E72: Impact of sanctions, deglobalization, food shortage risks, macroeconomic outlook and more

0:00 Jason's new "family office" and Sacks' new strategy 2:39 Understanding where all sides stand in the Russia/Ukraine War three weeks in 15:21 Sanctions risking a major food shortage: possible solutions, how we got here, creating distributed manufacturing and supply chains, capitalist incentives flipping 34:59 Breaking down the second- and third-order effects of the massive sanctions on Russia; best case/worst case outcomes for this new form of economic warfare, deglobalization 49:26 US economy big picture outlook: inflation, rising rates, decreasing uncertainty potentially a bullish sign in public markets; how that flows to private markets 1:02:06 Rewriting foreign policy playbooks 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.nytimes.com/2022/03/16/us/politics/russia-troop-deaths.html https://www.axios.com/zelensky-russian-invasion-ukraine-ea623eb5-4a14-4458-9640-af981081e4a4.html https://www.independent.co.uk/news/world/americas/russia-ukraine-invasion-francis-fukuyama-b2035413.html https://twitter.com/davidfrum/status/1504601558184517637 https://uscnpm.org/2022/03/12/hu-wei-russia-ukraine-war-china-choice/ https://www.washingtonpost.com/national-security/2022/03/16/ukraine-zelensky-information-war/ https://twitter.com/RichardHanania/status/1504824837964926981 https://twitter.com/ClintEhrlich/status/1504618754784735232 https://www.ft.com/content/7b341e46-d375-4817-be67-802b7fa77ef1 https://www.nbcnews.com/science/environment/first-drought-now-war-global-wheat-supplies-peril-rcna19298 https://www.agweb.com/news/policy/politics/if-you-think-fertilizer-prices-are-bad-now-heres-why-china-could-make https://www.eia.gov/outlooks/steo/images/Fig4.png https://www.agriculture.com/news/business/skyrocketing-fertilizer-prices-gouge-farmer-profits-groups-blame-consolidation https://www.marketwatch.com/investing/future/cu22 https://twitter.com/ianbremmer/status/1504214235114577926 https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm https://www.cnbc.com/2022/03/10/there-are-more-than-11-million-open-jobs-in-america-right-now.html https://www.nytimes.com/live/2022/03/16/business/fed-meeting-interest-rates https://twitter.com/DavidSacks/status/1503989745939980292 https://www.bbc.com/news/world-europe-26079957 https://www.usnews.com/news/world/articles/2021-06-16/the-latest-kremlin-official-says-summit-will-not-be-easy https://www.bloomberg.com/news/articles/2021-06-14/biden-says-ukraine-has-work-to-do-on-corruption-to-get-into-nato https://theintercept.com/2022/03/15/ukraine-russia-war-sovereignty-negotiations/ https://www.cnn.com/2021/09/01/politics/ukraine-volodymyr-zelensky-biden-white-house/index.html https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/01/joint-statement-on-the-u-s-ukraine-strategic-partnership/ https://www.state.gov/u-s-ukraine-charter-on-strategic-partnership/ https://www.amazon.com/Changing-World-Order-Nations-Succeed/dp/1982160276/ https://www.salon.com/2021/01/19/who-is-victoria-nuland-a-really-bad-idea-as-a-key-player-in-bidens-foreign-policy-team/

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

• 0:00Jason Calacanis?

  I now have a chief of staff. He's pretty great. He's worked for me for a while and he's doing a great job, but it's actually really helped. I will say that. And then I started a family office.

• 0:08David Sacks?

  Wow. Congrats.

• 0:10Chamath Palihapitiya?

  What does that mean? You have a place in your home that you call an office?

• 0:14Jason Calacanis?

  You don't like to break by your refrigerator and there's an office? It's a family office. Yes, the family goes in there to talk about office stuff.

• 0:21Chamath Palihapitiya?

  Where does Jade put the stickies that say we're out of granola bars?

• 0:24Jason Calacanis?

  In the family office.

• 0:43Jason Calacanis?

  Hey, everybody. Welcome to another episode of the All In Podcast, episode 72, part deux. With us today again, the prince of panic attacks, the sultan of science, David Friedberg. The prince of panic attacks. Oh, yes. And also The zephyr of Zoloft. And also, as you're hearing, cackling, the duke of degeneracy, the dictator himself, Chamath, Polly Hopatia. And of course, everybody's favorite, the Rain Man himself, the drunk History Channel Uncle, David Sacks. I mean, David, I follow you on Twitter. You're tweeting 50 times a day.

• 1:23Chamath Palihapitiya?

  Oh, I was thinking the same thing. When do you work?

• 1:26Jason Calacanis?

  What has happened to you? You won't meet with startups anymore. I bring you startups. You said, you know what? I'm no longer going to meet with startups.

• 1:32Chamath Palihapitiya?

  You're like stuck in your room tweeting.

• 1:34David Sacks?

  I don't do first meetings.

• 1:36Jason Calacanis?

  That is the end of your career. Huge mistake.

• 1:40David Sacks?

  No, it preserves my energy. There's nothing more draining than endlessly spending your day in first meetings.

• 1:46Chamath Palihapitiya?

  No, why don't you just have a short first meeting, like a 15-minute first meeting?

• 1:50David Sacks?

  Well, that's what we have a team for.

• 1:52Jason Calacanis?

  What if they have bad judgment?

• 1:54David Sacks?

  They don't because we know exactly what we're looking for. SaaS investing is very metrics-driven. And so the first meeting

• 1:59Chamath Palihapitiya?

  That's fair.

• 1:59David Sacks?

  Yeah, exactly. So it's like, you know, the first meeting, we just find out, do they meet our basic threshold for

• 2:05Jason Calacanis?

  Love it.

• 2:05Chamath Palihapitiya?

  For growth and

• 2:06David Sacks?

  Yeah, exactly. Yeah, so we run the numbers and then I will meet with them if they look good.

• 2:12Jason Calacanis?

  I love this. I would like all VCs to take the same approach. And I will let everybody know, my DMs are open, [email protected]. I will take the first meeting.

• 2:22Chamath Palihapitiya?

  Sax, I need to call you after this. One of our businesses, which is not in SaaS, has started to sell SaaS software and we've already booked $40 million of fucking ACV. By complete accident, from zero.

• 2:35Jason Calacanis?

  Wow. You stepped in it?

• 2:36Chamath Palihapitiya?

  Uh, and I need some advice.

• 2:37David Sacks?

  Okay, yeah, let's talk.

• 2:39Jason Calacanis?

  All right, everybody. Uh, it's been a bit, uh, of a crazy couple of weeks here and we have to start with the war in Ukraine and do a bit of an update. It's been over 20 days. The death toll continues to climb. We don't know exact numbers here. It's very hard to get information. We're not experts. We don't have boots on the ground. Uh, but according to, uh, the New York Times, 7,000 Russian troops have been killed. And Zelensky said on March 12th, 1,300 Ukrainian troops have been killed. I think we've got three or four angles we need to talk about here. One, I want to talk about food supply. Uh, with Friedberg, since you ran climate.com and have a lot of expertise in that. And of course,

• 3:21Jason Calacanis?

  Ukraine and Russia are the breadbasket of the world. Chabot, I want to talk about markets, of course, but let's go to our History Channel uncle first. Sax, you have been going down the rabbit hole, looking at the history of this. Let me just ask you just a point and question. Is Russia losing the war? And if they are losing the war, if that is a poss- is that even a possibility that they're losing the war? Are they losing the war? And then what is the exit ramp here and what does it mean on a go-forward basis?

• 3:53David Sacks?

  Right. I think, great question. So here's where I think we stand three weeks into the war is that Putin clearly miscalculated. He thought this would be a cakewalk. Obviously it has turned out not to be. The Ukrainians have put up very fierce resistance. The Russians have taken very serious casualties and losses. Um, and so the war is very much, you know, up in the air. It's the, the outcome is very much in doubt. So I think, you know, Putin was overconfident, uh, made a political, economic and- You know, obviously humanitarian mistake. But I think three weeks in, here is where I would characterize things is it feels to me like the West might be making a similar mistake

• 4:32David Sacks?

  of sort of excessive overconfidence and triumphalism, meaning that we think the rest of this war is going to be a cakewalk. And the reason I say that, let me just give you some examples and then tell you why it may not be a cakewalk. So you've got Francis Fukuyama had a piece this week. Basically, he's back with the end of history. He predicts that, you know, imminent Russian defeat and that there's going to be a new birth of freedom. Uh, for the West, it's going to be like the Bush doctrine and 20 years of failed policy in the Middle East never happened. You got David Frum, you know, all but predicting mission accomplished, just like the Iraq war. He said the springtime is going to be bad for anyone who bet on Putin, his words, which in his view is anyone who isn't a basically a neo con who favors regime change.

• 5:13David Sacks?

  You had a piece get a lot of circulation over the last week in the US-China perception monitor by, um, by I think a former Chinese, um, observer named Hugh Way. And he basically predicted that China would be under so much pressure by what the Russians have done, you know, in terms of humanitarian uh, losses that they would come out basically denouncing Russia and support the West. And then of course, I think the final example of what you might call Western triumphalism right now is that absolutely no one in Washington seems to be pushing for a ceasefire. They're, you know, they're all paying lip service at least to this no flows, no fly zone idea. Biden and the squad seem to be the last holdouts

• 5:57David Sacks?

  uh, for the idea of not imposing no fly zone. So I would say right now the West seems to be very confident about the way this war is going and not inclined to make any compromises or concessions. I just want to flag quickly why that, you know, why there might be some clouds on this silver lining. So you had a Washington Post article, first of all, warning, it was very interesting that Ukrainian military progress may not be as great as their quote, stratcom, their strategic communications. You know, aka propaganda. So in other words, the Ukrainians are very effective at fighting the information war, but the Russians are still making progress on the ground. You also had this Washington Post story about neo-Nazis flocking from all over Europe to Ukraine to

• 6:40David Sacks?

  fight for the cause. Again, that story got, it's very troubling and it got no likes or retweets because it just doesn't fit the great narrative here. You've got the slow motion humanitarian-

• 6:49Chamath Palihapitiya?

  Is that true?

• 6:50David Sacks?

  Yeah, but let's come back to, let me lay out all the issues and we can come back to. You've got the slow motion humanitarian disaster of, you know, a billion people across the world potentially starving if the spring planting doesn't happen, which we should let Friedberg speak to more. You've got the fact that Russia can still escalate this war. I mean, they could still rubble cities. Bielarus could enter the war and, you know, God forbid they could even use WMD. And then you have this idea, this dream of toppling Putin. Probably, look, it could happen, but probably a fantasy. You had 200,000 protesters, pro-war protesters turnout in Moscow today. Nationalism is still strong in Russia. Yes, there's anti-war protesters there, but the Russian people at the moment seem to be still behind Putin. And then I

• 7:34David Sacks?

  think you had today, the Foreign Minister of China came out with a statement, really throwing cold water on the idea that they support the West. They basically denounced the West for NATO expansion. So this whole idea of the Chinese bowing to Western media pressure, which they in other contexts call the Baizhou influence, I think that's a fantasy that is not going to happen. So, look, I think that, you know, we all support the Ukrainian cause. We all support their desire for freedom, their freedom from domination, from this Russian war of aggression. But what I wonder about is whether this would be the opportune time for Washington to try and push for a ceasefire instead of a no-fly zone. And we should talk

• 8:19David Sacks?

  more about what that might look like.

• 8:21Chamath Palihapitiya?

  Can I give you a psychological assessment of, I think, what's happening right now? Yes, great. Just as somebody who, as you know, you guys and I were just joking, but six days just being mostly off the grid with my notifications off.

• 8:36Chamath Palihapitiya?

  I was really like, honestly, like you, you kind of like go through this dopamine fast. And what it actually helps you do is pick out better signal. And, you know, with all respect, Sax, I think like a lot of what you said is not really

• 8:51Chamath Palihapitiya?

  as meaningful signal as the following, which is the most important thing that happened was both sides basically said the surface area of a deal was very much in sight and that they were down to three or four points. And I think that that didn't get reported nearly as much as it probably should have. And what I thought was psychologically interesting was that as soon as that was said, the next few days was when the rhetoric got ratcheted up extremely aggressively on both sides. And the way that I interpret that typically is having done deals, that's typically when you're closest to a deal and you're trying to get the last few Ts and Cs. And in that same construct as applied to Ukraine and Russia, I suspect what's happening is they both put out the trial balloon, it was well received on both sides, the surface area is now down to a few points.

• 9:37Chamath Palihapitiya?

  I'm not saying that those are justifiable in the end, but I think that if both of these two parties want to come to a ceasefire, which I think it does, we're probably much, much closer than anybody thinks. And right now, all of this rhetoric is meant to basically try to get the other side to budge a little bit more. And so I suspect, and you know, I could be completely wrong, is that we're much closer to a ceasefire than anybody thinks, and I suspect that you could see something in the next two to three weeks. And I think that that's really hopeful because you want this thing to come to an end.

• 10:06Jason Calacanis?

  The thing I'm trying to parse here, and I don't know if anybody here can even answer this, is how did, how did we either underestimate or overestimate, depending on the time, Russia's ability to invade another country?

• 10:23Chamath Palihapitiya?

  I think, I think the thing is we have, we can't even estimate correctly. So for example, there was something that said there was 100 out of 100, Russia has 170.

• 10:32Chamath Palihapitiya?

  Battalion, apparently. I don't know if that's true or not. Right. Of which 100 were sent in. We don't know if that's true or not. Of which Ukraine apparently destroyed 50, of which we don't know if that's true or not. So we're left to guess, and unfortunately, what that does is that people psychologically then fit, as David has used in the past, your priors. What are your biases? Right? What narrative fallacy do you want to believe? And then you're going to fit. So the pro-Russian factions will say that's entirely not true. The pro-Ukrainian factions will say, actually, it's even greater than that. Huge sustained military losses. The truth is somewhere in the middle that will only get accounted for after a ceasefire is in place. So I think we almost need to, again, we can get caught in this fog of war and talk about this stuff in ways which we don't accurately know.

• 11:18Chamath Palihapitiya?

  Or we can level up and say, the thing that we both know is there was on the record statements by the Foreign Minister of Russia and the President of Ukraine that a ceasefire and the surface area of that ceasefire is within sight. And unless something is materially changed, and in the last three days, which it hasn't, it means we are really, really close to this being done.

• 11:38David Sacks?

  So I agree with a lot of what Chamath said. I don't think it contradicts anything I said before. I agree that there was a big piece of news this week that caused markets to rally for three days, which is the announcement of a proposed 15-point peace deal. And we do know sort of the key features of that deal. It means that the three big features are Ukrainian neutrality, so they don't become members of NATO. You had Zelensky saying that NATO membership was off the table. Ukraine can't host foreign troops bases or weaponry. There'd be limits on Ukraine's military, but they would get security guarantees from the Allies. So it wouldn't be a complete demilitarization. And then the other pieces of it were Ukraine recognizing Russia's control of Crimea, recognizing that's not coming back.

• 12:21David Sacks?

  And then some sort of independence recognized for the disputed territories in the Donbass. So I think you're right, Chamath, that everybody now knows the broad contours of what a peace deal would look like. And the markets are starting to price in them getting to that peace deal. But I'm worried that if you look at it from the point of view of what people in Washington are saying, that there's no pressure here, coming from Washington, for Zelensky, who's basically our client, he's an American client, to make a deal. You know, if you compare this to, say, the 1973 Yom Kippur War, where the US was on the side of Israel, but still acted as a peacemaker and got a ceasefire

• 13:05David Sacks?

  done, you know, Kissinger got that deal done, even though we were on the Israeli side. You don't really hear anyone in Washington saying, let's get a deal done. So I hope you're right, but...

• 13:14Chamath Palihapitiya?

  It's because you're not, we're not talking about the elephant in the room, which is that in the Yom Kippur War, the unitary resolve and the military dominance of America was undisputed, and so as a result, its ability to be the mediator was also undisputed. We've already talked about this. When Biden called the UAE in Saudi, they wouldn't even pick up the phone. The people that are negotiating this peace treaty right now are Naftali Bennett and Emmanuel Macron. So we're not at the table. So I think a lot of what we're hearing as well is just a lot of the rejection and the psychological, you know, kind of anger that we have to not being even part of the process.

• 13:50Jason Calacanis?

  Maybe the world doesn't want us to have such an outsized role.

• 13:54Chamath Palihapitiya?

  Well, the point is, it's, we've moved past that. Whether you wanted us to be involved in it or not, we're not involved, and we are not the principal mediators in this. And we, I hope to God that Israel and France and whoever else is at the table gets this done.

• 14:08David Sacks?

  Yeah, I agree with that. But here's my concern is I think everyone knows the broad contours of the deal, but if you're Russia or you're Ukraine, you're getting daily reports of what's happening on the battlefield. And if you think you're winning, you have an incentive to stall the peace process, to cement greater gains and get more leverage for those remaining details and negotiating points. And so if Zelensky thinks that the Ukrainians are making progress on the battlefield, he's gonna wait. And so neither one of them, I think, left to their own devices, can be fully trusted to make a deal. I think you need the US applying some pressure or acting in a constructive way towards the process. And I think it's a huge problem that the US is not viewed as a peacemaker.

• 14:53David Sacks?

  We're basically viewed as so partisan and on the side of Ukraine that no one wants us involved.

• 14:57Jason Calacanis?

  David, we've talked on this pod about us not being the global police officer of the world and that other people need to stand up. So maybe the lesson here is, you know, maybe strategically...

• 15:07Chamath Palihapitiya?

  Jason, it's not like we were called on and we didn't stand up. We weren't called on.

• 15:11Jason Calacanis?

  Well, okay, that's we assume that. I mean, we don't have perfect information either. But let's let's get to Freiburg here. I think the other wrinkle in all of this, and I think it's quite positive, is sanctions are seeming to have a profound impact here, and people are looking at them as potentially maybe cyber warfare and just, you know, actual tactical warfare on battlefields is less important than economic warfare. And Russia has been essentially canceled from the global economy, from Visa to McDonald's to exports. And these sanctions are not just government sanctions. These are people opting into them, whether it's corporations and other entities saying, we're just not going to do commerce with

• 15:55Jason Calacanis?

  Russia. Unfortunately, and this is something you have great expertise on, and so we're lucky to have you here to talk about it. People may or may not know this.

• 16:04David Friedberg?

  I'm happy to be here.

• 16:05Jason Calacanis?

  This is the breadbasket of the world. They export more wheat than anybody, and they also export fertilizer, soybeans, and some other inputs, which we've talked about previously, that provide meat for the world. So what can you tell us about the downstream effects of there not being potentially or half as much crops coming out next year? And what would happen in places that are the beneficiaries or dependent on wheat and fertilizer from Russia?

• 16:37David Friedberg?

  So there's a number of first order and then second order effects that are not just about sanctions, but also about export controls by Russia that are creating swings in food markets like we've never seen, and will almost certainly lead to widespread famine by the end of this year at this point. So the first important point to note is about 15% of the world's calories come from wheat. About a third of that wheat comes from Russia, Ukraine. Russia has banned export of wheat. And the wheat spring planting season is like now, this week. And there's not a lot of planting going on. You know, a lot of commodity

• 17:21David Friedberg?

  folks are in the field trying to figure out who's actually going to go to field and plant. But no one's making

• 17:28David Friedberg?

  You know, the concerted effort that they normally would under normal circumstances. So not only is the current wheat supply in Russia, Ukraine blocked up and cannot make its way to countries like Africa or countries in Africa and elsewhere, but the future planting season is now significantly at risk. And again, that's 15% of global calories. And just to take a step back, the whole planet Earth operates on a 90-day food supply. So once we stop making food, humans run out of food in 90 days. So another way to think about that is our food supply excess, our capacity in excess is about 25% of our global production. So if our global production goes down by 12%, we've lost half of our global food supply. And that's not just linearly across all nations.

• 18:12David Friedberg?

  What happens is the most vulnerable nations lose their food supply first, and the richer nations buy that food supply to secure their population's calories. And so you very quickly see a bifurcation happen when you have a shortage in a food supply like this of just a few points, where suddenly famine is a real risk. And we already have about 800 million people on Earth that are subsisting on below 1,200 calories a day. So this very quickly tips the bucket in a significant way in a number of countries that's going to be really awful. And that's just on the wheat supply and wheat planting problem. The bigger problem is the energy price problem and the phosphorus and potassium problem. All fertilizer is made up of nitrogen, phosphorus, or potassium.

• 18:56David Friedberg?

  Those are the three major types of fertilizer that farmers around the world have to use every year in order to grow that crop. Without fertilizer, plants don't grow. Nitrogen is made from natural gas. 98% of the world's ammonia is made from natural gas. Natural gas prices, as you guys know, have doubled, and the futures market looks like in some places, natural gas prices going up like 4X. As a result, the price of ammonia fertilizer, nitrogen-based fertilizer, has gone from $200 a tonne to $1,000 a tonne. So it's five times as expensive to buy basic ammonia fertilizer today than it was a few weeks ago or a few months ago. And so this is now leading a lot of farmers around. And then the other big problem is phosphorus. So

• 19:37David Friedberg?

  Phosphorus, you know, by some estimates, I mean, you know, there's a little variation around here, but about 10% of the world's phosphate comes out of Russia. And about, you know, call it 25% of the world's potassium comes out of Russia, potash. Both of those markets are blocked up. They are sanctioned and they have banned exports, Russia has through the rest of 2022. So around the world, the cost to make nitrogen fertilizer has skyrocketed because of natural gas prices, because of the Russia problem, and Russia is not exporting potassium and phosphorus. And as a result, the price of nitrogen's gone from 200,000, the price of potassium's gone from 200 to 700, and the price of phosphorus has gone from 250 to 700.

• 20:19David Friedberg?

  So now it's so expensive to grow a crop that a lot of farmers around the world are pulling acres out of production. And they're actually going to grow less this year than they would have otherwise because it is so expensive and they cannot access fertilizer locally to plant crops. So not only do we have the wheat problem, we now also have the fertilizer problem and the acres coming out of production problem. And so food supplies are going to go down even further and this is going to become even more catastrophic. And so there's a scrambling going on right now, you know, food prices around the world as a result, everyone starts buying up all the commodities, they buy up all the corn, they buy up the soybeans, they buy up the wheat, and the price for corn has nearly doubled whereas, you know, from where it was in July of 2020, the price of soybeans, the price

• 21:03David Friedberg?

  of wheat are all skyrocketing. And in a lot of countries, they cannot afford to acquire, and individuals cannot afford to buy food with the skyrocketing commodity prices.

• 21:15Chamath Palihapitiya?

  Can I ask you a question? I think it's estimated that the US food supply, if you could X out the waste, would actually feed most of the developing world because I think 30 to 40% of all of our food is wasted. Can you do something with that?

• 21:28David Friedberg?

  Yeah, that is actually true. A lot of that happens at the point of consumption, so it's in people's homes. So it's a reverse supply chain problem where, you know, we throw away a lot of like stale bread and cereal that goes bad or whatever. There's some in the fresh vegetables market, but generally the core calorie-producing commodities are rice, wheat, potatoes, and corn.

• 21:55David Friedberg?

  Those commodities don't go bad in the supply chain. They end up getting tossed out at the end of the supply chain, which is at the point of consumption at home. So, you know, I'm not sure there's a real solution there right now. The bigger issue is like, how do you get bulk commodities to the places that are going to need them over the next 12 months? So, look, right now, we're reducing food supplies, stocks around the world. There's strategic reserves that are getting opened up and being released. As that starts to get diminished, and as the production kind of numbers start to come out, it looks like less acres are in production. You know, and God willing, we have a good weather year everywhere this year. Because, you know, a bad weather year in some markets could completely decimate the remaining supply that's coming out this year. Regardless, it is going to be a humanitarian disaster within a year.

• 22:39David Friedberg?

  And we will see hundreds of millions of people go starving. And there will be potentially, I think-

• 22:44Jason Calacanis?

  You said hundreds of millions of people are going to starve?

• 22:46David Friedberg?

  Hundreds of millions of people will go starving.

• 22:47Jason Calacanis?

  That's never happened in the history of humanity, has it?

• 22:49David Friedberg?

  Eight hundred million people already live on below 1,200 calories a year right now.

• 22:53Jason Calacanis?

  So, you're predicting that over 100 million people will die because of this?

• 22:57David Friedberg?

  I don't know about that famine. Like famine is this like, you know, short of calories. You know, within a market, it's not like, hey, there's no food. Like, you know, there will be strategic reserves released. There will be stuff, but it won't be enough. We just don't have enough. And the way supply chains are set up, there just isn't enough. And so-

• 23:12Jason Calacanis?

  So, once again, we found another supply chain weakness, like we did in COVID over and over again.

• 23:17David Friedberg?

  Boy, so free bird.

• 23:19Jason Calacanis?

  And strategic supplies will be released. But then hoarding is starting. So, David, you take it after this. But the one question I had was maybe talk to me about this concept of hoarding, because there seems to be a cascading effect. And you kind of talked about it a little bit.

• 23:34David Friedberg?

  Well, yeah, it's not just hoarding. I mean, as with any market, guys, as you know, when there's scarcity, people come in and buy at a faster pace. You know, everyone. And so, this is a market dynamic. It's not like people are physically hoarding loaves of bread. But commodity traders, countries, strategic reserves, they start buying up what they can get to prepare for the famine that's coming. Then prices go even higher. And then it kicks other people out of the market that couldn't afford to buy it. And the whole thing gets really ugly, really sad.

• 23:59Jason Calacanis?

  And there's no off-ramp here. There's no way to solve this.

• 24:01David Sacks?

  Well, what, Friedberg, yeah, the thing I want to ask you is if we had a peace deal right now, a ceasefire, would we avoid this outcome? I mean, like, how long, how long do we have to avoid this?

• 24:10David Friedberg?

  We need Russia to reopen fertilizer export markets now. We need natural gas prices to come down now, and we need them to plant the spring wheat. Those are three things that need to happen to solve this problem. If those three things don't happen, we're going into spring right now. So around the world, in the northern hemisphere, farmers are making plans, they're planting, they're deciding how much fertilizer to use. And so as this market starts to kind of work itself out over the next few months, a lot of the commodity traders and the ag departments, they publish these planting reports and they talk about how many acres of what were planted, and then everyone forecasts how much the supply will be. And we're going to start to see these uglier numbers come out over the next few weeks and months. Meanwhile, we're seeing supplies dwindle, and Russia's

• 24:52David Friedberg?

  holding all this stuff. So, you know, they're holding hostage phosphorus, potassium, and the natural gas pricing is just what it is. Remember, there are ammonia plants everywhere. There are ammonia plants, and all ammonia plants use natural gas to, you know, to create this nitrogen-based ammonia.

• 25:09Chamath Palihapitiya?

  Let me make a statement, and I'd love your reaction. We're finding out all of these externalities that was made with underlying poor scientific reasoning that has caused these issues to be exacerbated. So we know, for example, that our overreliance on Russian hydrocarbons could have been mitigated with nuclear, but we fell for shoddy science, and we fell for a bunch of uninformed people who ran this banner of like, you know, environmental protection, right? So they screwed us, okay? And those people now have meaningfully less credibility. Let me give you another cohort, Friedberg, and you tell me. All the people that pushed back on GMO and

• 25:52Chamath Palihapitiya?

  said GMO was unacceptable, it could never happen, it has to be X, Y, and Z way. And there are ways where we could have been working on plants that had different mechanisms of action in order to actually absorb and retain nutrients from the soil in different ways that would have made us less reliant in exactly the way in which fertilizer works. True or false?

• 26:14David Friedberg?

  Yeah, GMO technology, as a former Monsanto executive, you can call me a Monsanto shill here, but yeah, GMO technology has been hindered globally by a challenge to adopt it. And there are techniques and technologies that have not been aggressively developed because of the concern on approvals. Just to get a single GMO trait approved in the United States today and get it to market can take seven to 13 years. And even then, you have to still go get China to approve it because they're the biggest importer. And you have to, you know, get all these other market participants to approve it. And there are multiple agencies to get to approve it. Europe is finally, the EU is finally coming back to the GMO problem and saying, you know what, precision gene editing can actually

• 26:59David Friedberg?

  be beneficial to growing more stuff. Now, would it have solved this particular crisis?

• 27:04Chamath Palihapitiya?

  Sorry, can I just say what's so ridiculous about this?

• 27:07David Friedberg?

  Yeah.

• 27:08Chamath Palihapitiya?

  The fact that we have a modern agrarian economy is because we actually did figure out a way to do GMO, except we used the Punnet Square and we used successive iterations. But the minute that you try to scientifically scale it in a lab, all of a sudden, that same process is not, does not make any sense. To me, that's, it's just intellectually so inconsistent.

• 27:28David Friedberg?

  Yeah, the thing that really scares people about GMO, look, I mean, I've spent a lot of time on GMOs and the reason people are upset. I have a broader philosophical point.

• 27:36Chamath Palihapitiya?

  Do you believe in that, do you believe in that inconsistency, that intellectual inconsistency? How do you think somebody from, you know, pre-B.C. to today?

• 27:42David Friedberg?

  I think that agriculture-

• 27:43Chamath Palihapitiya?

  You don't think we iterated on our roots?

• 27:44David Friedberg?

  No, I think agriculture itself is technology. Think about it. Humans, humans used to go out and just eat whatever was lying around, what nature gave us. Then we started making rows in the ground and putting seeds in the ground and putting water on the ground. We engineered the earth to make stuff for us.

• 27:58Chamath Palihapitiya?

  Then we started to breed these plants.

• 28:00David Friedberg?

  And then we did plant breeding. And traditional plant breeding, through Norman Borlaug, saved the world.

• 28:05Chamath Palihapitiya?

  It's genetically modifying things.

• 28:07David Friedberg?

  And then what we did with GMOs, which is the distinction, just to be really clear about the definitional distinction between GMO and traditional plant breeding. GMO is when you take DNA from another organism and you put it in the plant's DNA to get that plant to do something very specific. And Jason, you came with me to Monsanto. I mean, you took the tour years ago, remember?

• 28:23Jason Calacanis?

  Yeah, I mean, you should be cautious. We should be cautious about anytime we're doing stuff like that.

• 28:27David Friedberg?

  Right.

• 28:27Jason Calacanis?

  But...

• 28:28David Friedberg?

  And then there's generally like a very visceral reaction when I make that statement. And people are like, wait, you're taking the DNA from bacteria and putting it in plants? And how do I know that's gonna work? And so there's these layers of concern, which, you know, are deeply psychological layers, but we can, you know, scientifically resolve this over time. But look, at the end of the day, humans today, you guys remember last year how much I was talking about that starch synthesis paper and how important it was? We don't need to grow plants to make the stuff we need to consume. If every city around the world had a starch synthesizer and it took CO2 from the atmosphere and water from the ocean and had this technique developed out, it could synthesize its own calories in a physical device without needing to rely on the ammonia supply chain and the

• 29:11David Friedberg?

  phosphate supply chain and all of the systems that we rely on that are super outdated, that are all a scaled up industrialized version of old school agrarian techniques. Humans today, I think, have the ability to synthesize and print food. And over the next couple of decades, particularly catalyzed by what's going on in Russia, Ukraine today, we're gonna see these technologies accelerate. It's obviously where I spend a lot of my time, but I'm super excited about it. Yeah.

• 29:34Chamath Palihapitiya?

  I think we suffer from a very insidious kind of plague in the world, which is the plague of overeducated dumb people. And it's almost as if, you know, because of their degree in the school, you give them inordinate power to make value judgments.

• 29:50David Friedberg?

  Right.

• 29:51Chamath Palihapitiya?

  That really put the world in a very difficult position. And so when you have something like a war in Ukraine, it just lays everything bare.

• 29:58David Friedberg?

  Or the pandemic.

• 29:59Chamath Palihapitiya?

  And you find, you find all these things like, you know, another, another version of this example, how did an entire continent, and specifically, I mean, Europe? Abdicate their entire energy security to a group of environmentalists and to a 16-year-old girl without even thinking about what the right answer was for themselves from first principles. That's really crazy that that happened. And you need a war where tens of thousands of people have to die to realize that that was a really bad set of decisions that have been compounding for decades. Here's another example where food security is yet another one where we weren't able to think cleanly from first principles. And so depending on who had more money, or who was able to create more psychological guilt or fear,

• 30:43Chamath Palihapitiya?

  was able to get an outcome that fundamentally puts the world at 100 million person plus famine. So somehow, we need to rethink how our institutions work because we are giving folks who haven't proved that they can handle power, the ability to influence outcomes, for the wrong sets of reasons.

• 31:04Jason Calacanis?

  Well, it's even worse from obvious people you talk about who are smart dumb people. They're so privileged that they're living in some bubble, making decisions for people who have food insecurity or energy insecurity. And it's only when COVID showed, hey, oh, semiconductors, I can't get my car that I want because it doesn't have the chip in it, or I can't get drugs, or I can't get PPE. Then all of a sudden, they see the value and redundancy and supply chain. But when they were living high on the hog and had nothing to worry about in 20 different flavors of Captain Crunch, they can't even think about people in Africa.

• 31:36David Friedberg?

  JK, I think it's really important to speak to the capitalist incentive and how you get there. So we've globalized supply chains because as a business, it doesn't make sense for me to do every step of the thing that I want to do because you can get better utilization out of CapEx if a system is running all the time to make stuff. So if one step of the system doesn't need the other system running 24/7, it's going to outsource that. And that's kind of think about like semiconductors, think about food manufacturing, right? It doesn't make sense for a farmer today to make his own ammonia. So there's a pneumonia plant that centrally makes that stuff 24/7, distributes it out to a bunch of farmers. That brings the cost down per unit of production. And so these systems have existed because we've had less capital with a higher ROI on capital invested at

• 32:20David Friedberg?

  every point in the system by distributing and having a kind of centralized supply chain system like this.

• 32:29David Friedberg?

  What we're looking at today is what happens when one part of that system fails. And now I think the big trend for the next decade or two, everyone's going to have like an institutional memory of this. And you're going to see companies that are going to start to vertically integrate supply chains. They're going to vertically integrate their manufacturing. We're going to see a lot of businesses make what traditionally would have been really quote unquote "bad capex decisions" and "bad investment decisions." And they're going to say, "You know what? We need to have redundancy because we cannot face the cataclysmic kind of circumstance that we faced in the past."

• 33:00Chamath Palihapitiya?

  I also think those are, by the way, the easy decisions. I also think that there are some more complicated ones of morality that we may have also misappropriated. I'll give you one example. So if you think about energy independence of America, I think there's not going to be, there's not going to be many who think that it's not critically important. Well, then you go and say, "We have a short-term bridge with hydrocarbons and the long-term solution is renewables." But underneath renewables is the idea that you have to store these things, right? You have to store the energy you make, whether it's from wind or solar, even if it's from nuclear, okay? And all of that results in us needing batteries, while batteries need lithium. There's enormous lithium deposits in the United States that today can never get access

• 33:45Chamath Palihapitiya?

  because we've decided that the, you know, the upper land grouse of a state is more important than America's energy independence, right? So when push comes to shove, a small rat-like creature is prioritized more importantly than America's energy independence. The downstream implications of that are now obvious. Rising costs, inflation, unemployment, potential recession, war, death, famine. Is the upper land grouse that fundamentally more important than all of these systemic risks to humankind? And the thing is, for a long time, we would never even think about the trade-offs to actually think about why that decision should be made that way. And now we actually have the ability to remake these decisions. So it's going to be really interesting to see whether we upend all of these existing

• 34:30Chamath Palihapitiya?

  frameworks, you know? And there's enormous environmental lobbies that have been created, that have raised hundreds of millions, billions of dollars to fight these battles systematically, wherever they come up. And in some ways now, what people will say, well, you've really prevented progress and you've actually done more damage. That's going to be a really interesting point in our evolution.

• 34:52Jason Calacanis?

  Good intent. Good intent. Save the environment and then there are downstream impacts. Let's go to Sacks about the sanctions. We saw a level of sanctions we didn't expect. They were ferocious. They were unilateral. They, they, they're, you know, undeniably having an impact. Do you think Putin would be at the table? Do you think these sanctions are really having a dramatic impact? And do you think that there'll be a tool that we should use in the future? Or do you think maybe we need to be more thoughtful about them? In other words, cancel culture comes up as a, an analogy here. People are saying, oh, it's like cancel culture for a country. I think it's pretty great that a country that is murdering their neighbors doesn't get to participate. But obviously, you could have

• 35:37Jason Calacanis?

  some serious concerns if fertilizer and supply chain issues, as we just discussed, are going to cause famine. So what's the balance here?

• 35:46David Sacks?

  Yeah, I think it's a great, another great example of, um, you know, we're not thinking through the second and third order consequences of what we're doing. We're just reacting. And so to, to Friedberg's point, um, so, you know, first of all, we have to realize this was more than just sanctions. This was a complete severing of economic ties. I mean, basically every Western country pulled up stakes out of Russia. They, I mean, they did it on their own, too. I mean, they did it because, for the reasons you said, because they wanted to make a statement that what Putin did was wrong. So every Russian who was working for one of these companies basically got fired and all the stores closed and so on. So I think, I think it is, the repercussions of it are going to be severe. However, these

• 36:30David Sacks?

  things, the economics of it take time to play out. And so do I think it creates pressure on Putin to make a deal? Yes. But, you know, if the, if this is going to be determined on the battlefield one way or another in the next month, do I think it has time to operate in that timeframe? Probably not. And I think what's likely to happen here

• 36:53David Sacks?

  Is that in the same way that the real repercussions of this war are going to be felt in grain production in six months, you know, there is an economic tsunami headed for our own economy as a result of the blowback from basically severing, you know, 144 million Russians from the global economy. There's also going to be geopolitical blowback. I mean, you know, I think it's very likely that the way this is going to play out geopolitically is that Russia will become a Chinese client. And, you know, all of those natural resources that China produces, the, the, the gas, you know, all the, the mineral wealth, that,

• 37:35David Sacks?

  those resources are going to flow on a conveyor belt, on a Belt and Road conveyor belt from Moscow to Beijing, and they're going to fuel the Chinese economy.

• 37:44Chamath Palihapitiya?

  Yeah, yes and no, because the reality is, the, the, the thing we have to remember is China is still a fundamentally export-driven economy, of which 35% just alone goes to the United States. When you add in Europe and other OECD countries, it's almost 60%. So I think the idea that all of a sudden you, Russia will be able to backdoor all of these things through China into the rest of the world, I think is not really realistic. And this is actually why I think the rhetoric is so high, because those two countries specifically are put in a very difficult situation. Like, what do you think the China calculus on Taiwan is looking what's happening to Russia? Has it completely export-driven economy?

• 38:22Jason Calacanis?

  What do you think it is?

• 38:23Chamath Palihapitiya?

  It's completely off the table, completely off the table.

• 38:25Jason Calacanis?

  They would never consider invading Taiwan, knowing that it would put Apple in a position or other companies that are entwined in the Chinese economy.

• 38:33Chamath Palihapitiya?

  I think what's happened, again, I've said this before, everybody has, was always, you know, sort of like land-baseding economic sanctions, you know, even on this pod, people are like, it's never going to work, it doesn't do anything. And it turns out it's just not true.

• 38:46David Sacks?

  To be clear, I think sanctions are an appropriate way to create economic pressure so that we can get a ceasefire and a peace deal made. Okay, so I do believe, in the same way that I believe we should arm the Ukrainians so they can defend themselves while I'm against a no-fly zone. The issue is just, are we actually using the leverage that we're creating to drive this process to a success, I'm talking the ceasefire process, to a successful resolution? Because if we just make this the new normal, which is, you know, a, basically an insurrection in Ukraine that drags on forever and China and Russia cut off from the global economy and becomes a client of China, I think there's a parade of horribles that flow from that.

• 39:31David Sacks?

  And Friedberg just outlined one of them, which is hundreds of millions of people across the world potentially starving. So my point about sanctions is not that we shouldn't have done them, but there are going to be big repercussions for our economy if we don't resolve the situation in Ukraine.

• 39:49Jason Calacanis?

  Let's do best case, worst case with this new economic order here and economic sanction ability that the West has now demonstrated, you know, quite effectively.

• 40:00Jason Calacanis?

  For me, the best-case scenario here is if you want to participate in the global economy and globalization 2.0 means you're going to have to be hit some base behavior level of being a good actor in the world if you want to participate in the wider economy. Therefore, as Chamath just pointed out, I think quite correctly, Taiwan's off the table. I mean, China already is having massive economic downturn and headwinds. The idea that they would face what Russia's facing right now in terms of sanctions globally would be cataclysmic for them. So do we think, what's the best case in your mind, Friedberg? The worst case of this new economic sanctions that we've just outlined? Best case, worst case?

• 40:44David Friedberg?

  Much of this is driven by Russian decision-making, not just our decision-making. And so, you know, there's a lot of question marks around what they're gonna, they've said definitively, we are banning all fertilizer exports through 2022. Okay, so like, does changing a sanction model at this point get enough resolve for them to kind of come back to the table? Do we need to kind of weave that into some? Discussion, peace discussion that they're having with Ukraine. I think there's going to need to be this multilateral, like, global, either support or partnership model that's going to have to kind of emerge for this to all get resolved positively.

• 41:27David Friedberg?

  I don't think that it's just about Russia and Ukraine agreeing to a bunch of terms. We're all going to be affected by what's going on and what Russia has chosen to do back to us. And we all think we're in the power and we've blocked them and destroyed the ruble and, you know, knocked them back to the Stone Age, yada, yada, but like, we're hurting ourselves far more than we realize and we have to go get something back from Russia in order to resolve this.

• 41:49Jason Calacanis?

  So nuanced.

• 41:50Chamath Palihapitiya?

  I'm not sure I totally agree with that. I actually think that, you know, necessity, what is it? Necessity is the mother of invention. I think that this has the ability, just circling back to what we said before, for us to rewrite all of these other decisions that were frankly not necessarily rooted in either first principles or long strategic thought, in a way that can actually improve the state of play for everybody, not just including us, for the next 50 or 100 years. So I'm not completely convinced that it's as catastrophically bad as you think.

• 42:21Jason Calacanis?

  Well, what about this, Friedberg, if we were thinking about food stability? You mentioned your slurry and, you know, being able to make these calories without actually planting any food. If we, am I correct?

• 42:34David Friedberg?

  It's not going anywhere if you call it a slurry, but yeah.

• 42:36Jason Calacanis?

  Okay. Let's call it a protein bar.

• 42:39David Friedberg?

  Protein bar. Like, ultimately, Jason, we can actually create pasta, bread, rice. I mean, that's where this all goes.

• 42:46Jason Calacanis?

  Perfect.

• 42:47David Friedberg?

  By the way, just so you guys know, I want to frame this up, it's super important. 60% of the world's calories come from carbohydrates, which are basically two molecules, amylose and amylopectin.

• 42:57Jason Calacanis?

  Okay.

• 42:58David Friedberg?

  That's what makes up starch. So if we can synthesize amylose and amylopectin, we can make it into any plant.

• 43:02Jason Calacanis?

  How long would it take? How long would it take? What would it cost to build your pasta-making machine and rice-making machine, you know, to have more food?

• 43:12David Friedberg?

  These are decades-long scale-up problems, right? This is not like, this is like, hey, we got a Apollo moon mission.

• 43:16Jason Calacanis?

  So it's similar to nuclear or solar and batteries?

• 43:19David Friedberg?

  Exactly. Yeah, yeah.

• 43:21Jason Calacanis?

  Got it.

• 43:22David Friedberg?

  But there are solutions to this. Look, I mean, this is why I keep coming back. To saying like, we're evolving the the global economy and planet Earth away from this model of centralized industrial manufacturing into a production system that looks more distributed, more decentralized with better technology. And that that's really a big trend for this century for for our global economy. And that's why right now, I think the near term trend is in deglobalization. People making less capital efficient decisions that create redundancy in supply chains. And there's a lot of ways as investors to play that, by the way.

• 43:53Jason Calacanis?

  Sax, what are your thoughts on maybe the the high order bit for the West being a race to resiliency or a race to redundancy in energy, in semiconductors, this race to resiliency in food supply?

• 44:06David Sacks?

  Yeah, I mean, look, trade creates economic wealth, but it also creates dependency. And we're realizing the downsides of having that dependency. If we're dependent and or Europe is dependent on Russian cash, or, you know, you saw during COVID, we've become dependent on Chinese pharmaceuticals. All the pharma companies have moved their manufacturing over there. And then, you know, that got when China was rattling the saber, because we were blaming them for COVID. This is back in in 2020, they all of a sudden started implying we might not get access to pharmaceuticals. So, look, we are gonna have to rethink all those trade relationships. You can't have trade without trust. Because, again, if you if you you are empowering the producer to cut you off when you make yourself dependent on that. So so look, I think we're gonna have to rethink all of that.

• 44:49David Sacks?

  But can I go back to your best case, worst case question?

• 44:52Jason Calacanis?

  Yes, I was trying to get somebody in there on.

• 44:54David Sacks?

  I think it's a good question. And, you know, I hear me lay out the best case and the worst. So the best case, look, the the best case is the sort of the Fukuyama argument, the sort of the from argument is this Western triumphalism, which is look, sanctions are gonna drive the Russians into submission. They're gonna topple Putin. The people are gonna rise up. They're gonna lose this war. We are gonna strike a great blow against autocracy and liberal democracy is gonna win. Okay, I understand that argument. Okay, now, what's the the worst case scenario? Worst case scenario is Friedberg's right, we end up with hundreds of millions of people starving. The war drags on because Russians aren't gonna give up. So the sanctions.

• 45:37David Sacks?

  You know, while be while hurting the Russians, don't end the war and in fact, drive them into the arms of the Chinese. You know, the Russia has been called a big gas station with nukes. That gas station will now fill up the Chinese economy henceforth, worsening the balance of power in Cold War II. And then there's a big, you know, tsunami or boomerang headed for the US economy. We we have a recession later this year as gas prices go to $7 and $10 a gallon. And so it ends up hurting us. And so I don't, I I certainly see the case for sanctions. But but I wonder if people are really thinking through the downside scenarios. And what I what I do think is that if that that the

• 46:21David Sacks?

  removal of sanctions should be certainly something we're affirmatively putting on the table in these ceasefire negotiations. And that sounds obvious, but I saw a tweet from Ian Bremmer, who's sort of part of the foreign policy establishment.

• 46:34Chamath Palihapitiya?

  Think tank guy.

• 46:34David Sacks?

  Think tank guy, who has been pretty good on like

• 46:37Chamath Palihapitiya?

  He's smart.

• 46:37David Sacks?

  He's smart, and he's been good on no fly zone. He's been saying the same things I've been saying, like, guys, this is tantamount to a declaration of war. We're not going there. Also, basically saying that, listen, no matter what the Russians do, we are not going to get into war three here. He's been cool headed about that. But he also tweeted that, listen, as long as Putin's in control of Russia, we can't ever do business with them again. Sanctions are sticking around basically forever. And I just wonder if that is an overreaction. If we're going to make that policy, I'd rather see us as America be willing to put economic relations back on the table as, you know, in this peace process as opposed to saying the Russians are cut off forever. Because otherwise, they're just going to

• 47:21David Sacks?

  become a Chinese client state. I don't see how that benefits us long term.

• 47:26Chamath Palihapitiya?

  Well, again, I did. But again, David, what do you think they do with China? China? What are they going to do? Take 60% of their goods and still export them to us even though it just contains Russian materials that are now considered contraband? They so they can't absorb it economically is my point. There's not enough demand outside these OECD countries to absorb all of that.

• 47:45David Sacks?

  Well, here's what I think.

• 47:47Chamath Palihapitiya?

  It's just mathematically not possible.

• 47:50David Sacks?

  I think, so look, I think you make a point, but I think if you're going to look at this from like a 50,000 foot level, I think there's like two grand narratives about what is happening in the world. One narrative, sort of the neocon, sort of liberal hegemony narrative is that we're in a great battle between democracy and autocracy. The other narrative is that we're in Cold War II. It's that it's more of a great power rivalry between the US and China. I tend to think that the latter is where we're really at in the world. And the reason why I say that is you look at, there's a lot of autocracies who frankly, we support because we want them on our side. For example, you know, Turkey is run by

• 48:29David Sacks?

  an autocrat. You know, Erdogan is becoming more autocratic. In Egypt, we had sort of democracy there for a brief moment. When Mubarak got overthrown, guess what? They elected the Muslim Brotherhood. And we didn't like that too much. And now we got General Al-Sisi in charge. We like that a lot better. You know, we are still allies with the Saudis and their, their more autocratic government. So I tend to think that, you know, the better way to describe what's happening in the world is a balance of power rivalry between the US and China, which is only going to pick up momentum in the current, in the coming decades. And we have to think about who's on our side of the ledger and who's on their

• 49:12David Sacks?

  side of the ledger. And, you know, I think at this point, it's, we've pretty much driven Russia completely onto the Chinese side of the ledger. And I think that's going to have like very bad consequences for us.

• 49:25Jason Calacanis?

  All right. Let's segue from here into the economy, inflation and markets. In a previous episode, Chamath, you talked about the psychological cycle of, you know, ignoring good news, then accepting it, being outraged by it, and then maybe not taking the good news. In the bad news column, obviously inflation continues. Last six months of CPI numbers, year over year, obviously. September 5.4, I'll fast forward to November 6.8, January 7.5, February 7.9. Excluding food and energy, core inflation still rose 6.4%.

• 50:04Jason Calacanis?

  That being said, we have 11 point X million jobs available for Americans. Five or six million people unemployed who are looking for work. Obviously, there will be some mismatch in terms of geography and skills there. And then corporate earnings, great, but a recession possibly looming. Where are you on this? And obviously, the market's bottomed out. So where are you at with the economy? Hope, fear and otherwise?

• 50:32Chamath Palihapitiya?

  Well, I think that we're in the midst of what I would call a melt up. So, you know, probably the next month, month and a half. There really isn't much quote unquote, bad news that hasn't been priced in. The thing that I've learned over the last few years is that markets don't actually care what the news is. They, they can process good news and bad news equally well. What they despise is the uncertainty of what the news could be. And so this week was really important because we had two huge buckets of uncertainty taken out of the market.

• 51:15Chamath Palihapitiya?

  So the one we've already talked about, which is when, when the market saw that there was a surface area of a deal between Ukraine and Russia, that was really constructive. Because neither side would have signaled something if both parties were very far apart. So that, that meant to the markets, we're a few weeks out from something getting done. And then the second thing was Jerome Powell and the Federal Reserve. They finally had their meeting. They raised rates 25 basis points. But even more importantly, they gave you a very prescriptive forecast of what the next year will look like at a minimum and possibly even two years. And once you could have that, you were able to then go and redo all of your expectations.

• 51:58Chamath Palihapitiya?

  And what people realized was, okay, you know, inflation may actually start to get tamed in the back half of the year. The economy is still quite strong and we could actually support two, two and a half percent interest rates and still actually grow really well. And so what you've seen in the last three or four days is a reaction to the loss of uncertainty. And so there really isn't, now, the only thing defying the ointment could be if the war all of a sudden escalates, not that it gets dragged on, because at that point, that's also, I think, been priced in. But if something very meaningfully different and Russia, in this case, ratchets up the

• 52:39Chamath Palihapitiya?

  intensity by going, you know, nuclear or something else, although I think that's a very long tail.

• 52:45Jason Calacanis?

  Chemical weapons seems a possibility, or carpet bombing.

• 52:48Chamath Palihapitiya?

  I think these are all very, very low probability events. But in the absence of these things, you basically have really constructive dynamics right now for at least the next month and a half, maybe even two months.

• 52:59Jason Calacanis?

  How much of this has to do with retail investors who were YOLO, hodlers, speculators, stimmy chess, getting super active for two years and then maybe getting super spooked right now and maybe needing the money to deploy in their lives?

• 53:14Chamath Palihapitiya?

  Look, the thing to remember, and I hate to be this blunt, but it's true. Retail is not a very good signal of anything. In fact, if you actually look at retail flows, typically you will make money by doing the exact opposite of what retail does. And I posted this in the group chat to you guys, you know, every single day since the beginning of this year, retail was a net buyer. In all of those days, the market got punched in the face. Finally, at the beginning of March, retail capitulated. Right? And I posted that same day and I said, guys, this is the moment to buy. And lo and behold, what happened? The markets rallied meaningfully from that point.

• 54:00Chamath Palihapitiya?

  And the reason is because they were going into the end of Q1. You have a huge tax bill due in April 15th. People were starting to just finally give up. They were buying every single day and they finally gave up. But that capitulation was the moment that you buy. So if anything, retail is the, you know, I've said before, you fade your fade list. You know, retail flows are something you typically will make money by fading, by doing the exact opposite of whatever retail is doing. And you just need to have access to that information. If you have access to it, you can kind of, you know, profit from it. So where are we going from here? Probably up.

• 54:36Jason Calacanis?

  David, you've been pessimistic. We're seeing a lot of changes in the private market. Funding rounds taking longer, a lot of funds getting closed, you know, venture funds, that is. But seems like a lot more diligence is being done. The time meantime to closing a deal has definitely extended massively. What's your betting strategy now as a venture capitalist?

• 54:57David Sacks?

  I think that there's going to be a trickle down effect of what's happened in the market to privates. And the valuations are going to go back to their pre-COVID levels. I mean, AR multiples pre-COVID were like 20, not 100. So we're seeing a massive repricing of deals and that's going to continue. And I don't think it's going to be this like transient effect. Everything's going to bounce back in a few weeks. On the public markets, the defining characteristic of these markets is volatility. I mean, the VIX, which is the measure of volatility, is at one of its all time highs. And so it's true that over the past week, we saw a nice sort of melt up or rally because there was speculation about this peace deal.

• 55:40David Sacks?

  The Financial Times had that article on the 15-point plan. Chamath is right that if that peace deal gets signed, I think the market rallies strongly because, you know, it went up considerably just on hopes that it might be signed. But on the other hand, if this peace process falls apart, I think the market will give back all those gains and then some. I think we are nowhere near out of the woods on all the risky scenarios that could develop from this war. I think that if there is no peace deal, I think you can almost expect Russia to escalate in the war. But they have said this is an existential issue for them. I think that would mean at a minimum, you know, heavy bombing of Ukrainian cities and

• 56:24David Sacks?

  then they'll step up the pressure even more on Biden and Washington to get militarily involved. This situation could still spin out of control. So, you know, I think in the absence of a peace deal, and then finally, we have all the risks of recession, we definitely are seeing a slowdown in the economy right now. And I think if this war continues and we don't get the spring planning and things keep, you know, deteriorating, I think we're headed for a very serious recession in this country. I think we'll go from slowdown to recession. So if I were advising Biden, of course, no one's listening to me, but if I were advising Biden, I would be telling Biden, listen, Mr. President, we are going to have a horrible midterms in November and, you know, we are going to have a really hard time in 2024.

• 57:06David Sacks?

  If this war continues and, you know, we head down into recession or any of the other catastrophes that could happen, we need to push for a peace deal right now. And the US should be playing a constructive role and we should be applying pressure wherever we can to make a deal because the broad contours of this deal to Chamath's point have been set. I don't think any of the details, now that we know, look, it's about Crimea, it's about Donbass, it's about neutrality, none of the details that we're still fighting over are more important than getting a peace right now. And if I were in the White House, I'd be singularly pushing for that.

• 57:43Jason Calacanis?

  Yeah, it's uh, it's complicated. There, the, the counter to that obviously is this could be, you know, the beginning of the end for Putin. And, you know, even if that's a 10% chance or 20% chance, the possibility that in our lifetime, you know, Russia could have a leadership change could be tremendous. Obviously, it's a coin toss, which way it goes, uh, but change could be phenomenal.

• 58:05David Sacks?

  So, look, that's certainly in the cards. And, um, and look, if somehow magically Putin got toppled and replaced with a Democrat, that would be a wonderful thing. Um, however,

• 58:15Jason Calacanis?

  It's happened before. It's rare, but it happens. Yeah.

• 58:18David Sacks?

  Well, tell me, when, when does it happen?

• 58:20Jason Calacanis?

  Uh, East Germany, right? We tore down the wall.

• 58:24David Sacks?

  Yeah, I mean, that was a reunification. Here, here, here's the basic problem is, is we, we understand the Russians, in the Russian system, you've got all these oligarchs are basically like bosses or mob bosses. And then Putin's like the boss of bosses, right? So what are the odds, if you take out the boss of bosses, that he's replaced with someone who's a Democrat versus the next biggest, baddest boss? Um, I, I think, you know, look, that, that's certainly a possibility, but my concern is that when you play for maximalist upside like that, you're also taking maximalist downside. And a lot of people have, have made this point that, look, if Putin's life is on the line, he's going to be more willing to do anything. And I think the, the better approach, and you've, you've heard people mention this idea of the golden bridge from Sun Tzu, which is give your enemy a golden

• 59:09David Sacks?

  bridge to retreat.

• 59:10Jason Calacanis?

  I mentioned it.

• 59:11David Sacks?

  So that he's not fighting for his life.

• 59:13Chamath Palihapitiya?

  That was, that was a really clever, um, framework, J. K. I think.

• 59:18Jason Calacanis?

  I mean, there must be an offer from-

• 59:20Chamath Palihapitiya?

  If you guys went and created a tally, and I'm not trying to be Debbie Downer here, but, you know, since the advent of the CIA, the number of times that we have tried to incite regime change, and then the number of times it's been successful, what is that percentage?

• 59:34Jason Calacanis?

  I mean, we don't know, because we don't know how many times we've tried.

• 59:36Chamath Palihapitiya?

  Well, we know, we know of many attempts.

• 59:38Jason Calacanis?

  Yeah, I mean, we've changed a lot of two-orders.

• 59:41David Sacks?

  Jake, every time we try it, we either get the same or worse. So, for example, Syria, we tried to get rid of Assad, he's still there, and now it's worse. Uh, Afghanistan, we tried it, the Taliban are back in power.

• 59:51Jason Calacanis?

  Well, no, but you have to take into the calculation is what if it does change?

• 59:55David Sacks?

  Hold on, Iraq, we got rid of Saddam, and now we've handed that country to, uh, Iran on a silver platter, the Ayatollahs control it.

• 1:00:04David Sacks?

  Gaddafi in Libya, we got rid of him because he was so horrible. And now that country is in chaos. So you've got to open their safe markets.

• 1:00:11Chamath Palihapitiya?

  We tried in, um, in Ukraine. We tried in Ukraine in 2014. So our, our track record is not super good.

• 1:00:21Jason Calacanis?

  Yeah, no, I mean, I, I think regime change is like chasing someone out or something.

• 1:00:26Chamath Palihapitiya?

  If we were a company at some point, we would have been pipped for our ability to do regime change.

• 1:00:31Jason Calacanis?

  I don't, I don't think it's a great strategy. I'm not necessarily advocating for it, but.

• 1:00:35Chamath Palihapitiya?

  Well, I'm not saying that. I'm saying whether or not it's a good strategy. I think that we are particularly not good at it.

• 1:00:41Jason Calacanis?

  Yeah, we need a performance improvement plan on that front.

• 1:00:43David Sacks?

  Well, we should just, I think we should just stop trying that. We shouldn't be going for a regime change. We should be.

• 1:00:47Jason Calacanis?

  Well, this is a good question. You and I had this thing where I said, you and I are in sync that we both want to contain dictators and maybe isolation. And you were like, I'm not into isolation. So I think a definition of like, what is the strategy for containment going forward post a peace deal with Russia? And isolationism, you know, I guess is a bit of a trigger word and it's loaded, but.

• 1:01:07David Sacks?

  Well, yeah, I'm not an isolationist.

• 1:01:09Jason Calacanis?

  The next person.

• 1:01:10David Sacks?

  I would describe my strategy as selective engagement, meaning that we still engage internationally on behalf of vital American interests and our core interests, but we don't stick our fingers in the pie of the internal affairs of all these countries all over the world to try and foment regime change. So for example, like what's an example of a vital American interest? I would say standing up to China in the sense that we do not want them dominating Asia and becoming a peer competitor to the United States that can then challenge us all over the world. So.

• 1:01:39Jason Calacanis?

  So more pragmatist on it.

• 1:01:41David Sacks?

  I would be more pragmatist.

• 1:01:42Jason Calacanis?

  We can be isolationist with North Korea because there's literally nothing they can do for us.

• 1:01:46David Sacks?

  And, and look, I would not be throwing countries like Turkey and Egypt and Saudi Arabia out of our coalition in Cold War II because we don't like the, the nature of their governments. And I'm not saying I support autocracy. I don't.

• 1:02:00Jason Calacanis?

  No, but the reality is. Dialogue is reasonable because if you don't, then the other side will.

• 1:02:06Chamath Palihapitiya?

  The foreign policy playbook is going to get fundamentally rewritten after this Russia-Ukraine war, in large part because of the effectiveness of government sanctions plus.

• 1:02:21Chamath Palihapitiya?

  Corporate social responsibility, whatever you want to call that CSR function. Public sentiment, woke is- cancel culture, whatever you want to call it. Yes, I agree. But the combination of these two things has proved to be incredibly effective at setting the stage for some sort of compromise or regime change. The spectrum of outcomes is there, but the point is that's an incredibly unique set of circumstances where before we never would have thought an economy that large or a country that important on the world stage would ever have compromised in the absence of military intervention. And I think that that's important to think about as we think about what our forward going China policy looks like. I think really like the, the importance of like the OECD, right?

• 1:03:04Chamath Palihapitiya?

  The importance of all these organized nations that consume from China, becoming more organized now probably makes more sense. I said this before in a tweet, but the importance of the US dollar has become completely primary, which has been an incredible benefit, you know, benefit of what has happened because of this war. You know, very small silver linings in the grand scheme of all of this humanitarian crisis, but those are going to be really important things that the United States can seize on. So, you know, we may in some ways have, have had some diminished power in order to facilitate peace in this, in this conflict, but the downstream capital that we could accumulate by organizing these countries more effectively, I think could be really important. And then separately, we have to have a moral conversation in the United States about all

• 1:03:49Chamath Palihapitiya?

  these things, like environmental laws, like our approach to agriculture that may have been underwritten. Absolutely, yes. With faulty logic. A little more pragmatism would go a long way.

• 1:03:59David Sacks?

  Yes, it would. I'm a little more pessimistic about our foreign policy establishment and part of the reason I say this is because I'm very disappointed in the Republicans. The Republicans used to be the party of vital national interest, meaning America did not get involved all over the world unless we had a vital national interest. You just never hear them making that case anymore. It's all the way back to sort of Bush doctrine. And, you know, as an example, they're all pushing for the no-fly zone. They're all pushing for the delivery of the MiGs despite.

• 1:04:27Chamath Palihapitiya?

  They want war. Just say the words.

• 1:04:31Jason Calacanis?

  They're weird. I mean, th- those right wingers are crazy. Why are they so?

• 1:04:34David Sacks?

  I've been very critical. I mean, I've been.

• 1:04:37Jason Calacanis?

  War on this. I don't understand their endgame. Is it just machoism?

• 1:04:41David Sacks?

  I think there's.

• 1:04:42David Friedberg?

  Anxiety.

• 1:04:44David Sacks?

  I think, I think there's two possibilities. I think.

• 1:04:45Chamath Palihapitiya?

  Is it Freebrooke? What is it?

• 1:04:46David Friedberg?

  Anxiety.

• 1:04:48Chamath Palihapitiya?

  Yeah.

• 1:04:49David Friedberg?

  And this is why I predicted war at the end of last year, but, you know.

• 1:04:52David Sacks?

  I think that's trying to be a great prediction. I, I look, I've been, I've been very disappointed in the Republicans and I think, I think here's where I think is going on. I think if any of those Republicans, like say, uh, Mitt Romney or something, uh, look, I think Lindsey Graham is just a crazy sort of warmonger, but, but you take someone like Mitt Romney, who's basically saying all of these, um, sort of more, uh, bellicose and escalatory things. If he was actually in Biden's shoes, I bet he'd be making the same decisions as Biden, uh, because he would not want to risk war three, but it's such a cheap, easy partisan political attack to say that Biden is being weak and he's not doing everything he can.

• 1:05:31Chamath Palihapitiya?

  Being weak at all. I think history will look back and think two things about, about this whole thing with, with the American lens. The first thing was, for whatever set of reasons, we lost it and we diminished some stature in the world as a perceived arbitrator and mediator in these kinds of conflicts. But separately, I do think Biden has done a very good job in seeing the forest from the trees. He held the line on military intervention and he has really ratcheted up the ability for others to impose economic sanctions beside and behind the United States. And I think that will turn out to be a master stroke.

• 1:06:04David Sacks?

  I give him credit.

• 1:06:04Chamath Palihapitiya?

  And I think that, that he deserves to be acknowledged for that. He did a very good job.

• 1:06:08Jason Calacanis?

  Because I, I think the, uh, Biden has done an amazing job of just saying outright, we're not going to war. We are not starting war with a full stop.

• 1:06:17Chamath Palihapitiya?

  That takes a lot of courage.

• 1:06:18Jason Calacanis?

  He has not even, I mean, and Sax, you've lauded him. I think that shows some electoral honesty on your part. And to your point, Chamath, there's a reason why we lost our credibility. These misadventures, as Sax calls them, in the Middle East have been disastrous. We made huge mistakes and we need to take a different approach. I'll, I'll give Trump a compliment. He didn't start any wars. And if you look at every president who came before him in our lifetime. Every time they start two or three conflicts and he was like, we're gonna have a no war policy. And now you got Biden say, we're not gonna go to war either. This could be a tipping point and our focus, I think, the ultimate checkmate should be Biden coming out and the EU coming out and saying, we are going to start a race to resiliency and here's how it's gonna look.

• 1:07:01Chamath Palihapitiya?

  Jason, it's an incredible point that you just made. I just want to reiterate it. Since Reagan, I can, I can explicitly point out incremental conflicts that the President of the United States has approved and greenlit to get us into, since Reagan.

• 1:07:17David Sacks?

  We've been in seven wars. We've been in seven wars since the end of the Cold War. It's amazing. The American people-

• 1:07:23Chamath Palihapitiya?

  And to the point, Jason, Trump was the only one that did not start a new war.

• 1:07:25David Sacks?

  Right.

• 1:07:26Chamath Palihapitiya?

  And for Biden.

• 1:07:26David Sacks?

  You, you wanna know why? Cause he was a populist and the people of the United States of America don't want these crazy wars. They are sick of all of these wars.

• 1:07:34Jason Calacanis?

  Here's the war.

• 1:07:34David Sacks?

  It is the foreign policy establishment that is pushing for all of these wars. And listen, why, and Obama the same way. Obam- let's just go back. Obama beat Hillary Clinton for the Democratic nomination because he was against the Iraq war and she was for it.

• 1:07:49Chamath Palihapitiya?

  Yep.

• 1:07:49David Sacks?

  Obama had the right instincts on Ukraine. He did not want to escalate the situation. Remember in 2014, when they took Crimea, he said, America does not have a vital national interest that justifies us going to war. He was right.

• 1:08:02Chamath Palihapitiya?

  The president that tried to incite regime change. It's, it's, it's-

• 1:08:05David Sacks?

  Right. And you wanna know why? You wanna know why? Because, because the State Department lifers. You know who instituted, who incited that? Our undersecretary of state for Russian affairs was Victoria Nuland, who was a foreign policy advisor for Dick Cheney. And these people bull weevil their way into the foreign policy establishment. They're in the think tanks, they're in the State Department.

• 1:08:27Chamath Palihapitiya?

  What, what word did you just use?

• 1:08:28David Sacks?

  Bull weevil. They, they like-

• 1:08:30Jason Calacanis?

  That's a great word.

• 1:08:31David Sacks?

  They, they are the permanent, hold on a second. They are the permanent establishment of Washington. The presidents come and go, they stay forever. She was there, she was caught on a phone call, basically picking the new leader of Ukraine after a coup in 2014.

• 1:08:49Chamath Palihapitiya?

  She, is she the one that had that famous quote that said, uh- Putin, fuck Putin, was that?

• 1:08:53David Sacks?

  He said, he said, yeah, she said, yeah, this is our guy, basically picking Yatsenyuk to be the new leader. And she said, fuck the EU, when the EU wanted to take a more temperate approach. Okay.

• 1:09:04Chamath Palihapitiya?

  Okay.

• 1:09:05Jason Calacanis?

  Look at William F. Buckley, here you go in Sax.

• 1:09:07David Sacks?

  I think the mistake Biden made, listen, I think Biden has good instincts on this. I think he had good instincts last year in June, when he called for basically an emergency summit with Putin to dial down the tensions. And I think that summit was successful. So what happened? Okay. The Intercept just had a great article talking about how tensions ratcheted down after that June summit. But they picked back up in October, November. What happened between June and October? I'll tell you what. On September 1st, Zelensky met with Biden in the White House and the State Department issued a joint statement. Basically reaffirming that Ukraine would be part of NATO, they would reaffirm military ties, economic ties. And then on November 10th, they published a giant charter agreement between the United States

• 1:09:51David Sacks?

  and Ukraine that was signed by Blinken. Now, look, did Biden know about this? Yes, but this is the State Department agenda. And it was on the heels of this charter agreement that the Russians basically said they had reached the boiling point. They basically delivered the ultimatum to the US in December and precipitated the crisis that preceded this war. So my point is just, listen, we have a State Department with its own agenda. It loves regime change. It loves having clients all over the world and inserting its fingers in the pie. And unless Biden, hold on, if unless Biden stands up to his own State Department, we will not get a ceasefire and we will not get a peace deal, and that will be disastrous for his presidency.

• 1:10:33Chamath Palihapitiya?

  What I will say is, I think Biden has done a very good job. And I know Tony really well, and I think Tony's trying to do the best job he can. I think he's done a pretty good job, all things considered as well.

• 1:10:44Jason Calacanis?

  That's awesome. Pre-Berg, any final thoughts here on, you know, a very difficult time period we're living through?

• 1:10:52David Friedberg?

  The global order is being restructured.

• 1:10:56David Friedberg?

  It's predictable. I think, again, if you read Ray Dalio's book, which I recommended heavily last year, it's surprising how much of that simple rubric is playing out today, exactly as that rubric kind of estimated it would. And, you know, the, look, I mean, by the way, one way to think about the China, Russia, US dynamic, you know, you've got a one, two, and three player. Game theory's number one wants two and three to be at it, because then they'll, you know, end up diminishing value. Number two wants one and three to be at it. Number three wants one and two to be at it. And so we're seeing that, that multi-party game theory play out right now. And, you know, again, based on that rubric, you could probably predict where this is all going to end up.

• 1:11:40David Sacks?

  Brilliant point. Listen, if you were to look at this from the Chinese standpoint, they must be loving what's going on, loving it. Old saying, I think Napoleon said it, never interrupt your enemy when he's making a mistake. Why is China so quiet right now?

• 1:11:54David Friedberg?

  Well, yeah.

• 1:11:55David Sacks?

  Because they love their dream. Their dream is the US and Russia attacking each other.

• 1:12:01Chamath Palihapitiya?

  We have to implement energy independence writ large, and we have to make sure that it is very clear we have influence amongst all these OECD countries, because if China takes one foot over the line, we have to have the ability to do to them what we've done to Russia economically. It's the only way in which we can ratchet down all this tension and find peace.

• 1:12:26Jason Calacanis?

  Yes. The new war is the war on our dependency on dictators. We must, must, must have a race to resiliency. We're going to talk about this and more at the All In Summit.

• 1:12:36David Sacks?

  No more Land grouse.

• 1:12:38Jason Calacanis?

  No more. May 15, 16, and 17, All In Summit, Miami. 500 of the 700 tickets are gone. If you want to apply for a scholarship, you can apply. Tell us how much you love the show at the website. Just do a Google search for All In Summit. Really excited to announce, Keith Raboy will be joining us, one of Sacks' besties, a very iconoclastic person. We're going for iconoclast. Next up, Brian Peterson, friend of the pod from Flexport, talking about all these supply chain issues. The number of speakers we're going to have is going to be extraordinary. Brad Gerson, a friend of the pod, is going to come talking about markets, education. Joe Lonsdale is halfway in. Again, another iconoclastic, controversial person.

• 1:13:16Chamath Palihapitiya?

  He said he's flying for the day, I know.

• 1:13:18Jason Calacanis?

  Yeah, and uh, um. We'll keep announcing more. We'll keep announcing more every week. Apply for a scholarship if you like. And we'll see you all there. For. Love you guys. Sultan of Science, The Rain Man, and the Dictator. I'm Jake Al. Love you, besties. Bye, bye. Bye, bye, besties. Love you, Sacks. Love you, Sacks. Love you, Free Bird.

• 1:13:37Chamath Palihapitiya?

  Back at ya.

• 1:13:38Jason Calacanis?

  Those are good feelings for you to have.

• 1:13:41Speaker 04

  We'll let your winners ride.

• 1:13:44Speaker 04

  Rain Man David Sacks.

• 1:13:48Speaker 04

  And instead, we open source it to the fans and they've just gone crazy with it.

• 1:13:52Jason Calacanis?

  Love you, besties.

• 1:13:53Speaker 04

  I'm the queen of Kinoah.

• 1:13:56Speaker 04

  Let your winners ride. Let, let your winners ride.

• 1:14:01Speaker 04

  Besties are gone.

• 1:14:04Speaker 04

  That is my dog taking a notice in your driveway, Sacks.

• 1:14:11Chamath 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, but we just need to release it now.

• 1:14:19Speaker 04

  What? You're the bee. What? You're a bee. Bee? We need to get merch.

• 1:14:26Jason Calacanis?

  Besties are gone.