybe Opendoor or Redfin were more considered. I actually had Glenn from Redfin on the pod not long ago. And he said it's a very hard operational business. You have to be very careful on what you buy in your entry price. That seems to have turned out to be true. Jason Calacanis (00:37:13): do you think Freeburn? David Friedberg (00:37:14): Rich Barton, who runs Zillow, is considered a legend in Silicon Valley. You know, he has been involved in some of the most successful Internet companies. And, you know, when he stepped back in as founder of Zillow set back in to to run the business a few years ago, it was viewed as kind of a second, you know, run direction of this business, and he was gonna take it into new areas. And then three and a half years ago, he announced the side by our program, which everyone thought was such a, you know, incredibly strong move. And, obviously, Easter which Chemopp is is involved in, and I'm sure we'll share more on. But it was such an obvious opportunity that if you could add liquidity to the real estate market, the the residential real estate market, there's an incredible amount of value to be had. Now the way that they wrote about it when they talked about it initially, and then the way that they've kinda talked about it in their earnings report this week was that they were trying to be a, quote, market maker in the business. And it turned out that what they were really doing was being more of a speculator. Right? A market maker looks at bids and asks and the spread and then tries to to to create a gap in that spread and make and take some share of it. And and by adding that liquidity, the idea is the spreads can narrow and they can make money. In this case, they were looking at the historical velocity of selling prices of homes and using that as a way to kind of project what was gonna happen, which makes them much more of a speculator than a market maker. And they clearly got this wrong, and they're kind of, quote unquote, models on you know, where a price is headed ended up getting them in trouble. There's also the inherent conflict where they are now competing in a way with the brokers that generate a lot of revenue for them and are part of their core business, and they were clearly, you know, cannibalizing their own business where the zestimate and some of the other scoring that they provide as a data and analytics platform to both sides of the existing market starts to get blown up because they're coming in and saying we're gonna put our, you know, our our foot down and say, this is what the value is. and it inevitably kinda cannibalizes the core product that they provide to to to both sides of the market. David Friedberg (00:39:15): So, you know, one could argue this was flawed from the beginning. The execution clearly was way off. And it begs the question, you know, where was leadership in kind of tracking what was going on here as these guys were buying homes at market prices that are well above what they were actually selling for in the market. No one was actually doing on the ground work. They were all doing kind of speculative models and saying this is what we think will happen. And then they woke up way too late and lost way too much money. I think they lost $300,000,000 in the quarter. So, you know, really a lot of questions and and a lot of challenges on this, I'm sure Timoth has a point of view on, you know, what makes Opendoor distinct from from Zillow But there there's a really important kind of, you know, underlying here. You know, the the the majority the yeah. The maturity of a Silicon Valley entrepreneur who's crushed it so many times, doesn't mean that they're perfect, and, you know, this was a big mess. Jason Calacanis (00:40:05): You you can go really too fast passed into a turn here, and clearly they flipped the car. Shamalff, I I I don't know how comfortable you are talking about this in general. Chamath Palihapitiya (00:40:12): Very comfortable. Okay. Well then, here we go. Number 1, you know, I'm not on the board. Of Opendoor. Of Opendoor. David Friedberg (00:40:20): Maybe tell us about your history with Opendoor, Shamak, would be super cool. Chamath Palihapitiya (00:40:24): Look, I I am one of the largest individual shareholders of that company. I think somewhere between 3 4% of the business I am. We you know, I came to own those shares with a large investment as well as through the transaction where we merged one of our specs into it and took us public? Yes. Couple things to say. The first is about the CEO and founder of Opendoor. Eric Wu is special special special special. So let me just leave it at that on that topic. The second is I think that Rich Barton is very special. but it speaks to 2 big mistakes that Zillow made. The first is that catching A wave of disruption is very difficult when you have an old line business that is fundamentally competitive with the new line of business. And Zillow, as David said, had this thing called Zestimate whose entire job was to directionally drive top top of funnel traffic into the rest of their media business. Now imagine you go to a website to look up your house value or somebody else's house value. Accuracy is a bug. The feature that makes this estimate work is an highly inflated house price. Right? Like, if you go and you see a crazy house price number, That's interesting. That's more click worthy. Then if you go in there and it shows some depressed value, you'd think the site sucks. That's the unfortunate psychological reaction. So I think whether we believe it or not or whether Zillow knew it or not, Zestimate over time basically calcified this idea of of price inflation. So the accuracy was never a goal. So then if you take that business and then you try to orient it towards home buying and you use probably Zestimate or some version of it to underpin how you buy and take risk, it creates a lot of risk, and I think this is essentially what played out where they were over buying homes and they didn't know how to price this stuff accurately. So, you know, my partner, Ravi, tweeted this out, but, you know, the open door margin on average is about 10%. The Zillow margin on average 3%. Chamath Palihapitiya (00:42:39): So they had a much more razor thin margin of safety here, which again speaks to pricing. And then it speaks to this third thing, which is that If you start doing one thing and do it really well with software, the gains over years really compound. And so when somebody else shows up and tries to pivot their business to try to copy it, it's very, very difficult. The classic example Google versus Yahoo. Yahoo had a beautiful directory driven business. But when Larry and Sergey, really Larry invented page rank, and then invented that first version of a Google search index. As we saw, it play out over the next 10 or 15 years. It was impossible for Yahoo. to really invest the technical capital necessary to catch up with Google. And every day and every week and every year as Friedberg talked about last week, Those technical gains compound and compound, and now Google is completely unassailable with respect to search. I suspect we will look back and the ability to accurately forecast price and volatility and the ability to sell these assets. At a defined margin of safety in a predictable way, is something software can solve? and it seems that open door is the first. It doesn't necessarily mean it'll be the only one, but it has an enormous head start now And as long as they can keep iterating, those gains will compound. So that's what I think. I just think this is a wonderful business run by an incredible CEO. Jason Calacanis (00:44:14): To wrap up this Zillow, sorry, Sachs. Any thoughts on, you know, Tremont's point here? You know, you're the rating agency. and you add this business and the business, it might be orthogonal to the existing money printing machine. On a strategic basis, where do you think any lessons or mistakes here? in terms of when you handicap Zillow, or do you wanna just move on and Chamath Palihapitiya (00:44:35): talk politics? David Sacks (00:44:36): I mean, look. I'm a I was a sea investor in Opendoor because Raboy invited me to the sea ground. So you know, I'm I'm a little biased here. But I think it's pretty obvious what happened. Zillow tried to copy them. The business is much more operationally comp than they realized. It's a low business low margin business with a ton which requires a ton of capital. So if you're off a little bit, the losses can be huge. and Zillow couldn't figure it out. They underestimated the difficulty. That's what frequently happens when a big company tries to copy a smaller sort of upstart company. So, I mean, that to me is what happened in a nutshell. Quite frankly, we're an hour into this pod. We haven't discussed issues any issue that I think is broadly relevant to most Americans. I think this is one of our worst episodes, and we're gonna bore everyone to tears. I frankly don't understand what the you're doing. I don't even know why we have a topic list. When you start pulling out your ass like DAOs, and I don't know what the else. Jason Calacanis (00:45:27): Alright. Alright. Fine. We'll talk about politics. Chamath Palihapitiya (00:45:29): I thought the doubt question sucked. Alright. I'm just giving you the opportunity David Sacks (00:45:36): that we shouldn't even be talking about. David Friedberg (00:45:37): Cut it out of the show. Cut Chamath Palihapitiya (00:45:38): it off. David Sacks (00:45:39): This whole episode should be cut. Jason Calacanis (00:45:40): Jesus Christ. Chamath Palihapitiya (00:45:41): You I think it's David Sacks (00:45:42): like one of David Friedberg (00:45:42): the students David Sacks (00:45:43): episodes you ever done. Chamath Palihapitiya (00:45:44): Yeah. I agree. I think we should say Jason Calacanis (00:45:45): that all. It's going great. Chamath Palihapitiya (00:45:47): What are you talking about? Jason, I agree. That that part where we cut it. That's -- Alright. Fine. You got -- Some loser. I'm trying Jason Calacanis (00:45:54): to give you guys the benefit of the doubt to just because it was like -- David Friedberg (00:45:57): No one cares. Jason Calacanis (00:45:58): Alright. fight. Calm down everybody. You wanna talk about politics. We talk about politics. It's okay, Zach. Go ahead. Tell us about the election. David Sacks (00:46:05): Okay. I'll just rattle off some of the key results here. from blue states. We have a wokelash going on all across the country. That's the important thing. In Virginia, a state that Biden won by Jason Calacanis (00:46:15): 10 -- He's cranking. David Sacks (00:46:17): Huge upset Republican Glenn Youngkin beat Terry McCall, a former governor there. He was this was a huge upset. McCall was supposed to win. Youngkin Jason Calacanis (00:46:26): 15148. David Sacks (00:46:27): So that's a 13 point swing versus where Biden was. just a year ago. In New Jersey, a state that Biden won by 16 points, the Democrat held onto it, but only by 1.5 points, and I bet you anything The r n c is kicking itself that didn't give any money to Chatterie, who is the challenger, who I think almost who came very, very close And there were down ticket seats that went Republican. So the the this is really interesting. In South Jersey, which is a blue collar bashing for Democrats Chamath Palihapitiya (00:47:02): historically -- -- versus burr. David Sacks (00:47:04): That's right. The Democratic state senator Steve Sweeney lost to a truck driver named Ed Duhrer who spent a grant in total of a $153 on his campaign. Okay. So those were some and then we had some Jason Calacanis (00:47:16): other -- -- write in? Like, he was printing our words to say write me in, I think. David Sacks (00:47:19): I don't think he has a write in, but But any event so so implications for 2022, Dave Wasserman have quick pull up a report calculates somewhere between a Jason Calacanis (00:47:27): 44 David Sacks (00:47:28): and 51 c game from the GOP. only need 5 seats to win the majority. So it's looking very bleak for the Democrats in 2022. And then I think you also had some very interesting local elections In Minneapolis, voters rejected a proposal to defund the police with 56% of the vote. They there was a ballot proposition to change the police department into some sort of larger public safety group voters were having none of it. in Seattle, which is a very liberal city. They voted for a Liberal Republican as city attorney, which is the office that constitutes misdemeanors. So bay against a police abolitionist who said she would stop prosecuting misdemeanors. Chamath Palihapitiya (00:48:11): You're forgetting that in Virginia, it wasn't just Glenn Youngkin that won, but basically it was Terry McColliff and then a lieutenant governor who is some milk toast individual and an attorney general candidate who was caught in blackface, which, by the way, there is no more racist thing you can do just to put Gillette you guys that -- Chat, Justin Trudeau. All the noncolors, okay, that are guys, please don't do blackface or brownface. It's such a bad. It's just not it's not Jason Calacanis (00:48:38): -- David Sacks (00:48:38): You're right. It was a sweep. So the lieutenant yeah. Chamath Palihapitiya (00:48:41): And it was a it was a black female lieutenant governor and a Latino attorney general. David Sacks (00:48:45): That's right. Chamath Palihapitiya (00:48:46): And they swept. Right? David Sacks (00:48:47): So -- That's right. That's right. So the lieutenant governor was Winston Sears. She's a a a black woman Republican. If you've seen the photo of her, she's frequently photographed with a giant assault rifle in her hands. That's her. And then the Hispanic attorney general Jason Miarie's 1 as well. So, yeah, it was a huge sweet And then, you know, in Long Island and Staten Island, which again are blue counties, you had 2 Republican prosecutors beat the local sort of incumbent democrat, decarceration as DA's. Jason Calacanis (00:49:17): -- Chamath Palihapitiya (00:49:17): rad. Just I think I think this is very clear -- Yeah. -- which is Trump was behaviorally extreme and after 4 years people were sick of it. Nobody wanted that behavioral extremism because it was unpredictable. People felt frankly in danger. And I think that that was legitimate. He also turned out to be extremely lazy and probably pretty dumb. Now what we're realizing is the different form of extremism, which policy extremism will also be met with the same response, which is that you you can't sustain election results and wins. Right? So people care consistently about 3 things. They care about the economy. They care about the education of their children, and they care about safety. And the thing that Glenn Youngkin did which I thought was at least a playbook for Centrus and the right And it's also a playbook for the Democrats if they choose to embrace it, is to understand that these things are reaching a tipping point where, you know, again, we've said this before. It is possible to live in a state of mind where you believe in black lives matter and you believe in law and order. Right? And and when you try to pit those two things against each other, for example, like, you would have thought the one place where they would have basically defunded the police in its entirety would have been Minneapolis after George Floyd, but instead even they drew the line and said no. or New York or New York. There was a there was a really compelling quote actually by this woman. I think it was in the New York Times. And what she said was I didn't elect Joe Biden to be FDR. I elected him to tack to the middle and just calm things down. that everybody could exhale so that we could reset. Same with me. And what's the Jason Calacanis (00:51:02): -- David Sacks (00:51:03): That that was Abigail Spanberger, actually. She's a Virginia yeah. She's a Virginia Democrat who wanna see it in one of those blue counties that just flipped red to vote for Youngkin. And since she got elected I guess she got elected last year, She's been telling the democratic person. She's the one who called out Pelosi in that, you know, caucus meeting saying, I don't ever wanna hear the words defund the police again. That is electoral poison. And then she said, yes. Nobody elected Biden to be FDR. They elect him to be normal and stop the chaos. And so yeah. Jason Calacanis (00:51:33): It's certainly my vote. Yeah. David Sacks (00:51:34): Yeah. There's a big backlash going on because Biden has decided to start governing, like, Bernie Sanders. No one likes for him to do that. Jason Calacanis (00:51:40): So, Saks, is the less in Debs learned this time around is it's very easy to beat Trump, but it's very hard to beat a moderate Republican. Chamath Palihapitiya (00:51:50): No. No. It's not that. It's like you just have to be a rational normal person. Jason Calacanis (00:51:54): That's what I mean by a moderate republican. Chamath Palihapitiya (00:51:57): Well, you just have to be moderate. I don't think it matters when this is Jason Calacanis (00:52:00): but this is the key takeaway. DMs. It was so easy for them to use -- -- to use Trump and be Trump. Chamath Palihapitiya (00:52:04): You know? But these three topics are not a Republican tentpole nor are they a democratic tentpole. They are the tentpole of reasonable people. Jason Calacanis (00:52:12): Yes. Meaning, which most people are reasonable? Chamath Palihapitiya (00:52:14): Hey, guys. Get out of the way so that we can, you know, have a reasonable life in an economy. hey, folks. Please make sure my kids when I send them to school for 8 hours a day, come back reasonably educated, and please keep my streets safe. And I'm not really willing to decarcerate ad hoc to such a degree that all of a sudden crime gets out of control. Those are not democratic or Republican temples. Those are just moderate centrist rational things to believe in. Jason Calacanis (00:52:39): Yeah. Being and also behave normally. Like, I I I think whatever happened with these progressives where they couldn't pass, you know, the stimulus bills, and things that almost everybody agreed on -- Chamath Palihapitiya (00:52:49): Glenn Youngkin was not behaviorally extremist. Yes. And and from a policy perspective, was pretty much down the middle. Eric Adams Eric Adams is not behaviorally extreme, and he is politically down the middle. The mayor of Buffalo who got reelected is not behaviorally extreme, and he's politically down the middle. Do you start to see a pattern here? Jason Calacanis (00:53:10): Yeah. Nobody wants AOC Bernie Elizabeth Warren or Trump. Chamath Palihapitiya (00:53:15): I think it's not it's not a question of AOC or Bernie or Trump. It's just that right now the temperature of America is Let's just all exhale and just re center ourselves as a country. Yeah. And so moderation and centrism is actually what calls for today. I don't know how to predict what happens in 15 or 20 years, and maybe AOC is the canary in the coal mine for where the country goes by a plurality of people in 15 or 20 years. But what's clear is it's not where it goes today. And I think that we it all behooves us to just take a real step back and sale and just read the tea leaves. Because every single thing that the Democrats tried to do to sort of like make this extreme really didn't work. The race baiting, all of that stuff really kinda failed. And I think that that's important to listen to. You know, because you had a lot of black Indian Chinese families that just showed up, Hispanics, you know, that again, reliable Democratic voters and voted for Glenn Youngkin in a way that was surprising to me. Right? And then So if you compare New Jersey and and Virginia, Biden won Virginia by Jason Calacanis (00:54:22): 10. Chamath Palihapitiya (00:54:25): He the the Democratic nominee lost, Biden won New Jersey by 16 and Phil Murphy barely sweep buy. It was, like, 10,000 votes. Jason Calacanis (00:54:34): Harrison's always had a a a Republican kinda leaning group. They're a very tuned Buy 1 by 16. Chamath Palihapitiya (00:54:41): This should have been a cake. Do you Jason Calacanis (00:54:42): have an I think that 16, how much of that is get Trump out of office is what we I think the Democrats need to Chamath Palihapitiya (00:54:50): Where repudiating behavioral extremism and policy extremism. So I think we just need to realize rational, normal, chill people who can do reasonable things, get our kids educated. So for example, on the education front, I don't know if you guys saw this because I tweeted and you can put this Nick in the group chat. But in California right now, there's a battle over math class. Ridiculous. Right? Where the title I'm just gonna read the title because it sets it off. California tries to close the gap in math But sets off a backlash. Proposed guidelines in the state would deemphasize calculus. Reject the idea that some children are naturally gifted. and build a connection to social justice. Critics say math shouldn't be political. David Sacks (00:55:32): Well, of course, the the way that those articles are always written, it's always about the backlash. You know? They don't talk about what what the people in charge are trying to do to basically degrade the curriculum. Of course, there's a backlash because parents don't like put the people on these school boards are doing. This was the sleeper issue in Virginia. It was the school board issue. You had you know, parents were already angry that the teachers' unions had kept the schools close for a year and a half during COVID. And while their kids were at home, work doing classes over Zoom, parents got a good look at what some of their kids were learning, and they didn't like what they saw. I mean, we're talking about lessons plans that incorporated CRT. And, you know, the 16 19 Project View of America singling out kids by their race, making them focus on difference. And then there were some, you know, rather explicit materials at young grade levels about, you know, LGBT issues. And so this led to a whole bunch of confrontations of school board meetings where parents of all races objective to, you know, the the least lesson plans for for their kids. And the school boards and administrators just dismissed their complaints about a hand, And, you know, their message was we're we're we're not teaching CRT to your kids. But if we were, it's a good thing and only white supremacists would object. So, you know, that was sort of what was happening in the background. And then McColliff comes along and makes this gigantic gaffe in the last debates, about 2 weeks for the election where he says, I don't think parents should be telling the schools what to teach. And -- What? Jason Calacanis (00:56:59): -- David Sacks (00:56:59): yes. This is Who's the customer? Chamath Palihapitiya (00:57:01): No. He said that he said that on a debate, and it David Sacks (00:57:03): was like -- -- debate about 2 weeks for the election. McCalliff was leading through this whole thing until that debate wherein this was sort of a a Kinsley Gaff in the sense that, you know, Michael Kinsley said a Gaff is when a candidate inadvertently says something true, you know, this is McCullough's view is that the teachers' units should be controlling the schools, not the parents. Well Done. Yes. So this is what Youngkin jumped all over, all of his ads in the last weeks of the campaign really focused on this issue in a poor gasoline on a fire. And then the most tone deaf thing McCauliff did is he had Randy Weingarten, who is the head of the the big teacher's union, come in and campaign for him at the 11th hour. Well, of course, that's not gonna save him because people are sick and tired of the teachers' unions. So, you know, this was basically the big sleeper issue. CRT and the schools in Virginia. And, you know, this is this, I think, specifically, is what the democratic party has to wake to is that these progressive ideologies are not popular. Chamath Palihapitiya (00:58:04): The other thing I'll say about Glenn Youngkin is that this is another thing that the that the Republican should hopefully pay attention to, which is You can look normal, act normal, be normal. You know, this is not an extremist in any way. This guy was the co CEO Carlisle which is a huge and very successful private equity firm. So this is a very rational reasonable person who didn't embrace anything that was really that pro Trump. And that should be a real wake up call to the Republicans, which is, hey. Let's just run fleet of normal people. David Sacks (00:58:39): I think what you saw I think Jamath is right that what you saw in Virginia is that the playbook that Gavin Newsom just used to feet the recall in California did not work in Virginia, which is he tried to paint Youngkin as a Trump proxy. And Youngkin very definitely, you know, avoided that. He got Trump's yes. He got Trump's endorsement. But very early in the process, he did not have Trump come to the state. And you'd have to say it also helped Youngkin a lot. That social media that Trump wasn't all over social media because he's been banned. So, you know, in a weird way, Facebook and Twitter deserve and assist here because they help keep Trump out of the Virginia race. So, you know, this playbook that that Newsom defined that would work very effectively from California, which is simply to keep running against Trump, I think Democrats thought they'd be able to win elections for years based on that. That playbook didn't even last 2 months. So, you know, so I think Democrats are gonna have to find a new playbook here. Jason Calacanis (00:59:38): Okay. So, Friedberg, on this California issue around education, one of the key or most controversial concepts is de tracking. In other words, instead of having high performing students go to a high performing track, and then everybody else stay behind. Maybe keeps in not all cases, but keep some of the students together because there is some research that shows if done right. if you track people together, the higher performing students will pull up the ones who are slightly behind. Other people say we're basically throttling people who could be the next Einstein or or the next world class leader in science, math, etcetera. any thoughts on the concept of detracting since I'm assuming you were in the high speed track in science and math? David Friedberg (01:00:25): maybe we should get rid of, like, JV and Varsity sports teams as well and you know, triple a baseball and Major League Baseball as well and, you know, any distinction of performance or exceptionalism goes away. you know and and that is kind of the the key social question is, are we gonna give up exceptionalism to minimize the distance between the exceptional and the average. Chamath Palihapitiya (01:00:53): And that's apparently what -- -- makes people makes people feel bad. David Friedberg (01:00:56): But I've said this point before, you know, we're doing it when we try and think about, you know, the the billionaire tax or what have you. As soon as you start to limit progress, you reduce inequality, but you limit progress. And the same will be true, not just in science, not just in business, but also in sports and athletics and and any other kind of system where you will have exceptionalism, you will have an average, you will have a distribution. amongst human performance. And as soon as we try and limit the difference in that distribution, we move the entire curve to the left. Jason Calacanis (01:01:34): Here's the counter Friedberg. What some studies have shown is yes. You will throttle the high performers. but we're seeing along race lines, certain demographics being left behind, other ones excelling, and that you can get Yeah. David Friedberg (01:01:49): It's an ethics and values question. Right? Like, do you think that individual freedom and the opportunity to pursue your opportunity your your your exceptionalism should be taken away from you such that others who aren't as exceptional as you are given, you know, greater progress than they would have had on their own. And that's the the key crux of what all of these social systems are grappling with, whether it's in sports or business or finance or or or education is what's the right thing to do. And that ethics question is gonna be defined by the social of the moment and, you know, the means of the moment and what we all think is is the right thing to do. And it's different all over the world, and it's different within political systems, but it's a very divisive point. that I think folks who find themselves on one end of that exceptional spectrum in different aspects are gonna have one point of view and folks on the other end exceptional spectrum are gonna have other points of view, and everyone's gonna be sensitively tuned to where they fall in that spectrum. I will say one thing, though. On that spectrum, exceptionalism is rarer than the average. Therefore, it is likely the case that over the next years and decades, we will see the the idea that we should remove exceptionalism in business and exceptionalism in education and exceptionalism in sports because it benefits the majority, and and and no one kind of recognizes it, and a lot of folks don't recognize the progress that is made by exceptionalism. And -- Right. Jason Calacanis (01:03:14): -- David Friedberg (01:03:14): and that's and then we're gonna wake up one day and be like, oh, wait a second. We don't have the the best sports teams winning all the gold medals. We don't have the smartest kids. We don't have the best businesses. China and Europe and Brazil and whomever else, the emerging markets are gonna India are gonna start to have them. Jason Calacanis (01:03:29): That's such a good point. David Sacks (01:03:30): I think this is a very old debate. It's the debate between a quality of opportunity and a quality of results. David Friedberg (01:03:35): Yep. David Sacks (01:03:35): And the progressive left is absolutely obsessed with a quality of results or outcomes, which they now call equity, which is we're gonna take people at the finish line, and we're gonna move them around. We're gonna redistribute the the outcomes to achieve a more proportional representation or something more fair. As opposed to giving everybody as much opportunity at the outset as possible. That is the fixation right now. That is why they are taking out advanced math from the schools. They're trying to level people. it's not gonna work. It doesn't lead to a more we wanna have an exceptional society. Where I think we should be focusing is creating as much opportunity for everybody. the way to do that would be to let every child go to the to the school of their choosing so that we would stop trapping kids in bad schools. But back to kinda just bring this back to the election for a second because I think it is a very clear repudiation of this progressive mindset And I think there's essentially 2 sets of reactions to it. If you look at sort of all the left wing commentators, the the one who I thought seemed to get it the most was CNN's Van Jones actually had, I thought, you know, a a rare moment of introspection where he said, well, this was the the result were a 5 alarm fire. He says it was a big, big wake up call for the Democrats to stop annoying voters with woke, hectoring, He he actually advised Biden to start triangulating against the work left in the way that Bill Clinton did, I mean, which is something that I've been suggesting on this this pod. Chamath Palihapitiya (01:05:03): So you're saying something super important. The game theory now is for Biden to put to the test, the progressive left, because now he can go firmly to the center and he can put all of the pressure on the progressive left in the house and Warren and Bernie Sanders in the Senate Jason Calacanis (01:05:23): -- David Sacks (01:05:24): Well, he's right. That's the first thing he should do is he should pull a sister's he should pull a sister's soldier on Bernie Sanders. He he can't keep delegating the domestic agenda to Bernie Sanders. He if he wants to save his presidency, he'll start triangulating in the way that Bill Clinton did. I'm not sure he's going to I think there's already a misperception that the reason why they lost selection is because they didn't deliver the goodies in this house reconciliation bill. That in other words Jason Calacanis (01:05:49): -- Chamath Palihapitiya (01:05:50): I don't Jason Calacanis (01:05:50): think the public cares about the goodies. I mean, they care about this normalcy in centricism. David Sacks (01:05:54): there there there's a part of the democratic base that does want the what's in that house reconciliation bill. But but here's the thing. Democratic turnout in this election was extremely high. The democratic turnout for McCollough was higher than the democratic turnout 4 years ago for the Democrat who won. the the turnout that in New Jersey was higher than what Murphy got 4 years ago when he won, the problem the Democrats have is that Republican turnout was extremely high even without Trump, showing that Trump doesn't matter that much to turn out. And the independents came out in a big way for Republicans. So this idea that Democrats can just win elections by delivering, you know, programs for their base that's not gonna work. So I think that's a misperception. I think Van Jones has the right idea. They need to triangulate, but you turn the channel to MSNBC, And they were just blaming the whole thing on white supremacy. Jason Calacanis (01:06:46): -- basically historical. Just on the detracking thing, this shows to me a severe lack of creativity you if you look at what happened in the NBA, they had this developmental league, which they didn't kinda run, then became the G League. They now have the ability to bring players fluidly from the warriors g league team up to the warriors or the Knicks team up to the Knicks. What this means is you don't have to say there's 2 different tracks. and the the 2 never shall meet. In the season, they can move up and down. In math, a very easy solution to this would be to have the high track for high performers have the regular track and then spend with all this money we have, say, hey. Every school's gonna be open from 3 to 5 o'clock, 4 days a week if anybody wants to, attempt to get into a higher track of math, just stay after school for 2 hours. Anybody can go and get one on one tutoring and just Double the number of teachers. David Sacks (01:07:38): The whole country wants excellence. They don't want leveling. They don't want equity. They don't wanna quality results. They wanna have a policy of opportunity. Jason Calacanis (01:07:46): But, David, they do want other people to move up. They do wanna see -- David Sacks (01:07:49): That's true. Jason Calacanis (01:07:50): -- around students and immigrants do better at math. That's what you're missing. David Sacks (01:07:53): Yes. And that's about a quality of opportunity. Absolutely. Jason Calacanis (01:07:56): No. It's not just about a quality of opportunity. They're so far behind statistically that you need to do something new. What we're doing is not working, David. that's why people are picking this bad decision. David Sacks (01:08:05): They're they're they are eliminating advanced math because they don't wanna actually look at the the problem. Jason Calacanis (01:08:12): What do you see the problem as? David Sacks (01:08:13): Well, if there's an underperformance assuring group, then you should work hard to raise them up, not eliminate the subject. Jason Calacanis (01:08:19): Give me a suggestion. David Sacks (01:08:20): charters and school choice. Jason Calacanis (01:08:22): Okay. David Sacks (01:08:22): Look. I mean, if you're if you if you're gonna define structural racism as conditions that that trap people of color in poverty across generations. It seems like a pretty fair definition. Then you have to say the number one cause of structural racism It's the school system. School system. Yeah. It's the school system because we know poor kids are trapped in schools that aren't very good Why? Because they're controlled by the education unions Jason Calacanis (01:08:46): -- They don't have a choice. They don't have money. David Sacks (01:08:49): So who is making that argument on the on the side of the left. No one. Why? Because everyone knows that the unions, especially the education unions, are the number one donors to the democratic party. So the Democrats won't even look problem. Jason Calacanis (01:09:00): All they'll do is blame white supremacy. could build their base is by saying we want to fix education That would be if you -- They are. What what David Sacks (01:09:09): do you say Youngkin just did in Virginia? By the way, 55% of Hispanics in Virginia voted for Youngkin. So minorities are shifting on this issue of charters and book choice. Yeah. because these Jason Calacanis (01:09:21): are the new private chats. David Sacks (01:09:22): These are the new quality of life issues. Chamath Palihapitiya (01:09:24): If Youngkin has a a good 4 years in Virginia, he he can run for president and crush this thing. Can I David Sacks (01:09:29): show you just one one chart and then we can get off the politics thing? which is it was this chart from this guy Patrick Ruffini who's a Polster. And I think it really illustrates the problem that progresses. The democratic party has Jason Calacanis (01:09:41): for the listeners. David Sacks (01:09:42): Okay. So what this chart shows is it basically shows where the democratic the democratic party is in the center of Republican Party is in relation to the center of the country. Okay? And, basically, as you'd expect in a democracy, whichever party is closer to 5 wins. Okay? So in 1994, when Bill Clinton was president, the Democratic Party, the center of it, was smack dab as 5. The Republicans weren't that far away. They were a Jason Calacanis (01:10:10): 6. David Sacks (01:10:10): So the party, even though there is a lot of partisan warfare, the the the political differences actually weren't that great. And Clinton, I think, more accurately found that dead center. Okay? Fast forward to 2004. So George W Bush's president now. The Democrats are at 4. Republicans are at 5. That's why Republicans won. Okay. Now go to 2017, these these poll numbers he did, and this is a few years ago. The Democrats are all the way at 2 Okay? And the Republicans are 6a half. So it's true that both parties that have moved all away from the center, but Republicans are one and a half points away from the center, whereas Democrats are 3 points away. So the Democrats have actually moved further away from the center. If you look at who are the activists in the Democratic Party who is the base, who is the energy, who does all the work, who does the contributions, it is the progressives. Right? This is why McCauliffe ran as Macauliffe is not a progressive. He was a Clinton Democrat, you know, going way back to the nineties. Okay? He was Bill Clinton's you know, right hand man in the party back in the nineties. But he nevertheless ran as a progressive in Virginia who supported the teachers' unions. Why? because he was appealing to the base of the party. Gavin Newsom did the same thing in California. Gavin was never a Bernie bro. I mean, he's always been liberal, but he he has moved very far left. And Biden has moved very far left as president. Why is that? Because the base of the party has moved very far left. So unless that gets fixed, I see maybe a decade. Jason Calacanis (01:11:41): -- to the party's base, but not the country's -- David Sacks (01:11:43): Exactly. So you're gonna need a strong Democrat who can basically give the Heisman to that part of the base, or they're gonna keep losing elections. I think this could be a Republican decade. I know it doesn't seem like it right now because you had Trump, and the Republicans lost. But look how quickly the Republicans turned around their electoral fortunes Jason Calacanis (01:12:02): -- David Sacks (01:12:02): So if Trump shows up Jason Calacanis (01:12:04): -- -- then that's just a huge detriment Yes. Chamath Palihapitiya (01:12:07): If Trump David Sacks (01:12:07): if Trump is the nominee in 2024, all bets are off. But in 2022, he's not the nominee. He's still a sensor to social networks. Chamath Palihapitiya (01:12:15): He's really nowhere in sight. And Jason Calacanis (01:12:17): -- Chamath Palihapitiya (01:12:17): Talk. -- people people have a very short memory, it turns out. They've moved on very quickly. Youngkin checked the box because he felt he had to to get the nomination and to run on the Republican platform, but then you think Young's gonna talk to Trump once? No. Not once. David Sacks (01:12:35): And I and I think and I honestly think this election's gonna help Republicans move past Trump because what our public and believes in in, like, that the electoral system is rigged now. Right? I mean, all these blue cities and states just delivered big results for Republicans. So where exactly is the ballot stuffing? Where exactly is the stole? Where are the stolen elections? And Chamath Palihapitiya (01:12:55): that's gonna that's gonna stop now too. They're gonna David Sacks (01:12:57): gotta stop overnight. Right? Because, I mean -- By the Chamath Palihapitiya (01:13:00): way, Kristen Cinema probably knows this. Like, you know, the the the funny thing about all of this is when Peter Tio put in $10,000,000 into this pack, for Blake Masters who used to work for him and said, you know, in Arizona, I'm gonna run this guy against you. Cinema attacked heart to the center. instantly. So she she knew too. David Sacks (01:13:19): Yeah. Well, so so just just a small point of question. So Blake is running against the other guy, the astronaut guy. I'm I'm spacing out his name. But but yeah. But but cinema is up Jason Calacanis (01:13:28): -- So to speak. -- David Sacks (01:13:29): in the next election cycle. So she got a little bit more time. But you're right. Like, cinema is attuned, and mansion is attuned. There are some of the few Democrats that are attuned to where the center of the country is. You heard a mansion in the wake of this election said, this is a center right country. These guys better wake up. You know, they should really now look, I think I think what's gonna happen in the wake of this election, it is that this infrastructure bill is gonna sail through. Because one of the crazier things that the progressives were doing was holding that bill hostage. It might have helped McCauliff don't think with a I don't think McArthur woulda won, but it might have helped him by a point or 2 if they had gotten that infrastructure bill done because a lot of those programs are gonna be popular in a state like Virginia. Jason Calacanis (01:14:09): Okay. David Sacks (01:14:09): But, I mean but but I think that, you know, this house reconciliation bill, they just seemed hell bent on jamming it through with all these tax increases. Yeah. Chamath Palihapitiya (01:14:16): How I David Sacks (01:14:16): don't I don't think that's not popular. You know, what the big issue in New Jersey, one of the Jason Calacanis (01:14:20): -- -- for them. Yeah. Chamath Palihapitiya (01:14:21): One of David Sacks (01:14:21): the big issues in New Jersey where you're almost at this upset within one point was taxes. You know? Yeah. There was a a gap by Murphy who said something like you know, he said he said that if taxes are someone's chief concern, he said, quote, maybe we're not your state. Can you imagine that? David Friedberg (01:14:38): Wow. David Sacks (01:14:39): And he almost lost the election because of that. So don't think all these big tax increases are what the country wants. And, you know, if Biden insists on allowing Bernie to dominate the agenda and Warren, I think it's gonna you're gonna see 40 to 50 seat losses by the Democrats in Jason Calacanis (01:14:56): 2022. Okay. Moving on to our final topic. crazy update out of China, a research team has developed a method of converting carbon dioxide into starch science magazine published this paper. From a research team, a 100 grams of catalysts converting 5 grams of CO2 per hour into starch, And Friedberg, I saw you tweeted that this is ten times more efficient than corn plants. What's the impact of something like this? Could it hit scale? Would it have an impact on food security, carbon, global warming? David Friedberg (01:15:34): Yeah. so I tweeted this paper out because it's just it's a fantastic demonstration of what's possible in this new emerging not emerging. It's been around for a long time, but kind of, you know, in the state of art in in biomanufacturing, you know, photosynthesis is the system by which most starches produced on planet Earth today that is plants convert sunlight and use water and carbon dioxide to make starches. And starches and and sugars, which are where carbohydrates are, account for 60% of human calories. And we get all those calories from rice, wheat, potatoes, which you know, are grown on about 60 percent of our acres that we farm on planet earth. So, you know, in in plants, there's a series of these chemical reactions. And what these guys did is they isolated and created a couple of specific proteins which are a class of proteins called enzymes. And what an enzyme is is it's a protein that can take different molecules and combine them and re enforce them to react and make something new. And they identified a couple of enzymes and engineered a few enzymes and put them together in a cell free system, meaning there's no cells involved. It's just a tank with a bunch of fluids in it, and and they stick in some carbon dioxide side that they can suck in from the atmosphere, and they they can and they have to drive it with some hydrogen gas, which we can just get from water. And the system basically converts that carbon dioxide into starch, which is being done at a rate that's almost ten times higher than what we see with with corn plants. So it's it's an incredible demonstration. There's there's several steps to the system, like 6 steps. And I did some back of the envelope map. And my back of the envelope map on what they demonstrated and and by the way, everything they did is publicly available reproducibility. David Friedberg (01:17:22): So people are gonna try Jason Calacanis (01:17:23): and -- -- source. Yeah. David Friedberg (01:17:24): Open source. So people are gonna try and copy this now. But my back of the envelope math, is, you know, this system can produce about 10 grams of starch per liter per day. which would mean it would take about 2.7 trillion liters to suck up all of the carbon dioxide side that all of humans are putting in the atmosphere every year from all of industry. That would require about 27,000,000 tank that are about 40 feet tall and about 8 feet wide. That whole all of those tanks could fit in in the area about 25 by 25 miles. you could attach 1 nuclear reactor to it to suck up the the water and convert it to hydrogen gas and feed this system. And those tanks, twenty five miles by twenty five miles would take out all of the carbon dioxide on planet earth. and convert it into usable starch. And that starch, by the way, that system could be tuned, not just to make starch for consumption, it could be used to make biofuels, It could be used to make bioplastics. It could be used to make anything that's hydrocarbon based. And so you can kinda think about this being the entry point to a series of production systems that we could use Chamath Palihapitiya (01:18:32): to make. Why? It's Friberg. Why did they open source it? David Friedberg (01:18:35): So they're they're a research team of scientists from China, and they've been iterating on this this process, this isn't the only process. Right? And so what they're showing is that this is possible. And what I think we will see is a lot of people rattling their brains now saying, not only do we use proteins and enzymes that we find innate but we're gonna start to engineer our own proteins and our own enzymes that are even more efficient than what we see in nature. And that's what's starting to happen. This system alone, what I just described as 25 mile by 25 mile system, which is tiny, is the equivalent of starts in from 42 US Corn Belt. If you took all the corn growing in the United States, it's 42 times that is what it would produce. That's my back of the envelope math of kind of what these guys did. And so I think what they're showing is this is what's incredibly Jason Calacanis (01:19:22): -- David Friedberg (01:19:22): Yeah. Yeah. And and and and the implications, we could go in a hundred directions and we could talk for an hour about what this means and what you could do with it. But I think it it it really catalyzes this this point that that that that we're kind of Everyone's always like, how are we gonna get all this carbon out of the atmosphere? What are we gonna do with this? Where there's a will, there's a way? The science is here today. 27,000,000 tanks made out of plastic. You could probably get that stuff produced, you know, a couple $1,000,000,000. Find a piece of land that's 25 by 25 miles. It's near some water and put a nuclear power plant there. And you could suck up all the CO 2 in the atmosphere, but -- Anyone Jason Calacanis (01:19:55): wanna take anyone I want to take a guess of how many people on the team were in advanced math courses. Chamath Palihapitiya (01:20:00): The funny thing about this that I think is really interesting is that it came at the same where we were ending, you know, what was this political theater of COP 26. You know, Greta Thunberg, who's You know? How dare you? How dare you? Blah blah blah. She she had this she had this very funny comment, which is like, you know, It was a bunch of corporate nonsense and the same old blah blah blah. It was sort of a description of COP 26. You know, we had this great trickle of, like, you know, agreements. There was, like, on Monday, there was an agreement to stop deforestation, and then you realize it's a non binding agreement. And you're like, oh, okay. Well, I guess we're not gonna stop deforesting. We're just gonna keep doing that. And all of this stuff just kind of, like, took a lot of my enthusiasm and I was a little despondent about what was going on. And then when I saw this thing, I was I was really quite impressed. I will say that There's a very tricky thing happening right now which is that developing countries basically said, listen. If you want us to go after climate change, we want $1,300,000,000,000 a year to support us. And so, you know, the Western world will have to figure out whether we're willing to pay you know, what is the equivalent of, you know, 6 or 7 percent of US GDP to a whole bunch of other countries every year for them to slow down. And if we don't make these payments to India and China and a bunch of other developing nations, they they have said we're just gonna continue to do what we're gonna do. Jason Calacanis (01:21:27): Here's an idea. half of that money and put it towards science. David Friedberg (01:21:30): Yeah. Take half that money and go build a plant that uses this system that was just demonstrated and put it in South Texas and suck up ocean water and convert that ocean water into hydrogen gas. Jason Calacanis (01:21:39): Great jobs. David Friedberg (01:21:40): By the way, ocean water can be turned into hydrogen gas by running electricity through it. So you're putting a nuclear power plant to make the electricity, you run it through ocean water, you create hydrogen gas, you pump it into these frigging tanks, and it sucks up all the c 02, and it makes stuff that humans can consume and that we can use. And suddenly, you have this abundance of material. You have this abundance of food. And and you can turn this and and you can turn this into a lot of different things. And, you know, this kind of goes to the point I've been making for a while. If we want to invest in infrastructure, this is the sort of thing that both solves climate change creates jobs and has extraordinary economic return potential built into it. Jason Calacanis (01:22:16): So how does he get politicians reelected? David Friedberg (01:22:19): know, I think the private market may come after this stuff. I'll be honest. I'm you know, I'm like, I'm talking to people looking at this being like, why do we make it plant that we can make biofuels and bioplastics and food and other stuff out of this this technique. And there's gonna be other iterations of this technique, but it's such a no brainer. Jason Calacanis (01:22:34): -- cost like a functional prototype of this? David Friedberg (01:22:37): Like, a small prototype, nothing. Right? I mean, couple million bucks. Yeah. Like, nothing. So, you know, Chamath Palihapitiya (01:22:42): I think the other thing that happened this week beyond this request for $1,300,000,000,000 is that we're now seriously considering carbon tears. And we talked about this on a pod before, but You know, I've said, I think this is the most disruptive thing in the capital markets and and geopolitics that can happen in the next 10 or 20 years. It's like an effective carbon tariff, which is to say that when a good or service enters the borders of a country, they will levy some tax that they think represents it's drag on the environment. And so you know, the simple example would be a car, you know, you make a car, you make a Tesla, in Texas, but the minute it crosses the border to Canada, Canada says, well, here's the true carbon intensity of this car. all of the energy that you put into the aluminum, to the batteries, you know, to the to the buildings where the engineers sat that were that were building FSD, And, you know, I'm gonna charge an $8000 tax on this car. Or iPhones coming out of China? Yeah. That's happening. I think that's coming. So I think that the combination of tariffs and these transfer payments is going to create a real economic incentive for folks to make these kinds of big technological leaps. So I'm pretty bullish on all of that. I'm less bullish on politician's ability to organize because, unfortunately, again, this time I really paid attention to COP, and it just looked like a bunch of really, you know, usage political theater. Jason Calacanis (01:24:08): No. This is just a Chamath Palihapitiya (01:24:09): lot of political theater. Jason Calacanis (01:24:10): Sachs, is this a science conversation about saving the planet? Do anything for you? Would you like to get back -- No. David Sacks (01:24:14): I mean, I think it's the way to solve the problem is you have to figure out new technologies to actually take carbon out of the atmosphere because you're not gonna do it through, you know, these political programs. I mean, you know, China, India, paying them and another developing nation's 1,300,000,000,000 a year. I mean, foreign aid already is one of the least popular parts of of the government's budget, you're gonna now pay 1,300,000,000,000 to these countries so that they it's nonsense. And you're gonna pay Jason Calacanis (01:24:44): -- Put money to our education system and great science and technology that solves the problem. David Sacks (01:24:48): Nobody understand for that. Yeah. And, you know, the the Jason Calacanis (01:24:51): the taxes Chamath Palihapitiya (01:24:51): as well. Jason Calacanis (01:24:52): -- education system. David Friedberg (01:24:53): Right. Jason Calacanis (01:24:53): Pour it in. David Sacks (01:24:54): Yeah. I don't think there's a political solution to this problem. That's gonna be palatable to people. I think it's gonna have to be solved through new technology. Jason Calacanis (01:25:02): Now let me ask you a question for you, Bert. You said there's a 6 step process. Given your experience building science and technology products, is it possible for each of those 6 steps to get, but 20% more efficient a year? David Friedberg (01:25:15): Yeah. Look, I mean -- Okay. just say that to describe that there's a series of steps in the system. It it you know? But at the end of the day, this is a a demonstration of science that has been, you know, probably funded to some small amount. But, you know, if if you start to iterate on this approach and think big picture and think infrastructure solution here, there's a lot of room for improvement, I'm sure. Jason Calacanis (01:25:37): So in the mature back of the envelope 25 by 25 mile, if this is getting 50% more efficient, 25% more efficient year over year. We could see it becoming twice as efficient every 2 to 3 years. and your twenty five mile might be a five mile radius city. David Friedberg (01:25:52): I mean, think about going to Mars. Right? What are we gonna do in Mars? We're not gonna grow freaking fields of corn and grow cows and stuff. Right? You're gonna need a system that literally takes the molecules that are in the atmosphere there, uses some electricity that's probably gonna be produced by nuclear power plant and convert those molecules into what you wanna make and consume. And that's what we can do on earth today. The systems are gonna get better. They're gonna get cheaper. They're gonna get faster. And that's why I'm highly optimistic about solutions to climate change in the century. It's not about an an if, it's about a when, and, you know, the when is gonna be defined by the willpower of how we are gonna allocate our people and our capital resources to solve these problems in the near term. We have the tools to do it. Jason Calacanis (01:26:32): I love the fact we're sort of hitting this fork in the road where it's like, do we just wanna give the money to a bunch of governments to pretend they're gonna solve this in grifters? Or do we wanna put it into science technology, innovation, and entrepreneur hand entrepreneur -- I know Chamath Palihapitiya (01:26:46): it's a former. Jason Calacanis (01:26:46): -- that execute execute. Right? So you wanna give it Chamath Palihapitiya (01:26:49): what'd you say? I picked the former. Jason Calacanis (01:26:52): We should yeah. Let's give it to politicians. We don't know what the fuck they're doing. I mean, it really is, like, when you know, I don't know if he's or Elon say, If you want a soft world hunger, can you make us David Friedberg (01:27:01): can you Jason Calacanis (01:27:01): make us great chunk? Chamath Palihapitiya (01:27:02): Let's talk about that. That's just so beautiful. I thought that was the David Friedberg (01:27:05): greatest that's dunk of the week. Nothing nothing gets me up in the morning, like, funding shenanigans. Chamath Palihapitiya (01:27:10): No way, Jay. I Jake, I'll tell the stories. Jason Calacanis (01:27:12): I mean, just somebody was like, oh, Elon, you know, made more money. Tesla Stocksman. No. No. Chamath Palihapitiya (01:27:16): An article. It was an article that was written. Sure. Jason Calacanis (01:27:18): And then he's like, well, if you wanna solve world hunger, I'm willing to sell shares -- Chamath Palihapitiya (01:27:21): Basics, you describe it. You're doing such a shitty job to do some David Friedberg (01:27:25): What are you talking about? I was on a point. Jason Calacanis (01:27:27): All I did was put a sis in your hands. You guys dunked everything. That's it. I'm out. David Friedberg (01:27:30): But do you wanna do it? There's an article? -- voice. Do it in his voice. Chamath Palihapitiya (01:27:33): Yeah. Hang on. There was an article. Stop. There was an article that was written that basically said, you know, you know, Jason Calacanis (01:27:42): $6,800,000,000, Chamath Palihapitiya (01:27:46): which is, you know, what Elon made like in a day or something. could cure world hunger. And then the head of the, you know, UN World Food Program retweeted that again, trying to further dunk on Elon. And then Elon responded. Well, if you can just show me a plan and just please reply in line here on Twitter, and it's credible and detailed. I'll just sell, you know, this talk and I'll give it to you. And everybody was like, oh my god. There was this oh my god moment like, wow. can this really happen? Ending world hunger sounds like a beautiful idea. It can only it does only cost, you know, 6,800,000,000 and, obviously, it went nowhere because the guy didn't have a plan, and it was just a complete joke. But that's what happened. Jason Calacanis (01:28:31): Yeah. And he's like, yeah, just put all of your put all of your expenses out there. Show us your plan, and it was like, oh, crickets. Nothing. Alright, everybody. On behalf of the dictator, Shamoff Palihapitiya, the queen of Kinois, the Sultan of Science, David Friedberg, and 4, the rain man himself reporting from definitely reporting from. Yeah. He's reporting from the New York Stock Exchange. Congratulations again. my bestie, Dave attacks on the triumphant IPO of Bird. We'll see you all next time on the online podcast by Bob. David Friedberg (01:29:08): we'll let your winners ride. Rainman, David Saffens. David Sacks (01:29:15): We open so sit to the fans, and they've just gone crazy with it. David Friedberg (01:29:24): like, white hair winter's dry. Chamath Palihapitiya (01:29:28): Besty's are gone. That is David Friedberg (01:29:31): plenty of dogs that give it a driveway steps. Oh, man. You should Chamath Palihapitiya (01:29:38): all just get a room and just have a think you, George, because they're all exclusive. It's like this, like, sexual tension, and they just need to release their houses. What? David Friedberg (01:29:47): You're the thief. What? Chamath Palihapitiya (01:29:49): Pure feet. David Sacks (01:29:49): Be your feet. Sweat. Sweat. Jason Calacanis (01:29:51): We need to get mercies are back.