加州的衰落，以及 SPAC 如何为成长股打开上市之门

Speaker 1 (00:00:00): Hey, everybody. Welcome back to the all in podcast besties. I have reunited. It's been a bestie summer, Chamath. How are you doing? You're back in America. Yes? Chamath Palihapitiya (00:00:08): I am back in America. Speaker 1 (00:00:10): Back in America. Jason Calacanis (00:00:12): Feels great. Good summer. Yes. Is it any summer? -- summer. Chamath Palihapitiya (00:00:15): I had 7 weeks in Italy. It was really incredible. Jason Calacanis (00:00:19): What is the vibe in Italy post pandemic? Obviously, they had the the roughest of any nation, I think. except for China and Wuhan with -- Well Speaker 1 (00:00:28): -- -- Jason Calacanis (00:00:28): with COVID 19. How how is the psyche there? Chamath Palihapitiya (00:00:30): No. It's incredible because they're I mean, they're so resilient. They basically decided that they don't ever wanna go through it again. So everybody wore a mask and people socially distanced. There's a lots of dinners outside. No restaurants We're really seeding people indoors. You'd walk into a a store, and you'd have to put some, you know, puro on your hands and wear a mask. And there was, like, you know, 40, 50 cases a day. And then I I keep looking at the news when I was there at 60,000 a day here. I was it's it was just really It was sad. And then on top of that to see the riots, the fires, I mean, there's a you know? Jason Calacanis (00:01:08): It's been a disturbing summer here. How are you doing, David Sachs? You're back in San Francisco, and you got to spend a little bit of time in an undisclosed location as we we know from the last couple episodes of the podcast. How has San Francisco right now? How has your bestie summer been? David Sacks (00:01:25): It's been great. Yeah. I was I guess I can now disclose that my undisclosed location was was Mexico, specifically Cava, and that was it was a great place to be for It's couple of months. Jason Calacanis (00:01:38): Nobody cares. Yeah. David Sacks (00:01:39): Yeah. Exactly. But actually, it it it it was great it was a great place to be in the early the pandemic because everyone was wearing masks. You know? They did take it really seriously. And there were very few cases and seemed like it was under control at least in the area I was. And then, you know, we came back to San Francisco for for school for for the kids' school, which, you know, I'm not sure we have to be here, but but that's that's, you know, that's where we came Jason Calacanis (00:02:07): back for it. -- actually open, or are they going to school, or they keep pushing it out 2 weeks like my kids are? Yeah. David Sacks (00:02:12): It's we don't they're not going in person yet, but I think they keep trying to figure out when they're gonna be able to start doing that. So it's it's all Zoom based right now. Jason Calacanis (00:02:20): Yeah. Which means no learning. Right? I mean, do you do you think these kids are actually learning on Zoom, or do you think it's just glorified babysitter? David Sacks (00:02:27): a little bit. I think it's it's it's difficult. Jason Calacanis (00:02:30): Yeah. We we gave up on it. And, Friedberg, are you there? David Friedberg (00:02:34): I'm here. Bay Area. Jason Calacanis (00:02:36): How how's your bestie summer been during this crazy time? David Friedberg (00:02:40): I've been in the Bay Area. I've been Crossing all all seven layers of Dante's Inferno here in California moving from the outer layer of COVID to the middle layer of California proposed wealth tax to the inner layers of extreme heat, smoke, and the absolute central layer of pain, more recently, my three year old daughter decided 34 nights ago to not sleep anymore. So, yeah, we've been living living the life. It's been glorious. And, you know, I wear a mask now for COVID, and then I wear another mask on top of that mask for the smoke. we're just living in the California dream. What my parents immigrated here for, you know, paradise. Jason Calacanis (00:03:24): Well, I guess that's a good place to start, and just if anybody cares, I spent Speaker 1 (00:03:29): 10 Jason Calacanis (00:03:29): days in the middle of doing -- Had Speaker 6 (00:03:31): a great Jason Calacanis (00:03:31): had a great time. I guess nobody cares. Yeah. I mean, how my bestie Summer was, but Chamath Palihapitiya (00:03:36): I'll -- We freaking Jason, how's your bestie's summer? Jake, how's your bestie's summer? Yeah. Jason Calacanis (00:03:40): I you know, I've been lonely, and I tweeted I'm lonely. And I got about 50 phone calls from people who are like, I can't imagine Jakeow being sad, but I actually had to talk with my wife. And I said, what are the symptoms of depression? Because I I think I might have depression and I went through it and I was like, I don't have depression. I'm just I have great empathy for all the people suffering and, you know, I just being isolated. You guys know me very well better than anybody. Like, I like to talk to people, and it's been really difficult for me to I'll be totally candid to be isolated like this. and the podcast is is great and doing this podcast is great. But, man, I miss people. I just miss people Chamath Palihapitiya (00:04:19): and What are the symptoms of your depression? just Speaker 1 (00:04:21): -- Chamath Palihapitiya (00:04:21): Before you were self diagnostic, I'm just curious. Jason Calacanis (00:04:24): Yeah. I was I I was feeling like just sad about watching the riots and watch people shoot each other and then watching, you know, the the the wildfires watching people die unnecessarily. and then watching the madness for the election. It was just all becoming like, I wouldn't say overwhelming, but it just made me very sad that you know, so many people can't go back to work, and then the stock market's ripping. And it it's a very I I don't know how you guys feel, but it feels very surreal. Right? Because in our world, I don't know how your portfolios and investments are doing. You know, a lot of the companies we've invested in as Angel Investors are doing just wonderfully, and we're investing more than ever. But then you you turn on the television, it's like the doom scrolling is crazy. So I had to just stop doom scrolling. I think that was the key thing, Chumoth, was just looking at Twitter is the trending topics is so depressing and just so overwhelming at times that I took 3 days off this weekend and went camping, and I literally didn't pull up Twitter, and I felt much better. So I think it's really Twitter related. Like, opening up the trending topics. I don't know if you did that on your holiday in Italy, but it really is a quick way to get depressed. Chamath Palihapitiya (00:05:34): The best thing is that I was using it in a different time zone, and so I was basically out of the flow. And it makes a huge difference because then you're not in the emotional turmoil of people's immediate reaction. And so you can just kind of move on. And then, also, I just had a really fun summer because I really tried to detach and not use my phone. I I had a you know, I kept my meetings to a few hours a day, and then, otherwise, I was doing things. David Sacks (00:06:05): Yeah. You you wanna know you wanna wanna know my phone call to Jake Powell? Speaker 6 (00:06:09): It's David Sacks (00:06:09): like, hey hey, Jakeel. I I saw on Twitter Speaker 6 (00:06:11): that you're you're sad and lonely. It's like, yeah. David Sacks (00:06:12): Yeah. It's like, are you suicidal? It's like, no. Okay. Goodbye. Jason Calacanis (00:06:20): I'm too much of a narc. I'm too much of a narc. Speaker 6 (00:06:22): I'm too much of a narc. I I'm too much of a narc. I'm too much of a narc. I'm too much of a narc. I'm too much of a narc. I'm too much of a narc. I'm too much of a narc. I'm too Jason Calacanis (00:06:22): much of a narc. I'm too much of a narc. I'm too much of a narc. But I do I do wanna thank you, David, for having me down to Cabo, and we we got to have some good times. We watched some good movies. Gladiator extended cut was great. some other movies that we watched could get us canceled so we won't admit that we watched history of the world or any other Mallbrook's movies, but we had a good time. We played a couple rounds of golf, and that was good times. Let's talk about California because I think, Speaker 6 (00:06:46): you know, we're we're all residents currently of California. Jason Calacanis (00:06:46): But let me just put it out there. How many people on the call are considering leaving California. Anybody, is that going through anybody's mind right now? because it's going through David Friedberg (00:07:00): my mouth. Chamath Palihapitiya (00:07:01): for well, it's not for me, but I think that California is sort of emblematic of what could happen if you actually have, you know, the legislative bodies plus, you know, the the top sort of political leader up and down on one ticket. I mean, you know, you you basically have, like, massive rife incompetence. and it's been compounded. You'd never I mean, you know, if people who are Democrats would have said, oh, the best thing that can happen for Democrats is if you have you know, local cities, plus an assembly, plus the state senate, plus the governor as a Democrat. Republicans would have said the same thing for Republicans. But as it turns out, it basically creates the worst outcomes. And so instead what you need is a little diversity of ideas and a little push and pull. But California is like a bunch of clowns in a clown car right now. It's a joke, but I'm not gonna move. Now a part of it I what I'm not gonna move is I I've you know, my taxes I've set up in such a way where California can't get access to most of my assets anyway. So, you know, they can pound sand Jason Calacanis (00:08:16): Yeah. David, how are you Sachs, how are you feeling about California right now? And just the craziness in San Francisco, the homelessness problem in San Francisco has become acute during this. It's it's really Speaker 1 (00:08:28): -- David Sacks (00:08:29): Well, it's a it's a disaster. Yeah. Speaker 1 (00:08:31): -- Jason Calacanis (00:08:31): on top of it. David Sacks (00:08:31): And -- It's it's a disaster. It's a disaster. I mean, I'm not I'm not leaving or anything, but it's certainly a topic of conversation that's come up a lot. And I do know people who have left I know a couple of people who, you know, prominent people in the ventric meter you've who've recently moved to Austin. And it's a horrible time for the the city and state to be proposing all these new taxes as a just take one example. because people are already realizing that because of COVID and and this new sort of work from home and and Zoom business culture where you can kinda work from anywhere that people are realizing they don't need to be in San Francisco or in Silicon Valley anymore to be, you know, in the technology industry. And so at precisely the time that people were reevaluating where they wanted to be, realizing that that could be anywhere. California is now you know, proposing to massively increase the cost of being here. So it's it's horrible timing. And then, you know, you do have this. sort of seemingly chronic issue in San Francisco, particularly with with the sort of homeless problem. This seems to keep getting worse. And there's there's sort of this weird hostility to technology and tech workers here that I think it somehow uses a scapegoat to prevent the city from dealing with its real problems. Jason Calacanis (00:09:55): And what do you perceive those real problems to be in in the city? I mean, you use the term homeless. I think most people looking at the problem, as one person candidly told me, you know, what we have is not. And I I wouldn't say who said this, a prominent person. They said this you know, Jason, the the issue here is this isn't a homeless problem. This is a junkie problem. And they use specifics that I'm using that term because That's the term to refer to people who are addicted to opioids, methamphetamine, fentanyl, and that if you were to actually unpack what we're calling a homeless crisis it's actually a crisis of drug addiction and specifically fentanyl. And I don't know if you guys saw the the we're gonna hit something like 500 overdose deaths this year. We're, like, gonna double last year, and it's all fentanyl. which is a particularly, you know, deadly drug. So, I mean, what how much do you think that is the problem, David? David Sacks (00:10:41): Hue huge. I mean, it's it's you're you're right that homelessness is not the the the cause of the issue. The homelessness is the consequence of long term drug addiction and mental illness. I mean, this is the it's the end state. And -- Yeah. -- you're right. The city is it's not really tackling the underlying issues. In fact, it's kind of eating and abetting them. I mean, how many millions of needles does a city give away every year and that it only collects a small fraction of them with the remainder ending up on the streets. It's just it's it's bonkers. And I think part of the problem is that we keep saying that until we is that we can't demand any improvement in the situation in terms of homeless people, you know, we have this, like, poop squad in in San Francisco. That's literally cleaning poop off the sidewalks because homeless people are using our sidewalks as as, like, a lit latrine basically as a bathroom. And and you what you keep hearing is that, well, we can't do anything about that problem until we solve the homeless problem. And that that's a that it certainly, we should try to solve that problem, but it's a very long term, you know, difficult and tractable problem. In the meantime, we can certainly do things like demand that homeless people not do that. Jason Calacanis (00:11:59): Yeah. And the policing seem to there seems to be a distinct issue with policing right now. I I watched the San Francisco tenderloin Twitter account, David Friedberg, and they've arrested something 60 meth and fentanyl dealers, but we have a DA, Chesa, I believe his name is. who doesn't believe in prosecuting any of those crimes related to drugs or petty crime? Friedberg, what does the city turned into for you as somebody who's been a long term investor in the Bay Area? David Friedberg (00:12:31): Well, I moved here after I graduated college in 2001, and I loved San Francisco. It was it was a quieter city and a pointer city. I honestly over the years have found the traffic and the congestion and the buildup of the city to be frustrating. I'm a little bit of a anomaly in the sense because I think a lot of people know, think that the city should continue to grow and progress and and build housing and so on. Those are all, you know, fine objectives. But I think the quality of life has degraded for some time in the city as as infrastructure hasn't kept up with the the changing pace of of companies growing here. And as a result, we've kind of got this ballooning and flading budget that's been poorly managed. You've got I forgot the statistic, but there's some number of thousand people plus that are city government employees in San Francisco earning over $300,000 a year. And so there there's a there's a chronic kind of bureaucratic issue that is the cancer that has caused, you know, a lot of the follow on crises that I think we're we're now experiencing acutely here in the city. Now in terms of leaving to your earlier question, I, you know, I was really like I've just been like everyone you know, like, the I call kind of talk about the the Dante inferno layers. It's also, like, for me growing up, it's like a 7 layer burrito. It's like one layer of shit after another. Start with the beans. And in the middle, you got the sour cream, and, you know, this city has just gotten kinda and the state has gotten more and more difficult to live in. And I and I was certainly thinking and talking to my wife, like, we gotta leave. Her family's here. So so we're not gonna leave the state. But then I get a call last week that that I think 18 of us were on with governor Newsom. And, you know, he he made a couple of really interesting points that really did honestly reset my perspective. You know, I I've tried to take a step back and and think a little bit more broadly about the long term opportunity in California. David Friedberg (00:14:22): the way the state operates right now, it's a 5th largest economy in the world. They ran a surplus. They refinance their debt. They've done a great job. kind of managing kind of the fiscal gap that that's that's being created by the COVID crisis. And, you know, governor Newsom made a point. Like, we have had the California Exodus story that's percolated and cycled really for decades. He pointed out an article which I've not been able to find but I've been looking forward from time magazine from 1959 that were, like, declared this is the year. Everyone's gonna exit us out of the state. And we hear it every couple of years there's some crisis that precipitates the mass exodus, and it hasn't happened because it is a great place to work. It's diversified industrial base. It's not just tech. Tech is a lot of the growth, but there's a lot of industry here, largest ag producer, largest large military Aerospace, industry and on and on and on. This is a it's a great diversified economy. It's a great diversified cultural base. It it's by the oceans. It's by the mountains. It's an incredible place to live and work, and I don't think any of us wanna give that up. And and the media has done a Speaker 6 (00:15:27): great job David Friedberg (00:15:27): kind of magnifying these these small stories that aren't really a story. Governor Newsom made the case that this wealth tax proposal, you know, was one assembly member. It didn't even get into committee. It wasn't even really being considered, but it kind of created this this press flourish, and everyone got involved. And everyone I know kind of freaked out about it, and it became this kind of another catalyzing event, but it wasn't really real. So if we kind of broaden our perspective a little bit both in terms of space and time, I I think we get a little more kinda comfortable with, like, of all the places to live and all the places to work, this is the best. And you didn't negotiate some taxes and move to Austin, but, I mean, then you gotta go live in Austin, you know, whatever. David Sacks (00:16:05): Well, it's it's it's the it's the best you're you're right then. It's the best in terms of climate, geography, natural beauty resources. And the industries that have developed here and have, you know, strong network effects, but it's not the best politically. I mean, it's among the worst politically, and it seems like the politicians are doing everything they can to mess it up. I mean, I almost wonder if there's, like, a resource curse issue, particularly with San Francisco, where, you know, like, there's this thing in And, I mean, this this observable thing with governments that that sometimes you get a resource curse where if there's, like, a lot of oil in the country or something, you end up with with a government that's not very good because people just spend all their time going to war to try and capture it. And I kinda wonder if, you know, San Francisco has been the beneficiary of being Smith to Silicon Valley, this enormous like wealth creation, prosperity, job creation, ecosystem that it had nothing to do with creating. And -- Yeah. Chamath Palihapitiya (00:17:02): I would say 2 things to build on what you're saying. The first is I think that when the economies in an environment are really, really good. All the really, really smart people wanna go into those economies and that leaves generally dumber people to do things like politics. So and that's less true in places that have shittier economies. Jason Calacanis (00:17:25): Yeah. It's fascinating. Speaker 6 (00:17:26): And I Chamath Palihapitiya (00:17:26): and I actually think that that's that's practically true. We may not wanna think it, and it may not may sound a little harsh, but it's true. And, you know, the the way that you reverse it is what Singapore does, which is you make the civil servants the highest paid people in the economy. Right? And you treat them like knowledge workers and you say, wow. Look. I'm gonna pay this person Speaker 1 (00:17:44): $250,000, $300,000 Chamath Palihapitiya (00:17:46): a year. You're shocked at the quality of the person you that's the the first comment I wanna make. The second one though is is that unlike all these other times where I think people have been, you know, sort of prognosticating the doom and gloom of California. The the the thing that's different now is that because it is such a dominant political environment for the Democrats, it's much easier to judge if they actually know what they're doing. And if they are going to do things that are aligned with the sort of like the moral code of the party that elected them, And so, like, let's just talk for example about the fact that we are not going to have police reform of any kind in California, which is where you think would be the 1st state where people got their act together and said, okay. If we really believe that we need to reform police, We can do it in our own backyards, but that legislation is gonna get blocked because Californians have decided that they care more about the alignment to police unions than they do to the right of law into social justice for minorities and blocks. That's crazy. Jason Calacanis (00:18:56): We should be the most progressive as your point on this, Chamath. And the point is to say it explicitly is the politicians are in the pocket of the unions. And because they're in the pocket of police unions and the education unions, we cannot make forward progress even though we're supposed to be the most liberal of all locations. Correct? That's in summary. Chamath Palihapitiya (00:19:15): Yeah. Exactly. The we we we actually if we believe that we have, you know, up and down the ticket, the ability to implement justice, Right? At least justice in the vein of the Democratic Party and what that platform represents. Or, for example, all of the people that were out protesting Okay? During Black Lives Matter during that entire movement, I suspect the overwhelming majority are Democrats slash progressives. or, you know, let's just say the majority or at a minimum of plurality. Okay? But then the idea that then you have a state, the most populous and the richest, filled up and down the ticket with people who are theoretically aligned with those political values, but then when push comes to shove and the legislation hits the floor, it basically gets mothball, to me, is inexcusable and disgusting. Jason Calacanis (00:20:05): Yeah. I mean, look at the housing issue. We we just had a bill That was an incredibly simple bill. I think it was Speaker 1 (00:20:11): 11 Jason Calacanis (00:20:13): yeah. s b 11 20. I don't know if you followed this one, but I've been following it on the Twitter. And It was a very simple piece of legislation. Any single family home lot could have a duplex on it. So you could have 2 homes on a single lot, and they couldn't even pass that in a city where, you know, a firefighter, a teacher, etcetera, cannot live within 90 minutes of where they work. And they couldn't even pass that David Sacks (00:20:37): Well, also, there's there's also a b 5. Right? I mean, Jason has Uber's 3rd or 4th investor. Jason Calacanis (00:20:43): I guess I'm sure David Sacks (00:20:43): you got something to say about that. Right? Well, I say Tommy 4th is a 4th, but Jason Calacanis (00:20:48): I I think 3rd or 4th, but here we go to the VC Braggs controversy. Speaker 6 (00:20:52): So we David Sacks (00:20:53): just Yeah. Could we just can we just pin down exactly which one it is so you could just say you're the 4th investor or something Speaker 6 (00:20:58): like that? Jason Calacanis (00:20:58): It's so much better to say 3rd or 4th, and that was interesting, obviously. But You know, a b a b fives is another one. Look at all the careers in which you can be, David, Zach's a freelancer. And the high the more money you make, the more you get to dictate your schedule. But if you are poor and if you are in an entry level job, the California government will not let you even though 70 percent of drivers for these services want to be freelancers. And the services themselves said they will put into a fund for health care. Like, they literally Uber, you know, Dar is like, hey, we're gonna put money into this lift is gonna put money into it. They still will not let people decide for themselves what shift they want. Speaker 6 (00:21:37): That's right. Jason Calacanis (00:21:37): It makes no sense. I mean and and And it David Friedberg (00:21:41): trickled into, like, journalists too. I mean, there's they said, now journalists, if you write if you if you write 30 article a year for a single outlet, you're technically considered an employee even though you're writing the articles on your own time with your own research and you're getting paid for successful arctic for good articles that are accepted. And then there was this follow on controversy about translators. It's like, well, translators takes 5 minutes to translate an article. So why would 30 articles apply to a translator? And it obviously, when you have that degree of confusion and complexity, something's off. Right? Jason Calacanis (00:22:11): Yeah. And and it feels like virtuous signaling. Yeah. Yeah. David Sacks (00:22:15): Well, I think well, I mean, the the reason why a b 5 happened is it was at the behest of the teamsters. Right? They're trying to unionize the Uber and Lyft drivers, and they can't do it unless they're employees. And so, you know, the the author of the the bill looked Lorena Gonzales who's served in their back pocket, you know, that that's why she put forward the bill. And then the absurdity of it was that, you know, they realized after introducing it that it would ensnare all these other occupations, like the writers and journalists and photographers and real estate brokers. Yeah. Even, like, feel like manicurists and so on. Speaker 6 (00:22:50): Yeah. Right. David Sacks (00:22:50): And so what they've been doing is they've been now modifying the legislation to exclude all of these categories. And in the process, they're kind of laying bare what's really happening here, which is this is all about either basically shutting down or forcing Uber And Lyft to comply with with the will of the teamsters. Jason Calacanis (00:23:11): And it seems like the legislation blinged when Uber and Lyft said, well, we'll just shut the service down. So what were your thoughts on when that happened, Saks? Dude, do you think will happen? Who who will win this a v Five shut down a showdown? David Sacks (00:23:23): Well, the the what In California. They they, yeah, they threatened to basically stop service, and they got stay, I think, from a judge. Yes. And so so a b 5 doesn't go into effect until November when and there's a ballot initiative that they're sponsoring. to get a b 5 overturned. So I think, you know, I don't I I don't start to predict whether it's gonna win or not, but that to me is, like, Whether if if a b 5 were defeated by a ballot in the shipment of November, that'd be a really positive sign for the state of California. David Friedberg (00:23:51): I'll say there was on this call with governor Newsom last week, he did point out that 85 was more of kind of a law of inevitability as a result of that whole dynamics state Supreme Court decision where the, you know, the Supreme Court basically said, look. Here's the criteria that defines an employee versus independent contractor. You know, they get to decide what work they do or what hours or whatever, and there's, like, some set of criteria they said, look, Uber drivers and all these other kind of technically independent contractors don't meet those criteria fully. Therefore, they are employees. And as a result, California Assembly tried to and had to effectively codify what it means to be an employee versus an independent contractor. And I'm not arguing for the case. I'm just saying, what was conveyed by our governor last week on why this ended up coming to bear. Now if they strike it down, there's gonna be some other wall that's gonna pop up because this of the state Supreme the Dynamex decision, and that's kind of you know, something's gonna have to get written down. So, Saks, don't you think it ultimately ends up just being some sort of negotiated point between all of these industry leaders and, you know, the state to kinda figure out, okay, what's everyone gonna compromise on to to get something written down that's law. David Sacks (00:25:01): I mean, possibly. I mean, Dynamax is not, like, constitutional. It's not a constitutional decision, so the legislature can do whatever it wants here. You know? And so if you were going to respond to Dynamics, you don't have to kind of enshrine it. So and I guess there there there was certainly some question whether Dynamex would apply to Uber and Lyft in in in this way. You know? They they they they could have made they could have made their arguments in front of a court. Right? Chamath Palihapitiya (00:25:31): The okay. The the problem is now, and whatever applies to California applies to every state legislature. How are these people supposed to figure this out? I'm sorry. But, like, you know, who who are we entrusting here to go and then all of a sudden understand the nuances of Lyft and Uber and really understand the job that they do versus the translators versus the this person versus the fat person versus the Dynamex decision. again, I think 20 years ago, I kind of would have believed that politicians were generally some of the smartest people, you know, frankly, amongst us. And it it really did attract a certain level of intellectual person who cared about legislating. But you know, now, basically, you just have, like, you know, Jerry Falwell Junior's running around. I mean, these these are they they're all just running around until they get caught on Instagram and get I mean, they're just they're not the smartest people that we're dealing with. And so what was what was Gavin Newsom's answer to that? It's really what I would Speaker 1 (00:26:32): -- David Friedberg (00:26:32): You know, the the the Jerry Football junior point didn't come up too much, but we can we can follow-up. Sure. Jason Calacanis (00:26:39): It does seem to me that if it if they do become full time, this would be a tragedy for the people who are trying to just do 10 to 20 to 30 hours of gig work. Like, what happens to those poor people who wanted to fill in between when they drop their kids off the school and pick them up and just grab a couple hours here and there as a second gig. Like, if this actually does pass in their full time Speaker 1 (00:27:04): -- Chamath Palihapitiya (00:27:04): Honestly, guys. Honestly, you guys are such you're you're you're you're honestly look. It won't affect them. It'll affect the long term profitability in the margins of the companies that have to hire them as full time employees, and they'll have to, like, you know, make a bunch of rules and blah blah blah, but it has huge operational implications, and it has really terrible OpEx implications for our company. But for the person that wants to work 10 hours, Jason, they'll still be able to work 10 hours. So I think I think the point is that, Jason Calacanis (00:27:32): like On a specific shift. Like, they're gonna have to come in at a certain shift time. Chamath Palihapitiya (00:27:36): I think the point is, like, the entire public markets who all of a sudden think that a business looks one way, has to figure out that it's really a cost plus business. And what it really means is you were if you were comfortable with a a 60% or 70 reduction in the market cap of some of these companies, you'd be okay with a b 5. And I think that's where the tension is, where the people that made the law don't care about the market cap because they don't own the stock anyways. And the people that are reacting to a b 5 are the ones that own the stock and are really thinking about the market cap. David Sacks (00:28:07): Well, but the drivers the drivers are obviously on the stock, and they're against it. Chamath Palihapitiya (00:28:11): No. If the drivers own 8 shares, David. I mean, come Speaker 6 (00:28:13): on. No. David Sacks (00:28:13): No. No. That's what I'm saying. These are not shareholders for the most part. But this really does reduce their flexibility to contract for their labor. Chamath Palihapitiya (00:28:23): No. But I think what you're saying will happen, which is that they will create a, you know, ab5prime, which is a modification that's neither this nor what it was. but it seems that the tailwinds are pretty clear, which is that we're moving to a place where these companies have to get built in a very clever way. And even if they are super clever in capturing consumer demand, the unit economics are gonna be pretty shitty. And I just think we have to own that. And and probably what it means more than anything else is it's not a real venture kind of business, and so you may be financing it or building it in a very different way than we used to. David Sacks (00:29:02): Right. But it doesn't have to be that way. What you're saying is is, I think, that this law will have very adverse consequences for their business. Okay. I mean, I grant you that. But it's it's a why is the the state interfering in the relationship between Uber and its drivers in this way when everyone's happy with it. Chamath Palihapitiya (00:29:19): No. But it's not. I think what actually is happening is the state is effectively capturing the excess return of Uber And Lyft. Meaning, I think if you just take a pure unemotional economic view at this, it's like any other market. If there is a huge amount of margin available, and there are not many competitors. What happens is somebody comes in to take the excess margin. Jason Calacanis (00:29:40): And you think that's the government who wants to take it and that unions wanna take it? Chamath Palihapitiya (00:29:44): Absolutely. Yeah. Absolutely. Jason Calacanis (00:29:46): And and and -- Should we let them then dictate what hours people work? The thought exercise that I Chamath Palihapitiya (00:29:51): would ask, guys, if there was in a market 90 different competitors for transportation. Would AB5 have been written past adopted, and my answer to you would be that it would not have been. Jason Calacanis (00:30:07): So Uber and Lyft's and DoorDash's success is what leads to people wanting to get caught and get a slice. Chamath Palihapitiya (00:30:12): The oligopolist model of success where not enough other companies are pulled through. Jason Calacanis (00:30:17): Got it. Well, that gives us a good segue into Speaker 1 (00:30:19): -- Jason Calacanis (00:30:19): By the way, sorry. Chamath Palihapitiya (00:30:20): Last point on this. Yeah. And the funny thing is the people who created the problem are the ones that hated the most, which are the investors. because they pile in the incremental dollars into the winners trying to king make a winner through capital, and now what's happening is their rate of returns are basically getting taken away. And I think that in in a in a weird way, that's also kind of fair. Well, I I would David Sacks (00:30:43): just disagree slightly in the sense that just because this has big distributional consequences, like, basically, who who makes the the surplus doesn't mean it also doesn't have a huge deadweight loss associated with it. And whenever you prohibit people from engaging in the type of economic contracts relationship that they want to engage in, you're reducing surplus. And so I I so I hear what you're saying, but And and I think there is I think this is all about regulatory capture. Right? This is the teamsters trying to capture a big piece of the value of Uber through their politicians in the legislature. So you're right about that. But I also think that we should care about it, not just as Uber Shareholders, but as consumers of the product because it's gonna get worse. Jason Calacanis (00:31:29): Well and also the product's gonna go away in certain jurisdictions. I mean, if Friedberg wants to get an Uber north of the Golden Gate Bridge or in the East Bay somewhere, they're just not gonna have the economics or I gotta use 1 -- -- communities Speaker 1 (00:31:42): -- Jason Calacanis (00:31:43): Yeah. -- and to to even operate the service. So just like Uber Eats and Postmates stopped delivering to Treasure Island, A lot of the drivers were in their local communities at home with Uber turned on and when they or DoorDash and when they got a call, they would leave their house. And that was part of the magic of it is you can just be sitting there, you know, Netflix or hanging out with your kids, and then a good call comes in and then you leave your house. That's why you would have that, like, one minute pause if you ever saw it. you know, in an Uber ride where it's like, why why isn't the car moving? It's because that person's at home. And they were capturing the the one ride every hour in their local, you know, suburban area. But if you force them to be hourly, Uber's gonna say, you know what? It's not worth having an 8 hour shift in, you know, whatever suburb, and and the service will go away, and then guess who's gonna not have service and transportation. Chamath Palihapitiya (00:32:27): I think -- -- people. Speaker 6 (00:32:29): No. Go ahead. Jason Calacanis (00:32:29): Sorry. I was saying it. David Friedberg (00:32:30): It's like Saks's point, like, you know, from a consumer perspective or Chima's point, if you end up with 90 of these service providers, and I'm a consumer, I'm less likely to order a cab or order a a a rideshare service, or I'm less likely to order food for delivery. I don't wanna deal with 50 fucking apps. I don't wanna have to, like, go find the one app that has the contract with the one restaurant, then the natural market dynamics, the the way that the market naturally evolves is I want simplicity as a consumer I want efficiency. That's what makes me wanna use it more. And when you take that away, because you're interfering from a regulatory perspective and how that market operates, the product sucks for me. and -- Yeah. Speaker 1 (00:33:08): -- David Friedberg (00:33:08): the shareholders ultimately suffer. I I think Chamath Palihapitiya (00:33:10): to your point, the way that that would probably get solved is you have people that are higher ordering the consumer behavior that own these relationships that enforce basically a a user experience. For example, Facebook and Google and Apple, say, we're abstracting all these services because there's 90 of you. Google says, I'm gonna put all of you guys on the map view. you know, Yelp says the same thing. And, essentially, what opens what happens is there's some, like, opened way where, essentially, a service provider can turn themselves on and broadcast into a network that says I'm available to do a for b, and it all gets fixed. Now That's a future state, Jason Calacanis (00:33:53): which was the original idea of Uber, by the way, was to make a marketplace like that. And now Uber's talking about doing a franchise. Exactly what you're saying, Shamoff, is let some franchisee take the East Bay and then provide their inventory to the Uber network. Chamath Palihapitiya (00:34:05): I think franchising is a really, really smart business idea, and I think that particularly in transportation and a lot of these services that have this natural dynamic to be local where there there are an infinite sum of many local markets. I think it's it's like a Burger King. It's like a McDonald's. And the the company that moves to a franchising model and then figures it out, I think, will be a huge winner. And that will key in that will be a very asset light really operationally sophisticated, very well run highly profitable business, Jason Calacanis (00:34:41): I think. Let's talk about the public markets. Wait, Jason. Can we just talk Chamath Palihapitiya (00:34:46): about the police brutality thing in California? I just wanna get Jason Calacanis (00:34:48): your chance to Chamath Palihapitiya (00:34:49): take, like, It really it really bothers me that California like, I bet you there's gonna be states that are diverse in its democratic and republican composition and some Republican states that passed comprehensive police reform and California will be one of the laggards. Jason Calacanis (00:35:09): What do you think if you could wave a magic wandramov, what are the 1, 2, and 3 things? Take a minute to think it through. and everybody in the call can. What are the 1, 2, and 3 things you would do to change policing in the United States? I have my own list, but I'm curious what you guys think. And I and I actually put a tweet storm out about my number one thing. David Friedberg (00:35:28): Well, the the Speaker 1 (00:35:28): -- Jason Calacanis (00:35:28): What are the specific tactical things? get tactical first Speaker 6 (00:35:31): step. Chamath Palihapitiya (00:35:31): I mean, the the first one that I've always been a big fan of as I've studied it at least from 10000 feet is ending Qualified Immunity. Jason Calacanis (00:35:38): Explain why and what that is. Chamath Palihapitiya (00:35:40): You know, qualified immunity is essentially that there there there is this immunity that certain individuals have and that they that they're not subject to prosecution. And so, you know, they essentially have a carte blanche to behave in ways that can be Good in some cases, very, very bad in other cases. Gray in other cases, yet there's no adjudication of their behavior. And so you have to allow people with solid, dispassionate, detached judgment to be able to enter and say, hey, listen. You are way out of line here. and there are consequences for it. And people coming in doing those jobs need to understand those consequences versus you have a carte launch to basically do whatever you want. And I think with Jason Calacanis (00:36:23): that -- -- specifically about the well, the shooting involving, I won't say murder right now because I think all the facts are not in. But Jacob Blake was shot in the back. He was obviously not listening to the police. the police then followed True's car. There is a discussion of if there was a knife on the floorboard and point blank. They shot him in the back multiple times. And I've heard both sides of this. You know, this person is not listening to the police. This person is going into the car. They're reaching potentially for a weapon. and the cops had no choice. It seemed to me that, you know, the training of a police officer might actually be that that was a legitimate tuning. But that means maybe they have to rethink policing because you could have easily taken that person down with it even the most modest of a choke hold or a tackle And when we see that, it feels like that's the raw shock test right there of, like, how you look at shootings in police. When you saw that shooting, I take it Tremov? of Jada Blake. And and Speaker 1 (00:37:19): -- Chamath Palihapitiya (00:37:20): I I saw it, and I I just like I I I can't see these anymore. They they send me off the rails for days, but, yeah, I did see it. And it's -- Yeah. Jason Calacanis (00:37:28): And so, I mean, when you when you look at something like that, that's clearly training has to change because I I I believe that based on police training and qualified immunity, this is going to be considered even though it's shocking to see it. I think it's gonna be considered you know, an allowed shooting or Speaker 1 (00:37:47): -- Jason Calacanis (00:37:47): Yeah. -- and it's there's not gonna the person's not gonna be prosecuted because the person was clearly not listening, and there was a knife on the floor and he was going for it. you know, it seems to me like we really need to change the actual training. The average is 6 months of training. So I think that's one of the top things that has to change is that these these police officers have to be trained not to fire first, but to use other tactics. Chamath Palihapitiya (00:38:09): So for me, the first one is that The second one for me, which I'm a really big fan of is that there needs to be a new way to actually intercept 911 calls and instead of deploying police officers, we have a separate branch of people that we, you know, massively pay and train that are effectively you know, social workers plus plus. Jason Calacanis (00:38:30): And Negotiators. Yeah. Chamath Palihapitiya (00:38:31): And and they should be deployed in all kinds of situations, where I think that what what people want is a de escalation, and I think that sometimes The words de escalation and police don't really sync up. And in most a lot of people's minds, they think of escalation So -- Yep. Speaker 1 (00:38:51): -- Chamath Palihapitiya (00:38:51): people who are trained to deescalate, I think and so for example, like, you know, all of the mental health checks, all of the mental health issues, could probably be deal Jason Calacanis (00:39:01): with folks Chamath Palihapitiya (00:39:02): like this. Jason Calacanis (00:39:03): Domestic disturbances would probably go into that category? Chamath Palihapitiya (00:39:05): The the third one is I would very much rationalize drug use just because I think the amount of low level offenses and arrests around drug use is antiquated for people's general views on drugs. and I think that it needs to sort of correlate to how society views it. And then, you know, the the the last two that I would give you is that there's a concept of no knock warrants That's how Brianna Taylor was killed. Jason Calacanis (00:39:31): Insane. Insane. Chamath Palihapitiya (00:39:32): It's kind of really scary. The idea that we could all be sitting in our houses right now as we are. And literally, the police can just charge in. Jason Calacanis (00:39:40): It's a little bit -- Totally unnecessarily. I mean, she was being for for some, like, low level drug idea, they're gonna knock the doors in. And, of the person's gonna try to protect themselves. That's but I mean, how's Saks? What what are your David Sacks (00:39:52): thoughts on? They knocked the doors in the end. They were plain clothes wearing police officers. So people are coming and and and they did it at, like, midnight when she was asleep. So, yeah, people busing to her house at midnight screaming, making noise, and not dressed as cops. That's that's a Jason Calacanis (00:40:08): crazy situation. Yeah. Yeah. Chamath Palihapitiya (00:40:10): And then the last one I would give you is militarization of police a lot of these ideas, by the way, are Justin Amush's ideas. I I've retweeted and I followed, but he was the one that put me onto these things. But, you know, like, you have all this excess military equipment in the army that gets basically passed through and now directly sold into police departments. Jason Calacanis (00:40:27): Especially post 911. We we basically militarize So those are my Speaker 1 (00:40:30): -- Jason Calacanis (00:40:31): What are what are your ideas around policing and and how we should change it? You've heard from us. David Sacks (00:40:35): I I I don't have more detailed ideas than than Shamoff. I think he's given some good ones for sure. I mean, I think we definitely need better training and I think better oversight over the use of force. the the the body cam idea, Jason, I've seen you you tweet about. I think that's pretty interesting too. I think you're Jason Calacanis (00:40:53): right. -- explain that. for a minute. The the body cam idea I had was I asked, does anybody know and, you know, does Black Live Matter or another organization track which police departments, because we could get a list of every police department that exists in some database somewhere. Do we actually know what percentage actually have body and what model they use and what percentage are working because one of the things that I think has happened this year is, you know, the live streaming and the the live video and the number of smartphones out there has resulted in us being able to see what Black and brown people have been telling us for decades, which is they're murdered by cops. And now we get to see it, and, you know, when you see George Floyd get murdered, it's it's fairly obvious that that's what happened. We don't have a video and they have the video of Rihanna Taylor getting murdered. So that's from a cop webcam I'm sorry, body cam. So I was thinking we should start with that as a basic, which is every single cop car should have a 360 a gamma in every cop. It should be a federal mandate, and I don't exactly know how federal mandates were, Zach. But don't you think there should be a federal mandate for just cameras and car cameras? David Sacks (00:41:55): I think I think it's a good idea. I think the use of cameras is a good idea. I mean, maybe not recording the police officers when they're sitting in their car. But every time there's, like, a Speaker 1 (00:42:04): -- Speaker 6 (00:42:05): A call. Speaker 1 (00:42:05): -- David Sacks (00:42:05): you know, like yeah. They pull somebody over. sort of Speaker 1 (00:42:08): -- David Sacks (00:42:08): Yeah. -- you know, like, 4th Amendment type search and seizure seizure type situation. Yeah. I think it would make sense to have that on video. Why not? Jason Calacanis (00:42:15): Yeah. And, I mean, I think you gotta think every police will behave better. Go ahead, Frebert. David Friedberg (00:42:20): There was a case the other day, young, guy, I think he was nineteen years old, was shot on DC named Dion Kay. I don't know if any of you guys watched the body cam footage. Jason Calacanis (00:42:32): No. And David Friedberg (00:42:32): so he was a nineteen year old black man who was shot. died. But in the body cam footage, you can see that he pulls out this gun and throws it. And when he pulls out the gun and flings his hand around, he's got the gun in his hand. That's when the cop shot him. And so there was about a 100 protesters that showed up, but it's largely become a non story as a result of the facts associated with the body cam footage. But I just wanna propose something else. It's a little bit more radical. Maybe my libertarian ideals kinda crossed with my socialist ideals in in forming this this concept, but perhaps Speaker 1 (00:43:03): -- Jason Calacanis (00:43:03): You're a socialist? David Friedberg (00:43:05): No. Yeah. I don't know. I've never been accused of that. But -- No. Speaker 1 (00:43:08): -- Jason Calacanis (00:43:08): if we David Friedberg (00:43:10): if we trace back, you know, the the systems are are really chaotic. Everything you're talking about is layers and layers of bureaucracy and ideas and shit we should do to manage the problem. But there is kind of one common, you know, butterfly effect butterflies at the source of all of a lot of what we're talking about, which is guns. If there weren't any guns in the United States, I would not feel threatened as a police officer. I would never have any reason to feel threatened and I would never have any reason to pull a gun. The reason I always make to pull a gun as a police officer is my life is threatened. And in the absence of firearms, I have no right to pull a gun. And that's the case in, like, the UK, for example, where there are, like, no police officer shootings of of civilians because they are never under threat of being killed by a gun. So there's a simple answer, which is get rid of the guns, but, you know, a little too controversial and, obviously, many layers to to that argument. especially from kind of both sides. But I I would say, you know, much much of what's gonna go on now and in the future, it's just chaos theory. be building more layers of complexity. It's more entropy. It's more kind of associated complexity to try and resolve the underlying problem of all of this, which is that we've got guns on the streets. We've got guns people's hands. And therefore, you know, there's always this threat against every individual that their life might be taken by another. David Sacks (00:44:29): let me make a prediction right now. There's not gonna be any new gun control legislation for generation because of the the looting and writing that's going on, gun sales are an all time high. I mean, every single gun store that Speaker 1 (00:44:43): -- Jason Calacanis (00:44:43): Ammunition rolled You David Sacks (00:44:44): can't you can't get guns. You can't get ammo. And there are more first time gun buyers in the United States for the last several months than there's ever been. I mean, the the ranks of the NRA must just be swelling right now. And so so this idea that you're gonna get gun reform, I don't think it's gonna happen. people aren't gonna support it. And, you know, I think, you know, use the word, I think, idealistic. I mean, I I I think it's, like, a little bit naive to assume that you're gonna be able to get rid of all the guns in the hands of bad actors. There are a lot of people in this country who feel the need to have a gun to protect themselves. And, you know, the cops can't always get there quickly enough. And a lot of people feel the need to to have that for self defense. Jason Calacanis (00:45:29): I also think the minimum amount of training for a police officer should not be 6 months. I think they have to re I mean, if we really want to have the society move forward and you know, to solve our issue of race, which is, you know, like the original citizen of America. We're we're gonna really need to start thinking about making you know, police go back to school for 18 months, 12 months and rethink how we how we address the situation because it's it's just tragically unfair that one group of people's children has to worry when they're driving in a car. And, you know, other people on this call don't have to worry. Right? And you know, that is just crazy. Let let's take a hard shift to the economy and then we'll go into the election. What do you think, Tremont, you've been talking a little bit about the economy and and the stock market ripping again, and we seem to have hit a pause But we did have, like, a massive rip with Tesla and Amazon Tesla and Apple, I guess, doing a stock split. And we hit all time records. Why are we hitting all time records to mouth? Chamath Palihapitiya (00:46:31): We have the most important thing that's happened, I think, in economics in the last 10 years. The Federal Reserve Jerome Powell gave this landmark speech, and he basically said we are going to keep rates at 0 for the next half decade. basically. And Speaker 1 (00:46:46): -- 5 Jason Calacanis (00:46:47): years is at 0. Yeah. Chamath Palihapitiya (00:46:48): I mean, quite honestly, it's it could be a decade, but they're gonna let inflation run Before they basically match it with rates, there's no path to any near term inflation of any kind whatsoever. And so, Jason, my honest perspective is, you know, you're basically going to get paid to be long equities because your risk free rate is 0 and will soon be negative. And what are you supposed to do if you're an asset manager? What are you supposed to do with, you know, your take California back to Houston, California? Let's just say you're Calpers. You're the California pension system and you have 100 of Speaker 1 (00:47:28): 1,000,000,000 Chamath Palihapitiya (00:47:28): of dollars, then you need to generate 5 or 6 percent a year to make sure that your pension isn't insolvent, and the government is paying you Speaker 1 (00:47:38): 0. Jason Calacanis (00:47:39): k. So that eliminates that option. No treasury for you. Chamath Palihapitiya (00:47:42): Your long equities. And when everybody is in that situation, you're overwhelmingly long equities. And, you know, the you cannot fight the Fed, and so you cannot wait them out. It's not like you can say, oh, don't worry. They're gonna change your mind. they will change their mind, but in reaction to market conditions that are out of your control. So all of these opportunities, in my opinion, are generally buying opportunities and I'm generally bullish. I'm more bullish now than I was before. Jason Calacanis (00:48:12): So you can't put your money into treasuries you can't put it into a savings account, obviously. You can't put it you you it doesn't seem like real estate or commercial real estate is a great bet right now. So your options are private companies or public companies, correct, Jema? Chamath Palihapitiya (00:48:29): I think it really is just public companies. And I don't even think it's private companies. So meaning where wherever capital is constrained, the returns again, these excess returns are getting eaten up. And so the the most unimpeded market for gains right now is the public markets. I mean, like, no offense, but I think that if you were a very good stock picker in the public You're generating better returns than Sequoia, benchmark, name your best venture fund. You know, I see all these people spouting off on Twitter about how good they are in the early stage markets. It's all kind of small dollars and not that meaningful. Jason Calacanis (00:49:05): You know, I'm on the call right Shavaca. I'm like, I'm on the call. I mean, you're literally talking to the guy's batting off about hitting home runs. Saks, what are your thoughts on this? Like, Private markets, obviously, is the op where we operate, both David's, Friedberg and Sachs. And you're seeing great deals, I think. I'm I've invested in twice as many companies during the pandemic as they did before in the same 6 month period. What are you seeing in the private markets? And where do you think, what is your take on best CCs, public markets? Zachary. David Sacks (00:49:33): Yeah. We we saw some of the best deals that we've seen during COVID. And, you know, I'm I'm very bullish about the state of entrepreneurship. in the US. I mean, just the the number of interesting companies doing interesting things. And the the infrastructure that makes it so easy for founders to get started and create new companies. It's so much easier now to create a to create a company that it was 10 years or 20 years ago. And, of course, it's easy to point to all the ones that don't work or that don't seem like good ideas. But but there's so many more experiments that are happening, and I think it's gonna I I'm, you know, I'm very bullish about that part of the the American economy. Jason Calacanis (00:50:11): And, Friedberg, what are your thoughts on private markets? And, obviously, you're building private companies. You have capital to build them I take it given your track record? David Friedberg (00:50:20): I spend most of my time accepting rejections from my very close investor friends in my very project, so I wouldn't say that that ever becomes true. I'll tell you the truth. Still selling every day. Dial in for dollars. But No. There are certainly more investors, more capital, more risk taking, more kind of valuation extending than I think has it was the case pre COVID. I think Jamat's point is right though. There is so much more liquidity available through access to retail and international market participants. In in a public setting, then there is in a private setting it if because of this liquidity premium and the easy access to to putting capital in, it's just extraordinary how much as I've watched close friends and companies and companies I've invested in, I'm sure you guys have done the same, transition from private to public, the valuation jump is extraordinary. like, on on on a metrics basis. Right? So what whatever the metric might be, you get public. There is this flurry of of market participation. As a result, it drives up. There's there's a multiple expression. Jason Calacanis (00:51:26): Wait. I thought Speaker 1 (00:51:27): -- Chamath Palihapitiya (00:51:27): You're a beast. Sorry. Can I just say something? That's such a such an important smart thing that Friedberg said. So Jason, for example, like, all of us were all still in the private markets. And I'm not trying to take away from the private markets, but what David said is so important. If you used to look at a SaaS deal, you'd price that SaaS deal 10 times ARR. Right? Then there's a little bit of inflation. You know, the rates go up. The prices that people pay go up. Now all of a sudden, we're paying 12 times, 15 times. Now it's 20 times if you're growing a 100% rate every year. So what's happened? the market has become more efficient and the excess return is getting eaten up. And so you're like, okay. Well, that's still really good and you wait 4, 5, 6 years and you think you're gonna get paid The crazy thing is, like, once that company transitions to the public markets, I mean, all of a sudden, if you actually turn the investor base over and you actually create a float so that public market guys can buy it, they'll pay 30 times. David Friedberg (00:52:23): That's right. Speaker 1 (00:52:23): 35 Chamath Palihapitiya (00:52:23): times, forty times. So there's a massive multiple expansion. So companies should be going public sooner. David Friedberg (00:52:29): If you think about this, like, if I'm trying to raise money for one of my companies, I'm gonna call on my 10, 20, 30 friends that I know that are investors in private markets and say, hey, guys. Do you wanna look at this company? And maybe I'll get 2 or 3 interested parties, and maybe we'll kind of on what a fair valuation would be. If I could take that same company and instantly make it available to a million investors, and all I need to do, by the way, is raise $10,000,000. All I need is some small number of them to write a couple $100 check, and I'm able to fill that that round up. The the valuation as a result of the liquidity available in that market is so much higher because everyone's gonna there's gonna be much more participation in bidding. And so, you know, what I think Chamath is tapped into with the SPAP vehicle and what Robin Hood is realizing. And and and I don't think that we all talk about this enough, but there's this massive, massive, massive market of international investors. of small of international retail investors who are now rushing into US Equities. Jason Calacanis (00:53:25): Friedberg, didn't we see that in the ICO craze as well, where you you I think if we took anything from the ICO craze, it was the global appetite for risk and the dot com boom before that. And I think we have to give bestie a lot of credit here for leading the SPAC movement. I mean, what's your take on everybody copying you down the SPAC path to mop at this point? I had desktop metals an early angel investment that just spacked And then I think Speaker 1 (00:53:49): -- Chamath Palihapitiya (00:53:49): I let I co led the place. Jason Calacanis (00:53:50): Thank you. Yeah. And then they told me that. Thank you for the markup. And I've been hearing like, I'd I'm get if I'm getting inbound as an angel investor from I literally got a cold email from some high profile people and they're like, hey. Can you do you have anything for us to back. I mean, this is, like, the 3rd or 4th time. People are coming down to my dipshit level of angel investing saying, can you introduce us to the calm guys? Can you introduce us to Robinhood? I'm like, I think you can go direct to them. But what is your take on how many specs have been created since you like, literally single handedly restarted the spackle Mitch. Chamath Palihapitiya (00:54:20): I think that's because you Jason Calacanis (00:54:21): don't think you've ever gone a record about this. Chamath Palihapitiya (00:54:24): I'm really proud of what we did when we created this thing 2 years ago. I said I wanna basically create a new way of doing IPOs. I called it IPO 2.0. I reserved IPO a through z on the NYSE. I I hope to fulfill that, and I think I will. But taking a step back for a second, in the year 2000, there were 8000 public companies in America on the American Stock Exchanges. And in the year 2020, there are 4000. So we've shrunk in half the number of public companies while at the same time We've, you know, 10 x, the amount of comp the amount of capital and the number of people. So we don't have a large enough surface area in the public markets. That's why companies are better off going public because they're going to have a much more receptive audience of people that are dying to own growth of any kind. Jason Calacanis (00:55:18): What's the earliest and the median that people should go public? Chamath Palihapitiya (00:55:21): Well, so so here's the thing. So, like, if you're, like, one of 30 companies in a venture portfolio that's growing at 50 plus percent, you're 1 of 30. But when you go public, you're 1 of 1. You know, when you're growing 50, 60%, you're you become very unique all of a sudden. You're a sort of a Speaker 1 (00:55:39): 1% Chamath Palihapitiya (00:55:39): kind of a company. You're an outlier, and so you get treated you know, incredibly well. So that's the backdrop. I think a company should be going public around year 5, year 6. What revenue footprint? About 50,000,000. You know? At 50,000,000 and what they're doubling, I think that they should be going up. And you know, it allows them to build capital slowly. It allows them to basically contain control. It minimizes dilution. I think it's a really powerful model. And then on on the number of specs, what I would say is I think it's really good that the market is getting diversified. I think what's gonna happen is, like, the the thing with specs is it's it's gonna be no different than in some ways the banks that preceded us, which there's going to be a distribution. You can go to Goldman Sachs, and that'll mean some one thing. You can go to Merrill Lynch or b of a or UBS, or Jefferies. It'll mean other things. You can go to Allen And Company. It'll mean yet another different set of things, and I'm sure there's gonna be a, you know, an an organization that is all about cost. Some is gonna be all about relationships. Some so I just think that's gonna be the distribution. My personal perspective, it's probably us and maybe 1 or 2 other people who really dominate the space. And I'll and I'll tell you the only reason why I say that. I think it's going to be really important when these people try to get these facts done, what they're gonna realize is it's really hard, and it's hard for a couple reasons. Number 1 is you have to marry operational insight, and public market sophistication. And the founder will get really smart about being able to figure out whether this person is just a financial arbitrager or if the person has enough operational experience to deeply understand the business, why you have to translate it to the public markets well. That's one huge thing that I think that people will will start to will start to hone in on. Anyways, there's a bunch of other things. But Jason Calacanis (00:57:33): Are you now competing David Friedberg (00:57:34): with people for this -- -- to Saks to Saks agree with the $50,000,000 number? Jason Calacanis (00:57:38): Yeah. Sure. David Sacks (00:57:39): I'm I'm cool with that. know, I invest well before that. So I'd be I'd be happy for Speaker 1 (00:57:43): -- David Friedberg (00:57:43): You probably have a bigger portfolio of $50,000,000 investments. Yeah. David Sacks (00:57:47): It is. It's great for for for me and Jason. And I, you know, I I think Chamath deserves a ton of credit on on the sole spec thing. It is I don't know if all the listeners are aware of this, but the spec things become a huge wave There's a ton of people creating them. Kevin Hartz is a new one. Reed Hoffman as a new one. They're you know, the East Coast, hedge fund guys. Pincus and and then the East Coast hedge funds, like, Bill Ackman or whoever, they're all creating them. So Tremata has really started a wave here, and I think the appeal of a spat to a founder. I'll put in a plug of why I think it's a good idea for a founder to consider this is because you essentially what what founders are used to is doing, you know, private rounds. Right? You agree on a on an amount raise and evaluation and it's a percent dilution, and you're done. That's it. and it it's simple. Right? And and when you IPO and need to raise money, it's not like that. You have to then work with an investment bank. They'll put together a book. You do, like, a roadshow. do this whole dog and pony thing. You don't know how much money you're gonna get at the end of that process or what the valuation's gonna be. And then on top of that, we know statistically, Bill Girley published all the stats, the investment banks are gonna rip you off. So, you know, so the what a SPAC does is it prices like a late stage private round. You just agree with the spec motor on evaluation and amount raised. And then on top of it, you get kind of a direct listing along with it. Now all of a sudden, you start trading as a public company. And so a SPAC is like a combination direct listing plus private round. And I think that's gonna be appealing to a lot of founders as they start to discover this more Jason Calacanis (00:59:22): and more. Sacks in a way you're saying it's gonna feel more like doing a series d than it does a road show. And -- Yeah. Speaker 1 (00:59:27): -- Jason Calacanis (00:59:27): I think that comfort level for somebody like Robinhood or Com or DataStax or Thumbtack or any of these companies that you and Speaker 6 (00:59:35): I are. Chamath Palihapitiya (00:59:35): That's a pretty company in your portfolio. Jason Calacanis (00:59:37): I'm just listen. I got Speaker 1 (00:59:39): 2 Jason Calacanis (00:59:40): IPOs in 2 years. This is I think this is gonna be the new thing for early stage investors is we're not gonna count unicorns anymore. We're gonna count specs. We're gonna count public listings. Right? And And I think that's probably better. Chamath Palihapitiya (00:59:52): By the way, the other the other thing that I'll say to founders is one is I think you need to you need to think about, do these people have the combination of operational and financial acumen in the public markets and investing experience in the public markets and the operational credibility to describe the business. And I think you can trade off one for the other if one is so deep, meaning if Warren Buffett was doing his back, you'd say, well, he has no operational experience, but he's so credible in the public markets, then, you know, that's all that matters. but you need to be super, super deep in 1 or have a really brilliant and thoughtful level of credibility in the Publix, meaning an early stage investor who isn't married to somebody who can basically say, I know how hedge funds work. I've made them money, and I'm gonna make them more money and mutual funds, etcetera, is troublesome. The second thing is for founders, you have to really make sure you understand what is in it for the person that's doing this back. I mean, in every deal, I write a minimum of a $100,000,000 personally. And that's a lot. And so I -- Let's get in the game. Speaker 1 (01:00:58): -- Chamath Palihapitiya (01:00:58): I feel very much at risk, and so I take a lot of time to make sure these things go well. And then the third is that for the spec person, what I'll tell them is they are gonna find that there's a bunch of land mines And I'm not gonna, you know, say it upfront because I think it'll be fun for them to find out themselves along the way. But they're but these things are hard. The first one took me two and a half years. They're hard. They're hard. Jason Calacanis (01:01:22): They're hard. Hey. Let's swing to the election now and talk a little bit about the flip flopping we're all doing because we've gone from Trump's alok to Trump's not alok, you know, and we've had many different theories But here we are. Are we 60 days out now? How many days of the election? Is it exactly 60? And then 1st debate on September 29th, Chamath Palihapitiya (01:01:44): Yeah. Jason Calacanis (01:01:45): Yeah. So we're we're we're at the 55 or 56 days mark to the taping of this. And the first debate, I think, is September 30th. So we're we're we're about 3 weeks away from Joe Biden and Trump going at it. What's everybody's handicapping? Now the the mark the market seem to be saying even money or a slight edge to Joe Biden? What are our thoughts? Chamath Palihapitiya (01:02:08): I think that I think Biden's looked the crispest he's looked. Speaker 6 (01:02:15): Okay. Chamath Palihapitiya (01:02:15): And so Speaker 1 (01:02:15): -- Jason Calacanis (01:02:16): Is that actually encouraging? Or not encouraging. Chamath Palihapitiya (01:02:19): I I think it really is because I think he's a really good like I said, he doesn't have to be better than Donald Trump. He just has to not be Donald Trump. for a lot of people. And so, you know, he becomes a very good do no harm alternative because, you know, to support Donald Trump, you have to have a view. to support Joe Biden, you can have no view. Right. And I think that that, in general, that's a that's a demand maximizing thing to do. So I think he's relatively well positioned. It's the crispest I've ever seen him on television. There's less stuttering. There's less not stuttering, but, like, less, like, mental gaps. David Friedberg (01:02:57): Yeah. Chamath Palihapitiya (01:02:57): You know, the the -- What Speaker 6 (01:02:59): do you Jason Calacanis (01:02:59): think of the VP choice, Kamala? make safe. David Sacks (01:03:03): So I I I agree with Shamalff that that was kind of the the the take or or theory on Biden, like, a month or 2 ago is that he could just run a protest vote against Trump. And and and and that's why the basement strategy appeared to make sense, is that he would say nothing do thing. Go nowhere and just and just try to run as a protest vote against Trump. And I think that was working a couple of months ago when you know, a, COVID seemed a lot worse, b, the economy seemed a lot worse. We're now down to about 8% unemployment we were at. 13 or Speaker 1 (01:03:36): 14%. David Sacks (01:03:38): And c, you know, Trump had seemed to kinda mishandle the the reaction to to Floyd. He seemed to be inciting it. But now we have this this issue of the the looting and violence and predominantly democrat run cities. And I think, you know, Trump has sort of found his sales pitch now in opposing the the basically, the the the radical left and these these mobs and and protests that seem to be you know, causing tremendous unrest and looting and violence in our cities. And I think it's I think it's a in combination with the improving conditions of the economy and COVID, I think it's a winning pitch for him unless Biden finds a more compelling way of responding. which he has not to date. I think you know, somebody like Bill Clinton would know exactly how to respond. I think he would you know, and that's -- Just Jason Calacanis (01:04:32): better instincts. Yeah. Speaker 6 (01:04:33): Well, I David Sacks (01:04:34): think, you know, he would pull a sister soldier to use a term from the the, you know, political dictionary where, you know, maybe he would take this crazy new book in defensive looting and figure out, you know, and give a speech denouncing that. I mean, he would find somebody to his left who represents you know, a fringe of the the left that you presumably doesn't support and find a way to dissing some self or denounce them. Jason Calacanis (01:04:55): Like, it doesn't, maybe. David Sacks (01:04:57): like Antifa, like, you know, the the anyone you know, the any of the left -- Looting in Portland. Looting in Portland. I think there's a lot of Jason Calacanis (01:05:04): Target shortly. Nobody wants to support that. And so Biden comes out and says, hey. We don't support that, and it gives him that law and order vote. David Sacks (01:05:11): But and he hasn't he hasn't really done that. I mean so of my favorite political pundits right now are Andrew Sullivan and Matt Taibbi, who are, you know, very they're they're strong supporters of Biden. They're very anti Trump, but they think he's failing on sort of this these issues because he's not he's not figuring out the right way to to denounce what's happening? Speaker 6 (01:05:33): I Jason Calacanis (01:05:34): think a lot of this has to do with when kids go back to school and the death rate of COVID. And as I was tweeting and I got I got a lot of people angry at me about tweeting this, but I said, I think this is a setup for Trump to go into the first debate with, you know, well under, you know, 6, 700 deaths a day. And then the next debate in October with, you know, call it, 3 or 400 deaths a day. And, basically, declare that he did saw COVID because we've been trending down for 5 weeks now, and he started wearing a mask 6 weeks ago, 7 weeks ago, July 11th was first day who wore a mask. A cynic would say he almost timed mask wearing, which is obviously what we talked about in the first episode or 2 of all in podcast. with our discussion about why is wearing a mask so difficult for him, and it seems like he slow played it. He he, you know, he set he's he's slow played He hit a set on the turn and here he is like he wore the mask on July 11th. He wore it 4 months late. But guess what? As Shamalff was saying, everybody wears a mask and every and and these things go down in Italy, we're we're gonna come into the first debate. What if it's 400 deaths a day? And then the second debate, it's 200 deaths a day. And then our kids are back in school in October. which is seems to be the case. Right? All the schools are saying, you know, be ready for October to open. And what if he actually does have a vaccine that has somewhat credibility or any of these high speed testing machines come on. I mean, this could be a setup of all setups for him to just, you know, drop the microphone. Hey. Look. The economy is at an all time high, and COVID debts are at an all time low. David Sacks (01:07:04): Well, I mean, yeah, I think I that seems to be Speaker 1 (01:07:06): -- -- Jason Calacanis (01:07:06): on fire. David Sacks (01:07:07): That to me seems like the the trajectory. I mean, we spent a long time on this pod talking about what a disaster San Francisco and California are. Those are one party states and cities. And I think, you know, we're not just selecting a person as president. We're also electing a party in a movement and a governing philosophy. And however much Trump is, you know, disliked, by a lot of people. I think a lot of people are looking at, you know I I think they they they may like Joe Biden personally and and think that he personally is safe, but they don't like the movement and the party and the governing philosophy, that is now associated with Biden. Jason Calacanis (01:07:44): So if you had to put your entire net worth on it, Chamath, Biden or Trump? Biden. I think Biden's good. Sachs, entire net worth, David Sacks (01:07:56): I I I would I predict Trump at the moment. Wait. Jason Calacanis (01:08:00): Wait. You predict, but you but you wouldn't put your entire net worth on. If you had to, I could see your hesitation. You want Trump Trump to win. But you would you wouldn't put you wouldn't put your dinette worth on him. David Sacks (01:08:09): Oh, yeah. Of course not. Jason Calacanis (01:08:11): You would put it David Sacks (01:08:11): on -- This is this is about a 55% sort of thing. Jason Calacanis (01:08:16): So Biden has a 55% chance of winning. So even though you're voting for Trump, you are not going you would not put your fortune on Biden. David Sacks (01:08:24): You you asked me who I predict. Right now, I'm predicting Trump. You'll remember on the last part I predicted Biden, so it moves depending on what I see happening. Jason Calacanis (01:08:32): Yeah. And I I'm gonna go with buy -- Yeah. Chamath Palihapitiya (01:08:34): Buddy, Jason. -- knows. Jason, I think I think the better way to get a better answer is not to force somebody to put their entire network on the line. It's just Jason Calacanis (01:08:40): to say, Chamath Palihapitiya (01:08:40): who do you think is gonna win? Speaker 6 (01:08:42): Who do Jason Calacanis (01:08:42): you think is gonna win, Saks? David Sacks (01:08:45): How many times do I have to answer this question? Jason Calacanis (01:08:47): You think Trump's gonna win? You actually David Sacks (01:08:49): Yes. Yes. I do, actually. Jason Calacanis (01:08:51): Really? That's fascinating. And it's pretty recent there. Speaker 1 (01:08:54): -- David Sacks (01:08:54): is the first time I've Chamath Palihapitiya (01:08:55): said this. Speaker 6 (01:08:56): I'm here. David Friedberg (01:08:56): I think it's I think it's the same as it was last time for me and has been most of this process is it's a coin flip and it still is a coin flip and there's a lot of noise between here 60 days from here. Jason Calacanis (01:09:09): Alright. Well, then if we if we do think it's a coin flip, Friedberg, what happens if Trump is elected against? Some people think this is all institutions are broken forever. America's broken forever. hyperbolic Speaker 1 (01:09:19): -- Jason Calacanis (01:09:19): That that's the David Friedberg (01:09:20): that's the perception on both sides. Right? So the perception and the motivation on both sides is democracy is crumbling. and the resultant action is to elect the the the person you think will restore democracy. The reality is both candidates to some degree might move us a little bit further away from democracy. And some might argue that Trump makes us feel a little bit more, like, a autocratic dictatorial regime, and some might say that Biden makes us feel a little bit more like an AOC socialist regime. It's not all the way as if we had Bernie in the seat, but You know, the the reaction isn't necessarily. Let's go back to the middle. Let's become a centrist government. Let's let's have good political debate and And a good by the way, the one show I've been watching a lot of lately just to nostalgia to to Shamal's tweet earlier today and make me feel better about life is West Wing. where, you know, Jed Bartlett is the president, and he wants a great national debate. We all wanna have this intellectual exercise of coming to the truth and coming to the best decision for the nation. And I don't think anyone feels like that's the case today, nor will that be the case tomorrow with either of these guys in the seat. And I think the the point then becomes, well, who's gonna better align with my values. And, you know, it it is really a crumbling democracy kind of motivation I would guess if you were to survey people as to how they're making their choice. Jason Calacanis (01:10:35): If Trump is elected Friedberg, do you feel it is an acute, you know, existential crisis for America as a democracy? You personally Speaker 1 (01:10:42): -- David Friedberg (01:10:43): I I don't I don't think democracies and with a bang. I think they end with a whimper. And I think that's been the case historically and, you know, no democracy has has lasted. our our our democracy in the US has has lasted longer than many. But democracies I'll just tell you my my point of view on this. The democracies ultimately enable freedom of operation in free markets that that result in in greater progress than any other governing system. The problem with progress is that progress is asymmetric. You have some people who progress at a much greater rate than than than most. And and it is that delta that motivates the end of that system ultimately. while everyone in the United States or the average and even the bottom quartile of the population in the US is better off than they were 50 years ago in of income and health care and shelter and access to food and access to all these things, they're the top 1% of the US is further ahead than the median. And it is that delta that motivates the end of democracy, and it is that is which is then perceived to be unfair about this governing system. And that ultimately results in fascism or socialism. And then fascism results, socialism ultimately restricts anyone from progression, and that's why fascism and socialism ultimately end up in in in some sort of you know, democratic outcome. And it is a cycle, and, you know, we're kind of in this, you know, awkward phase of trying to figure out what the hell we're gonna be next. And I don't think that awkward phase is realized in the next presidential term, but it is gonna be realized in our lifetime. Chamath Palihapitiya (01:12:12): I think that that's a really good point. I completely agree with that. Go Biden. Jason Calacanis (01:12:19): Go for. Please win. Okay. Wrapping up here. Media selections of your bestie Summer, bestie Book, bestie TV show, bestie Binge. What do you got? You got a bestie book recommendation, Sachs. You got a bestie Speaker 1 (01:12:32): -- David Sacks (01:12:33): Yeah. My my my recommendation is gonna be a David Friedberg (01:12:34): little different, but David Sacks (01:12:35): I've been I've been subscribing to a lot of newsletters on Sub Stack. Jason Calacanis (01:12:39): Yeah. David Sacks (01:12:39): And I found that to be pretty interesting. And I I mentioned 2 of my favorite writers, especially around you know, politics election time, Andrew Sullivan, and Matt Taibbi. So check that out. Jason Calacanis (01:12:51): Your Overton Windows open enough to get to those 2. who are super polarized, and they actually kicked Andrew Sullivan out of New York Magazine for making other writers at New York Magazine feel unsafe with his words. David Sacks (01:13:04): All all my favorite writers seem to have been canceled at some previous publication, and now they've set themselves up on substax. So Speaker 1 (01:13:10): -- Jason Calacanis (01:13:10): It is amazing how the overton window has closed. That's you have a bestie binge, a bestie book, or a bestie newsletter, or a bestie podcast you wanna share with the besties? Chamath Palihapitiya (01:13:19): I would give a shout out to a book called Americana, which is about it's a history of American Capitalism, told in chapters for every call it, like, you know, 5 to 7 or 10 year or a decade period. It's really interesting for people into business. It's written by a guy named Bo Srinivasan. Jason Calacanis (01:13:40): Okay. Besty Friedberg. What do you got? Best a queen of Kenois? David Friedberg (01:13:44): I took a week off and hung out at the beach, and I've been to watch the godfather Speaker 1 (01:13:49): 1, 2, David Friedberg (01:13:50): and 3 as I've done several times in my past. I also watched one of my favorite top 5 films of all time. There will be blood by politicians and Jason Calacanis (01:13:58): such a good film. That opening scene is just crazy. David Friedberg (01:14:01): The opening scene Speaker 1 (01:14:02): -- David Friedberg (01:14:02): It's just such a beautiful film. Oh, it's great. Cool. It got me it got me down yeah. It got me down this research path on the Standard Oil company, and I ended up first off, I ended up reading Mario Puzo's godfather, which is very graphic and interesting. But if you've seen the movie, I don't think you get much more from the book. But then I started reading Ron Cernow's biography of Speaker 1 (01:14:23): -- Speaker 6 (01:14:24): Oh, yes. Speaker 1 (01:14:24): -- David Friedberg (01:14:24): Ron Seller. Jason Calacanis (01:14:25): Yeah. And so David Friedberg (01:14:25): I don't know if anyone's made it through that 727 page too. Jason Calacanis (01:14:29): I got about 500 pages in. Yeah. David Friedberg (01:14:31): It is detailed. It's detailed. So it's not you know, it's it's not probably you won't gain as much from it as perhaps reading a a Wikipedia article. But the standard oil, the the era if you think about what technology is or what we call technology in the US today in our world and and it's mostly software and now increasingly biotech, You know, there have been different areas of technology and different areas of monopoly and and just hearing the story of the railroads and standard oil and what took place Speaker 6 (01:15:01): in David Friedberg (01:15:01): this country. It's incredible, and it it's so analogous to what's going on and and the outrage and the sent and the fake news that goes on about these people as they've been successful. You know, it really is. History teaches us everything, and it's so I've just you know, I just in the era of standard oil, just learning about the stories of that time and the people of that time, this is one book that's that's been you know, an interesting part of the tale. Chamath Palihapitiya (01:15:26): Best East, I gotta go. I love you guys. Jason Calacanis (01:15:28): Love you too. I'll see you Chamath Palihapitiya (01:15:29): on Thursday. Speaker 1 (01:15:30): -- Chamath Palihapitiya (01:15:30): and Friedberg. I'll see you on Thursday. Jason Calacanis (01:15:32): Yeah. Stake it up. Let's go outside. I'll just give him all my closing, the fish that ate the whale, a book about Sam Samory, who was the Banana king, and another interesting book you might like. I love capitalism by Ken Speaker 6 (01:15:45): Langone who, you know, built Jason Calacanis (01:15:45): he built Home Depot. and it's a pretty great story about well, both stories of capitalism, and I think you all like them. Friedberg, if you like, the yeah, the the books you were talking about. Yeah. Alright, everybody. We'll see you next time, and don't forget to rate and subscribe and We'll be taping another episode in another 5, 6, 7, or 8 weeks. Hopefully, earlier than that, take your sachs, take your Friedberg, take your Chamath, and we'll see you all next time. The online podcast.