E58: November's CPI, preparing for a downturn, macro outlook, Better.com's botched layoffs & more

0:00 Bestie Intro: Chamath's happy hour and sweater feud 7:11 Breaking down the new 6.8% CPI number, reflecting on old inflation takes, jobs report, understanding why CPI is misleading 23:05 How growth stocks got overblown, current valuation outlook, government as capital allocators 40:12 Deficit trouble: will another president ever try and balance the budget? Areas of positivity in the economy 50:29 Better.com's botched layoffs, impact of overcapitalization, macro outlook for founders 1:11:16 Lessons from the Jussie Smollett saga Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast 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.cnbc.com/2021/12/10/consumer-price-index-november-2021.html https://www.bls.gov/opub/ted/2021/consumer-prices-increase-6-2-percent-for-the-year-ended-october-2021.htm https://www.marketwatch.com/story/what-powell-must-do-next-after-admitting-that-he-was-wrong-about-transitory-inflation-11638460995 https://www.cnn.com/2021/01/27/economy/inflation-federal-reserve-janet-yellen/index.html https://www.nytimes.com/2021/03/22/opinion/us-inflation-stimulus.html https://www.nytimes.com/2021/03/10/business/economy/inflation-markets-federal-reserve.html https://www.axios.com/inflation-consumers-survey-1932e8d0-b01b-4c39-8fb4-4fdb9a96958d.html http://cdn.cnn.com/cnn/2021/images/12/10/cbo.report.on.build.back.better.pdf https://www.politico.com/newsletters/playbook-pm/2021/11/10/does-the-wh-owe-larry-summers-an-apology-495052 https://www.cnbc.com/2021/12/03/jobs-report-november-2021.html https://twitter.com/BillAckman/status/1469438745791410183 https://www.cnbc.com/2021/06/10/stanley-druckenmiller-fed-lulling-investors-into-false-sense-of-security.html https://www.businessinsider.com/congress-progressives-back-bill-4-day-workweek-remote-work-2021-12 https://youtu.be/-_wvTa8aiu8 https://www.thebalance.com/deficit-by-president-what-budget-deficits-hide-3306151 https://twitter.com/Jason/status/1469370800771715073 https://www.forbes.com/sites/davidjeans/2020/11/20/mortgages-fraud-claims-and-dumb-dolphins-a-tangled-past-haunts-bettercom-ceo-vishal-garg/?sh=6ed46a0110f4 https://youtu.be/pXLx5OY21Bk https://youtu.be/wZXoErL2124

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

• 0:00David Sacks?

  Actually, the funny story from the, from Art Basel. So I was hanging with, with J Cal and we're talking to Beeple.

• 0:06Jason Calacanis?

  Yep.

• 0:07David Sacks?

  And for some reason, J Cal was being nice to me and he said to Beeple, he said, you know who this guy is? This guy is a legend in Silicon Valley. You know, he introduces me.

• 0:16Jason Calacanis?

  Yeah.

• 0:17David Sacks?

  And then I said to Jace, I'm like, you know, this is Beeple and he who just sold like two $60 million like NFTs. I'm like, this guy's a legend too. And without missing a beat, J Cal says, well, maybe for the next year.

• 0:49Jason Calacanis?

  Hey everybody, welcome to episode 58 of the All In Podcast. Yes, the podcast. I don't know if you guys have been watching.

• 0:58Chamath Palihapitiya?

  I'm drinking, boys. I'm drinking.

• 0:59Jason Calacanis?

  Well, it's a Friday. We're, we're filming late on a Friday. You can tell from the backyard, uh, behind Chamath that it's the evening and he's cracked open a little something, something.

• 1:09Chamath Palihapitiya?

  A little, little, little delishy poops.

• 1:11David Sacks?

  Oh, Bond.

• 1:13Chamath Palihapitiya?

  2002 St. Eden.

• 1:17David Sacks?

  That's a, that's a label of Bond, correct?

• 1:20Chamath Palihapitiya?

  Yes, sir. Bond St. Eden 2002.

• 1:22Jason Calacanis?

  Oh, very nice. Uh, thanks for the invite. I'll be right over.

• 1:27Jason Calacanis?

  Episode 58 last week, episode 57 peaked at number 40 episodes in the world. So thank you to the fans. Uh, we broke 125,000 subscribers on YouTube and, uh, the pods over there are getting 150,000 views. So thank, just thank you to the fans. A lot of questions about the All In Summit. I went to see the locations when I was in Miami. We've got the location we want. We're working on dates and you'll have more information soon about that. Uh, so welcome back to the program with us today. As always is the Sultan of Science, the Queen of Kinwa himself, David Friedberg, the Rain Man. Yeah, he's definitely back from our Basel. Of course, he went to our Basel. And I don't know if he bought any art, but I was on

• 2:09Jason Calacanis?

  his boat with him. Uh, or his rented boat. David Sacks and I were on a boat.

• 2:13Chamath Palihapitiya?

  Ooh, rented boat.

• 2:15Jason Calacanis?

  Well, I mean, he hasn't bought one yet, but I think he's moving there. And then, of course, the dictator himself, Chamath Polihapatia here. Chamath. With an obnoxiously expensive sweater. Tell us about that.

• 2:28Chamath Palihapitiya?

  Yes, yes.

• 2:29Jason Calacanis?

  Everybody wants to know.

• 2:30David Sacks?

  What animal was killed to make that garment?

• 2:32Jason Calacanis?

  What animal was killed for that horrible Ernie sweater?

• 2:35Chamath Palihapitiya?

  This, this is a collection.

• 2:37Jason Calacanis?

  Oh, God.

• 2:38Chamath Palihapitiya?

  Of the foreskins of some white tigers.

• 2:41Jason Calacanis?

  I'm out, I'm out.

• 2:43Chamath Palihapitiya?

  I mean, it is incredibly soft and smooth.

• 2:47Jason Calacanis?

  I literally got a complaint.

• 2:49Chamath Palihapitiya?

  Like, like foreskins are.

• 2:50Jason Calacanis?

  Oh, God. I guess we're really going in a bad direction, right? I've literally got a complaint.

• 2:55Chamath Palihapitiya?

  Freezer and Sacks are like, what are they talking about?

• 2:57Jason Calacanis?

  I literally got a complaint on DM about Chamath's conspicuous consumption of his sweaters. And she was like, listen, I don't mean to tell you your business, but I think Chamath is turning off the audience with these sweaters.

• 3:12Chamath Palihapitiya?

  Was it an angry mid-level white?

• 3:14Jason Calacanis?

  It was a white, but a very extremely successful one. I'll leave it at that. Anyway.

• 3:18Chamath Palihapitiya?

  Really? Really?

• 3:21Jason Calacanis?

  They were just concerned. They were like, every week, really?

• 3:23Chamath Palihapitiya?

  Really?

• 3:24Jason Calacanis?

  We have to go through Chamath's sweater?

• 3:26Chamath Palihapitiya?

  Does she pay, does she pay attention when I put in $700 million a year into climate change? How, has she put in that much?

• 3:31Jason Calacanis?

  Uh.

• 3:32Chamath Palihapitiya?

  With her shitty sweaters?

• 3:33Jason Calacanis?

  Uh, okay. Listen, enough. Give Chamath some more wine. Give him some more wine. Someone text now. It's gonna be one of those.

• 3:40Chamath Palihapitiya?

  Just checking. If we're gonna, if we're gonna start moral virtue signaling over here.

• 3:44Jason Calacanis?

  All right. Well, this, we got a lot to cover. I mean, this is just absolutely crazy. I want you to finish a glass of wine real quick and then roll into the show. This is, this is going well so far. This show is gonna go off the rails. I've already lost control of the show. Uh, all right. We got to start with inflation and the economy. Uh, while Sacks and I were in Miami for our Basel, there was an absolute panic going on. Two, three in the morning, people checking their Robinhood and Coinbase accounts to figure out how much they had lost in their crypto holdings. But today.

• 4:16Chamath Palihapitiya?

  I lost more in the Robinhood stock than I have in the Robinhood app.

• 4:22Jason Calacanis?

  That's too soon, bro. That's too soon for me. I'm about to distribute. I'm like, do I distribute now or wait for?

• 4:28Chamath Palihapitiya?

  That thing has been a stone sinking to the floor of the ocean.

• 4:33Jason Calacanis?

  Well, I mean, it's pretty crazy.

• 4:34Chamath Palihapitiya?

  Never to be found.

• 4:35Jason Calacanis?

  No, I mean, listen, seventeen, eighteen billion dollars, a pretty great valuation. Right now, I think it's an opportunity for people, but I'll leave it at that. Let's talk about inflation.

• 4:45Chamath Palihapitiya?

  But we're not dispensing stock advice.

• 4:48Jason Calacanis?

  We're not selling any of my shares. I'm telling you right now.

• 4:52Chamath Palihapitiya?

  Before I distribute my stock and mark my capital gains, I'd like to advocate to be like Robin Hood.

• 5:00Jason Calacanis?

  Chama, I'm gonna just ask you, don't show up drunk for the next episode. Oh, my Lord. I can't even get through the first story here. Okay. Inflation grows.

• 5:09Chamath Palihapitiya?

  Does this woman even own a cashmere sweater that she has?

• 5:11Jason Calacanis?

  He may get off of.

• 5:12Chamath Palihapitiya?

  Who is this person?

• 5:14Jason Calacanis?

  Fuck her. Oh, please beep that out. God almighty. All right.

• 5:19Chamath Palihapitiya?

  What a fucking loser.

• 5:21Jason Calacanis?

  Stop it.

• 5:21David Sacks?

  Chama, I'm glad to hear you're doing something with all those foreskins because we don't want them to go to waste. What do they do with the foreskins, all those circumcisions?

• 5:30Jason Calacanis?

  I would love for you to just drive here and touch the sweater. I mean, I can't. I'm like, this is something to do on a Friday night. Um, all right. Inflation numbers. This is important, folks. Inflation year over year.

• 5:44Chamath Palihapitiya?

  Sorry, but excuse me, but if you're, if you're spending your time working in biotech, working in crypto and fighting climate change, it's wrong to buy a cashmere sweater? Like, all of a sudden, like, you also have to look like a homeless fucking lumberjack?

• 5:59Jason Calacanis?

  Because we have to start the show.

• 6:02Chamath Palihapitiya?

  Because being ugly is so cool now?

• 6:04Jason Calacanis?

  The idea was, do we have to start the show with your fashion choices?

• 6:07Chamath Palihapitiya?

  You started with that bullshit statement by this person who better be good looking or well dressed, but otherwise they have no right to make this claim.

• 6:15Jason Calacanis?

  All right. Calm down, Chama. Let's get to the show.

• 6:20David Sacks?

  You insulted his sweater game. That's a definite no-no.

• 6:22Jason Calacanis?

  Now we know where he's most sensitive.

• 6:25Chamath Palihapitiya?

  Honestly, you might as well have called me a [bleep].

• 6:28Jason Calacanis?

  Oh dude. You might as well. Dude, dude, stop. It's just a sweater comment. And it's just conspicuous consumption. Is that, is that what she's really trying to say? Maybe she's trying to, maybe she's trying to call me a p-. I know, because you brought it up. Who is it? Out her. I'm not out. Let's cancel her. We're not gonna, nobody's getting canceled for pointing out that you're talking about $4,000 chinchilla sweaters. I've never said how much they cost. We beeped it out. I've never said how much this sweater costs. Do you own a sweater worth more than $4,000 or less? Of course I do.

• 7:04Jason Calacanis?

  I rest my case. I own many, but that's not the point. Guilty on all charges. Conspicuous consumption. Uh, CPI, the past three months, today was 6.8 year over year. It's the largest increase since 1982. We're getting back to the post Jimmy Carter era. Uh, and when Reagan got in there, inherited that mess, September was 5.4, October 6.2, November 6.8, points up 0.6 or approximately 10% over October, 1.4% over September.

• 7:37Jason Calacanis?

  And, um, here's the chart, uh, for those of you watching, uh, on the YouTube channel.

• 7:44Jason Calacanis?

  This all started in March of 2021. That was the first month where the CPI rose over 2%. And who was wrong on inflation? Well, the Fed Chairman Jerome Powell called it transitory numerous times over the past two years. Treasury Secretary Janet Yellen, uh, in her Senate confirmation hearing in December of 2020, Yellen said she believed the Fed and Biden admin could take advantage of interest rates being near zero and spend more on stimulus. Economist Paul Krugman thought it was transitory in his op ed, How Not to Panic About Inflation. That did not age well. Quote, "Our businesses actually starting to set prices and wages based on the expectation of high future inflation. If they aren't, and my bet is they won't be, then the lesson of 2010 to 2011 will remain, don't panic."

• 8:27Jason Calacanis?

  My God, he could not have been more wrong. Who was right on inflation? Jamie Dimon in March, I would suspect there is a pretty good chance you're going to see rates going up and people are starting to worry about that. The American public, specifically Gen Z, has been on top of this issue. Uh, 77% of Americans were either somewhere, were somewhat, were very concerned about inflation back in March. And Gen Z, people aged eighteen to twenty-four had the highest rate of very concerned about inflation at fifty-two percent. Larry Summers also got this, right? Sacks, what are your thoughts on inflation, which now seems acute and permanent?

• 9:04David Sacks?

  Right. Well, it's definitely not transitory. Remember when it was at about five point one percent over the summer? That the administration said, no big deal. This is transitory. Don't panic. Then it went to six point two. Now it's six point eight. Looks like it's headed to seven percent. And the real problem here is that these guys, the administration, have not adjusted course in light of this data. What they've tried to do instead is now speciously claim that the same bills that they had written and conceived, the Build Back Better bill, somehow, even though it was conceived at a time that was really deflationary, that somehow this is going to fight inflation. They're essentially repurposing. They're just changing the arguments they're using as opposed to changing their legislative priorities.

• 9:49David Sacks?

  And just today, we got a report from CBO saying that this Build Back Better bill wasn't going to cost two trillion, like the administration said. It's going to cost five trillion and add three trillion to the deficit.

• 10:00Jason Calacanis?

  Over ten years, correct?

• 10:00David Sacks?

  Over ten years, if those programs are not sunsetted. So there's a bunch of budgetary gimmicks that were put in the bill. Basically, a lot of the programs would sunset after one year or three or six years. And so that's the only way they've gotten it to this, you know, one point nine trillion dollar price tag. The reason why that's a gimmick is because once the programs are created, there's going to be, it will create a special interest or constituency who is now dependent on those programs and no one's ever going to want to cut them. Milton Friedman famously said that there's nothing quite so permanent as a temporary government program. So that is the game that progressives are playing, is they're going to create the dependent, the dependency, the constituency who, once they receive the program, is never going to want to give it up.

• 10:44David Sacks?

  And they're counting on the fact that these programs will not sunset, which means they will cost five trillion and it will add three trillion to the deficit. So, you know, the problem is, it'd be one thing if we were in a deflationary environment, if the economy was in the tank, but the These guys are continuing to pump more and more stimulus into an economy that has enough. And really Larry Summers made this point all the way back in February. I think this is worth reading. What he said, he said, there's a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels. Were set off inflationary pressures of a kind we have not seen in a generation. He said this in February, everyone in the administration dismissed him, all the liberal economists that you mentioned, basically derided him.

• 11:28David Sacks?

  He turned out to be exactly right. And he was just saying this about. The, the one point, roughly two trillion they passed back in February for of COVID stimulus. And, you know, since then they passed 1.2 trillion for infrastructure and now it's this another five trillion for build back better. So. You know, the, the real problem here is that they are not adjusting course in light of this data. That keeps coming out that inflation is a bigger and bigger.

• 11:55Jason Calacanis?

  So what's the right thing to do in your mind, Sax? And then what about you, Chamath?

• 11:58David Sacks?

  Elon said it, can this bill? We don't need it. This is not what Biden was elected to do. You know, he was elected to provide normalcy, stop the chaos. And he, he never got a mandate for this kind of, you know, whatever 10 trillion dollars of taxes and spend.

• 12:13Jason Calacanis?

  We've been wanting to do an infrastructure bill for a long time, but we didn't, that was prior to pumping so much stimulus into the system.

• 12:21David Sacks?

  If he'd just done the infrastructure bill and not the build back better, it would have been one thing. But we're, this is basically the, the third hyper-stimulatory bill that, that they've sought to pass. First they did the COVID release bill at a time when really. The economy didn't need that stimulus. I mean.

• 12:38Jason Calacanis?

  All right. And then just dovetailing this and get Chamath involved in this is the jobs report. November non-farm payrolls increased only 210. They expected it to be 573. So it's a big miss. However. Kind of a missed bag because there's over 11 million job openings. And we're now at 4.2% unemployment rate, which is the lowest, which, which is getting towards the pandemic lows and, you know, it's. This is like before the 2008 financial crisis.

• 13:05Jason Calacanis?

  Shabat, how do you reconcile inflation along with this crazy bizarre job situation where people will not go back to work, people are planning on resigning, there continues to be resignations, and there's too many job openings, and people are raising salaries and still can't hire people?

• 13:20Chamath Palihapitiya?

  Well, I think we did a pretty good job of unpacking the great resignation, I think it was last pod, so right, remember like?

• 13:27Jason Calacanis?

  Yeah.

• 13:27Chamath Palihapitiya?

  There are three structural issues at play in the jobs front. One is that you have this really meaningful under-immigration that's happened because of Trump. The second was you've had a big mismatch between the degreed classes in America and the jobs that they can have for what they think they should earn, meaning you go to school, you get into all this debt, you try to become a teacher or something, and then you realize you can make more at an Amazon warehouse. Crazy.

• 13:57Jason Calacanis?

  Strange.

• 13:58Chamath Palihapitiya?

  And then the fourth is you have all these boomers with an enormous amount of savings, thirty, forty, fifty trillion dollars, who are pulling forward their retirement and also subsidizing their kids. You put it all together, there's less of an incentive to be in the job force unless you pay higher wages. Now, let's just put a pin in that for a second. I think the thing that Sacks talked about is really important, which is that we have to really figure out whether inflation is transitory or it's persistent and it's here. And I just want to bring up, Nick, I'll send you these texts, the Twitter links to this, but Bill Ackman tweeted out these two things today, which is that if you-

• 14:34Jason Calacanis?

  Fan of the pod.

• 14:35Chamath Palihapitiya?

  Brilliant investor, by the way, a great human being, brilliant investor. Two very specific things. He actually called out something that we also mentioned before, which is that CPI is horribly calculated, and it's really imprecise. And if you unpack CPI-

• 14:53Jason Calacanis?

  Consumer Price Index.

• 14:54Chamath Palihapitiya?

  The Consumer Price Index. There's something in there, a component of it, that's very important, which is called the owner's equivalent rent, right? How much can somebody basically charge rent to other people? The way that they calculate that, which is thirty percent of the, thirty percent of the calculation, is they just survey a handful of people. The problem is you don't need to survey because the actual exact data is available from single-family rentals that report this number. So their survey showed basically a much, much smaller increase than what the actual increase is. And let me just give it, so the largest owners of nationwide single-family rentals are reporting

• 15:39Chamath Palihapitiya?

  a 17% year-over-year rent increase.

• 15:42Jason Calacanis?

  Wow.

• 15:43Chamath Palihapitiya?

  The OER that was calculated, quote unquote, by survey in the CPI was 3.5%. If you flow that through, it means that core CPI actually went from 4.9% today to actually 9%. And the CPI print, which was 6.8%, was actually 10.1%. So it just goes to show you, we have sources of data that the government is not in a position to collect or measure. We have horribly inaccurate econometric models that we use. You know, you know that phrase, sort of shit in, shit out. So unfortunately, you get very bad.

• 16:23Jason Calacanis?

  Garbage in, garbage out.

• 16:24Chamath Palihapitiya?

  You get very bad crappy data. And now, all of a sudden, we're printing numbers, we're supposed to make policy against those numbers, but the numbers that underlie this decision-making is fundamentally flawed, and it's flawed in the wrong direction.

• 16:36Jason Calacanis?

  Okay, let's bring Friedberg in. Friedberg, what do you think is happening here vis a vis also the creation of companies and entrepreneurship? Because one of the weird things that's occurring is we're starting to hit a record number of LLCs, S corps, C corps being created. It seems like a lot of people are becoming freelance nation, hundreds of thousands of new companies during the pandemic were started.

• 16:57David Friedberg?

  That is probably one of many places where the water is flowing when you fill my cup and it shall overfloweth. I was talking to a guy this week who has a...

• 17:11Jason Calacanis?

  Juicy Smollett?

• 17:12David Friedberg?

  It's not that person.

• 17:14Jason Calacanis?

  Oh, come on, come on. Put the wine down.

• 17:17David Friedberg?

  No, no, let him drink the wine.

• 17:19Jason Calacanis?

  Go ahead, Friedberg.

• 17:20David Friedberg?

  And this guy has a multi-billion dollar consumer credit portfolio in subprime, which means, you know, he's got the, a bunch of consumers owe him money that generally there's going to be a high default rate. And his...

• 17:35Jason Calacanis?

  No comment.

• 17:36David Friedberg?

  Not and he said that this year, the portfolio performed beyond like the one percentile of the model distribution of what they expected to happen. They they had the yield on the portfolio be forty percent higher than they thought it would be. Because there's so much liquidity in the hands of individuals. And so I think, you know, Jason, while you might make the argument that companies and jobs are being created, that is one of many places where like, you know, you overflow a river and lots of streams start to flow. You know, we're seeing asset bubbles everywhere in NFTs, in crypto, in startups, in new startups, in new ideas, in home prices, in everything.

• 18:16Jason Calacanis?

  Sneakers.

• 18:17David Friedberg?

  Now, the problem with inflation is, you know, it's a definitionally, we all use this term and we throw it about, but like inflation is really the measure of price going up over a period of time. And generally, you want to have inflation of some amount that allows you to see economic growth and expansion that allows you to fund the debt that you used to create that growth in the first place. And so without without some sort of an inflationary pressure, which is the output of economic growth, you end up, you know, being unable to meet your debt obligations and then things get really ugly and the system as it was constructed, because most of these governments and systems like we have today are funded by debt. So, you know, Stan Druckenmiller gave a good interview in Q2.

• 19:02David Friedberg?

  He was kind of on a road show, you know, sounding the alarm bells around what was going on. He was saying the market is not speaking right now because basically the Fed kept canceling the market signals with their with their interest rate policy. And by canceling those market signals, it seemed like we had a free for all at the government level to keep spending. And so I do think that these two are pretty interrelated. The fact that we've kept interest rates low have allowed policymakers to say, you know what, the cost of debt for this government is zero. We can do anything we want, just like consumers are saying, we can do anything we want, we can buy anything we want, we can spend any way we want. And as a result, we're kind of seeing this, you know, inflationary pressure persist. Now, the problem is if you then raise rates and you can't

• 19:44David Friedberg?

  Borrow that money and suddenly people have to start to pay that debt down with without economic growth having occurred. The business goes, the whole system goes bankrupt. So the challenge that the Fed has is how do we raise rates without triggering an economic recession? And if people are now have overspend and are over levered once again and rates go up. It's going to get really ugly really fast. And so the, the, this is a first derivative balancing act. And yeah, there's, there's no simple and easy solution, unfortunately. Meanwhile, technology is causing deflationary pressures, which is exactly, you know, maybe what you don't want to see happen. When you're trying to realize economic growth. Um, and that's, uh, yeah.

• 20:25Chamath Palihapitiya?

  The other thing that we talked about is that the Fed basically changed the or the government changed the rules on the percentage. Basically what qualifies as a conforming mortgage. Remember that? And so now that's basically at a, at a million dollars. And if you think about it, most Americans, you know, 80 to 90% of their true underlying wealth is their home. To the extent that they build, you know, a positive net worth. And if you all of a sudden, you know, push up the upper bound on what a conforming mortgage is to a million, a million dollars. That effectively means it's, and it's roughly about 20%. That effectively means that you're moving people's net worth up by about four or five percent.

• 21:06David Friedberg?

  That's right.

• 21:07Chamath Palihapitiya?

  So, and so if they take that and then they take that money out of their home via a HELOC or an equity line of credit, right? Home equity line of credit. And then, you know, to your point, Friedberg, they spend it or they invest it or they, you know. It could be a real disaster scenario in five or six years.

• 21:24David Friedberg?

  By the way.

• 21:24Chamath Palihapitiya?

  No, no, this is more like 1929 kind of.

• 21:27David Friedberg?

  Yeah. By the way, if you go back to the, remember when we were in like the depths of the market collapsing and everything when basically the economy shut down with lockdowns when COVID started. And I was speaking to a senior banker at that, like that day. And he told me, look, it's pretty simple. What's going to happen? The Fed's going to drop interest rates to zero and they're going to pump money into the system. Because that's the only way you're going to be able to keep asset prices from collapsing. And we're going to artificially inflate asset prices and we're going to do it for a long time. Because then people look at the stock market and they say, oh my gosh, stocks are going up. Oh my gosh, revenue is going up. Everything gets inflated by pumping money into the system. And the problem is while there's a, you know, a perceived, you, you keep saying the home price goes up and I keep saying stocks go up.

• 22:10David Friedberg?

  But the purchasing power that arises when the inflation is higher than what those things are going up at indicates economic recession underlying that inflationary bubble. And the circumstance needs to be analyzed, unfortunately, a little bit more deeper than that, which is it's not just about inflation, it's about have we pumped enough money in to trigger economic growth that we can come to balance where the growth can outpace the inflation and we're not there.

• 22:35Jason Calacanis?

  Well, superimposed on this is...

• 22:37David Friedberg?

  Because, like, think about it, sorry, let me just say, let me just say one simple analogy. Let's say I've got 50 clams and, you know, there's suddenly a bunch of clams come into the clam market, now I got 100 clams. And if the number of clams has gone up by 3X, my purchasing power has actually gone down by a third. While it might look like I've now got twice as many clams, I can only buy one-third as much as I could buy before because there's so many more clams floating around and that's the problem.

• 23:00Jason Calacanis?

  I love clams.

• 23:01David Friedberg?

  You love clams.

• 23:02Jason Calacanis?

  Clams, because you know, the big clams, so you like them just... All right, listen, I did a little bit of math, I've been watching the price to sales ratios of some of the top companies, we can pull this up on the screen, and the price to sales of companies, including Zoom, obviously was ridiculous during the pandemic, that was a pandemic stock. So on top of all of this money being printed into the system, you had the participation of a bunch of stonk traders, you know, and that whole movement, buying up meme stocks or others. We had the price-sales ratio of Zoom, in other words, the value of the enterprise versus

• 23:44Jason Calacanis?

  their actual sales was at 123, it's now at 14.7. Peloton was another one of those at 23, now down to 3X, down 87%. Coinbase Square also, it drops off pretty significantly here. But you can also, we looked at the peak price to sales and how much larger it is then. And so some of these are now off 8X, 4X, and then it drops off to 2X, 1X.

• 24:12Jason Calacanis?

  But it's quite a, I don't know if you guys are looking at the numbers or if you have any thoughts on this, but we're, it seems like there was a mispricing of certain equities.

• 24:21Chamath Palihapitiya?

  There wasn't a mispricing. The Federal Reserve forced a lot of institutional investors to be out as long dated as possible in buying earnings. Because if, you have to remember, it's not just that real rates were effectively zero, but if you wanted to own inflation protected securities, it was actually a negative yield. So we were destroying people's savings. And there are a lot of individuals, sorry, well, not individuals, institutions that must own some of these inflation protected assets. So we were already in a negative yield environment. What are those folks supposed to do if they have to fund an 8% return a year to pay the pensions of,

• 25:01Chamath Palihapitiya?

  you know, good people, firefighters, teachers, you know, it's, you name it, policemen, et cetera, right? They were forced to invest in the kinds of funds that would then go out further and further out into the future to buy the promise of future cash flows. And when all of a sudden, a whole bunch of other assets that, that they held, which were supposed to be safe, implodes on them, right? Because all of a sudden inflation changes and the front end of the yield curve goes whoop. And all of a sudden, all these assets, when yields go up, prices go down. Now the fireman's pension is like, oh my gosh, we just lost all this money. We never thought we were going to lose.

• 25:45Chamath Palihapitiya?

  And we're long all these, you know, crazy tech stocks. And so then they're forced to sell so that their overall exposure goes down. That's called degrossing, okay? And we've been going through a very painful process of this degrossing. Hedge funds are doing it in droves.

• 26:02Jason Calacanis?

  Can I ask you a question then, Shama? I'm sorry to interrupt, but should they not have looked at these multiples and said, you know what, maybe this one's out of whack and I should buy the ones that are not as out of whack? Because this to me seems...

• 26:16Chamath Palihapitiya?

  Not really, because for the last 15 years, if you had, you know, the, the problem with being a value investor over the last 15 years since 2008 is you were basically a dumpster diver. And you got paid absolutely, you know, you didn't make anything because, because they misunderstood what value was. Value isn't necessarily things that are cheap. Value is things that are things that are valuable. And over the last 15 or 20 years, what was once a question is now definitive, which is that the things that are valuable tend to be technological because they're super high margin, they grow really quickly, they compound, they create enormous cash flows at scale.

• 26:53Jason Calacanis?

  Agreed.

• 26:54Chamath Palihapitiya?

  The point is, you couldn't own that stuff. And if you sat on the sidelines, you weren't meeting your 8% hurdle. You were all of a sudden looking at some risk of defaulting on your pension obligations. So this is how this whole cycle brought us to today.

• 27:07Jason Calacanis?

  So there was nowhere, what you're saying is, if I can summarize, there was nowhere else for them to put their money. Saks, price matters, though. So is this just bad capital allocation? People weren't thinking about the entry price of their investments? We're giving too much credit?

• 27:20David Sacks?

  Well, I think, I think what happened is that you had a liquidity fueled boom going on. So what we've seen over the past four or five weeks, about the first week in November, the market basically peaked and at least growth stocks did and SaaS companies did. If you look kind of, November 8th was sort of the beginning of the downturn. And since then, most of these growth stocks are down about 30% plus. Crypto is down now, I mean, it's sliding as we speak, 30, 40% off a, off a peak around the same time. What happened around the first week in November? Well, you had three Fed governors come out and make very hawkish statements about the fact that the Fed was going to need to double the speed of its taper and that you're going to have two to three rate increases next year.

• 28:03David Sacks?

  And so basically, we went from being in a low interest rate environment, which has been the case, not only just low interest rate environment, low interest rates with massive stimulus and pumping out of Washington by both the Fed and by, by Congress. Okay. And so you went from that environment to all of a sudden an environment of now we're expecting to have rate increases and that's going to suck the liquidity out of the system. The, the amazing thing that I'm seeing right now is that every investor I know is having the same conversation. It doesn't matter whether you're a SaaS investor or a real estate investor or a crypto investor, they're all having the same conversation, which is what are interest rates going to do? How much liquidity is that going to suck out of the system? And how much of the boom that we've experienced over the last couple?

• 28:47David Sacks?

  Years has been because of this unnatural liquidity that's been pumped into the system. And so I've never seen it. I've never seen it be the case that investors across every asset category are having that macro conversation as opposed to talking about like micro stuff, right? Like

• 29:05Jason Calacanis?

  The specific company, the earnings, the product, who they're beating, the market share.

• 29:09David Sacks?

  Nobody's talking about that. Like what building do I buy or what SaaS can I invest in? It's all about what is happening in the macro picture. And this is where I think what Biden is doing is so unbelievably off base is, okay, look, he didn't start trillion dollar deficits. You know, that happened with the previous president. I'm not saying that was good, but, but now what we have is a situation here of of the Fed is getting extremely hawkish of tightening. We're seeing inflation now out of control and yet there's been no adjustment whatsoever.

• 29:41Jason Calacanis?

  Nobody is changing.

• 29:43Chamath Palihapitiya?

  Can we just say the ugly truth? Wait, let's just, let's just call, let's just call a spade a spade at this point because I think we can. I think, and I think Biden was, is and will ever be a really moderate, down the middle centrist. I don't think there's ever been an extreme bone in that man's body. He has always come off at like, you know, the word that I think what I've always thought of Biden, even now is equanimity. The guy is a really down the middle person. He's not an extreme individual. I think that's the only kind of personality, by the way, that could have thrived for eight years as a VP with Obama and had been in every room and every meeting. The problem, Sax, and tell me if you think this is totally off base, is that there was a head fake

• 30:27Chamath Palihapitiya?

  after he won the presidency where there was this fake lurch to the progressive left. And it turned out that it was a complete head fake because that whole cohort of people just totally jumped the shark. Because all that rhetoric then unfortunately turned out to be not worth much. It started to blow up in their face in every single election that's happened since then, at the local level in cities, at the state level in places like Virginia. And in the middle of all of that, I actually think what happened was that faction tried to push an extremely aggressive legislative agenda to paint Biden as the next Roosevelt, which maybe he didn't even have the desire to be because I think that he seems a very low ego kind of person. And now we're actually realizing, oh my gosh, this makes no sense.

• 31:12Chamath Palihapitiya?

  And so the part of why I think the markets are kind of like hand wringing is you would expect at this point, the federal bureaucracy to actually step in. But I think there's like a real lack of confidence because for example, today, when there's a CPI print of somewhere between seven and 10%, the only democratic sounding, you know, the talking point was one of the squad proposing a four day work week. I mean, that is insane.

• 31:41Jason Calacanis?

  That's like you're in crazy debt and you're like, you know what we should do? We should spend more money and work less.

• 31:47Chamath Palihapitiya?

  When the CBO says we're about to go three more trillion into debt, the solution isn't to four, well, it's, I actually think if you want to work less, work less. You know, maybe you're lucky and your boomer parents can give you money, but there's a bunch of us like me who had to grind. I didn't have anybody to fall back on. And if you all of a sudden pass the law that said, hey, Chamath, you can only work four days a week, I would be really angry because you're depriving me of 20% more of a chance to beat all those other soft candy asses that went to all those fancy schools that weren't willing to work.

• 32:20Jason Calacanis?

  Yeah, ignore. That's the stupidest suggestion.

• 32:22Chamath Palihapitiya?

  Let me work.

• 32:23David Sacks?

  So I think, I think this, this proposal that came out to basically this was a new proposal that they were going to limit the work week to four days a week, wouldn't let people work five days a week. The reason why it's, well, it's a bad idea in general, but it's a particularly sort of brain dead idea to propose during a height, you sort of this inflationary period because again, inflation is caused by too much money chasing too few goods. Well, so that you have a demand component. From the pumping and the stimulus, but you also have the supply component, which is we don't have enough goods and services. Why? Because you've been, you know, passing out these STEMI checks that that disincentivize people from working. We have problems with the ports. We have these COVID restrictions have all gone in the way.

• 33:03Jason Calacanis?

  Restaurants are closing three days a week because they can't find servers.

• 33:07David Sacks?

  So we've had a shortage of goods and services. The last thing we need is a 20% reduction in the number of workdays or work hours that are available. So it just shows like how out of touch these progressives are. But look to Chamath, to your point about Biden, I, I, look, I, I don't know. You know, exactly what's in Biden's heart. To me, it doesn't really matter. I think, I actually think he's pretty liberal. I, he's not all the way out to where, you know, AOC is fine, fair enough. But look, at the end of the day, I think, you know, this idea of Biden being a moderate, you know, moderate is as moderate, moderate does. He has not governed like a moderate, whether that's because, you know, this moderate thing was just a marketing shtick on his part and he's actually more liberal or whether

• 33:51David Sacks?

  he's been co-opted and taken over by the progressives. I don't really care what the reason is. The fact of the matter is he has not governed like a moderate.

• 33:57Jason Calacanis?

  At least we pull back the spend, David. I mean, the spend was gonna be.

• 33:59David Sacks?

  No, we have not pulled back the spend.

• 34:00Jason Calacanis?

  Well, no, no, no. The original, remember the original, uh, bill was gonna be two or three times.

• 34:05Chamath Palihapitiya?

  We just loaded, we put the bullet in the chamber and loaded it for Manchin. This bill is not going to happen, David, with the $3 trillion deficit increase.

• 34:11David Sacks?

  I hope not. I mean, but the point is that, look, if, if, if people like us don't speak up and say, this is a reckless,

• 34:19Jason Calacanis?

  Pump the brakes.

• 34:20David Sacks?

  Yes, exactly. Then it could happen.

• 34:21Jason Calacanis?

  You can only fly the plane so fast before the wings come off. This is too much speed for the airframe. Let's go to a clip of our friend Elon talking.

• 34:29David Sacks?

  This is a $5 trillion bill.

• 34:31Jason Calacanis?

  Let's go to this clip of Elon talking about capital allocation. Uh, it's a couple of, it's like 30 seconds and then Friedberg, I'd like you to comment on the other side. Let's go.

• 34:39Speaker 04

  You know, at some point, really what you're doing is capital allocation. So you're not, it's not money for personal expenditures. It's what you're doing is capital allocation. And it does not make sense to take, uh, the, the job of capital allocation away from people who have demonstrated great skill in capital allocation and give it to, uh, you know, an entity that has demonstrated very poor skill in, in capital allocation, which is the government.

• 35:03Jason Calacanis?

  Yeah. Friedberg, your thoughts on Elon's? I've, I've said it in the past.

• 35:10Jason Calacanis?

  This was at a Wall Street Journal conference, by the way.

• 35:12David Friedberg?

  You can think of a government, or a nonprofit, or a corporation

• 35:21David Friedberg?

  as an organism, as a living organism, and each living organism wants to eat and grow. And there is no such thing as an organism that says, "Over time, I want to shrink and shrivel away and die." So, the organizing principle of the people in the government is to do more for their constituents, for their owners, which are what they believe to be the taxpayers, or the folks that elected them to office. The politicians themselves, I would argue, are more actors in the Ouija board of behavior that's going on here, and less kind of the mental designer of a system that they're trying to use to infiltrate change in the world individually, and conquer and gain individual power.

• 36:04David Friedberg?

  There may be some degree of motivation there, but I think largely it's more about the fact that that organism, that government, wants to grow, wants to spend more, wants to do more over time, not less. And this is true of any business. Every business wants to grow. If you're not growing, you're dying. And every nonprofit. There's no such thing as a nonprofit that says, "Let's not fundraise, and let's spend all our money," and then shut down. And so I just think, as much as we want to kind of sit here and rationalize a way to better politicians that are going to better serve us, that are going to think smarter, the reality is, every government, every institution of government in the history of humankind has tried to grow, and eventually they cycle back.

• 36:44David Friedberg?

  The United States, like I said last year, may be kind of going out with a little bit of a whimper, less of a bang, and that's going to be a function of the devaluation of currency, or having less of a place in the global stage, and so on. But I think Elon's right. He feels, and many people in business feel, like they're in competition with the government for capital.

• 37:10David Friedberg?

  And that capital, the only difference is that the government can force that capital, can force that revenue. And no business can. And so they've got an unfair advantage in that in that that stage of playing for capital. And this is where, you know, Bitcoin feels to a lot of people like a great equalizer. And yeah, I'm not a I'm not a huge like, I'm not not a Bitcoin maximalist or anything. But I think that's where the appeal arises, which is, you know, as Jefferson said, like, every generation needs a revolution. And I think that this is the revolution that folks are looking for, which is how do we get this big monopolistic player off the playing field to let us do what we want to do?

• 37:48David Sacks?

  Well, I mean, it's so easy. I mean, all Biden has to do is what he was elected to. He never had a mandate for this $10 trillion of spending. I mean, the guy ran a basement campaign. I mean, his he was elected to not be Trump. Okay, he was elected to stop the chaos. Not yeah, not to not to engage this $10 trillion progressive agenda. You know, Elon, I think, made a really good point about the capital allocation there. You know, people think, okay, Elon's got all this money. So he must be enjoying this like incredible lifestyle. Look, he's right that once you have that much money, you can't spend it all on personal consumption, you invest it. And so the question is, who's going to make that investment is who's going to be better at it, Elon, or the federal government? We know Elon is better

• 38:30David Sacks?

  at it. He creates incredible innovations. He's gonna put people on Mars. I mean, he can do incredible things with that capital. Whereas the government just squanders it, you know, there's another Elon another really good. I think Elon actually understands economics at a macro level really well. He had a really good. There's an equally good snippet of him on the Rogan show, you know, called a horn of plenty, yeah, the horn of plenty, where he says, look, there's a lot of people out there who think the economy is just like this horn of plenty that produces all these goods and the goods is magically appear no matter what we do. Okay. And so if some people have more goods than others, it's just because they stole them from the horn of plenty. What he actually but he said is, no, this is not the way the economy works. People actually have to make the stuff. You know, if people

• 39:14David Sacks?

  don't make the stuff, there is no stuff. Okay, this stuff doesn't just magically appear. And the way the stuff gets made is you have people making smart capital allocation decisions and engaging in hard work. And that's what actually produces the Stuff and it's not a zero sum game. So if you think about like this agenda that we have in Washington, it really flips this on its head. It is doing everything it can to stop the production of the stuff, whether it's the stimmy checks or the COVID lockdowns or, um,

• 39:43Chamath Palihapitiya?

  you know, Bonus unemployment, extending that. Or just confiscating the earnings of people so that they can spend it on whatever they want.

• 39:52David Sacks?

  Right, exactly. It's, it's actually, it's actually putting constraints on the production, on the supply of the stuff. And then meanwhile, it's just printing all this money. So then we wonder, where's the inflation come from? Well, obviously it's coming from printing more money for fewer goods. That's, that's basically the, the problem with the agenda we have in Washington right now.

• 40:12Jason Calacanis?

  The increase in the deficit is just getting stunning. Uh, if you look back on the five or six last, uh, presidents, Reagan, 142% increase. Uh, he got us up to 1.42 trillion. He had to obviously, uh, combat what happened under Jimmy Carter, uh, George Bush, George H W Bush, 30%, 36% increase. President Bill Clinton, a 1% decrease. The first time we've had a stimulus, uh, I'm sorry, a surplus in a long time. And then, uh, Bush the second, 57% increase.

• 40:42David Sacks?

  Now, the economic results under Bill Clinton were amazing.

• 40:44Chamath Palihapitiya?

  Amazing. I was just about to say, he's a goat.

• 40:47Jason Calacanis?

  Yeah, but I mean, at the time, what was very interesting is politicians actually took this issue of balancing the budget very seriously.

• 40:54Chamath Palihapitiya?

  Really seriously.

• 40:55Jason Calacanis?

  Deadly seriously and thinking about how we would pay for things. And now we don't seem to think about who is going to pay for these things.

• 41:03David Sacks?

  Yes.

• 41:03Jason Calacanis?

  Which is going to screw our children.

• 41:06David Sacks?

  Okay. So you have to remember that Bill Clinton was the president who said the era of big government is over. And when he left office, he actually bragged about reducing the federal government's share of the economy from 22% to 18 and a half percent. You would never hear a Democratic president.

• 41:21David Friedberg?

  It'll never happen again.

• 41:22David Sacks?

  You'll never hear a Democratic president. Well, first of all, they wouldn't do it. But second, they wouldn't brag about it. You know, you can't even say something like that.

• 41:28Jason Calacanis?

  They would be ashamed at balancing.

• 41:30David Friedberg?

  Let me ask you, do you think a Republican president would? Cause I'm not convinced that any party matters at this point. It feels to me like the incentive structure is such that the individuals who are representing constituents who get them elected and they can pass more dollars back to those constituents drives a systemic model of growth for the government and therefore the government is complete, competing as a monopoly on the field for capital.

• 41:53David Sacks?

  Yeah, look, I think you got a point.

• 41:55David Friedberg?

  You thought Trump was gonna be this guy and Trump came in and he ended up spending more. And I recognize they were extenuating circumstances and so on, but I thought he was gonna go in. I thought the the premise was blow up the government, you know, cut all this nonsense and the deficit kind of shot up.

• 42:08David Sacks?

  You're you're right that Republicans have a very spotty record on on government spending. And we did have trillion dollar deficits pre-COVID under Trump, and that was not that was not good. Uh, but what Biden is doing now in the face of inflation is worse. And, look, I mean, historically, the best, the the the only times that you really have, um, it seems like fiscal responsibility is when you actually have, the the best track records have been when you have Democratic presidents, Republican congresses, and the Republicans suddenly find their principles on spending when there's a Democrat in the White House. You're right that when Trump was in office and had Congress and, uh, George W. Bush, you know, had Congress, Republicans spent a lot of money too. So it's absolutely a bipartisan problem.

• 42:53David Sacks?

  But what's happening now in Washington is, under Biden, is is unprecedented, is a breaking of the bank. They're talking about minting trillion dollar coins. So, yes, it was a problem under Republicans, but this is even worse. Um, and here here's another thing is the Fed is now saying that they're projecting two to three rate increases next year. So let's call that 75 basis points. Multiply that by the close to 30 trillion of government debt that you're talking about, Jason. That's about 150 billion a year of interest payments on the debt of debt service. Okay, 150.

• 43:23Jason Calacanis?

  Extra, extra, extra.

• 43:24David Sacks?

  Extra, that doesn't exist today.

• 43:25Jason Calacanis?

  And it's not fixed rate, by the way.

• 43:26David Sacks?

  That's right. It's all short term rates. It's all short term rates, cuz, yes, so, so you're looking 150 billion of incremental debt service costs, right? So multiply that over 10 years. That's 1.5 trillion over 10 years. That's your Build Back Better right there. Where is this money for Build Back Better gonna come from? We have 1.5 trillion of increased interest rate costs starting next year.

• 43:48Jason Calacanis?

  And and how do we get the cycle of people wanting to go back to work and be productive? It feels to me like this could be.

• 43:55Chamath Palihapitiya?

  Raise wages.

• 43:56Jason Calacanis?

  Which is what's happening, but people are still not going back to work. Have you been watching the the the?

• 44:01Chamath Palihapitiya?

  No, but Jason.

• 44:02Jason Calacanis?

  People are offering $70,000 to be a manager of a Taco Bell and people won't take the job.

• 44:05Chamath Palihapitiya?

  Well, then you offer 75,000.

• 44:08Jason Calacanis?

  I still don't think they fill it.

• 44:09David Friedberg?

  No, I think I think I think I think that model is dead. I think low-cost labor is inevitably the

• 44:15Chamath Palihapitiya?

  Well, it's not low-cost if they're making seventy-five thousand dollars.

• 44:18David Friedberg?

  Well, I mean, I think in order for people to buy the production.

• 44:21Chamath Palihapitiya?

  It may still be labor, but it's high-cost.

• 44:22David Friedberg?

  I don't think Taco Bell is going to sell burritos if they cost six dollars. So if they're going to have to raise labor costs, people aren't going to be buying Taco Bell. They're going to go somewhere else. So the low-cost model of consumerism in the United States, which has been a stronghold for our economy for a hundred years at this point, may be coming to an end, or it will accelerate the implementation of automation across that sector of the economy.

• 44:43Chamath Palihapitiya?

  Yeah, that's what's happening.

• 44:44David Friedberg?

  I think that's more likely.

• 44:45Chamath Palihapitiya?

  That's more likely. By the way, if you read the press release for the four days a week.

• 44:50David Friedberg?

  I'd pay four dollars for a Taco Bell burrito, though.

• 44:52Chamath Palihapitiya?

  Gobbledegook, in the four days a week thing, it said, workers for far too long have been forced to work very long hours and not get paid. And, wait, wait, they were not paid? And so the idea is just like, you know, opt out, but then if you opt out, you'll make even less.

• 45:10David Friedberg?

  Yeah.

• 45:11Chamath Palihapitiya?

  In a moment where you can actually make more.

• 45:13David Friedberg?

  Yeah.

• 45:14Chamath Palihapitiya?

  These idiots who are coming up with these ideas.

• 45:16David Sacks?

  The Chinese must be looking at these BIZE-ows wrecking the American economy.

• 45:23Chamath Palihapitiya?

  Oh, my God.

• 45:23David Sacks?

  But in terms of, in terms of, well.

• 45:24Chamath Palihapitiya?

  They don't need to do anything. We're destroying it from the inside.

• 45:27David Sacks?

  Yeah, exactly. So just in terms of what we should do here, I actually think there's a lot of strength in the economy right now. It's not all negative. I mean, the unemployment rate is down to four and a half percent. The labor participation rate, yeah, it's quite low. I mean, it was three and a half percent before COVID, so we're getting close to where we were before COVID. The labor participation rate is not great. I think it's like sixty-one percent.

• 45:46Chamath Palihapitiya?

  Salaries are up.

• 45:47David Sacks?

  It was sixty-three percent before COVID, so we need to get more people working. We could do that by ending the STEMI checks, okay? But the most important thing we could do right now is imagine we do Biden the biggest favor by just putting a bullet in this Build Back Better Plan, because I actually think there'd be a massive relief rally, and the economy would take off like a rocket next year. If you just got government out of the way, they have printed enough. The best thing that could happen is they stop this pumping and stimulus, and then the Fed doesn't have to raise rates as aggressively next year. And we could let things have more of a soft landing as opposed to this sudden austerity, which is whipsawing the economy.

• 46:24Jason Calacanis?

  So just slow the plane down and then maybe break this bill into 20 component parts and and just try to get a couple of things done.

• 46:30David Sacks?

  He spent all the money. He spent all the money. It's spent.

• 46:33Jason Calacanis?

  I mean, this is a bender of all benders. And if people are refusing to go back to work, we're going to have to, we talked about this in the last episode, we're going to have to think about letting people immigrate.

• 46:41David Friedberg?

  Jason, I think it's a generalization to say people refuse to go back to work. I think the jobs that people had when when their options open up to them, you know, may not be jobs they want to go back to.

• 46:50Jason Calacanis?

  Correct. I agree.

• 46:51David Friedberg?

  And I think that there's going to be a larger, significant growth in a services economy that didn't exist before. Think about how many yoga instructors there are today that didn't exist 20 years ago. How many, you know, people doing hair.

• 47:02Jason Calacanis?

  YouTube creators.

• 47:03David Friedberg?

  YouTube creators, creator, the creator, the creator economy alone, right? Like Hollywood no longer has a monopoly on content. And people are spending more time consuming content than ever before. So, you know, there's a services economy that I don't think we really predicted or modeled. And we all assume, oh, my God, that we're not going to, no one's going back to work. It's like, guess what? People are spending money. And they're going to spend money on new stuff. And these new industries are going to emerge. We know creators, and those creators are going to create jobs around them. You know, one amazing creator will hire 100 people to, you know, staff his videos and make his music and edit his stuff and, you know, run his business and so on. Like, it's just, it's just the way that the economy shifts. There's been a moment here that is like a Cambrian explosion of new species of industry, where, you know, this meteorite of COVID came and hit planet

• 47:48David Friedberg?

  Earth. There was an eradication of the old species, you know, minimum wage jobs for crappy labor work that people don't want to do. And all of a sudden, the sun came out and new stuff is emerging and new life forms are emerging, new jobs are emerging. And I think we're just, we're going through a really ugly transitory period. But I think like, like Sacks said, it could be really great on the other side. And there's also an, yeah, sorry, there's one more argument to be made, which is our friend Brad Gerson sent me a note today who's saying, I know you guys are going to rant on your all in pod today about inflation. I want to remind you about the deflationary effect of technology. And it is really being felt in the economy. I think we all see it, how software alone can reduce the operating cost and the labor cost of businesses, drive up margins, increase growth. And so, you know, there's a number of tailwinds here. But I think Sacks is right.

• 48:31David Friedberg?

  There's a masking going on with respect to the capital that's just being bandied about right now. And it's, it's a, it's a risky, nasty kind of, you know, maelstrom of a, of a sea we're trying to cross right now.

• 48:43Jason Calacanis?

  I want to point out two positive things to build on Saks's positivity. Number one, I don't know if you guys are following Omicron in the UK. They have record cases right now, but deaths and they're also done great with the vaccine, obviously, a small country with a lot of resources. So they're hitting record cases for this last cycle, but deaths and hospitalizations are down and they say upward 25, 50% is part is now moved to Omicron. And it seems like that this could be the end game, maybe.

• 49:15David Friedberg?

  And Did you ever see the, the end of, what was it outbreak where they like dropped that bomb and it was like the massive bomb that takes all the air out of the room and like shock, shocks, everything. And then they're like, okay, it's over. You know, there could be this thing happening where Omicron is the, you know, the, the air bomb that gets dropped, clears the room and then it's all over, you know?

• 49:34Jason Calacanis?

  Well, and then here's the other thing.

• 49:35David Friedberg?

  We don't know.

• 49:36Jason Calacanis?

  I'm seeing the salaries going up faster than inflation. People are raising people's salaries, you know, in double digits to try to get them to come to these jobs. So the people who are choosing to go back to work and people are eventually choosing that and switching jobs to, to Matt's point, I think they're going to be making more money and they're going to be more resilient and they are going to be a little more empowered and that could end up being a great thing. And then finally, in terms of technology, I have one robotic company that serves coffee and they had a record week.

• 50:06Chamath Palihapitiya?

  Pump it.

• 50:07Jason Calacanis?

  They, I'm not going to pump it, but they, I don't want to say the name.

• 50:09David Friedberg?

  Pump it.

• 50:10Jason Calacanis?

  No, no, they, they broke $11,000 in people ordering from a robotic coffee machine. Previously the record was like 7K a week. So people are getting used.

• 50:21Chamath Palihapitiya?

  Tell your stupid lady friend I have an $11,000 sweater.

• 50:24Jason Calacanis?

  Oh no, please stop it. Stop it. All right, listen, I don't know if you guys saw this better.com layoffs viral video, but

• 50:34Chamath Palihapitiya?

  Can you break this down, J. Cal? I was not following this.

• 50:38Jason Calacanis?

  All right, very simple. There's a company called better.com. They get rid of origination fees or whatever and commissions. They try to get you faster mortgages, insurance, whatever. They were going to SPAC. SoftBank was going to put in 1.5 billion in the pipe. Everything was going according to plan.

• 50:52David Friedberg?

  SoftBank was already in the company, right? So they were trying to get their own company out.

• 50:55Jason Calacanis?

  Yeah. So, uh, obviously the market corrects. Everybody always asks us as a group, what happens when the market corrects? Well, here you're about to see it. This guy decides I got to cut 10% of the company. Instead of having his managers go to each group and have a logical, small discussion about how they're going to correct things and maybe some sort of thoughtful process, he decides he's going to get on Zoom to the entire 900 people who are fired and in a very bizarre way.

• 51:22Chamath Palihapitiya?

  Sorry, 900 people were fired?

• 51:24Jason Calacanis?

  900 people, but

• 51:25David Friedberg?

  Over Zoom.

• 51:26Jason Calacanis?

  Over Zoom.

• 51:27Chamath Palihapitiya?

  How big is this company?

• 51:28Jason Calacanis?

  10,000 employees. And he says to them that the last time I had to do this, I laid people off, I was, I cried and I'm going to try to do better this time. But if you are on this call, effective immediately, you're fired. It's just another one of these crazy clips we have to respond to.

• 51:43Chamath Palihapitiya?

  I want to see it.

• 51:44Jason Calacanis?

  30 seconds. Trumath, give me your thoughts on this.

• 51:46Speaker 05

  Thank you for joining. I come to you with not great news. The market has changed, as you know, and we have to move with it in order to survive so that hopefully we can continue to thrive and deliver on our mission. This isn't news that you're going to want to hear, but ultimately it was my decision and I wanted you to hear from me. It's been a really, really challenging decision to make. This is the second time in my career I'm doing this and I do not, do not want to do this. The last time I did it, I cried. This time I hope to be stronger.

• 52:22Jason Calacanis?

  Okay. And then here's the second clip where he basically tells everybody over Zoom that you're not going to be able to log in and you got two week severance, three weeks before, a month severance, and it's like three weeks before Christmas. Go ahead.

• 52:34Speaker 05

  We are laying off about 15% of the company for a number of reasons. The market, efficiency, and performances and productivity. If you're on this call, you are part of the unlucky group.

• 52:50Chamath Palihapitiya?

  You, dude.

• 52:51Speaker 05

  That is being laid off. Your employment here is terminated effective immediately.

• 52:56Chamath Palihapitiya?

  Are you kidding me?

• 52:58Speaker 05

  What does this mean for What's next? You're gonna get an email from HR, [email protected] to your personal email address regarding the details of your severance and your benefits for all US employees. We're providing four weeks of severance, one month of full benefits, and two months of Cobra for which we will pay the premium. So three months total benefits if you elect for Cobra.

• 53:21Jason Calacanis?

  All right. I mean, we've all operated business before. Does anybody?

• 53:26Chamath Palihapitiya?

  I've had to do layoffs before. It is the most fucking brutal thing.

• 53:30Jason Calacanis?

  Yeah, this is the exact wrong way to do it, though. Terrible. I remember an AOL.

• 53:34David Friedberg?

  There's no right way to do it, but I think the question with this guy is to examine, you know, the growth incentive that got him to this point. He took SoftBank money. SoftBank, as you guys, as we all know, creates a very strong incentive and capitalizes businesses to go after kind of ultra, perhaps unnatural growth. And there's almost always shocks that occur after they do that. And the circumstance, I think, could have been avoided. Maybe he built a business a little more steady, but then his valuation would have been lower and he wouldn't have been able to access as much capital. And so, you know, unfortunately, the loss of jobs is the cost of capital with these ultra-high-growth incentives that are kind of being structurally built into the fundraising rounds in these later-stage deals lately. I don't know if you guys agree, but it's just-

• 54:17Jason Calacanis?

  Sax and then Chamath.

• 54:18David Sacks?

  Okay, so-

• 54:19Jason Calacanis?

  How would you do this, Sax? You're an operator.

• 54:21David Sacks?

  Yeah, I mean, so I've had to lay people off before, but never in this era of COVID and remote work. So the question, and look, it is miserable, and I think that it is the right thing to do for him to take responsibility if this restructuring was caused by a strategy that was, you know, overly prioritized growth. I think he could say something like, "Look, this is my fault, the company's fault, you know, not your fault." So I think he could have-

• 54:48Jason Calacanis?

  Exactly.

• 54:49David Sacks?

  I think he could have couched that. I think he could have taken responsibility. That being said- I don't think he owed the grovelling apology that he was forced to make because, look, here's the thing, how do you lay 900 people off in this era of remote work? I mean, they're all working from home. There's no office for them to go into where you could sit them down one on one like a human, like you used to be able to do and have a conversation. So they are laying people off by Zoom now and it's unfortunate, but I think it's just this new world that we're in and I don't know that there's a much better way to do this. I think the words could have been better. Maybe it could have been more organized, but how do you lay off people who are working from home?

• 55:24Jason Calacanis?

  I have an idea, but let me let you go first. Any thoughts you want to add? And I'll tell you how I would have done it.

• 55:29Chamath Palihapitiya?

  I remember when I had to do my first layoff at AOL.

• 55:36Jason Calacanis?

  One of them there.

• 55:37Chamath Palihapitiya?

  And, and there was a lot of those rifts. And I remember the first one, I was in my early to mid twenties as a manager and we had three or four people or whatever. And I remember distinctly that AOL had this policy at the time, because I guess they had maybe like better, like tens of thousands of people, employees, lots of call center as an example, and they've had to have rifts before. They would have security guards and there would be a security guard outside the meeting room where you would bring somebody in and talk to them. And I just remember being seared in my mind because never having done it before, I was like sweating profusely, really nervous. I didn't know what to say. I felt really bad. I felt very guilty. And then you learn how to do these things and there is a very humane way to try to do these things.

• 56:20Chamath Palihapitiya?

  It's never the best thing to do, but you try to give people a fair exit package and all of these things. Let me put that aside because I think what Friedberg said is so good and so important. The root cause of why this is here, as far as I can tell, is not a company that doesn't have consumer demand. It's a company that may have been mismanaged for growth to meet the consumer demand because of too much money. And this is a thing that is an avoidable mistake.

• 56:53Chamath Palihapitiya?

  And this is where you have to figure out how much you want to basically swim with the tide and be like everybody else, which is to be able to go to the dinner party, say, I raised X amount of dollars at Y valuation and just keep ticking it up and ticking it up. Or to actually have the discipline to hit the brakes and say, I don't need it. I don't know what to do with it. I'm not ready to take it. I need to figure out my business model. Those are two different kinds of decisions. There's going to be layoffs in both. But if he actually came at it from the perspective of, listen, guys, we've been growing methodically and there's just been a structural change, or for example, rates are ticking up, there's a lot less demand and we have to right size the company. That's a very different statement than maybe we overgrew because we were drunk on free money.

• 57:39Chamath Palihapitiya?

  And now we have to realize that we actually have too much capacity for the demand that actually exists. And those are avoidable mistakes, frankly.

• 57:47Jason Calacanis?

  Yeah, I've had to do layoffs. Obviously, it's not fun. This was executed terribly. To your point, Saks, I think a much easier way to do this would have been to go to the leaders in each group and say, hey, listen, we're going to have to do these layoffs. It's going to affect different groups. So you take your group into a subset of Zoom, you explain to those people and you do it. Hey, listen, we are reorganizing because of these reasons. Chamath had some good language there, people did. But this idea of mass firing 900 people with one person, I think that's the critical error here.

• 58:18Chamath Palihapitiya?

  That's either, that's a little megalomaniacal. That's a little insane to me.

• 58:22Jason Calacanis?

  It was almost like he wanted to talk about himself in this as opposed to taking responsibility to unpack it. Obviously, when something like this happens, then the floodgates open. Forbes got a 2020 email leak where he called his own employees dumb dolphins. In the email that's been leaked since this came out, you are cap locks on, too damn slow. You are a bunch of dumb dolphins and dumb dolphins get caught in nets eaten by sharks. So stop it. Cap locks on, stop it, stop it right now.

• 58:54David Sacks?

  This is the pylon. This is the pylon.

• 58:58David Sacks?

  No, for 24 hours, he's the incarnation of evil in the eyes of the media and then they're going to move on to a new person in a couple of days. So, I mean, look, I think.

• 59:06Jason Calacanis?

  Have you ever wrote in that to employees? Do we have an email coming out from?

• 59:11Chamath Palihapitiya?

  I wrote, I wrote all caps. Guys, I quit the group chat for a day.

• 59:17Chamath Palihapitiya?

  I all caps you guys this week.

• 59:20Jason Calacanis?

  Rage quit?

• 59:21David Sacks?

  But can I connect with something Chama said about, about, okay, so that you have this, this, this larger question about our, did the company grow too fast and our founders asking the right questions about growing too fast? Let me connect that with the first conversation we had about the macroeconomic situation. I think, you know, every startup board right now probably needs to be having a conversation about the macro picture because there's one of two possibilities happening right now. We've already seen in the past five weeks, we've seen 30 to 40% correction in the public markets for growth stocks and SaaS companies. That is absolutely going to trickle down to venture valuations. I think it already has.

• 1:00:01David Sacks?

  If you look at the crossover guys like Tiger and COTU and D1, I guarantee you they're all updating their models or valuation models based on the public comps. So, you know, we are now in a slightly different environment. I don't know that 100 times ARR is, is, is the metric anymore as it was, you know, say two months ago. I don't know where the new metric is going to land. We're going to have to see some deals get done post correction. But, you know, we could be in a very different environment here. And I think, I think there's two possibilities. Either the, the rate increases that are coming next year are now priced in and we're going to go back into, you know, a, a mode of going back up into the right. And especially I think if this BBB bill gets killed, we'll go back and up to the right.

• 1:00:44David Sacks?

  Or this could be getting, be the beginning of a protracted slide as, you know, more and more market participants realize that we're in a very different kind of environment and we may not have seen the bottom yet.

• 1:00:56Jason Calacanis?

  If you were running a company SaaS and you had just raised that $100 million crazy round at 100 times, what do you do? If you were running a SaaS company, what would you do?

• 1:01:06David Sacks?

  I just had this conversation with one of our SaaS founders. They just closed a monster round at a great valuation and I, literally a few weeks ago. And they have some interest for more people wanting to get into the round. And I just pointed out, listen, you know, we may be going into a very different environment and I think the company is worth the valuation we got, but you know, the, if you just look at the public comps, valuations are down 30, 40%. So if we were to take more money into the round at the same valuation, that's kind of a good deal for the company and it gives us more runway, gives us more insurance.

• 1:01:38Jason Calacanis?

  Secure the bag, no downside.

• 1:01:40David Sacks?

  Secure, yeah. So we, those are the types of conversations I think is prudent to be having right now. And frankly, there's a lot of investors and certainly a lot of founders who never lived through the dot com crash and down markets and they don't know how bad it can get. They've only seen good times.

• 1:01:55Jason Calacanis?

  Right. What 18 months of nuclear winter? No, no checks being written?

• 1:02:00David Sacks?

  Yeah, I mean.

• 1:02:00Jason Calacanis?

  Whatever you got, whatever food you have in the cupboard is what you're eating for the next 18 months.

• 1:02:05David Sacks?

  To 2003, you had three years of nuclear winter, pretty much. But you know, in 2008, 2009, it was about 18 months of nuclear winter. I mean, it's just.

• 1:02:14David Friedberg?

  It wasn't even, it wasn't even that cold, but.

• 1:02:16Chamath Palihapitiya?

  You want to hear a great 2008, 2009 fundraising story?

• 1:02:20David Sacks?

  Sure.

• 1:02:23Chamath Palihapitiya?

  I'm at Facebook, market just implodes. And we need, we decide that we need to raise some insurance, just a little, you know, a little insurance policy, little money, little downside protection. And I remember that we were having all these conversations with TCV. And you know, they're, they're a really good firm, very smart. And basically, you know, we, we told them what the price was. I think it was like

• 1:02:50Chamath Palihapitiya?

  $7 billion pre. Right? Like $7 billion, we want to raise 500 million, just please, just do it. We, we just wanted a little margin of safety. And they came back with their model and they updated their model, David, to your point. And they came back at like 6.8 or 6.7, something like that, 6.5. And we were like, my God, what the fuck is this? Like this is not seven. We just like, we just want to raise some money at seven and seven was a down round because we had already taken money from Microsoft at 15 billion. No, at 15. So we had thought we had hit the jackpot when a year ago, a year earlier, we raised 249. Million dollars from Microsoft. Now, by the way, why 249?

• 1:03:33Chamath Palihapitiya?

  Because at 250 million, Bomber would have to go to the board. So he goes 1 million under the number where Bomber can sign the check himself. So we get Bomber in for 249 at 15 billion. A year later, the great financial crisis happens. We are raising money. We tell TCV, please just give us 500 million at seven or eight, some number. They come in 700 million under because their model says whatever. And I will never forget this. It was a Saturday afternoon. I was on the phone and I think it was with like Ted Elliott, our general counsel at the time. And we got a term sheet from a certain person, Yuri Milner at DSD. And Yuri came in, he throws the high heater at like eight and a half or nine.

• 1:04:14Chamath Palihapitiya?

  No board seat, all common. I mean, a completely disruptive mood and move.

• 1:04:22Chamath Palihapitiya?

  And all I just remember asking Ted Elliott was, does he vet? Meaning like, will the wire clear? Will justice let the money come into the United States? Not knowing, right? Because we had heard, you know. Anyways, the money cleared, we took the check and the rest is history. I have a good story about that. When you are, when you are facing

• 1:04:43Chamath Palihapitiya?

  an enormous downturn, you have a fiduciary responsibility, David, to your point, to make sure you're well capitalized. But then on the other side, you have a really important fiduciary responsibility to you and all the employees and everybody else to run this thing properly. And you cannot get confused that value and valuation

• 1:05:08Chamath Palihapitiya?

  are not the same thing. Absolutely not, yeah. And so the minute you conflate the two and you're like, I'm an X billion dollar company and start behaving that way, you're dead.

• 1:05:16David Friedberg?

  By the way, there's a big difference. I think it's important to note. I know it's been said many times before, but I'll, I'll say it again. There's a difference between what your responsibility is as a board and as a fiduciary to the shareholders of that individual company and what the incentives and motivations are for the big investor that just put all this money into your company for their portfolio as a whole. For their portfolio as a whole, they would rather tell everyone, go hard, go fast, spend as much money as you can, and they hope that one out of 10 companies becomes 100x from there. And it's okay if nine out of 10 die. So they don't care if you die. They care if one out of 10 companies goes 100x.

• 1:05:58Jason Calacanis?

  Yep.

• 1:05:58David Friedberg?

  You have a different incentive and a different motivation because if the company dies, your shareholders, you as an entrepreneur, your team lose out. And that tension needs to be understood really clearly by entrepreneurs and executives that are taking money under these conditions. Tiger Global, SoftBank, Co2, they're great people. There's good people investing there, but the incentive for them is quite different than it is for you.

• 1:06:22Jason Calacanis?

  They're betting on a big winner.

• 1:06:24David Friedberg?

  And do not, do not expect that just because they're betting on a big winner, that they're expecting you will be the big winner.

• 1:06:30Jason Calacanis?

  It's, they're indifferent. As long as they have one, go 100x, it's fine.

• 1:06:34David Friedberg?

  Doesn't matter what happens to you.

• 1:06:35Jason Calacanis?

  When I met Yuri Milner, he came to a certain poker game, not to play, but just to say hi. And I said to him, I said, you put all that money into Facebook. There's like a week or two after it happened. I said, why didn't you take a board seat? That's never happened. And he looked at me and he goes, Justin Kalakas, you don't need to have a board seat to be influential. He was right. He became a goat. I was like, I think this guy's gonna like whack me any minute. The rest is history. The most Tony Soprano line ever. You do not need the board seat to be influential. I was like.

• 1:07:10David Sacks?

  What do they use? Compromat?

• 1:07:12Jason Calacanis?

  What? I don't, I don't wanna know. Compromat. I don't know. Compromat. He's got guys. And someday I'll tell the story of the three hour lunch I have at Yuri Milner. All right, listen, for, I, I don't know if we have anything else to clean up here. Juicy Smollett. Are we talking about Juicy Smollett? Is it Jesse or Juicy? Is it Jesse? All right, listen. The famous French actor.

• 1:07:32Chamath Palihapitiya?

  As Dave Chappelle calls him, the famous French actor, Juicy Spoley.

• 1:07:36Jason Calacanis?

  Listen, I don't even want to go there, but I, there's a person who pretend this, I mean, I think it's actually worth talking about since we do go to, we do talk about race sometimes. There's an actor who faked that he was attacked in a bias attack. He was found guilty of doing this. It's deranged, it's sad, the person has mental issues.

• 1:07:56David Friedberg?

  I'm hanging, I'm not interested, I'm not interested in the gossipy stories. You guys have a good time. I'll see you guys all later.

• 1:08:01Chamath Palihapitiya?

  Okay, let's move. What else we got on the docket? I don't want to lose Friedberg so quickly. I don't, I miss Friedberg.

• 1:08:08Jason Calacanis?

  Are you gonna come to the party tomorrow?

• 1:08:10Chamath Palihapitiya?

  I want to hug Friedberg's bony body.

• 1:08:12Jason Calacanis?

  Why don't you come to the party tomorrow? Sax is coming. What are you, what are you, all of a sudden you're John Lennon?

• 1:08:17Chamath Palihapitiya?

  Boys, I was in, I did the thing with the thing of the thing that we talked about. So the thing is good. And then I was in,

• 1:08:24Jason Calacanis?

  doing another thing. All right, that's all good. Okay, so don't show up.

• 1:08:26David Friedberg?

  Jake out said he was gonna go skiing. I said, you go skiing. Have a good time.

• 1:08:28Jason Calacanis?

  No, I'm showing up for my besties. This is like the Beatles. And you know what? Shemat's turning into, to John Lennon. He's gonna hang out. He's got some yoke on, a thing going on. He doesn't want to show up.

• 1:08:38David Friedberg?

  Well, Rick and T is gonna be there.

• 1:08:40Jason Calacanis?

  Sax, you're going?

• 1:08:42Chamath Palihapitiya?

  Guys, you know how far it is from where I live?

• 1:08:45David Friedberg?

  I know, because I play, I come to your house to play poker.

• 1:08:47Jason Calacanis?

  He comes to your house every week during his support.

• 1:08:51Chamath Palihapitiya?

  And I love you for that.

• 1:08:52David Friedberg?

  Yeah.

• 1:08:52Jason Calacanis?

  Are you gonna go Sax? What's the chance of Sax shows up? He RSVP'd. Are you gonna go Sax? Should I pick up on the line?

• 1:08:57Chamath Palihapitiya?

  The RSVP, he didn't even do one of his.

• 1:09:00David Sacks?

  Friedberg's holiday party?

• 1:09:02Chamath Palihapitiya?

  Yeah.

• 1:09:02David Sacks?

  Well, I have a conflict.

• 1:09:04Jason Calacanis?

  He came to your bur- oh, you have a, oh, here it is. What is the conflict? You need to drink some pap?

• 1:09:10David Sacks?

  Holiday party tomorrow night, so.

• 1:09:11Jason Calacanis?

  Oh, my. You're going down to for his party? Can I go? I'll skip Friedberg's for that.

• 1:09:16David Sacks?

  Yeah, yeah.

• 1:09:17Jason Calacanis?

  Fine, sorry Friedberg. I'm out. We're selling you out. Wait, why are you go-

• 1:09:21David Friedberg?

  It's all good, besties.

• 1:09:22Jason Calacanis?

  Why are you, wait a second, you're picking over Friedberg?

• 1:09:26David Sacks?

  I mean, I've gone to holiday party for like the last five years or whatever it is, number, maybe more years than that. It's always a good party.

• 1:09:33Chamath Palihapitiya?

  Tell us what it's like. Tell us what it's like.

• 1:09:34David Friedberg?

  When you see him, do you look him in the eyes and say, what have you done for me lately?

• 1:09:38Jason Calacanis?

  The two of them never, the two of them haven't looked each other in the eyes. They've never looked in the eyes. And that was like an accident, when they first met, they accidentally. Okay, I gotta run. What, wait, no, wait, wait, wait. Okay, okay.

• 1:09:49David Sacks?

  Well, let's do the Jussie Smollett thing quickly.

• 1:09:51Jason Calacanis?

  No, we do it last, because you don't want to talk about it.

• 1:09:53David Sacks?

  Better let us be guys.

• 1:09:54Jason Calacanis?

  What else do we have? A new bank IPO was huge.

• 1:09:57David Sacks?

  Who cares?

• 1:09:58Jason Calacanis?

  BuzzFeed IPO was a complete disaster. Eighty percent of people already have their SPAC. BuzzFeed is circling the drain, what a disaster. The end. Thank you for tuning in to the All In Podcast.

• 1:10:08Chamath Palihapitiya?

  No, that's all we have on the docket today?

• 1:10:10Jason Calacanis?

  Chamath is ready, man.

• 1:10:11Chamath Palihapitiya?

  Are you lonely Chamath?

• 1:10:12Jason Calacanis?

  Chamath is loose. Lucy Goosey.

• 1:10:14Chamath Palihapitiya?

  He's a little loosey. He wants to go for a round too.

• 1:10:16Jason Calacanis?

  I've been working, I've been working so, ugh, I am working so hard. I know, I am wiped out this week. I was traveling all week, I'm exhausted. I got people in town, I gotta run. Okay, we'll let Freeburger, we'll just go for five more minutes.

• 1:10:27Chamath Palihapitiya?

  Jaba.

• 1:10:28Jason Calacanis?

  I'm gonna go tomorrow, Freeburger, I'm not selling you out like these other two. I love you, J. Cal. Like Ringo and, love you Freeburgers. Love you guys, we'll see you later. And I'm leaning over here, I'm gonna be in Paul McCartney.

• 1:10:37Chamath Palihapitiya?

  Did you tell me about my poker game on Monday? Oh my god.

• 1:10:40Jason Calacanis?

  Wait, you had a poker game? Thanks for the invite.

• 1:10:41Chamath Palihapitiya?

  Oh my god.

• 1:10:42Jason Calacanis?

  You went big?

• 1:10:43Chamath Palihapitiya?

  It, we lost our minds.

• 1:10:47Jason Calacanis?

  Oh no.

• 1:10:48Chamath Palihapitiya?

  And there was, there was some.

• 1:10:50Jason Calacanis?

  Is there a big Al story?

• 1:10:51Chamath Palihapitiya?

  There was some enormous carnage. Uh, wires were initiated today, so everything is settled.

• 1:10:57Jason Calacanis?

  Were you carnaged?

• 1:10:59Chamath Palihapitiya?

  Nope.

• 1:10:59Jason Calacanis?

  Oh.

• 1:11:00Chamath Palihapitiya?

  I did a little bit of this, I did a little chewing of the carcasses.

• 1:11:06Jason Calacanis?

  You're like one of those, was there a whale and you're just like a great white shark, just taking bites after the whale's dead? Of the blubber?

• 1:11:12Chamath Palihapitiya?

  We quit at 3am and it was, uh, it was nice.

• 1:11:15Jason Calacanis?

  That is crazy. All right, so for Jussie Smol, and now that, uh, Freeburger's gone.

• 1:11:19Chamath Palihapitiya?

  Yeah, Jussie Smollett.

• 1:11:20Jason Calacanis?

  I mean, it's just very weird. I mean, I think on a race issue, this is like the worst possible thing to happen. Because we do have instances of Asian hate, of, you know, people being beaten up for the color of their skin, for their sexual preference, whatever it is. And then this person is so mentally deranged, that they set up a biased race attack. Apparently, am I correct, that he did this in order to get sympathy so that his acting career would do better? Or do we not know?

• 1:11:48Chamath Palihapitiya?

  Apparently, he was like negotiating his contract and he thought.

• 1:11:51David Sacks?

  He was worried about getting cut from the show.

• 1:11:53Jason Calacanis?

  What?

• 1:11:53David Sacks?

  He was on the show Empire and he was worried about getting cut from, cut from the show. But look, I, to me.

• 1:11:58Jason Calacanis?

  So this, hold on, explain that to me. He's worried about getting cut from the show. So the logic jump is if I had a race attack, they can't fire me?

• 1:12:04Chamath Palihapitiya?

  No, play the sympathy card.

• 1:12:05Jason Calacanis?

  Sympathy card, I got it. Yeah, I just want to make sure I'm understanding it and I'm not crazy.

• 1:12:09David Sacks?

  He, he made himself into a cause celebre of the woke left. This is in early 2019 when everyone was worried about, you know, Trump. So he claimed that he was beaten by two MAGA, you know, haters who tied a noose around his neck and poured bleach on him. I'm not sure what the bleach was about. I think maybe that was.

• 1:12:28Chamath Palihapitiya?

  No, no, no. Don't even more precise.

• 1:12:29David Sacks?

  Something.

• 1:12:30Chamath Palihapitiya?

  He said.

• 1:12:31David Sacks?

  Is that what it was?

• 1:12:31Chamath Palihapitiya?

  Two white dudes. Okay. And then, and then at one point he, in the, in the interview, when they, the interrogators or the investigators were pressing, are you sure they were white? He said, well, you know, I don't want to be racist.

• 1:12:47Chamath Palihapitiya?

  Like, and then it turned out the two dudes were black. Like, I mean, like from.

• 1:12:52David Sacks?

  But he hired them. Yeah. He hired them. He hired them and he paid them by check. So this is not like a master criminal.

• 1:12:59Jason Calacanis?

  It's no Lex Luthor.

• 1:13:00David Sacks?

  No, no. But, but, but look, I, I, I think this story, what it's really about is not just a story about one sociopath doing this crazy thing. It's really more a media story. This is about how the media.

• 1:13:11Jason Calacanis?

  They loved it.

• 1:13:12David Sacks?

  They loved it. And I think.

• 1:13:13Jason Calacanis?

  Wall to wall news.

• 1:13:14David Sacks?

  Wall to wall coverage. And I think this reflects all the worst qualities of the media. Number one, rush to judgment. They immediately bought into the story and they were attacking the Trump administration for creating the hate and the MAGA people. So there was a feeding frenzy. Number two, there was no, and this goes with the rush to judgment. They didn't do any fact checking whatsoever, right? Because the story was too good. It fit all their priors, just like the Rolling Stone, Ivermectin hoax about, you know, the MAGA people, you know, in Oklahoma hospitals or whatever. That story was too good and Rolling Stone and Rachel Maddow bought.

• 1:13:47Jason Calacanis?

  No fact checking.

• 1:13:48David Sacks?

  Bought the hoax, hook, line, sinker, because they didn't do the fact checking. And then number three, no corrections. None of these sources ever apologized, did the mea culpa, issued a correction. There's just an eerie silence coming out of all the sources who pumped the story like.

• 1:14:03Chamath Palihapitiya?

  You have to, Nick, please put it in the show notes. The, there's gotta be a YouTube clip of the Chappelle joke around Juicy Smollett. And the basic joke is like, every colored person stayed silent. All the blacks, all the browns. And the joke, the punchline of the joke is because we were all like, hmm, he's probably did it. You know, like, why aren't you defending Juicy Smollett? And the whole point is, nah, he looks kinda guilty to us.

• 1:14:29Jason Calacanis?

  Well, I mean, hold on a second.

• 1:14:31Chamath Palihapitiya?

  It's incredibly funny.

• 1:14:31Jason Calacanis?

  If you let's just play 15 seconds of this, a deep link to his first interview. I think this is his first full interview. Just play 10 seconds of that, because this is of Juicy Smollett.

• 1:14:42Chamath Palihapitiya?

  Yeah.

• 1:14:43Speaker 06

  I noticed the rope around my neck and I started screaming. And I said, there's a rope around my neck.

• 1:14:48Speaker 04

  Did you get any kind of description of the attack?

• 1:14:52Speaker 06

  I gave a body description and I, you know, because I saw this, but, and you know, right here or whatever. But I didn't see, I can't tell you what color their eyes were. And I did not see anything except the second person I saw running away. And the first person, yeah, I saw, saw his stature. I gave the description as best as I could. You have to understand also that it's Chicago in winter.

• 1:15:20Speaker 06

  People can wear ski masks and nobody's gonna question that.

• 1:15:24Jason Calacanis?

  It's just so deranged. I mean, the poker towels are flying off of him. He's like thinking.

• 1:15:28Chamath Palihapitiya?

  Does this make him a bad actor or a good actor? I just want to know, David, as a producer, are you hiring him now or not?

• 1:15:36Speaker 06

  Maybe, maybe I will hire him, actually. I think he'll be working pretty cheap.

• 1:15:39Jason Calacanis?

  He finally got his Emmy. Oh my God, sorry, too soon.

• 1:15:43David Sacks?

  But the crazy thing here is that a lot of people, all the liberal elites basically fell for this hook, line and sinker. President Biden, Vice President Harris, Pelosi. They all jumped the gun on this and were basically denouncing, they bought into the story. They were denouncing this racist attack and blaming Trump and the administration for it.

• 1:16:03Jason Calacanis?

  I have a new policy. I wait until the court case is over to comment on these crazy things. I don't want to comment on a Twitter. I don't want to like it or retweet it. We have a justice system. If this stuff is hitting the justice system, just let the process happen because

• 1:16:18David Sacks?

  Right.

• 1:16:19Jason Calacanis?

  The velocity of social media is such that, and we talk about algorithms all the time, that if something like this happens, it's going to become the number one story and a billion people are going to see it. And then there's fallout. And the fallout here is it just divides the guy, oh, just everybody shut up and wait.

• 1:16:34David Sacks?

  The same thing happened on the Rittenhouse case, right? Massive rush to judgment. They accused this kid of being a white supremacist attacker who basically like a school shooter. It turned out to be totally false. But you know, the court systems have been doing an amazing job. When you think about the cases, I think the courts have been on quite a run in, I think, contradistinction to the media keeps getting it wrong. Right? So you think about it. So Derek Chauvin convicted, Jussie Smollett convicted, the, uh, the three killers of Ahmaud Arbery convicted. Okay. But Kyle Rittenhouse, not guilty. Kenneth Walker, not guilty. This was, uh, Breonna Taylor's boyfriend who killed a cop when they killed her. Remember they bust into the apartment?

• 1:17:16David Sacks?

  He basically, um, pled, uh, his case, he pled self-defense because he didn't know who was shooting at them. And he, he got off.

• 1:17:24Jason Calacanis?

  No knock warrant. Yeah.

• 1:17:26David Sacks?

  He got off just like Kyle Rittenhouse did. So, you know, people I think are jumping the gun on a lot of these cases.

• 1:17:31Chamath Palihapitiya?

  There's actually an enormous amount of justice. America is an incredible country.

• 1:17:36Jason Calacanis?

  We don't get enough credit for that.

• 1:17:37Chamath Palihapitiya?

  That mostly finds a way to get to the right place. Obviously there are moments where we completely get it wrong. But David, to your point, those are some really powerful examples in modern history with a lot of scrutiny, where, um, our peers, American jurors, found the way to get to the right answer.

• 1:17:56Jason Calacanis?

  Yeah. Feels great.

• 1:17:58Chamath Palihapitiya?

  Bravo to America. Bravo to those folks.

• 1:18:00Jason Calacanis?

  Good job. Good job.

• 1:18:01Chamath Palihapitiya?

  By the way, the Breonna Taylor example is a really wonderful example. And the Ahmaud Arbery thing was really important to me as well. Thank you for bringing it up. I appreciate it.

• 1:18:09David Sacks?

  Well, you know, because, because I think, you know, when the Rittenhouse verdict came down, a lot of people were saying, well, look, if Kyle Rittenhouse had been black, he wouldn't have gotten this self-defense justice. Well, Kenneth Walker, actually, that case was a self-defense case, and he killed a cop.

• 1:18:23Chamath Palihapitiya?

  Not a single article in the mainstream media to basically actually defend Kenneth Walker.

• 1:18:27David Sacks?

  Yeah. And he, he actually shot a cop, right? And, but, and he still got off because when they bust into that apartment, the jury thought it was reasonable.

• 1:18:36Chamath Palihapitiya?

  Very, very tragic.

• 1:18:37David Sacks?

  That he was acting in self-defense.

• 1:18:38Chamath Palihapitiya?

  Very tragic that that, that, that the officer died, and I'm sorry for their family. But, but I really hope that Kenneth Walker has a, a really amazing productive life from here.

• 1:18:47Jason Calacanis?

  Yeah, I mean, and it's

• 1:18:47Chamath Palihapitiya?

  It's a terrible situation all around.

• 1:18:49Jason Calacanis?

  Of like, are these no-knock warrants even warranted? Like, what, what are we doing? Like, is that necessary?

• 1:18:55Chamath Palihapitiya?

  If Kenneth Walker lives a productive life and does good in the world from here, he does a small up out to kind of make up for that injustice of Breonna Taylor and probably, you know, kind of creates some positive karma for the family of the officer that passed away. And that's the best that you can do.

• 1:19:12Jason Calacanis?

  Would just be great if it, as Americans, we could start looking at these issues and saying, like, justice is worth pursuing, the truth is worth pursuing, and we're all in it together. The United States, like we talked about today in the economy.

• 1:19:24Chamath Palihapitiya?

  Also, we got it right in places that the elite coasts

• 1:19:32Chamath Palihapitiya?

  kind of point to and look down on. We got it right in places like Georgia and deep parts of Georgia, you know, and, and, and I think that that's something for us to also think about. It, it is the virulent strain of the liberal elite that really do judge the rest of the country for being in a way that is actually not true. They got it, they got it right in Kenosha, Georgia, Kentucky, Illinois, just to be, just to put it on the record.

• 1:19:58Jason Calacanis?

  We'll see you all next time on the All In Podcast for the dictator Rain Man and the Queen of Kenwa. See you all next time. Bye-bye.

• 1:20:26Speaker 05

  Besties are gone. That is my dog taking a piss in your driveway.

• 1:20:36Chamath Palihapitiya?

  We should all just get a room and just have one big Hugh Georgie because they're all just just like this like sexual tension but they just need to release somehow.

• 1:20:44Speaker 05

  What your B B? What your B? What your B? B? What? We need to get merch. Besties are back.