Yen Carry Trade, Recession odds grow, Buffett cash pile, Google ruled monopoly, Kamala picks Walz

(0:00) Bestie intros: Jason is back from COVID! (3:55) Yen carry trade unravels, Japan's unique economic issues (27:22) Recession odds growing, is the US already in a "lowkey recession"? (45:46) Why Buffett is selling Apple and massively increasing Berkshire's cash position (55:54) Major antitrust ruling against Google, predicting outcomes (1:22:41) Kamala picks Minnesota Governor Tim Walz as her running mate Follow the besties: https://twitter.com/chamath https://twitter.com/Jason https://twitter.com/DavidSacks https://twitter.com/friedberg Follow on X: https://twitter.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://www.wsj.com/health/wellness/covid-guidelines-2024-cdc-symptoms-contagious-cdefb6b8 https://tradingeconomics.com/japan/interest-rate https://pebblewriter.com/the-yen-carry-trade-explained https://www.statista.com/statistics/604424/median-age-of-the-population-in-japan https://www.reuters.com/markets/asia/japans-nov-core-consumer-inflation-hits-fresh-40-year-high-2022-12-22 https://x.com/GoldmanSachs/status/1793998451291615316 https://www.wsj.com/economy/central-banking/boj-wont-raise-rates-when-markets-are-unstable-deputy-gov-says-6f4bf962 https://www.cnbc.com/2024/03/01/the-us-national-debt-is-rising-by-1-trillion-about-every-100-days.html https://www.wsj.com/finance/the-u-s-government-will-soon-spend-more-on-interest-payments-than-defense-ee6fbeec https://www.nytimes.com/2024/07/10/business/archegos-bill-hwang-guilty.html https://www.bloomberg.com/news/articles/2024-08-08/jpmorgan-says-three-quarters-of-global-carry-trades-now-unwound https://www.cnbc.com/2024/08/02/job-growth-totals-114000-in-july-much-less-than-expected-as-unemployment-rate-rises-to-4point3percent.html https://fred.stlouisfed.org/series/UNRATE https://polymarket.com/event/how-many-fed-rate-cuts-this-year https://www.google.com/finance/quote/. DJI:INDEXDJX https://www.google.com/finance/quote/SPY:NYSEARCA https://www.google.com/finance/quote/. IXIC:INDEXNASDAQ https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-08-07-2024/card/airbnb-stock-slides-after-rental-company-warns-of-slowing-u-s-demand-inf2c6emjcl5KI7KmkfR https://www.google.com/finance/quote/ABNB:NASDAQ https://x.com/RealEJAntoni/status/1799085407394845087 https://www.forbes.com/sites/gurufocus/2024/02/15/warren-buffett-bolsters-chevron-stake-revealing-key-q4-moves https://www.google.com/finance/quote/AAPL:NASDAQ https://www.ft.com/content/2aa3b542-d4e4-4afb-8d81-89bb734d7b17 https://www.documentcloud.org/documents/25032786-googleruling https://x.com/Jason/status/1820823406503157764 https://x.com/chamath/status/1817893425137508474 https://www.vox.com/2018/10/31/18039528/tech-employees-politics-liberal-employers-candidates https://www.natesilver.net/p/tim-walz-is-a-minnesota-nice-choice https://x.com/NickFondacaro/status/1820840411335737852 https://x.com/KamalaHQ/status/1820918063966962143 https://amp.cnn.com/cnn/2024/08/06/politics/tim-walz-inside-harris-vp-pick https://www.nytimes.com/2024/08/07/us/politics/vance-walz-military-record.html https://x.com/PokerGO/status/1818836856890704291

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Jason Calacanis?

  Sorry, everybody. I wasn't here last week.

• 0:02Chamath Palihapitiya?

  So what's your bit, Jake? I'll ju- jump into your bit.

• 0:05Jason Calacanis?

  No, there's no bit. I'm just, I'm, uh, you know, I'm triple vaxxed. I took the Paxlovid and I'm back, everybody. I know everybody was very concerned about me. Thank you to everybody. But I can take my mask off, right, Friedberg? Do I need a mask in 2024?

• 0:18David Friedberg?

  You're good. You're clear.

• 0:20Jason Calacanis?

  Okay, so let me take one of these off.

• 0:25Jason Calacanis?

  Who's getting comfortable?

• 0:27David Friedberg?

  You're in the clear for one.

• 0:28Jason Calacanis?

  Okay, you know what? I'll take the third mask off. Totally free. No, mask free. I hope I don't get you guys infected with COVID.

• 0:33David Sacks?

  We can treat COVID like the flu now.

• 0:35Jason Calacanis?

  I mean.

• 0:35David Sacks?

  You see that? They finally admitted after two years of shutting down schools, the economy, everything. Like, oh, it's just the flu. You treat like the flu.

• 0:43Jason Calacanis?

  Well, it's interesting, you know, I got the COVID, just to explain to everybody, I went to Billy Joel's final concert with my daughter. She, we had a great time. It was his final MSG.

• 0:52Chamath Palihapitiya?

  Nick, timestamp the end of it so everybody can just get to the end of it. Sorry, go ahead, Jason.

• 0:57Jason Calacanis?

  There's no bit here. I'm just saying, I'm letting people know that I think I got COVID at the last Billy Joel show. It was a great show. Um, shout out Billy Joel. But it was 48 hours. That was very intense. And then I took that Paxlovid and I came right out of it. But so apologies to everybody, but man, it was no joke.

• 1:12Chamath Palihapitiya?

  Great story.

• 1:14Jason Calacanis?

  Great story.

• 1:15David Friedberg?

  Great story.

• 1:15Jason Calacanis?

  Well, I mean, listen, a lot has happened since I've been gone.

• 1:18David Friedberg?

  Earlier today. Did you guys sneeze?

• 1:21Chamath Palihapitiya?

  Yeah.

• 1:21Jason Calacanis?

  The Olympics happened. Are you guys taking the Olympics at all? Friedberg, you seem like a guy who would watch obscure Olympic sports.

• 1:28David Friedberg?

  I think there's a lot of sports that should be regular. It's like the pistol shooting guy.

• 1:32Jason Calacanis?

  Anyway, it's all moot because, um, you know, the paparazzi were there and they took pictures, Chamath. Do you know this big paparazzi in Paris this year because of all the celebrities there?

• 1:41Chamath Palihapitiya?

  Yeah, the paps are all over the place in Europe.

• 1:43Jason Calacanis?

  They're everywhere. They're everywhere. I'm sure you saw them in Italy. It's, uh, it's getting crazy. But, um, they got you when you were getting your gold medal. Nick, pull it up. This is, this was, I think, in Us Weekly. Here it is. Here's Chamath getting his gold medal. Okay, oops.

• 1:59Jason Calacanis?

  Whoa. Now, this, this is in the, uh, category of, uh, being the biggest prick. Now, just let people know Chamath has various, he's the biggest prick.

• 2:12Jason Calacanis?

  Other people were there too, by the way. It wasn't, it wasn't just Chama. Friedberg was also there. Here's his Friedberg. Yeah. Most likely to fight a girl. Yeah, there it is. He was in the...

• 2:22David Friedberg?

  Am I the Syrian, uh...

• 2:24Jason Calacanis?

  Yes, that she was in the women's category of boxing.

• 2:27David Friedberg?

  In the women's boxing? Right. Thank you. Thank you, J. K.

• 2:31Jason Calacanis?

  Sax was there too, though, by the way. Here he is. He, uh, he won silver for the least Olympic body. Well done, Sax. Look at that. The least tasty white. I think you got robbed of the gold. There he goes, Sax. Look at that form.

• 2:48David Sacks?

  I like that guy.

• 2:49Jason Calacanis?

  Yeah. At the very least, the Ozempic and Wegovy, you lost the weight, but you didn't add any muscle definition. That's a known, that's known, right, Friedberg? It's known. You lose the muscle, right?

• 2:59David Friedberg?

  That's right.

• 2:59Jason Calacanis?

  You didn't, yeah, fat and the muscle. Um, I was there too, by the way, and I'm very, very proud to say, uh, in a photo finish, you can see me there. You guys know this one, right? This is the 100 meter virtue signal. So you see there, Reid Hoffman just edged me out. And I'm right ahead of Paul Graham. So we, uh, virtue signaling 100 meter dash. It was pretty great. It's pretty great. But congrats to Reid Hoffman also coming on the pod to debate you, Sax.

• 3:27David Sacks?

  Hard to beat them in virtue signaling.

• 3:29Jason Calacanis?

  I know. I felt like, I felt like silver in this case was a gold, you know, given the competition, right? You can just, if you medal in that group of virtue signals, you're good.

• 3:55Jason Calacanis?

  All right, everybody. Welcome back to the All In Podcast. Of course, the number one podcast in the world. And I'm back, daddy's home, and we've got a very full docket. Sax will get his red meat at the end for all the MAGA lunatics in the comments. Don't worry, he's gonna get his red meat, but we got bigger fish to fry in the markets. Markets were down big on Monday due to something called the yen carry trade. The Dow was down 700 points, Natdaq was down like 6%. It was unsettling. Social media went crazy on Sunday night that it was gonna be the end of the world, the beginning of a recession, maybe a depression. And this all happened because Japan's central bank raised their interest rates by a whopping 15 to 25 basis points.

• 4:39Jason Calacanis?

  And we'll explain why that's important in just a moment. We'll get Chamath to give us a little overview here of the yen carry trade. But this is a big deal because Japan has had its interest rates at near zero, even negative since 1999. So this little blip on the chart is, you know, the interest rate going up there in Japan. So, quick explainer and then Chamath will have you go deeper. The yen carry trade is a pretty basic concept. Investors borrow at 0% interest or close to it due to this 0% interest rate. And then you convert your yen into another currency, or perhaps a stock like Nvidia, and you take the spread. So, you know, the goal is

• 5:20Jason Calacanis?

  obviously to return a higher rate than the cost of borrowing the yen. And so here's an example of it. If you just want to look at the flow, you borrow some yen at 0%, you invest it in stocks, whatever. You get some appreciation, and then you liquidate the stocks and you pay back your bill. Of course, this could all go horribly-

• 5:37David Sacks?

  Yeah, but a safer way to do this is just to invest in a US T-bill that's paying 5%.

• 5:43Jason Calacanis?

  Sure. Or people were doing, yeah, people were doing the Australian-

• 5:46David Sacks?

  The market going down.

• 5:47Jason Calacanis?

  Yeah, so you have like-

• 5:48David Sacks?

  You borrow yen at 0%, invest in T-bills at 5%, and you pocket the difference.

• 5:54Jason Calacanis?

  Yeah, you just have to pay back the loan, of course. Chamath, this can all go very wrong if a number of things happen. So maybe you could give us an overview of this kind of trade? Have you ever done something like this? What do you think of these type of trades? These quote-unquote "free money" trades, you know, picking up free money off the ground trades?

• 6:15Chamath Palihapitiya?

  I mean, I think these kinds of things. So I've never done them. And part of the reason why is I think these things look genius and they work until one moment in time where they stop working and it stops working so severely that it becomes almost impossible to unwind yourself. And so you can get caught. Yeah, so I, I think typically in these situations, the thing you have to remember is you don't really make a lot of money in this trade. The way you make a lot of money is by leveraging this trade up. So meaning it's not like borrowing a million dollars in yen and then swapping it to US dollars and then putting it in T bills

• 6:55Chamath Palihapitiya?

  is a real moneymaker. You're talking about 50K. That's not really going to move the needle. So what people try to do in these situations is do it on a billion dollars and then lever it up five or 10X. The problem with that is that you're posting all kinds of collateral as margin to these banks to give you that leverage. Because then all of a sudden capturing 150 basis points on 10 billion or 15 billion. Now we're talking about real money. And so when these things go wrong and they happen very suddenly, what it does is it puts pressure on all other asset classes because people are scrambling to make sure that they don't get margined out.

• 7:41Chamath Palihapitiya?

  And what you saw over the weekend was it mostly a lot of that happening, which was a lot of these folks were putting this trade on to the tune of tens or probably even 100 billion plus dollars. Wow. Of which they had maybe five or 10 billion of equity and 80 to 90 billion dollars of just margin. And that's what caused this very quick cycle. Then it looked like it unraveled itself. And so people thought, oh, we're probably mostly past this. I actually think we're not. I've said this before. I think one of the most interesting things I've learned in the last few years about the

• 8:23Chamath Palihapitiya?

  stock market is the stock market is owned by and large by these algos, right? Meaning there is these large, kind of murky grayish hedge funds that have these computer trading algorithms that are allowed to be levered to the tune of, you know, 13, 15, 20 times about $50 billion. So these folks are swinging around a trillion dollars each, okay? And we all just live in their world because when these algorithms make a decision and they react to these kinds of events, that's when the real volatility starts. So I think the most important thing was summarized by friends of ours

• 9:09Chamath Palihapitiya?

  from Goldman Sachs. I just wanna, Nick, if you wanna just throw up the picture that they sent me. So they, they sent, they sent some really good market insights whenever these things kind of happened to a bunch of their clients. And one of the interesting things that they observed is a couple of facts. The first is the algorithms in the middle of all of this chaos sold about $41 billion of global equities. Okay, no big deal. Except that it actually causes everybody else to have to react and then they sell billions and billions more. The other thing that they noticed though is that there, we're in a moment in time where you can see how these algorithms will behave over the next month.

• 9:51Chamath Palihapitiya?

  And right now, if there's relatively minimal volatility and not much changes,

• 9:57Chamath Palihapitiya?

  the algorithms will have to sell another 160 odd billion dollars of equity. And that'll pull through many hundred billions more from everybody else. So I think we're in a little bit of a delicate moment where the preponderance of the market action will be to continue to sell. And I think it's just going to be when we look back in hindsight, another reason why getting levered on these things is very dangerous. There's no free money, basically.

• 10:25Jason Calacanis?

  Yeah, there is no free money in this free money trade. And just to translate a little bit of this on the margins for the audience who's not familiar with it, margin is a loan, fancy way of saying a loan, margin call. You have some asset that backs it up. You know, in your case, it might be, you know, a civilian, it might be your house, whatever, your bank account. In these cases, these big companies, these hedge funds might have cash or equities. And if they come down and they have to pay the loan, they are forced to liquidate it. And in some cases, those assets are controlled by the person giving the loan. And they will just start programmatically selling your shares in whatever, Apple, Google, whatever Nvidia you own, to pay down that margin.

• 11:07Jason Calacanis?

  And this is called a margin call, thus the name of the movie. And so it's incredibly dangerous. And the leverage is you and I can, or like any civilian could borrow, you know, $500,000 against their $2 million house and home equity. Rich people and these big banks, they can borrow 10 or 20 times the value of the assets, which then could lead to absolute chaos. Friedberg, let's go to you next, and just talk a little bit about what's going on in Japan, because they have had a rush of people buying their stocks, the population declining. It's a very unique economy. Maybe you could talk a little bit about it.

• 11:47David Friedberg?

  One of the biggest challenges facing Japan is the level of debt that they've accrued. Their debt to GDP ratio is currently 263%. They have about 1.3 quadrillion yen of public debt on an annual GDP of about 591 trillion yen. They're currently, at the federal level, spending about 20% of GDP per year. Five percent of GDP is being spent per year just on servicing the existing debt. And that's at interest rates set by the central bank of roughly 0%. So, you know, or whatever the market is trading it at, so slightly above 0%.

• 12:28David Friedberg?

  But if the central bank had to start to raise rates because inflation started to run away because there's so much yen in circulation, there's so much debt outstanding, the federal government would not be able to actually service this debt. So as of March of 2024, the Bank of Japan, the central bank, actually holds 53% of Japan's outstanding government bonds, which is equal to about 100% of Japan's GDP. So their central bank has bought the debt that's being issued by the federal government to fund their budget, a large chunk of which right now is being spent just on paying the interest on the debt while interest rates are close to 0%.

• 13:08David Friedberg?

  So imagine if interest rates bumped up to 1, 2, 3, 4, 5% as we're seeing with US Treasuries. We were recently at a nearly 5% handle on the 10-year Treasury. It would become an unsustainable debt burden for the Japanese government to be able to handle that. And a large part of this is being driven by a number of crises that Japan has faced since the early 90s. So there was the financial crisis in '08, there was the nuclear meltdown, there was a couple of earthquakes, tsunamis, and a lot of debt has been taken on to support the country after those crises. But really importantly, and Nick, if you could just pull up this age chart, is the aging of the Japanese population. So this chart shows that, and you can kind of see back to 1950, when the average age

• 13:53David Friedberg?

  in Japan was 21 years old. And today, the average age in Japan is around 48. You know, in the next decade, it'll be 50, then it'll be 52. So that means more and more people are relying on public pension. Today, 33% of their government spending goes towards their social security programs. In the US, for comparison, social security is about 20% of federal spending. So that number is only getting bigger and bigger. As the population ages, the Japanese government has to continue to service. Their older population and they've had to face several crises. Their debt has ballooned to a level that is well beyond any other industrialized nation. And the only way to continue to service that debt economically is to keep interest rates low. And the problem with keeping interest rate low? Inflation.

• 14:38David Friedberg?

  And that's the big driver that caused them to say, let's uptake the interest by fifteen bips or twenty five bips. Is to try and tackle the inflation problem they're facing, just like our central bank recently tried to do the same. But clearly, the market can't have it. So Japan is in a real pickle. And I think that it shows how much having a large amount of federal debt can impact the ability for a nation to maneuver itself during difficult times. And ultimately, debt payments come due. They come due either in the form of economic contraction or massive taxes or inflation. And currently, Japan is paying for it in terms of inflation.

• 15:16Chamath Palihapitiya?

  Sorry, you're saying Japan has inflation? Japan has no inflation.

• 15:19David Friedberg?

  The government raised rates to tackle inflation. I'll pull up the inflation chart. Japan's inflation hit a forty year high. And this just shot up in the last eighteen months. Inflation is running at close to four percent a year.

• 15:32Jason Calacanis?

  And so they're setting Friedberg

• 15:36Jason Calacanis?

  the interest rate in the country and they own the debt. So they're basically in control of or they're manipulating the economy and trying to control it, correct Friedberg?

• 15:47David Friedberg?

  Well, their central bank has to buy most of the debt. And their central bank sets the rates. So they have a large amount, fifty, you know, fifty three percent of their federal, of their public debt is held by their central bank.

• 15:57Jason Calacanis?

  And if they don't pay a high interest rate, then people don't buy future bonds. If they do raise it, they have to pay that rate. So this is the conundrum, Friedberg, if I were to summarize it.

• 16:07David Friedberg?

  Well, yeah, while rates are low, you see this, you know, particularly in a market like we're facing today, where there's global inflation. They need to raise rates in order to reduce inflation. The problem with raising rates is this, this, you know, this currency problem.

• 16:21Jason Calacanis?

  But also buying the debt, Chamath, is, you know, who's buying debt if you're not getting anything on the coupon, correct? That's another challenge they face in Japan is that.

• 16:31Chamath Palihapitiya?

  There's a famous quote from an economist, Simon Kuznets, who said, there's four kinds of countries in the world. There's developed countries, undeveloped countries, Japan and Argentina.

• 16:41Chamath Palihapitiya?

  And I think the reason he said that is that Japan has been in this state since the 90s. So they had a massive property and equity bubble collapse and they've not had to deal with anything that looked like typical economic issues since then. And part of it is because the government plays a very big hand in the Japanese economy. There's a lot of price controls there. So I don't know, I'm not sure what it is that we can learn there that you can extrapolate to the rest of the world.

• 17:10Jason Calacanis?

  Yeah, it is a very unique Saks geography and economy. So Saks, your thoughts on this overall and what we can expect? Maybe you could take the future looking, forward looking and prediction crystal ball. Good.

• 17:22David Sacks?

  So I think Friedberger is right that the reason why the Japanese central bank tried to raise rates, I mean, despite a tiny amount, was because they are dealing with inflation. If you look at that inflation chart and you go back to when their inflation was zero, roughly in 2020, the exchange ratio between the US dollar and the yen was about 100 to one, meaning one US dollar could buy 100 yen. Now it's at roughly 150 yen to the dollar. So their currency has massively depreciated over the last several years. And a big part of the reason why is because, again, their central bank is offering roughly zero and you can earn 5% in UST bills. So people are basically moving their money to countries that pay a lot more on their

• 18:07David Sacks?

  bonds and they're even borrowing yen, like we talked about, selling the yen to then buy Australian dollars or US dollars to invest the money there. So there's huge downward pressure on the value of the yen. And the way this creates inflation is that Japan is a, is obviously an island that has very few natural resources and it has to import all of its oil. So it has an advanced economy, but it needs to import a lot of resources. And so as its currency depreciates, the price of all those commodities goes up. And this is why you're seeing inflation in Japan. Now, when the central bank tried to solve this, it created huge jitters in the financial market because it was starting to unwind the whole.

• 18:50David Sacks?

  Yen carry trade, which is something like 20 trillion dollars.

• 18:54Jason Calacanis?

  Wow.

• 18:54David Sacks?

  And so the, the Bank of Japan backed off and you heard the, the Japanese central banker said, "We can't raise rates while it would create instability in the global markets. We have to wait until it's stable." But the problem is that raising the rates and unwinding the yen carry trade creates the instability. So what they're saying is we're never going to be able to raise rates. And the result of this is going to be more inflation in Japan. Their currency is going to continue to depreciate. You know, they've been unable to defend it. And so what I would expect is that the US dollar is going to keep buying more yen. It's going to go from, I don't know, 147, 150 to-

• 19:33Jason Calacanis?

  There is one-

• 19:34David Sacks?

  Some bigger, some bigger number.

• 19:35Jason Calacanis?

  It's one huge upside to this, Saks.

• 19:37David Sacks?

  And who's going to pay the price here is the Japanese consumer because everything's going to cost a lot more.

• 19:43Jason Calacanis?

  Yeah. And that was, you know, obviously when the, when you get 158 yen to the dollar, this is extraordinary. I was talking with Tucker and we just took our Niseko ski trip this year from four days to seven because it is just such a great deal. So.

• 19:59David Sacks?

  It'll be good for tourism because yeah, you'll be able to travel to Japan much more cheaply.

• 20:02Jason Calacanis?

  Amazing.

• 20:03David Sacks?

  But if you're, if you're actually Japanese and you live in that country, you're going to see your purchasing power continue to erode. So I would expect big domestic problems in Japan and eventually they may conclude that this system does not benefit them. Now who does it benefit? You could argue that it benefits the United States because it has subsidized the purchase of our debt, right? Because again, so do you have this yen carry trade of 20 trillion and a lot of that has gone into US bonds or US T bills, right? And so it basically is a huge subsidy to the US Treasury's need to continuously issue more

• 20:44David Sacks?

  and more debt. We're issuing what a trillion dollars of net new debt every 100 days. So having the Japanese consumer subsidize all of this by taking it on the chin. You know, in terms of inflation, in order to provide this yen carry trade, you could argue has been very beneficial to the US Treasury.

• 21:00Jason Calacanis?

  And Chamath, at some point, the, you know, the percentage of your debt to GDP, you know, we've talked about it so much on this show. You've said previously, hey, you know, we can have a little bit of this because we're a very strong dollar. So when you look at Japan, is there some lesson here for the US? Or, you know, maybe some warning here that we shouldn't necessarily follow them too far down this road?

• 21:26David Friedberg?

  Nope.

• 21:28Jason Calacanis?

  Okay, keep printing money. Got it. Okay.

• 21:30David Sacks?

  Well, I don't know. I mean, I tend to agree with Friedberg here that when you have massive amounts of debt, it definitely limits your flexibility.

• 21:37David Friedberg?

  It's just arithmetic. You're going to pay for it with either economic contraction, higher taxes or inflation. Those are the three places it goes.

• 21:44Jason Calacanis?

  Yeah, and they did test it. They've stress tested now, yeah.

• 21:47David Sacks?

  One of the reasons why Japan can't raise rates is because their debt will become even more expensive. Right? I mean, Friedberg isn't that part of the problem?

• 21:59David Friedberg?

  Yeah, that's exactly right. And then their federal spending gets compressed because now they have to service that debt. Again, they're already spending 25% of their federal budget on servicing existing debt with the low interest rates. And they've got to support an aging population.

• 22:13David Sacks?

  Okay, so to analogize this to the US, our debt service costs, or what are they at now? Like, well over a trillion?

• 22:20David Friedberg?

  We're about a trillion a year with a proposed 7.3 trillion budget, so we're at 13.6%. And Japan's at 25%.

• 22:28David Sacks?

  Over the next 10 years, isn't our debt service supposed to rise to?

• 22:32David Friedberg?

  Yeah, as all of the, as all of the low interest bonds mature and we issue new debt at a higher interest rate, our debt service cost is going to continue to climb. It's already higher than discretionary military spending at over a trillion a year.

• 22:45Jason Calacanis?

  Well, just buy Bitcoin and when it goes to a million dollars a coin, we can just pay it all down. So problem solved.

• 22:50David Sacks?

  Just one other point is, I think it shows the fragility of the global financial system. I mean, the markets snapped back as soon as the Bank of Japan backed off, basically capitulated, said, okay, fine, we can't, we can't defend our currency. We're just gonna let it keep depreciating. We're gonna let inflation keep raging. As soon as they declared that, then the market snapped back, but it just showed in that 24 hours, putting aside like all the panic porn that was on social media, because I think that was overdone. It still showed how fragile the global economy is. The yen carry trade has injected roughly $20 trillion of liquidity into the global economy, and that is propping up all sorts of things, right? And that is subsidizing US government debt.

• 23:34David Sacks?

  And you just wonder if the yen carry trade were to end, because let's say, for example, the Japanese people don't want to experience hyperinflation, then what would that do to the global economy? It just showed how rickety the whole system is.

• 23:49Chamath Palihapitiya?

  I think it shows how much leverage there is in the system.

• 23:52David Friedberg?

  Totally. That's what it is. It's all about leverage.

• 23:54Jason Calacanis?

  Okay, let's talk about leverage for a section, Chima.

• 23:56David Friedberg?

  Leverage on leverage on leverage.

• 23:58Chamath Palihapitiya?

  So for example, like if you take something like Citadel runs about $50 billion and they have extremely precise risk management systems. They're the best in the business. But as a result of that, they are so systematically important to make the financial machinery run properly that as they're inspected and as they prove that they have very good risk management, they're allowed to lever up to incredible levels, you know, 15, 16, 17 times. So I think that Citadel with the 50 billion of capital that investors have given them is probably running a trillion dollars on a daily basis in the markets. Renaissance Technologies, same situation. Millennium, same situation.

• 24:43Chamath Palihapitiya?

  A bunch of these funds that sit inside of the large banks, same situation. So when you add it all up, you're probably talking about a few hundred billion dollars of notional capital.

• 24:55Chamath Palihapitiya?

  That's enormously levered. That's what causes the that sensation, as Zach said, that things are rickety.

• 25:02Jason Calacanis?

  So should we have more increased regulation or increased scrutiny on this? Chamath, you've talked about it before when we had some of these hedge funds flip and we talked about maybe some regulation.

• 25:12Chamath Palihapitiya?

  We have a lot of regulation on banks. Essentially, what happened is after all of the chaos of the great financial crisis, the thing that we don't talk about is what we really did was keep running the same, if not more, risk. We just took it off balance sheet. So the banks were able to structure business lines to work with these hedge funds. And these hedge funds, in turn, were able to show over time that they're so tightly managed that there are no black swan events that could happen, that they can run highly levered. So I think we are in this moment where there'll be these fissures from time to time. So here's this Bill Huang, that's an example. The carry trade is another example.

• 25:57Chamath Palihapitiya?

  There have been examples a couple of times a year, but at some point, these folks will have taken too much risk. And we'll look back on it and we'll think that hedge funds should probably have been more regulated than they are with respect to their leverage ratios, not with respect to their strategies.

• 26:15David Friedberg?

  With this particular trade, JP Morgan yesterday or a few hours ago said that they think about 75% of the yen carry trades have now been unwound. And it was at 50% a little over a day ago. So the market has moved to kind of unwind these trades, it seems, and we're pretty much at the end of the levered fallout of this particular activity. So I put the link here.

• 26:40Jason Calacanis?

  And so people at home understand when we move on to the to the to the next phase of the financial markets, all of those people had to cover those trades, which means they all have to sell assets at the same time as buying yen or covering the yen. And that's what causes this acute chaos in the markets. We saw the Nasdaq go down 6% or in some cases, maybe people wanted to take some chips off the table since things were.

• 27:02David Sacks?

  Yeah, but they're going to put that trade back on. In fact, now is an even better time to put that trade on because a bank of Japan's basically just capitulated and said that they can't raise interest rates while things are so unstable. So we know they're just going to keep rates where they are. So if I was one of these traders, I'd just put the trade back on now.

• 27:21Jason Calacanis?

  So let's talk about the landing here in the US. Let's get US centric now. And it looks like maybe it's going to be a bumpy landing rather than a soft landing, as one might suspect. And as we talked about here, that we think this could be bumpy to soft. July's job reports was pretty bad, which is good in some ways when you're thinking about inflation. So the new jobs added were way down, growing 114,000 in July. And a bunch of these estimates have been reported downward over the past year, just so we make a note of that. And this was below the Dow Jones estimate of 185,000. There's your chart. It just keeps ticking down.

• 28:03Jason Calacanis?

  You know, since the Fed started hiking rates and you hear anecdotally about all of your friends, 88% of millennials right now are actually preparing to be laid off, according to a recent survey. Unemployment is way up. In the short term here, we're at 4.3% in July. That's the highest since October of 2021, up from 4.1% last month and 3.5% in July. So you take that July number to now, it's pretty significant. Here's your chart on the jobs. Obviously, historically, it's low, but it's ticking up pretty quickly, which is what you would expect with the rate hikes. And we had this great moment of hourly earnings growth going up. So how much people

• 28:45Jason Calacanis?

  make on average per hour was going up. And I think that was causing a decent amount of the consumer enthusiasm in the economy. Here it is. It's coming way down from almost 6% down to three and a half. And so that means Fed rate cuts are coming. Here's your chart from a prediction market of the chances of how much the Fed cuts rates this year. Looks like 75 to 100 basis points is the majority. About 60% of people believe it'll be one of those two numbers. I'll stop there. There's a lot more to talk about here, and we'll get into specific companies and the NASDAQ. Let me pull up this last chart before I go to you, Chamath. It's been a strong year for the market. S and P and NASDAQ,

• 29:30Jason Calacanis?

  both up 11% year to date as of Thursday morning. But obviously, a massive, I guess, do we call it a correction when it's, yeah, 20% is correction territory, Chamath? So. Your thoughts on the wider US market and the sell-off?

• 29:46Chamath Palihapitiya?

  I think we're in a low-key recession. So I think that we're going to probably go through a couple of very difficult revisions of old data. The thing to remember about non-farm payrolls isn't as much what the number is, but if you actually look to the number of times it then gets revised, the reality is that these things get revised constantly. And right now, we're in this trend where we are overestimating and revising down. Sacks mentioned this, that that was the same with GDP. So we are, I think, in a tough situation. And then what you're seeing is folks that run very cyclical businesses are telling us in very plain-spoken English that

• 30:28Chamath Palihapitiya?

  demand isn't there. So the one that was interesting this past week, Jason, you mentioned millennials, but like Airbnb, where you think all these young people are running around YOLO-ing whatever cash they have, Airbnb had a massive warning on demand. So when I think the excess capital, whether it's the STEMI check or what have you, has been exhausted, you're now starting to see it bear out in these cyclical businesses. I don't think the demand is there. I think we're in a recession. It probably becomes more obvious in Q3 and Q4. And so Powell's going to have to cut.

• 31:07Chamath Palihapitiya?

  The question is, will he overreact to the pressure and cut 75 to 100 versus 25 and take it slow?

• 31:17Jason Calacanis?

  Okay, Friedberg, technical definition of a recession is two quarters in a row of negative GDP. We haven't had that, but we're sort of bouncing along that possibility. Is the recession baked in? Or if they cut rates at the extent the prediction markets are predicting and they're signaling, do you think we have a nice rebound? How do you feel about the overall US economy?

• 31:40David Friedberg?

  Obviously, you have to account for inflation and government spending. How much of government spending is driving economic growth? Today, the US is proposing to spend $7.3 trillion next year out of $25 trillion GDP.

• 32:00David Friedberg?

  So the US federal government is roughly 30% of GDP. And we obviously still are tackling inflation. The real question is how much of the economy is growing because of productivity gains in the sector of the economy where people are making things and doing things versus the government using its ability to tax and borrow to drive growth in the economy by inflating numbers, by pushing revenue onto businesses, by pushing capital into the markets, by creating levered trades in the markets using their borrowing capacity and their taxing capacity. So that's the thing I remain concerned about.

• 32:42David Friedberg?

  I mentioned this last week, I remain highly concerned about many sectors of the economy that are deeply challenged right now, particularly the industrial sectors, manufacturing sectors, the agricultural sectors, but services and software sectors where you can raise prices and you have a nice high margin business, you can continue to grow and look good. But there are many parts of the global economy and the US economy that are pretty challenged right now.

• 33:08Jason Calacanis?

  Sax, let's talk about this soft to bumpy landing. Consumers are definitely weakening on the low end. Airbnb and Amazon are example of bargain hunting, people who are looking for discounts, who want to save money with those services. Higher end services that have a bigger price tag like Uber and some of the high end retailers are showing actual growth and they're saying the consumer's strong. So it was a tale of two cities during this earnings season with a bunch of the high end folks saying strong consumers on the high end, weak consumers on the low end. What are the chances we go into a recession? And, you know, second question for you. Elon was recently on Lex Friedman for, I think, eight days or something. It was like a record podcast of how long he was on.

• 33:53Jason Calacanis?

  But one of the things he talked about was that he had discussed with Trump and Vivek has been very strong about this on our podcast and other places, and he was a leading VP candidate of making the government more efficient and radically cutting the amount of spending. But there would be a reaction. So does the potential GOP administration have a platform to cut costs massively or not? And do you think that, you know, that would have been maybe?

• 34:19Jason Calacanis?

  Too unpopular to sort of unveil that plan now as a presidential candidate in either party.

• 34:24David Sacks?

  I don't think they have that plan specifically because I just think that you would need, you would need a super majority in Congress to do something like that. And I just think that this election is going to be too close regardless of who wins to provide that kind of mandate. I mean sadly, I think we do need to get government spending under control, but I think it's a long-term political problem and I just think our political system doesn't have the will to fix it. I do believe Republicans will be better than Democrats on that, but I think that's the truth of it. To go back to your first question on the state of the economy, I had lunch with a very prominent investor yesterday who's very plugged in with the hedge fund community. And he said that the sentiment shift, you know, I'd say again, within hedge funds, professional investors, public market investors,

• 35:09David Sacks?

  had been very sudden, that people were now very worried about the risk of a recession. And I do think that the Airbnb revenue that Chama cited is a big factor. Airbnb's stock went down 15% in one day on soft demand. And what's driving all of this is consumer weakness, or at least fear of consumer weakness. You mentioned the rise in unemployment. It went from 4.1% to 4.3% month over month. So 4.3% is still a pretty low number by historical terms, but to jump so much in one month, that's a pretty big increase. And then of course, it's up from 3.5% a year ago. So we're seeing pretty big increases in unemployment.

• 35:53Jason Calacanis?

  10% year-over-year, 5% month-over-month is very significant, yeah.

• 35:56David Sacks?

  Yeah. So these are big changes. There's real evidence of consumer weakness. And I think professional investors are getting quite worried about the risk of a recession. And I guess just one last point on this is that If you were to remove the impact of government spending, it's pretty clear the private sector is in a recession. I mean, like we've been talking about, government's been going hog wild with spending. We have, the government is running 6% of GDP deficits. The latest Q2 growth number was something like 2%. So if you force government to live within its means and to cut its way back to balance, we would definitely be in a recession. We'd have a negative growth rate. So I do think that the economy is looking pretty shaky

• 36:41David Sacks?

  all of a sudden. Whether we actually tip over into recession in the next few months, I'm not sure.

• 36:46Jason Calacanis?

  All right. Well, listen, I want to corner everybody here with a question. You've got to answer the question. You can't avoid the hard questions here on the All In Podcast. Chamath, sitting here a year from now, market up or we experience a recession defined as two quarters of negative GDP? Which one is the more likely scenario? Market up or a recession? Give it a percentage or just which is more likely? Free bird, your neck.

• 37:10Chamath Palihapitiya?

  Well, those are not, those are, those are not opposing things. So you're saying in a year from now? I don't, I don't honestly know.

• 37:18Jason Calacanis?

  Okay.

• 37:18Chamath Palihapitiya?

  But I do think that we'll probably be in a technical recession.

• 37:23Jason Calacanis?

  Okay. So you lean towards, I'll just go recession, no recession in the next year.

• 37:27Chamath Palihapitiya?

  But I also think that there's a pretty decent chance the market will be up.

• 37:31Jason Calacanis?

  Ah, got it. Okay. So we could have a recession, but the market goes up. So to unpack that, I am with you on that same prediction because I do think people are addicted to efficiency. They're going to lay people off and earnings are going to keep ripping as these companies become managed so well.

• 37:45David Friedberg?

  That's a small percentage of the economy, Jay Cal. That's a few tech companies. But much of the manufacturing sector, the industrial sector, the ag markets, like there's a lot of markets where you don't have this option to just cut knowledge workers. The knowledge worker economy, the software economy has the ability to do that. The tech economy can do that. But much of the rest of the economy doesn't have a lot of maneuverability like we do in this, in this fast growth, high margin kind of industry we work in.

• 38:10Jason Calacanis?

  I think it's a good point, but I do see McDonald's, Starbucks, and some of those consumer retailers are taking steps right now to right-size their businesses and offer $5 meals or $3 coffee. So I do think there's a Shift in management and how they run these companies.

• 38:26David Friedberg?

  That's about reduced forecast, right? So when their revenue decline, when their revenue forecasts have to be cut, they have to cut headcount. That's different than creating more efficiency.

• 38:34Jason Calacanis?

  Well, but they're also cutting stores and they're cutting things and projects that are inefficient. So I just think there's going to be massive efficiency in all sectors. That's going to be the theme for the next year. But I mean, it's obviously.

• 38:44David Friedberg?

  That's that's a loss of jobs and a loss of growth, right? So just to be clear, when you cut stores, you have less growth. When you cut jobs, that's because you don't have as much revenue growth. So those are about.

• 38:53Jason Calacanis?

  But earnings can go up, right?

• 38:56David Friedberg?

  They can be supported, but you're still facing contraction. And, you know, one of the challenges right now, a lot of food companies, a lot of retail companies have been raising prices to try and keep earnings going up, but there's hitting this natural inflection point where consumers no longer buy, where you find this tipping point. I don't know if you guys have been to the supermarket lately, but man, it is crazy expensive how like prices have gone up like 50 to 100% on like everything at the supermarket. And this is like.

• 39:23Jason Calacanis?

  It's basically impossible.

• 39:25David Friedberg?

  We could deal with it, but like a large percentage of people, this is a big deal in terms of like, now you have to budget your life and you spend less.

• 39:32Chamath Palihapitiya?

  Matt and I, when we're here in Portofino, we go in the morning to the fishmonger and we'll buy, you know, fish for the family. It is unbelievably expensive and, you know, we always think to ourselves, how is it possible that folks can actually choose to eat healthy and local if they want to? It's next to impossible.

• 39:51Jason Calacanis?

  What was the whole fish? Tell us.

• 39:54Chamath Palihapitiya?

  You know, like if you want to have like locally caught soul, it's like 48 euros a kilogram.

• 40:02Jason Calacanis?

  Wow.

• 40:02Chamath Palihapitiya?

  And like, it's expensive and it's expensive for all kinds of. So to feed a family of seven, which is what we are, you'll have to spend, you know, 150, $200. It's not sustainable. It's not something that can, that makes sense for enough people anymore because that probably used to be 40 bucks or 30 bucks.

• 40:27Chamath Palihapitiya?

  But Freiburg is right, like we're in a real, serious problem because it's, it's like these systems have remained the way that they have been for a very long time. And while other industries, like the tech industry, have captured all these incredible efficiencies. But the problem is that then these other industries are what supports everyday people's everyday lives. And in the absence of a way to actually reduce cost and improve quality, you end up where we are today, and I don't think that that's sustainable.

• 40:57Jason Calacanis?

  Freiburg, greater chance of a recession in the next year or not a recession? You have to give an answer.

• 41:02David Friedberg?

  Yeah, I think there's a great chance of a recession.

• 41:04Jason Calacanis?

  Yeah, majority chance of recession, go on.

• 41:06David Friedberg?

  But I do think that there's going to be government programs to mitigate the effect, meaning you could see the markets, the equity markets continue to rally on some of the government programs and government activity, which has become kind of like the learned behavior. It's like Pavlovian. It's like we have, we have an economic problem, the government steps in and spends money.

• 41:27Jason Calacanis?

  Let me get an answer from Sax.

• 41:28David Sacks?

  The reason why the markets could rally in the midst of a recession is because interest rates get cut. We've already seen that the expectations of rate cuts have now grown substantially. The markets are starting to price in 100 to 150 basis points of rate cuts this year, where before it was more like 25 to 50 basis points. So obviously, lower interest rates make stocks go up. So I think that's the main driver of the rally you're seeing right now, J Cal, not the prospects for increased efficiency. Because I think, you know, those prospects were already there.

• 42:00Jason Calacanis?

  So are you majority case recession or majority case not recession in the next year?

• 42:05David Sacks?

  I've been predicting recession for like three years now because I just think when you jack up interest rates so suddenly, so violently, you get recession. So I guess if I, if you pin me down, I'd say recession. And I'll tell you one of the reasons, one of the reasons why.

• 42:19Jason Calacanis?

  Interestingly, I've just checked the notes, Sax. You predicted five of the, nine of the last five recessions.

• 42:25David Sacks?

  I know, I know. Look, it's the same recession that I've been predicting. It's very simple. When you jack up interest rates from near zero to five and a half percent. That makes everything much more expensive.

• 42:36David Friedberg?

  Unless the government spends money, which has been the counterbalance, right? And that's a lot of why governments do. And by the way, I have a theory on this. I think this is also why we have an open border policy or why the current administration has pushed an open border policy, because that can also be deflationary to counteract the effects of the interest rate accrual because of the economic effects.

• 42:56David Sacks?

  It lowers wages overall and fills jobs.

• 42:58David Friedberg?

  It increases the workforce, etc. It creates more competitive workforce, but no one's allowed to publicly say that. And I do think that that's one of the primary motivating factors of having an open border policy.

• 43:08David Sacks?

  Well, people have been saying it. I think you just did. It's well said. If you look at job creation over the last four years, there's been no net new job creation for native born Americans. All the job creation has been foreign born or.

• 43:22David Friedberg?

  Because native born Americans have too high of a wage expectation. That's the fundamental problem, right?

• 43:26David Sacks?

  They're too affluent. I agree. I don't think it's too high.

• 43:28David Friedberg?

  Right. And I'm not making an argument one way or the other. I'm just highlighting, I think that this is one of the motivators for the policy.

• 43:33David Sacks?

  I think it'd be a lot better to let their wages rise. But in any event, let's not get political on it. Just to the point about recession, Jason. I mean, yeah, look, I've been predicting the same recession, but I think one of the reasons why it might finally come now, first of all, you've got a lot of investors are suddenly worried about it. There's been a big sentiment shift. I think the other thing is I don't think we know all the bad news yet. Unknown unknowns. Yeah. Well, none of us were tracking the yen carry trade like very, I mean, it was something we may have heard of, but it's not like we were actively thinking about it until this past week. And the question is, how many more things are out there like that? And I also think that the pattern with this administration has been to hide the ball. They hid Biden's senility for years. Not to get political, though.

• 44:18David Friedberg?

  Zach, you just said not to get political.

• 44:20David Sacks?

  Not to get political.

• 44:21David Friedberg?

  Zach starts out by saying, yeah, not to get political, but Biden.

• 44:24David Sacks?

  This is just a fact.

• 44:26David Friedberg?

  Look, it's not political.

• 44:28Jason Calacanis?

  I was about to give him an award for saying not to get political and moving on.

• 44:31David Friedberg?

  I know, so good.

• 44:32David Sacks?

  I'm making an economic point here, actually, and you guys can decide if I'm just being partisan or whether I have a good point here, which is, look, I think the MO of this administration has been to hide the ball. And any good news, they would have reported. Do you think that they're reporting all the bad news? I don't. I think there's more bad news that's going to come out after the election because there's too many incentives for people to hide it.

• 44:53Jason Calacanis?

  And for people who don't know, we're talking about the concept of black swans. In order to have a black swan, it has to be something you're not aware of and it has to be, have a dramatic impact. The yen trade would not fall into this because people were well aware of it, even if it wasn't front page news, and it didn't have a dramatic impact. But there could be black swans sitting there. Obviously, the black swan that you can think of recently would be in the great financial crisis, the subprime mortgage. That truly was massively impactful and it was not known. Dotcom was known and was massively impacted. You need both of those categories to define a black swan. And there could be black swans, right, Sax, is what you're saying?

• 45:31David Sacks?

  When you said that the yen carry trade didn't have a big impact, that's because the Bank of Japan backed off. So if they kept going with it, we don't know what the impact would have been.

• 45:40Jason Calacanis?

  Correct. But it didn't. So just so people who are tracking the black swan tracker, just the more you know, let's talk about Apple. Chamath will give you your flowers right now. They're coming to you. Just look to your left. Here comes a huge bouquet because you predicted. I didn't actually send you flowers. He looked to his left. But here's your virtual flowers. You predicted, I think, absolutely correctly that the less Berkshire Hathaway and Buffett talk in their documents and their letters and at their events about a trade, the more they're falling out of love with it and... I understand Berkshire Hathaway has sold half of their largest position,

• 46:23Jason Calacanis?

  which is Apple. Some people are saying because they don't have faith in the company. Some people are saying because they're overweighted. Other people saying because they, Friedberg, want to get more cash on the books to make other acquisitions. So, Chumak, maybe just take your victory lap and then we'll, I think Friedberg double clicked on this and did a deep dive.

• 46:42Chamath Palihapitiya?

  I don't have much to say. I mean, I think it's been a trend in their letters when he stops mentioning a company in his letter, it's because he's selling.

• 46:53David Friedberg?

  It's a great, uh, great read.

• 46:54Jason Calacanis?

  There it is.

• 46:55Chamath Palihapitiya?

  Yeah. And that's what happened here.

• 46:56Jason Calacanis?

  Okay. So, Friedberg, take us through this.

• 46:59David Friedberg?

  Well, so it looks like since the start of the year, they've sold 55% of their holdings in Apple. And if you look at the end of the year, Nick, if you could pull up this image with the pie chart, this is what Berkshire's stock holdings were in their non-majority owned businesses. So businesses that they don't own the business outright. And 50% of their portfolio was in Apple at $174 billion. We obviously saw Apple's stock price peak, highest level ever, just a few days ago.

• 47:31David Friedberg?

  But it has since come down, as it was reported, that since the start of the year now, Berkshire sold 55% of this position. So some people are arguing that they've got a point of view on the company's strategy and competitive kind of landscape. Some folks have argued that the valuation multiple has gotten too high, trading at nearly 30x earnings. The stock has risen 900% since Berkshire bought the stock in 2016.

• 47:56Jason Calacanis?

  Nine-bagger. Nicely done.

• 47:58David Friedberg?

  And some people would argue that the percent of the portfolio is too high at over 50%, as you can see here, at the start of the year. But, you know, I'll kind of provide some of the counter arguments. You know, Warren Buffett does not do much analysis on corporate strategy when he provides reviews of the stocks that he's picked. He often finds and talks a lot about great managers that generate great returns. And he sticks with them. And he sticks with them sometimes for many, many decades. The management in this company has not changed. The return profile on cash invested and cash returned has only improved since he put money in. They're generating more cash flow. They're offering more dividends. They're doing more stock buybacks. And he's happy to be concentrated. Over the years, he's made large bets on single companies to the point that sometimes he just outright buys the entire company like he did with GEICO.

• 48:44David Friedberg?

  In 1996, he always talks a lot about finding a company that is run by great managers that has a premium product with a nice high margin and a durable moat, strong brand value. As I look at kind of what's really gone on here, it feels to me like the difference between Apple and some of the other big holdings in its portfolio is that many of those other businesses are regulated monopolies. So BNSF Railway is regulated by the Federal Railroad Administration. Berkshire Energy, which owns Mid-American, is a regulated utility. The prices that they charge consumers are set by the government, so they have a market that's locked in. The prices are set, they have locked-in distribution, they have locked-in utility value. And the same is true in the insurance business. Geico's rates are approved and set effectively by state regulators.

• 49:29David Friedberg?

  Berkshire has a moat because they've got the largest capital base and they've got this machine that just keeps generating cash, and the rates are publicly set by government. Apple, however, is not regulated, and it is very clear that Apple is facing very deep and severe financial impact from the regulatory authorities that are overseeing the business. So if you look at the Google antitrust ruling-

• 49:49Jason Calacanis?

  Right, we're gonna get into the Google deal in a second.

• 49:51David Friedberg?

  Yeah, there's a real regulatory risk there because Google's paying Apple $20 billion a year to be the default search engine. Apple also has a very deep relationship with China. They have a lot of manufacturing being done in China, and they sell a lot of product into China. So as regulators start to take a harder look, as they've said they're going to, at companies' relationships with China, that's a real risk to Apple. Advertising, tracking users, and then the subscription fees that are charged to consumers, and most importantly, we've talked a lot about the 30% vig that Apple takes on their App Store and how regulators are now stepping in and take a look at this. So because this business is not yet a regulated monopoly, it may be a monopoly in many senses of the word, it's not regulated yet, and that transition could be financially painful for Apple.

• 50:35David Friedberg?

  Once they get to the other side, it starts to look a lot more like a large-scale Berkshire-type business. So that's my kind of summary take on what's going on with Apple.

• 50:42Jason Calacanis?

  Awesome. Well, I don't know, I think it's pretty deft. Sax, your thoughts on this massive increase in cash and what Berkshire Hathaway is thinking? What is Warren Buffett thinking here? Is it this became, he became overweight Apple, or that he's building up cash because a recession's coming and he wants to buy things on the cheap? Or regulation to Friedberg's point.

• 51:02David Sacks?

  When we had this global sell off on Sunday, Monday, a lot of people were sharing this chart online and pointing out that Buffett was sitting on this gigantic cash pile, by far the biggest cash pile that he's ever sat on. We then had a market recovery. So people aren't really talking about this, but it does stand to reason that Buffett is building up a war chest here and he's somewhat defensively positioned. You can see that, you know, was it like 2021, 22, the cash pile went down because he started making a bunch of investments. Now the cash pile is really high. So it seems logical to infer that he thinks that the risk reward right now is, is not great on public equities and he is, again, he's

• 51:46David Sacks?

  just a little bit more risk off.

• 51:48Jason Calacanis?

  What do you think of the regulatory risk argument Friedberg is floating here, Chamath?

• 51:53Chamath Palihapitiya?

  I think that David is right, that Friedberg is right, that the China thing could have impacted it, but because he also sold a lot of BYD, which they've owned since 2008, I think. So, you know, that's a Chinese EV company. And so it could be just that that could have played a part. To be honest, I don't know.

• 52:15Jason Calacanis?

  So what you're saying, China dependency, both of those have a China dependency. So he maybe felt the overall portfolio had too much China dependency.

• 52:22Chamath Palihapitiya?

  Maybe, yeah. I could buy that. That seems like reasonably logical. I think the thing to remember though, is that these decisions, I think, have been stewing for at least a couple of quarters. Remember like, you know, that letter that he writes was not written yesterday, right? That was being drafted months and months ago. So these decisions were made, or even longer. So I think these decisions were made a while back. Another reason, if we're going to play kind of conspiracy theorists is like, you know, after the death of Charlie Munger, maybe what he's starting to do is consolidate the book so that it can transition elegantly to Greg Abel when Buffett passes away.

• 53:10Chamath Palihapitiya?

  And so that could be another thing as well.

• 53:12Jason Calacanis?

  Let me unpack that for a second. So when you say that, you're saying he wants to hand it off with less risk in it. So dependency on one stock would be risk, a dependency on China would be risk. He wants to make it really clean. So the handoff is smoother. He wants to hand off a very organized book.

• 53:27Chamath Palihapitiya?

  Or maybe he and Abel, he and Greg Abel have already talked about the kind of risk book that they want over these next five to 10 years. And it reflects a discussion about what the incoming CEO wants.

• 53:41Chamath Palihapitiya?

  It could, so there could be all kinds of reasons why. I don't, I don't really know. I just think that Apple, just back to Friedberg's core thesis. I agree with many of his general points. I'm not sure that they affected the Berkshire strategy, but Apple is sort of a little bit wayward. It is a company with an effective and unregulated monopoly or duopoly that doesn't really know what to do.

• 54:10Chamath Palihapitiya?

  And I think that that's the biggest problem with that company. And that's independent of Buffett selling now or selling a year from now or having not sold a year before.

• 54:19David Friedberg?

  Once you're regulated, you know what the prices are, you know what you can do, you know where you can go. And all that risk is off the table. That's what is a feature of all of those other monopolies he owns. Is that the government has a role in it. So it's a highly predictable business.

• 54:34Chamath Palihapitiya?

  By the way, and you mentioned the Google thing, but this clearly was not part of his calculus. I think he just got very lucky. But if you're holding Apple today, I think you have to take the $20 billion that Google pays you every year, which comes in at 99% margin, and you should probably sensitize the value of Apple. We're not having that 20 billion if this antitrust ruling against Google stands.

• 55:03David Friedberg?

  Yeah.

• 55:04Chamath Palihapitiya?

  That alone could be worth upwards of half a trillion to a trillion dollars, depending on what multiple you want to put on that 20.

• 55:11David Friedberg?

  Well, I mean, what's crazy is the Apple, Apple's still up to 214, which is 11, 12% higher than it was at the start of this year at 185. The stock is just coming off of its all time highs at 230 a share. So it's just barely off the all time highs.

• 55:29Jason Calacanis?

  I mean, this is just an extraordinary amount of cash to be held by both Apple. Apple's, you know, also has over 100 billion in cash now. Warren Buffett has close to three. 100 billion. Allocators want to make trades and they got a better, obviously, he's got a better trade I think he can make on this. Whether that's the 5% he's going to get on the 300 billion, or maybe there's something he wants to buy. That's another possibility. So, uh, great job wrapping this all up. And let's pivot to the federal judge that ruled that Google has an illegal monopoly in search and advertising. This is huge news. Perhaps this is the biggest news in the tech industry for a couple of years. On Monday, a judge ruled that Google had acted illegally to maintain its monopoly in online search.

• 56:13Jason Calacanis?

  If you remember, this was filed under the Trump administration in 2020 by the DOG. The 277-page ruling agrees that Google abused its search business monopoly by paying billions of dollars to third-party platforms like Apple and Samsung in order to be their default search engine. So it's not just that you have the monopoly, it's how you maintain the monopoly. Uh, this is called TAC, traffic acquisition cost. We've talked about it here many times. According to the suit, Google conducts around 90% of web searches. I think we all know that. Companies disputing that claim. The ruling doesn't contain remedies yet for Google's behavior. They're going to decide that in a subsequent ruling. Obviously, Google is going to fight this.

• 56:58Jason Calacanis?

  It could result in a change in business practices, i.e. they cannot pay Firefox, Samsung, Apple to be the default search engine anymore. That will lead to many interesting possibilities. Uh, Chamath and I were discussing them on X. And so this is huge news. Uh, this is going to be great, I think, for the search engine market. I know Apple, from my time doing Mahalo, a human-powered search engine, over 10 years ago, when I sent it to Steve Jobs, he opened it up in the middle of the night and started playing with it. And there were many reviews of...

• 57:34Jason Calacanis?

  Or many rumors of Apple wanting to be in the search business because they had a contentious relationship with Google. Obviously, when Google competed with Android, that upset Steve Jobs greatly. And also, Google created Chrome, which also Safari and Chrome competing with each other. It's not out of the question, I think, Chamath, that you could see Apple, when they lose this $20, $30 billion deal for Tac, to start their own search engine. By DuckDuckGo, Brave has an amazing search engine and a search API. And they've obviously, they've got a crawler. So people don't know this, but Apple has a crawler. My prediction is, Apple buys a search engine and they go it alone and expand their advertising network like Amazon, Uber,

• 58:17Jason Calacanis?

  and other companies have. What's your take on this? And what we're going to see in the future? Will this ruling stand up? And then what are the downstream market impacts?

• 58:26Chamath Palihapitiya?

  I think that this Google thing is the most important thing that's happened in Tac since the Microsoft DOJ decision in 2000.

• 58:39Jason Calacanis?

  Internet Explorer, yeah.

• 58:40Chamath Palihapitiya?

  Yeah, because if you, if you go back to that consent decree in 2000, it essentially handcuffed this incredibly foreboding company for more than a decade, while all kinds of innovations happened. So they missed out on two huge waves, right? Microsoft essentially missed out on social and then they missed out on mobile, largely as a result of that consent decree. And then they were able to catch up and embrace SaaS and the cloud.

• 59:07Jason Calacanis?

  Amazing.

• 59:08Chamath Palihapitiya?

  Amazing. But there is this small O outcome here, which is essentially a consent decree, where Google gets handcuffed for some number of years, and it creates a couple of big waves of innovation, of new companies that can succeed, that may not have otherwise been able to succeed in the absence of such a consent decree. And a good example of this would be the AI-powered search experiences that you're starting to see, whether it's from OpenAI, or Perplexity, or a few of these other folks. The big O outcome, though, is more if you go back to

• 59:51Chamath Palihapitiya?

  the Ma Bell kind of thing, where the company gets broken up. I think that the odds of that are extremely unlikely. So I think the big O outcome.

• 1:00:03Chamath Palihapitiya?

  Is probably something that you can pretty safely take off the table. I think it's going to be a little low outcome.

• 1:00:09Chamath Palihapitiya?

  But the point is that there's a distribution here between these two things that this judge will be in control of.

• 1:00:16Chamath Palihapitiya?

  And I think that, again, again, I'm just guessing. I think both the Democrats and the Republicans will really support whatever happens here.

• 1:00:27Chamath Palihapitiya?

  And that's not necessarily because, I don't think that's necessarily because they have a bone to pick with Google. I think that, you know, they have bones to pick with other companies more than Google. But I think that it, it starts to set the tone for being able to check big tech in a very meaningful and productive way. And I think that that has important ramifications for Washington.

• 1:00:51Jason Calacanis?

  Okay, Sax, not to make it political, but this is the government stopping corporate America. So it can't not be political. What's your take here? And what will we see in the future? More regulation, more rulings like this slap on the wrist breakup? Is this more to come or this is peak regulation in your mind of big tech?

• 1:01:11David Sacks?

  Well, I, I think this is a good decision. I mean, Google clearly is a monopoly. In fact, it's at least two or three monopolies. They have monopoly in search, they have monopoly in advertising, and they at least have a dominant position in video with YouTube. And I think that it would be great if the government broke up this company. I mean, it should be, it should be at least three or four companies. I mean, there should be, search should be its own company, advertising should be its own company, YouTube should be spun out. And then I don't know if G Suite should be a separate company or should get lumped in with search. I, I don't know, but I think this should be at least three or four companies. And I think Republicans will be on board with that because frankly, Google's a threat to democracy.

• 1:01:50David Sacks?

  If you go to Google and search for search results of anything related to the election, it is clearly so biased.

• 1:01:57Jason Calacanis?

  Explain that, yeah.

• 1:01:59David Sacks?

  If you want to get the latest info on Kamala Harris, just search for Donald Trump. I mean, compare the search results, and I've done this and I've posted the results online. If you search for Trump, you'll get a bunch of negative articles on Trump and you'll get positive articles about Harris. And then conversely, if you search for Kamala Harris, you'll get positive articles about her and it's like Trump doesn't exist. It's clearly, they have put their thumb on the scale here in favor of the candidate they prefer as 97% of their donations indicate.

• 1:02:27Jason Calacanis?

  Here's a real time search, I just did Donald Trump. As you can see, the first one that came up was a Harris story about Trump and Harris. Google has actually addressed this issue. The issue is actually, I think, I'll take a little bit of the other side of it, not bias in the algorithm, but bias in media. The overwhelming majority of media is left-leaning and there's a very small amount of Republican, right-leaning media when compared to the left, obviously. And so when you do a search for Donald Trump, you know, you've got the first three choices. New York Times, left-leaning, Washington Post, left-leaning, Newsweek, left-leaning, CNN, left-leaning, Daily Beast, super-left-leaning. Five of five are left-leaning. That really is the issue, is that there isn't enough GOP or right-leaning media to actually make this work. That's at least my take on it.

• 1:03:12Jason Calacanis?

  What's your take?

• 1:03:13David Sacks?

  Well, well, okay.

• 1:03:14Jason Calacanis?

  That's their explanation.

• 1:03:15David Sacks?

  Yeah, okay, fine, but the problem is that

• 1:03:17Jason Calacanis?

  And I believe it, yeah, yeah.

• 1:03:18David Sacks?

  They're waiting the publications they want to wait. Why is Daily Beast like some authority on the election? They're the most partisan, ridiculous, untrustworthy publication when it comes to the election. So why should they be top four? I mean, why isn't Fox News in there? Why isn't New York Post in there? Why isn't Substack in there? There's a lot of great publications on Substack. So they are very selectively choosing the publications who, you're right, are in the tank for the Democrats. So that they are reflecting the bias of the mainstream media, but they are being very selective about what media they show. And even so-

• 1:03:52Jason Calacanis?

  Here's Kamala Harris. And let me just give the statistics here. Hold on. Kamala Harris, I just did a search, first five, New York Times, NBC, The Hill, CNN. Is The Hill right or left? I don't know.

• 1:04:05David Sacks?

  They're left.

• 1:04:05Jason Calacanis?

  Would you say sex? It's left, yeah.

• 1:04:06David Sacks?

  They're left.

• 1:04:07Jason Calacanis?

  And then Forbes, which I think would be considered right. And then Fox, obviously right. So, I mean, it's just the percentage of news sources here.

• 1:04:15David Friedberg?

  The Guardian often, yeah, the Guardian's often rank right. So there's another two.

• 1:04:19Jason Calacanis?

  Yeah, so it would be like three of eight in this case.

• 1:04:23David Sacks?

  I want you to, I want you to put on the screen this.

• 1:04:24Jason Calacanis?

  Yeah, go ahead. You can do it.

• 1:04:25David Sacks?

  I, I tweeted some receipts. Please click on the screenshots. I can show you the side by side. And you'll see what I'm talking about. Okay, I searched for Donald Trump. What do I get? News about Harris, the first, this is on my phone. So this is mobile. The articles are all basically about Harris criticizing Trump. Okay, then the second carousel is about the Project 2025 director stepping down, which is pretty tangential of Trump, but is a major Democratic line of attack on Trump. So this whole thing seems rigged to support the DNC point of view on Trump. Same thing, you search Donald Trump latest news. Same thing, there's some weird story about Donald Trump's nephew. I didn't even know he, about this person, but somehow they're elevating it to be a major story.

• 1:05:09David Sacks?

  And again, the first carousel is all about Harris. Now, keep going, please.

• 1:05:14Jason Calacanis?

  Yes, ma'am.

• 1:05:14David Sacks?

  Okay, now we look at Kamala Harris. Top stories, just Harris. No news about Trump.

• 1:05:20Jason Calacanis?

  Got it.

• 1:05:20David Sacks?

  The next one? Same thing. Okay, so the point is that when you search for Trump, you get news about Harris and criticism of Trump. When you search for Harris, you get positive news about Harris. There's no way you can tell me that this is fair or this is a result of an algorithm that hasn't been tampered with. This is very clearly programmed. I mean, you get different carousels depending on which candidate you search for.

• 1:05:46Jason Calacanis?

  I am going to take the completely other side of this, but Friedberg, I want to give you a chance because you worked at Google. I think you know a lot about the algorithm. What is there? An explanation for this that makes technical logical sense, given what you know about the algorithm? And then I'll give my position, then Chamath, you can go.

• 1:06:02David Friedberg?

  There's very little editorialization going on with respect to showing the rankings of the news sources. The ranking of the news sources is typically set by some ranking algorithm. The algorithm is usually around click-throughs, views, popularity of the sites, how many visitors there are. So there are other metrics that drive the order. So for example, if NBC, CNN, Fox News, all have higher rankings than some smaller publication, they're going to end up higher in the ranking algorithm because they have a higher, call it, quality score. There's also measures on how often people click through and come back, the bounce-back rate. So if they click through an article and then come back, that can actually reduce the ranking versus if they click through and stay on the site.

• 1:06:47David Friedberg?

  So there's a lot of factors that go into the ranking algorithm. The thing that probably upsets people is that there isn't any transparency into this. So there's no understanding on how these things are ranked, how they're set, and it's probably very good guidance and feedback that there should be more transparency and openness. And I'm not necessarily trying to defend anyone's product or behavior. I'm just saying that there's certainly a lack of understanding on why one thing is being shown versus another. I'll also say, Sax, that there's probably the case, or there might be the case, that there's many more sites potentially putting out pro-Harris articles than there are putting out pro-Trump articles, which can start to overweight the algorithm, as you know, or overweight the rankings that are showing up. So that might also be feeding into this, that the general news media bias is what you're actually seeing versus a Google bias.

• 1:07:32Jason Calacanis?

  Correct.

• 1:07:33David Friedberg?

  I don't believe that.

• 1:07:34Jason Calacanis?

  Okay, let me get Chamath involved here on this issue, and then I'll give my position. Chamath, do you have any thoughts on this, generally speaking?

• 1:07:42David Friedberg?

  I do want to come back to the antitrust ruling in a minute.

• 1:07:43Jason Calacanis?

  Okay, absolutely. Sax thinks the fix is in. Friedberg thinks this is explained algorithmically, but that Google could do a better job explaining and being more transparent about the algorithm. I agree with that 100%.

• 1:07:57David Friedberg?

  And look to the media companies.

• 1:07:58Jason Calacanis?

  Google has always considered a black box.

• 1:08:00David Friedberg?

  Go look.

• 1:08:00Jason Calacanis?

  And I agree 100% as I explained. The number of independent journalists in left-leaning publications is like 30 to 1.

• 1:08:11Jason Calacanis?

  Places like Fox News, which is largely opinion

• 1:08:12David Friedberg?

  We talked about this countless times.

• 1:08:14Jason Calacanis?

  There are so many, there are so many more. Investment in journalists by Republicans.

• 1:08:19David Friedberg?

  There are so many more liberal journalists and there's so many more liberal media outlets out there.

• 1:08:23Jason Calacanis?

  Twenty to one.

• 1:08:24David Friedberg?

  That is a big, it's probably twenty to one.

• 1:08:26David Sacks?

  Yeah. Yeah, of course, I understand that the mainstream media is hopelessly biased. Please remember you said that when we discuss it.

• 1:08:32Jason Calacanis?

  No, no, no. Hopelessly outnumbered.

• 1:08:34David Sacks?

  Some other time instead of saying it's conspiracy theory.

• 1:08:35Jason Calacanis?

  He didn't say biased. Sax, I gotta stop you there. He didn't say biased. What we said was it's twenty or thirty to one. It's outnumbering. So if the pool of things the search can come up with is thirty to one, it's of course going to appear biased, which is what they need to do is they need to show who's in the ranking, what percentage are left, what percentage are right, what percentage are middle of the road. Show that at the top.

• 1:08:56David Sacks?

  The mainstream media is biased. We all know that. You can defend it however you want to defend it. You can.

• 1:09:00Jason Calacanis?

  Nobody's defending it.

• 1:09:02David Sacks?

  Okay, fine. So we agree on that. I don't know why you're making these.

• 1:09:05Jason Calacanis?

  I agree with you five times.

• 1:09:05David Sacks?

  Taking you into points. Okay. My point about Google is they're reinforcing the bias because they uprank the mainstream media sources and they downrank the sources that provide a distant opinion or an alternative opinion. Again, why is Vanity Fair upranked above the New York Post?

• 1:09:20Jason Calacanis?

  I don't know if that's.

• 1:09:22David Sacks?

  Is that because of their journalistic quality? I don't think so.

• 1:09:25Jason Calacanis?

  One way to think about this.

• 1:09:26David Sacks?

  Why is it that Kamala Harris' search result does not say anything about Trump, but the Trump search result has a carousel on Kamala Harris? That looks programmed to me.

• 1:09:37Jason Calacanis?

  You want an answer?

• 1:09:38David Sacks?

  Yeah, that looks programmed to me.

• 1:09:39Jason Calacanis?

  Okay, I'll tell you the also answer. This was the week Kamala, or this the last ten days or so of Kamala taking the position, raising tons of money, hiring her VP, and Trump disappearing from public life for ten days. So there's also a, on top of the thirty to one ratio of, let's say, left-leaning journalists to right, you also have, this was Kamala's coronation week, so therefore it's going to be. I don't think Google is in the bag with their algorithm anyway. I think it's the source material they're indexing. Trumoff, what are your thoughts?

• 1:10:11Chamath Palihapitiya?

  One of the things that I like to do when I'm in Portofino is when you see these huge yachts in the bay, I like to figure out what they are.

• 1:10:21Jason Calacanis?

  Okay.

• 1:10:21Chamath Palihapitiya?

  And so I use Google for like a vessel finder.

• 1:10:28Chamath Palihapitiya?

  And two of the top three links send me to spyware.

• 1:10:35Chamath Palihapitiya?

  And I think to myself every time, every year this happens. How is it that in 2024, Google hasn't figured out how to click these links in a sandbox, isolate the ones that send you to spyware, and just take them out of the index? And of course, they can do it. They have, you know, 100,000 people and 2 trillion a market cap.

• 1:11:02Chamath Palihapitiya?

  So I think that there's like just a level of technical navel gazing at some level that I think besets every big company. And so there are other examples here that you can look at that are a lot less charged than politics. I think Freebrooke is right that it's largely algorithmic, but I think David is right in that there is a quality problem. I think the solution here is that for certain extremely important moments, there needs to be a little bit more intervention, and there needs to be a little bit more curation so that it passes the smell test. I mean, the the version of this that I that I also experimented with, and Nick, you can find the tweet that I had,

• 1:11:46Chamath Palihapitiya?

  was when I was searching for the assassination of Donald Trump on Google, it just that it didn't show up. It does show up now. So I think they got the message and they fixed it. So clearly, somebody's listening. And I think clearly then the index changes. So I think that both things are possible, which is the algorithm can improve. And also that certain things before people start to complain loudly about this perceived bias, there should be enough intervention to make sure that the algorithmic results pass a smell test. And if they're not,

• 1:12:27Chamath Palihapitiya?

  to add some amount of reinforcement learning or something else, some human feedback that allows...

• 1:12:34David Friedberg?

  That allows you to get to a good answer that's unbiased.

• 1:12:37David Sacks?

  Before we leave this topic, can I show this chart? Okay, look, this is a chart showing.

• 1:12:43David Friedberg?

  We know, of course, all of tech, all of tech is deeply biased towards the Democratic Party.

• 1:12:47David Sacks?

  People in the audience may not know, okay?

• 1:12:48David Friedberg?

  Okay.

• 1:12:49David Sacks?

  Employee donations to party are, again, it's well over 90% to Democrats. This basically represents the constituency of Silicon Valley, okay? Inside these companies. We also know that Google search results use more and more manual interventions. Friedberg, you agree with that, right? That over time.

• 1:13:07David Friedberg?

  There's definitely, again, there's, there's meant to not be an editorial process, but there certainly is tweaking of rankings.

• 1:13:13David Sacks?

  Okay, so all the people doing this stuff are Democrats. They're liberal. And you're telling me that this does not have an influence and does not create bias? Come on. You can see the bias in a common sense search for Trump versus Harris.

• 1:13:26David Friedberg?

  I'm just saying, like, you've, you've, we've all made a huge leap in this conversation from talking about an antitrust ruling, which I will speak to very specifically in a minute, to, oh, my God, tech is biased, that's what's driving the, you know, the, the, the sense of the nation. I don't know if you've noticed, Sax, but more than half the nation is going to vote for Donald Trump. More than half, like nearly 60%.

• 1:13:46David Sacks?

  I think it would be like, I think it would be like 70 or 80% if it weren't for the bias of the mainstream media being boosted by big tech.

• 1:13:51David Friedberg?

  Well, call it balance in the fourth, then, I guess, but like.

• 1:13:54David Sacks?

  Hold on a second, maybe, maybe not, maybe not quite that percentage. But if you look, if you look at, if you look at issues polling on issues, the Republican position on most issues is like a 60 to 70% winner. And yet, the elections are a nail biter. And I think a lot of it has to do with the influence of the mainstream media and big tech.

• 1:14:12David Friedberg?

  Okay, well, let's come back. So I think that everyone has what Sax is speaking to is a deeply rooted feeling held by politicians, held by regulators, on one side of the aisle or the other. When Democrats feel shunned by the search engine, or by Twitter, or by Facebook, they raise their hand and they say, let's regulate these guys. When Republicans feel shunned because they're not showing up in the news rankings or the algorithms, they feel, let's regulate these guys. When it actually comes down to the court case, here is what is being described. When you go to Apple and you type in a couple of words in the URL bar. That you want to search for because we've all gotten used to this. You guys may not remember this, but nearly 20 years ago, when browsers first came out

• 1:14:56David Friedberg?

  on desktops and on mobile phones, you would not be able to just search by typing into the URL bar. You would have to type in a web search engine in the URL bar, hit go, and then you go to their search box and you type in your result. What happened around the mid 2000s, 2004, 2005, is you suddenly were able to type in a couple of words into the URL bar of a browser and hit go, and it would give you search results. The question is what search engine did it give you those results from? And that's what this lawsuit is about. Google started to pay companies like Apple to make Google the default search engine when you would type in a couple of words and hit go into the URL bar because search

• 1:15:39David Friedberg?

  became the primary way of surfing the internet, not typing in a URL and going to it. And then when they started doing that, they started to see more search traffic. Now, the real question from an antitrust perspective is did Google leverage its monopoly to pay to continue to be the default search engine to lock in the search market and prevent competition by doing this?

• 1:15:59Chamath Palihapitiya?

  Well, the judge, the judge already said yes.

• 1:16:01David Friedberg?

  The judge said yes. Google is monopolizing search because they're paying to lock in the ability to type in to get the default on the search bar. By the way, you can go into the settings and change it. But what would the other default be? So now if Apple created their own-

• 1:16:17Chamath Palihapitiya?

  David, I think you're being, you're being too narrow. Hold on one second. You're being too narrow. The initial complaint in the Microsoft Internet Explorer thing that kicked off the whole DOJ thing versus the consent decree were two totally different things. I think that you're underestimating the scope of the remedy.

• 1:16:34David Friedberg?

  I get it. Let me finish. So like if they were to then say, like, let's get, let's make sure Google can't do that again. What's the search engine? Is it Bing? Is it Apple's search engine? Because then there would be an antitrust claim to say that if there is a default search engine without the consumer having to actively choose what their search engine is, someone is monopolizing the install base that Apple has, or the install base that whomever has, where they are becoming the default search engine. Now, to your point, like, the ability for the judge to then say, "You know what? This is one action of many that you are taking to monopolize search. Let's go ahead and figure out how we can prevent you from monopolizing search." And this is really focused on search. It becomes a very hard leap to say, "Let's break up the company."

• 1:17:17David Friedberg?

  There's bias in the newsfeed that you guys are ranking. This has nothing to do with search engine rankings. It has nothing to do with owning YouTube. It has nothing to do with, like, owning cloud. It has everything to do with Google monopolizing the search business, which is the biggest business on the internet.

• 1:17:31Chamath Palihapitiya?

  I do think the big O-

• 1:17:33David Friedberg?

  And that's where that consent decree gets narrowed somewhat, and where there's a lot of paths, but I question what path is there gonna be? It's not gonna be antitrust triggering.

• 1:17:40Chamath Palihapitiya?

  No, no, no. I don't think that's a narrowing. Again, the big O outcome of breaking up the company, like what happened in Ma Bell, I don't think that's gonna happen here. A little O outcome that is a consent decree, similar to the one that Microsoft had to sign, is very likely. But what I want you to understand is the way that that started, which was literally around Internet Explorer and bundling, versus the consent decree, was meaningful orders of magnitude broader. So what I'm saying is, this little O outcome is going to be much bigger than the scope of this lawsuit. And if they don't, man, they have dodged an enormous bullet. And all I'm saying is, the, I think, if you had to be a betting person-

• 1:18:24David Friedberg?

  They settled on that, right? Like, with, with Microsoft, if I remember right, it was an agreed settlement? Like, ultimately, they signed? They, they, there was a-

• 1:18:31Chamath Palihapitiya?

  It was a consent decree. Basically, what happened is, for 10 years, the DOJ became the, became the product managers of all critical projects inside of Microsoft.

• 1:18:39David Friedberg?

  Right.

• 1:18:40Chamath Palihapitiya?

  The point is this, which is that, when Microsoft went through this- The government, and they had broad support, use that consent decree as a way to essentially hobble this company so that other competition could come in.

• 1:18:54David Friedberg?

  I don't disagree. Yeah, I don't disagree.

• 1:18:56Chamath Palihapitiya?

  It wasn't just, it wasn't just in the narrow scope of where that initial focus started.

• 1:19:02David Friedberg?

  I hear you.

• 1:19:02Chamath Palihapitiya?

  And what I'm saying is, this judge will read that for sure. And I would, and if, and if Google gets away with just having to do something around tack and search.

• 1:19:14David Friedberg?

  Yeah.

• 1:19:15Chamath Palihapitiya?

  It, they have dodged an enormous bullet.

• 1:19:17David Friedberg?

  No, I think you're, look, I think you're right. And I think the reason you're right is because of how inflamed Saks is. Because the way that Saks feels, I think, is the way that every politician feels.

• 1:19:27Chamath Palihapitiya?

  No, I think if, I think if Saks gets its way, it'll be a big O outcome and they're gonna break the company apart.

• 1:19:32David Friedberg?

  I know, I know, I think that's where everyone wants it to go. Well, Saks is here, Saks you wanted to know.

• 1:19:35Chamath Palihapitiya?

  What I'm, what I'm, what I'm saying is the little O outcome is meaningfully worse than where this lawsuit is.

• 1:19:40David Friedberg?

  I'm gonna make my final statement, there's a strong, I agree with you, and I'm not trying to defend Google, and I'm not trying to defend some outcome here. I think you guys are correct. I think that because of how inflamed people are, at the influence that these companies have, Meta and Twitter and Google, there is going to be a strong push to do a lot more than what the narrow focus of the ruling, in this particular case, to do something much more significant to hurt these companies and make them less influential and less powerful.

• 1:20:09Chamath Palihapitiya?

  Saks. Anything to add?

• 1:20:12David Sacks?

  I'm not inflamed, I have a point of view that I think is informed by facts and evidence. The fact of the matter is, the vast, vast majority, well over 90% of the employees at Google are liberal Democrats. And the Google search does rely on manual actions, and the people performing those actions are, again, overwhelmingly from one side of the political aisle. Furthermore, we can see in the search results that they do appear to be hopelessly biased in favor of one candidate at the expense of another. I mean, you're asking me to deny the evidence in my own eyes and ears, I can see what's happening. I think most people can see what's happening. I do not think that Google should be putting its thumb on the scale on one side of the election here.

• 1:20:56David Sacks?

  And Jason, you may have a point that it's reflecting the bias of the mainstream media. I don't think that makes it okay. I think that Google should have to work a little harder to be neutral. And they could do that, they could do that easily by balancing their news sources.

• 1:21:10Chamath Palihapitiya?

  Okay, I feel like Saks and I got to the

• 1:21:13Jason Calacanis?

  Perfect place. I agree. Google's filled with obviously left-leaning. Don't deny that. I agree that the left, the media is biased. They all picked a side. And then I just want to show you one chart because it's super important for you to understand. The number of people in journalism, this is from 1971 to 2022, who say they are identifying as Republican, has just absolutely plummeted. I know this, and this is what I'm trying to explain to you, Sax. Is an incredible opportunity for your parties, since you know you're passionate about this, is to invest in more journalism, invest in more journalists, because I don't buy this independence. The fact that they're claiming they're independent in journalism, I believe that's cap. I believe they say that.

• 1:21:54Jason Calacanis?

  But the gap is 33% now between people who say they're Democrats and people who say they're Republican in journalism. That is a key piece to this problem. And layered on top of it, I agree with you that Google is filled with liberal people, and I agree with you, Chamath, that they need to intervene and put at the top of the search results in news. These are the, you know, this is what we're indexing. This is the percentage that's left-leaning. This is the percentage that's right-leaning. And there are a lot of organizations that examine and rate publications on their bias, left and right. And that's something that Google could do that's very unique and that could move the whole country forward. You're saying? Which is they could showcase that up top. So to my friends at Google who are listening, do a better job of just being more transparent so we don't have this tension in society.

• 1:22:38Jason Calacanis?

  Okay, it's time for Sax's red meat. Sax, we have a VP candidate. You have been absolutely waiting for this moment. The race is a dead heat. Here's your second course of red meat. I brought you that giant. This, you know what this is? This is the steak for two. No Branzino for you. This is the steak for two, for one. You ordered the steak for two, for one, Sax. Get in there, medium rare, you got your cowboy cut. What did you think when you saw Kamala Harris and her VP pick move ahead in?

• 1:23:14Jason Calacanis?

  Almost universally, all polls and prediction markets to the lead over your boys, Trump and Vance. What did you think of the pick? Go ahead. Enjoy your steak.

• 1:23:25David Sacks?

  Well, I was very happy with it. I was very happy with the pick. I mean, so first of all, I think I said last week or two weeks ago that I thought the pick was would be Shapiro, Josh Shapiro, the governor of Pennsylvania. It was such an obvious choice for Harris because this whole election could easily come down to 10,000 votes in Pennsylvania. It is the tipping point state and Harris probably has to win that state in order to win the election. And you have a very popular governor of that state. He's got something like 63% popularity in that state. He's also perceived as a moderate, so he would have helped Harris position the ticket more towards the center, which apparently is her goal, since she's repudiated all of

• 1:24:06David Sacks?

  her far-left positions. So it just seemed teed up to be so perfect. And then what happened is there was a smear campaign by the progressive left against Shapiro. He was the only one of the VP shortlist candidates that seemed to get all this oppo dumped on him before the pick. And that campaign against Shapiro seems to have spooked Harris, who seems to be fairly risk averse. And she went with this guy, Tim Walz from Minnesota, who is a darling of the radical left. And I think that he's already presented many opportunities for attack by the right. There's three big issues that I think Walz is going to have to address because Republicans are already landing blows on him. Number one, stolen valor.

• 1:24:50David Sacks?

  He has clearly and on several occasions overstayed the extent of his military record. Look, obviously, I've never served, but I know that among people who have, this is a very big deal. Campaigns have big issue. Campaigns have imploded over this. So that's number one. He's got the stolen valor problem. Number two, on trans, he seems to have bought into every aspect of the trans agenda. And he's made Minnesota a sanctuary state for minors who want to come there for puberty blockers and sex reassignment surgery. Even without parental consent, the law that Gavin Newsom just passed or signed that drove Elon

• 1:25:30David Sacks?

  out of the state, Tim Walz got there first in Minnesota. So he is, he is not a centrist. He is very far on the cultural left. And then I'd say like a third issue that I don't even know if people have really gotten to yet, but I think it will eventually come up is that Walz was, was insanely authoritarian on COVID. I mean, this is a guy who told us that Minnesotans live by a motto of mind your own damn business, but he set up a COVID stitched hotline so people could rat out their neighbors for leaving the house or having dinner parties or walking their dog without a mask. And it was, it was real. I mean, violators could be punished by 90 days

• 1:26:10David Sacks?

  in jail. So again, this guy has been to the left of Gavin Newsom on cultural issues. And I think that's going to be a big problem for the Harris campaign. And I don't really understand why she went with him when there was such an obvious alternative who was available, who could have given her a swing state, who could have positioned her as a moderate.

• 1:26:31Jason Calacanis?

  What are your thoughts? And you want to speculate? Your chance to bash the Democrats and speculate. Go, Chuma.

• 1:26:40Chamath Palihapitiya?

  No, I have no bashing to do. I will say two things. One is that I think his stance on this trans stuff is a little problematic in these swing states. I say a little, only because I think it matters more what Kamala's stance on all these topics are. But I do think that where there's going to be a, a big judgment issue around her selecting him is if there is veracity to the stolen valor claims. And so when Sean Ryan has an example, incredible podcast, if you guys don't listen to it, it's great. But like, you know, when he gets to the bottom of this,

• 1:27:25Chamath Palihapitiya?

  and he will, Tim Walz better hope that he told the entire truth.

• 1:27:31Jason Calacanis?

  Okay, Friedberg, your thoughts? We're dancing around the issue here. You had talked a couple of weeks ago about an organization that didn't want to put a Jewish person in the top position or in a top position. Do you think that this is or there are any concerns of Shapiro being Jewish that caused him not to be selected? Or do you think maybe he bowed out because he wants to run for president? As some people are saying, and maybe he his star shines a little too bright for the second position. What are your thoughts? Let's go right to the antisemitism claims.

• 1:28:05David Friedberg?

  I'm not going to make that proclamation. I don't know what Vice President Harris's decision-making process was. I don't know who she talked to, what she cared about, if she cared, if she was even in charge, I have no idea. All I know is that there have been other conversations I've been privy to behind closed doors where senior people have been passed over because they are Jewish and because of the concerns of someone Jewish being viewed to be in a leadership position in an organization. And the impact that that might have, that there is a brewing distrust as a result of the conflict in Gaza.

• 1:28:38David Sacks?

  Let me say something about this issue, frankly, in defense of Kamala Harris. I don't think she's antisemitic. And I don't think that accusation should ever be made without real evidence. Okay, that being said, Van Jones, who is in a position to know because he's an important political pundit in the Democrat Party, said that one of the reasons why Shapiro was passed over is because of this issue. And he said that antisemitism had become marbled into the Democrat Party. I don't know exactly what he meant by that.

• 1:29:09Chamath Palihapitiya?

  I saw, I saw that quote. That was really jarring, actually.

• 1:29:13Jason Calacanis?

  So marbled is an interesting term.

• 1:29:15David Sacks?

  Yeah.

• 1:29:15Jason Calacanis?

  That means it's like absolutely in the fabric of the party.

• 1:29:19David Sacks?

  Yeah, yeah. So I don't, now, I don't think Harris is. I think she's just risk averse and didn't want to alienate certain factions within the Democrat Party.

• 1:29:27Jason Calacanis?

  I agree with that statement.

• 1:29:28David Sacks?

  You're right. But in the process of being risk averse, she chose this guy Walz, who I think has got much bigger vulnerabilities than Shapiro does. And I think the question now is whether Walz is even going to make it to the convention. I think he might have to drop out.

• 1:29:44Chamath Palihapitiya?

  I don't understand, by the way, I saw the dating process that Donald Trump had with his VP candidates. Right, Sax and I saw some of it really up close.

• 1:29:54Jason Calacanis?

  Yeah, explain it.

• 1:29:56Chamath Palihapitiya?

  Well, I can only speak to what I saw, but it just seemed to me that there was this month's long audition where I think they were just trying to figure out, I'm guessing here, completely guessing, where these folks stood on things, but also he was trying to get a sense of the person and whether they got along and whatnot. But what I also suspected is that this person was being highly, highly scrutinized behind the scenes on everything that they've said or done, where the person who's going to make the pick, in that case, Donald Trump, was deciding, can I live with these issues or not? What the articles about the VP process on the Democrat side was more painted along

• 1:30:41Chamath Palihapitiya?

  the lines of there was a meeting and she kind of liked him, and so she went with him. And I agree, I don't think there's an antisemitic bone in her body, to be totally honest with you. I don't get that sense at all.

• 1:30:56Jason Calacanis?

  Yeah, no, no, I, yeah, that's not the issue, but the calculus, right?

• 1:31:00Chamath Palihapitiya?

  But what I would say is, this is the number two person, I mean, maybe you should spend more than a day, and then maybe people should be really vetting this person behind closed doors on all of the things that could go wrong. And, I mean, you have to assume that that happened.

• 1:31:18David Sacks?

  Yeah, let me make a couple of points there. So, so number one is, Trump had a lot more time to vet and get comfortable with his VP candidate, because he's been the presumptive nominee for many months, whereas Harris inherited the nominee ship without a primary battle, right? Biden just abdicated less than three weeks ago. So, that's the reason why she didn't really have time to go through a courtship process for her VP. Now, as to the vetting process, I agree with you, I think it's somewhat inexplicable, because these stolen ballot claims have been out there for a long time. When Walz ran for governor, there were former soldiers who came forward and said, yeah, he was supposed to be the commander of our National Guard unit, he was supposed to go with us, and

• 1:32:01David Sacks?

  he quit right before we got deployed to Iraq.

• 1:32:06David Sacks?

  And so these complaints have been out there for a while. Moreover, he has many public statements saying that he was deployed to Operation Enduring Freedom, which I think was Afghanistan, and he simply wasn't. I mean, at least that's what I understand to be the case. So

• 1:32:22Chamath Palihapitiya?

  Or he was deployed during that time. I think this sounds like a lot of cap. He was deployed during that time, but he wasn't in combat, right? Is that?

• 1:32:31David Sacks?

  He never saw combat, and he said that he carried a weapon in combat, in war. So this isn't like a use of soppy language once or twice. This has been around circling him for many years now, and there's been many examples of him saying these things

• 1:32:45Chamath Palihapitiya?

  Let me ask you a question.

• 1:32:46David Sacks?

  On video. So my point is

• 1:32:47Chamath Palihapitiya?

  Wait, can I just say one thing?

• 1:32:48David Sacks?

  I think the vetting was very poor. I think the vetting was

• 1:32:50Chamath Palihapitiya?

  This is what I was gonna say. So there's, there was, there was a great quote, and I don't know if this ever made the light of day, but there was a moment where

• 1:33:01Chamath Palihapitiya?

  was thought of as a potential VP nomination. He was like a real big Democrat stalwart. And I don't exactly know the claims, so and but I'm not gonna go there. But the phrase that I was told is

• 1:33:18Chamath Palihapitiya?

  doesn't vet. And what it was, was a way of saying, look, we take our time. We understand everybody's background. We know what skeletons are in folks' closets. And in that example, whatever was going on was sufficient enough where he would never really get nominated for something very, very big. And I think that's sort of what comes up here, which is that in this impassioned desire to make a decision quickly, I still think the Democratic Party had an extra two or three weeks to make sure Tim Walz really vets. Now, I don't know if whether these claims are true or not. Again, somebody will get to the bottom

• 1:34:03Chamath Palihapitiya?

  of it. But it creates a poll over this campaign too early.

• 1:34:09Chamath Palihapitiya?

  And where I think Kamala probably wants all of that noise away so that she can define what she stands for. It's sort of what we said last time. Go after these five big issues that people care about. Go into the five states on these five issues and try to win this election. She can't do that. If this is like, oh, what is your decision making like? Why did you pick this person? Why did this person lie? So they have to nip this in the bud very quickly.

• 1:34:34David Sacks?

  Look, in my view, this was an easy choice. Even if she didn't like Shapiro, she could have gone with Beshear or she could have gone with Mark Kelly. Remember the astronaut Mark Kelly was one of the top two contenders. You know, at least that was what was reported. In other words, she could have gone with a moderate.

• 1:34:48Chamath Palihapitiya?

  Well, CNN CNN CNN reported that Kamala thought that Shapiro was too ambitious. So.

• 1:34:54David Sacks?

  Okay, so why not Mark Kelly?

• 1:34:55Jason Calacanis?

  He would have outshined her for sure. Shapiro is really good at speaking and eloquent and she's not.

• 1:35:00Chamath Palihapitiya?

  Shapiro Shapiro is really sharp. I mean, that guy.

• 1:35:03Jason Calacanis?

  Unbelievable.

• 1:35:04David Sacks?

  Okay.

• 1:35:05Chamath Palihapitiya?

  He's on the ball.

• 1:35:06David Sacks?

  I'm not saying it has to be Shapiro, but the the remit here was really clear just strategically. You want to choose a moderate from a swing state. That's it. Because this whole election can come down to one state and you want to basically portray yourself as a moderate. So this is a very easy assignment. Find me a moderate from a swing state. And what do they do? They choose a radical from a safe state, safe for Democrats. They got Minnesota locked up. Why do they need to take on this baggage? There's no reason for it. And Chamath, I do think they rushed the vetting, but I think it wasn't because of passion or something like that. I think they're running out of time because remember Biden was supposed to be the nominee. Harris was supposed to be on the ticket as VP. They weren't supposed to do this process. And then all of a sudden it happened three weeks ago because Biden abdicated.

• 1:35:52Chamath Palihapitiya?

  Look, I think I think that a vice presidential pick matters, but only so much. And I think more than helping, I think what VPs do on balance is if you pick the wrong person, it can meaningfully hurt a campaign. I think the, you know, Dan Quail potato thing comes to mind. You can become a little bit of a laughing stock, which just becomes baggage that you have to overcome.

• 1:36:21Chamath Palihapitiya?

  And so this is again where it's a little bit of a head scratcher. I would just have thought that this would have been a little bit more buttoned up.

• 1:36:28David Sacks?

  Totally. And let me tell you, if, if, if Waltz doesn't drop from the ticket, I predict there'll be Gold Star families protesting all of their events. And that's going to be a real headache from now till the election.

• 1:36:39Jason Calacanis?

  Here is the quote in question, Harris campaign, and this is from the New York Times, had promoted this on social media, just so we're clear when we're making all these claims that he did steal valor, that he has not been convicted of stealing valor, which is an actual crime. Just so we get things right here on the pod. Here's the quote that he said, "We can make sure that those weapons of war that I carried in war is the only place where those weapons are at." And so Mr. Waltz never served in combat and that quote that he made, I guess people are now weaponizing to say that he's saying, those, here's a quote, "Those weapons of war that I carried in war is the only place where those weapons are."

• 1:37:22Jason Calacanis?

  So he was not in war, technically. He was a reserve. And he is battalion was going to be called, he claims. So that's a guess. What we are questioning and Vance said, "I'd be ashamed if I was him and I lied about my military service like he did this." I could see where people might be a little bit, I can see both sides of this issue. Sax, you want to dunk on him or?

• 1:37:47David Sacks?

  I'm not going to dunk because this is still an unfolding story and it's going to play out over the next couple of weeks. And we'll see where it lands, but it's pretty clear that he at a minimum exaggerated his service and he exaggerated his rank.

• 1:38:00Jason Calacanis?

  I would like to thank both JD Vance and Waltz for their service. I appreciate both of their service. I'll leave it at that from my perspective.

• 1:38:08David Sacks?

  Listen, whenever I meet a vet, I always thank them for their service. But those vets will tell you, you can never exaggerate what you did. You can't say you were in war when you were not in war.

• 1:38:18Jason Calacanis?

  Of course. Yeah. So I guess we'll, we'll see how this plays out. All right, everybody. This has been another amazing episode of the All In Podcast. To recap, Google's big news, the markets are in flux, the end trade is off and.

• 1:38:34Jason Calacanis?

  Kamala Harris leads the race. We've got eight weeks left. We'll be here for you every single week and we will be seeing some of you at the, I believe, sold out All In Summit. Are we sold out right now, Friedberg? Master of Ceremonies Friedberg, executive producer.

• 1:38:49David Friedberg?

  We are sold out. We might do a little overflow, just because we know people don't show up. So we might do a little bit of a last minute, kind of overflow ticket sale, but we are sold

• 1:39:00Jason Calacanis?

  out of seats. What do people need to know about their party outfits? Everybody is asking me, what party outfits do I need?

• 1:39:04David Friedberg?

  The first night's party, we're gonna have Top Gun Beach Volleyball and we're gonna have Back to the Future. All the scenes from Back to the Future for the second party. I can't wait to see what Jake wears.

• 1:39:15Jason Calacanis?

  I'm gonna work on my, "Beth, get your damn hands off her, Beth." Actually, you should go as, you should go as Beth. Hands off her, Beth.

• 1:39:24David Friedberg?

  McFly!

• 1:39:26Jason Calacanis?

  McFly! All I know is Trumats wearing a Speedo. Anybody home, McFly? Anybody home? Any home? Beth, get your damn hands off her.

• 1:39:36David Friedberg?

  I love you guys. I gotta go. Love you.

• 1:39:38Jason Calacanis?

  Okay, enjoy Italy. We'll see you on the lake, everybody. For the Sultan of Science, the architect, the dictator, I am the executive producer and world's greatest moderator, executive producer for life. We'll see you next week. Bye-bye.

• 1:39:51David Friedberg?

  Love you, boys. Bye-bye.

• 1:40:24Chamath Palihapitiya?

  We should all just get a room and just have one big U-Jorgie because they're all just, it's like this like sexual tension that we just need to release somehow.

• 1:40:50Jason Calacanis?

  And now the plugs, the All In Summit is taking place in Los Angeles, September 8th, 9th, and 10th. You can apply for tickets summit allinpodcast.co. And you can subscribe to this show on YouTube. Yes, watch all the videos. Our YouTube channel has passed 500,000 subscribers. Shout out to Donnie from Queens. Follow the show x.com/theallinpod, TikTok, theallinpod, Instagram, theallinpod, LinkedIn, search for All In Podcasts. And to follow Chamath, he's x.com/chamath. Sign up for his weekly email, what I read this week, at chamath.substack.com and sign up for a developer account at console.grok.com and see what all the excitement is about. Follow Sacks,

• 1:41:35Jason Calacanis?

  at x.com/davidsacks and sign up for Glue at glue.ai. Follow Friedberg, x.com/friedberg. And Ohalo is hiring. Click on the careers page at ohhalogenetics.com. I am the world's greatest moderator, Jason Calacanis. If you are a founder and you want to come to my accelerators and my programs, founder.university, lunch closed slash apply to apply for funding from your boy J Cal for your startup. And check out athenawow.com. This is the company I am most excited about at the moment, athenawow.com to get a virtual assistant for about $3,000 a month. I have two of them. Thanks for tuning in to the world's number one podcast. You can help by telling just two friends. That's all I ask. Forward this podcast to two friends and say, this is the world's greatest podcast. You got to

• 1:42:20Jason Calacanis?

  check it out. It'll make you smarter and make you laugh, laugh while learning. We'll see you all next time. Bye bye. Pull up this clip of Hellmuth because he loves when we talk about him on the show, even though he's banned from the show by Chamath for life. He took Sachs, the battery pack of the log. He got This guy had pocket jacks to his ace queen, I think. He hits his queen or his ace. And he loses his mind, but he's in good spirits for the first half of this. Play this clip.

• 1:42:47Speaker 04

  Jack, how many has 38 outs? Six.

• 1:42:50Speaker 05

  What's the odds on that?

• 1:42:51Speaker 04

  Well, huh? River card. Oh, he's a jack, look out!

• 1:42:56Speaker 05

  100%.

• 1:42:57Speaker 04

  Duck the card, eh? Duck the card, baby, let's go!

• 1:43:00Speaker 05

  Wow!

• 1:43:01Jason Calacanis?

  Here we go!

• 1:43:01Speaker 04

  Duck the card, eh? Nice hand.

• 1:43:03Speaker 05

  Thank you, buddy. One time, baby.

• 1:43:04Speaker 04

  Oh my god.

• 1:43:05Jason Calacanis?

  Come on, eh?

• 1:43:06Speaker 04

  Yes! Has he ever covered?

• 1:43:07Jason Calacanis?

  Nice hand.

• 1:43:08Speaker 04

  Buddy, I told you that, alright.

• 1:43:10Jason Calacanis?

  He's steaming now, it's building up.

• 1:43:11Speaker 04

  You want me to quit? Alright, I'm gonna [bleep] quit.

• 1:43:12Jason Calacanis?

  No, no, I don't want you to quit!

• 1:43:14Speaker 04

  You're such an [bleep].

• 1:43:15Jason Calacanis?

  I'll tell you guys right now!

• 1:43:16Speaker 04

  No, I don't mind losing the flip, I really don't. But come on, I asked you not to do that [bleep]. You have been more out of line to me than any other person. No! You've been more out of line to me than any other [bleep] person has been out of line to me in a year and a half. [bleep] you, man. Don't even talk about it, buddy. I don't know who you [bleep] are, but I'm never gonna film with you again. Phil, you just lost a big pot, so let's just like, you know... No, I don't give a [bleep]. JR B just, he just apologized.

• 1:43:39Jason Calacanis?

  I'm serious, if you...

• 1:43:40Speaker 04

  I don't give [bleep]. No, I asked you not to do it, you've been a [bleep]. I had a guy who was [bleep] all day yesterday. Let's play it. Oh! Oh! Oh! What the [bleep] wrong with this guy, man? Slam? I asked you not to [bleep] keep going now.

• 1:43:55Jason Calacanis?

  I wasn't talking about what you think I'm talking about.

• 1:43:56Speaker 04

  He's at the game, JR B's at the game. Phil, I'm saying I have chips, if you need chips, alright? I get to play with a group of people and Palo Alto, who I love and I have fun with. That's who I play with. Oh, that's us?

• 1:44:07Jason Calacanis?

  He called us! I play with people in Palo Alto!

• 1:44:13Jason Calacanis?

  One of them is [bleep]. His net worth is 1.2 billion. One of them is David Sacks. The gate code to his house is 1234 pound. I mean, it is crazy.

• 1:44:24David Sacks?

  I wanna thank Phil for the shout out.