E66: $FB's major pullback, Rogan/Spotify mess, Xi/Putin meetup and understanding supply chain issues with Bestie Guestie Ryan Petersen (Flexport CEO)

0:00 Sacks' shining moment 2:34 Bestie Guestie Ryan Petersen joins to break down the supply chain situation: core issues, solutions, things to look out for 45:49 $FB's major pullback: causes, headwinds, and why going all-in on the Metaverse might have been a "frothy market mistake" 55:28 Breaking down the competition in the "XR Wars": Meta, Apple, Microsoft and Google; why a phone might have been a better $10B/year bet for Facebook, Google's strategic brilliance 1:09:14 Spotify's Joe Rogan situation: positions, speech rights, division amongst free speech 1:23:08 Reflection on Baby Boomers' transition from radically free speech and anti-government to authoritarian, misinformation changing over time, using science to discredit science 1:30:10 Xi Jinping and Putin are deepening their relationship: what does this mean for the world, and how should the US strategically respond? 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.google.com/finance/quote/INGR:NYSE https://www.forbes.com/sites/stevebanker/2021/04/23/walmarts-massive-investment-in-a-supply-chain-transformation/?sh=41a6b18340ed https://www.cnbc.com/2022/01/20/peloton-to-pause-production-of-its-bikes-treadmills-as-demand-wanes.html https://twitter.com/typesfast/status/1451543776992845834 https://www.google.com/finance/quote/FB:NASDAQ https://www.cnbc.com/2022/02/02/meta-reality-labs-reports-10-billion-loss.html https://www.cnbc.com/2022/02/02/facebook-says-apple-ios-privacy-change-will-cost-10-billion-this-year.html https://www.google.com/finance/quote/PYPL:NASDAQ https://www.google.com/finance/quote/SNAP:NYSE https://www.cnbc.com/2022/02/03/facebook-and-google-stocks-have-diverged-and-the-reason-is-apple.html https://twitter.com/GavinSBaker/status/1462831115572596744 https://www.google.com/finance/quote/NFLX:NASDAQ https://www.google.com/finance/quote/AMZN:NASDAQ https://twitter.com/DavidSacks/status/1489321225520238592 https://bariweiss.substack.com/p/get-ready-for-the-no-buy-list https://www.nytimes.com/2022/01/26/arts/music/spotify-neil-young-joe-rogan.html https://www.theverge.com/2022/2/3/22915456/spotify-ceo-joe-rogan-daniel-ek-town-hall-speech-platform-podcast https://www.dailymail.co.uk/news/article-10475473/Barack-Michelle-Obama-preparing-shop-new-podcast-partner-amid-outcry-Joe-Rogan.html https://www.washingtonpost.com/arts-entertainment/2022/02/02/spotify-rogan-white-house-covid-misinformation https://twitter.com/ggreenwald/status/1488252747489202181 https://twitter.com/ggreenwald/status/1489258034865971205 https://www.thewrap.com/tucker-carlson-liberal-viewership-fox-news https://twitter.com/echeloninsights/status/1487118055582965762 https://twitter.com/MonmouthPoll/status/1488180589505167372 https://www.wsj.com/articles/russias-vladimir-putin-meets-with-chinese-leader-xi-jinping-in-beijing-11643966743 https://www.voltairenet.org/article215540.html

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

• 0:00Jason Calacanis?

  The fact that Sacks, his greatest moment in life was beating Peter Thiel in a multi-game chess. You ever see that picture of?

• 0:07Chamath Palihapitiya?

  Yeah.

• 0:08Jason Calacanis?

  Of him with his arms raised and Sacks can't believe he beat Pete. I mean, tell us about that moment.

• 0:13Chamath Palihapitiya?

  Nick, show that picture of Sacks. I mean, listen, here's what I say. When I saw, when I saw that picture, I had a couple of thoughts. Number one, I've seen this picture somewhere else. And then number two is, oh my God, it was on NBC's To Catch a Predator.

• 0:29Jason Calacanis?

  I mean, I have never seen Sacks happier. I like the birth of his children.

• 0:34Chamath Palihapitiya?

  Oh my God.

• 0:34Jason Calacanis?

  Pales in comparison to this moment.

• 0:36David Sacks?

  I'll tell you, that was the day of PayPal's IPO. And so we did a party in the, it was like a keg party in the parking lot. That was the extent of the celebration and Peter did a 10 game. Yeah, he did a 10 game simultaneous, which means he's playing against 10 people at the same time. And he goes board to board and makes his move. And I was the only one out of the 10 that beat him. And somebody, I guess I put money down. I had put money down. I put like 20 bucks down or something on the game, which is a foolish thing to do against Peter. Cause he's like a chess master and, uh, and I somehow I won and you can see I've got the money in my hands raised up.

• 1:10Jason Calacanis?

  Look at the look on Peter Thiel's face.

• 1:12David Sacks?

  He hates losing.

• 1:13Jason Calacanis?

  Look at the look on P. I mean, he's so angry and he, but he sees the joy in your face and he can't process it.

• 1:21David Sacks?

  And look at Max. Max is to my right and Rollup is to my left and they're so happy. Yeah.

• 1:26Jason Calacanis?

  Pure joy.

• 1:27David Sacks?

  Yeah. But this was a few seconds before Peter smashed all the pieces off the board and, uh,

• 1:33Jason Calacanis?

  What? He flipped the board?

• 1:35David Sacks?

  He always does that when he loses and, uh, his motto is when you call him a sore loser, he says, show me a good loser and I'll show you a loser.

• 1:43Jason Calacanis?

  Wow. Such a great line. But I just want to also comment on the pleats on Sacks's pants and how high that waist is.

• 1:51Chamath Palihapitiya?

  And the cell phone holster. And the cell phone holster.

• 1:54Jason Calacanis?

  Oh my God, zoom in on the cell phone holster. Is that a BlackBerry?

• 1:59David Sacks?

  This is pretty iPhone, guys. This is like, I mean, this is like late 90s fashion.

• 2:04Chamath Palihapitiya?

  Keeps on giving.

• 2:05Jason Calacanis?

  I do have to say, Rollup's hair game, I mean, strong hair.

• 2:09Chamath Palihapitiya?

  Rollup's always had incredible hair. His hair is incredibly thick.

• 2:11Jason Calacanis?

  Great hair to this day.

• 2:12Chamath Palihapitiya?

  Incredible thick. Yeah, it's still thick like that.

• 2:15David Sacks?

  Never noticed.

• 2:26David Sacks?

  We open source it to the fans and they've just gone crazy. Love you, best. Queen of Kinoa.

• 2:33Jason Calacanis?

  All right, everybody. Welcome to another episode of the All In Podcast. With us again today, the dictator Chamath Palihapitiya, Rain Man David Sacks, and the Sultan of Science, formerly known as the Queen of Kinoa. He's out of that business. David Friedberg. We got a lot on the agenda. However, one thing that we've had a hard time figuring out is the state of the supply chain. And it's confounding. It seems like nobody knows what the hell they're doing. But there's one guy who's been on Twitter and we happen to know him. He's been on my pod and Friedberg knows him. And his name is Ryan Peterson and he's a bit of an expert on this.

• 3:17Jason Calacanis?

  And we thought we'd have a bestie guestie come on. We don't do this too often. Maybe it's the third or fourth bestie guestie. And um, welcome to the pod, Ryan Peterson from Flexport.

• 3:28Ryan Petersen?

  What's up, guys? Thanks for having me on.

• 3:30Jason Calacanis?

  What's up, Ryan?

• 3:31David Friedberg?

  Ryan, did you tell Olivia you were doing the show today?

• 3:33Ryan Petersen?

  No, I didn't tell her. So she's good. She's a huge fan.

• 3:36Jason Calacanis?

  Don't tell her.

• 3:37David Friedberg?

  Where is she right now? Is she like not there?

• 3:40Ryan Petersen?

  She was in the room next door, but I told her to leave me alone. I'm doing a podcast. She knows I'm doing a podcast. She doesn't know which one.

• 3:44Jason Calacanis?

  That's awesome. She's a super fan.

• 3:46Ryan Petersen?

  She's a very big fan. She's literally wearing the wet your beaks hoodie right now.

• 3:49Jason Calacanis?

  It's awesome. Fantastic.

• 3:50Ryan Petersen?

  By coincidence, she doesn't know I'm on the show.

• 3:52Jason Calacanis?

  Fantastic.

• 3:53David Friedberg?

  So what? You're not going to tell her, right? She's just going to watch my next show and you're going to be on it?

• 3:57Ryan Petersen?

  You will listen to it. Yeah, we'll probably listen to it together tonight whenever it comes out.

• 4:00Jason Calacanis?

  Ryan, what is the state now? Should we be worried about the supply chain? Is it getting better? Is it getting worse? What's 2022 going to look like?

• 4:07Ryan Petersen?

  Yeah, I mean, I think the supply chain means a lot of things and it'll depend what your industry is, what's really happening. But you know, it goes for everything from manufacturing products, which means sourcing all the subcomponents like semiconductors through logistics and final delivery all the way to a customer store. And where Flexport focuses on is sort of picking goods up from factories around the world and delivering them into fulfillment centers all over the world. So kind of that global mile is what we sometimes call it. There you're seeing real disruption and it starts really with the pandemic shift in consumer behavior where people started buying more goods because they couldn't go to restaurants and travel and things. And so a lot of spend shifted on to goods and imports are up almost 20% imported

• 4:50Ryan Petersen?

  container volumes. So that's the start of it all. And then what we learned is our infrastructure is dilapidated and unable to handle a 20% increase. And by infrastructure, I mean the number of ships in the world, the capacity throughput of the ports, the number of trucks and availability of trucks and chassis, which is the trailers that haul containers around. We just didn't have enough of these things or the port capacity, you know, like, look at American ports operate this. I just learned this statistic pretty recently and I keep saying it because it appalls me. Our ports operate with a lower throughput and productivity level than Mombasa, Kenya. And, you know, we just do not have modern port infrastructure. Rotterdam's been fully automated for 20 years. So they want

• 5:34Ryan Petersen?

  to run 24/7 and keep containers flowing through the port. They can do that with self-driving trucks and everything.

• 5:40Jason Calacanis?

  Is that a technology issue? Or do you think that's a regulatory capture and union issue? Like a labor issue, like a labor?

• 5:46Ryan Petersen?

  The tech is there, you know, it's existed for a long, long time. It's really about labor, getting together with management, negotiating these things and allowing it to happen. And the way that our ports are run is it's pretty crazy. When you look at it, they treat labor as a fungible commodity, as in the the port terminal operators will say, I need this many workers tomorrow. And the union provisions that many workers, but it's different people every day doing operated complex, you know, heavy machinery that you can't like the number one thing in business is like, what did we learn today? And how are we going to do better tomorrow, every day with your team? But if it's a new team every day, like, that's not even possible. So I don't know how you can drive a productivity improvement when it's different workers every single day of the week.

• 6:30David Sacks?

  Right. So wait, they're not full-time employees? They're like staff by the hour?

• 6:34Ryan Petersen?

  Their union workers are paid by, they have annual contracts.

• 6:37David Sacks?

  The union decide who goes to work every day and who gets shifts?

• 6:41Ryan Petersen?

  Yeah, and where. And so they'll show up at different terminals. And there's like 15 different terminals. So they just kind of move around, do different jobs.

• 6:46Jason Calacanis?

  Essentially what we saw on the waterfront.

• 6:49Ryan Petersen?

  Yeah.

• 6:49Jason Calacanis?

  Where like the union decides you get to work today, these other people didn't, whatever. It's like literally like that movie. Yeah.

• 6:55Ryan Petersen?

  Yeah, it's literally like that.

• 6:56David Friedberg?

  Even going further back in supply chains to manufacturing centers.

• 7:01David Friedberg?

  How much are you hearing about and seeing kind of labor shortages because people are out for COVID and hey, someone's sick, they gotta take 10 days off. And when, you know, 10% of the employees get sick and they lose 10 days of work, the facility sees a decline in productivity to, you know, 70, 80% of normal. And then, you know, all of the output of that facility goes way down. I mean, are you hearing about more of that stuff happening, particularly during this kind of Omicron wave, where the real effect of that hasn't really hit the supply chain system yet? And we're still kind of seeing a buildup of, you know, of demand and we don't, you know, we haven't really kind of hit the problems?

• 7:40Ryan Petersen?

  So for the last 18 months, China had this total zero tolerance policy and was very successful in keeping COVID out of, out of their country. And so manufacturing just kept running as if not no problem in China, which is the majority of this manufacturing. With Omicron, you're starting to see that it is still taking hold in a zero tolerance policy. We haven't yet seen like major shutdowns and waves of shutdowns, but a little bit, you're seeing that here and there. The zero tolerance policy has shown up, for example, at least twice where one long, one port worker in a Chinese port got COVID and they shut the whole port down for like three weeks.

• 8:18David Friedberg?

  Yeah, that's crazy.

• 8:18Ryan Petersen?

  Which is really extreme. I mean, US workers have been getting COVID nonstop and the ports keep operating, even at, you know, we have lower levels of productivity, but they'll shut the whole port down. That happened both at Yantian, which is the largest port in China, or second largest in Ningbo, which is the third largest. So it's been very, very disruptive. It's also happened at the airports over there. So that's something I'm definitely keeping an eye on here over the next couple of months, or even next couple of weeks.

• 8:42David Friedberg?

  Are we still having this, like, we're ordering too many goods and we're backed up? Or is it that we're backed up for six months just trying to fulfill all those pandemic orders? Like, what's the state of the backlog today, if you could describe it?

• 8:55Ryan Petersen?

  So volumes are high, but they're sort of flat. They're, year over year, they're flat now. They're much higher than pre-pandemic, but they're pretty much flat year over year. And that's what has me so worried here is that you have increasing delays. Even though the input's the same, and when you have a complex system where the same amount of inputs coming in, but the delay is getting longer and longer, that's a very worrisome sign. Like if you're ever building a technology system, you're building this system and you're sending the same amount of bits in and performing the job is taking longer and longer, that should be like, that would be a very alarming sign that you're going to want to send some of your best engineers in here to debug the thing.

• 9:31David Friedberg?

  But I think we're seeing that, like, because a lot of companies, people don't realize, like, when they buy capital equipment, like, machines that, you know, are either sold to end users or machines that are used in their own production systems. Capital equipment is typically assembled last minute. It's not like, you know, there are companies that own huge pieces of equipment and then they ship them and they just get plugged in and turned on. There's usually components associated with them. And, you know, in businesses I've been involved in over the last couple of years, we've got a lot of lab businesses and hardware businesses. And just getting capital equipment has been like, delays like we've never seen. It's like, you know, a year to a year and a half or something that used to take four to six weeks to arrive. Because the company that makes that equipment is having delays with each of their component suppliers.

• 10:11David Friedberg?

  And then all of this stuff backs up into the system and it plays out where the end user is now stuck waiting a year, year and a half, and the business doesn't make progress. And a lot of hardware companies in Silicon Valley right now are facing these significant shortages where they can't get the equipment they need to ship product to their customers. And they're sitting around burning money every month. And so the, when the, the result will actually show up down the road when all of a sudden they miss revenue three, four quarters down the road. And that's why I've been saying for, you know, a couple of shows now, that the biggest thing I'm concerned about is when the revenue shortfall start to hit the companies that are dependent on these supply chains. But you don't actually see the revenue shortfall for a couple of quarters after the supply chain problems hit them.

• 10:51David Friedberg?

  And just this quarter, with the quarterly earnings, we're now seeing that the company yesterday that reported called Ingredient, they're a big food ingredients company, and they just reported how supply chain problems have now backed up to effect, and the stock was down like 10, 11% yesterday. And this is like a very stable, very mature. Third largest producer of starch in the United States and their business got totally hammered, but it took a while before that hit them. And so, you know, it feels to me, Ryan, I mean, correct me if I'm wrong, but like a lot of the business level and market level risk isn't going to show up for a while after these supply chain problems really persist within their organization.

• 11:29Ryan Petersen?

  This is the thing that has me most concerned is what's happened is it's now taking a hundred and fifteen days on average across our customer base from when the factory says, hey, these goods are ready, come pick them up to when they finally get delivered to a warehouse in the United States.

• 11:46David Friedberg?

  Crazy.

• 11:46Ryan Petersen?

  A hundred and fifteen days. Before the pandemic, that was fifty and fifty even felt high. Like the ship is only taking fifteen days. Like what the heck is going on? Lot of inefficiency, a lot of customs processing, hard to find a truck, et cetera, even in normal times. When you go to a hundred and fifteen, all of a sudden, these companies are so much less agile, like because you've placed the orders and you're forecasting demand is so hard. And now you're forecasting demand for twice as long of a time period. You've already placed all that inventory. If your demand goes down, guess what? You've already ordered the goods. So I'm really worried that we're going to find out in six months or in some time period in the future here that people have ordered way too many goods, that these companies expected demand to stay high and keep booming.

• 12:28Ryan Petersen?

  At some point, consumers start going to restaurants and start traveling a lot more. You get pre-COVID consumption patterns and all these companies get stuck with way too much inventory that they paid way too much to ship and get delivered and they can't sell it. And so I'd be very worried for like middle market kind of retail, direct to consumer econ, these types of businesses that aren't very sophisticated in demand planning and end up with way too much inventory.

• 12:52Chamath Palihapitiya?

  I think that there's been this weird dispersion, actually, and I think that like these supply chain issues are not broadly distributed. So if you bear with me for a second, if you watch the earnings reports, I don't know how close you you watched them, Ryan, this past couple of weeks, but like Apple and Tesla basically said, ah, it's kind of reasonably well managed. Particularly on the chip side and we see the whole thing easing Q4, Q1 of next year. Amazon last night basically said, yeah, there's some toughness in the system, but we think it's sort of like reasonably achievable. And they're past it. And so it seems like the bigger companies who have influence were able to manage through it.

• 13:30Chamath Palihapitiya?

  These smaller companies, to your point, who really do rely on many actors in the supply chain have been really thrown left and right. They probably don't know where demand really is. So is that sort of the more nuanced, actual, the way that it's running out?

• 13:45Ryan Petersen?

  Yeah. And it's sort of, it's very interesting to see this flip. So pre pandemic, the biggest companies paid the least for freight because they buy the most freight. So they negotiated good rates. Now they're paying the most and they're the biggest companies for a reason. They have the best businesses. They either have the best margins, the best, you know, they just built something that people want it scaled to be huge. Well, when times are tough and you need to spend extra to prioritize your freight, to get loaded, to sign a contract, to make sure that these ship owners and airlines honor their commitments and serve up, step up. It's the big companies that can afford it. And so they're not paying extra for freight, but they're getting around these problems. And freight is a really interesting market because it's pretty inelastic.

• 14:28Ryan Petersen?

  Like you're either going to ship the thing or you're not. Whatever the price is, you're probably still shipping it. And so like, I haven't ever looked at an Apple at this level, but I'm sure that if you did, you'd see that it's a, the percent they spend on freight is just negligible. So if they doubled it, it wouldn't matter.

• 14:44David Friedberg?

  But to Chamath's point, it seems like, and I think we're seeing this a lot, the bigger companies can actually afford to integrate their supply chains. Whereas before it didn't make sense to vertically integrate. Like I think Walmart announced that they've spent like 11 or 12 billion dollars kind of rebuilding their supply chain themselves. Apple obviously has captive facilities all the way down to the fab, where they're driving the whole supply chain from fab to components. All these Foxconn facilities that are operated for them are captive facilities. But Tesla obviously has a very deeply integrated supply chain team, whereas GM probably relied on subs who relied on subs who relied on subs. And that's why GM delivered like no electric cars, but Tesla was able to keep volume up. The guys that are winning are the ones that are integrating supply chains.

• 15:27David Friedberg?

  And do you think that that kind of becomes a persistent solution here where, you know, bigger companies, their competitive advantage becomes, hey, we're going to own our whole supply chain all the way through, we're going to own more of the infrastructure all the way through, like Amazon's done with delivery vans, and ultimately be able to kind of, you know, have a true competitive advantage because of this disruption that's going on right now?

• 15:45Ryan Petersen?

  Yeah, potentially. I mean, I think my vision for Flexport is that we become that layer and we allow small businesses, medium-sized businesses to get access to world-class logistics services and get them, you know, sort of almost be a union that can represent them at the table against these bigger guys. I think it's very interesting to see companies, like the biggest companies have gone out and chartered their own ships.

• 16:06David Friedberg?

  Totally.

• 16:07Ryan Petersen?

  Wild experiment to watch for my, I sit here with popcorn.

• 16:10Chamath Palihapitiya?

  You're bringing up a really important effect of all of this, which is what happens now in six or nine months, to your point, when the consumption of hard physical assets turns towards the consumption of services, which it typically does, right? If you revert back to the mean here, you know, people aren't going to be buying as many Pelotons and all of that stuff because they bought them all, right? They bought all the physical goods they need. And to your point, these companies have over-ordered all this inventory. Actually, Peloton is a perfect example because they basically shut down their entire supply chain last, at the end of this past quarter, and essentially said, our inventory turns will be more than enough to meet, you know, existing demand for the foreseeable future. That's an enormous capital problem that these companies now all of a sudden will face, right? So like,

• 16:54Chamath Palihapitiya?

  the next step beyond all of the supply chain issues could be, and I think Sacks has been talking about this a lot, like a, a pretty bad recession if these companies have all this inventory and they don't know how to get working capital.

• 17:04Ryan Petersen?

  Yeah, it'd be real ugly. And the other factor is the price has gone crazy. So, the price of shipping a container, long run, like I've been in this business and been a customer of this business for 20 years, and you can just rule of thumb, it costs you 2,000 bucks to ship a container from China to the West Coast. During 2016, that price collapsed. You have these booming bus cycles of an asset market. 2016, it was 550 bucks. Last year was $20,000. So it's up 10x over normal, it's up 40x over, or more, right, over just a few years ago. And what what that's done is create a real barrier to entry. Like for a D to C e-comm business, you used to be able to just go to China, find some product,

• 17:49Ryan Petersen?

  put your slap your label on it and go sell it on Amazon and you were in business. And there's like a huge number of people doing this. Right now, you have to come up if you want to ship 10 containers. It used to be you needed 20 grand. Now you need 200 grand. That's like, that's a real barrier to entry. So actually, I've talked to some companies in this space. We're really happy. Like if you have an established business, you're like, great. Now it's much harder for Joe Schmo to show up in China and start competing with me. So I was really surprised to hear that. I thought that was, I guess, pretty sophisticated take.

• 18:18Jason Calacanis?

  At what dollar point does air freight compete with containers? Because when we start hearing about chips, I was always wondering, and again, I'm no expert. But putting a bunch of chips on a plane versus putting them in a container, given how much those chips are valued by a Tesla, whoever's putting them into, you know, a car. Um, it's in what was the breaking point?

• 18:40Ryan Petersen?

  Certainly, but air freight price has just gone in line and it's gone up 5x as well. And and one thing to remember is that 50% of all the world's air freight flies in the belly of passenger planes, which should kind of horrify you if you're ever flying on a passenger plane from from East Asia, but to the United States, it's probably a whole bunch of stuff down in that belly. And those are grounded. So the the supply of-

• 19:00Jason Calacanis?

  Why are they grounded?

• 19:01Ryan Petersen?

  Nobody's flying to China right now.

• 19:03Jason Calacanis?

  Oh, I see. So because there's no-

• 19:05David Friedberg?

  Now, we're seeing kind of the backlog play into commodity cycles, right, Ryan? So we're seeing like a lot of these commodities because of these discontinuities in these supply chains, suddenly commodity prices are spiking all over the place. And I mean, do we think that that settles down? Or do you think it kind of continues for, you know, the foreseeable future until this all works its way out?

• 19:25Ryan Petersen?

  Yeah, I mean, I'm not the right person to ask about commodity prices. Maybe Chamath has a view on that, but I, you know, on the logistics market, I don't see it sorting itself out for the next year, for the next couple of years.

• 19:35David Sacks?

  In fact, you've you've warned that it might get worse, right? You've, I mean, I saw on Bloomberg, you said that there could be a union strike in maybe October. What are the prospects for that? And what happens if if that takes place?

• 19:46Ryan Petersen?

  Um, so it's on July 1st of this year, the the West Coast Union, it's called the ILWU. There that union extends from the southern border, so from Mexico all the way to Alaska, and it includes Canada. So the whole West Coast of the United States is run by this one union at the ports. And they are their contract expires on July 1st. And in years past, so the last time this happened was in 2015. This is a contract that was signed then and extended at some point. But in 2015, it had a three-month period where nobody could import anything on the West Coast. And some major companies missed Christmas that year. So that's July 1st. Typically, there's kind of slowdowns in the months leading up to that.

• 20:27Ryan Petersen?

  And we've already had slowdowns for a couple of years with hundreds of ships are now waiting offshore. So, yeah, I can't make a prediction.

• 20:35David Sacks?

  This is slowdown basically a negotiating tactic by the unions?

• 20:38Ryan Petersen?

  In the past, it has been. I'm not convinced that that's what we've seen over the last year versus, you know, they are, there are legitimate problems, staffing, people getting COVID, et cetera.

• 20:47David Sacks?

  So is there a role for presidential leadership in sorting out these union issues? Or just sorting out the issues with the port more generally or avoiding a strike in July?

• 20:57Ryan Petersen?

  I mean, it seems to me that if Biden wants to get reelected, this inflation, supply chain issues are pretty top of mind. It's in the news and are going to be on people's, you know, you want to be seen doing things. And I do think there are things that can be done. So, yeah, there's a role. And as far as union negotiations, Biden's probably pretty as equipped as any president's ever been to negotiate with a union and get them to play nice and not screw up his reelection with a, with a strike. He's known as a union-friendly president and go sit down and do a deal with them where Trump would probably never be able to do a deal with the union because they know that they're sort of natural adversaries. So there's something there.

• 21:37Ryan Petersen?

  There's a lot more to be done. And, and I, you know, I got into some arguments with people that are like, you know, that's not in the president's power to do such and such. I'm like, yeah, but he's the President of the United States. Pick up the phone like you can do things that aren't legally in your power just by asking for favors and other people do them. And negotiating with unions is a good idea, a good example. Convincing to change the zoning laws in LA so you can stack containers higher would be another. Yeah, that's not the President of the United States jurisdiction. But if he calls the mayor of LA or the city council.

• 22:06Chamath Palihapitiya?

  Can you explain that? So what, what does that mean?

• 22:08Ryan Petersen?

  So in Southern California, you can't stack a container more than too high in a truck yard by law. Well, we got no place to put these containers.

• 22:17Chamath Palihapitiya?

  But is that a, is that a danger issue or is that like a site issue, sight lines? Like what?

• 22:22Ryan Petersen?

  I see a little bit about, so I think there's some safety issues, although they're stacked six high all over the world. So that's not that legitimate to my, in my view.

• 22:30Chamath Palihapitiya?

  And in California, it's what, four or something?

• 22:32Ryan Petersen?

  Two, too high.

• 22:33Chamath Palihapitiya?

  It's too hot. Oh, wow.

• 22:35Ryan Petersen?

  At the truck yards, at the port, you see them stacked six high, but in the truck yards, two is the limit.

• 22:39Chamath Palihapitiya?

  Okay.

• 22:40Ryan Petersen?

  And so it's, it's a, it's also an eyesore, especially in California. Containers are a sign of free enterprise and it's just, the people in California can't stand to see them.

• 22:50Chamath Palihapitiya?

  Right.

• 22:51Ryan Petersen?

  They really just object to the idea of capitalism in their neighborhoods like that.

• 22:57Chamath Palihapitiya?

  But there could be like some kind of temporary waiver that we do just to get through all of this backlog, which is to say, okay, let's just ease all of these small little things that slow the process down just to get all these ships, you know, unloaded, right?

• 23:10Ryan Petersen?

  Yeah.

• 23:11Chamath Palihapitiya?

  Off into the world where they need to be. And then we could revert back to what we are after things, you know, kind of normalize.

• 23:17Ryan Petersen?

  Yeah. So we did that. So like I, I wrote about this, this zoning law. And what's, what's happening then is if you can't stack the container three high, there's nowhere to put that third container. So you leave it on the trailer. And now you have one less trailer in rotation servicing the port to unload. And that's, that's true across Southern California right now. There are thousands of trailers with containers on them because they're not allowed to stack them. They'll get fined if they do. So I tweeted about this and the, the city of Long Beach actually responded. I tweeted about it at 6:00 AM. By 3:00 PM, the city of Long Beach had changed the zoning law to allow stacking up to five high, I believe. I'm told the fastest response by any government to citizen action like ever.

• 23:56Chamath Palihapitiya?

  That's incredible. You must feel great about that.

• 23:58Ryan Petersen?

  It was great, but unfortunately only Long Beach did that. LA never followed through. Other, and there's not that many truck yards in Long Beach. A lot of them are in Los Angeles, Compton, Rancho Dominguez, et cetera. So.

• 24:08Chamath Palihapitiya?

  I saw.

• 24:08Ryan Petersen?

  This is the kind of thing like, yeah, Joe Biden could call these mayors and say, hey, let's work on this, right?

• 24:12Chamath Palihapitiya?

  Yeah, but let's face it, he's super union Joe, right? Like, I mean, he wouldn't even say the word Tesla over the. No, but Jason, isn't that more pro-union? Because won't these, won't folks be working more and getting paid more? I don't think there's a reluctance to pay. Right? Because clearly like you're going to have to put some money into the system and where the money comes from, we can figure that out later. But the point is that there's a, there should be a desire to actually get the people on the ground to be working.

• 24:36Jason Calacanis?

  It wasn't even a third shift, Ryan, right? Like that was another thing you were working on, on top of the stacking of these containers to get, you know, more of these, you know, to alleviate the problem. You were also talking about they don't even have a third shift some nights, but they seem to have added a third shift. Did that become permanent or not?

• 24:52Ryan Petersen?

  No, they do have a third shift, but nobody's showing up is the problem. So if truck drivers don't work in the middle of the night, warehouses aren't open in the middle of the night.

• 24:59Chamath Palihapitiya?

  But is that a compensation issue, Ryan? Like if we paid more, would folks show up? Like, is that just a supply demand issue that needs to get sorted out?

• 25:05Ryan Petersen?

  Never underestimate incentives. Um, I, there's, there's just a lot of factors and a lot of, a lot of it is, it's so easy to point fingers at somebody else and blame someone in the chain, right? Supply chain. You've got all these different people and it's, everybody has their own opinion, you know? We, at one point I wanted to hear what the union's opinion was, what, what are they saying? Because everyone else is calling them lazy and not working hard. What's really happening? So we, I sent a taco truck down to the port a couple of months ago, just to, because we, I figured we give them free tacos, they'll talk to us and that worked.

• 25:35Chamath Palihapitiya?

  That's a game changer right there. Yeah.

• 25:37Ryan Petersen?

  That really worked. So we, we, well, we got, um, they, they loved it. They said we're the only business ever to send tacos to the port. And then they told us all about what their viewpoint was. They viewed that the truckers are screwing up, that 50% of all the appointments, where a truck is supposed to come and pick up a container, they're missing their appointments.

• 25:56Chamath Palihapitiya?

  Right.

• 25:56Ryan Petersen?

  Um, and because, and then, and then, so that's what sent me investigating, wait, why are they missing the appointments? That's when I learned, oh, they don't have any trailers, these chassis, because they're stuck under containers and can't be unlocked. So a lot of it is going here. It's the supply chain's kind of like this, that metaphorical elephant in the dark room, right? And everybody sees their own aspect of it, but you got to synthesize all those perspectives and kind of take a systems view and see if you can get some real understanding. I'm not convinced I have it yet, by the way. I think it is more complex and I'm, I'm really beware of simple narratives. If someone, even including me, says, oh, this is exactly what's happening. Like, there's really a lot of complexity in all of this.

• 26:33Chamath Palihapitiya?

  Ryan, how much of this is sort of the extreme end of the other spectrum, which is basically the US exceptionalism view that says, okay, we just need to really in-house more of the stuff that we need so that we don't actually have to rely on some of these arcane methods of just transporting goods from point A to point B?

• 26:52Ryan Petersen?

  In my view, that would be a shame if we have the best companies in the world who need to be able to source raw materials, components, finished goods, anywhere on planet Earth, and we should have a modern infrastructure that makes that possible instead of being like, oh, we can't trade with the rest of the world, so we're going to become like self-sufficient. You know, we might as well go back to everybody being a farmer, subsistence farmer on our own land. Like, I think we should have global infrastructure that's really great and seamless and makes it really easy. But you're right, that might be an end result as people can't rely on these supply chains and start saying, hey, let's manufacture at home or let's manufacture in Latin America. Let's manufacture closer to home. To my perspective, that would be a shame.

• 27:32Chamath Palihapitiya?

  Well, I think the pendulum always starts from one extreme to the other. And I think the middle ground is probably that you need to have some heterogeneity, right? You have to have some amount of it that is not just singularly reliant on China. Maybe it's to Central or Latin America, right? Some that's domestic, but that domestic production probably has to be subsidized by something because we're never going to be able to run as efficiently and as cost-effectively as, you know, cheaper international labor. You know, unless we invent something really, you know, incredible. So the balance is probably in the middle. But it's going to take us a long time to kind of get there, I think.

• 28:10Jason Calacanis?

  I saw Governor Abbott was pitching people on, hey, just send your containers to Texas. We're cheaper and more central in the country. Is that true? Is that a solution?

• 28:20Ryan Petersen?

  It takes much longer, costs much more. If the union goes on strike on the West Coast, it'll be one of your only options, bringing stuff through the canal. What you'll very quickly see is that the canal is going to back up. Can't move that many more ships through the canal that are currently going to the West Coast, so. A lot, and you've seen that a lot where the bottleneck just moves. For a while last summer, the, for example, the trains that were going into Chicago, they were really having a hard time staffing the railroads out there. And it was taking them a long time to unload containers at the, at the port, at the terminals inland in Chicago. And drivers, a lot of the truck drivers are owner operators. So these are entrepreneurs who own their own truck, work for themselves.

• 29:03Ryan Petersen?

  And they were able, pre pandemic, to do three loads per day at these Chicago railheads. Go drop it off, come back, get another one, three times. With the delays and the traffic jams that resulted, they were only able to do one a day. And so you opt out because you can go drive for UPS or FedEx or take your truck and do something else. So we had this huge reduction in drivers. And that's the kind of a feedback loop that we should all be really mindful of here. Where a problem begets more problems and you get these positive feedback loops in the system that really vicious cycles. And so, you know, bottlenecks move and you'll see as soon as they, if everybody started to ship to Houston, guess what? Houston port won't be able to handle the volumes either. It's not like it's magically better just because it's a Republican state or something.

• 29:48Jason Calacanis?

  Do we need more ports or do we just need to run them more efficiently? And then who determines who runs the port? Cause I know that they, I've seen some tweets of yours where they license, the government, I guess, owns the ports, but they license it to people to have the franchise there. More ports, better run ports, and then what's the business model of ports?

• 30:08Ryan Petersen?

  I'd say better run ports is the answer. I don't think we need more ports. You can't really create ports out of thin air. Like there, there's only a handful of geographic locations that actually make sense for a port. And we have, we have great geography, like the San Francisco Bay, like this is probably the best natural harbor in the world or one of them. And the Oakland port is perfectly fine. It's, who owns it is the city of Oakland or the city of Long Beach, the city of LA. So the local cities own the ports in the United States. That is a difference between the United States and Europe, for example, where they're sort of national strategic assets. They're still government owned, but it can be operated as a sort of public good for everybody. Instead of, what are the odds, given what's going on in Oakland, that that's the big priority of the mayor of Oakland to like,

• 30:52Ryan Petersen?

  run a better port, like she's got a lot of other things on her, on her list. And so that's one problem with our system. And then second, they do rent it. So the government owns it and then rents it to a private company that operates it. And then, but those, as a condition of renting the port, you must agree to hire the ILWU. You can't run a non-union port in the United States.

• 31:12Jason Calacanis?

  Should the government buy, the federal government buy the port from Oakland, buy the port from Long Beach, offer them some, you know, trillion dollars or billions of dollars and buy it out from them?

• 31:21Ryan Petersen?

  It's not a terrible idea. I mean, as long as you're forcing everyone to use union labor, it's not really like a private sector endeavors. It's like you can't, especially with the way that the unions run. So you can't do that much. But like, here's an example where technology could, Flashport already made this technology. We could 10x the throughput at one of these ports overnight. Which is today, a truck driver shows up looking for a specific container. He's like, I got this container number. So they have to make an appointment at that hour. And as I said, they're missing 50% of their appointments. Well, on the backend inside the port, they gotta go find that container in this, in the needle in the haystack and make sure it's at the front during that one hour when the guy shows up for it. And you could, we already have this tech to make it what we call a free flow stack.

• 32:03Ryan Petersen?

  Where you just have this, the truck pulls up and you give them the first, the first container off the line. And then the mobile app tells them where to take it. And he doesn't have to come for a specific container. And if you did that, you'd just be every 30 seconds coming out of here instead of every 10, 15 minutes. You'd easily 10x the throughput. And this is, we already have this tech. So. Uh, it's a matter of implementation, deployment and how do you get around a lot of people that don't really want to see better running ports. And uh, it's, it's pretty sad to sit where I sit.

• 32:33Chamath Palihapitiya?

  They don't benefit from better running ports, although.

• 32:35Jason Calacanis?

  That's the good point.

• 32:37Chamath Palihapitiya?

  Although at the backend, they, they suffer from higher prices and inefficiency and not getting the things they want on time.

• 32:42David Sacks?

  Well, if, if you listen to Elon talk about unions and why Tesla is not a union shop, it's got nothing to do with wages. You know, he said, we'll pay you the union rate or better. And it's not about mistreatment because he said, listen, if someone mistreats you, we're gonna have a no assholes rule and we'll get rid of them. The issue is inflexibility, right? He wants to drive continuous process improvement at Tesla and he can't do that with a union shop because every change has to be negotiated. And then if there is a worker who's not living up to the performance bar, you can't get rid of them and they can't repurpose workers and have them work a different line. So that's why Elon has always resisted being a union shop, not the wages, not mistreatment, purely inflexibility.

• 33:24David Sacks?

  And it seems like that's what you're seeing in the ports as well is we can't drive changes and improvements because everything's so highly contractually negotiated.

• 33:35David Sacks?

  That's my editorial comment, Ryan, what do you think about that?

• 33:37Ryan Petersen?

  No, I mean, it's kind of, it's worth studying a little history here is that like, you know, we went through the container revolution in the sixties and seventies and the union agreed to it and they, that dramatically transformed the waterfront. These guys like, you see photographs from that era, they would put it on their back, like burlap sacks full of stuff, like hauling it on and off these, these ships and kind of load them by hand. It was a real art and it was a massive employment driver. And by the way, we've still barely recovered from this, like the West Side Highway in New York is finally like a nice park, but it sat there for 50 years, like dilapidated piers and ugly ass buildings and some of those are still there. San Francisco waterfront still mostly like that, south of the Bay Bridge, it's still like these old dilapidated buildings.

• 34:20Ryan Petersen?

  So it's kind of funny to see how long it takes like that infrastructure to change. But there was, and I don't know, I'm not like the world's expert on this history, but somehow they convinced the union to adopt containerization, which is about, it's far more radical than anything we would be proposing now in how you would change their workflow or change their work. Like that was complete change where it's really these giant automated, or these giant cranes that replaced the worker.

• 34:45David Sacks?

  Couldn't Biden deploy his commerce secretary or, I mean, isn't there some cabinet official he could deputize to say, go solve this problem, go bring the parties together?

• 34:53Ryan Petersen?

  Yeah, and I think, I suspect that'll happen over the coming months because July 1st is pretty bad timing for a midterm election if they were to go on strike. And I think he's got a lot of incentive to make sure that

• 35:04David Sacks?

  He does have the incentive. It just seems like, I mean, you've been tweeting about this for months, that nobody's paying attention in the administration. I mean, we've all been reading your tweet storm saying, like, someone in Washington really should be paying attention to these ideas.

• 35:16Chamath Palihapitiya?

  This spans over two administrations now, right, Ryan? Both administrations have been out to lunch on this. They've been focused on it.

• 35:23Ryan Petersen?

  The unions are a really big issue. That's going to come up this summer. There's, it might be an even bigger issue that's gotten even less attention, which is on January 1st of next year, January 1st, 2023, which is tomorrow in shipping terms, that all the ships in the world will have to reduce their carbon emissions by 13%. And these are internal combustion engine.

• 35:44Chamath Palihapitiya?

  Sorry, Ryan, Ryan, hold on a second. Wait, just explain what that means by who's mandating that and how is that enforceable and why does that have to?

• 35:53Ryan Petersen?

  It's, it's the International Maritime Organization. It's part of the United Nations and it's the group that is overseeing global ocean freight. It's the regulatory body for ocean freight in the world. And it's the United Nations group. So any member state of the United Nations must follow the rules of the IMO and they've all said they will. And so the IMO has said, all existing ships in the world must reduce their carbon emissions by 13%. And again, it's an internal combustion engine. We don't know how to make it 13% more carbon efficient or we would have done that already.

• 36:20Chamath Palihapitiya?

  Can you actually buy indirect offsets? Like, can you go and buy some Amazonian rainforest credits and offset the?

• 36:26Ryan Petersen?

  No, you can't offset it. And it's not about the fleet either. So some of these fleets have LNG, liquid natural gas. So the fleet might be more efficient, but it's down to the individual ship and it has to. So there is one way to reduce the emissions of a ship and that's to go slower. And if you go 30% slower, then you can achieve a 13% reduction in carbon emissions. Well, if you look at it on a per container basis, by the way, it's the same amount of carbon emitted because the ship is still carrying the same number of containers, just going slower. But it will reduce the supply of shipping capacity and slow everything down another 30%. That that takes place January 1st, 2023. It's getting very little attention, but to my view, it's going to be massively disrupted if we slow everything down, reduce the capacity of the network that much further.

• 37:11Ryan Petersen?

  Prices are going to go to the moon and it's like really asinine law because it doesn't actually achieve any carbon reduction.

• 37:18Jason Calacanis?

  The fuel type, correct me if I'm wrong, is this like MGO, MDO, like it's dirtier fuel? Is that correct?

• 37:24Ryan Petersen?

  So the same group IMO actually passed a new law January 1st of 2020. And it got totally, it was supposed to be a huge deal in our industry and then COVID hit and we all kind of ignored it. But that eliminated the worst kinds of fuel. Sulfur used to be, you could have this bunker fuel that was up to 3% sulfur. She led to crazy amounts of sulfuric acid, which is like apparently like 15 times worse than carbon as a greenhouse gas. And so that was eliminated and now it's still kind of ugly bunker fuel, but it's not like it used to be. The reputation is probably still carried over from from pre 2020.

• 37:58Jason Calacanis?

  Got it. If you could wave your magic wand as we wrap up here and change two or three things that to you seem like layups, and I think you've kind of hinted at them in order, what would be the changes just based on your intuition and your knowledge of the supply chain? What two or three things are the layups we got to do right now?

• 38:15Ryan Petersen?

  I think first off, it's got to start with some with metrics like what if you care about something, measure it. The metric that the government's been using for ocean freight delays has been how many ships are waiting offshore at the port of Long Beach? And this is like one of the most mischievous, I don't know if it was just like outright fraud or incompetence, but one of the worst things I've seen from a government in terms of PR is they they passed this rule that the ships have to wait 150 miles offshore so that the carbon, so that the pollution wouldn't hit LA like reasonable, good. But then they kept using the same metric for how many ships are waiting right outside the port and and it went way down and they started celebrating that success.

• 38:56Ryan Petersen?

  So like, let's actually use the right metric, which is how long is it taking cargo to transport? You can't just hide the ships and celebrate that there's no ships there. Um, so if we get the government.

• 39:06Jason Calacanis?

  You're saying that the government pushed the ships beyond the measurement window and then said they don't exist?

• 39:11Ryan Petersen?

  Yes. Basically, the transportation secretary and the port of LA director got up there, this government official.

• 39:17Jason Calacanis?

  That's like when I went to an XL sweater to hide my gut and I was like, I'm thin.

• 39:21Ryan Petersen?

  Yeah.

• 39:21Jason Calacanis?

  Look, better to look at the scale.

• 39:24Ryan Petersen?

  So if we at least get them focused on the right metric, which I think we have the best metric right now, we call it the Flexport Ocean Timeliness Indicator. It's how long is it taking the cargo to from when the factory says it's ready to when it can be delivered? Now, any solution that we create, we have a metric. We know, okay, there's a KPI here.

• 39:41Chamath Palihapitiya?

  Door to door?

• 39:42Ryan Petersen?

  Yeah, door to door.

• 39:43David Sacks?

  You mentioned the Transportation Secretary was part of that press conference where they're taking credit for changing the metric. So I assume that's Buttigieg, who's in charge of dispersing the $1.2 trillion infrastructure bill. Is there any money in the infrastructure bill to solve this problem?

• 39:57Ryan Petersen?

  There's, um, there's $17 billion allocated to ports. I went and read it and I couldn't find any money that was going to be spent on building ports. It was like, study this.

• 40:08David Sacks?

  Here's the crazy thing. We just had this trillion dollar infrastructure bill that's supposed to modernize and update the infrastructure of the country, and it's doing nothing to solve the most pressing supply chain issue in the country, which is the bottleneck at the ports, which is driving inflation, which is causing interest rate increases and wrecking the economy.

• 40:24Chamath Palihapitiya?

  There's a term in, in Washington, which is called a Christmas tree bill, and the infrastructure bill is an example of that, which is this is not a directed shot on goal. What this is, is a random, you know, tree that you go and hang little things on top of, and eventually the whole thing is covered. So it kind of looks beautiful from afar. But when you get really close to it, it's a little bit chaotic and you don't understand what's going on. And so to your point, the fact that Ryan can say there's $17 billion allocated to something like ports, but it's unclear to him, who's an expert in the space, where that money goes and how it's spent, gives us zero chance of figuring this out.

• 41:00Ryan Petersen?

  Yeah. I mean, it was like, it's like things like, oh, each state must create a supply chain readiness report about, it's like, what, what are you talking about? Like, Singapore put $20 billion to build a badass automated port, like.

• 41:16Ryan Petersen?

  That's like a reasonable thing to do. Like let's spend $20 billion, make the most automated amazing port in the world. That'd be a good use of government money, but like to then create studies and consultants. I don't know that any of it's going to hit the ground and shovel.

• 41:28Chamath Palihapitiya?

  Right. So you're saying, you're saying that $17 billion that goes to, you know, studies and consultants could actually get redirected and we could pick a port. Where there's an amenable city and actually completely modernize it to set the example of what modern shipping should look like in the United States that at a minimum matches what's happening in the rest of the world.

• 41:46Ryan Petersen?

  Yeah, I think that'd be pretty awesome. And it doesn't seem to me like science fiction, like the government wants to build a port. Who's going to stop the government?

• 41:51Chamath Palihapitiya?

  That seems too, too logical and too obvious, Ryan.

• 41:54Jason Calacanis?

  Well, we could have the ports compete for who gets to get that 20 billion to be the modernized port like.

• 41:59Chamath Palihapitiya?

  Well, if you put to your point, Jason, put the, put the mayors in competition and see which mayor wants us in their backyard.

• 42:05Jason Calacanis?

  Does Greg Abbott want it? Does Long Beach want it? Does Oakland want it? Who wants to fight to be the most modern port? That should be. DeSantis wants it. I'll tell you that.

• 42:13Chamath Palihapitiya?

  DeSantis Miami. Yeah, exactly.

• 42:14Jason Calacanis?

  I'm sure DeSantis and Greg Abbott want it. I don't know that California's two incredible ports want it. And those are the two that are closest to China, by the way. Spoiler alert.

• 42:23Ryan Petersen?

  You guys remember when Google Fiber ran that competition and they got like mayor of Pittsburgh to swim in like a frozen lake and it was awesome, right? Like government, yeah, please bring us stuff.

• 42:34Ryan Petersen?

  So yeah, I think I, I, I don't have a lot of faith. Even if that came around, it would take five, six years, right? Even if it was done right, you don't get a port overnight. Um, there are some very simple solutions like this, changing the zoning law, adopting technology to go with a free flow. Out of the port, put some metrics in here, like have someone focus on this. A key part of problem solving is make sure the problem doesn't get worse. So let's assign someone to go work with the union and the, and the, and the company terminal operators, make sure that they don't go on strike. Uh, make sure. And then someone needs to go to look at this IMO UN thing and figure out if the United States is really going to go through with that because it's pretty crazy.

• 43:09Jason Calacanis?

  Well, listen, Ryan, you've been incredibly generous with your time and knowledge and Incredible. Your leadership, watching you as, you know, a CEO and a leader, go out there on a boat and go visit and buy the frickin tacos and actually boots on the ground figure this out, like, the country owes you a debt, the world owes you a debt, to really keep this, you know, problem down to first principles and figure it out. And our government should be taking notes. And really, the other leaders who are importing, whether it's Apple or Tesla, you know, it'd be great for all of them to be supporting you. I don't know if they've reached out, but maybe the, you know, a half dozen of you can then sit with this administration and the next one and just tell them where to point the money cannon. Well, it doesn't seem like they know where to point it.

• 43:50Chamath Palihapitiya?

  We have a lot of people in Washington that listen to this pod. Please.

• 43:53Jason Calacanis?

  Yes.

• 43:54Chamath Palihapitiya?

  Just reach out to Ryan and.

• 43:55Jason Calacanis?

  Just reach out to Ryan and have lunch and just sit there and buy tacos for these poor people.

• 44:01Chamath Palihapitiya?

  Ready, ready. Let Ryan buy you a taco, guys.

• 44:04Jason Calacanis?

  Ryan, bring your taco truck to Washington.

• 44:06David Sacks?

  One of the big common denominators of both business and politics is that leaders have to focus on the right problems. And when they're not focused on the right problems, like, bad things happen. And, you know, we know that inflation is a huge problem. The Fed now is raising rates or projecting raising rates very quickly, which is creating, it was created a huge market downturn. It's a very blunt instrument. It could cause a downturn or recession. So that's the big problem. And yet, there are specific solutions and fixes to the inflation problem by updating or modernizing the ports that Ryan suggested. But who's focusing on it?

• 44:39Jason Calacanis?

  And they'd be more strategic, right? Sacks, it'd be a more strategic sniper shot as opposed to this blunt instrument, like you're saying.

• 44:45David Sacks?

  Right, exactly. So, you know, and so what have they been focusing in Washington on? Definitely not this, you know?

• 44:51Jason Calacanis?

  Absolutely.

• 44:52David Sacks?

  And then I see Ryan post these suggestions on Twitter, and then all these people come in, and they're all like fatalistic. Oh, well, the president can't do anything.

• 44:59Jason Calacanis?

  Of course, the president can. Emergency wartime.

• 45:02David Sacks?

  If there was ever a time for presidential leadership, this would be it. What I worry about is that if you're the union leader and you know that you've got Biden in the White House, who's always going to take their side, why wouldn't you make your demands more unreasonable?

• 45:14Jason Calacanis?

  Yeah, they should be asking for triple time to keep it open overnight.

• 45:16David Sacks?

  Why wouldn't they? Do you really, if you're the leader of that union, do you really believe that Biden's going to break your strike? No way.

• 45:23Jason Calacanis?

  No way. Ask for quadruple time. Yeah, just make it painful. You should make the most of the crisis.

• 45:29Chamath Palihapitiya?

  Egregious ask possible. I mean, this is your max leverage right now.

• 45:33David Sacks?

  Max leverage.

• 45:33Jason Calacanis?

  Never waste a crisis. Yeah, this is your time. All right, man. Listen, Ryan, thanks a lot. Great bestie guest appearance. Thank you.

• 45:40David Sacks?

  It's my pleasure. I'm a big fan of the show, so being a bestie guest, he means a lot to me. So thanks, guys.

• 45:44Jason Calacanis?

  And we'll continue the discussion perhaps at the All In Summit in May.

• 45:48Chamath Palihapitiya?

  Exactly.

• 45:48Jason Calacanis?

  See you in Miami. Facebook stock has dropped over 25% after reporting negative user growth for the first time and not only $10 billion or maybe even $12 billion lost a year on their AR/VR headsets and project, but also a $10 billion decrease in projected 2022 revenue, thanks to Apple's privacy features. I guess we got to go to you first, Chamath.

• 46:15David Sacks?

  PayPal dropped 25% too.

• 46:17Jason Calacanis?

  Yeah, we have to pay, and then Snapchat had a whip saw back and forth. But Chamath, when you see this, you called this with your spread trade. Maybe you could walk us through what you saw, you know, whatever it was, three, four, five months ago, and then what you're seeing now. And at this level, with $250 billion wiped off the market cap, what do you, what do you think about the future of this as a trade and as a company?

• 46:39Chamath Palihapitiya?

  Well, I think the trade did what it was supposed to do, which is in a period of a lot of volatility, I saw an opportunity to, you know, just reduce my risk exposure. Look, I'm generally long very risky assets, right? I mean, all of us are in the business of building companies that have huge volatility because all of our companies generate earnings very far in the future. And so, you know, in November of last year, I was trying to figure out what I could do to shield myself.

• 47:12Chamath Palihapitiya?

  And the reason I wanted to shield myself was because I saw Elon and Jeff in part selling, but also I saw that clearly we were going to go through a period where that high-growth tech was going to trade down. So I sold some of that high-growth tech, but then I also wanted to figure out a way where I could be less exposed to some of that volatility by continuing to hold what I had. And the best way that I figured out how to do that was to do the spread trade. And so, you know, what I saw at the time was that there is one business above all others that I think is immune amongst big tech from any sort of real long-term issues, and that's Microsoft. And I think David expressed the reason well, is that it's an enterprise business now. You know, politicians generally don't tend to care

• 47:57Chamath Palihapitiya?

  about enterprise businesses. They have enormous longitudinal growth in front of them, and they're able to do things on the margins, specifically around M&A, to keep building their business with very little oversight. And we saw this because they had the courage to do this Activision deal, you know, just a few weeks ago. If you could imagine, again, no other company in big tech could even dare try to do a $70 billion acquisition because of the scrutiny.

• 48:23Jason Calacanis?

  In this climate, it was a bold move, yes, yeah.

• 48:26Chamath Palihapitiya?

  I think it's not a bold move. I actually think it says the obvious, which is Microsoft is beyond the level of regulatory scrutiny that the rest of big tech actually has because they are consumer businesses. The second safest company is Google, and the reason is that Google has the best of both worlds. They're both a platform because of Android, but then where they are at risk of being an app, they have an incredible deal with Apple that blunts that effect. And so when Apple talks about all their push to privacy, you still have this very specific relationship. And Facebook called it out in their earnings release. They said, "We believe that Google has preferential treatment relative to the rest of the internet." In that Apple deal, because they pay Apple fifteen or twenty billion dollars a year.

• 49:11Jason Calacanis?

  And for people who don't know, that's for search. The default search on your iPhone goes to Google. Google pays fifteen billion dollars to Apple. And the accusation, explain the accusation there of why that would give them preferential, in case people don't connect the dots.

• 49:26Chamath Palihapitiya?

  If you're paying somebody fifteen or twenty billion dollars a year, they're less likely to do bad things to you. They may do bad things to other people, but they're not going to do as many bad things to you.

• 49:33Jason Calacanis?

  Did you believe that?

• 49:35Chamath Palihapitiya?

  Yeah.

• 49:35Jason Calacanis?

  That allegation from Zakiya.

• 49:36Chamath Palihapitiya?

  Well, no, I don't believe the allegation, but I think that general character, that general thing is true. Like, you're not going to screw over your partners, you're going to screw over other people before you screw over your partners.

• 49:47Jason Calacanis?

  Got it.

• 49:47Chamath Palihapitiya?

  Whether this applies here, it'll have to be borne out in some kind of lawsuit or state AGs or blah, blah, blah. But anyways, the, I think the point is that every other company has a lot more headwinds than Microsoft and Google in big tech. And then the third thing is, was a market observation from Gavin Baker, which I thought was incredibly brilliant. And what he said was, when you see a drawdown, meaning when the markets go down, it'll affect high-growth tech first.

• 50:18Chamath Palihapitiya?

  It ended up touching a bunch of other areas second, like biotech. But he said this key thing, which is, big tech will be the last to crack, but when they do, they are going to get shot. And so I spent a bunch of time just trying to figure out, when big tech gets cracked, who's going to get cracked the hardest? And I just kind of wanted to create a spread between those who were the most inoculated to those that were the most at risk. As it turned out, Netflix puked it up, Facebook puked it up. Amazon actually got really crushed, even though this past day, they had a pretty decent rally because of their earnings, but they really got crushed. So in any event, the trade is what the trade is. The bigger thing is, what is going on at Facebook? And I think what you see are three really important headwinds that Facebook called out explicitly.

• 51:04Chamath Palihapitiya?

  One is that when they talked about usage kind of flattening and starting to decay, what they're really talking about is TikTok. And I think what we learned is that TikTok is an enormous threat and a huge competitive force now in the consumer social app ecosystem. The second is that Facebook is fundamentally an app that sits inside of an ecosystem that is subject to the rules of the platform owner, and that's Apple and Google. And so this IDFA change, so the change in how you can track advertisers, Facebook's site is going to have a $10 billion impact in 2022. And then the third thing, which was more implicit, is in order for them to grow, if

• 51:49Chamath Palihapitiya?

  you can't grow organically, the only other way to grow is inorganically, and unfortunately, as we're seeing, the regulatory focus on this company is really enormous. And so it was a, you know, it was a pretty watershed moment in, I think, that company's discussion of their future. And Mark actually kind of said that as much in the press.

• 52:08Jason Calacanis?

  Sax, you look at this business, you made an interesting observation. Facebook rebranding itself as Meta before Meta exists, it maybe looked at as another sort of sign that maybe they got a little tilted, maybe? What we should take on the sort of changing the name of the company before that business really is at scale or exists?

• 52:31David Sacks?

  Yeah, I mean, it's a bubble move because, look, when you're in an up market and the market is super frothy, we had, in hindsight, last year was a giant asset bubble funded by all this liquidity coming out of the Fed and the federal government. So, yeah, in a bubble like that, all investors care about is the growth story. And so Facebook went all in on the story around Metaverse, but in the cold light of day, you know, once the, once the punch bowl's been taken, yeah, once the punch bowl's been taken away and you're in the hangover and you're in sort of a very volatile, potentially...

• 53:04Jason Calacanis?

  The DJ packed it in.

• 53:05David Sacks?

  Yeah, bear market, investors go, wait a second, you know, this VR division is losing $10 billion a year.

• 53:12Jason Calacanis?

  It might even be 12, by the way, because they said it was a little higher, so.

• 53:16David Sacks?

  They lost 6 billion last year. They lost 10 billion this year. So the losses are escalating. And so in that kind of market, investors are like, wait a second, do I, do I want to invest in a company that, uh, whose future is that unclear? I mean, if you look at this, at this market, we've seen that the growth stocks are down 60, today's an update, yesterday was a horrible day. So they're bouncing around 60, 70% down off the highs in early November. Okay. But the fangs are only down like 14% or something like that.

• 53:48Jason Calacanis?

  Right.

• 53:48David Sacks?

  But Facebook basically took themselves out of the, the sort of the, the market leader bucket and put themselves in the growth bucket.

• 53:56Jason Calacanis?

  They're like, yeah, treat us like Peloton. We're speculative.

• 53:58David Sacks?

  Why would, why would they want to do that? You know?

• 54:00Jason Calacanis?

  It's a terrible strategic decision, you're saying.

• 54:02David Sacks?

  Well, it was a, it was a decision, it was the kind of decision where you look back with 2020 hindsight and you say, look, that kind of decision could only be made in a bubbly, frothy market. You would never make that decision in the kind of down market you have today. And other decisions look stupid as well. So PayPal was just down 25%, okay?

• 54:21Jason Calacanis?

  Why was it down? Yeah.

• 54:22David Sacks?

  Well, they just, uh, well.

• 54:23Jason Calacanis?

  No growth in users?

• 54:24David Sacks?

  It was mostly on the forecast and yeah, they're, they revised their forecast down considerably. And of course they tried to blame it on the economy, but other companies, you know, Amazon just had a huge beat, uh, relative to expectations.

• 54:37Jason Calacanis?

  Yeah.

• 54:37David Sacks?

  They're up 15% today. So not everybody is, um, blaming the macroeconomic picture of the way that PayPal did. Any event, my point is you go back six months ago and you know, what was PayPal doing? I wrote a story for, um, Barry Weiss for her Substack about how PayPal was taking the lead to financial deplatforming. They were working with the ADL and the SPLC to kick, to just to identify groups to kick off their platform. So that's what management was spending their cycles on figuring out how not to grow, how to kick people off their platform and trying to figure out how to get more people on it.

• 55:11Jason Calacanis?

  Sounds familiar. Who else is trying to kick people off their platform?

• 55:14David Sacks?

  It's the kind of thing you do when you're in a frothy market and your stock is up and you're feeling triumphant. You can waste your management cycles on stuff like that. Now their stock is down 25%, you have to wonder, gee, do, do we wish we had spent our time on other things?

• 55:28Jason Calacanis?

  Okay, so Friedberg, I have a question for you about the future. Obviously, Facebook has bet the farm on Meta. They're betting on VR and I guess eventually AR or what collectively is called XR. And then we have news that Apple has a seemingly brilliant goggles product coming out. Developers are getting into it and they are the masters of hardware. So now Zuckerberg has decided he will be on a collision course with the company that just took $10 billion in revenue from them by doing the non-tracking, and that is the masters of hardware. So we have this collision course coming and then just two weeks ago, Google said, hey, by the way, remember that Google Glass thing?

• 56:10Jason Calacanis?

  We're not giving up on VR, AR either, and of course, Microsoft, we all know, has their HoloLens. So when we look at that four-horse race, if you were to bet and rank who's gonna win? Apple, goggles, Google Glass, whatever they're gonna call the new thing, HoloLens and Meta's Oculus? Who's gonna win and what do you, how do you look at that competition between the big four?

• 56:33David Friedberg?

  I don't know if that's a race you wanna be in.

• 56:35Jason Calacanis?

  Okay, I like that answer. Race to nowhere.

• 56:38David Friedberg?

  Have you guys used the Oculus Quest device?

• 56:42Jason Calacanis?

  Absolutely, I have two of them. Try, oh my.

• 56:44David Friedberg?

  Have you played the games where you like move continuously through space? And like when you do that, it's like you're gonna throw up. I mean, I'm not sure that this notion that that becomes the new computing modality is like a fair and true notion. And so, you know, there may, it may end up becoming kind of a niche entertainment device, almost like a Nintendo Switch where there's a, you know, a mode when you're using it. But I'm not sure it replaces traditional static two-dimensional computing in front of you. The jury's still out. I don't see like a computer sentiment that says these things will ultimately kind of prevail over the current mode. So, you know.

• 57:23Jason Calacanis?

  If it does work. Who would win in your mind? Who's got the best chance? Well, let's assume we're all going to use it every day for two hours as our desktop. We're going to put it on. We're going to find workout apps to use, whatever. It's going to become, let's, let's assume, you know, that

• 57:38Chamath Palihapitiya?

  Well, I think you just answered your own question. In, in, um, in all of these things, when you build hardware, I think you can take a lot of parallels from what happened in the PC space. Um, if you have uh, commoditized PC manufacturers, Compaq, Dell, IBM, right? There are innumerable number, thousands of companies that made PCs. The value created to the application layer, to the operating system. And the people that can actually build ecosystems are typically the ones that win. And the people that already have an ecosystem and all, all they have to do is port somebody from, you know, platform A to platform B, has a meaningful advantage over somebody that has to convince you to come to a new platform altogether. And so, you know, if you're a Microsoft and you have

• 58:21Chamath Palihapitiya?

  thousands or hundreds of thousands of developers, or if you're Google and you have hundreds of thousands of developers, or if you're Apple and you have millions of developers, it's just a smaller bridge to cross in order to convince them to build for one extra endpoint.

• 58:36David Friedberg?

  iOS versus Android, you know,

• 58:39Jason Calacanis?

  Versus Microsoft.

• 58:40Chamath Palihapitiya?

  Yeah. And by the way,

• 58:41David Friedberg?

  It seems like the obvious transition, whereas like Facebook is like, you gotta go build all this stuff.

• 58:46Chamath Palihapitiya?

  And Apple made um, an incredibly important set of uh, decisions a few years ago, which I didn't think a lot of people talked about, but they had an OS tree that was branching far too widely, right? They had a different operating system for uh, the phones. They had a different operating system um, for iPads, uh, desktop, for watches. And they've started to try to converge and shoehorn these things into, into a set of basic primitives, so that it's more controllable. And I suspect the reason is because that gives them more optionality to go into a car, to go into a headset, without having to do an entire developer rebuild.

• 59:23Jason Calacanis?

  Even better than that, Chamath, is a great point you bring up, because they also started investing in their own chipset. And I think all of that chipset innovation gives them a dramatic uh, advantage in having smaller batteries and more processing power in a headset if it does work, which what chips does, what chip asset does Facebook have? None. So

• 59:43Chamath Palihapitiya?

  I don't want, I don't think we should say that Facebook is down and out, but let's just qualify what we think can win. So that's one thing. The other thing to remember is when you look at the PC industry, How did Intel become so dominant? Part of what Intel was able to do to outcompete AMD and everybody else was that program called Intel Inside, which is effectively these co-marketing paths through dollars that they would use to actually give an incentive for Dell and for Compaq and for all these other folks to basically build the spec. And that was the Windtel monopoly, right? Microsoft and Intel. If you play that out in VR, what you really need is just a bag full of cash. Because if you give developers a subsidized incentive to build for your platform, they'll do it. So then, again, if you rank the companies,

• 1:00:26Chamath Palihapitiya?

  you just need to look at how much cash do they have? Because those with the most cash have it. So again, I think the best way to think about this is how many developers do you have today? How much cash do you have today? How much cash will you have in the future? And you can probably rank and just do a reasonable expected value to think about who has the best chance of winning, assuming the platform is roughly equal. Now, if the company on that list with the fewest developers and the least money has a superior device, if that device is superior enough, they can overcome those things.

• 1:00:59Jason Calacanis?

  Right. And Facebook has the least money and Facebook has the least developers.

• 1:01:03Chamath Palihapitiya?

  If you have rough parity, I think the person with the most money and the most developers probably has the best chance of winning.

• 1:01:10Jason Calacanis?

  I like that framework. Sacks, Facebook has the least developers. They have no relationship with developers. In fact, they kind of screwed them over with Facebook Connect a couple of times. They have the least money, but they do have the largest user base of profiles. So does that give them some advantage here? And how would you rank who's going to win, who's going to lose?

• 1:01:27David Sacks?

  Well, I think it gives them an advantage in Chamath's framework of porting over their app onto whatever the dominant platform is going to be. But probably it's the operating system players who are probably going to be able to extend their operating system into this new VR/AR world, probably. What I wonder about is would Facebook have been better off? If they were going to run a $10 billion a year money-losing division, that's highly speculative. Would they have been better off gambling that on building their own phone? Or maybe their own forked version of an Android phone? And the reason why I say that is...

• 1:02:01Jason Calacanis?

  The project that I...

• 1:02:02Chamath Palihapitiya?

  Started.

• 1:02:03David Friedberg?

  I was about to say.

• 1:02:04Chamath Palihapitiya?

  We talk about that.

• 1:02:05David Sacks?

  We've now seen, we've now seen.

• 1:02:07Chamath Palihapitiya?

  Let's not redig that.

• 1:02:08David Sacks?

  Well, they're losing, they're losing 10 billion a year now because of this one permissions change that Apple has made. Right. Because they're completely dependent on Apple's operating system for a big portion of their revenue. So what is their defense against that? I mean, they're really pretty helpless. If you look, just to make a comparison, if you look at the strategic brilliance of Google, what was it? First of all, after they came up with this cash cow, the idea of search, and then they combined it with this sort of keyword auction they got from Overture. They said that, listen, the next strategic move is we can't let anybody disintermediate us. So what did they do? They started moving upstream. The first, the first sort of upstream player was the portal, right? So they start competing against Yahoo, they gave away Gmail, then it was the browser. So it was Microsoft Explorer, so they gave away Chrome.

• 1:02:53David Sacks?

  Then it was the operating system, they gave away Androids. They said, we're not going to let anybody else be upstream of us. And so they just started replacing all those layers of the stack, giving away free products with free, right?

• 1:03:04Chamath Palihapitiya?

  Yeah, sorry, and a good free product.

• 1:03:06David Sacks?

  Yeah, great. I mean.

• 1:03:07David Friedberg?

  And they all have billions of users. Also say a big part of the monetization lock-in was Google then extended into the publishers very quickly with the acquisition of AdSense. And the publishers then allowed Google to offer the greatest CPM that those publishers could have over any other advertising network. And as a result, Google built their network and then built their advertiser base. And they effectively, you know, got this huge lock-in. The only disruptive threat to Google was what Facebook did, which is to create demographic profiles. Where instead of targeting ads based on keyword or search intent, you could now target ads based on demographic. And then Facebook took it a step further and did retargeting. So basically following you across multiple sites, but Facebook always knew.

• 1:03:50David Friedberg?

  And as we just discovered, that was always going to be a weak point for them because they were dependent upon hardware devices that were going to let them do that tracking across apps and across sites. And that's why Google always had this kind of key, you know, lock-in advantage that, you know, will persist. And the network is just so big on both sides, you can't compete.

• 1:04:08Jason Calacanis?

  To Sax's thought bomb, if they had invested in a phone, let's say they made a thousand dollars, let's say they made a phone with a bomb of $800 or something.

• 1:04:16David Friedberg?

  They just did this, by the way, just remember, the Fire TV, the Fire Phone. And he gave a bunch of great speeches, you can watch these and what happened with that. And just, you know, despite his extraordinarily large user base, his committed loyal users, all these reasons, his magical, talented, technical team, he hired the best people. He also tried to do the same with search, by the way, with A9. And remember, Apple also tried to do the same with search. All these guys tried to kind of compete.

• 1:04:40Jason Calacanis?

  It's not easy to execute, yeah.

• 1:04:41David Friedberg?

  It's not easy to execute, and you get a lock-in with the network value, but you also get a lock-in with the talent. And, you know, this was a really hard thing to pull off, and you have to get it all right.

• 1:04:50Jason Calacanis?

  So let me ask Chamath a question, based on what Sax said, should they have deployed 10 billion into phones? If we go back two years and they did deploy 10 billion into phones, they take an $800 bomb, which is probably what the best iPhone cost. I think it cost 700 for Apple to make, and they still have it for 1500. They could basically give the phone away for half price, maybe give it away for $400 or $500.

• 1:05:10David Friedberg?

  That's what Fire Phone was.

• 1:05:11Jason Calacanis?

  And if they gave away for $400, and you had to be a Facebook user, you buy it, they get the credit card of the person, that would be, they could put 25 million phones into the market every year.

• 1:05:20David Friedberg?

  That's what Amazon thought, and it didn't work.

• 1:05:22Chamath Palihapitiya?

  I don't think that moves a needle.

• 1:05:23Jason Calacanis?

  So you don't think it would work?

• 1:05:24David Friedberg?

  It didn't create a better user experience for users. Users got a better experience with the iPhone.

• 1:05:28Jason Calacanis?

  Okay.

• 1:05:28David Friedberg?

  And then they got a better experience with Android.

• 1:05:30Chamath Palihapitiya?

  The window of time was in 2009, 10, and 11, when there wasn't lock-in. And, you know, I think that's, that's been well discussed about what we were doing and what we tried to do, so there's no point rehashing it.

• 1:05:44David Sacks?

  But why did Facebook give that up? Because there wasn't an initiative, right?

• 1:05:47Chamath Palihapitiya?

  It wasn't that. It was, it came down to, you know, an ask that I made that we didn't get, and it didn't happen. So it didn't happen.

• 1:05:56Jason Calacanis?

  And we'll leave it at that.

• 1:05:57David Sacks?

  Yeah, by the way, I'm not saying that would have been successful.

• 1:06:00Jason Calacanis?

  Neither did I. We didn't get to the starting line, so we'll never know.

• 1:06:03David Sacks?

  In fact, I think it's unlikely that it would have worked because I'm not sure exactly what Facebook's value prop would have been. My point is just if you're going to lose $10 billion a year on a division, wouldn't it be better for it to be something strategically vital as opposed to something that feels a little bit optional?

• 1:06:17Jason Calacanis?

  Even if the majority chances you don't win, the question is if you had a 20, 30, 35% chance of being a player in smartphones, would you take that chance? And I think you have no choice but to take that chance and it would be worth it, the expected value.

• 1:06:30Chamath Palihapitiya?

  Yeah. One thing I'll say in defense of Facebook is I think that all of this like antitrust scrutiny is a little bit ridiculous today and it looks pretty ridiculous. And let me just explain why. Like, it seems that capitalism is pretty much working as intended because if you looked at Google's results, if you looked at Snap's results, at Pinterest's results, at Amazon's results, there is a vibrant and growing advertising ecosystem. By no means could you claim that Facebook has any real monopoly on that, number one. And when you fold in TikTok, it's absolutely true. And then if you think about the usage curve of TikTok, there's a check and balance there on usage. And so anybody that thinks that Facebook is

• 1:07:12Chamath Palihapitiya?

  a monopoly today, I think is a little misguided. So really, I think what politicians need to do today, you know, February 4th, is be a little bit more honest about what they really care about, which is really around Section 230 and the misinformation, disinformation fears that they have related to Facebook's distribution power. Because now, if you're going to try to legislate this company, it's really unfair. Like, especially going back 10 years to litigate an acquisition, you'd never do that to any other company that, you know, is sort of maybe on the back half of their growth cycle. It just doesn't make any sense.

• 1:07:44Jason Calacanis?

  It would be like going after Google now for the YouTube acquisition.

• 1:07:47Chamath Palihapitiya?

  Amazon reported $31 billion of advertising revenue.

• 1:07:50Jason Calacanis?

  Crazy.

• 1:07:51Chamath Palihapitiya?

  There is a vibrant, diverse advertising ecosystem. Facebook is not in control of that ecosystem. And so trying to legislate them as a monopoly in that ecosystem is insane today.

• 1:08:02Jason Calacanis?

  What do you think, Sax? Do you think this regulation is based on the fact that Facebook kicked off Trump and is scaring politicians over actual competitive reality?

• 1:08:11David Sacks?

  I think that politicians are using the threat of regulation to try and drive the the speech policies they want on these social networks. That's what's really going on. I mean, the merits of the case-

• 1:08:23Jason Calacanis?

  So you agree with me. It's had nothing to do with the business.

• 1:08:25David Sacks?

  Yeah, look, who should get regulated on antitrust grounds? Apple. You know, Apple is, and maybe Google. I mean, they're the big monopolists. I mean, they control the operating system. I mean, those guys-

• 1:08:34Jason Calacanis?

  90% of search and they-

• 1:08:36David Sacks?

  And I would say Amazon with respect to the verticals where they're competing with their own-

• 1:08:41Jason Calacanis?

  Yeah, basics.

• 1:08:42David Sacks?

  With the basics, exactly. So, in other words, when you control an operating system and then there's developers or other, you know, downstream players on that ecosystem, you have to treat them fairly. You can't privilege your own policy to then dominate vertical after vertical. So-

• 1:08:57Jason Calacanis?

  Yeah.

• 1:08:58David Sacks?

  There are real antitrust concerns with those three companies. With Facebook, way less so. And yet, they get the brunt of the attacks. Why? Because the people in Washington are trying to coerce Facebook into controlling what they call misinformation, which is really just speech they don't like. And that is highly inappropriate.

• 1:09:14Jason Calacanis?

  Perfect segue. Last week, we didn't jump into the Rogan Spotify debate. Maybe we should have. But we'll talk about it now with a lot more context. Obviously, Neil Young and some other folks that were pulling our music off, Joni Mitchell, whatever. Some actual high-profile blogger said they don't want to be on there. And then Joe Rogan and Daniel Ek both decided to talk about this. Joe Rogan said, "Listen, I'm a comedian. I don't prepare for these hair views. And I just see where they go. But this show has gotten very influential. It's the number one podcast in the world. It's got ridiculous listenership. So maybe I should-"

• 1:09:52David Sacks?

  Right now.

• 1:09:53Jason Calacanis?

  "-have it right now. Maybe I should have it labeled. And maybe I should have people on afterwards. And maybe I should do some extra fact-checking. I thought it was the best non-apology, you know, explainology of an apology." Because he did say, "I'm sorry if you don't like it." But he did kind of say that he- Would do better and then Daniel X said and then I'll let you guys comment. Daniel X said, listen, we produce shows and we approve guests for The Ringer and for Gimlet, which we own those studios. We license Joe Rogan. We don't do any editing on his show and we will remove ones after the fact, but it's a licensing veil. Therefore, we're not a publisher. I'm

• 1:10:35Jason Calacanis?

  curious what you thought Friedberg on the non apology and culpability for someone like Joe Rogan having guests on who are anti vax or, you know, maybe are debatable in terms of science because yeah, he is a comedian, but as he says, like the show is kind of big now. So maybe I should do a little fact checking. What do you think he should do when he has scientists and people and people on?

• 1:10:59David Friedberg?

  I'll make two points. One is I don't think that journalism is regulated in the sense that, you know, we have freedom of speech. So anyone can stand up and they can say, I have this belief or I have discovered this fact. And you may not actually hold that belief and that fact may not be true, but you're still allowed to stand up and say it and you're still allowed to have someone come on and say it. And so I don't think that there's any disclosure obligation. He's putting on a show. It's the same as any news show or entertainment show. I don't think that there's a clear line or boundary. I mean, what the heck do we do here? We've all got opinions. We try and talk about the news. We talk about our perspectives on the future. You know, what the heck is it that we're doing here? You know, there's no kind of clear line there. So I don't think that he has any obligations to do anything he doesn't want to do, except if and when his

• 1:11:41David Friedberg?

  audience tells him or the listeners that he cares about tell him, his customers tell him, this is what we expect and want from you. And then he responds to his customers, that's the way the market works and that's the way the enterprise system should work. I think the separate bigger question here that's really important and worth noting, you know, and I just want to speak about this for one second. All of the great internet companies started with this notion that they were creating democratization, that they were creating access to information that didn't exist, whether it's access to media or access to search results or access to the content or whatever that that may not have been available to you. And that was a driving force for the entrepreneurs and the founders that started all these businesses and all of them had these very idealistic Points of view that we're not going to censor, we're not going to take a point of view.

• 1:12:25David Friedberg?

  We're not going to put our foot down and say what is and isn't going to be displayed or shown or made available to our users. We're going to let users choose what they want to get access to and what they want to hear and listen to. And in all these cases, from Google to YouTube to Twitter and now to Spotify, the idea of being just an access, a platform for access is proving to be wrong. All of them are de facto publishers. They ultimately have to make decisions about what they do and don't let on the platform. And de facto, if you let something on the platform, you're giving it permission. You're giving it a voice, you're giving it amplification and you're giving it access. And so all of them are now getting caught up in this problem that I don't think anyone from Larry or Sergey or Jack Dorsey or Daniel Ek ever wanted to be in.

• 1:13:09David Friedberg?

  They all wanted to be these democratization platforms. And now they're finding that there is no way to avoid being treated like a publisher. And a publisher has someone that's called an editor and an editor decides what is and isn't put on that publishing platform, as has always been the case in old media. And now in new media, they're all kind of stumbling into this problem and they're not set up for it. And it's creating issues where people on the right are saying, you're censoring us. And people on the left are saying, you're not giving us access to information we want. And it's, you know, it's just kind of the, I think, the transition that none of them expected, but we're all seeing happen.

• 1:13:41Jason Calacanis?

  Chamath, if Daniel Ek is giving a hundred million dollars to Joe Rogan, can he claim, listen, it's just we're a platform when, you know, listen, we're on Spotify as well, but they don't pay us. Doesn't it change the relationship when they give him the hundred million? Or can Daniel say, you know, intellectually, honestly, like, hey, listen, we're not responsible for this. I mean, they're backing up the Brink's truck and they're promoting it like heck. Are they a publisher or not in your mind?

• 1:14:09Chamath Palihapitiya?

  I read yesterday that Barack and Michelle Obama's deal with Spotify just expired and they're going to shop it. I suspect that somebody will pay them tens of millions of dollars to produce content.

• 1:14:24Chamath Palihapitiya?

  That's not illegal.

• 1:14:26Chamath Palihapitiya?

  And it's a sign of a free market that's working. Spotify has a business to run and that business is to get content in front of the users that are paying them a lot of money on a monthly basis to get access to that stuff. And so who are we to say how Spotify should run their business? I think you have a choice. Neil Young expressed his choice. There was a person in the New York Times, she took her podcast off of Spotify.

• 1:14:52Jason Calacanis?

  Yep.

• 1:14:53Chamath Palihapitiya?

  There are subscribers that probably left, but then there are also subscribers that probably joined.

• 1:14:58Jason Calacanis?

  Yep.

• 1:14:58Chamath Palihapitiya?

  And

• 1:14:59Jason Calacanis?

  Paid, yeah.

• 1:15:00Chamath Palihapitiya?

  And paid. And so the reality is that's the free market. Being allowed to choose and being allowed to vote with their feet. And I think that all sides of that are in the right. So I think Spotify should be allowed to run their business. I think Joe Rogan should be allowed to say what he wants. If Spotify chooses to put a disclaimer in front of that podcast, that's their right and that's good too. And if Joe Rogan decides that he wants to have, you know, point, counterpoint across podcasts or within a podcast. That's laudable as well, and that should be his decision. But I don't think people should be forced to make these decisions by law, because I think we get into a very slippery slope. Because you don't totally understand the incentives of the lawmaker there.

• 1:15:42Jason Calacanis?

  And we have a free market, as you're pointing out, Shama. The free market is working perfectly.

• 1:15:48Chamath Palihapitiya?

  And more

• 1:15:48David Sacks?

  A lot of people don't like this free market.

• 1:15:50Chamath Palihapitiya?

  More important than the free market, we have a founding document of principles that we all agree to.

• 1:15:55Jason Calacanis?

  Yes.

• 1:15:55David Sacks?

  Yeah, and unfortunately, there's a lot of people who don't agree to it.

• 1:15:57Chamath Palihapitiya?

  And that says we have a right.

• 1:15:58Jason Calacanis?

  All right, so here we go. Let's go to our constitutional attorney, counselor. Take us there.

• 1:16:03David Sacks?

  If you're talking about the principle of free speech, there's a lot of people who don't believe in it. That's the problem. First of all, you have this geriatric hippie.

• 1:16:10Jason Calacanis?

  Whoa, whoa, whoa.

• 1:16:12David Sacks?

  This Jerry, can I finish? Let me finish my rant, J Cal, then you can get in, okay?

• 1:16:15Jason Calacanis?

  Rant away, rant away.

• 1:16:16David Sacks?

  You got this geriatric hippie.

• 1:16:17Jason Calacanis?

  I love Neil Young.

• 1:16:18Chamath Palihapitiya?

  No, you know what happened here? Wait, sorry, Sax, just there. That was J Cal saying, oh shit, he's gonna get a bell cluster clip and he got tilted.

• 1:16:25Jason Calacanis?

  I got interrupted.

• 1:16:27Chamath Palihapitiya?

  He had to interrupt you there. That's really brutal, J Cal. Fuck the bell caster. Go ahead, bell caster.

• 1:16:31David Friedberg?

  I thought you were talking, I thought you were talking about Joe Biden.

• 1:16:35David Sacks?

  Can I explain? Can I actually explain what happened? Cause I think frankly, you guys are completely missing it. The wheel of censorship broke on Joe Rogan this week. They tried to Alex Jones him and it failed. Okay. First you have this geriatric hippie Neil Young, who somehow has turned into a narc. And he plants a flag and he tries to get all these people behind him. And the very online crowd says, yes, we gotta cancel Rogan. And then you got Jen Psaki from the White House. Weighing in, bringing in the coercive power of the administration on the side of censorship. Okay. And what happens? Rogan comes out with this non apology, like you said, and he seems so reasonable. He's a guy who's inquisitive. He's on the side of just asking questions. He's on the side of balance. He says, yeah, look, I want to present both sides of the issue.

• 1:17:20David Sacks?

  And everybody was like, there is no reason to be censoring this guy. Rogan is an everyman. And if they would censor him, they would censor every man. And that is why there was enormous backlash to it and everybody has opposed this. And so I think this is the week that this ridiculous idea of censorship has broke. Now, it would be nice if everybody, to Chamath point, did agree with this principle, but they don't. The fact of the matter is, J Cal, that censorship is now the official position of the Democrat Party. And you see it in the poll numbers. There was a great tweet that

• 1:17:54Chamath Palihapitiya?

  Glenn Greenwald.

• 1:17:55David Sacks?

  Glenn Greenwald posted where he showed the polling numbers on this. So, okay, you go back to the days of the Obama administration, both Democrats and Republicans agreed that the US government and tech companies should not get involved in this type of censorship. But today, there's been a bifurcation. Democrats or lean Democrats versus Republicans who lean Republicans. It's 65 28.

• 1:18:20David Sacks?

  In favor of government taking steps to restrict info online. And it's 76 37 Democrats versus Republicans on tech companies.

• 1:18:28Jason Calacanis?

  Bonkers.

• 1:18:28David Sacks?

  The First Amendment is no longer a consensus, and that is fundamentally the issue.

• 1:18:33Jason Calacanis?

  Scary.

• 1:18:33David Sacks?

  But I gotta tell you, I think there is a backlash against this. And I think that most of the country now, and I think this is where they went too far, is that Rogan is not Alex Jones, he's not Trump, he's not Milo Yiannopoulos. He seems like a reasonable guy. He is the biggest figure in independent journalism. He gets 11 million viewers every week. And I think there's a lot of people, especially young people, who are going, this has gone too far. And by the way, I do not think Obama ever would have made this political blunder of effectively denouncing Rogan, because Obama tried to appeal to young voters. And I think Jen Psaki, by putting the administration on the side of the censorship, they've made a huge mistake.

• 1:19:13David Sacks?

  And the same week, we saw that Tucker Carlson now gets more young Democrats listening to his show than CNN and MSNBC. And I'm telling you, this is the reason why.

• 1:19:25Jason Calacanis?

  Okay, Henry, you can put in the roaring crowd of applause at this point. The best, the best thing that I saw.

• 1:19:32David Sacks?

  I'm telling you, J.K., you got big problems.

• 1:19:33Jason Calacanis?

  I'm an independent, stop making me the Democrat. I'm an independent.

• 1:19:36David Sacks?

  There are now more Tucker Democrats, okay? Among the key young demographic.

• 1:19:42Jason Calacanis?

  In your writer's room or Tucker's writer's room? Which writer's room?

• 1:19:45David Sacks?

  I'm a Tucker Democrat, J.K.

• 1:19:46Jason Calacanis?

  You're Tucker, you are. You love, you love Obama, you love Clinton. I think what's happening is that, I mean, and Chamath, you've said this over and over again. Chamath? I'm sorry. Chamath Palihapitiya. You had on one side, you know, the right went, lost their mind in the alt-right. Now they've come a little bit more center. And then you may now have the, the Democrats have lost their minds. The fact that anybody can't look at Joe Rogan and say, he's a comedian. He worked on a show where they fed people shakes of blended insects, field factor, and he's taking mushrooms. And he's like, why are you taking me so seriously?

• 1:20:22Chamath Palihapitiya?

  Well, wait, I think you're being, hold on, I think you're being super dismissive of Joe Rogan. I think he's actually, as Sack said, a pretty reasonable, curious person. And then, yeah, he does the stuff that everybody else does.

• 1:20:33Jason Calacanis?

  But he doesn't prepare for the show. He literally said, I don't prepare for the show. I don't do any preparation.

• 1:20:37Chamath Palihapitiya?

  Maybe he does, or maybe he doesn't. I don't know.

• 1:20:39Jason Calacanis?

  No, he said explicitly he doesn't. And he fact checks in real time. So you've got to keep your expectations at a certain level with Joe Rogan, I think.

• 1:20:44Chamath Palihapitiya?

  I, I, I think that that's implausible to believe. I know that that's what he said, but, you know, 11 million people a week, $100 million deal. I do suspect that he does some sort of preparation. I don't think he's a, he's completely winging it. Okay?

• 1:20:58Jason Calacanis?

  He literally said he wings it. But, okay.

• 1:21:00Chamath Palihapitiya?

  I understand that. But I think that's not the point.

• 1:21:03Jason Calacanis?

  Okay.

• 1:21:03Chamath Palihapitiya?

  Okay. The point is whether he prepares or not, the excuse isn't, sorry, the dog ate my homework. It's, hey, listen, I have a right to have this guy on my show, just like I have the right to have this other guy on my show. You can listen to both and then you can decide for yourself.

• 1:21:18Jason Calacanis?

  You could change the channel.

• 1:21:19Chamath Palihapitiya?

  Okay. That's the important point. So Jason, I would not like try to make this whole arguing about whether he was prepared or unprepared as the excuse. It's whether you believe there's a fundamental right to free speech, or whether you believe that people who disagree can disavow people and get them canceled and get them kicked off air.

• 1:21:35Jason Calacanis?

  Yeah, no, I obviously don't agree. I don't agree anybody should be canceled. I think he should keep going.

• 1:21:39David Sacks?

  Whatever Rogan's level of preparation, which I think is actually pretty high, the people who are accusing him of putting out misinformation are far more guilty of it themselves. And I think one of the best points in Rogan's non apology, as you called it, is he said, listen, a lot of the things that we used to consider misinformation are now the truth. For example.

• 1:21:58Jason Calacanis?

  And we've talked about it on the show. Yeah.

• 1:22:00David Sacks?

  Well, we've been ahead of the curve in calling all this stuff out. You know, we could have been accused of misinformation. So examples, the lab leak theory, used to be considered misinformation, the cloth mask not doing anything. Listen, Dan Bongino was kicked off YouTube two weeks before the CDC, for saying that Dan Bongino, he's a pretty big conservative commentator. Okay. He's got an audience of millions. You can be dismissive, but a lot of people like him, J Cal. But look, my point is, he was kicked off YouTube for saying cloth masks don't work. Then the CDC comes out two weeks later and says the same thing.

• 1:22:30Jason Calacanis?

  Right. I think that's a valid point. Yeah.

• 1:22:32David Sacks?

  Well, it's the key point.

• 1:22:33Chamath Palihapitiya?

  I personally like, you know, for example, we've talked about this thing where like, if you look at like the top distributed links on Facebook, who do you see? Ben Shapiro, Dan Bongino? You know, Breitbart. Joe Rogan. Right? Yeah. My takeaway with all of these things is there are people of those things, if I listen to, I'd probably find abhorrent. But there are people there that are probably, I would be, you know, I would, I would, I would, they would appeal to me. In all cases, they should all exist, though, because the whole point is let me spider my way through this stuff and figure out for myself. Yeah. What works and what doesn't work. Yeah, more speech is the best counter. The summary of this that makes the most sense is Elon tweeted this out, Nick, you can put this because I gave you the image, but it's a, it's a meme of Neil Young where

• 1:23:14Chamath Palihapitiya?

  it says, if you won't censor the guy I don't like, I won't let you listen to Keep On Rocking in a Free World. Paradoxical, yeah. And, and it's, and it's just so true, which is like, on the one hand, you know, you are a standard bearer. Now, maybe what we should really do is talk about what has happened to this boomer generation over the last 50 years where they were, you know, sex, drugs, rock and roll, no war in Vietnam, let's fight for our rights, let's fight for equality. Then punk rock. You know, no, I'm talking about just those, those, those folks. Okay. Back then, who are now 50 years later, you know, sitting on $70 trillion of wealth and who are basically like, you can't say this, you can't say that, don't do this, don't do that. Wear masks, don't leave your house. You know? Yeah.

• 1:23:59Chamath Palihapitiya?

  Fauci is right. They're scared because they're old. Wear masks, don't, or your dick canceled. Pangolin. Yeah. You know, this is, I mean, that generation, I think we all have some soul searching to do about what happened to that generation. I think they're scared because they're old and they, and they feel like they're going to die from COVID.

• 1:24:13David Friedberg?

  Is it that generation or is it the fact that every generation rebels against the prior and ultimately becomes conservative? And, you know, that's the, that's just how life goes.

• 1:24:22David Sacks?

  I don't, I don't think they've become conservative. I think they've become authoritarian. I think that what happened is they're now in power, the boomers are in power, they've been making the decisions for the last 20 years. I think there is enormous popular discontent with the way the country's been run over the last two decades, the futile, pointless wars in the Middle East, the debt, the economy, the unfairness, that it goes on and on. And what's, and especially with COVID, I mean, this COVID policy over the last two years has been a fiasco. And the point of this censorship of misinformation. Is to suppress the debate. I mean, what ultimately is the point on take, for example, COVID of saying that people cannot take a point of view. It is to stifle the debate that's to prevent an honest debate on these issues.

• 1:25:06David Sacks?

  And the people who have an interest in doing that are the people who are in charge and are failing. And if you gave people the information, they would be voted out of office.

• 1:25:15Jason Calacanis?

  If you look, when I asked, what are the specific claims that either Joe Rogan or his guests made that people are objecting to? A lot of the people who were objecting and wanted him censored really didn't know. And one of them was, he said, early on, I don't know for a young person who's in shape, if I would advise them to take the vaccine. I know a lot of people who have that position, which is like, if you're young, and I think actually Friedberg, you might have said mRNA early on in this podcast, is a very new technology. And I could see people wanting to wait and see. Did you not say that? I don't want to get you canceled here, but I think we did have that discussion.

• 1:25:48David Sacks?

  Have that conversation.

• 1:25:49Jason Calacanis?

  That's a valid conversation. mRNA is a new technology, right, Friedberg? You should think about it and we should be cautious.

• 1:25:56David Friedberg?

  Don't draw me into your cancel debate here.

• 1:25:59Jason Calacanis?

  That's why I said we, I just changed it to we were talking about that. Don't you remember that discussion we had, like, and I asked you, I think, mRNA, what do you think of this versus the regular one, the J and J?

• 1:26:08David Friedberg?

  I think generally we've seen

• 1:26:12David Friedberg?

  science being used as a way, as a term to discredit what I think would arguably and typically be scientific principles, which is inquiry, challenging hypotheses. And having, you know, vigorous debate to resolve to some sort of objective truth. Otherwise, you're having some sort of subjective belief. And more often than not, we've seen politicians and others grab on to the term science and saying, this is science. It says this. When in fact, the process of science is inquiry and it is to challenge, you know, again, a hypothesis and what might be kind of a thesis. So, um, so yeah, I think generally this has been a pretty scary time to watch because it's almost like gaslighting.

• 1:26:57David Friedberg?

  You know, it's like, hey, you know, you're using the term science to discredit the notion of science. It's been pretty brutal. I sent you guys this, this cartoon link, by the way, it's so funny.

• 1:27:07Jason Calacanis?

  Oh, I just got it. Old left versus the modern left. It's a Volkswagen bus with a bunch of hippie dippy flowers and it says free speech, free love, 1971. No CIA, screw the establishment, resist authority. And then it shows like a modern SUV with 2021. It says masks up, I heart the CDC, obey the establishment, no free speech, do what you're told, obey, basically. You have another poll you want to share sex?

• 1:27:34David Sacks?

  Well, yeah, this is a really interesting one. It says a majority of voters, 55% say COVID should be treated as an endemic disease, while a majority of Democrats say it should be continued to be treated as an emergency. And then there was a similar poll, the Monmouth poll just came out, where 89% of Republicans, 71% of independents, say that it's time we accept COVID is here to stay and we need to get on with our lives. Only 40% of the Democrats. So the reality is that the rest of the country, I think, has moved on. It's ready to move on. The split is not between Democrats, Republicans anymore. It's within the Democratic Party. The Democratic Party is now divided on this question of whether we should move on as a country past COVID.

• 1:28:16David Sacks?

  Half of the Democratic Party still believes that COVID should be treated as this emergency.

• 1:28:21Jason Calacanis?

  Do you think that it's cut by age? Do you think there's a bias by age?

• 1:28:23David Sacks?

  For sure, for sure. I think, yes, absolutely.

• 1:28:25Jason Calacanis?

  Old people are more scared, yeah.

• 1:28:27David Sacks?

  But I think, I think the media and the party, they've programmed their soldiers to be, you know, to treat COVID as an emergency and they can't deprogram them. And this is why I think we're seeing Tucker's, Tucker is now the biggest demographic among young Democrats.

• 1:28:41Jason Calacanis?

  That's insane to me. It's insane. The idea, that idea is insane.

• 1:28:44David Sacks?

  This does not bode well for the, on top of everything else that's happening in the country, this has not bode well for the Democrats in November. And then you had this crazy thing at the, you know, the Magic Johnson party at that football game.

• 1:28:57Jason Calacanis?

  I held my breath. I took a picture of Magic Johnson. I held my breath so I wouldn't get the virus.

• 1:29:02David Sacks?

  With Garcetti and Newsom. Newsom claimed-

• 1:29:04Jason Calacanis?

  It's the new I didn't inhale.

• 1:29:06David Sacks?

  Yeah, exactly. And then Newsom says that he was only photographed at the exact moment where he took off his mask for two seconds, you know?

• 1:29:12Jason Calacanis?

  You know what? If you go to the ski slopes, there is nobody with a mask on and nobody's enforcing it and no restaurants. And this is in Democratic country. Everybody has moved on at this point. Everybody's willing to, it seems to me.

• 1:29:23David Sacks?

  But why haven't they? Why haven't, why haven't Newsom and Garcetti?

• 1:29:26Jason Calacanis?

  The media and the politician, because they're first for signaling. And they want to keep power?

• 1:29:29David Sacks?

  But to who?

• 1:29:29Jason Calacanis?

  I don't know, you tell me.

• 1:29:30David Sacks?

  That's, that's, that's the point.

• 1:29:31Jason Calacanis?

  Well, I think they're dumb. They should take the position that we reopen.

• 1:29:35David Sacks?

  I think they're afraid of their own voters.

• 1:29:36Jason Calacanis?

  But wouldn't taking the reopening position get you more voters at this point? People are tired of this. They want to move on. Doesn't make any sense. They're making a bad political decision, aren't they?

• 1:29:44David Sacks?

  I think they're beholden to their base. That's the point is I think, I think the whole country has moved on. Even most Democrats have moved on, but the democratic base has not moved on. And that is why, you know, Newsom and, and Garcetti have to pay lip service to this.

• 1:29:57Jason Calacanis?

  Well, I mean, and these guys have been telling everybody, got to wear a mask, got to wear a mask, and they're not wearing masks. And let's face it, they weren't wearing masks at, uh, the French laundry. They have never worn masks. They've been throwing their own parties with no masks. They're a bunch of hypocrites. A whole lot of them. All right. In, uh, other news, Xi Jinping and Putin got together and they're apparently besties. Here's the quote, "Some actors representing but the minority on the international scale." I think that's us. "Continue to advocate unilateral approaches to addressing international issues and resort to force. They interfere in the internal affairs of other states, infringing their legitimate rights and interests and incite contradictions, differences and confrontation."

• 1:30:39Jason Calacanis?

  Uh, the statement said, "I am willing to work with President Vladimir Putin to plan a blueprint and guide the direction of Sino-Russian relations under new historical conditions." Mr. Xi said, he added, uh, "That China and Russia should act like big countries as they intensify coordination on fighting the coronavirus pandemic, yada, yada." Any, uh, feedback from our squad?

• 1:31:07Chamath Palihapitiya?

  I mean, you could have rewritten that press release as, you know, we will, uh, we want to try to destroy US hegemony and replace it with ourselves.

• 1:31:16David Friedberg?

  This is the beginning of the end of US cultural and economic influence globally, or dominance, rather, influence, uh, globally. And I think that it's, uh, you know, something that we've talked about quite a lot. You know, I mentioned in, in the prediction episode that I thought that Putin was going to play a major role this year and, um... And, you know, he's clearly not just, you know, out for his own interests, but he's going to play a really important role in China's rise to economic and cultural dominance.

• 1:31:48Jason Calacanis?

  You agree, Chamath, is this the sign that they're going to be running the show? Or does this look like something else to you?

• 1:31:54Chamath Palihapitiya?

  No, no, no, I don't think that there's a show to run. I think the point is that there was a first among equals for the last many decades in the world order, where, you know, America was that first among equals. And I think what they're saying is that it's time for that to change. And, and, and they're going to tie that to their ability to influence foreign policy in countries the way that we have historically. So, you know, this is sort of basically putting a marker on the table that says, this is going to be about, you know,

• 1:32:30Chamath Palihapitiya?

  a different cohort of people that are also going to have an equal say. And if you think about where this all plays out, it's always in economics, right? And this is where, again, you have to think about what China has done, which is they have, while we were fighting wars, you know, putting trillions of dollars into the Middle East, they took their trillion dollars and bought resources all through Africa.

• 1:32:50Jason Calacanis?

  Yep.

• 1:32:50Chamath Palihapitiya?

  Right?

• 1:32:51Jason Calacanis?

  They built infrastructure.

• 1:32:52Chamath Palihapitiya?

  They bought infrastructure all through South America. They put infrastructure all through Southeast Asia. You know, that, say, call it 15 trillion dollars that we spent in one direction, they spent another, that's a 30 trillion dollar gap. That's going to create a resource imbalance that they will use to create even more influence in the future. And we have to figure out a way to counteract that.

• 1:33:13Jason Calacanis?

  Sax, what do you think? Is this a changing moment in the world order? Should we be worried that these two dictators are going to act in unison? And then maybe one gets the Ukraine, one gets Taiwan? Is this like really earth shattering news? Or do you think it's saber rattling and not that big of a deal?

• 1:33:33David Sacks?

  Well, I think it's a dramatic statement and photo that was, was put out. It was a continuation of what we've seen where they have, you know, Xi and Putin have been getting, and Russia and China, they've been getting friendlier and friendlier. What saddens me and sort of sickens me as really an American patriot who would like to see the American world order continue is the way that we have blundered and created this this type of situation. So to Chamath point, first of all, we wasted 20 years trying to do nation building in the Middle East. Six we wasted $6 trillion on that. How did China, you know, lose by not being part of that? They benefited. They were building

• 1:34:13David Sacks?

  Belt and Road while we were, you know, engage in this foolish interventions in the Middle East. And now more recently with Putin, we've really driven Putin into Xi's arms because we keep threatening to add Ukraine to NATO, which is not something that's in America's interest. If we would just give up on that position or just reaffirm that Ukraine should not be a member to NATO, it enormously helped diffuse tensions with Russia. And by the way, your your point that these are dictators are natural allies. That's not that's not historically been true. So during the days of the Soviet Union, you know, you had Nixon and Kissinger make the great opening to Mao and China, and we were able to cultivate

• 1:34:55David Sacks?

  a relationship there because China and Russia were natural antagonists. And it was a major move in the Cold War that we were able to cultivate Mao, and we did so, even though he was a dictator with blood on his hands. So Russia and China are not natural allies. We should be doing a better job of not so thoroughly alienating Putin that he is rushing into Xi's arms. That's the blunder I see here.

• 1:35:22Chamath Palihapitiya?

  By the way, after this summit, they're going to meet with Iran. There's a tripartite thing.

• 1:35:29David Sacks?

  Access of dictators. This is like the Legion of Doom. We need to be playing our cards in a much smarter way.

• 1:35:35Chamath Palihapitiya?

  Yeah, we need to play our cards.

• 1:35:36Jason Calacanis?

  Look, what is the strategy?

• 1:35:38David Sacks?

  The strategy is, look, we want the American-led world order to continue, but we got to be much more selective about picking and choosing our battles.

• 1:35:46Jason Calacanis?

  Yeah.

• 1:35:46David Sacks?

  Iraq, Afghanistan, Syria, Libya, they were huge mistakes. And now on top of it, we're talking about Ukraine. What's that?

• 1:35:53Jason Calacanis?

  Yeah, looking forward, like you keep bringing up the past. What's the look forward strategy in your mind?

• 1:35:57David Sacks?

  The look forward strategy, I think, is to diffuse and de-escalate the situation in Ukraine, exactly the way Obama did it, which is to recognize that America does not have a vital national interest the way that Russia does.

• 1:36:08Jason Calacanis?

  Then how do you handle Taiwan?

• 1:36:09David Sacks?

  To reaffirm that the nations of the caucuses that have border disputes with Russia, Ukraine, Moldova, Georgia, they are not eligible candidates for NATO at the present time. Kick that can down the road by 10 years.

• 1:36:23Jason Calacanis?

  Okay, we talked about that in the last episode.

• 1:36:25David Sacks?

  Taiwan is a much more complicated situation. I do think we have a vital national interest there.

• 1:36:28Jason Calacanis?

  Got it. Okay, so two very different situations. I actually agree with you. Yeah, yeah, I think Taiwan, we have to hold the line.

• 1:36:34Chamath Palihapitiya?

  Yeah, we have a responsibility in the United States, and I think we're starting to do it. So I think there is good news where, you know, part of the strategic vital interest for Taiwan is because they have critical resources that we need and we depend on. And specifically, those are semiconductors. You know, we have now, I think, allocated, you know, 50, 100 billion dollars of capital, of CapEx across a bunch of companies that have committed to building domestic capability. And so we have to make sure we follow through on that, and that's successful. And the reason is that it gives us optionality. It allows us to breathe. It allows us to actually make rational decisions and be patient in our decision making. And I think that's going to be really important over the next 10 or 20 years. And so we have to invest in the United States.

• 1:37:15Chamath Palihapitiya?

  So the solution to all of these things is we cannot be overly dependent on any one country, any one shipping lane, any one product, any one natural resource. You just can't do that anymore.

• 1:37:27Jason Calacanis?

  We have to be strong at home, and we have to build strong relationships with other countries. And yeah, I think, I think we've got a, an operating philosophy here. All right, listen, let's wrap there. Uh, we'll see everybody on the next episode for the dictator Chamath Palihapitiya, the Sultan of Science, David Friedberg, and the Rain Man himself, triumphant versus Peter Thiel in that PayPal match. Great moment. David Sacks.

• 1:37:53Chamath Palihapitiya?

  Love you, boys.

• 1:37:54Jason Calacanis?

  Love you, besties. Bye bye.

• 1:38:06David Sacks?

  And instead, we open sourced it to the fans and they've just gone crazy with it. Love you, Wes. I'm the queen of Kenwa.

• 1:38:19David Sacks?

  Besties are gone.

• 1:38:22Jason Calacanis?

  That is my dog taking a licking on this here driveway.

• 1:38:30Chamath Palihapitiya?

  We should all just get a room and just have one big huge orgy because they're all just... It's like this like sexual tension that we just need to release out.

• 1:38:38David Sacks?

  What your... B B. What your... What your B. What? We need to get mergies are back.