市场动态、加密崩盘、俄乌终局与播客现状

Chamath Palihapitiya (00:00:00): Dick, you look a little grifty. You okay? Jason Calacanis (00:00:02): Yeah. Me? I'm great. I'm great. David Friedberg (00:00:04): You look half a Millie richer today. What's it like to be half a Millie richer? Chamath Palihapitiya (00:00:09): Jacob, you look like a failed hostage taker. Jason Calacanis (00:00:13): Laugh it up, boys. Slap it up, boys. Laugh it up, boys. When you see my other projects drop Chamath Palihapitiya (00:00:18): -- Oh my god. -- Jason Calacanis (00:00:19): you're gonna be crying again. Okay? Chamath Palihapitiya (00:00:21): I can't wait. David Sacks (00:00:22): Why don't you take yes for an answer, Jake? How? Jason Calacanis (00:00:24): I I've taken this for an answer. Welcome to the all in podcast with 3 miserable rich bastards who pull up the ladder behind him. David Sacks (00:00:32): you wanna explain why it took us a month to produce a new episode, Jay Cal? Jason Calacanis (00:00:37): What about the well, hold on a second. David Friedberg (00:00:39): Attorney. Let me give you guys the TLDR. Jay Cal thought be all in part with his, and then he realized it wasn't. No. If you guys wanna go, there we go. There. Jason Calacanis (00:00:51): totally transparent. I requested I requested to own 6% more of the all in podcast. David Friedberg (00:00:57): No. No. No. Back up to the summit. back up to when you wanted to kick me Chamath Palihapitiya (00:01:00): off the show. Back up before that where we -- Jason Calacanis (00:01:02): Oh my god. Are we really doing this? David Friedberg (00:01:04): You're okay. Jason Calacanis (00:01:04): We're gonna do it. We're gonna -- Okay. If you wanna do it, we David Friedberg (00:01:07): can't talk about this for 45 minutes because what happens Chamath Palihapitiya (00:01:09): -- Jason Calacanis (00:01:09): It's so boring. So boring. David Friedberg (00:01:10): We plan the summit. We plan the summit. Jay Kal doesn't like how I was concerned about the summit, and I bitch that and, you know, I was negative to him, finished the summit. Jay Calacanis to kick me off the show. David Sacks (00:01:21): Yes. David Friedberg (00:01:22): Brad Gersner, Bill early would have higher rates. Jason Calacanis (00:01:25): It comes to bullying. Speaker 5 (00:01:26): dickens to boy. David Sacks (00:01:26): and Jaykout getting into it. It wasn't. It was actually, it started with Friedberg and Jaykout getting into it. David Friedberg (00:01:31): Jaykout wanted me off the show. Jason Calacanis (00:01:33): Alright. I'll do I get to explain the series of events or no? David Friedberg (00:01:36): Okay. You wanted me off the show. David Sacks (00:01:39): True or false. Jay Cal. Jason Calacanis (00:01:41): I felt That -- -- minute. -- if Friedberg if Friedberg wasn't enjoying his time here and was going to constantly complain every week about every detail why the show is not good, there was always the option for him to maybe do half the shows and have Brad Garson or do half the shows. or have Bill Gurley or rotate in. And so if he was going to be miserable all the time and worried about the show, I gave him the option. to have somebody else take his spot. David Friedberg (00:02:10): Did you or did you not say that this is your show? You're the leader, and you wanted me off the show. Jason Calacanis (00:02:14): I never said that. Oh, no. And nor would I say I don't need to say that. Chamath Palihapitiya (00:02:17): -- David Sacks (00:02:17): you could summarily replace any of us. Effectively, you acted like we all work in the US, your show. Jason Calacanis (00:02:22): Sacks, I don't think Tramont's replaceable just for the record. So David Friedberg (00:02:25): That's true. He does think that. He does. Jason Calacanis (00:02:28): I do not change from what's replaceable. Freightberg, I do think. I mean, I did pull up the Brack Gersner episodes. I think they have slightly more views. So but People love you, so it kicked you. David Friedberg (00:02:36): You tell tell my mom and my wife that he thought I was replaceable on the show. Chamath Palihapitiya (00:02:39): Guys, I would like to jump in by just summarizing this so that we can move on. So basically, what happened was we had agreement that it was 25% each. There was a moment where Jay Cal believed that he deserved more. We had to sort through a lot of the underlying issues that caused them to believe that. We got to a good consensus. We now have a signed agreement that governs how the show and other things around the show and offshoots of the show will work. We are 25% equal partners, and now we can move on. So enough for the bitching. Let's go. David Friedberg (00:03:10): All good. And I love you all. Chamath Palihapitiya (00:03:12): I love you all too. Jason Calacanis (00:03:13): I love you all too. To be clear, my position I I do feel like this needs to be out here was If we're gonna make it into a media company, my request was, listen, I think I own. I should have 10% more equity, and I'll go to work every day and do the work, and you guys can just show up. You guys agree to that, and then you guys said, you don't wanna do it? And I said, okay. Fine. So here we are. We're back at square Chamath Palihapitiya (00:03:32): 1. Jason Calacanis (00:03:33): So let's just get to work. David Friedberg (00:03:34): We just wanna do a pod, and we just wanna Jason Calacanis (00:03:36): There's not gonna be any more summits. There's not gonna be any business here. It's just a pod. I have other events I do. I have other pods I do. If I want to get paid, I'll do them over there. And here, it's just a pod that you see every week. So let's get into it. Everybody wants to talk about markets. Oh, by the way, if you guys want your intros, that's 1% each. Chamath Palihapitiya (00:03:52): Intros, go do it. Jason Calacanis (00:03:53): Those are 1% each. So when you guys are willing to pay me my 1% additional equity, you get the intros. And when you want the all in sum at 2023, that's another one. We're gonna get an each week from Jay David Friedberg (00:04:02): Cal now. You're gonna Jason Calacanis (00:04:03): get it's gonna be prorated monthly. It's gonna be a point 8 percent equity per month vested. David Sacks (00:04:07): I just think it's so fascinating that we went through all of this you know, I don't know, storm and drawing or whatever, this this, like Chamath Palihapitiya (00:04:16): -- Sturman drawing. -- David Sacks (00:04:16): months of non taping, and, you know, and this, like, all this turmoil in our relationship so you could get an extra 1% from us. Chamath Palihapitiya (00:04:25): 2% Jason Calacanis (00:04:25): each. 31%. I believe I should just so you know, I do this for a living. And if I do extra work, I believe I should and if you want me to be the the de facto CEO of this, them, David Friedberg (00:04:37): I should get a little extra Chamath Palihapitiya (00:04:38): -- David Sacks (00:04:38): We don't want that. Jason Calacanis (00:04:38): And you don't want that too. That's fine. That's fine. This is just gonna be a project we do every week, and then all your griffs whatever, you know, you're spinning out from the production board or whatever copycat app you're making, you can fucking do as an as a side graft. Here we go. Chamath Palihapitiya (00:04:56): Oh, do the intros. Let's get going. Come on. Let's go. Jason Calacanis (00:04:59): I'm not no. There's no int zero intros. No intros. Intros are out. David Friedberg (00:05:02): what about, hey, everybody? Hey, everybody. Jason Calacanis (00:05:04): I'll I'll I'll do a hey, everybody. Hey, everybody. Hey, everybody. Welcome to us. David Friedberg (00:05:08): As I'm freebie for you. Hey, Frank. It's free for you. Let your winner slide. Rainman, David. Speaker 5 (00:05:21): We open source it to the fans in a discovery. Jason Calacanis (00:05:29): Hey, everybody. Welcome to another episode. The all in podcasts were back for episode 84 with me of course, the Sultan of Science, the Prince of Panic, a The queen of Kinwa himself, David Friedberg. How are you doing, buddy? Great to be here. Great to be here. Alright. I missed you. David Sacks (00:05:44): you feel the tension? Jason Calacanis (00:05:45): There's still Speaker 5 (00:05:46): a lot David Sacks (00:05:46): of tension. Jason Calacanis (00:05:47): There's still tension. There's still no tension there. David Friedberg (00:05:49): Jake Hill and I will be hanging out tomorrow night. We'll we'll make it. David Sacks (00:05:52): Have you guys resolved it? Jason Calacanis (00:05:54): I I'm cool. I'm cool, Freightberg. Chamath Palihapitiya (00:05:55): I mean, David Friedberg (00:05:56): I bought a dinner. Jason Calacanis (00:05:57): I think we're he did buy me a wonderful dinner. Oh my lord after the Warriors game. Shout out to the Warriors. Alright. And, of course, With us is the rain man himself. David Sacks. How you doing, buddy? David Sacks (00:06:08): Good. Jason Calacanis (00:06:09): You ready to go? David Sacks (00:06:10): Don't try and deflect this thing on to me. I was only tangentially involved. David Friedberg (00:06:14): Says the guy who spent Chamath Palihapitiya (00:06:16): 72 David Friedberg (00:06:16): hours on David Sacks (00:06:17): the contract. I wrote a very fair contract so that we can move forward. Jason Calacanis (00:06:20): And then you proceeded to break it in the first 15 minutes by slandering me and disparaging me, but I'll give it Speaker 5 (00:06:25): a minute. David Sacks (00:06:25): Come on. That was good for ratings. Jason Calacanis (00:06:27): Good for ratings. Yes. I thought your name was pretty great. He did the meme of the two buttons of the superhero traffic. Chamath Palihapitiya (00:06:33): That was good. Jason Calacanis (00:06:33): That was good. Jason Chamath Palihapitiya (00:06:35): -- That was good. -- Jason Calacanis (00:06:36): making jokes breaking the breaking the non disparage clause. And then, of course, the dictator himself from some undisclosed location in a European city, I don't know if I'm allowed to say that. Jamal papa Tia. Welcome back, boys. Chamath Palihapitiya (00:06:50): Episode -- What's up, boys? Jason Calacanis (00:06:52): Alright. Well, since we last convened -- But Chamath Palihapitiya (00:06:55): Get it on. Jason Calacanis (00:06:56): Yes. The the all in summit is finished. All the episodes have been released, including Palmer Lucky yesterday. And here we go. The markets are in complete turmoil, spied down 21% year to date, down 17% year to date, as Saks has pointed out. That is not representative of what happened to growth stocks at the same time. And the May CPI went up and it was at 8.6. We also got to 75 basis point rate hike. Who wants to start here? Chamath. I mean, it's market. So maybe I'll just dump it to you first and then we'll go around the horn to Saxon and FreeBird. Chamath Palihapitiya (00:07:32): Wow. There's a lot to say. So bear with me for a second. But The thing that you have to do before you talk about what is happening now, I think it's probably useful to go back and you have to really start at the end of the great financial crisis. And the reason is there is a bunch of people coming out of the GFC who confused what the US government and some European governments were doing. At the time, there was a risk of a huge financial contagion And so the US stepped in and the Federal Reserve started to use their balance sheet to buy toxic assets. Right? And the ECB did that, and I think Japan did that as well. Anyways, a bunch of banks did it. I mean, a a bunch of governments did it. And then there was this body of pseudo scientist, civic economist who coined this thing called Modern Monetary Theory, which basically said, hey. You can keep printing money. and introducing it into the economy to smooth things out and to actually drive long term growth. And it turns out that a bunch of government officials fell for it. And if you fast forward to 2022, so 14 years later, You know, governments around the world had printed something to the tune of about 30, 35 odd $1,000,000,000,000 of money into the economy that should have never been there. So the thing to remember is, like, we have not necessarily just been obfuscating true supply demand in the last 6 or 8 months when we've been talking about a recession or inflation. We've been actually doing it since 2008. It's just that it's been building up in the system. So one of the things that we have to realize is that all of that money somehow needs to get destroyed in some way, shape, or form if the true economic equilibrium is meant to be found. What is true supply? What is true demand in the absence of government sloshing money around trying to prop up things that should not be propped up or buying votes or all the grifts that these folks have engaged in in the last, you know, decade and a half. have to get undone. So that's the backdrop. So if you think about taking $30,000,000,000,000 out of the global economy, You know, you're talking about almost, you know I think it's 85,000,000,000,000 is the world GDP. So, like, you know, it's it's it's almost half of an entire year's worth of global GDP. Chamath Palihapitiya (00:10:02): It's gonna take 3 years probably of the slow meticulous running off of money, you know, not reintroducing new money. So it seems like we're at the beginning of the beginning of something that's gonna be long and drawn out. Now that's separate from and that's separate from whether we're in a recession or not. That's just the bear market that we're in. Right? And so you have to look at asset prices today as a microcosm of a much larger trend that has to be about fake money pushing asset prices up. And now taking all that fake money out and finding out what the real price of something is. And I just don't think that takes 6 months. So for all the people that were you know, fingers crossed hoping that this would be the end of it. Fed raises 75. We're done with this. They're gonna raise 75 more. I just think that's not how it's probably gonna be. It's gonna take, you know, 24, 36 months. That may mean the bottom doesn't happen for another 18 months. So I think it's a we're we're in for a lot of choppy market action. Jason Calacanis (00:11:05): Sex, 3 asset bubbles, clearly all, you know, being impacted. We had stocks. Looks like that story was pretty violent Then we had crypto this last 2 or 3 weeks have been absolutely insane in terms of that asset bubble. And now record high inventories for homes. Record sales are now dipping below the average of the last 20 years and We're seeing mortgage origination just absolutely get crushed 6% mortgages just a couple of months ago. It was 2. x. for some folks. So when you look at those 3 asset bubbles, do you buy, chametz? Hey. We're gonna see even more application in these for another 18 months possibly, or do you think we've taken such crazy action? This has come down so violently that we're now bouncing along the bottom. launching along the bottom or 18 months of more pain? David Sacks (00:11:58): Well, the the stock market, especially gross stocks, may have taken the majority of the corn in but you're right. There are other asset classes, and I think we're gonna see the carnage start to rotate into those. So you're right. If you look at residential real estate now. The prices are at the highest they've been relative to median income since something like 2006, 2007 before. that sort of great real estate crash, that precipitated the greater session of 2008. So I think there are gonna be more more shoes to drop. I just wanna build on Jamas point about root causes here. Milton Friedman once said that there's nothing quite so permanent as a temporary government program. The temporary government program was quantitative easing. We had this great recession of 2008 that could have turned into depression. They broke the glass in case of emergency. They started this. QE, which is basically the government intervening to buy bonds in the market. They had never done that before, and they loaded up their balance sheet. The crazy thing is that program was still continuing until last year. Why? I mean, it was, like, on cruise control. And so last Chamath Palihapitiya (00:13:01): year -- No. No. It was it was it was continuing to last month, and countries like Europe are still doing it. 9% inflation in Europe and they're still buying bonds. David Sacks (00:13:10): Right. So if you go back to last year, the Fed bought 54 percent of the government's debt despite the fact that the economy was growing at, like, 5% GDP that it was bouncing back really strongly from COVID that you had the stock market at all time highs. And yet, they were still intervening with this massive QE And then when we got the the surprise 5.1 percent inflation print last summer, they didn't stop QE till the end of q 1. So you're right. They kept basically printing money, and it's still going on. And that's created massive distortions in the economy now. So the Fed, I would say, is the number one culprit here and Jay Powell is the number one culprit. But the number 2 culprit is the Biden administration. And I think Biden did three things very early on. In the 1st few months of his presidency, to effectively tank his presidency. Number 1, he canceled our energy independence on his first day in office, canceling the Keystone pipeline and making it much harder to drill. And, of course, energy inflation is the one factor in this sort of overall inflation. Number 2, he pushed through that last 2,000,000,000,000 of stimulus on straight party lines, the ARP, the American Rescue Plan after Larry Summers said economists in his own party said this is gonna create inflation. Don't do it. And then the third thing is, and no one really talks about this, is that Biden could have used diplomacy in 2021 to basically find an off ramp to this Ukraine crisis before it turned into a full fledged war. And if you listen to the economist the International Development economist, like Jeffrey Sacks. He basically says that Biden pulled his cabinet and said, listen, should we negotiate and compromise with the Russians They all said no and Biden handed down the order we will not compromise with the Russians. So now we have this massive war in Ukraine that's fueling food and energy inflation, it's gonna tank his presidency. And I don't even think there was any debate -- But Chamath Palihapitiya (00:15:01): we're but David Sacks (00:15:02): we are confident about this. Chamath Palihapitiya (00:15:03): We may not be negotiating against Russia, but we're enabling them to print enormous surpluses, meaning I don't know if you guys saw but there was an article today. Janet yellen is traveling around basically convincing folks to not include Russian oil from a bunch of import bans so that these Russian oil tankers can be insured why so that they can sell this oil to places like China and India, etcetera. David Sacks (00:15:33): The ruble's at a 5 time 5 year high. The ruble's at a 5 year high. Chamath Palihapitiya (00:15:36): We push for all these sanctions Europe gets on board and says, we're gonna do it and we're gonna take the lumps. And then we go around Europe and basically say, well, we kinda wanna fight this proxy war, but at the same time, we wanna try to fixed inflation, and we didn't mean to cause this, and it's completely disorganized what's happening. Jason Calacanis (00:15:53): Okay. So if you had 6 minutes in the pool for when Sachs would blame Biden for the economy. You win. Well, who who do you blame? I mean, David Sacks (00:16:00): you Well, David Friedberg (00:16:01): I mean, I mean, Jason Calacanis (00:16:01): we we talked about quantitative easing starting in 2008, so that that goes over a couple of presidents. And, again, the question I would have for you, Saks, is how much of the spending, the free willing spending, you know you know, was from the previous administration? because it does David Sacks (00:16:14): seem -- -- spending is a bipartisan problem. There's no question about it. But what I just Jason Calacanis (00:16:17): wanna make sure that we point that out. Yeah. David Sacks (00:16:19): For sure. And and Republicans only seem to find their principles on spending when there's a democrat in the White House. I totally get it. And I would like to see more fiscal responsibility regardless of which party is in power. And I like to see the Republicans less be less hypocritical in their principles on this. But look. Perfect. Here's the thing. The economy was bouncing back strongly last year and Biden still pushed for this last 2,000,000,000,000 of spending and then a 1,200,000,000,000 more on infrastructure. And then remember, the 4,000,000,000,000 of build back better where man should save them for themselves. Exactly. Jason Calacanis (00:16:49): I mean, what would if What would that have looked like? Friedberg, you haven't spoken yet. Thoughts on, you know, this these asset bubbles, I guess. And then the buying of the bonds seem completely unnecessary for some period of time. If we are acting as the 50% plus buyer of bonds. What kind of distortion does that create in the market? Because if the government's competing against other people in the marketplace to buy those bonds, How could they possibly be priced correctly? David Friedberg (00:17:17): Let's just be very careful about our framing. There's the US treasury, which issues bonds and raises capital on behalf of the US government for spending programs. Then there's the central bank, the Federal Reserve, And our central bank's job is to, number 1, maintain liquidity in the capital markets so that businesses can invest in growing their their products and growing their businesses and the economy grows, while not providing too much liquidity that you end up with inflationary effects. And inflationary effects means that there's too much money in market and you see that money find its way into escalating prices on different, you know, assets. And the Fed's long term goal remember is to provide a stated goal of Jerome Powell in particular right now with changes over time, but generally the intention of the Federal Reserve. is to make liquidity, to make cash available to banks who ultimately make it available to businesses, In such a way that there's enough cash in the system that the businesses grow and that people have capital to invest in growth, while keeping inflation at Chamath Palihapitiya (00:18:29): 2%. David Friedberg (00:18:29): So their long term target is 2% inflation. And it's also correct me if I'm wrong, Shane Brown. Making sure that there's enough cash to support economic growth. So remember, last year, you'll remember Stan Druckenmiller was very public about how insane it was that the Federal Reserve was still buying bonds. And so so there's one way to introduce cash into the system is to make cash available as a loan to banks, and then those you know, they use that money to loan to businesses, and it makes its way through the economy. Another way is for the Federal Reserve to step in and actually buy bonds freeing up the money that other people would be otherwise using to buy bonds to go and invest in other things. So they're effectively forcing liquidity into the market by taking bonds out of the market. And last summer or q 2 of last year, Druka Miller was pounding the table saying, guys, the economic indicators on how quickly the markets or on how quickly the economy is growing relative to how much inflation there is, indicates that we should stop buying bonds and we should stop injecting liquidity into the markets. This makes no sense it is nonsensical. And there was no strong point of view from the Fed at the time other than There was uncertainty about the the bounce back of the from the recession from COVID. There was uncertainty about what else was happening in the economy, and, yeah, at it, but the the numbers, the economic indicators we're showing very clearly, the economy is growing at a robust pace, low unemployment, and inflation is starting to pick up, holy crap. It's time to cool it off. And the Fed made a judgment call. Their judgment call really kind of was to keep going. And then we end up in this massive runaway inflationary problem where if you keep too much liquidity in the system for too long, you have inflation even if you have economic growth. David Friedberg (00:20:06): And now by pulling the money out of the system super, super fast, we reduce the inflationary effects potentially, but we tank the economy because now all this money coming out of the market means people are spending less and buying less and businesses have less to borrow. Right. The borrowing costs are high. And then that that's that's the big vacuum though. Jason Calacanis (00:20:22): Hold on. Let me go to Chamath and then Saxx. David Friedberg (00:20:24): I just don't see one thing. The the rate the rate in which we pull the money out, which has had to be really, really fast over the last few weeks. can cause a recession. And that's the the biggest concern right now, is will that actually trigger a massive recession or not that everyone's watching? Jason Calacanis (00:20:36): So, Shamalff, I guess, act one of the things we need to clarify here is the actual mandate of the Fed. I was under these understanding that the Fed really was there to make sure of maximum employment and that, you know, low interest loans were available and price stability. These are the were the stated goals for a long time. David Friedberg (00:20:53): Not low interest rates. Capital capital Calacanis available for the economy to grow -- -- moderate rates. Chamath Palihapitiya (00:20:59): -- David Friedberg (00:20:59): without exceeding inflation of 2%. That's the goal. Jason Calacanis (00:21:02): So maximum employment, price stability was also in there. That's my GDP David Friedberg (00:21:05): growth because remember, we can't ever pay our debt if our GDP is not growing. Jason Calacanis (00:21:09): Okay. David Friedberg (00:21:09): while minimizing while keeping inflation below 2%. Chipmoth, whatever point you want to make, feel free to make. But, also, Jason Calacanis (00:21:14): I was just wanting to know from you. Where where did the fed go wrong? with their mandate if at all here because we do have maximum employment right now. We have out of control price stability. Chamath Palihapitiya (00:21:24): Look. Here's the thing. You you you I think we have to also be sensitive to the fact that the fed operates on a certain class of data, and that data in the 21st century is pretty pathetic. Nick, you can probably find this, but there was an article. I think it was in the New York Times that really walked through how CPI is calculated. and it's a bunch of people that work for the government that walk around with iPads, building relationships with local businesses and all these random places all around the country. and asking them to, you know, chit chat for 15 minutes and do these surveys. Now you would have thought that in 2023 or 2022, what the government would have said to, you know, Visa, Mastercard, American Express, all the payment rails, the banks, and Stripe is, send me a feed in the following structured way so that I can actually have an absolute precise sense of inflation because inflation really only occurs when a a good or a service trades hands for money. Right? And you calculate what did that thing trade at the day before, and what is it trade for today? So you could get an absolute precise sense of it. Instead, we do this random sampling thing and Jason Calacanis (00:22:31): it's back to Chamath Palihapitiya (00:22:32): -- -- David Friedberg (00:22:32): humans, etcetera. Chamath Palihapitiya (00:22:33): if you read this article, your takeaway will be, oh my god. This is very rickety, and it drives an enormous hammer that we use try to manage the economy. That's the first thing. I think you need to buckle your seat belt because the next 3, 4, 5 months of CPI will probably be very, very bad. 7, 8, 9%. Why? There are a handful of components that have gotten completely runaway. Number 1, the biggest one is rent. And so rent works on a 3 month lag. We're gonna reintroduce what the true owner's equivalent rent is into CPI. So we can already forecast that CPI going up. Oil is at a 105 bucks a barrel. Russia is basically trying to break the back of Europe by now messing with their nat gas supplies. The German energy minister yesterday said that if that happens, it could be a contagion equivalent to Lehman Brothers with respect to energy. When you play all of these things out, What you have is unfortunately rampant runaway costs that really have no mechanism to get back and check In the absence of some real governmental changes, our policy on this Ukraine Russia war, you know, how we intend to sort of work or cooperate or fight with China. All of these things have to get solved. So in the absence of that, prices are gonna continue to go up. And so what does the Fed do? How does it throw away what little credibility it has left? When there's 8 9 percent inflation prince, and saying we think we're done for right now. You can't do that. So they will overcorrect because there is just gonna be so much pressure for them to act. All roads, I think lead to lower equity prices. And I think what David said astutely is We've seen the first wave, but now it has to touch all these other areas. For example, we have gotten totally drunk on debt as a country. one of the most obvious places where we've been serving alcohol far too late into the night is in the financing of all these private equity leverage buyouts. Yeah. Leverage Jason Calacanis (00:24:49): is dangerous. Chamath Palihapitiya (00:24:50): These are sketchy companies that are sort of, like, teetering on insolvency at times where private equity comes in, levers up the balance sheet with debt They price it right to the edge of what's legally allowed or what's financeable, and then they go do it. But that's all assuming the economy continues to grow. And so if all of a sudden you have some recessionary forces or prices go up and earnings don't, you'll have, you know, a contagion in the debt markets. You could have a contagion in the commodity market. So we are dealing with some really tough boundary conditions. David Friedberg (00:25:24): Real estate. Most Americans have most of their net worth tied up in real estate. Yeah. And if we see a 30 30 percent correction in real estate, it can be a real problem, particularly with rising interest rates, inability to refinance. Jason Calacanis (00:25:35): Sachs, the dual mandate is, hey. Keep inflation 2% and then keep the unemployment rate reasonable. The unemployment rates amazing with still so many jobs out there even with these layoffs. In fact, one might argue we made too many jobs available to the point at which people maybe aren't working as much or just, you know, underworking and and not taking advantage of these amazing jobs out there. Where do you see this going Saks now that we can't seem to get inflation under control? And people are looking at their 401 k's. They feel a lot poorer, but is the demand side gone yet? I mean, have have consumers decided I'm not going to buy the next house. I'm not going on this vacation. $6 gas makes no sense. $7 gas makes no sense. I'm not gonna go on this weekend excursion. I'm staying home. David Sacks (00:26:22): Yeah. I mean, look, consumer confidence just had the biggest drop think, in 40 or 50 years. We if you look at, like, right track, wrong track polling for the country, only something like 24% believes that the country is on the right track right now. If you pull people, are we in a recession? And they don't look at, like, you know, the quarter over quarter growth. They just look at what they're feeling. 56% of the country are says we're already in recession. It's about 70% Republicans, about 50% Democrats. So the country is already hurting. People are already feeling it. And this is gonna Chamath Palihapitiya (00:26:55): -- Jason Calacanis (00:26:55): Is this psychological sex, or are they actually making decisions now to spend less? David Sacks (00:27:00): No. I think it's both. I mean, you start with the real inflation and people feel it, and they also hear about it in the media. And then they start to adjust their their decisions. And this is the problem with fixing yeah. This is the problem with fixing an inflation problem as that is based on expectations. So once people start to expect inflation. Then businesses have to start operating as if there's gonna be an inflation rate next year, so they have to start raising prices. And it's actually very hard to put the horse back in the barn. And this is why I think the Fed is probably more likely to overshoot on raising rates is because if they really wanna stop inflation now, they really have to slam on the brakes. And then that's gonna lead to a recession. And if they don't, then we end up with, like, a chronic sort of stagflationary situation where you get lower growth and inflation persist. So it's a bunch of bad options right now. And I think to the point Friedberg is making it earlier, you know, this Ray Dahlio piece that he just published as a blog on LinkedIn. He said, look. What you want is a fed that is alert at the wheel. and gently applies the accelerator or the brakes based on what's happening. And instead, what we had is the Fed was asleep at the wheel They should have started reacting gently to inflation last summer. Instead, they waited 9 months, and now they're slamming on the brakes. And this is a bunch of bad options. I think we, you know, we are gonna have a recession. Jason Calacanis (00:28:21): The way this kind of can I David Friedberg (00:28:23): just make one suggestion? I wanna put this out there because I sent it on our text, and I Anyone that's listening, in DC, please think about how we can change the way the Federal Reserve operates. But it doesn't make sense to have humans with subjectivity applying their subjectivity to a set of, as Chamath pointed out, infrequent data that comes in chunks and comes in spurts and only having a mechanism of changing rates by 25% each month or sorry. 25 basis points once a month. we should have continuous real time monitoring of economic data and software or AI or some sort of informed set of models should then predict what inflation and economic growth rates will be as that data comes in. react in real time, and on a daily basis, we should be adjusting the overnight rate in a one basis point increment. So we can have the ability to more quickly, more efficiently, and in a higher resolution way. Jason Calacanis (00:29:22): Yeah. Smooth it out. David Friedberg (00:29:23): A smoother way and a higher resolution way make these adjustments, It's silly that we're still operating the way we did in a pre digital age as it is with a lot of industries and a lot of bureaucracy. But in this case, it's particularly prudent, and it's becoming particularly important and relevant as we're seeing right now with the stagflation risk that we're facing where we could have massive inflation and recession at the same time. Because if we had made smaller adjustments every day for a period of time as these economic data indicated that we should be making them more quickly we would not be in this problem. And I don't think that having humans and their judgment should necessarily be the way that we drive this thing. David Sacks (00:29:56): Listen. I we we don't need them making daily adjustments. I don't think Fed can fine tune an outcome like that. I just think that they can't be asleep at the wheel for 9 months. David Friedberg (00:30:04): I mean, we should have AI running this freaking thing. I mean, what's, David Sacks (00:30:07): like Listen, I I Speaker 5 (00:30:07): don't I don't think when you when you said that, David Sacks (00:30:09): you know, Congress needs to somehow change the the way the Fed does business. I actually think that the Fed has the correct mandate, which is the dual mandate of considering inflation and unemployment. We shouldn't be basically chunking that up by adding a bunch of mandates. And, actually, the administration has been trying to add mandates. They basically gave the Fed a mandate around climate change. They gave them a mandate. David Friedberg (00:30:31): Yeah. No. I don't don't change don't change the mandate. They they Jason Calacanis (00:30:34): have to try to chase -- -- multivariable. Yeah. Exactly. David Friedberg (00:30:37): The tools the tools should change. David Sacks (00:30:39): Yeah. Right. We really wanna focus Fed, and I think the administration has been politicizing the Fed by giving them a bunch of mandates. Totally. Look. If you wanna pursue those policies, do it at HSS. Do it in the interior department. don't basically confuse the Fed and make them pursue climate change or equity or what have you. I mean, that is just bad that is not their remit. Right? Their their remit is controlling inflation. I really think this just comes down to the fact that for 9 months, they sat on their hands and ignored the inflation evidence. Remember this word? Transitory? You know, we heard so much last year about inflation being transitory. How'd they know that? You know, why didn't they start rethinking this quantitative easing. Chamath Palihapitiya (00:31:18): The headline from The Wall Street Journal says it all how the inflation rate is measured. 477 government workers at grocery stores. David Friedberg (00:31:25): Yeah. Software should be taking data from different feeds and software can learn -- I Chamath Palihapitiya (00:31:31): don't I don't agree David Friedberg (00:31:31): with you. And what are the predictors of inflation and what are the predictors of growth? and make a recommendation. Chamath Palihapitiya (00:31:37): I don't agree with you that it needs to be real time. In fact, I think it would do more harm than good, but I do think that we can know these things without sampling in such a porous way. And, you know, you can work with private companies to give you the feet of data to to allow you to do it. And now, you know, we're going to look. We've had a system of overcorrecting and undercorrecting for years The problem is the stakes get higher and higher as the economy grows and becomes more complicated and entertaining. David Friedberg (00:32:05): And we have more leverage and we have more leverage and we have more industries that are leveraged and more asset classes that are leveraged like housing. Because -- I mean, this is such an -- -- by even a few points, you could tank everything. Chamath Palihapitiya (00:32:17): I also wanna tell you guys a quick story 1 of the most interesting canaries in the coal mine of all of this was 2 days ago and what happened to Facebook. And this sort of ties a lot of this stuff together in terms of, like, economics, inflation, asset prices, equities, tech, we should we then we can try to talk about non sort of, you know, big tech. But the everybody was saying, oh gosh. The mark gonna rip on the open. You know, we were closed for Juneteenth. And then on Tuesday, the market you know, the S and P was up like 250 basis points, 2.5%. And the Nasdaq was also up, you know, call it maybe 300 basis points roughly. But Facebook was down like 400 points. Right? So it's a big spread. And why is that? And I was like, this makes no sense to me. What is going on with this price action? Everything was up. Apple was up. Google was up. And so I called around and, you know, I was like, why is this happening? And this is the best explanation I got. When you look at who the incremental buyer is, in the stock market. It tends to give you a sense of whether prices can go up or will continue to go down. And the Pourist informed buyer tends to be retail. And the most informed buyer tends to be these very large institutional hedge funds. Right? So there's a spectrum. And Facebook is an example of 1 of the of big tech that is poorly owned by retail. So it's mostly owned by smart money. And the case that smart money makes for owning Facebook is that it's got an extremely cheap price to earnings ratio. so you must own it. And what they said was that they you know, looking at the tea leaves of consumer demand, What they actually re underwrote was that, actually, it's not that the price to earnings was cheap. It's at the e in PE was just wrong. And if they pass through all of these increases in inflation and, you know, their earnings expectations into Facebook, it's actually more like fair value at a lower price. That's why they sold it so much on a day where the market was up. Now why is that important? Well, eventually you're gonna touch all these other stocks as well that are gonna go through earnings revisions in this recession. This is where I think Wall Street has done a very poor job on behalf of retail. Chamath Palihapitiya (00:34:39): If you look at the average estimates of earnings, you will be shocked to hear that Wall Street actually has this year being record earnings next year earnings continuing to go up. How is that even possible? Jason Calacanis (00:34:53): Well Chamath Palihapitiya (00:34:54): -- Jason Calacanis (00:34:54): How is that how is that if you're sitting here, Chamath Palihapitiya (00:34:56): How do you see how do you see earnings continuing to go up into these prints like this? When you cannot pass through you know, 80, 90 percent increases in energy and COGS and whatnot. How does it matter? Jason Calacanis (00:35:09): I think the the what people would say is maybe they're gonna lower their costs. And so with layoffs, and can and lowering salaries and lowering spend on advertising, you know, the earning the e could go up if people start bell tightening, and then we start having companies that are being run, you know, just more Chamath Palihapitiya (00:35:28): -- David Friedberg (00:35:28): You'll Chamath Palihapitiya (00:35:28): have to sell more. You'll you'll have to sell fewer things because there'll be fewer people with jobs to buy things. Jason Calacanis (00:35:34): But we have 10,000,000 job openings. So this is the weird thing about this recession is because we haven't let a lot of people immigrate into the country. David Friedberg (00:35:40): But it I mean, Jason Calacanis (00:35:41): is that we have so many jobs. Chamath Palihapitiya (00:35:42): Is that what you think the consensus view on Wall Street is that basically a bunch of people get fired, and so that's why earnings continue to go up? Jason Calacanis (00:35:49): Well, they stop hiring for 2 years in advance. Right? Facebook said they were hiring for, like, 2024. Their hiring plans were looking out 2 years. now if they go on a hiring freeze, maybe there's you know, and that's their number of you thoughts. I'm just putting out a theory. Chamath Palihapitiya (00:36:02): I'll give you the counterfactual. I think Wall Street's wrong. Okay. And I think that earnings are gonna go down this year and will definitely go down in 23. And so I think what probably happens is the entire world of equities needs to get repriced at a lower price. And in that, it's gonna put enormous pressure on these cash burning non profitable tech companies. Jason Calacanis (00:36:25): Well, that's for sure. But in the ones that are profitable, Shamov, they're aware of this. Facebook just canceled, like, 2 of their prototypes they were working on to save money. So that whole $10,000,000,000 into, you know, VR, I think they're trying to make that number look smaller smaller. Sachs, what do you think? David Sacks (00:36:40): Well, I think you're bringing up a really interesting point with this. The 10,000,000 you know, job openings. And now that that number is coming down really fast as companies close open recs and they basically freeze hiring. So that number is gonna come down very, very fast. But one of the major contributors to inflation is that The labor force participation has been very low. About millions of people left the lay labor force during COVID as a result of the stimulus checks and the freezing of rent and evictions. I mean, look, rents are not people's number one expense. If they don't have to pay rent for a couple of years, A lot of them may not work or may not work as much. So we've had this problem where we really need about 2 million people to reenter the labor force. And if you describe inflation as too much money chasing too few goods, we need to increase production and productive Palihapitiya. And when you have millions of people dropping out of the labor force, you've got less goods and services being produced that people want. So just reducing the money supply is not gonna get us out of this mess. We also need to improve productive capacity. Jason Calacanis (00:37:46): Just to put a number on that, we we peaked in the 1999 era at 60 7% of participation in labor force, and then it's been down in this low Chamath Palihapitiya (00:37:55): 60, 61, 62, Jason Calacanis (00:37:57): and it continues to be low. But that is the solution. Here we get that 7%, that gap Chamath Palihapitiya (00:38:02): -- Speaker 5 (00:38:02): You can't just fix David Sacks (00:38:03): the demand side because if if all you do is fix the demand side, what you're doing is you're killing the economy to reduce demand in order to bring it down prices. That's very painful. It's all pain. But what you also have to do is fix the supply side. You have to increase the availability of all the critical inputs into the economy. So labor obviously is one of them, but also critical resources like energy, you know, oil, natural gas, and so on. And that goes back to fixing the supply chain, hopefully getting a resolution of the situation in Ukraine, the war. So if we could fix those things, it's a way to improve the economy without creating more pain. Jason Calacanis (00:38:40): Friedberg, if the prices of just daily living, of which transportation and housing and health care are now the top 3, I believe, groceries in health care, I think, have flip flopped a couple times in the last decade in terms of cost. If those things go up, Would that make people want to go back to work to pay for those things, or does it create capitulation where people say I'm moving in with my cousin? I'm gonna lower my balance sheet. What what is your prediction there? Are more people gonna go to or do we still have this, you know, call it 10 million people in the country who just don't wanna go to work? David Friedberg (00:39:10): I've mentioned this in the past, but I think there's more there's another kind of interesting outcome of this. We we've had several months in a row of pretty significant increase in consumer credit, And I think the the reason is things are getting more expensive. People generally do not like to reduce their spend on stuff or their living their lifestyle. Once you get used to a lifestyle like going out to dinner once a week or going to the movies every week and and you create a budget, you create an a life experience around that, a model around that, it's very hard to say, okay. I gotta cut budget now, and I gotta reduce my life. I would rather say I'm gonna keep doing that, or at least there's some inertia or some item, to keep spending on the things that you've been spending on, and the way you do that in a model where you don't have as much income or you have less income and things are getting more expensive is you take on more debt. And so there is a little bit of a nervousness that I have had that people's response generally the consumer response to inflation and to a a kind of a a shifting income environment like this is not necessarily to cut as quickly, but take on more debt and keep keep buying. And so I I am a little nervous about that, but I do think, obviously, at some point, everyone has to figure out ways to generate income. There have been a lot of these kind of ancillary markets that are typically the first to go, these extra services markets where people, you know, have found other ways to make money, side hustles, and whatnot that may or may not be as robust if they have been historically. And so people may need to go back for more secure stable income and and these jobs get filled. I look. I mean, as we all know, there's an opportunity, and and this is the whole concept, I think, behind build back better. it's not super thoughtful in terms of the approach, I think, based on my understanding of where that money is supposed to go because it doesn't create long term jobs. But there is an opportunity to build new manufacturing and new infrastructure jobs in the US right now that could enable a healthy transition here. But that legislation needs to be done smart. David Friedberg (00:41:20): It it can't be done with this. Like, hey. Let's build a bunch of bridges, and then a bunch of contractors make a bunch of money, and no one has any long term jobs out of it. we've gotta find ways to spend money on creating long term sustainable, you know, new industry here. Jason Calacanis (00:41:33): Yeah. And job openings, 11.4. It's come down about Chamath Palihapitiya (00:41:36): 6 Jason Calacanis (00:41:37): or 7%. So, you know, it's it's gonna be trailing, but it's for sure we're seeing it in our industry with the hiring freezes. that, you know, we're gonna work through those open jobs. What are the chances that inflation gets under control? in the next year? And should the Fed go for, like, the 1% slam on the brakes? There was some talk about that. Obviously, they went for 50 -- A lot David Friedberg (00:41:58): of the remember, a lot of the elements that we were kind of saying, oh my gosh. I can't believe the climate crisis. So, you know, wheat is down, I think, 30%, lumber is down, Chamath Palihapitiya (00:42:08): 50%, David Friedberg (00:42:10): gas prices are coming down. So, you know, there there are some of these, you know, commodity spikes that we've experienced over the past couple of quarters, particularly recently, that are really that have had a significant part of the fueling effect on the inflationary trickle down into ultimately end products and whatnot. And those are coming down. You know, there's a real question of how quickly that flows through the economy and flows through to the price of goods that that consumers ultimately end up paying for. the gas prices right now are the biggest concern. Right? Like, unless you can get gas prices under control, that always always has a massive impact on spending. on consumer spending, which drives a recessionary cycle. And so the if I'm the Biden administration, I'm, 1st and foremost, I I don't care about the general inflationary indicators as much as I care about getting the price of gas down. That is a super super critical number to to fix. Jason Calacanis (00:43:05): Is is this are these gas prices gonna change how Americans look at what car they buy? Because they're gonna get worse. Chamath Palihapitiya (00:43:11): -- Jason Calacanis (00:43:11): last time we had that. They're gonna get worse. -- started looking at not buying SUVs. Chamath Palihapitiya (00:43:16): We could have $7 gas. Jason Calacanis (00:43:18): Oh, I there was a picture, actually. I tweeted in California, there was a $7.11 gas. Chamath Palihapitiya (00:43:24): Broadly. Broadly. We could have $7 gas all throughout the country. David Friedberg (00:43:27): But, Jay Cal, the you know, remember, the average automotive automobile in the US lasts for 12 years. That's how often people change out their cars. So that's 8% of the fleet being changed per year. Yep. And the interest rates for auto loans have spiked like crazy now with this change in the Fed rates. And as a result, the delinquency on auto loan port Folioids has spiked like crazy. Yeah. And so, you know, yes, sure. Theoretically, people will think about buying an electric car, but most people aren't thinking about that on average for 5 or 6 years from now because that's the average of a 12 year cycle. Right? 5 5 years from now. Chamath Palihapitiya (00:44:00): Wait till all these Peloton bikes need to get repossessed. Jason Calacanis (00:44:02): Well, All these actually, the the the weight for cars and the over pricing of cars has ended in the last two months. And there are multiple cars now in the 25, 30 k for a fifty plus mile per gallon car. I think this actually one of the silver linings coming out of this is people might actually stop buying as many SUVs or, you know, I think our average is in the low twenties right now, and Europe is in the high forties. Chamath Palihapitiya (00:44:23): The problem is, like, you know, every other for miles per gallon. part of the government. It acknowledges that you have to really ring fence and protect consumers. Right? Like, if you look at the securities laws They're meant to protect them at all costs. And, Jason, you've, you know, you've been frustrated by some of the rules that haven't changed. And when they changed, they changed so slowly But the reason is because sometimes that you you want people to make good decisions. And if you, you know, give them a bunch of firepower, they're just gonna spend And, you know, what we really did was we gave folks just a ton of money and what did they do? They acted rationally. They spent it. Yep. Now we have to take it all back, and that that's I don't think that's gonna be as easy or as simple as people think. Jason Calacanis (00:45:12): What what percentage of the money supply do you think is in excess right now in the United States? Chamath Palihapitiya (00:45:16): Well, look. I told you this because I wrote this in my annual letter, but it's it's stunning that, you know, the reason the stock market went up, dollar for dollar was actually tied to the growth in the m 2 money supply. The correlation was point 92. So for every dollar this that that the Fed printed, the stock market went up by 92¢. So, you know, it stands to reason that if the fed is gonna take $3,000,000,000,000 to $5,000,000,000,000 of value out Then we have to re rate the equity markets by 3 to $5,000,000,000,000 at a minimum. And then you have to re rate and re baseline for earnings. so that's probably another 20 or 30 businesses. Jason Calacanis (00:45:53): Yeah. Let's talk about the end game here. The rates go up. People stop buying homes. People go back to work. and energy prices come back down because people are not buying as much of it, spending goes down, and people rebalance, and that takes a year. Chamath Palihapitiya (00:46:09): The job openings could also disappear, by the way. I mean, like -- They're Jason Calacanis (00:46:12): going down 400,000 a month is what you know. Chamath Palihapitiya (00:46:14): Yeah. You're you're assuming that all of a sudden, like, demand stable, but it's not necessarily stable. And and in a demand and in a demand contraction, yes, people get fired, but then also new job openings change. Right? Yes. There's fewer of them. They're they're more specific in the way that people -- Salaries go down. Right? Jason Calacanis (00:46:30): That that's not the Chamath Palihapitiya (00:46:31): least. -- go down. Jason Calacanis (00:46:32): That's the piece I'm waiting for. That to me, that would be I don't know if you guys have early warning signs, but the 2 early warning signs I have in my, you know, job of investing at early stage companies is when people Chamath Palihapitiya (00:46:42): -- David Friedberg (00:46:43): Well, Chamath Palihapitiya (00:46:43): what's the average salary for an engineer? If that hasn't gone down by now, then it's -- But that that's David Sacks (00:46:47): a lagging indicator. Right? Jason Calacanis (00:46:49): It's -- Without me to meet capitulation. Salaries go down or people instead of laying people off sacks, they do salary cuts out of company. That is really hard to do. Right? That Yeah. David Sacks (00:46:58): I know. I don't think they Jason Calacanis (00:46:59): do so much. -- preferences and deals. David Sacks (00:47:01): Right. I think the way the salaries come down is that startups freeze their hiring plans where they late pull off. And now all of a sudden, the war for talent sub sides, easier to hire people, and so there's no need to keep raising up salaries. Jason Calacanis (00:47:12): Are you seeing that? Yeah. David Sacks (00:47:14): I think we're seeing the beginning of it. But I gotta tell you, I mean, I think that startups have not fully embraced or or realized what what's happening. I just got back from the co 2 Summit over the past couple of days. This was an event that was hosted by Kotu, you know, whose founders are Philippe and Thomas Lafonte. Very smart guys, very smart investors who've been public market sort of hedge fund investors for a long time, but also have a large venture fund to do growth stage investing. Some of the takeaways from that conference, it's some of the more vivid lines that stuck with me is that one of the speakers said that he said that when it comes to runway for startups, 3 to 4 years is the new 2 years. Because if you just have 2 years a runway, you're gonna need to raise in a year And in a year from now, we're giving them over a recession. They're predicting they're forecasting that capital availability is gonna decline about 75%. The amount of money that's venture money that's available at the ecosystem, down by three quarters. So if you try to raise in that environment, either you're not gonna be able to or investors are gonna you know, have all the leverage. You're not gonna get terms that you like. So they were recommending 3 to 4 years of runway. So that is not what I think a lot of companies Chamath Palihapitiya (00:48:29): -- That that Jason Calacanis (00:48:29): just not even possible. David Sacks (00:48:31): The other thing that the other really vivid takeaway is that they did some polling of the startup founders who are in attendance. Okay? And what the numbers basically showed is a is a contradiction. On the one hand, the founder sort of understood that intellectually, that we're headed into a downturn, we're headed to a recession. And so the polling reflected that. On the other hand, if you ask the founders how they're gonna react to it, What are you gonna do about it? Are you gonna cut headcount, or are you gonna accelerate your business to beat competitors? Everybody said, oh, we're gonna out accelerate our competitors. So everybody thought that there are the exception. In other words, everyone understood we're headed for this massive recession that's gonna be really bad, but we're gonna be the one company That doesn't need to cut. We're actually gonna grow. We're gonna accelerate during the downturn. So there was a real contradiction in how founders are interpreting this advice. And I have to tell you when I talk to founders in our own portfolio, what I see is, you know, we've now done multiple meetings where we lay out what's happening in the economy. And they get it. They understand it. And when we do a board meeting, they're like, okay. We're gonna go look at our plan, and we're gonna reevaluate, and we're gonna make major cuts. We're gonna bring our burn multiple down to, you know, the where it should be. But then, you know, when you check-in with them a couple of months later and you're like, where are you on the plane? Jason Calacanis (00:49:44): Haven't taken the medicine. David Sacks (00:49:45): It's or or the medicine is like a 10% cut. And I'm like, guys, like, 10% is a performance review. Jason Calacanis (00:49:51): Yeah. Like -- That's what you should be doing every year anyway. David Sacks (00:49:54): Yeah. You get rid of the bottom, like, the c performers. You promote the a's and b's, and you get rid of the c. So no one really wants to take the medicine yet. And know, it's a problem. I mean, Sequoia has this great chart called survival of the quickest that we should put up on the screen, and it shows 2 lines. One company is the one that takes medicine right away, brings their burn down to where it should be, and then they're able to grow from there. And they really will out accelerate the competitors. But then there's the company that basically delays and waits. And what happens is by the time they finally get religion to make the cuts, is too late because even after they make the cuts, they don't have enough runway on the other side. Jason Calacanis (00:50:31): They burn the capital. Yeah. David Sacks (00:50:32): They burn the capital, and then they're in a death spiral. So I think, you know, what what companies need to think about is this is this 75% reduction. Imagine if you did a $100,000,000 round last year, Right? If you go try to raise next year in the most recession, that $100,000,000 round might look like a $25,000,000 round. So imagine if you're burning an extra 25 to 50,000,000 more than you should be according to your burn multiple, you're basically burning the next round. Forget the fact that the last round gave you all this cushion. Think about how much of the next round you're burning. And if you reroute your thinking around that, it could lead to a change in behavior. Jason Calacanis (00:51:09): Heading totally, I'm seeing people come back from rounds where they were expecting 40 or $50,000,000 in some cases like with 250 k in revenue, 500 k in revenue, they were living in a 200 300 times revenue kind of world. It it was just insane. And, you know, they're now coming back with $10,000,000 caps, $15,000,000 caps. on their notes. Chamath Palihapitiya (00:51:34): I was offering a $100,000,000 of -- at a 50% discount, and I said, call me when you get to 65. David Sacks (00:51:40): and that's the best company. Jason Calacanis (00:51:42): That's literally the best company. That's the best and the best founders to bet on, right, of of probably most private companies since then. You don't David Friedberg (00:51:48): like that valuation, Chamath? What is that valuation? 40 at 50 percent off? Chamath Palihapitiya (00:51:53): I I it's it's less of a judgment on -- but it's just more an observation that we're at the beginning of the beginning. Again, we're at the beginning of the beginning. Okay? For all of us that lived through 2000, this was 4 years of sheer hell. and a grind. Now we have $30,000,000,000,000 that we have to work through the economy. A recession we have to overcome. A war we need to end and people all of a sudden assume that 2 or 3 rate hikes in 5 or 6 months of headlines are enough. And on the margin, maybe they're right. But from my perspective, you know, it's less a judgment on, but it's just an observation that we're at the beginning of something that just fundamentally has to take some amount of time to work its way through the system. And so I don't understand why anybody would give up their liquidity in this moment right now. Why would you? Why would I why would I give up a $100,000,000 of cash in my bank account? I would not do that right now. David Sacks (00:52:50): Does the cash the caps the cash gives you so much optionality. It's basically Chamath Palihapitiya (00:52:54): So much optionality. David Sacks (00:52:55): So you're gonna be looking for distress. And this is the thing. And so you have a huge amount of capital leaving the ecosystem. Like we know, Tiger is basically out. I mean, they were the basically, the default provider of growth stage capital over the last couple of years. So you have a lot of liquidity leaving the system. And then the liquidity that's in the system is waiting for distress. So you're right. And at David Friedberg (00:53:15): There's a quarter I mean, like, we talked about, there's a quarter $1,000,000,000,000 of, quote, unquote, dry powder. I mean, I know Shamak thinks that people are gonna give that money back, but There's never been. David Sacks (00:53:23): There's like Jason Calacanis (00:53:24): There's not there's Speaker 5 (00:53:25): not that Jason Calacanis (00:53:25): much that David Sacks (00:53:25): a lot that's deployed. Chamath Palihapitiya (00:53:27): They're not gonna give it back a lot that's deployed? David Sacks (00:53:29): Yeah. Look at that that Tiger Fund. Tiger raised a new twelve $1,000,000,000 fund that was announced in March. And TechCrunch, we covered it on the show a month ago. Yeah. The TechCrunch article saying it was already deployed in 6 months. David Friedberg (00:53:41): So -- I wasn't on that show. David Sacks (00:53:42): Oh, that was the one where where Jake will try to replace you with Brad Gerson. And Chamath Palihapitiya (00:53:45): we should we should really show weekly going forward instead Jason Calacanis (00:53:48): of monthly. It might be better to keep up with these trends. Okay. Speaker 5 (00:53:50): Speaking of your end. Jake, you made a a good point there. Please go back just for David Sacks (00:53:53): a second. You said the founders were they're still anchored on this world of 2 to 300 times ARR valuations. Let me just tell you where the new valuation levels are, and this is obviously in flux. But I'm pretty sure the valuation levels are at 20 to 30 times ARR. That's for a company that's growing 3 x year over year. Chamath Palihapitiya (00:54:09): 3 David Sacks (00:54:09): x year over year. That's the best of the best. The reason how you get David Friedberg (00:54:13): there -- -- 10 x next year is ARR basically. Yes. Exactly. And and David Sacks (00:54:16): the way that you get there is that if you look at, like, the the multiples for, like, the best public SaaS companies, that are, like, say, a 40% grower like a snowflake. They're at 8 x. Yeah. So, you know, so, basically, it's -- We're Jason Calacanis (00:54:29): giving more credit for the higher growth rate. Yeah. David Sacks (00:54:32): Right. But they really have to have that 3 x growth. So, you know, if you're a founder, think about the fact that when you try to go raise next year, Assuming you're the best the best, you'll get 20 to 30 times a r r. Now think about you're spending not last round's money. You're spending the next round's money. If you could just reorient your thinking that way, you'd burn a lot less money. Jason Calacanis (00:54:54): Yeah. The the I literally had a deal you know, in the 3040 range, and and angel investors who never early stage angel investor seed funds that did not look at multiples are now asking me because when I send a deal memo to 10,000 people for my syndicate, people hit reply. People are hitting reply now and saying, I did the math on this. This is the multiple. This is this. This is the burn multiple. They're actually doing the math. So we all of a sudden have discipline that I have not seen in this investor class. in the 10 years I've been doing it. So that is, to me, one of the great silver linings here. I think people are gonna do a better job with their personal balance sheets. They're gonna invest less in speculative stuff, and they're gonna invest more in the actual builders who have discipline. So we're gonna see this massive swing to discipline, and we're gonna flush out all the people who don't have product market fit. Chamath Palihapitiya (00:55:47): Think think think about all those folks like, what's happened in the last 6 months? It's like they've been long unprofitable tech. It's got smoked by 75 to 85%. They've been long crypto. That's gotten smoked by 65%. More. Jason Calacanis (00:56:01): Yeah. Chamath Palihapitiya (00:56:01): I mean, if they weren't using a calculator, then they as hell should be using a calculator now to figure it out. Jason Calacanis (00:56:06): No. I mean, people well, you think about it. There's a whole group of investors who have only known the up market. There's a whole group of founder only in the growth market. If you're under forty years old, you don't understand what you're about to experience. And here we are. That's that's a perfect time to segue into crypto. Bitcoin's price is down Chamath Palihapitiya (00:56:24): 71% Jason Calacanis (00:56:26): from the all time high Chamath Palihapitiya (00:56:28): 69 Jason Calacanis (00:56:29): k in November of 2021 bottomed out at 17,000 or so on June 18th, Ethereum's price down Chamath Palihapitiya (00:56:35): 78%. Jason Calacanis (00:56:36): And if you look at the craziness, since the last all in episode you know, the this 3 AC, 3 hour of capital, they're a crypto hedge fund that was letting people basically loan out their crypto. They are basically closing a Chamath Palihapitiya (00:56:50): $10,000,000,000 Jason Calacanis (00:56:52): crypto Hedge Fund at its peak. They're insolvent according to the reports. Tara Luna collapsed. The founders and employees at that company are not being allowed to leave South Korea. doesn't mean they're guilty, but it's certainly not looking good. And there is a whole situation with Solana and a company built on top of Solend, which is not Solana. It's an application built on top of it. I talked to Vinny Ling, my friend earlier this week about it. They had a whale who had tried to loan out a 100,000,000, and they had to freeze their account because they thought the downward pressure since there's not many buyers in crypto right now. to collapse Solana. So thoughts on crypto writ large. What is this gonna look like, Saxx over the next David Sacks (00:57:36): year for crypto? -- crash all over again. I mean, basically, you had an extremely promising technology. I mean, it is a promising technology. Chamath Palihapitiya (00:57:43): Of course. Yeah. David Sacks (00:57:44): It is a future, you know, technology platform. But the price action got totally decoupled from the level of progress in the space. And people were not valuing these things based on real customers, real usage and real use cases, but it was became, you know, very speculative. And again, all this was fueled by the excess liquidity that was pumped into the system. So, you know, we've said it before that crypto is like a liquidity sponge. It sucks up and there's a lot of excess liquidity. It sucks up that liquidity. But now that sponge is getting wrong out. And and you know part of the problem is with the interest rates going up, you know, it's one thing when you have negative real interest rates, And and and and you can't earn a return on your money, then you start to get you basically, people start to push the envelope and invest in more and more speculative things. But as you can get a real return in like, let's say, there's like a real risk free rate, now there's alternatives for all that cash. And then you got the problem of leverage as well, which I think over the last few weeks, the crypto space was heavily over levered, and a lot of people got margin called and wiped out. Jason Calacanis (00:58:47): That's the contagion that's occurred. And people were levered up 5, 10 times their Bitcoin on these roads. Chamath Palihapitiya (00:58:52): Wait till these token sale things get litigated. I mean, The amount -- God. -- the amount of grift by so many of these venture firms in running these sketchy deals where they would put in Some amount of money. This is my understanding of the scam because it was explained to me. You put in a little bit of equity at some crazy price. And then you get these tokens, and apparently, there's no like, you can just sell these tokens day 1. And so what happens is, like, you you price the equity but it's meaningless because really what you're getting is the right to get some amount of these tokens. The price is crazy. You sell it, and then you just kinda walk away. And apparently, you know, you do these deals where you just rinse and repeat this thing. Well -- Wait till wait till that gets exposed. David Friedberg (00:59:35): I mean -- That seems like a firm Jason Calacanis (00:59:36): the firm that did this the most is entries in Horowitz, Chris Dixon, I think, was considered, like, the best investor last year or the year before. because of all these token returns, I I gotta wonder when they go now that this people are losing money, that's when people start suing. I mean, what is it gonna look like if they were what what do you think their marks look like last year versus right now? I mean and all these coins, like, looking back in the review mirror and saying, hey. You bought all these coins. You flipped some number of coins. I mean, to your point, Shamal, like, what is the litigation path and the the the shadow economy that was created? What is that? Chamath Palihapitiya (01:00:17): Well, there's an article there's an article in I think it was in Bloomberg about folks trying to figure out how to get A lawsuit filed against Binance. And the problem was that they didn't even know what entity to sue. It's not clear who owns what and, you know, what owns the other and who the ultimate look through ownership structure is and And it doesn't mean that Binance is guilty of anything, but the article was just, you know, showing how there was a US investor who lost $1,200,000. who wanted to file a lawsuit, and they have every right to do that, couldn't even find the corporate entity to to actually file this lawsuit against. So If that's what's happening in a $1,000,000,000,000 market, there's I mean, it's gonna be Jason Calacanis (01:01:01): a lot of pain. Chamath Palihapitiya (01:01:02): It's it's a lot of oversight that's that's that Freeport, Jason Calacanis (01:01:05): what is this gonna do to regulation in crypto at this point? Because crypto regulators now gonna or regulators are gonna just be looking at this going, wow. Look at all the pain and suffering, and when a local DA gets, you know, 5 or 6 of their people complaining they lost money in Terraluna or whatever it is, This is, like, the perfect opportunity for them to collect a pelt and get some crypto kit and, you know, hold them responsible and get some great headlines. I mean, What do you what do you think happens from this point forward in the crypto land? David Friedberg (01:01:35): What you just said. Okay. So Jason Calacanis (01:01:37): there you have it. Yeah. But what about regulation? I guess that's the next piece because all of these entities have taken David Friedberg (01:01:43): a very Chamath Palihapitiya (01:01:43): -- David Friedberg (01:01:43): The SEC last July or August published this kind of initial opinion letter, but Remember, there's also the CFTC. There's a bunch of regulatory authorities in the United States that have a longer process than government's ex US that have had a much more kind of stringent point of view that there's a lot of casino like gambling going on with these things, and that's it. There's no functional utility. There's not a it's not Is it a security if there's no underlying business? If it's not a security, then it's just a bet on something. If it's a bet on something, it's gambling. It's, you know, obvious that Chamath Palihapitiya (01:02:14): If it's a security, it has to be governed by the SEC. If it's a future or commodity, it's a CFTC. And the problem is we need congress to pass some legislative framework that puts the puck in one side of the of the arena a rink or the other. Yeah. And otherwise otherwise, all this gray is going to exist for a long time, and people you know, if if if governments really hate it when retail investors lose money, well, watch out because they just had $2,000,000,000,000 of money. David Friedberg (01:02:42): In the US, we have a lot of other regulators that can prosecute cases like the DFS in New York. This is the Department of Financial Services. They are a pretty litigious prosecutorial group. I mean, they go after scams and people praying on consumers and retail investors in a very aggressive way. Often outside of the purview of the SEC, they often coordinate with the DOJ or the SEC in in evaluating enforcement decisions, but they they they will prosecute. And and I think that there's a you know, as you said, a lot of opportunity when people have been grifted out of their money for politically motivated and, you know, people that generally have kind of the right point of view that are in a position to prosecute to go after the offenders. So you're right. There will be there will be a lot of action on this over the next couple of years. And then Chamath is right. The way it gets resolved is a congressional act. But, by the way, I'll just point out, In the year 2000, Congress passed what was called the Commodity Futures Modernization Act, and that CFMA was really meant to kind of, quote, bring commodities and futures into the digital age. And they started working on it in Chamath Palihapitiya (01:03:52): 1996. David Friedberg (01:03:52): It took 4 years to get it done. Within 4 years, it was already out of date. and a lot of what was going on with respect to how exchanges operate and the types of contracts are being created, it was already missed. So the problem we have here is that by legislating the state of the market today without creating enough flexibility and how enforcement action can be pursued and how things can be interpreted in the future, you could end up in a similar situation where people just find end run around, and the whole thing repeats itself in the next few years. because guess what? people will always want a gamble, and grifters will always want a grift. And so there will always be a way to try and scan people out of their money. Jason Calacanis (01:04:28): Yeah. And that's just Sky Dayton's poker game. Peo. David Friedberg (01:04:31): Tayo. By the way, are you are you -- Jay David Sacks (01:04:33): Cal is always gonna want a Jay Cal. David Friedberg (01:04:35): I'm sorry. Oh, you get Jason Calacanis (01:04:36): adding what you're calling. Hey, everybody. Download calling. You can David Friedberg (01:04:39): get the amperage in the game. Chamath Palihapitiya (01:04:41): So you're gonna listen to it. Jason Calacanis (01:04:42): Before we pivot, if you want a perfect example of this, and this is just a less it to founders out there. If you feel like you're in a gray area, you probably are. People were like, oh, NFTs. You know? They're just trading cards yadayadayada. And it's not a big deal that somebody at OpenSea decided to front run the market. Oh, they just bought a trading card ahead of everybody else. Who cares? Will you know who cares? Turns out the southern district of New York cares and they are a pretty serious group of people, former employee of NFT Marketplace, OpenC was charged in the first several digital asset insider trading scheme. So just because insider trading didn't exist as a concept for NFTs before. Congratulations. Chamath Palihapitiya (01:05:24): -- doesn't exist in crypto. I mean, if they wanna really find the honeypots here. I mean, it's the worst kept secret in crypto how much insider trading is going on among the organizations that run the exchanges and their side pockets that they use to to manage liquidity. I mean, this is the it's the biggest thing that's been happening in crypto. Jason Calacanis (01:05:47): If you're wondering why people were spending 100 of 1000 of dollars on a board ape or whatever, like, there might have been some shenanigans going on here. Chamath Palihapitiya (01:05:56): And I mean no. But, Jason, it's not it's not illegal. This is my understanding, though. It's not illegal to front run crypto trade. So most of these organizations that that run an exchange right, compete for order flow, and they're able to just look at that order flow, and then they front run the trade, and they're on the other side of that. So they're always making money. And so they were making Tens of 1,000,000,000 of dollars. All these exchanges were. Jason Calacanis (01:06:19): Yeah. And then I I guess the question becomes Saks, you know, in terms of since you're an attorney, like, how you interpret this stuff. There there may not be a law on the books about front running NFTs, but there are laws on the books about fraud and NFT and conspiracy to you know, grift people out of their money. So this is all gonna come crashing down, and the discovery is going to the next level. Chamath Palihapitiya (01:06:40): Southern District of New York actually subpoenaed any of these changes, all hell would break loose. Jason Calacanis (01:06:44): Oh, no. They are. You could be sure that's in process. If they go after Chamath Palihapitiya (01:06:48): 1 Jason Calacanis (01:06:48): NFT flipper -- No. Chamath Palihapitiya (01:06:49): No. Not no. Forget NFTs. I'm saying coin. crypto. Like, that's the huge market. Jason Calacanis (01:06:55): And they will they're turning over these cards because you know how they like to work. They like to flip their way up to the top person. but we're we're not talking about January 6th here. We're talking about how gas in the Ukraine next. David Friedberg (01:07:05): Hey, yo. Jason Calacanis (01:07:06): Hey, ho. That's a little reference for you. Chamath Palihapitiya (01:07:10): Listen, not not that we're not that we're an hour and 10 in, and we've we've kind of, like, broken the ice and we're we're friends Jason Calacanis (01:07:15): I feel good. I feel like we're you wanna reach out to team again. you you Chamath Palihapitiya (01:07:18): wanna redo our intros so you do not being such a bitch? Jason Calacanis (01:07:22): Aw. I don't I don't care. I don't care. David Friedberg (01:07:24): I don't think -- Can we just move forward? Jason Calacanis (01:07:26): I think we all understand. I like to be recognized. You said you Chamath Palihapitiya (01:07:29): said that you were workshopping an intro. So do you wanna do your intros at the end of this or not? Jason Calacanis (01:07:34): I'm not doing the intros. No. I'm not striking on interest. No. I I didn't -- They were they were reading is what it was. I wanted to. The intros Chamath Palihapitiya (01:07:39): -- -- David Sacks (01:07:39): an extra point. He needed an extra point. Jason Calacanis (01:07:41): No. And and it's not about point. That was a joke. I I wanted to do intros. Speaker 5 (01:07:44): I didn't know coming into this, how sensitive Jason Calacanis (01:07:44): people would be, and then Saks is like, I need to have in the contract, but non disparaging NDA, and I'm scared about the things I said. So spike content needs to David Sacks (01:07:58): be -- I actually took that out. Jason Calacanis (01:07:59): You were the spike content guy. You're the most concerned about spike content guy. No. No. David Sacks (01:08:02): No. We no. We have an agreement around that. David Friedberg (01:08:04): Is a good is a good rule? Non disparagement. He didn't wanna have in there. Jason Calacanis (01:08:07): I under oh, we didn't want he he David Friedberg (01:08:09): wants to have David Sacks (01:08:10): a clear David Friedberg (01:08:10): way to disparage you day at night. I mean, he's Speaker 5 (01:08:12): running out. David Sacks (01:08:12): I took it out because I thought you would be more sensitive about accusing others of disparaging you. Jason Calacanis (01:08:18): I my this whole show is you disparage a new show. Chamath Palihapitiya (01:08:21): -- have an intro or not for things. -- Jason Calacanis (01:08:22): don't have interest prepared. No. I'll do interest next episode, I promise everybody. I wanted to take the temperature of my besties. I don't know if people are sensitive right now. You want me to make a joke about Brad Gersner David Sacks (01:08:32): in -- -- real shit to talk We talk about Ukraine and World War Chamath Palihapitiya (01:08:35): 3. Jason Calacanis (01:08:35): It's not all about our narcissistic nonsense as 4 -- Go ahead, David. Over teenage boys running amuck. Go ahead, Zach. David Sacks (01:08:42): So something happened in the last week that I think is pretty disconcerting. I mean, just intellectually speaking, we all know that wars that go on and on have a tendency to late. And there was an example of how this could happen over the past week. Lithuania is now essentially stopping the flow of goods from the Russian mainland to another part of Russia called Kliningrad, which is it's called an Oblast. It's little area, but it's outside the Russian mainland. It's basically Speaker 5 (01:09:09): between Poland and Lithuania. And so David Sacks (01:09:09): goods go by rail from the Russian mainland to Clinton Grad. And they've been stopping these goods because they say they're under EU sanction. The problem is Listen, when you think about a sanction, a sanction is me not buying goods from Speaker 5 (01:09:27): you because I don't like what you're doing. That's fair game. David Sacks (01:09:28): Everyone has a choice over who they wanna buy from. But this is not that. This is Lithuania deciding to stop goods going from Russia to Russia. And so the Russians say this is a blockade, I think, with some justification. And blockades are understood to be an act of war. So you've got Lithuania, basically engaging in this act of escalation against Russia. David Friedberg (01:09:54): We always thought it would be Poland, but it's liberating. David Sacks (01:09:57): Exactly. remember, Lithuania is is a member of NATO. They have an article 5 guarantee. Now think about the upside versus downside of this action. In terms of from the western point of view, the upside is, this has absolutely no impact on the outcome of the war. This is not gonna help anyone in Ukraine to blockade Kaliningrad and prevent coal and building materials and steel from reaching Kaliningrad. That's not gonna have any impact on the war. So there's zero upside to this from a military standpoint. But the downside is that you now have Lithuania and Russia getting into it. And if they get into a war, then we are instantly pulled in under Article 500 Middle War 3. So this is the kind of dangerous, escalatory act that has no upside, only downside for us. And my view on it is that we have to tell we have to instruct, frankly, are treaty allies not to engage in these types of dangerous acts because there's a huge externality. We can be pulled in. This is very dangerous. And I just wonder if the administration is on top of this. Did they give the green light to the Lithuanians to do this, or were they caught by surprise? And what is the reaction to acts like this? You know what I worry is that we're conducting foreign policy by virtue signaling, where we just say, who are the good guys and who are the bad guys? And, you know, if if the Russians are the bad guys, Lithuanians are the good guys, so therefore, this is okay. It's like playing cops and robbers on a global stage. I think we need to be asking the question, is this smart or is it dumb? Is this Prudential or is it reckless? Is this in our interest or is it not in our interest? And, you know, I really got a wonder about who's mining the store on this? Jason Calacanis (01:11:41): Day a Chamath Palihapitiya (01:11:41): 120. Jason Calacanis (01:11:43): And it feels like this is just doesn't have an ended site. Is there an ended site here? David Sacks (01:11:48): What's the end? I mean, the the end David Friedberg (01:11:50): What it is you purchase Chamath Palihapitiya (01:11:51): 1? Jason Calacanis (01:11:52): yeah, what are the 2 parties want at this point? I mean, the people in Russia are suffering during this. The people in the Ukraine are being murdered in Ukraine are being murdered. I mean, how does it end? Chamath Palihapitiya (01:12:02): At the problem is that Biden engaged the United States in a proxy war without our real explicit discussion. Number 1. And then number 2 is then we pulled and we pressured Europe to really draw a hard line but then now are kind of working around it so that the countries that suffer the most are Europe. Now I think you're starting to see the tea leaves though. Last week, there was a group of European Leaders. I think it was Macron, Draghi, And I can't remember if it was the German chancellor or not and one other person who went to Ukraine. And if I had to bet I think the message was kind of like, alright. Listen. Like, we need to find an organized detonte here because there is, you know, according to Europe, a layman like situation in terms of economic contagion that could manifest over the next months So I think that the end game is probably some organized negotiated detente and ceasefire. I don't think anybody will be happy with it, but I think by and large Russia is and has won. you know, meaning they've won economically. They're selling oil like it's not, you know, like it's going out of style. It's just not selling it to Europe and to America. You know, they're selling it to China. They're selling it to Africa. They're selling it. Jason Calacanis (01:13:28): India's fine with it. They'll they'll take some David Sacks (01:13:30): cheaper. Also, Chamath they've won. They're winning on the battlefield. There was an article in the Washington Post there was article in the Washington Post in the last week or so. And the Washington Post is basically the House organ of the Washington establishment and the the blob basically saying that hopes are dimming for Ukraine on the battlefield. The Russians have now won 20 to 25% of the country. They've won that eastern that Donbas region. They've done it with the help of Russian separatists in Ukraine. And there were the the amazing thing in this article was that they were saying, that the Ukrainians were days away from running out of ammunition. Despite the Chamath Palihapitiya (01:14:04): 40,000,000,000 David Sacks (01:14:05): that we just appropriated to them, where did that money go. Jason Calacanis (01:14:07): And then and conversely, they're saying Russia is having just unbelievable casualties, and they're running out of weapons. And they are obviously out of Kyiv now, and they're in the Donbas mostly. So -- No. I don't think the Russians are running David Sacks (01:14:19): out of anything. The Russians the the the so listen. I I said on this pod -- Well, Jason Calacanis (01:14:24): they said they're out tanks. Right? The the the the and the and the troops Well, David Sacks (01:14:27): they've they've adjusted their strategy and they've they're they're they're learning. They're adapting to this new kind of warfare, this asymmetric warfare. where you can take out a tank with a drone. You know? Yeah. But but look, you know, remember on this pod, 3 weeks into the war, everybody who is in favor of this proxy war was saying how great it was, and they were saying it was gonna lead to a new birth of freedom in the west that it was strengthening our alliances, You had Francis Fukuyama predicting that we were gonna win the war, and it would lead to this rebirth of freedom in the west. We should have known at that moment everything that Fukuyama basically predicts the opposite -- He's Chamath Palihapitiya (01:15:01): always wrong. He's always David Sacks (01:15:02): he's always wrong. It's like negative one correlation. Yeah. And remember I said 3 weeks in that we were potentially I think Putin made the mistake in the 1st weeks of thinking this would be a cake walk, but that we were making the mistake of thinking the next phase would be a cake walk. And sure enough, Here we are. Russia has now won the eastern part of Chamath Palihapitiya (01:15:18): the country. Just to just to build on what you said, you know, we engage in economic sanctions, and I was the first one to say Hey. This could really work, and this could be a road map for how to do it. And it turned out this is the road map for how not to do it. You can't on the front door, say, hear these sanctions and then walk around the back door and basically open the door for them. These these sanctions were so porous as to be like Swiss cheese. We focused on virtue signaling acts like confiscating a plane or a boat or a house, but we didn't focus on the structural things we needed to actually you know, make the mandate that we believe to be just to come to life. And so Russia's completely worked around it. Their economy effectively you know, is thriving. So what have we gained? Jason Calacanis (01:16:03): How is it thriving? I mean, I don't know that thriving is how they would describe their economy right David Friedberg (01:16:08): I mentioned this in their printing record Chamath Palihapitiya (01:16:11): -- David Sacks (01:16:11): Rubals are fossil high, Jason. David Friedberg (01:16:13): They're selling gas. They're selling phosphate. They're actually making a market, and the price of have doubled and tripled in those commodities because the flow has been restricted, so because they're restricted. Chamath Palihapitiya (01:16:22): -- the opposite of what we tried to do. And by David Friedberg (01:16:24): the way, I'll point I'll I'll point out something that I pointed February, which was the biggest concern for me at the time. When we stopped allowing trading in the securities of Russian companies, we yanked away Chamath Palihapitiya (01:16:35): $400,000,000,000 David Friedberg (01:16:37): of market cap that was held primarily by pension funds and retirement funds in the US and Europe and gave that value to Russia for free. We basically said, here you go. Here's all these securities. We're no longer allowed to trade in them. So guess what? you guys can trade in them. You can have Chamath Palihapitiya (01:16:53): -- David Friedberg (01:16:53): They got they got all of their gas and energy and nick Nickel and Mining company for for free. David Sacks (01:16:58): I think it's such a good point. Chamath Palihapitiya (01:17:00): -- David Friedberg (01:17:00): dollars for these companies. We leave them. We ripped the stock out of retirement funds, and we gave it to the Russians and said, here you go, Putin. take all of these securities for free and enjoy oh, and by the way, because of our idiotic sanctions and the way we're employing them, the commodity prices are gonna double and triple companies are gonna have record profits this year. Happy fucking birthday. The ruble's up 5 x. Jason Calacanis (01:17:21): It's not up 5 x, but yeah. Okay. David Sacks (01:17:23): It's a great point because if Putin had retaliated against the West, by nationalizing Chamath Palihapitiya (01:17:27): 400,000,000,000 David Sacks (01:17:29): of western assets in Russia. Everyone would have been up in arms. But he didn't even have to do that because we just gave him -- We gave him -- -- 400,000,000,000. totally. I mean, how did this policy make sense? It's this policy of conducting Chamath Palihapitiya (01:17:39): -- David Sacks (01:17:39): You cannot -- -- conducted David Friedberg (01:17:41): in Russian securities. I'm I'm freaking BlackRock I own a $1,000,000,000 of Russian securities. The US government just took it out of my portfolio that my clients own stakes in and gave it to the Russians for free. They're gone poof. crazy. David Sacks (01:17:55): I think listen. I think we've got, like, a a a 2 level problem on this Ukraine war. One is that our policy hasn't made We should have been using diplomacy last year to avoid it. This we had all these false hopes around strengthening the west and the western alliance by allowing this war to happen. We then, instead of trying to shut it down through a negotiated settlement, we try to use as a proxy war to weaken Putin. Instead, it's done the opposite. So there's a whole series of policy failures here, but there's another deeper level to the failure, which is the personnel who are implementing these policies, the Washington establishment blob who've been of both parties, the the sort of uni party who've been implementing these policies, there has been no dissent within the Washington establishment The only guy who really spoke up in a decisive way was John Mearsheimer, the professor of International Relations from University of Chicago, and he was treated as a pariah by the blob in the Washington establishment. Everything he predicted has come true. David Friedberg (01:18:52): Yeah. He predicted this year's ago. Years ago He David Sacks (01:18:54): predicted the US was leading Ukraine down the Primrose path, and the result was that Ukraine was gonna get wrecked. And so it has Chamath Palihapitiya (01:19:01): Can I just read the first paragraph of this Bloomberg article that I just posted? Russia's current account surplus more than tripled in the 1st 4 months of the year to 95, 28,000,000,000. The central bank said as prices surge, freezing, and gas imports, and imports plunged under the weight of sanctions. Well, you know, if you're Putin and you're looking at this, you're like, wow. Maybe I should be under sanctions more often. David Friedberg (01:19:24): Totally. Chamath Palihapitiya (01:19:24): You know, what country should I invade next? Because this is -- -- sanctions. David Friedberg (01:19:27): All that sanctions was a restriction on the free market. And when you restricted the free market, you basically created a spike in price, but the market his market could still operate with a narrower set of trading partners. He is selling energy to certain trading partners. He's selling phosphates. He's making money. They are exporting product, and they're making more Because certain people can't buy, and they've gotta go drive the price up elsewhere. Chamath Palihapitiya (01:19:48): So not not only did our sanctions package not work, and not only is the treasury treasurer treasury, sorry, flailing around now trying to find even more backdoors, we actually opened a very dangerous precedent, which is now we allowed oil to settle in currencies that are not just the United States dollar. And now Russia and China trading and settling in CNY, That's not good for us. This is not how you preserve the integrity of the reserve currency of America. Jason Calacanis (01:20:15): I I don't understand the EU of cutting all of their energy and then becoming dependent on Russia, then creating a ban and sanctions, but then they made a carve that oil delivered by pipeline. Janet Yelen has been negotiating this carve out. We have been enabling Russia to sell. We know the EU pass this legislation David Friedberg (01:20:35): to -- Look Chamath Palihapitiya (01:20:35): look in the Wall Street Journal today. The articles -- Jason Calacanis (01:20:37): They're reading the CNBC right now about it. Like, the EU passed this landmark sanctions package in May, but they also allowed the stuff that's coming by pipeline for some reason to be a carve out. If the EU wants to contain Putin from invading countries on their doorstep, they gotta actually become energy independent. That's the the beginning and end David Friedberg (01:20:56): of this. -- not popular, and this is the problem with populism. Jason Calacanis (01:21:00): What's not popular? David Friedberg (01:21:01): It's not popular to continue to have to to to have energy independence. Nuclear was not popular, and so the politicians, the legislators responded in a short sighted way to the popular opinion of the day. And this is the challenge -- Absolutely. Jason Calacanis (01:21:15): Yes. Huge mistake on Germans part. They closed 3 nuclear reactors here. Chamath Palihapitiya (01:21:18): -- David Sacks (01:21:18): sentiment in Europe got highly by these environmental groups. David Friedberg (01:21:21): Exactly. That's my point. David Sacks (01:21:23): But in the US, I think the people of the country wanna be energy independent. percent. And it's elite opinion that bought into these foolish ideas that basically we should cancel energy independence. We cancel the Keystone pipeline. Jason Calacanis (01:21:37): Job number Chamath Palihapitiya (01:21:37): 1. -- David Sacks (01:21:38): new drilling. America should be a net energy exporter. Chamath Palihapitiya (01:21:41): 100%. Jason Calacanis (01:21:42): Job number 1 is to be energy independent. And job number 2 is to move to renewables. Chamath Palihapitiya (01:21:48): -- David Sacks (01:21:48): now. I'm at there's another piece to this. Jason Calacanis (01:21:49): Right? So -- -- this in sequence. David Sacks (01:21:51): Yeah. When he came in, he said that he was gonna make the Saudis a pariah on the world stage. Remember this? Now he's going hat in hand to them to try and get them to produce more to lower the price. So what was the point of this foreign policy? It it was contradictory. He cancels his energy independence. He basically insults the salt the Saudis on which were even more dependent for oil. And then he basically refuses to engage in diplomacy on Ukraine. These policies are contradictory. Even if your goal was to basically isolate the Russians, you would then want to improve our relationship Chamath Palihapitiya (01:22:25): -- 100%. -- David Sacks (01:22:25): for Saudi, and you'd wanna produce more of our own oil. Chamath Palihapitiya (01:22:28): 100%. Jason Calacanis (01:22:29): Yeah. You you you he overplayed his hand for sure. I mean, you you can't not have heat in the winter in Germany, and the Germans are completely -- That's David Sacks (01:22:39): common, by the way. That's common. You think things are bad right now. Wait until winter. Ah, it's getting serious. And that's only gonna increase Putin's leverage. And that's when you're gonna see a real fracture in the Western alliance. This idea that Ukraine strengthened the Western alliance I think you will start to see the fractures of this winter. David Friedberg (01:22:55): National I mean, Germany's got to put those new the the slow march of nationalism will continue, and this will be another catalyzing of turn your nukes back on. And and David Sacks (01:23:02): and and I also think that you know, in thinking about the Western Alliance, I think that, you know, countries like Germany and France are really gonna question US Leadership. when they have basically a huge economic recession, and they're wondering how they're gonna heat their homes in the winter. But I think in the US, is time to reevaluate some of the alliances that we've gotten ourselves in. Again, with this Lithuania situation, do you really think that Lithuania would be basically poking that big Russian bear if they didn't have the US standing behind them as a bodyguard. No way. They would be much more circumspect and Prudential. And the re and the fact of the matter is that these Eastern European countries, the Baltic countries, and Poland, they have enmities. They have friction with Russia going back 100 years. And these guys basically they have very provocative attitudes towards Russia. And our alliance with them can draw us in. So we have to really keep a close lid on that. We do not want them making moves on their own because we could get drawn into a world war here. David Friedberg (01:24:06): Yeah. And by the way, to your point, Sachs also you know, there continues to be escalating issues with debt and concerns about debt repayment across the EU. And while Germany is, you know, looking to the US for support and worried about energy prices, they're gonna end up having to foot the bill to support a bunch of these EU member nations that are facing debt crises and will continue to face significant debt crises over the years ahead. I mean, Greece made a payment recently, but Greece's debt to GDP is still over 200%. Italy's at a 155%. Portugal's at a 134%. I mean, the numbers are pretty significant that has rates declined. -- today. Chamath Palihapitiya (01:24:47): You know, it was Yeah. David Friedberg (01:24:49): The the the the the spread on Italian debt has spiked over the last couple weeks. Chamath Palihapitiya (01:24:53): Spiked. Bridgewater basically's biggest short for short. David Friedberg (01:24:55): Germany's got another freaking crisis to fight now. And I think you're right. The the Western alliance is more than just military at this point. There's this you know, do I really wanna be the economic savior over and over again? of my smaller member states, and guess who's gonna benefit in all of this China? Like, they're gonna look at this fracture, and they're gonna be like, great. Chamath Palihapitiya (01:25:17): By the way, just speaking of speaking of China for a second, you know, we talk and we we blow v 8 about our desire for energy independence and, you know, we exclude Tesla from, you know, any sort of major meaningful legislation. We trumpet, you know, these companies that are just completely woefully behind in building energy independence. We think about, like, a gas tax holiday, but as, like, kind of like a you know, something that still needs an act of congress to pass even though congress has said they have absolutely no intention of passing it. Meanwhile, We keep losing our footing to China just today catl which is one of the largest battery manufacturers announced a pretty meaningful improvement in their, you know, 3.0 battery design. These guys are now building batteries that can go a 1000 kilometers. in both of the major, you know, compositions that really matter. n m c and l f p and and I just look at these things and I'm like, Wow. We cannot actually get capacity funded to build domestic battery capability because we're too busy kind of basically virtue signaling on things that don't matter. And in return, nothing happens. China continues to lap us. We It's really it's a really bad state of affairs. We are we are in a very odd period in terms of government effectiveness. David Sacks (01:26:41): If if you think about China's foreign policy, how have they lost out by not being part of all these conflicts? How have they lost out? They they can't Chamath Palihapitiya (01:26:50): Exactly They're buying prices of oil that were 9 months ago to 18 months ago, and so there not only has Russia's output price been capped, but that's okay. China's input cost has been capped, and so they don't suffer the same rate of inflation that the rest of us do. So to your point, David, you know, our, quote, unquote, exclusionary sanctions were ineffective. They were porous. And we allowed our largest competitive frenemy, if you will, to basically be able to, you know, drive their entire economy at 30 to 40% of the a a discount to what we have to pay to do the same. David Sacks (01:27:29): Right. When when when China goes abroad, they go abroad in search of economic resources and economic development. That's the point of Belton Road. They don't insert themselves in these middle of these conflicts that they don't understand. They were never involved in the Middle East. They were never involved in, like, policing, you know, all these different countries. that has cost us a fortune. And now the bill is finally coming due in the form of this inflation. We are gonna have some form or another of austerity in this country And it's partly because of this highly militarized foreign policy in which we have sent ourselves abroad to be the world's policeman. We can no longer afford to do that. Chamath Palihapitiya (01:28:05): Can I make a generalization so that you react and tell me if this is true or not? If you have a country that has existed in some way, shape, or form, you know, the the borders could be blurry, but roughly. For 100100 years and in some cases 1000 years, where internally the population of that country views themselves you know, in a great way. They they they don't feel like their country is a meaningless nothing country. Any attempt to economically humiliate such a country tends to have failed in the past and will continue to fail. And there tends to be Other countries who view it as one of these things where, well, if them, then why not us? And then they sort of, you know, in a in a backhanded way support everybody. So We end up in this odd situation where we are picking fights we cannot win. David Sacks (01:29:00): Totally. Chamath Palihapitiya (01:29:00): And and the consequences for us are economically really damaging. David Sacks (01:29:05): Right. Chamath Palihapitiya (01:29:05): Absolutely. -- consequences for everybody else to stay on the sidelines is, like, economic prosperity. That doesn't make any sense. Right. Unless Jason Calacanis (01:29:14): you're in Europe, then you're afraid that Russia is going to roll over more countries and that you have this existential risk that this dictator is going to attack more countries. So -- Okay. Chamath Palihapitiya (01:29:24): -- David Sacks (01:29:24): if Jason Calacanis (01:29:24): you're living in Eastern Europe, you might have a different view of it. Yeah. David Sacks (01:29:27): You might Jason Calacanis (01:29:28): very much accept and want some help from you know, NATO and other folks who -- But Chamath Palihapitiya (01:29:32): you're not getting that help. That's the problem with that. That's the sad part of. David Friedberg (01:29:35): I mean, Jason Calacanis (01:29:35): if it's poorly executed, it's not working at this point in time, I mean, it's about Well, Jacob, David Sacks (01:29:40): if if you look at the EU, okay, as an entity, they have almost the same GDP and output as the US And if you compare them to Russia, their economy, their their GDP is ten times greater than Russia. They are rich. They can afford to allocate a few percent of their GDP of their government budget to defense, they shield to defend themselves. They really should. And so this idea that we have to go over to Europe and bankrupt ourselves to defend rich Europeans, they should be picking up a 100% of the cost of that. A 100%. I don't know why we're paying. for rich Europeans when our country is massively in debt. Why aren't we passing the bill to them for that? Jason Calacanis (01:30:21): Yeah. Yeah. I we're absolutely yeah. Do we have to spend that much money to to do that? No. And then, obviously, the worse in the Middle East were Chamath Palihapitiya (01:30:33): -- David Sacks (01:30:33): Let me pick up on the force policeman idea. What kind of policing works the best? community policing. When the policemen are from the neighborhood and they know all the players, they understand the subtlety of the -- Yeah. Jason Calacanis (01:30:43): Put some address. Chamath Palihapitiya (01:30:43): -- David Sacks (01:30:44): area. Exactly. The US has made itself the world's policeman. We parachute into areas that we don't understand. We did in the Middle East. It was very ineffective What we should do is let the regions deal with the problems themselves first, and we should be the policeman of last resort, not first resort. Let the Europeans take the lead. They should be paying for their own defense. You know, we could still have NATO, but they should be paying for it. They should be the first responders. And if they can't handle it, then we can back them up. But this idea that we need to be on the bleeding edge of all these conflicts bankrupt bankrupting ourselves It's a foolish idea. Jason Calacanis (01:31:21): Energy independence is a solution to all of this. We wouldn't have to deal with these desk spots if we didn't if we had energy independence. Speaker 5 (01:31:28): So -- We're Chamath Palihapitiya (01:31:28): getting we're getting circles run around us by China, Jason, on the innovations front. Jason Calacanis (01:31:34): circles run around us by China on the innovation front. Example? Chamath Palihapitiya (01:31:39): I just told you, the CATL battery that they just announced today. Yeah. It's incredible. Jason Calacanis (01:31:44): Yeah. I mean, battery technology is we we have a lot going on there as well. I mean, it seems like the battery technology issue has been solved for EVs for some time now. I mean, if an EV can go two hundred miles and we can build them at scale, which seems like we're on the precipice of, we're gonna be good. You don't need more than 200 miles on average. It's just a luxury every mile after that given how fast superchargers are working. So just practically speaking, 95% of Americans will do just fine with a electric car that does 200 mile range. and the other 5% can do a hybrid or can still burn oil. We just need to get more we have to be more serious about the miles per gallon. Right now, we are just absolutely Apparent in our use of fuel in this country. It it's just crazy that we have low twenty miles per gallon as our average when other countries are 30, 40, 50, you know, or 3040 because Chamath Palihapitiya (01:32:37): we like our, you know, seven seat suburbance, Jason Calacanis (01:32:39): which is ridiculous because 99 out of a 100 missions in that suburban are done with 1 or 2 people in it. The fact that our Ubers, you know, and our lifts or whatever are coming with giant suburbans with one person in it is just Chamath Palihapitiya (01:32:51): I have a I have a Fiat e 500 here, like a little mini -- Jason Calacanis (01:32:55): Oh, it's incredible. David Friedberg (01:32:55): Yeah. Jason Calacanis (01:32:56): It's incredible. I mean yeah. I mean, this is why I mean, this is the path. If we can just If you just think about it, if if we were to double our miles per gallon, there are cars right now that are doing 50, 55 miles per gallon. we really have to be more punitive in terms of tactics on Chamath Palihapitiya (01:33:12): the agencies. -- forecast, Jake. How what's gonna happen with Biden? Jason Calacanis (01:33:16): Oh, okay. So I guess -- Give David Friedberg (01:33:17): me your Chamath Palihapitiya (01:33:17): give me your scorecard. Give me your grade. How's he doing? Jason Calacanis (01:33:20): For Biden? Oh, it's it's disastrous. I mean, it it I think the only thing more disastrous than Biden would be having Trump do a second, third, and 4th term, 100%. So Chamath Palihapitiya (01:33:30): but so play it out play it out. Jason Calacanis (01:33:32): I don't think he's gonna run again. I think they're gonna have to Chamath Palihapitiya (01:33:34): -- David Friedberg (01:33:34): You don't think Biden's gonna run again? Jason Calacanis (01:33:36): I think they're I think between then and now if the economy keeps going the way it's going, he would be a lame duck and impossible. And I think he might say, you know what? I'm gonna retire to spend time with my kids and my golden years, and they might convince him that him running again is a really bad idea, and Kamala Harris is a disaster as well. She hasn't proven anything in the 1st Speaker 5 (01:33:54): few years. David Friedberg (01:33:54): Yeah. Who would the dense put up? Jay Cal. Jay Cal, as a Democrat, who would you wanna have put up? David Sacks (01:33:58): I think it's gonna be DeSantis versus Newsom in Chamath Palihapitiya (01:34:01): 24. I yeah. I but sorry. Explain that. David Sacks (01:34:05): Okay. So well, which part of it? Newsom or DeSantis? David Friedberg (01:34:08): How does Newsom get the nod? David Sacks (01:34:10): Okay. Here so Newsom has a very weak challenger in in California. It's a 30, demonstrate. Hold on. win? Hold on. So he's gonna handily win reelection in California. He's already no. He's not even campaigning for reelection in California. He's he's already campaigning to be president The thing that he did that was politically smart and I say this, not as a fan of Newsom, but this is someone who's analyzing the politics of it, is that he went on true social. and he bay to basically counter, you know, republican lies. And so he's positioning himself as a fighter for progressive values. And The reason why that's gonna be flattering to the Democratic base is that when the Democrats lose big in November, they're gonna have there's gonna be a reckoning. and they're gonna have to understand why they lost. And the fact of the matter is that ideologues never blamed themselves or their agenda. They are gonna say that it was not communicated well. and that we needed a basically, a better communicator who was a fighter. And so they will basically pin the blame even more on Biden. And so Newsom is positioning himself as that sort of Democratic progressive fighter. If you go back, remember when Michael Avanati Like, they were you know, Progressive were talking about him as a presidential candidate for a brief minute. They swooned over him. Why? Chamath Palihapitiya (01:35:20): -- to jail? David Sacks (01:35:21): Yes. He's in jail. David Friedberg (01:35:22): right now. Jason Calacanis (01:35:23): It's a total grifter scumbag. David Sacks (01:35:24): Yeah. Total grifter scumbag, but you gotta remember seeing that happen on there every day because So he has a funny name. Chamath Palihapitiya (01:35:31): Jay Cow says his name in the funniest way possible I remember in our poker game when, like, Halmi had said he had no numbers on it. Jay Cow, what's this guy's name, say his name? Jason Calacanis (01:35:37): Michael Avanati. David Friedberg (01:35:39): I don't Jason Calacanis (01:35:40): know how these I never met these sucks. Speaker 5 (01:35:41): My bad about it being bad at boom. My mic will have a thali. Right? Jason Calacanis (01:35:45): It's a disaster. Yeah. It's an interesting concept. David Friedberg (01:35:48): Yeah. Zach, can you giving the devs will give you some the nod. Can he actually win in some of these these middle states? David Sacks (01:35:56): Well, you gotta remember, and this is true for both parties that the general electorate does not pick the candidates. The parties pick candidates and the base of the party David Friedberg (01:36:04): picks candidates. They want someone that can win Pennsylvania. They want someone that can win Pennsylvania. They want someone that can win Florida. David Sacks (01:36:09): Yeah. But yes and no. So if you remember when when Bill Clinton pulled the Democratic Party back to the center in 1992, and, you know, the whole Democratic leadership council, and they really remade the Democratic Party at that time as a more centrist party. They had just come off 3 disastrous presidential elections. So Reagan and Eighty 84 and then Herbert Walker Bush in in 88. So, you know, it took 3 big losses for them to rethink. I don't think progressives are gonna rethink their agenda, you know, based on one midterm loss even though I think it's gonna be gargantuan later this year. So I think they need more losses to really reevaluate their agenda. I mean, look, the activists in the party are deeply invested in their agenda. They're just not gonna give it up. They're gonna blame it on a communication problem. They're gonna say, let's find a new messenger. And Newsom will seem like a younger, fresh face. So I think that's how it could happen. And if you look at the Democratic bench, Jason Calacanis (01:37:07): he will show up. Can he also who else they got as the issue? Who else Speaker 5 (01:37:10): they got? Jason Calacanis (01:37:11): Do you need anybody else David Friedberg (01:37:12): with Warren? Jason Calacanis (01:37:13): I'd be a Buttigieg and AOC if they wanna go full like crazy left would be, and then if they wanna go more moderate. David Friedberg (01:37:20): That's not that doesn't win on election. You gotta someone that can win the elections. David Sacks (01:37:23): I agree. I agree, but David Friedberg (01:37:24): it's gonna David Sacks (01:37:25): be about turnout. -- governor of a big state, which is as of now Chamath Palihapitiya (01:37:28): -- Jason Calacanis (01:37:28): And the $100,000,000,000 $100,000,000,000 surplus looks good for him. So, yeah, I mean, Gavin Chamath Palihapitiya (01:37:34): -- David Sacks (01:37:35): It's a scenario. It's a scenario. But look. I think Chamath Palihapitiya (01:37:37): -- Jason Calacanis (01:37:37): The big question is will Republicans field Trump after January 6th. And David Sacks (01:37:42): I -- I I think the answer is no. And Chamath Palihapitiya (01:37:45): -- Jason Calacanis (01:37:45): It's too shameful, right, to to do that? David Sacks (01:37:47): I I think that Look. I think Trump's promise he won't stop talking about the last election, and I think elections are always about the future. And the Republicans get nominated candidate who represents the future. Jason Calacanis (01:37:58): No Republicans want him as going out there trying to steal an election again. David Sacks (01:38:03): No republicans want -- If you look at if you look at Strawpolls. Okay. If you look at straw polling, DeSantis now is beating Trump in straw polls in the Republican Party. Jonathan Chait, who is a pretty smart liberal, definitely not a Republican, but he's a sometimes those very smart observations. Remember the whole 0 COVID thing? Anyway, here's an article just today. talking about how DeSantis has now eclipsed Trump within the Republican base. And if you look at the numbers that within if you if you poll Fox News viewers, and likely Republican primary voters. DeSantis is up like a couple of points in the straw polls, but among Fox News viewers, he's up like 10 to 14 points. So in other words, the Republican base, the activists who are the influencers, they already have moved from Trump to DeSantis. David Friedberg (01:38:49): No. They love him. Yeah. Yeah. So I don't feel the 5th Chamath Palihapitiya (01:38:52): -- DeSantis runs. He's gonna run he's gonna win a a landslide. David Sacks (01:38:57): This is why I say it's DeSantis versus Newsom, I think. But, look, it could be DeSantis versus Biden. It could even be Trump versus Newsom. I think the configurations that win for their Republicans I think if Biden's on the ticket, I think any Republican wins. I think if it's DeSantis versus Newsom, I think DeSantis wins. I think, however, And this is sort of the nightmare scenario. I think if it's something like a Newsom versus Trump, I think Republicans could lose that just because You know, the people -- For sure David Friedberg (01:39:24): they win. Chamath Palihapitiya (01:39:25): -- David Sacks (01:39:25): people people are thinking about the future. They they they want they they don't wanna be reminded of the past. And So I think there are rules there. Chamath Palihapitiya (01:39:33): No more often to pass to Jason Calacanis (01:39:34): his insane and deranged. You can't you can't have 2 -- I'm trying to steal him here. Chamath Palihapitiya (01:39:37): -- running for president. No more would be great. Jason Calacanis (01:39:40): Yeah. Yeah. I think -- Alright. Chamath Palihapitiya (01:39:42): -- not nothing against talking to 70 five Jason Calacanis (01:39:44): years old would be good for me. David Friedberg (01:39:45): Alright. This has been a this has been a very long episode. Jason Calacanis (01:39:47): Well, yeah, we'll we'll considering how much Saks is gonna spike, and we'll get it back down to 45 minutes. Alright, everybody. It's amazing. Absolutely, guys. Chamath Palihapitiya (01:39:55): It's really nice going anywhere. Everybody works. We're back. Jason Calacanis (01:39:59): I'm not going anywhere. You're gonna need a wrecking ball to take me out of here. You're gonna send him the David Sacks (01:40:04): next shot. Jay Cal. Chamath Palihapitiya (01:40:06): We don't wanna get rid of you, but now all we need is 3 out of 4 votes. So vote me off. David Sacks (01:40:10): We never wanted to get rid of you, Jay Kalb, but we knew we had to do certain things to get you to act right. Chamath Palihapitiya (01:40:16): Oh my gosh. Oh, boy. Jason Calacanis (01:40:17): Here it comes. Chamath Palihapitiya (01:40:18): Jake Alparta brought a knife to a gunfight. He David Friedberg (01:40:22): came to negotiate. Jason Calacanis (01:40:23): You guys don't want any in Australia? And you're lucky to give me two points. That's fine. Chamath Palihapitiya (01:40:28): Jake Out came to negotiate the treaty of West Philly, and he left with half a snickers bar. Jason Calacanis (01:40:32): It's fine. It's fine. You guys don't get no more interest for you. That's actually awesome. Chamath Palihapitiya (01:40:36): -- Jason Calacanis (01:40:36): all in Summit, no more interest. David Friedberg (01:40:38): Hold back our payment. By the way, I'm about to get on a call with our lawyers. We're gonna get the account set up. all the money transferred from your David Sacks (01:40:44): stomach for Jason Calacanis (01:40:44): real luck with Speaker 5 (01:40:45): that. Yum yum. Jason Calacanis (01:40:46): Good luck with that money. That's long gone. I put that on the warriors. Chamath Palihapitiya (01:40:50): I tripled it. For good. Jason Calacanis (01:40:52): Alright, everybody. We'll see you next time. Chamath Palihapitiya (01:40:54): On the all -- Love you, boys. Bye. Jason Calacanis (01:40:55): Bye bye. Love you, Matty. Bye bye. Bye bye. David Friedberg (01:40:59): We'll let your winter Friedberg. Rainman, David Saffens. Speaker 5 (01:41:07): And it said, open source it to the fans, and they've just gone crazy with it. David Friedberg (01:41:16): want airliners ride. Besty's our car. I told the 13th. That is my dog thinking, and Speaker 5 (01:41:24): I wish driveway. We should all just get a room and have one big huge order because they're all just useless. It's like this, like, sexual tension, but they just need to release that mountain. David Friedberg (01:41:38): What? You're the bee bee. What? You're David Sacks (01:41:41): a thief. What? Jason Calacanis (01:41:43): Where did you get Merckies are back?