科技工作文化、加密监管与稳定币，兼谈奈飞：对话 Coinbase CEO 布莱恩·阿姆斯特朗

Jason Calacanis (00:00:00): Brain Armstrong. What's up, bro? Speaker 2 (00:00:02): What's up? Jason Calacanis (00:00:03): How are you? Brian Armstrong (00:00:03): Good to see you. Chamath Palihapitiya (00:00:04): It's good to see you as well. Brian Armstrong (00:00:05): Yeah. Jason just pinged me yesterday, and he's like, why don't you just come on as guess? Randomly. And I was like, okay. Great. Let's do it. Chamath Palihapitiya (00:00:11): That's so good. I'm really excited to hear what JakeAL's intro is for you. Speaker 2 (00:00:15): Oh, man. Yeah. You guys keep you Brian Armstrong (00:00:17): keep getting water and water on Speaker 2 (00:00:20): The weather winner Chamath Palihapitiya (00:00:20): is wide. Speaker 2 (00:00:20): Rainman, David Sachs. Jason Calacanis (00:00:21): And it David Sacks (00:00:21): said, we open Speaker 2 (00:00:28): sits to the fans and they've discovered a reason. Jason Calacanis (00:00:35): Hey, everybody. Welcome to episode 77 of the All in podcast less than 30 days for the sold out All in Summit. And there's a wait list, but, sadly, I don't think we're gonna get to anybody on the wait list. We've got a great great episode for you. I thought I'd bring a bestie guestie in, but not tell my bestie. So we'll see if they can figure out who's coming on the pod today. But let's get the intros over with. He's investing in SAS at different stages coming off of Miami Bender for the ages. Doing shots with Roy and vanilla ice, the rain man is back. He's twice as nice. David Saxx, everybody. How are you, sir? How is your adventures with vanilla ice? David Sacks (00:01:16): Good. I'm still here. Jason Calacanis (00:01:18): You're still here. And so vanilla ice, that costs $1600 to get him to show up. What does vanilla ice cost to show up for a party. So that's about 10 k. I think it's about 10 to 20 k. No. A little bit more, really. David Sacks (00:01:32): A little more. Jason Calacanis (00:01:32): And did you go on stage and do ice ice Baby with him? David Sacks (00:01:36): I didn't, but there's some, like, teenage mutant ninja turtles type dancing around with him. Got it. Whatever. It was interesting. Jason Calacanis (00:01:43): It was interesting. David Sacks (00:01:43): People liked it. It was fun. was fun. Jason Calacanis (00:01:45): Oh, very nice. Very nice. And you're still in Miami for -- David Sacks (00:01:49): Tech week. Jason Calacanis (00:01:50): -- whatever. Tech week. Okay. So he won't eat your meat, but I'll take your MDMA. He's very interested in your DNA. When he's in the lab he's in heaven, he hasn't been in the same since that rave in 1997, the Lord of the Laboratory at the Sultan of Science David Friedberg. How are you, sir? David Friedberg (00:02:06): That was my favorite one. I like that one. Yeah. Speaker 7 (00:02:08): Well, I love you. Jason Calacanis (00:02:09): You peaked in 97. Yeah. At about 2 AM. You were peeking at about 2 AM. Chamath Palihapitiya (00:02:15): Did you say he doesn't want your meat, but he wants your MDMA? David Friedberg (00:02:18): Yes. Jason Calacanis (00:02:19): He won't eat your meat, but he'll take it here. -- if you may. David Friedberg (00:02:23): Shout out Speaker 7 (00:02:23): to producer Nick who really crushed it this week. His bank of Jason Calacanis (00:02:26): -- I just want his too butt ache. It's hard to keep it together for these sometimes. His bank account would make a crap Speaker 7 (00:02:35): I'm Prince jealous. His knitwear collection is over Zealous. Jason Calacanis (00:02:38): When he's out of CNBC, he makes a scene last time he did leg day. was 2019. Supreme leader of Spax, Speaker 7 (00:02:45): the dictator himself, Chamafaliha Patia. Chamath Palihapitiya (00:02:47): I've been actually spending a lot of time working out on my legs. Jason Calacanis (00:02:50): Really? I have been working on shoulders and chest, and my legs have always been diesel. I will be doing a shirt off selfie this summer. David Friedberg (00:02:57): Take care. It looks like you have not I bought new shirts since you lost all the weight because that shirt looks about five sides too big. Jason Calacanis (00:03:03): I bought this one halfway through the weight loss, and now it's still too big. So I got another slimmer. I got the slim fit. No. I got the normal fit, and then I got the slim fit. David Friedberg (00:03:13): From peak to now, you've lost, what, like, Jason Calacanis (00:03:15): £50? £213 was my peak, like, 4 years ago, and I was 167, 168, Chamath Palihapitiya (00:03:22): the others. Jason Calacanis (00:03:22): Yeah. So whatever that is. £45? That's awesome. something I feel incredible. I've started running again, and, you know, I did 40 days of skiing this year, and I'm gonna take up kite surfing, I think, this summer. I want another sport to do, you know, in the summer. David Friedberg (00:03:34): Are the people around you annoyed at your increased energy levels? Jason Calacanis (00:03:37): Yes. People who work for me are annoyed. I'm sleeping better. Everything's just going better. I highly recommend everybody you know, just try to lose some weight. A lot of options out there for you, including Munich. Alright. We have a very special bestie guestie. Today, He's a lean mean crypto machine who sorta looks like Mister Clean. If you need some tokens, you know who to call. Satoshi has his picture hanging on his wall. His NFT game is never lacking if you talk about politics at work. You might send you packing. The king of coins, the cooing of tokens. Chamath Palihapitiya (00:04:08): Who is he? David Friedberg (00:04:09): Brian Armstrong. Brian Armstrong. Brian Armstrong's with us. Hey, Brian. Chamath Palihapitiya (00:04:12): How are Jason Calacanis (00:04:16): you? Brian Armstrong (00:04:17): What's up, y'all? Chamath Palihapitiya (00:04:18): You could have gone Vitac Vitalic at the first part, but we became Brian by the office part. Jason Calacanis (00:04:24): Any Welcome to the show, Brian. We've obviously talked about you a whole bunch, and you've been on this week in startups. And I think you know all the fellas here. but thanks for for joining the pod. Thanks Brian Armstrong (00:04:33): for having me. This is awesome. I I listen to your show every week. Jason Calacanis (00:04:36): Aw. Thanks for that. So I guess, you know, the the topic we all have talked about a whole bunch is work and keeping people focused at work. you took a very bold step which Toby at Shopify I think followed. I just said listen. If you're coming to work, our mission is crypto. Can we stop talking about every other thing in the world and and just stay focused on that? And I think that was maybe it was that a year and a half ago David Friedberg (00:05:03): that Somewhere Speaker 2 (00:05:04): like that. Jason Calacanis (00:05:04): Yeah. You did that. Everybody wants to know how that worked out for the company. So maybe you could tell us what it was like to go through that because, I mean, you were a target for for for a period of time. We all thought seems reasonable. And then how has that actually impacted day to day life for the people who decided to opt in to working at a Single focused Coinbase. Brian Armstrong (00:05:27): Yeah. So I would say, you know, short term, it was quite a painful transition. I think it created a lot of consternation. There was know, some folks in the media decided to go call a bunch of people who'd left the company and, you know, write hit pieces and all that kind of thing. And, frankly, you know, about 5% of the company opted into the exit packs package. So there was some teams that were shorthanded. A lot of people had to work extra time to fill in the gaps. But long term, I think it turned out to be an incredibly positive decision. for the company. I do think there's a lot of companies in Silicon Valley right now and probably elsewhere is that, you know, the CEOs and the management team almost feel like they're being held hostage by the employees. And I feel for some of these organizations, you know, Sundar probably has an incredibly difficult job right now. We saw that that video from Microsoft, I think, last year with with Satya and kind of with with people talking about their hair color and stuff. And they don't feel like that they can really lean in and move the company in the direction they want, and they're they're fearful of kind of all these internal dynamics. So, you know, I think there's probably a better way to do it than what I did, which is if you're starting a company today, just make that clear upfront. I didn't make it clear upfront. And so the company culture started to diverge and drift, and I had to kind of realign it, which was which was a painful process, if I was doing it over again, I'd probably just set that as the expectation upfront, and there wouldn't be this, you know, public, awkward realignment. But, yeah, I think I'm I'm really glad that I did it. I think Coinbase has been very productive since then, and we've been able to attract a lot of the best and brightest people from some of these other companies that are, wanna be in those companies anymore. I wanna work at a company where we just focus on the work and the mission because that's actually important. So I'd say it's been positive David Friedberg (00:07:00): Brian, I've always talked about this as being like the difference between a hard culture and a soft culture where hard cultures are companies that really define what they do and what they don't do and what they spend time on and what they don't spend time on. And sometimes what you don't spend time on the product, sometimes it can relate to things outside or externalities to the business. Do you think that that's become kind of a trend where, you know, soft culture in Silicon Valley is more about, like, appeasing, a very fickle employee base. And as a result, you kind of aren't as clear about what you're not gonna talk about and are gonna talk about and suddenly the troops rule the day and things get kind of sidetracked and productivity goes down. I mean, can you talk a little bit about what you've seen you know, with other cultures around the valley and how that's kind of affecting work and what employees are choosing to go to and not go to? Brian Armstrong (00:07:49): Yeah. So I think You know, Ben Horowitz always talked about, like, wartime CEO, peacetime CEO. And frankly, you know, I'm kind of a conflict avoid in person. Right? I never thought of myself as, like, wartime CEO. We're like we're all going in this direction. Let's go. Go. Go. You know, I never really thought of myself like that, but I think what I'm trying to do now is find the happy medium between these two. So you the company should have a really ambitious mission. And then I think you as a CEO, you do have to say no to things, which are off track from that. You do have to part ways with people who are not helping raise the the talent bar in the company. And so in some ways, you have to be, I guess, hard in that sense. But I don't think it's it's not like, you know, we're only here to make money, and it's like, it's bonus time or you're out or whatever. It's like we actually have a much softer culture than that, I think, in Silicon Valley, which is Most of the missions of these companies are trying to do great humanitarian efforts, and they're trying to improve the biggest problems in the world. And so people sign up for those because they wanna have a real impact. And, you know, we take time to, like, go for exec off sites and we walk in nature and, you know, we have, like, coaching. We do all this touchy feely stuff. So I think it's kind of a mix of both is the right balance. I don't think of myself as, like, you know, a Wall Street hedge fund or, like, the most touchy feely culture you can imagine. Chamath Palihapitiya (00:09:01): Why do you think companies now have sort of veered into this place where they have to kind of appease these fringes on either side. How do do do you did you spend time trying to figure out, like, how did we evolve there from just being mission focused to having to deal with all this other stuff? Brian Armstrong (00:09:16): Yeah. I mean, one I have on this is that in Silicon Valley, especially pre pandemic, we were all it was so competitive to get talent. Right? You know, Google and Facebook, they were just kinda one upping each other on, higher and higher salaries. And so I I know as a CEO of a company that was rising at that time, I felt incredible scarcity. Like, I had people leave to get out who got better offers, and it was, like, a real issue. And so I was doing anything I could to retain people and keep them. And so if a if an employee said, hey. I want, you know, another flavor of water in the kitchen or whatever. I was like, okay. Maybe we should do it. Right? But I think, you know, during the pandemic, we remove we move to remote first as a culture. The the talent like, the talent we could get opened up by a 100 x of people all over the world who were really hungry and, like, frankly thankful for these jobs And that actually changed the scarcity mindset a little bit to say, hey. You know, if you don't wanna be here, that's fine. We can we have other people we can go recruit and hire in who really are gonna value it. that's probably just one piece of it. It's it's a much more complex issue than that. I think one other one other thing is that, you know, like Google and Facebook, I think, kind of, made this a common trend in the valley where companies would host these open mic q and a's on every Friday or every 2 weeks or whatever. it was almost like a town hall. It felt like a democracy. Right? And in a democracy, like, the leader, you know, works for the people. They're elected by the people. But what got very awkward was that these open mic q and a's, it became, you know, this kind of, like, hostile thing of, like, how can we make the person squirm? And let's ask than these difficult societal issue questions that aren't actually related to their company and what we're all building. And, you know, I think that was actually a mistake in Silicon Valley. We we've since gotten rid of that these open mic and As because it it really encourages people. I'd say one we we were like a 150, 200 people. Everyone was on the same page. Brian Armstrong (00:10:58): Everyone was asking good questions. once we got to, like, 500, 700 people, it started to feel like there was a little bit of an us versus them. And then, you know, the questions got very off track. And I I realized at a certain point, and this is not a democracy. I want everyone's input. I'm not gonna rule, like, with an iron fist, but, ultimately, know, I'm the CEO. I need I need to help guide this company in one direction and force the hard decisions. Not everyone's gonna like them. So we're not gonna allow people to do grandstanding, open my There's just a little bit of a risk for that. You know, 99% of people don't do it, but even one person does it and it kind of creates this snowball effect. So we got rid of the open mics. People can still submit questions, but they're there nobody else can see them. We read them ahead of the q and a. And if there's a good theme in the questions, we address it, but you can't, like, brand stand with an open mic. Chamath Palihapitiya (00:11:41): I saw this It was in Twitter, Nick. Maybe you can find it, but it was like this general that had commanded all of these different battalions. And he was talking about What it was like in all the different theaters in which he's operated, and he basically said, you know, 80% of the men and women that serve for me were just absolutely incredible. You could always rely on them a Jason Calacanis (00:12:01): 100% Chamath Palihapitiya (00:12:02): of the time they were a Jason Calacanis (00:12:03): 100% Chamath Palihapitiya (00:12:04): aligned. And then he said there was 15% that was wishy washy. And what they were looking for was how you managed and dealt with the 5%. And the 5% of folks were always trying to push the boundaries and try to figure out where the escape valve was or where the exception was or, you know, whether they would be grandstanding or whether they try to blip break a rule, and he said his entire energy was focused on keeping those folks extremely focused and on point or out because that was what solved for the 15% because the 80% would be fine, but if you didn't deal with the 5, the 15 would go crazy, and then the 80 would get ejected. And it just kind of the whole thing would rot. And it was a really interesting reminder that there's these people that come into these companies almost with the desire to see these companies go sideways or just waste their time, which is completely counterintuitive because you think you join for the mission. but they don't all the time. Jason Calacanis (00:13:00): And to be fair, you I think total people listen. You you could, as a group of people off hours, create your own, you know, dinner party and talk about whatever topics you want. This is just when I'm paying you to come to work. For those 8 hours, you know, on the company servers, if you're using Slack or whatever, you know, communication platform you're using, let's just stay focused on getting the work done so this could be a viable, enter prize. But you were fine with people if they wanted to self organize and do that on their own time. Correct? You weren't saying you can't have political beliefs, you can't care not care about BLM or some right wing days David Sacks (00:13:38): or nothing. Jason Calacanis (00:13:38): -- David Sacks (00:13:39): biggest sort of misnomers or miss Characterizations. Yeah. Exactly. deliberate mischaracterizations about the policy is that it somehow silenced people or prevented them from you know, taking positions on issues or donating to cause they cared about. The policy never said that. It just said that while we're in the office together, on Coinbase Time, we're gonna engage in Coinbase's mission and avoid fractious debates that divide us. Yeah. That's right. Jason Calacanis (00:14:06): And there's a time for those debates and it just might not I I think a lot of this has to do with Slack. I'd be totally honest. Yeah. When people are in a Slack room and they're fresh And people can have valid frustrations. Like, there are things in the world that are horrible, and, yeah, you wanna talk about it, and, yeah, you build friendships at work. It's completely understandable. that people would wanna blow off steam. And but just people have to look at Slack as not an AOL chat room. It's not Reddit. It's not AOL chat. Maybe you could talk a little bit about communications, and then I think David has follow-up. Brian Armstrong (00:14:34): Yes. I agree with you, Slack. I think, you know, it's an amazing tool, but it does start to turn into social media once you get more than, I don't know, five hundred people in in a room or a thousand people. A lot of CEOs I've been talking to, we're all trying to figure this out because we still think Slack is a net positive to productivity, but it has a huge negative in terms of most distracting people with lots of things popping up all the time, but also these kind of social media flame war that emerge and mob like behavior. So some of the things I mean, we've been trying is, for instance, if if we get any kind of a Slack room that has, say, more than 500 or 1000 people, We'll often try to limit it. So only you know, you can you have to be a VP or level 9 and above can only post in there, and otherwise it's read only. we're trying to you know, Dunbar's number is a 150 people. Right? You're trying to think, who who can you remember everyone's name and have some sort of group affinity with them? And any too much above Dunbar's number, we try to, like, cap it, so it's it's a read only chat room. But I think these tools need to keep evolving, and I hope I know there's a couple of startups y'all might have funded some of them that are working on this. Jason Calacanis (00:15:33): Yeah. There's an actual neat feature you can do in Slack now where, like, that level 9 person can post. and everybody else can post in the thread. Like, you can reply to the thread, but the opening salvos and thread have to be started by somebody in that sort of group. So But the Slack definitely needs to double down on this. I also think they put that random room in there. And you put the random room, it's like basically waving the flag, like, It's random. Put stuff in there. I think you gotta delete that if you're running. I tell all startups. Delete the random room and tell people do not post memes and jokes, David. You had a follow-up. David Sacks (00:16:03): One thing I was gonna say is, so Brian I agree everything you said. The the one place maybe where I would nitpick in a way that gives you a little more credit is you found a Coinbase back in 2012. Right? David Friedberg (00:16:14): Yeah. David Sacks (00:16:14): So if you had created this policy on day 1, I don't think you or anybody could have predicted that these issues would arise the way they have. I remember 1012 is a year. I sold my company to Microsoft. We never had to deal with any of this stuff, and we were using we didn't have Slack back then. We were using Yammer. Very open culture. People could communicate on anything. We never had sort of hyper activist employees. The word woke didn't even exist yet. and it just wasn't an issue. So it would have required you, I think, to see ahead so many years. And I think what's happened is over the last several years has been drift towards, you know, employee activism inside these companies. I don't think it's coming from both sides of the political spectrum, to be honest. I think it's coming from the sort of hyperwoke employees, and they engage in petitions and letter writing campaigns and threats of boycotts. And they sort of Hector and malmow these CEOs to basically give in to them. And we've seen it at Apple the way that the Apple is pressured to fire Antonio Garcia Martinez. And they gave in, and now they have a letter writing campaign every month. And you just saw it in Florida. I think Bob what's his name? Bob Chapak -- Chapak. David Friedberg (00:17:22): Yeah. I don't David Sacks (00:17:23): think he's gonna survive the year after what just happened at Disney. And it's because he gave into the employees took sides against the, you know, governor in Florida and the legislature, and they just ripped away Disney special privileges. in Florida. You saw it at at Netflix where Ted Sarandos was sort of mow mowed by these employees who want to cancel Dave Chappell. He ultimately stuck by Chappell, but only after groveling to these employees. And so I think we're seeing these issues did not exist even 5 years ago, I would say. And I think the reason why the Coinbase story is so relevant to a broader audience and what you did with your policy is so relevant is I just think every company's got to make a decision sooner or later or on where they stand. Do you give into these petitions and mobs and boycotts do you allow unlimited activism inside the Four walls of your company, or do you take some sort of more neutral stance where You say, listen. We're all gonna leave our politics to the door so we can effectively work together on the company's mission. I think every company eventually is gonna have to either Bitcoin base or be Apple. You're gonna have to be Coinbase or be Disney. You're either gonna have to give into the mob and suffer the consequences or you take the short term pain of doing what Brian did, and you basically realign everyone around the mission. And a year later, you're very happy with where you are. Chamath Palihapitiya (00:18:45): The good thing with Netflix and Disney, though, is that they're gonna be very clear examples of the business impact of getting distracted. And I think that, you know, Brian took leadership, but the business impact, at least from the outside looking in, was not really measurable. Obviously, he felt that the team felt whatever they did and that business is working, but it wasn't done as a public company pre and post, so the counterfactual is hard to measure. In the case of Disney and Netflix, it's really clearer to measure. Right? Meaning, in all of this confusion, Netflix has completely botched their business model. In all of this fighting now internally inside of Disney, Not only are they gonna lose essentially a fiefdom inside of Florida, but it's gonna have repercussions with respect to taxes, with respect to debt, with respect to the quality of the service they can deploy. And that'll eventually flow through the business and that'll be measurable by investors. And I think David I think probably what I think which is a slider sort of more modified version of what you just said is in the next few quarters, I think CEOs will actually be better equipped to numerically point to why taking Brian's path is the value creating path for shareholders and for stakeholders. And the cost of getting distracted, quote, unquote, can be really expensive if you if you are a a for profit company. Jason Calacanis (00:20:04): But and you also have the option to run your company and say, you know We care about this issue a whole bunch. We really care about human rights here. We really care about communications and freedom of speech. and I'm gonna run Twitter as a Friedberg of speech company. And everybody has to align behind that. Chamath Palihapitiya (00:20:20): It's what Jason Calacanis (00:20:21): you believe in censoring. This is not the right company for you. If you believe in policing speech or you're uncomfortable with uncomfortable speech or speech that makes you feel uncomfortable, you you don't have to work at Twitter. So it's not like you have to, you know, do what Brian did and say, hey. We're just -- Chamath Palihapitiya (00:20:37): You gotta decide. -- on Jason Calacanis (00:20:37): this. You gotta decide. -- make a decision and be intentional about it. I think it's harder bed. No. Chamath Palihapitiya (00:20:41): My I was just gonna say my only point is in the absence of intentionality, Jason, you'll slip into one realm of the other and not really know what you're trying to do. I agree with you. And my only point is that you'll be able to measure the impact of unintentionally slipping and sliding around Jason Calacanis (00:20:54): -- Yeah. -- Chamath Palihapitiya (00:20:54): versus picking a course and sticking to it. David Friedberg (00:20:56): me ask you guys a question. If you're an individual and you wanna affect social change, where is the forum in the theater that you think you would go to first. You spend most of your time at work. And maybe you don't have as much free time to go march and protest in the streets. And if you did, no one would pay attention to you there anyway. So, Sachs, like, I know that you'll probably have a point of view on this, but, like, if you're giving a nineteen year old who has a strong point of view or a twenty five year old who has a strong point of view about something that they wanna see change in society, what's the right forum for them to have their pro and to make their voice heard. David Sacks (00:21:35): I think that companies are a great change agent. I think we all do being in Silicon Valley creating start all believe that startups are a great way to change the world. Those startups have missions. Brian's company has a mission around crypto and ex and expanding democratizing access to the financial system based on crypto. Elon has a company that is accelerating the world towards sustainable, transport, and sustainable energy. He wants to make where I quit a little bit with what Jason said about free speech. I think Elon wants to make free speech restore its place back in Twitter's mission. So it's not like a separate thing. It's actually, like, should be very core to what they do. I think that there's a mission driven company out there for any young person who cares about that issue. Chamath Palihapitiya (00:22:21): Right. David Sacks (00:22:21): And if there's not if there's not a for profit vehicle, there's a 501. You can go join knob off a company or a -- Start 1. Exactly. Jason Calacanis (00:22:28): -- donate money to a cause. You have the whole weekend. You got meetings. You can write a blog post. David Sacks (00:22:33): What I don't think would work is when you have people who don't who aren't really mission driven, their mission is whatever the current thing is. And so they're just kind of, like, oscillating from the the 1 the cur you know, from one current thing to the next current Chamath Palihapitiya (00:22:47): thing. David Sacks (00:22:48): And every 3 months, there's an issue du jour that that, you know, they care about more than anything else in the world. Look. There's not gonna be a company that can accommodate that sort of fickle active David Friedberg (00:22:57): Brian, can I ask you a question? Are there any systems, decentralized systems that kind of give individuals you know, that that you viewed interesting models that give people the ability to affect social change in a way that kind of historically may have been more of a hill to climb where people can kind of aggregate resources and aggregate a voice in a way that can kind of affect outcomes. And do we think that that kind of becomes a mechanism for social change in the future? Brian Armstrong (00:23:25): You may you're making me think of DAOs and things like that, but I think a lot of that is kinda unproven. Like, DAOs are probably good ways to get new kind of governance systems in place for allocating capital or maybe even managing a city or or a society. But I you know, kinda agree with David. I think the best way to affect change right now today is for young people is start a company or join a company. I think young people are sometimes a little enamored with, like, becoming an activist, but I think fundamentally that's you're you're sort of giving up your power by saying, like, Well, they have the power and I don't, and so I'm gonna speak truth to power. But I think, you know, some there's context for that historically where that may have been more true. But I think today, a lot of people they have more than they realize. And if you go start a company, which by the way, companies are decentralized too. You can have lots of little companies all over the world. They're not, like, you know, monolithic usually. And so if they start a company, they can have a good impact, I think, on the biggest issues out there. Chamath Palihapitiya (00:24:18): And I think over time as well, the way that you have real impact is that you prove yourself in the market of ideas to have a high reputation and to be really reliable. And that is not something that you can just overpower you know, because you're nineteen or twenty and you're really upset by something. At some point, you're going to have to really invest your time and dedicate yourself to something that you really, really care about. And then the world tends to move to the good ideas. So I think part of like what we also need to remind folks is that this is a Like, if you wanna make real sustainable change, it's hard. It doesn't matter in which area you pick. It is just really hard, but if it's really worth it, you should give your life to it. But what I think people push back on is the more superficial forms of just virtue signaling and saying, yeah. In this moment, I really wanna pretend I care about something, but when push comes to shove, I'm not really willing to take the next step. I don't I think that most people find that very unreliable. David Sacks (00:25:15): Yeah. I think a good question to ask. for somebody who purports to really care is, like, what do you care about that's not currently in the news? You know, that's not like the hot thing that everyone is basically obsessed with. Jason Calacanis (00:25:26): Well and then how are you changing it? And what is your plan to change it over the next decade or 2? Like, you have -- Yeah. Brian Armstrong (00:25:33): But it takes David Sacks (00:25:33): it takes it takes many years to effectively create a startup, you know, 5 years, 10 years. And so if your issue dujours is whatever is in the news, you're not gonna be able to create that kind of change. You know, I do think there are a lot of similarities between mission driven startups and political movements. You know, I wrote a blog post called Pure Startup as a movement where I basically say that you know, good marketing is about evangelism. It is has everything in common with what good political leaders do. Basically, they critique the status quo They tell you what the world likes looks like today, what the problem with that is, and where the world needs to get to, what the solution is, and then how they're gonna deliver that solution. So you can, I think, as the leader of a company, be very mission driven, you can bring about that change you wanna see in the world, you just have to attach a business model to it. If you don't have a business model, you're just collecting donations. Jason Calacanis (00:26:24): Let let's build on that, Brian. What is the stated mission today of coin base. Yeah. Brian Armstrong (00:26:29): Our mission is to increase economic freedom in the world. And if for people who aren't familiar with that term, economic freedom is kind of an an economic term like GDP, but it looks at the measures of different countries of the world, and it looks at factors. Like, are there property rights enforced? How stable is the currency? How easy is it to start a business? you know, is there a corruption in bribery, prevalent, and things like that? And what's really cool about economic freedom is that it basically countries with higher economic freedom, you know, like, Singapore and the United States and Ireland. Like, they tend to correlate with all kinds of things we want in society, not just better economic growth, but even higher self reported happiness of citizens, better treatment of the environment, better income for the the lowest 10% in society. Chamath Palihapitiya (00:27:10): Gender quality, all that stuff. Brian Armstrong (00:27:11): yeah, gender equality. And then, yeah, countries with net low economic Friedberg, you know, Cuba, North Korea, Sudan, these are some of the lowest They tend to have, you know, even things we don't want, like, higher corruption, higher war, higher infant mortality. So it's Basically, when I read the Bitcoin white paper back in 2010, I had this thought eventually that was like, maybe cryptocurrency is this unique moment of history, this unique technology that allows us to inject economic freedom into the countries all over the world, especially now that more and more people have a smartphone, and we can basically put good financial infrastructure, good property rights, you know, global trade, a stable currency into 200 countries all over the world as one small relatively small group of people, and, hopefully, it has all these positive downstream impact. So that's the mission of Coinbase. Jason Calacanis (00:27:58): When you look at the regulatory environment, it has been far from clear what's allowed here in the United States. In fact, you had a pretty strongly worded Tweetstorm back in September of 2021, some really sketchy behavior coming out of the SEC race recently story time. Maybe you could talk a little bit about the SEC's approach to cryptocurrency versus securities, XRP comes to mind. and knowing your customer, you've obviously taken a very conservative approach to what tokens you put on the platform and then you have competitors who are off Shore who it's kinda Yolo anything goes. What is the current administration doing right, wrong, and and what needs to happen here in the US? to for us to be competitive in crypto while still protecting citizens from, you know, being bag holders. Brian Armstrong (00:28:53): Yeah. So big question. So, you know, as a startup, you're always trying to thread the needle here. You don't wanna wait too long for clarity because sometimes these things take 5, 10 years, and so you'll just never launch a product. But if you if you're too aggressive, you you can blow the place up. And so what we always did in the early days of Coinbase as we said, We wanna go do what we think is gonna be required in the future. Go get licenses. Go do KYC. Go go go do AML anti money laundering. And so we tried to basically do the right thing, go and talk to these regulators proactively. Now the US has actually been pretty forward thinking on this, say every year, we get more and more clarity. So Coinbase is now a very regulated financial service business. You know? I I can go through the whole list. We have A license from the CFTC, a federal like regulator. We acquired some broker dealer licenses, which the SEC regulates. We have money transmission licenses. We're bit license in New York, etcetera, going not just in the United States, so we're we're in many, many countries around the world. So how do we get more clarity? Well, one thing I'll just say is it's actually better for there to be lack of clarity than to be clarity that is punitive or bad. So it's good that there's a little bit of lack of clarity as long as it's not a curtailing industry, but would be even better is to have clarity that does provide that right balance of good consumer protection you know, make sure that there's a fair level playing field for all the players, and then it allows innovation to flourish. And so What's good now is that in the US, you know, the Biden administration put out an executive order recently kinda asking all of the different agencies and departments to come back with a clear plan. And they did recognize the potential innovation in crypto in that in that executive order, which I was really pleasantly surprised to see So what's happening now is that there was a little bit of jockeying I think there where the SEC said, hey. These all look like securities to us, and I don't think that's quite true. You know, the CFTC is regulated commodities while some crypto is gonna be commodities. Brian Armstrong (00:30:43): I think here's here's what I'm realizing is that crypto is gonna be many different things. It's not just gonna be one regulator doing it. So, you know, think about cryptocurrencies like Bitcoin. That's pretty clearly a commodity or or Ethereum. Right? Like, Many of these are commodities that probably should be regulated by the commodities regulator c the CFTC. Now if people wanna raise money for their company, a security token, that should be regulated as a security by the SEC. That'd be great to have more clarity on that. Let's have we we would love to keep working with the SEC to make that a well broaden path that any company can go raise money, and that's how it would get listed on an exchange like ours, and we could register as a broker dealer or whatever license is needed. Separately, there's also some cryptocurrencies that are gonna be currencies like stablecoins and, you know, maybe the treasury should regulate those. And, finally, there's gonna be cryptocurrencies that are none of the above. They're artwork or something that's probably shouldn't even be regulated. And so the US with various financial, you know, international bodies like G Twenty and FADF and all these IMF are probably gonna put some policy papers together. We're gonna eventually end up with some kind of a test that says, is this cryptocurrency a commodity, a security, a currency, or something art else like artwork? And then maybe and by the way, maybe 5 more things we haven't even thought of that it'll end up being in the future. Jason Calacanis (00:31:57): Like -- -- would you make the test for this is a utility token versus speculative security because that seems to be the one that's really hard for people to figure out 99% of people are buying a token on Coinbase because they wanna see it appreciate, and they wanna see it gain value. And only 1% are using it for the actual utility of it, is it then a security? Is it by the percentage of people who use it? How how would you as the the, you know, the leader in this industry, you know, actually define it. What's your definition? Brian Armstrong (00:32:33): Yeah. So I think look. I I don't wanna be presumptuous here. I don't I think that we can we can put some policy papers together, but I don't wanna be you know, it's the policymakers job to to come up with the policy, so I don't wanna up anyone's toes. But that being said, I think there's some existing case law out there. Like, the Howie test is something from a long time ago. We could probably build upon that. So the Howie test kind of says, you know, is this an investment in a common enterprise with an expectation of profit, and that would make it a that would make it a security. So there are a lot of pieces to that. know, is it an investment? Well, if you're just giving the tokens away, I guess, people aren't investing. Right? Is it a common enterprise? Well, maybe if it's decentralized and you don't actually control this entity, like, You own, you know, less than a majority share or something, maybe then that's not a security. Right? Or if there's not an expectation of profit, people are using it for something. So every startup right now in the space has basically had to hire a bunch of expensive lawyers to go tease apart these old old rules that some of them were like, the 19 thirties, you know, before the Internet and every everything and try to understand where they're falling. And so I think Building upon that Howie test, but it could be something that includes a commodities definition, something a currency definition. you know, I think we should basically, it's on us and the other crypto companies out there to go hire a really smart lawyer who has drafted legislation before and a bill and actually get a draft of it out there, and then we can start to circulate it with various policymakers and get their feedback. And maybe they take it and run with it. Maybe they say, thanks. We have it. We've got it from here, but that's our next step. Jason Calacanis (00:33:58): Friedberg Sachs, Jamath, would you go with the Howie test? Or do you have thoughts on how to how the government here in the US should say, this is a security. this is Chamath Palihapitiya (00:34:08): a utility token. I think what the EO did was basically kind of give people enough regulatory safety in the sense that something reasonable will probably happen in the reasonable future so that people could keep building and iterating. My big takeaway in the last sort of, like, 9 months is that this thing is now too big to fail, and the guy government basically has to just find a reasonable framework to enable something because the alt the the real big issue, Jason, would be if they did something crazy, And now, you know, retail would just get completely smoked because I think they are the Jason Calacanis (00:34:43): -- What do you think is reasonable? Chamath Palihapitiya (00:34:44): I think Congress has to basically pass a sensible set of legislations that clearly demarket exactly what Brian said. This realm of stuff goes to the CFTC. This realm of stuff goes to the SEC. Now you guys go and implement. And if left to their own devices, those 2 will use these arcane laws and try to negotiate amongst each other who should be covering what, but they can't arbitrate that decision. And so as a result, nothing will nothing reasonable will happen. So I think that's what has happened. Congress has to get together and write something reasonable. Jason Calacanis (00:35:11): You are building companies at the production board? every year. You build a couple companies. You have to go through securities law. You have to, you know, raise money from accredited investors. You do it in the traditional way. But you must be looking at crypto saying, well, I could launch Kana, unique, whatever project, and have a token associated with it and raise money and raise it globally or start it down. What do you think is a reasonable way for people like yourself who are playing by the existing rules? to be able to embrace this new technology and these new platforms and paradigms. I think -- How should the government handle it? David Friedberg (00:35:47): Well, some perspectives important, which is you know, go back to kind of the 19 twenties in the United States and there were pre 19 twenties, folks would go around and tell tall tales about interesting business ideas or business concepts or things that they were gonna do with if they got a bunch of money from investors. And investors gave them money. they didn't actually deliver on what they said they were gonna do, and they got swindled. And there was swindled story after swindled story that you can read about. And we saw this even with the ICO craze of a few years ago, right, where people tell a tall tale, you expect some value or some asset that you're kind of putting capital into that will pay off over time, and there's a swindle behind it. And that's really the origin of securities laws in large part is to protect the individual from being swindled, to protect the storyteller that can take money away from people and figure out how to kind of rip them off and create a a set of laws that the government can then enforce through the risk of imprisonment against doing those things. The challenge becomes when there's this more thoughtful way of running capital markets on the other side? And how do we actually resolve to some medium ground here? I'm not sure that you're gonna have as quick of a resolution to say, well, let's go back to the old way where anyone can say anything to anyone they want and anyone can put money into any project that they want. Because the role of the arbiter is to protect those from being taken advantage of. If 85% of those projects are great, And 85% of the investors are intelligent and know what they're doing. It's the 15 it doesn't matter. It's the Jason Calacanis (00:37:19): 15% David Friedberg (00:37:21): that the government is here to protect. And that's the reason we have an institution called the government, is to create systems of protection for those who are otherwise unable to protect themselves. Now a free market libertarian might say, we should have at it. But the problem is we all have a we all feel as a group at some point a moral obligation to protect those who are unprotected. And that's why these systems emerge over time, and that's why these institutions exist. that's why the government exists, and that's why these securities laws exist. And so it's difficult to assume that we can just go back to the kind of you know, prototypical days of, you know, let me raise money for anything with any story without any regulation. and assume that it's gonna work out well. because all it's gonna take is a few of these stories before you have folks standing up in congress saying this is unbelievable. We can't let this happen anymore. Let's go shut down the miners. Let's go shut down the data centers. Let's go after every asset we can. And by the way, they will because look at what just happened with Russia. the way that governments can kind of coalesce around digital systems now and make significant change and block things from happening I don't know if there is a world where we can assume that even with a free and open Internet that these systems can truly be decentralized, given the reach that governments have. And it is gonna be, in my mind, I've said this in the past, kind of the great tension of the 21st century, socially, is the decentralized systems that really wanna challenge what we believe to be a lot of overreach that's happening by governments against the government's belief role to be protecting those who are who need the protection. And so I don't know. That's a very long winded moral statement. Jason Calacanis (00:38:56): Well, I mean, I think it's a a very interesting one. Brian, what do you what do you think of Brian Armstrong (00:38:59): get it. These are complicated issues. Right? We wanna balance protecting people, but we also wanna not have the government be in a position where it's picking winners and losers. And so You know, you just because something is legal doesn't make it make it a good investment, I guess, you know, you could've you could've owned Netflix last week or something like that, and you guys might talk about that in a minute. But, look, I think we all wanna get rid of fraud. Right? So if you commit fraud, meaning you lied to investors, then that's gonna be a crime. Right? Like, we I wanna I wanna work with anybody in government to go put that make that stuff not happen. The danger is if we ever get into a place where we say, well, only wealthy people can now invest because somehow there's an accredited investor test. That's inherently exclusionary. I don't I don't like the accredited investor laws. if we ever get into a place where the government is saying, you know, well, you have to you have to have x, y, z criteria and a person with this many years of experience on their resume. And then now we get into, like, the government sort of designed by committee to pick winners and losers. And that's that's inherently flawed because, you know, a lot of true breakthrough innovation, they look like bad ideas at the big They're the kind of things that a government body would never invest in or put money into. Right? So that's the inherent tension we have to worry about where protecting people, but not putting the government in the role of picking winners and losers. Jason Calacanis (00:40:14): Sachs, do you have any input on this sort of framework? You are investing traditionally in stocks, but you have also allocated some money to multicoin capital and other folks who are buying tokens And then you have to distribute them, and you have to deal with these downstream legal issues. How are you dealing with them? And then what do you think is a is a proper framework here in the US for protecting consumers while allowing innovation. I David Sacks (00:40:36): think the big picture framework that we have is correct, which is you kinda have this dichotomy between security tokens and utility tokens. So security tokens, basically, it's a token that's issued that it's basically like a share of stock or of a fractional ownership in some business, doesn't really have a lot of functionality associated with it. That's kind of an end run around the securities laws as you treat it like securities. On the other hand, though, there are a lot of tokens that are issued as part of creating a new kind of technology network. And Those tokens have real functionality. And if you were to subject them to securities laws and impose KYC and accreditation, you have to go through all these hoops just to add one to your wallet, it would destroy the potential functionality created by these systems. So where there's really utility like that, I think the government should foster innovation by having a lighter hand, don't subject them to securities laws. And really, what entrepreneurs need in the space are some safe harbors, some really clear lines around what would trip them up and and have them cross over from utility token and security token. So they know to avoid those things so they can continue innovating on their core project. Jason Calacanis (00:41:48): I think that's well said. I I have three ideas, Brian. I wanna run by you. Number 1, a sophisticated test for investors in crypto and in startups. So just like you get a gun test or, you know, a test or a driver's license, We come up with a way for people to become sophisticated. They take a simple test, maybe it's a, you know, whatever number of questions. And then second, maybe some safe harbors around the scale of a project. So any crypto project under 10,000,000 can be an experiment and you know, it's kinda like no need to have rules. People just have to sign a disclaimer or waiver. This is an experiment. Then things maybe between 10 and a 100,000,000 you implement KYC and maybe throttle the number of -- David Sacks (00:42:28): Those are some good ideas for when you're talking about the bucket of security tokens. If you wanna start imposing those kinds of rules on utility tokens, you can't have a functioning network with, like, all these sort of friction Well, Jason Calacanis (00:42:41): hold on. But if then if the project gets scale, then you just have to file a little more, have a little more k o I see it. And then finally, the founders of these projects, they can just launch them and disappear They have no director like duty to the project. Do you think there needs to be something similar to directors in corporations? So Just three ideas there that I I've heard other people talk about or I've been thinking about, Brian. Brian Armstrong (00:43:06): Those are pretty good. I I like those actually. I mean, nice thing about a driver's license test for financial literacy is that it doesn't measure how much money you have. So it would allow smart, you know, aspiring people who didn't start a lot of money like a lot of us to to also be able to participate early on in these, which would be really great. Yeah. I think and, you know, some kind of a safe harbor or sandbox provision, I think, is a is a really great idea as well. And lastly, yeah, I mean, if you were able to Basically, I think your 3 ideas are great. So those those are good. David Sacks (00:43:37): I think they're they're they're good for securities. But, I mean, should if you just wanna buy gas on a blockchain to run your program, or you're a user of a of a application that's being run on a blockchain, you just wanna buy a token for gas. Do you really have to go through all these like KYC type Brian Armstrong (00:43:53): Hopefully not, especially if it's if it's a utility. I mean, self custodial wallets and DApps or decentralized DApps are this huge area of innovation that you know, you wouldn't wanna, like, imagine if the US government had said you need to come in to register to make a website or something like that. That that would have been a terrible thing for innovation globally. So and you have to remember too that a lot of this is gonna flow to the country with the most permissive laws. So a lot of governments around the world not the most permissive, but the most well structured that balances all the all the pros Jason Calacanis (00:44:20): -- Maybe clear. Chamath Palihapitiya (00:44:21): Yeah. The thing that I would just add to this, though, is that there's a lot more than just AML and KYC guys that has to happen for this to be a functioning ecosystem. We average, I think, 1 hack a week in the crypto ecosystem. Right? This bean stock happened, like, just a few days ago. That was almost $200,000,000. Last month, Taxi Infinity, what was that? Almost $600,000,000. So there's a lot of stuff where in the in the normal securities world, like if you're a director of a company, And you don't have these adequate procedures. And, Brian, you live this every day where there's, like, an audit committee and there's somebody that shares audit that has to go and think about information security and blah blah blah. And all these disclosures have to happen -- Insurance. Jason Calacanis (00:45:04): -- Chamath Palihapitiya (00:45:05): but all these disclosures are really about actual work being done. If you don't do that work and then you get hacked, you're actually liable. Right? There's no version of this in a world where it is a little bit of the wild west, so that stuff also has to exist. This is what I What I mean by I actually think Congress just needs to kind of, like, update the set of laws that actually allow the CFTC and the SEC to do their job to include this and say now go and increment basically figure this out. Because even if you get the AML and KYC stuff right, then there's all this other stuff where, you know, these folks that had they're basically, you know, all this all this value deprived, who do they go to to try to get the money back? You know, in in the case of Axi, I mean, This is it's an incredible thing, but, like, you know, they went to Andresen and they raised the new round. They're like, we're just gonna make everybody whole, but that's insane. Right? That's, like, not you can't expect that to happen with every single project or every single company. It's not gonna be possible. Brian Armstrong (00:45:57): Yep. Well, I think a couple things will happen. I mean, in the in the custodial world, crypto, there'll be more regulation. There already is. Right? Like, we we have a New York Trust company that we get audited for various control environments and safety and things like that. But in the self custodial world, everyone is gonna start to be in control of their own assets. And I think that, you know, the tools are getting better and better for that, like, you know, social recovery of keys if you if you forget your password and these kind of smart contract wallets. And so, you know, both are growing. I think in the future, people may actually start to take more responsibilities for storing their own wealth if if they wanna choose to do that, and that'll allow them to kinda access a broader ecosystem of of things. Jason Calacanis (00:46:37): Let me ask you a question, Brian. Everybody seems to be very concerned about Tether. You, I don't believe, participate in the Tethr ecosystem at Coinbase. Is that correct? Brian Armstrong (00:46:48): Well, we're not participating direct but we support as many assets as people wanna use. And that that is one of the ones that we've supported people that would deposit and withdraw in Coinbase. Jason Calacanis (00:46:57): They've been banned in New York. They've had regulatory action in Canada. People are concerned about their attestation or lack of clarity on their commercial paper. What what do you think of these stable coins getting very big And maybe USDC seems to have it pretty tightly covered, but there's all these concerns and regulatory actions against Tethr. Is that a a big nothing burger, or does it concern you that there's a lack of transparency into their holdings? Brian Armstrong (00:47:30): Yeah. So I would say, you know, some of the early stablecoin efforts definitely didn't have all their ducks in a row from a reputational point of view. You know, I'm not an I'm not an expert on Tethr. My understanding is that there have been some investigations and enforcement actions which have required them to go in there and clean up some things. And, you know, our our digital asset listing group kinda looked at a lot of this in-depth and made that judgment call that where they where they were and where they are now, But, yeah, I do think that we're seeing the emergence of new groups like, you know, USDcoin is is one of those that I think has some better controls around it. And there's actually a bunch of set stablecoins now that are decentralized, you know, die and fracs and Jason Calacanis (00:48:12): -- Explain what that is and why it's important. Brian Armstrong (00:48:15): Well so okay. So it really comes down to trust. I mean, you know, you can trust you can decide to trust something like USDC that kind of audit requirements and, you know, a big 4 accounting firm come in and and look at it and things like that. Or you can look at smart contract code. And, you know, thousands of people around the world can look at that, and there's an inherent bug bounty if you find an issue there. And if it hasn't been found, then you can start to think about trusting that. Now I think stablecoins like like Dye and and others, they've been able to create these relatively complex systems that have sort of one asset which is intended to be stable, but another one which is sort of the collateral. And you could imagine various black swan events where, you know, the peg would get broken and things like that, but it really hasn't happened yet and dive, and it's shown a lot of resiliency, which I've been very impressed by. There there's one actually, one other type of coin, which I think is even maybe more interesting than just wrapping a Fiat like a dollar or a rupee or something like that. Because frankly, you know, the dollar is seeing a lot of inflation. You guys have talked about it many times on this show. So do you really wanted to have a stable quote stable coin that is inflating, you know, 8% a David Friedberg (00:49:20): year? Exactly. Brian Armstrong (00:49:21): There's there's some new coins coming out, which I've been really excited to see, which are I think, you know, biology calls them flatcoins, but they're basically looking at the consumer price index, and they're trying to that basically have flat purchasing power. and assume that the dollar and and various fiat currencies around the world are actually gonna go through more inflation. That's a pretty cool idea. And you can do that in a creative way on a blockchain by having various oracles, which are these sources of truth. And if enough of them you know, 51% of them tell you the CPI we think is this this year, it can kind of keep keep pace with CPI, which is a really cool innovation, I think. Jason Calacanis (00:49:54): Thank you so much for Brian Armstrong for joining us for the first hour. And now we'll continue on with our Netflix discussion. Chamath Palihapitiya (00:49:59): Brian's fantastic. He was Jason Calacanis (00:50:01): a very honest. He answered a lot of questions very honestly, and he's a super fan of the show. Chamath Palihapitiya (00:50:05): That business is a great business. That business would be a great Jason Calacanis (00:50:08): business. He's thoughtful. We like somebody who's thoughtful. David Sacks (00:50:10): I really think that the challenge that Brian faced a year and a half ago and the policy decision he faced is now being faced by every CEO. across America. And that's the broad relevance is, you know, what are they gonna do? Do you see this this quote by the McDonald's CEO? The former McDonald's CEO, Ed Renz, on Wednesday said companies have no business being in politics and has launched a new advocacy coalition to fight woke corporate politics. He said corporations have no business being on the right or the left because they represent everybody there and their sole job is to build equity for their investors. Jason Calacanis (00:50:43): Wait. The people who make Filet O Fish are not gonna chime in on Ukraine anymore? David Sacks (00:50:48): Yeah. But but think about that because that actually is a pretty radical Jason Calacanis (00:50:53): It is a line in the sand. Yeah. He's standing on Brian Childers. Let's be honest. I think, you know -- David Sacks (00:50:58): The CEO McDonald's. I mean, that's like a big you know, traditional Fortune 500 type corporation, and they're saying, like, we're not doing this anymore. Jason Calacanis (00:51:05): Well, you know what? They were more than willing to do it if it scored them points. what they realized was it's gonna be a never once you engage that, you're never gonna be able to disengage from it. Alright. Let's pivot over to Netflix. They reported a drop in net subscribers for the first time in 10 years and the stock dropped 35% Market cap from a 155,000,000,000 to about 98,000,000,000. According to Bloomberg, as of Wednesday, Netflix was the worst performing S and P 500 so far in 2022, stock down 63% year to date. ACMOND dumped his entire stake and booked a $430,000,000 loss. And a a large part of this was because they didn't hit their 2,500,000 or so target. increase in subscribers, and they, in fact, lost all 700,000 Russian subscribers as part of boycotted Russia because of the Ukraine war. What do we think is happening here? Is this a bellwether, Chamath, for something more important going on? Or is this just Netflix not executing well? Chamath Palihapitiya (00:52:17): I think there are there's a macro thing, and then there's a Netflix specific thing. The macro thing is that We are learning the broad sweeping impact of Apple's privacy changes, in my opinion. You first saw it flow through into Facebook's earnings and basically them saying this is gonna be really tough. And you had Netflix even if you add back the Russian subscribers basically spend almost $600,000,000 in the quarter on customer acquisition to effectively they would have generated 500,000 subscribers net churn, right, which was still about a 1000000a half under where they needed to be. So the point is that, I think Netflix in some ways was a little bit of a canary in the coal mine. for the the shrinking effectiveness of online advertising. And I think that's why you then saw 2 days later Facebook got taken to the woodshed in 2 days was down. You know, now it's down, I don't know, 15, 20%. Google I think has been down a lot today. It's just creating absolutely smoked relative to the market. So that's the macro issue, which is I think it's really hard for these ads to be as effective as they used to be. And it's only gonna get worse because Google has also said that they're gonna implement a lot of the same versions of what Apple did inside of Android. So customer acquisition is going up. So if you look at then all the companies that have to live and die on CAC, it's gonna be an expensive road. That's the macro thing I think that not enough people are talking about. I think the micro thing inside of Netflix is that, you know, people churn out of a service when there isn't enough value. And I think that's the most basic explanation of why so many people are leaving Netflix is that it's not that valuable. So when you're spending $20,000,000,000 a year on content, but people more than ever are leaving the service, you have to inspect How much are you really spending in these areas and what is it actually creating in terms of, like, library value? You know, Disney plus I think has gotten has done an incredible job in a much shorter period of time. Apple after only a few years wins the first skurr of any of the streamers, right, beating Netflix even though they've been in there and spent Jason Calacanis (00:54:30): a 100 for best picture. Chamath Palihapitiya (00:54:30): For best picture, but I'm saying David Friedberg (00:54:32): Yeah. Chamath Palihapitiya (00:54:32): So when you put all these things together, I think Netflix probably has lost a little bit of the script, but they're also suffering from a really macro headwind, which is the advertising business is broken. David Friedberg (00:54:42): I would imagine that, like, total subscribers to streaming services, and if you were to add up total subscription service dollars, it's probably growing a lot. Oh, for sure. Netflix's relative share is going down because the quality of the competitors is improving so much. even companies that are not able to deliver like CNN shut down CNN plus this week after investing Jason Calacanis (00:55:04): $300,000,000 David Friedberg (00:55:05): in trying to build out the service, I mean, folks are putting serious dollars behind these projects. And so the competition is fierce, and they've got deep content libraries behind them. I personally think HBO Max is the best streaming service now Jason Calacanis (00:55:17): -- David Friedberg (00:55:17): Awesome. -- followed by Disney Plus, followed by maybe a mix of Amazon, Netflix, and you know, prime. And so like Netflix's relative value is going down because there's so much other content. When I'm thinking about what to watch. I'm looking at Disney Plus. I'm looking at HBO Max, and I'm like, hey. You know, what should I watch tonight? And then I look at Netflix, Netflix doesn't have a monopoly in content anymore. And so when I've got limited dollars, I'm I I I personally I look at this after we were texting about it. I subscribed to 7 streaming services right now. And if I didn't care as much about how much I was spending per month, I would probably cut 3 of them. And that's what it's a proper -- -- 100. Yeah. Chamath Palihapitiya (00:55:58): You're you're also then highlighting the second, I think, macro thing that is is actually equally important, maybe even more important, which is you know, the the first rule of capitalism says that excess returns will always get competed away. So, you know, Netflix had the run of the place where they were an effective monopoly. David Friedberg (00:56:16): Totally. Chamath Palihapitiya (00:56:16): And now when everybody else woke up and got religion, they decided to invest, and they've created some really compelling content. And so all of those returns will now get spread across 7 or 8 or 9 competitors, which means that just by definition mathematically, Netflix can't win the weight that they used to. David Friedberg (00:56:32): And the network advantage in the streaming model is content and consumers. So you have better content. You get more consumers. You spend you get more money from consumers. You spend more on content. at some point, you get diminishing returns in that network model. And now we're seeing those diminishing returns hit Netflix. They haven't built advantages in search and discovery or in other or in social sharing or other features into the app or into the service that will give them more of a lock in value. Because all I'm doing is buying con is is watching -- They're also three times the price. -- that elsewhere. Jason Calacanis (00:57:01): They're also three times the price of Disney Plus and other services. So they're in the competition space, people are starting to look at and go, Is this worth, you know, a Disney and an NBC, or is this worth a Hulu and an NBC streaming service? Sachs, you had some debt? David Sacks (00:57:16): Well, I mean, I agree with that. I would just add one factor to this, which is what Elon said, which is he said the woke mind virus is making Netflix unwatchable. I mean, the quality of the programming has gone down. I mean, Netflix used to be really good. I can't think of, like, a show now that I watch on Netflix. And I do watch HBO Max right now and Disney Plus because they got some shows that I like. So I think somehow the programming people at Netflix have gotten out of touch. David Friedberg (00:57:45): Yeah. Are they pandering to that audience, Zach, you think? And, you know, similar to kind of how Disney ended up Right? And do you think that there's broadly this kind of media problem of trying to pander to the wrong audience? David Sacks (00:57:55): I mean, they almost threw Chappell off, who's the number by far, the number one comic, in, you know, in in American comedy. And they absolutely would have thrown Chapelle off and done what a lot of those employees wanted. if they didn't have such a big deal with him if he wasn't such a big deal. Jason Calacanis (00:58:09): No. I think they held the line pretty pretty -- David Sacks (00:58:12): There's a lot of groveling. There's a lot of groveling Chamath Palihapitiya (00:58:14): in Jake Jason Calacanis (00:58:14): out. I think they reasonably heard the concerns of their employees and said, we reasonably disagree. Cannot you guys are questioning? David Friedberg (00:58:21): Yeah. But but, David Sacks (00:58:22): Jason, it showed it showed it but, yes, but What I look. Yes, maybe. But what I'm saying is that that episode revealed that the people are doing the programming in Netflix, obviously, Like, they're not like, I think they've lost touch with where most of the country is. Chamath Palihapitiya (00:58:37): I will give a shout out. I have not watched a series on Netflix in probably a year Jason Calacanis (00:58:42): Ozark? No? No. Chamath Palihapitiya (00:58:44): No. But I will give a shout out to never have I ever, which Mindy Kaling created. She's amazing. And that series is incredibly funny and poignant and cool and awesome. But outside of that series, I cannot think of a single reason why I would actually pay for Netflix. So you David Friedberg (00:59:01): got let me ask you guys a question. So going back to because, you know, there was the whole Disney pandemic. Chamath Palihapitiya (00:59:05): HBO Max, however oh my god. so good. David Sacks (00:59:08): The whole industry is suffering this problem. Do you remember the Oscars? We don't even watch it anymore. David Friedberg (00:59:12): This is the question I have for you. Do you guys think that there's a difference culturally in the management of the media company. So let's go through them. WarnerMedia, Disney, Netflix, Amazon, And do you think that that cultural difference may create an advantage and success? Do you think that WarnerMedia is operating HBO Max differently because they're culturally different. Jason Calacanis (00:59:35): Yeah. Because they're culturally different. HBO is always being culturally different. David Sacks (00:59:38): They have -- No. Jason Calacanis (00:59:39): And for or tours, HP Chamath Palihapitiya (00:59:41): has oh, I David Sacks (00:59:42): I -- -- suck for years. They got a few good shows now. It's it's more like luck, Chamath Palihapitiya (00:59:46): I think. Jason Calacanis (00:59:46): -- for our tours. They always have David Sacks (00:59:48): gone to vision Jason Calacanis (00:59:49): of the director, the vision of the writer, and taken a lot of risk. When you hear that HBO logo, David Friedberg (00:59:55): I I agree with Jason. Jason Calacanis (00:59:56): -- be a high Chamath Palihapitiya (00:59:57): end -- I David Sacks (00:59:57): I agree to hear some really good shows right now, but until the last couple of years, it was, like, pretty dismal. Jason Calacanis (01:00:02): -- business. But, I mean, to Freebrook's point, you know that Netflix -- David Sacks (01:00:06): I would say I would say Disney has Marvel, and that's why they have Marvel and Star Wars. And that's and kept that extremely relevant. Jason Calacanis (01:00:13): And Pixar yes. The IP there are IP -- I cannot tell you David Friedberg (01:00:16): how how much and and the advantage Disney has is the rewatchability of their content. I don't know how many times your your kids have all watched Moana. My kids have watched I've had to watch Moana a 100 and times already. Jason Calacanis (01:00:29): Yeah. Let's hear David Friedberg (01:00:30): it. Let's hear you. Right? Jason Calacanis (01:00:31): Yeah. Felt out of Moanjo. David Friedberg (01:00:32): And and and the -- You're welcome. Yeah. You're welcome. And the and the Star Wars content, as you guys know, you could rewatch Star Wars And Marvel. I mean, like, the the content is very different on right? Takes our movies too. You can watch a hundred times over. That's very different content HBO Max is thrilling and engaging and doesn't feel like it's pandering. Chamath Palihapitiya (01:00:51): HBO right now is operating at the next level. I mean -- So many good shows. Jason Calacanis (01:00:54): -- Chamath Palihapitiya (01:00:54): it it for me. David Sacks (01:00:55): But Netflix was 5 years ago. Chamath Palihapitiya (01:00:57): So understand, but we're not talking about the past we're talking about today. Jason Calacanis (01:01:00): Yeah. Netflix went with these very big deals with big celebrity names and you know, I think they just lost their uniqueness in terms of risk taking. So they went with Adam Sandler, no offense to Adam Sandler fans. and they're doing a lot of reality TV now. And if you look at Hulu like Dopesick and then the dropout if you look at Apple TV, Ted Lasso, we crashed, and then you look at HBO Max with just, you know, euphoria. By the Chamath Palihapitiya (01:01:27): way, yeah, even I I I can actually Jason Calacanis (01:01:29): -- -- David Friedberg (01:01:29): you for it. Can you the euphoria -- Foria is incredible. It would never be on Netflix. Chamath Palihapitiya (01:01:33): It would never get made. It would never get made David Friedberg (01:01:35): on Netflix. That's the point. Jason Calacanis (01:01:36): Right? Yeah. They don't wanna take risk. HBO is, like, for adults, it's paid, and they're gonna take risk. And Disney doesn't can't touch that. I think Hulu is a sleeper. I mean Chamath Palihapitiya (01:01:45): Hulu is great. Have you guys watched a series called The Great? on Hulu? No. It's about Catherine The Great. It is incredible. I David Friedberg (01:01:52): can't wait my Hulu. I can't I can't upload my Hulu subscription. Jason Calacanis (01:01:55): So -- I'm watching severance right now. That's amazing. It's, like, really likes, you know, a -- By the Chamath Palihapitiya (01:02:00): way, I started paying for YouTube TV so that I could get streaming cable. Jason Calacanis (01:02:04): yeah. I think you could give it David Friedberg (01:02:05): a hulish idea. That's my number one my number one watch thing. It's YouTube TV because I don't Jason Calacanis (01:02:09): -- Do you have YouTube without ads? David Friedberg (01:02:11): Yeah. You I do YouTube Chamath Palihapitiya (01:02:12): premium and it's it's Jason Calacanis (01:02:13): such a Chamath Palihapitiya (01:02:13): game change. How do you do that? Like, I think Jason Calacanis (01:02:16): YouTube red or premium? YouTube premium, it's called. David Friedberg (01:02:18): It's 9 bucks a month to mop. You can afford it. Jason Calacanis (01:02:21): You see no ads on YouTube. David Friedberg (01:02:22): Ask your assistant to ask her assistant to sign you up, and and you won't have Jason Calacanis (01:02:26): to watch ads on YouTube. Are you functionally not able to use the Internet now, Tramont. Chamath Palihapitiya (01:02:30): I actually have people that do it for me. Brian Armstrong (01:02:33): Do they type in your email password for you? Jason Calacanis (01:02:35): Yes. They're like, how does this work? And they're like -- Chamath Palihapitiya (01:02:38): There's a person Jason Calacanis (01:02:38): right there Chamath Palihapitiya (01:02:39): that flips button on Jason Calacanis (01:02:40): the road. -- Chamath Palihapitiya (01:02:40): jump in if I can't get the mouse to work. Jason Calacanis (01:02:43): He's got the VP of product from Astron who lives in a little shack in the house next door who comes over and uses the remote for him. Yeah. Thanks for tuning in everybody for the dictator himself, the Sultan of Science, and David Sachs, we have a jam packed agenda. My god. The Summit is gonna be amazing. Let's just do a little recap here of what's happening. We've got some pretty great speakers, Ryan Peterson, Nate Silver. Clara Vickkel, Brad Gershner, Palmer Lucky's coming, Elon's coming. Keith Royce is coming. Joe Lonsdale, Tim Urban. David Sacks (01:03:16): Wait. Do you see Elon Musk coming? Jason Calacanis (01:03:18): Oh, is that what it says on the website? Yeah. He's on the website now. David Friedberg (01:03:21): Elon Musk. Jason Calacanis (01:03:21): Elon Musk. -- coming. David Sacks (01:03:22): Nice. David Friedberg (01:03:23): Of PayPal. Jason Calacanis (01:03:25): Antonio Horacio. I mean, we've got just an all star -- You're David Sacks (01:03:29): kinda very great there. And I think Glenn Greenwalter TV are coming. Jason Calacanis (01:03:32): Yeah. That's gonna be amazing. And so it's gonna be really great. Alright, everybody. We'll see you next time on the all in podcast. Bye bye. Speaker 2 (01:03:42): We'll let your winners ride. Jason Calacanis (01:03:45): Rainman, David Saffron. Speaker 2 (01:03:49): And it said -- We open source it to the fans, and they've just gone crazy lately. Chamath Palihapitiya (01:03:53): Love you back. I sweet Speaker 2 (01:03:59): what air winter's right. Chamath Palihapitiya (01:04:02): Besty's are bad. Oh, thirteen. Brian Armstrong (01:04:05): That is my we should Chamath Palihapitiya (01:04:09): all just get out one big huge order because they're all these useless. It's like this, like, sexual tension that we just need to release somehow. Brian Armstrong (01:04:21): What? You're the bee bee. flirt your feet. Sweety. Jason Calacanis (01:04:25): Sweety. Sweety. Where did you get Murkeys are back?