E108: Doxing debate, Nuclear fusion breakthrough, state of the markets & more

(0:00) Jason's new gig! (1:05) Twitter's new privacy rules, notable suspension, doxing dynamics (20:48) Nuclear fusion breakthrough and geopolitical ramifications (42:58) Jason and Sacks's big night (51:11) State of the markets: Coupa acquired by Thoma Bravo, startups at all stages seeing heavy valuation reductions, what LPs are thinking (1:22:08) TV catch up, worst person in tech bracket 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.finextra.com/newsarticle/41483/checkoutcom-chalks-70-off-valuation https://twitter.com/Cernovich/status/1602457619431493634 https://twitter.com/elonmusk/status/1603190155107794944 https://en.wikipedia.org/wiki/National_Ignition_Facility https://www.ft.com/content/4b6f0fab-66ef-4e33-adec-cfc345589dc7 https://www.neimagazine.com/news/newsfusion-industry-survey-shows-significant-increase-in-private-investment-9860867 https://www.reuters.com/markets/deals/thoma-bravo-buy-coupa-software-615-billion-2022-12-12 https://www.finextra.com/newsarticle/41483/checkoutcom-chalks-70-off-valuation

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

• 0:00Jason Calacanis?

  Captain Calacanis is here, reporting for duty.

• 0:03David Sacks?

  Wait, is that Spirit Airlines, Cap?

• 0:05Jason Calacanis?

  Absolutely. Spirit Airlines. I just wanted to say, All In Podcast, now sponsored by Montclair and Spirit Airlines.

• 0:12Chamath Palihapitiya?

  Or now sponsored by the Village People.

• 0:16Jason Calacanis?

  Y M C A.

• 0:18David Sacks?

  Now, are you a pilot or a flight attendant, Jake How?

• 0:21Chamath Palihapitiya?

  He's a flight attendant.

• 0:22David Sacks?

  I don't think he's thin enough to be a flight attendant.

• 0:24Jason Calacanis?

  Are you fat shaming me? Are you body shaming? You can't do that nowadays. That'll get you cancelled. Getting Saks cancelled at this point, like, fat shaming would be number 72 on the list.

• 0:34Chamath Palihapitiya?

  He can't get cancelled because all the libs have left Twitter. There's nobody to...

• 0:37Jason Calacanis?

  There's no home monitors left?

• 0:39David Sacks?

  That's not true. They all pretend.

• 0:41Jason Calacanis?

  No, they quit every week?

• 0:42David Sacks?

  Yeah, it's like all the libs who said they moved to Canada when Trump got elected.

• 0:45Jason Calacanis?

  Yeah, Canada immigration.

• 0:47David Sacks?

  Go ahead.

• 1:05Jason Calacanis?

  A hacker figured out a way to take all this data and track, you know, people's yachts, people's planes. Obviously, one of those people was Elon. Elon had a security issue. This is all public information. So, the larger issue at stake here is the fact that the law allows for people to do this persistent tracking of planes, which then becomes persistent tracking of a person. And what really is at stake here is how we define the term doxing. For people who don't know the term doxing, it means giving a person's location. That could be your home. That could also be you're at a location for some period of time. You're at a hotel, you know, for a basketball game. And it's pretty clear. You can take a picture of a celebrity

• 1:48Jason Calacanis?

  and say, there's a celebrity here. Oh, Lady Gaga's at the farmer's market. What I object to here, we all understand doxing is dangerous and it, in fact, is against the law to just give people's addresses and stuff like that. The issue here is a new type of doxing, which I'll call, you know, persistent coordinated doxing, where dozens of times a month, you're giving a person's location. It may not be against the First Amendment, Sacks, I think you would agree, but we have to ask ourselves, do we want to live in a world where whether a person's on an electric bicycle, or an airplane, or any device in between, somebody should be releasing dozens of times a month, a specific dedicated feed of their location? It is terrorizing as a parent when this happens.

• 2:33Jason Calacanis?

  I've had doxing, people on the call here have had various security concerns. We don't want to live in a world with de facto doxing. What these sites were doing was de facto doxing.

• 2:43David Friedberg?

  I think it was a bad decision, and I think that it represented, the least generous statement would be that it represents deep hypocrisy, in that not just a few weeks ago did he say he would never delete that account, but he also said he was buying Twitter to enable freedom of speech and freedom of expression, and that he wouldn't come in and do the same sort of content moderation that was done by the old regime. And then he came in and did exactly what the old regime did, which is that he took the rules, and he took the, quote, "moderation policies," and he found a way to use them to make some editorialized decisions that he thought was appropriate. Now, the more generous thing is what you guys are saying, which I don't think is necessarily wrong, which is that he's trying to protect people where there's some loophole or some

• 3:28David Friedberg?

  law that doesn't seem right morally, but it is the law, and it is what it is. In those cases, I think you run into the exact same issue that the old guard at Twitter had, that the moderators and the executives at YouTube have dealt with, and that the executives at Google have dealt with, and that we sit here and we criticize, until you're on that side of the table, and you're forced to make these moderation decisions, you're forced to make these policy decisions, and you're forced to implement these policy decisions because of some moral framework that you now think is appropriate. And guess what? Some people will say, "That's not freedom of expression, that's not freedom of speech." You're taking that away from some people, you're taking this particular case away from a 15 or 16-year-old kid who's built a Twitter feed.

• 4:11David Friedberg?

  And so I think what it shows is just how hard it is to moderate these sites, these platforms, and that there is no simple, easy, idealistic ideologue of, hey, all these things are open, all these things can be used by anyone all the time. Because as soon as one of these edge cases start to happen, you want to come in and do something about it.

• 4:28Chamath Palihapitiya?

  Chamath, what do you think? What should happen going forward? So I have had these issues happen to me multiple times. I'm not nearly as important as Elon is, but it feels the same when you're in the middle of it.

• 4:43Chamath Palihapitiya?

  It feels pretty terrorizing.

• 4:46Chamath Palihapitiya?

  That being said, I think the real decision for somebody like me is that if it's too much is frankly just to get rid of it and, you know, to find a different mode of transportation, that's a little bit more anonymous. You're pragmatic about it. And the reason I say that is that I just think that you would have to go and get the government to basically change the law, which they're not going to do. And so then as a result, your reaction will seem somewhat contrived and deeply personal. And in that, I think you lose credibility. Let me just summarize this and be the first one to just state this. I think that if there's any person in the world that can figure out Twitter, it's probably Elon. But man, has he taken on just a gargantuan battle.

• 5:29Chamath Palihapitiya?

  And increasingly, I am not a fan of this battle, and I'll tell you why. This is a man who has essentially proven that he can bend the laws of physics on behalf of humanity. He's done it twice, once in electric cars and once in rocketry. The problem is that the realm of decision-making at Twitter has nothing to do with the laws of physics and is governed by emotions and psychology, in which there is no canonically right answer. And so he's quickly finding out that half the population will always find fault with him, no matter what he does. And now, the implication of that becomes very important.

• 6:09Chamath Palihapitiya?

  We saw yesterday that he had to sell another $3.8 billion of Tesla stock. Why is that? It's because this transaction, which was, you know, very tight to get done, probably required lots of margin. You know, there, I, look, I have a margin loan at Credit Suisse, so I know how these things work. And you can very quickly get margin called. You have to sell down things that you own in order to maintain your collateral limits. We've talked about this before. He's had to do this twice now in the last few weeks. And that's because, again, not because of the demand at Tesla, as far as we can tell, but because people believe he's distracted. And so people are anticipating weakness at Tesla. People are now shorting the stock.

• 6:51Chamath Palihapitiya?

  Anyways, it's causing this downward spiral. And can he fix it? I think so. Can he pull it all out? Sure. Is it just putting himself under an enormous amount of pressure that he could have avoided? Somewhat, yes. And I think that this is sort of where we're at. Um, six weeks in. My gosh.

• 7:14David Friedberg?

  Totally. I mean, I was saying this guy learnt in six weeks what it took YouTube seven years to learn. How hard it is to moderate content. And, you know, I think the thing that-

• 7:23David Sacks?

  This is where I disagree is you're attributing so much good faith to these content moderators at YouTube and Twitter when the Twitter files reveal that they made no effort to suppress their bias. In fact, they were like, pretty much-

• 7:39Chamath Palihapitiya?

  Wait, can you, before, okay, before you react to that-

• 7:42David Sacks?

  Dancing in the streets every time they booted off someone they didn't like.

• 7:45Chamath Palihapitiya?

  Fair enough. Before you react to what Friedberg just said at the end, that coda, can you respond to what I just said? Isn't it true? Like, it's like-

• 7:51David Sacks?

  Well, look, I mean, if you define what Elon is, you know, doing there as, you know, acting as a judge, arbitrating on every little content moderation decision, is that a great use of his time relative to what he could be building at Tesla and SpaceX and doing on behalf of humanity? Then no, clearly not. But if you define what he's doing in the larger sense as restoring free speech- To the most important town square social network, hopefully thereby inspiring other tech companies to move in the direction of opening things up, then I actually think it's a pretty good use of his time. So, look, I think we can quibble about this or that decision that he makes, or this or that tweet, but I think the overall thrust of what he's

• 8:34David Sacks?

  doing is very important for the country and for humanity. So, I get where you're coming from. Hopefully, he'll find some people at Twitter who he can empower and trust to make these content moderation decisions, so he's not drawn into every single little battle, right? We do want him focused on the highest priority problems.

• 8:53Chamath Palihapitiya?

  My point is just that, I get that. I just think that what he's learning and what we're living and seeing in real time is that there is no canonically right decision ever in this space. There's only a decision where some percentage will support and some percentage will always be against. That's my point.

• 9:10David Friedberg?

  Correct.

• 9:11Jason Calacanis?

  He did say when he took over, he knew that would be the case. He said, "You will know I'm doing the good job when both sides are equally upset." Just to put a pin in it, I think it's important for people to understand what the new policy is. So, I'm just gonna quickly read it, just to...

• 9:25David Friedberg?

  Jake, hang on, sorry, hang on one sec, before you get to... Because I think the philosophical point, rather than the specific one, is an important one. And I just want to respond to what Chamath said and have Sacks respond to this. In the case of the points you make around the Twitter files, and by the way, I don't agree with any of the moderation decisions, personally. So, I don't think that someone should be suspended for posting public information. I don't think someone should be suspended for saying controversial things. That's my personal opinion, just so I'm clear on that. Because I know that, you know, that that's been questioned.

• 9:55Jason Calacanis?

  Describe yourself as a strong free speech.

• 9:58David Friedberg?

  Libertarian.

• 9:59Jason Calacanis?

  Libertarian, sure.

• 10:00David Friedberg?

  Sure. And so, in this particular case, I think what really irked me, I was trying to identify why it made me so angry when he did yesterday. It triggered me, it really did. And I think the reason was that in the case of the Twitter file points, it was a minority, it was a minority that was affected. It was one person that was affected because the majority wanted to do that thing to that person. And I think in this case, it's that the minority... Wants to affect the majority in the sense that Elon has aggregated this control and this power over moderation and he's benefiting himself and a few people that have private planes and he's shutting down hundreds of tweet feeds Twitter feeds that are using publicly available

• 10:40David Friedberg?

  information and so it feels even more onerous of a of a use of power and influence because he's taking he's doing something that benefits a small number and affecting a large larger number whereas the whereas the other one was affecting a small number that benefited a large number because that's what a lot of people wanted to see happen. A lot of people wanted to see Trump suspended and it wasn't right either. Okay, I don't know if that if that makes sense.

• 11:06Jason Calacanis?

  Yeah, we understand your position completely. I just want to add to that. In this policy, I think it's very important to understand what he is saying about this. Accounts dedicated to sharing someone else's live location are going to be suspended going forward. You can still share your own location, obviously, content required, you know, content for public engagements, you know, the president is speaking somewhere, whatever. You just really can't be persistently, consistently tracking an individual otherwise known in, you know, plain speaking as stalking.

• 11:36Chamath Palihapitiya?

  But Jason, if NPR is live tweeting.

• 11:39Jason Calacanis?

  Sure.

• 11:40Chamath Palihapitiya?

  Jerome Powell's speech.

• 11:41Jason Calacanis?

  Perfect. No problem.

• 11:43Chamath Palihapitiya?

  At XYZ location.

• 11:44Jason Calacanis?

  Not a problem. If they do Jerome Powell's location for the next year, for the next year, 10 times a week, on his off duty, on duty.

• 11:55Chamath Palihapitiya?

  I'm just saying, I'm just saying, like, let's just say he gives a speech every week. Is that illegal?

• 12:01David Sacks?

  No, if you're giving if you're giving a speech at a public place where you've announced that you're going to be appearing at a certain time and place, you've already made public where you're gonna be. What we're talking about is what Elon Jet was showing was a live stream of precision GPS coordinates over a sustained period of time.

• 12:19Jason Calacanis?

  Yes.

• 12:19David Sacks?

  And not to be too dramatic about it, but if you look at like the weapons are so successfully being used in Ukraine right now, they're all precision GPS guided. Now, right now, you have to be a state actor to get a hold of those weapons, but you could imagine over the next decade that having someone's precise GPS. Coordinates over a sustained period of time, it would be pretty easy to target them for and not to be dramatic here, but for assassination.

• 12:42Jason Calacanis?

  Yo.

• 12:42David Sacks?

  That is a security risk. There's no way around that.

• 12:45Jason Calacanis?

  I brought this up with Palmer Lucky, man. I'm scared. That dude could come at me anytime when I get my jet. I don't want Palmer Lucky taking me out. Yo Palmer, I'm sorry dude. Do not take me out. I'm gonna get my jet. I'll be on my first flight and he's just gonna send a drone in.

• 13:01David Sacks?

  But look, let's talk about hypocrisy for a second. Okay.

• 13:03Jason Calacanis?

  Uh oh, here we go.

• 13:04David Sacks?

  Let's, let's talk about CNN's hypocrisy and the media's hypocrisy. Because earlier in the week, they were saying that any criticism of Yoel Roth, who is Twitter's former head of trust and safety, amounted to a threat to his safety. And they had this like theatrical tweet where they claimed he was having to flee his house, which a lot of people found pretty preposterous. They were basically saying that public criticism of someone who has put themselves out there to engage in a public debate, who's writing op-eds for the New York Times, that is a threat to safety. However, publishing someone's real time location on a continuous basis. So they could be targeted.

• 13:41Jason Calacanis?

  It's not intellectually consistent. It's not intellectually consistent.

• 13:43David Sacks?

  Safety.

• 13:44Jason Calacanis?

  That is not.

• 13:44David Sacks?

  Sorry, if, if one of those two things is a threat to safety, it's the real time doxing of somebody.

• 13:49Jason Calacanis?

  Yes.

• 13:49David Sacks?

  I think we now understand why Elon did what he did. He basically had an incident in LA in which the safety of his kid was threatened because he's got stalkers coming after him. So his safety is a real issue. It's not like a made up issue.

• 14:02David Friedberg?

  But why should his, yeah, why should his personal experience affect the usage of a service that hundreds of millions of people use? And that's the big issue.

• 14:10David Sacks?

  The decision should not be based on what affects him personally. There needs to be a principle basis. There needs to be a principle basis for any decision about content moderation or censorship. Maybe in the first few hours of that decision, it wasn't handled perfectly because there wasn't a principle basis. But since then, one has been put in place. The principle basis is what J Cal showed, and this applies to everybody. And so, you know, now it's a debate about whether that policy makes sense. Now, is Elon just as arbitrary and capricious as the former executives who are running trust and safety at Twitter? I don't think so for two reasons. Number one, he's promised. Transparency. He said that when we ban or shadow ban an account, there has to be a reason for it. And you have to be alerted to it. In other words, none of the shadow stuff.

• 14:53Jason Calacanis?

  No shadow.

• 14:54David Sacks?

  Be informed.

• 14:54Jason Calacanis?

  You get your speeding ticket, you get your ticket. It's there, right. No more shadow.

• 14:59David Sacks?

  That is different. And then the second thing is that, and again, I think you could say they didn't do this perfectly in the first few hours. But there needs to be a principle basis for a censorship decision, and it needs to be applied to everyone equally. And so far, we haven't seen any basis for believing that he's not applying this principle equally. I mean, it's still very early. Whereas the former rulers at Twitter were indulging their personal bias and personal preferences in who they were banning. There were two standards of justice. If you were someone who was allied with them, it was almost impossible to get censored, no matter how hateful your tweets were. But if you were somebody on the other side of the political bait, they were eager to suppress you. And I think that at least so far, Elon has not shown that type of selectivity.

• 15:40David Friedberg?

  He selected against someone that put him at personal risk.

• 15:45Jason Calacanis?

  I think, yes.

• 15:46David Sacks?

  But you understand what I'm saying.

• 15:47David Friedberg?

  I do, I do.

• 15:50David Sacks?

  If that's where the decision had stayed. Then I would agree with you. But I think that since then, they've put in place, they've undergirded that decision.

• 15:58David Friedberg?

  I gotta tell you.

• 15:59David Sacks?

  Policy.

• 15:59David Friedberg?

  I think those sites are, I think those tweet streams are cool. I think there's some cool tweet streams that some of these people run, and there are hundreds of them, and they're actually kind of cool. You can see where these different planes.

• 16:08Jason Calacanis?

  You're in favor of people tracking people's planes.

• 16:11David Friedberg?

  Like where Air Force One is, they show all these different planes. Look, and whether or not the FAA should be publishing this data is a separate question. But it's on the open internet. It is already there. It's like turning off the RSS feed from the open internet to protect himself.

• 16:24Jason Calacanis?

  Okay.

• 16:24David Friedberg?

  That's why it feels onerous.

• 16:25David Sacks?

  So here's the part I agree with, which is, I think this policy with regard to planes specifically is going to be futile.

• 16:32David Friedberg?

  Yeah.

• 16:32David Sacks?

  It's going to be at best harm reduction, because as long as there's many ways to publish this information.

• 16:36Jason Calacanis?

  It's on Reddit, it's on Facebook.

• 16:39David Sacks?

  So listen, I think this whole, I think this whole policy on Twitter is a little bit of a red herring. I think the real issue, the real underlying issue is that the FAA is publishing these ICAL numbers, thereby making every plane personally identifiable. I don't think there's, I haven't heard anyone explain why that's necessary.

• 16:53Jason Calacanis?

  I have a counter to it, Sax, if I may.

• 16:58Jason Calacanis?

  What we saw, whether you agree with it or not, with the mass banning of certain individuals, did actually silence them and take them out of the public square. One of the reasons, in fact, Elon wanted to buy Twitter. So if you look at certain individuals, whether it's Milo, Alex Jones, Trump himself, right on down the line, when they got banned across all systems, it was dramatic in terms of the reach of that information. So because of the size and scale of YouTube, Facebook, Twitter, et cetera, when they act in coordination, they can have a dramatic impact. Not a perfect impact, but a dramatic, which is why we have this issue of, hey, should 230 be rethought? Because when they act en masse, it is extraordinary

• 17:41Jason Calacanis?

  what they can do to an individual. They took Alex Jo... How do you consume Alex Jones? You have to seek that out in a major way. It's distinctly different. Chamath, last word, and then we're moving on to what could be the greatest science corner ever in the history of all in pod. Final words, Chamath.

• 17:59Chamath Palihapitiya?

  I think this is a great transition. We're about to talk about nuclear fusion. And my point is, I don't care about any of this stuff. Like I said, like, this is my point is like, if you take like an average person, okay, you know, we are, let's say, awake 16 hours a day. And, you know, if you take out the time with our family, David, the family is people that are related to you.

• 18:23Jason Calacanis?

  Can we DM Sacks those people one more time?

• 18:27Chamath Palihapitiya?

  Yeah, we'll send you their names. But if you take that out and you take out, you know, exercising and, you know,

• 18:34Jason Calacanis?

  Can we also explain that to Sacks? That's when you increase your heart rate and sweat, Sacks.

• 18:38Chamath Palihapitiya?

  The point is that you have, let's just call it 12 hours, you know, a functional executive time that you can apply to a problem. And you can break that down into these blocks, right? I would really love what is basically the smartest human and the most productive human of our generation to be filling those blocks with things that sort of like really transcend and increasingly and I agree that freedom of speech is important increasingly those buckets are being filled with things that are very low level and hyper tactical

• 19:17Chamath Palihapitiya?

  and are distractions at best to the to the path of free speech and so I think that hopefully he gets all this shit under control over there he finds a good executive team I would like to see him get back to landing rockets on barges getting to Mars Let's do it.

• 19:36Jason Calacanis?

  Finish self-driving, we're almost there.

• 19:39David Sacks?

  Chamath definitely has a point, but I would say one of the reasons why we don't care that much about this issue is because I think something to understand that's important is there are different kinds of speech and different kinds of speech deserve different levels of protection the fact of the matter is like business advertising is not as protected as political speech porn is not as protected as political speech political speech speech criticizing the people in power is the most protected category of speech because the founders of the country understood that the people in power will always try to insulate themselves from accountability by limiting that kind of speech but that is precisely the kind of speech that the former rulers of Twitter suppressed the most and showed the least sensitivity to so listen I mean is Elon gonna be the perfect content moderator? No, I mean

• 20:23Jason Calacanis?

  Nobody is, nobody is.

• 20:24David Sacks?

  Nobody is but I do not believe that puts him in the same category as you know Vijaya Gotti or Yoel Roth who showed no sensitivity for political speech he has indicated a desire to restore freedom of speech and I think they ultimately ended up in a good place

• 20:40Chamath Palihapitiya?

  I want him to get us to Mars.

• 20:42Jason Calacanis?

  I want him to get us to Mars, I don't care about banning Twitter handles. Let's move on to the best science corner ever so according to sources scientists working for the US government have achieved a net energy gain in a fusion reaction for the first time.

• 20:56Chamath Palihapitiya?

  No, no, not net energy gain, get it right. We had ignition energy, which is very different from net energy.

• 21:01Jason Calacanis?

  Okay, hold on. I know that you're in the anti camp. Please let the science nerd have his moment.

• 21:05Chamath Palihapitiya?

  You have to say it correctly, so that people understand what you're talking about.

• 21:08Jason Calacanis?

  Let me just make it even simpler then. Explain to us what fusion is, Dr. Friedberg, and explain to us why this could potentially change everything.

• 21:17David Friedberg?

  We did this on a show once before, but I'll kind of do a quick kind of summary again. Basically, if you take atomic nuclei, which are made of protons and neutrons, and they repel one another, right? Because protons are positively charged, so they want to push apart from each other. So with enough energy and enough density, meaning that they're moving fast enough and they're close enough, they'll overcome their repulsion and jam into each other. When that happens, some energy is released. Because the total mass of the fusion of those nuclei is actually less than those nuclei when they're on their own. And so some energy is released, and that energy drives a chain reaction.

• 22:00David Friedberg?

  And so fusion is this concept that is fundamental to physics and fundamental to the energy driver of our universe. So the star in our sky,

• 22:12David Friedberg?

  the sun, is driven by fusion. And only about 15% of the mass of the sun at the center is dense enough to actually drive fusion. So the big challenge with fusion is how do you get these these atomic nuclei close enough together and moving fast enough that they'll actually fuse and release energy? And that's super hard. The reason it happens in the sun is because the sun has so much mass that the gravity pulls all those particles together. They get close enough, they get hot enough, they move fast enough, and fusion happens. Boom! All this energy comes out, and every day we're warm. Now, to do it on Earth is very difficult. But if we can do it, what happens when you fuse nuclei together is you don't release any, this isn't like a radioactive fission reaction.

• 22:58David Friedberg?

  You release energy that can be harnessed to drive our systems, our technology.

• 23:02Jason Calacanis?

  How is it done?

• 23:02David Friedberg?

  Yeah, so in the 1950s, you know, this was theorized, hey, we could do fusion on Earth. We got to get a really, really dense plasma, meaning the atomic nuclei and the electrons have kind of gone off the atoms. And it's just the nuclei spinning apart, you got to get them to move super fast, like tens of millions of degrees Celsius, and you got to get them really close together. So how the heck can you do this? So there's a couple of concepts to do this, one of which is called inertial confinement, which is where you basically create a little pellet of the material you're going to try and get to fuse. And you put a ton of energy on the outside, and you compress it really hard, really fast. And when you compress it really hard, really fast, and you can get it to be done in a perfect sphere, and you can get it to collapse on itself very quickly without, you know,

• 23:47David Friedberg?

  kind of shooting all over the place, enough of those particles will come close enough together, fast enough, hot enough, and they will start to fuse. Another way is through magnetic confinement, where you use magnetic fields to create a really hot plasma, get it to spin around or to move, and then the magnet brings that super hot plasma closer and closer and closer together until all those particles are moving fast and they're dense enough that they start to fuse. So, you know, one is called magnetic confinement, the other one's inertial confinement. And so what we saw happen this week is at the National Ignition Facility, which is a facility that was built starting in 1997, and they've spent about three and a half billion dollars to date. They demonstrated a net energy output from the fusion reaction of an inertial confinement system.

• 24:32David Friedberg?

  And what that means is they took a little pellet, and that pellet was made up of deuterium and tritium. The atomic nuclei that they use, the particles that they use are deuterium, which is a proton and a neutron stuck together, and then tritium, which is a proton and two neutrons stuck together. And the reason they use those two combinations is of all the different ways you could fuse nuclei together, this has the best energy output of any kind of reaction.

• 24:58Jason Calacanis?

  So, Free Bird, what actually happened this time that made this work for what apparently only three billion dollars, you said? You didn't say three trillion, you said three billion.

• 25:07David Friedberg?

  Three and a half billion.

• 25:08Jason Calacanis?

  About a third of what Sam Bankman-Fried stole. We have done something here, allegedly. So what actually happened that is so dramatic that we have a press conference, everybody's losing their mind?

• 25:19David Friedberg?

  So yeah, I just want to highlight one more thing about why this is so hard. You have to get such an incredible density, you have to get incredible energy. So high temperature and high density that confining those atoms and not letting them escape and, you know, basically dissolve before they fuse is super difficult. It requires so much energy in such a controlled way, in such a perfect and precise way, that all of the digital technology, the magnets, all the measurement systems, all the software, it's taken us decades to get everything that allows us to do this today. And now we're at the point that we may be able to start to realize production scale kind of versions of this.

• 26:02David Friedberg?

  So what they did is they had a small deuterium and tritium pellet, and they shown 192 lasers onto this container that held that little fuel. Those 192 lasers, the whole thing happened in a billionth of a second. The lasers pulsed, boom, here's an image of it. And as they did that, they, you know, basically X-rays kind of hit the sphere, this little BB, if you will, BB kind of thing, and compressed it. And it compressed so quickly and with such heat, and it didn't dissipate because it was done so precisely, all the lasers hit at the exact right time. Boom, this thing compressed, and then energy came out. And the energy that came out that was measured was one and a half times the energy that kind of went into that reaction. And here's a chart that I'll show you from the National Ignition Facility,

• 26:47David Friedberg?

  which shows just how inefficient the system still is. And this isn't even speaking to Chamov's point, but basically these guys lose 90% of the energy that they put into the center of the system. Only 10% is actually used to drive the compression. The rest of it is lost, and there's a lot of ways to improve the efficiency of the system from here. But basically, they put two megajoules in, they got three megajoules out. And so it was the first proof point, production proof point, in the 70 years that we've been theorizing about nuclear fusion here on planet Earth, that this is possible and it's real. Now, this is these kind of inertial confinement systems.

• 27:29David Friedberg?

  There are 33 private technology companies today that have raised about $3 to $4 billion so far this year to pursue several other technologies besides what the National Ignition Facility is showing, to try and build production-ready versions of nuclear fusion. And so these 33 companies are using a bunch of different types of tools. One of which is the Tokamak. If you show the image, I'll show you this one.

• 27:54Jason Calacanis?

  There it is.

• 27:54David Friedberg?

  Yeah, Tokamak, this is what we talked about.

• 27:56Jason Calacanis?

  That is the magnetic spinning thing that looks like Iron Man's arc reactor. Which I think they based it on, yeah.

• 28:03David Friedberg?

  Yeah, you create a plasma, you basically speed up the hydrogen nuclei super, super fast. These deuterium and tritium nuclei, super, super fast. And then you use magnets and the magnetic field has to precisely squeeze the plasma. Squeezing it, squeezing it, squeezing it. And if it's slightly off in even the tiniest way, think about a balloon, right? If you put a pinhole in a balloon, everything escapes from the balloon.

• 28:26Jason Calacanis?

  Yeah, you gotta do a perfect.

• 28:27David Friedberg?

  That's how technically hard this is. You're basically trying to create a balloon with a magnetic field and they're trying to keep the gas and you're trying to make it smaller and smaller and smaller. And if any tiny hole emerges, the entire plasma shoots out of it.

• 28:39Jason Calacanis?

  Now that they've done this, is that what happens in Uranus? Like when you're trying to hold in the wagyu. Anyway, let me ask this question then about the consistency of this and then we'll go to you, Chamath. Can they do it consistently? Or do you think this is like they got lucky once? Or are we going to be sitting here a year from now and they're like, we put in two and we got out six? And we did it five times.

• 29:04David Friedberg?

  Yeah, so now we've proven that humans can do this, okay? Which is, look, I mean, I want to give you guys some, and I know kind of some of Chamath's concerns, which is how production.

• 29:13Jason Calacanis?

  Humans can recreate the sun is what this comes down to.

• 29:16David Friedberg?

  No, no. Guys, I want to just say one, like.

• 29:19Jason Calacanis?

  Not even close.

• 29:21David Friedberg?

  I want to say one important thing from a historical context. All breakthrough technology starts out seeming impossibly large, impossibly expensive and impossibly slow. The Human Genome Project 20 years ago cost $100 million to sequence the human genome. Today, we can do it in a couple of minutes for $100, okay?

• 29:44Jason Calacanis?

  Incredible.

• 29:44David Friedberg?

  The first computer, the ENIAC computer, had 500 flops of compute capacity. It filled a room. It cost $8 million to build. 20 years later, we had a mainframe.

• 29:54Jason Calacanis?

  You're using all the wrong, no, this is all this emotional bullshit. You're using the wrong examples. Okay, let him finish, then you go, Chamath. Good. Finish your sentence, Friedberg, and then we go.

• 30:03David Friedberg?

  And today, we have an iPhone that can do 2 trillion flops of compute in your pocket. I think that what we're seeing with fusion today is similar to what we saw with the ENIAC computer in the 1950s, which is the demonstration that compute is possible. And now we're seeing a demonstration that fusion is possible. And a lot of folks have anticipated this moment, and they've invested ahead of this. Now, I don't know if any of these companies that are currently kind of being built are going to be production ready anytime soon. My estimate is that we will see production demonstration of fusion in the 2030s. So call it 8 years from now plus, and then you'll see grid scale scale up in the 2040s. So this isn't something that's going to happen next year or 2 years from now.

• 30:45Chamath Palihapitiya?

  It's already happening. What are you talking about? Okay, now, Chamath, your rebuttal. Oh, my god. Knowing you're a huge fan of solar. This is the most navel-gazing, head-up-your-ass, scientific bullshit I've ever heard. Okay. Couple of points. Let's start with the basics. The first is that there was no previous technical analog.

• 31:03David Friedberg?

  Why are you angry at me?

• 31:06Chamath Palihapitiya?

  I'm not angry. I find this so tiring, hearing this. It's all syrupy nonsense. You seem a little triggered. He's right.

• 31:11David Friedberg?

  Yeah, why are you so angry?

• 31:12Chamath Palihapitiya?

  Like, I don't get it. Because I don't find this intellectually honest. Okay. I find it deeply intellectually dishonest. Explain why, but let's keep the emotions. Let me finish. Let me finish. Okay. When you talk about sequencing the genome, there was no alternative. So you're right. It was an enormous technical leap forward. When we built a computer, there was no analog. It was an enormous technical leap. And so you're right, we have a cost curve we don't understand. And then we iterate as rapidly as possible in all these innovations where we built an entire infrastructure to ride down the cost curve. The thing is, fusion energy exists today.

• 31:53Chamath Palihapitiya?

  It's called the sun. We actually know how to capture it at virtually no cost right now. So according to the IAEA, today you can capture grid level solar energy for about 3 cents a kilowatt hour. That's as close to zero as we've ever been, and over the next 10 years, their forecast is it's going to get to 1.5 cents. If you then want to store it and you layer in storage costs, we'll be at a whopping 3 cents a kilowatt hour. That's where we are today. And so I think that fusion does exist. I do think that this is an incredible technical leap to replicate something that exists. And I think that's where the intellectual dishonesty is. It does exist.

• 32:38Chamath Palihapitiya?

  It has been captured. It can be harnessed, and there is a positive energy equation, just in a different modality that doesn't speak to these technically minded individuals. A couple of other points about what I saw. I think it's incredible what happened, okay? But just to make sure we're clear, this is 192 lasers, the size of three football fields, that consume 322 megajoules of energy, which then ultimately delivered 2 megajoules to a target which then released 3. So this is why I'm saying we had positive what's called ignition energy. We did not have positive electrical energy captured. So yeah, could we figure this out?

• 33:17Chamath Palihapitiya?

  Absolutely. Can we then shrink the three football fields down to something that looks the size of a laptop? We possibly could. Will it take 20 or 30 years? Possibly. But in the meanwhile, if the goal is unlimited costless energy, you're on that cost curve already.

• 33:34David Friedberg?

  Yeah, but why can't it be both? So you said I was being intellectually dishonest. What was I intellectually dishonest about?

• 33:39Chamath Palihapitiya?

  Yeah. You're comparing this-

• 33:42David Friedberg?

  What you're saying is right. Yes, you can get-

• 33:44Chamath Palihapitiya?

  You seem to be in agreement.

• 33:45David Friedberg?

  Industrial scale, like, yeah.

• 33:46Chamath Palihapitiya?

  I just think that, I think that you're trying to say that this is an entirely new thing. No, it's a different approach to a thing we've already beaten and basically- Capture. Let me bring.

• 33:58David Friedberg?

  What I would argue, Chamath, and I think this is important. The net energy you can capture on, say, a football field sized facility from solar is, you know, a tiny fraction of the energy you could generate from a football field sized fusion reactor. And that's why the argument would be like, hey, you know, when we were developing computers, hey, we have abacus is we shouldn't be developing computers. And I think that's the analogy I would use here.

• 34:21Chamath Palihapitiya?

  This is why the cost per kilowatt hour is what the the levelized cost of energy tries to do. It tries to to normalize that argument away because everybody would say that, hey, hold on a second, you're going to need planefuls of this or boatloads of that. And people said, no, what's the levelized cost of energy? How, what is the cost per kilowatt hour to generate energy? And what I'm saying is that is an absolute scale and free is zero and we're at 1.5 cents.

• 34:50David Friedberg?

  Here's what I would say, Jake, how one sec.

• 34:53Chamath Palihapitiya?

  Okay.

• 34:53David Friedberg?

  Chamath, the opportunity here is not necessarily about cost reduction. It is about scalability. And if hydrogen is abundant, which it is on this planet, it is nearly infinitely abundant. We can take that hydrogen and we can scale up energy and electricity production in a way that is unimaginable compared to solar. And I don't think that solar should be excluded. Solar is key today and should be scaled up. And I'm 100% in agreement with you. But the scalability to go 100x, if we want to make 100 times more electricity, I think we need fusion and I think that it's feasible.

• 35:26Chamath Palihapitiya?

  So I think we have reached a good settlement here. Chamath, you're saying, hey, listen, we're getting solar down so cheap, we can solve this problem. All forms of energy. Okay, great. We are solving that so for our needs today. And then what Friedberg is saying, but what if you had unlimited, a thing that we can't even imagine? Beautiful. Now, watch as I get Sax involved in a science conversation. He has zero interest in.

• 35:52Jason Calacanis?

  Mr. David Sacks, if in fact, there was 100% more free electricity available in this timeframe, the next 10 to 20. 100x. 100x the available energy, in other words, supply of energy just becomes flooded. And it's free essentially. What would be the geopolitical reaction on planet Earth in terms of this incredible rivalry rivalry we have with China and for humanity on a political basis?

• 36:22David Friedberg?

  Such a good question, Jake.

• 36:24Jason Calacanis?

  Go ahead, Sacks.

• 36:25David Friedberg?

  That's a good question.

• 36:26Jason Calacanis?

  Here we go. Thank you. World's greatest moderator at TM.

• 36:29David Sacks?

  Why don't we let Friedberg answer it?

• 36:30David Friedberg?

  No, no.

• 36:31Jason Calacanis?

  But you're the politics guy. Get in there. Take a second to think it through.

• 36:34David Sacks?

  If Friedberg already has thought about this, let's, I want to hear his answer.

• 36:35Jason Calacanis?

  No, we want you.

• 36:36David Friedberg?

  I actually want to hear your answer. You know, in, in a world where, you know, energy becomes more abundant and more affordable and more payable.

• 36:43Jason Calacanis?

  David hasn't been paying attention, guys. This is what he's trying to say. He was just on a group thread with Tucker.

• 36:47David Friedberg?

  By the way, can I just say?

• 36:49David Sacks?

  Jake, I'll, I'll call your intellectual dishonesty and raise you a steel man.

• 36:54Jason Calacanis?

  Go ahead. Go ahead. I love you. I love you, Sacksy, too. You know I do. Sacks and I had a great night out, Monday night, a Sunday night. Woo, let's talk later.

• 37:04David Friedberg?

  I just want to be very clear. Last week, you called me petty, too. I think we're.

• 37:09Chamath Palihapitiya?

  Well, here's what I want to be clear. I, I think that.

• 37:11Jason Calacanis?

  I'm just glad that you guys are fighting, not me and Sacks.

• 37:14Chamath Palihapitiya?

  Guys, please let me finish. I think that this breakthrough is really valuable. I think it's interesting to see that these kinds of scientific breakthroughs continue to happen in government-sponsored facilities and not private companies. And I think that that's probably where a lot of these innovations will continue to come from, because look at the scale of what had to be built. Three football fields and 322 megajoules of energy and 192 lasers. This is really complicated, expensive stuff. I'm an enormous fan of these kinds of scientific breakthroughs. I want to be clear. I think that where I struggle is translating this into actually an investable area. And I worry that this is going to consume lots of money by folks that could otherwise

• 37:57Chamath Palihapitiya?

  put money to work in things that will actually pull forward our energy independence and energy abundance sooner and faster. So for example, you know, there are all kinds of things that we could do to secondary ternary, third and fourth and fifth generation batteries that aren't happening today. There are a bunch of things that we could do to actually create an infrastructure of green hydrogen. And the the simplistic answer is we could do it all. But the reality is money is finite and we can't. And all I'm observing is I do think that more practical things that do have geopolitical ramifications sooner are not going to get funded because people do get enraptured by this. And my skepticism

• 38:38Chamath Palihapitiya?

  is that this is still in the realm of government sponsored research and is not really an area that for profit private companies can tackle. And so I would rather those for profit companies, for example, Y Combinator just today, put out something where they were, you know, call to action, a request for startups in climate. And when you look at that list, those are really practical investable areas. And I just want to make sure that the capital allocators that listen to this weigh those equally. I am glad, I'm glad that the US government did this. I hope they do more of this. But if you're asking me, quite honestly, I would rather the next $10 billion go into energy efficiency HVAC than fusion because

• 39:19Chamath Palihapitiya?

  A, fusion exists and B, I think it's going to happen at an innovative bench scale level by the government and not by a private company.

• 39:28David Friedberg?

  Let me just, let me just respond to that real quick. Tom, I, I think that the idea of allocating our resources as a society should be done on kind of, you know, on a portfolio basis. 80% on the pragmatic near term, 15% on the kind of next gen and 5% on the moonshot. And this maybe starts to shift from the 5% to the 15%, maybe it's still in the 5%. But I don't see kind of over Funding happening. So I'll tell you guys, there was a survey done. There's 33 private companies in fusion that are kind of fusion companies today. VC back eight new this year. So the number has kind of increased by 33% this year. And so far this year, those companies have raised around three to $4 billion.

• 40:10Jason Calacanis?

  Which by the way, is a fraction of what was done by 15 minute delivery companies from convenience stores.

• 40:17David Friedberg?

  Exactly my point. And, and by the way, the biggest funding is happening in I care, which is the largest construction project in Europe. And this is a $30 billion production scale fusion demonstration system that should be online by the end of the 2020s.

• 40:30Jason Calacanis?

  Government sponsored.

• 40:31David Friedberg?

  Government sponsored. Yeah. And so to your point.

• 40:33Jason Calacanis?

  I'm a huge fan of government sponsored research. Now we get finally the first science corner. Everybody brace themselves. It's the first science corner. Where David Sacks has his opinion. Pop the cherry Sacks. Here we go.

• 40:45David Friedberg?

  Come on, you can do it. You can do it.

• 40:46Jason Calacanis?

  Mr. David Sacks.

• 40:47David Sacks?

  Well, what's your question? Your question was a little bit was, was not a very hard question.

• 40:53Jason Calacanis?

  Okay, hold on, coming in. What's the geopolitical impact if this does happen? 100x energy is available.

• 40:57David Sacks?

  It's fantastic for the United States if it actually happens. And the reason is if you look across the world, there's this thing in politics known as resource curse. Where the worst governments, the most despotic governments tend to be in the countries that have the biggest natural resources, ironically. So the countries that have huge amounts of petroleum or other kinds of minerals. They've tend to have pretty corrupt governments. And the reason for that is that if you're sitting on a giant oil reserve, you don't need to make anything else work. You just fight over who gets to control that oil reserve. And that's what politics ends up being. You don't need to create policies that foster innovation or attract knowledge workers, right?

• 41:42David Sacks?

  You just basically mine that oil. So if all of a sudden you're talking about turning energy into a software problem or an innovation problem. That looks a lot more like the software industry. That's an area where the United States has a huge advantage. And yeah, I think it would pull the rug out from under many countries all over the world in favor of the United States. I mean, it's a big if, because where I agree with Chamath is this stuff still seems pretty far off. And it's still pretty unproven from a commercial standpoint, but I agree with Friedberg. Why not try investing in it and cultivating it and see where it goes?

• 42:18Jason Calacanis?

  Okay, fantastic. This was a fantastic science corner where we actually engaged David Sacks, which country?

• 42:26David Sacks?

  Did you find anything to disagree with there, J. Cal?

• 42:29Jason Calacanis?

  All right, take it easy. This, I just want to let people know.

• 42:32David Sacks?

  I think you, you liked that answer, right?

• 42:33Jason Calacanis?

  Well, I, I love all of your intellectual.

• 42:36David Sacks?

  Was that steel enough for you?

• 42:37Jason Calacanis?

  I love your intellectually. I love.

• 42:41Jason Calacanis?

  I thought I was a steel person. It felt silverish. It felt silver, silver manny. But I love what you're intellectually on. Silver personing. Yes, you're silver baying. You're silver thing.

• 42:52David Sacks?

  Was that a plat- was that platinum, gold or silver?

• 42:54Jason Calacanis?

  I think that's your, you're in platinum with some diamond dust. I just, can I just say?

• 42:59David Friedberg?

  Spent a couple nights together this past week has really improved the mood of the show. I mean, when you guys go out and drink together and have fun, you guys are.

• 43:06Jason Calacanis?

  Sacks and I laughed our asses off Sunday night. Can I just say, we, Sacks and I had the best 48 hours together in a decade. This is Sunday night.

• 43:16Jason Calacanis?

  It turns out Chris Rock and Chappelle are playing at the Chase Center where, um, Chamath used to own a piece of the Warriors, right? And this incredible arena has this incredible show and, you know, me and Sacks and some friends, we'll leave it at that, go to the show. Our, our bestie Draymond is at the show. So I text Dre and I'm like, hey, you going to see Chris Rock by chance tonight with, uh, Chappelle? He said, yes, sir. I said, hey, we're gonna go with a couple of friends. Maybe we roll together, hang out after the show. We go.

• 43:47Jason Calacanis?

  And after the game, after the show, which was incredible, we go backstage, and I'm sorry, to the, to the, uh, practice court. And we're hanging out with Draymond in the practice court with Dave Chappelle. Dave Chappelle and I start shooting hoops. David Sacks is talking to Chris Rock about free speech. Steph Curry comes out and starts giving Dave Chappelle and J. Cal, uh, shooting lessons. Where Chappelle and I are bricking like old men, you know, you know, uh, on a concrete court. All of a sudden, Steph says, hey, J. Cal, you got it? And by the way, he's a fan of the show. He says, you, you're short every time. And, uh, just, you know, hit the backboard. You gotta go long. Then he tells Chappelle, you gotta change this.

• 44:30Jason Calacanis?

  All of a sudden, we start hitting shots like, you know, we're on the Warriors. You're raining threes. Rainy. It was literally like cut into here. Were these mid-range jumpers or threes? I was, uh, uh, free throw line extended, free throw line extended. Cut into here, Rain Man and Rain Dance from Along Came Polly. Rain Dance, Rain Man.

• 44:49Speaker 04

  Let it rain!

• 44:53Speaker 04

  Rain dance! Let it rain!

• 44:57Speaker 04

  Let it rain!

• 44:59Jason Calacanis?

  I was hitting brick after brick, rest in peace Philip Seymour Hoffman. So then we're chilling, and Sax and I are talking to Dave Chappelle.

• 45:09Jason Calacanis?

  Joe Lacombe, owner of the Warriors are there, the majority owner, you know, as opposed to you being a minority owner.

• 45:15Chamath Palihapitiya?

  That's racially charged.

• 45:17Jason Calacanis?

  No, no, I was speaking at-

• 45:19David Sacks?

  The only person who drops more names is Phil Hellmuth.

• 45:21Jason Calacanis?

  Absolutely, I'm trying to catch up.

• 45:23David Sacks?

  I mean, you'd name drop anymore.

• 45:24Jason Calacanis?

  No, he is, he's holding back-

• 45:25Chamath Palihapitiya?

  He's holding back three names.

• 45:28Jason Calacanis?

  Sax, am I leaving out 10 names?

• 45:30Chamath Palihapitiya?

  He wants to say it so bad, but he's not gonna say it.

• 45:32Jason Calacanis?

  Not doxing anybody.

• 45:33Chamath Palihapitiya?

  Oh, you're so brutal.

• 45:34Jason Calacanis?

  There'll be zero doxing.

• 45:35Chamath Palihapitiya?

  Oh, brutal.

• 45:36Jason Calacanis?

  So we, I kid you not, Chappelle comes over and says, "Chappelle, Sax, you guys wanna go to, uh, after, to do a, go see me do a show at like 1 a.m. at this like local comedy club with 70 seats?" I said, "Word?" "Yes." We go, at 1 a.m. Chappelle sits on stage, smoking cigarettes, and doing 90-second pauses, and then having a beer, and interacting with the audience, and does a two-hour set after doing this set with Chris Rock at the Chase Center. Me and Sax and Dre Amont hilariously laughing. The, the stuff, Chappelle is a genius.

• 46:20Jason Calacanis?

  And when you see his show, and Chris Rock, by the way, he puts a tight set together. I mean, Chappelle's got this storytelling thing where he kinda meanders a little bit and then he hits you with it, but Chris Rock is just bang, bang, bang, bang, bang, bang, bang. Extraordinary. Just two incredible minds at the top of their game.

• 46:38Chamath Palihapitiya?

  Artists.

• 46:38Jason Calacanis?

  Artists at the top of their game, doing what society needs. But more importantly, doing what David Saxon I needed, which was to laugh our asses off together and remember our friendship. So it was a great night out. I want to say to bestie Draymond, Dave Chappelle, and Chris Rock, thank you. The David Sacks, Jake Howe bestie friendship has never been stronger. I don't know about Friedberg and Chamath, that seems to be on the rocks.

• 47:03David Friedberg?

  Yeah, it's weird. We'll be in, we'll be vacationing together next week, so we'll

• 47:08Chamath Palihapitiya?

  I love, I love Friedberg.

• 47:10David Friedberg?

  Yeah.

• 47:11Jason Calacanis?

  Well, we are going to be.

• 47:12David Friedberg?

  Whatever, whatever's going on, we'll take a walk and figure it out.

• 47:15Jason Calacanis?

  Well, I just want to say the alliances amongst the besties.

• 47:17Chamath Palihapitiya?

  I got mad, I'll be honest. I got mad at Friedberg when he edited that Google bit to say the exact opposite of what he actually said. That felt dishonest and disingenuous.

• 47:27Jason Calacanis?

  Yeah, just beep that, but yes.

• 47:28Chamath Palihapitiya?

  That is the thing that bothered me. I have to be honest. That's you playing to the crowd versus you being honest and telling what you think.

• 47:34Jason Calacanis?

  Friedberg, Friedberg, can I, all right, let me put that in the form of a question. Friedberg, has your fame as the Sultan of Science, because, listen, you, nobody knew who you were outside of Silicon Valley before this, has it impacted your ability to speak?

• 47:47David Friedberg?

  No, no, no, not my fame. Look, I'll be, I'll be honest, and I'll speak openly about this. I had said that there could probably be a significant headcount reduction of like 75% at Google and the business could keep operating. And I took it out. And I took it out because I have a lot of friends that work at Google. Google's a close partner of mine. They're an investor of mine. And frankly, I just want to be careful about that. It's not something I commonly do. You know, as you guys know, I usually speak my mind pretty clearly, but I was just trying to be respectful. And that's the reason I did it, you know?

• 48:19Chamath Palihapitiya?

  I think that that was fine. What I'm saying is not that. It's just that the part that you edited in actually made it seem like you were not saying that at all, but the opposite. I think if you had cut the whole thing, it would have been more honest. But to keep that other thing in actually led the perception of the opposite.

• 48:37Jason Calacanis?

  So you were triggered by that?

• 48:39Chamath Palihapitiya?

  No, no, I'm not triggered. I'm saying, I think we should have a principle.

• 48:42David Friedberg?

  Hold on, guys, very often, Chamath, like, yeah.

• 48:44Chamath Palihapitiya?

  I know. I think that we should just have a principle to not play to what the perception of what we say should be, especially if it means we could be saying the opposite of what we actually mean. That's all.

• 48:55Jason Calacanis?

  Intellectual honesty is a bestie tenant. It's a bestie tenant.

• 48:59Chamath Palihapitiya?

  I think so.

• 49:00Jason Calacanis?

  Absolutely. Bestie tenant. Always. And the other bestie tenant, besties always come back together. If we have a fight, we always come back together. Sax, can I-

• 49:06David Sacks?

  I'm still mad at you.

• 49:08Jason Calacanis?

  A little bit?

• 49:09David Sacks?

  Nah, I'm just kidding.

• 49:10Jason Calacanis?

  Didn't, okay, we just-

• 49:11David Sacks?

  But talking about hypocrisy, I mean, so Chris Rock gets up there-

• 49:14Jason Calacanis?

  How great was Sunday night?

• 49:15David Sacks?

  Chris Rock gets up there and he gives, like, right out of the gate, he's attacking woke. Right out of the gate.

• 49:21Jason Calacanis?

  Swinging, came out swinging like Will Smith.

• 49:25David Sacks?

  Shug Smith, you mean?

• 49:27Jason Calacanis?

  Shug Smith, he took down Will Smith. I mean, the Will Smith takedown, which you will see in this special, is so complete, it is just chef's kiss. But how great was his set? Let's say, just give Chris Rock his flowers. He did he, did he fillet and fricasse?

• 49:46Jason Calacanis?

  He-

• 49:47David Sacks?

  He did, but I thought the more important part of the set was the, he came right out, like, calling out all this, you know, you know, holier-than-thou woke stuff, yeah. And, and there was that undercurrent T. Chappelle's set as well.

• 50:00Jason Calacanis?

  And also, he said, "Listen, words can't hurt you unless you write them on a piece of paper and tie them to a brick." We, these, a, a, a bigger point right now, and this does tie into our first story, is I think comedians look at Twitter as a place to get canceled, not a place to be part of the discourse. And that's a huge loss. That's indicative of our society being broken. And it's incredibly important that these comedians be allowed to mock and to speak and to step over the line and challenge us as citizens in a free society. And we should cherish them, and we should not even try to cancel them. Let them cross the line. Let

• 50:43Jason Calacanis?

  them say things that make us uncomfortable so that we can understand ourselves and our society better. And I just want to say-

• 50:49David Sacks?

  Why can't you include lips of TikTok in that?

• 50:52Jason Calacanis?

  Oh, do we want to have a discourse about it? Oh, my God. I can't-

• 50:54David Sacks?

  No, I want a conversation about it, I'm just asking you.

• 50:56Jason Calacanis?

  I'm okay with mocking, I just don't- No, don't start. You guys, you did so well, come on, let's go. Here we go. No, Jake, I'll cut it out. All right, well, we have two more science corners to get to.

• 51:07David Friedberg?

  All right.

• 51:08Jason Calacanis?

  Well, if you don't, I mean, I just.

• 51:10David Friedberg?

  No, let's talk about the Coupa deal. And Sacks, this is right up your alley. Have you?

• 51:14David Sacks?

  I haven't paid a lot of attention to it, to be honest.

• 51:16David Friedberg?

  Oh, really?

• 51:17Chamath Palihapitiya?

  The thing you guys asked is like, you know, what signal will Elon's moves at Twitter be for the rest of the tech industry? I think the biggest wake up call is to actually PE companies. So if you play this out and you think that Coupa is, you know.

• 51:36David Friedberg?

  Explain what Coupa is, please.

• 51:38Chamath Palihapitiya?

  Coupa is a, is a software as a service company that does revenue management, I guess, or expense forecasting, or some, something in the financial realm. I don't particularly know, to be honest. But anyways, this is a company that, you know, was off seventy or eighty percent from the high, like a lot of SaaS companies were when rates started to go up. And they got this offer from, from Tomo Bravo. But here's what's so interesting about this deal. If you think that, you know, these guys bought a company, I'm just going to make up a number, at twenty times EBITDA, right?

• 52:14Chamath Palihapitiya?

  And, and you see Elon at Twitter and you think, well, wait, maybe we can't cut seventy-five percent, but maybe we can cut fifty percent of headcount and the company can still do well. And, you know, you take half of the expenses out of the business. All of a sudden, you know, if your EBITDA doubles, you're actually buying it at ten times. So I think the thing that is the, that is the real insight here is twofold. Private equity can still put out a lot of private credit to fund these deals. And SaaS companies are perfect because they have huge free cash flow, right? So instead of funding it based on earnings, they can fund it based on ACV and ARR. So private equity will be super active. And two, all these rifts basically show what the efficient frontier is for the number of employees you need to run a company.

• 53:00Chamath Palihapitiya?

  And if you can cut fifty percent of the headcount, private equity folks will do that. And so I think Coupa is like the canary in the coal mine. It is the beginning of what I suspect is a tidal wave of PE sponsored deals in tech companies, largely SaaS, but may go into other realms.

• 53:20David Friedberg?

  Yeah, recurring revenue that can go profitable.

• 53:23Chamath Palihapitiya?

  Taking advantage of these two things. Tap the private credit markets and finance it based on ARR and then fire 50% of the team and double earnings capacity.

• 53:30David Friedberg?

  Sax, your thoughts?

• 53:31David Sacks?

  So on Coupa, I thought the most interesting thing was just the, we got a public comp. Well, we got a comp on what private equity is paying for public companies right now. So the deal happened at an $8 billion valuation. That was a 31% premium to the public price. It was 8.4x next 12 months revenue. And on a trailing basis, it was about 10.4x the last 12 months revenue. And by the way, all the comments were around how what a rich price Tomo Bravo was paying. People generally thought they're paying a premium to the valuation.

• 54:08David Friedberg?

  So I think this- Sax, it was 77% premium before the rumors came out that this was happening. So it was a pretty big premium.

• 54:15David Sacks?

  Yeah, good point.

• 54:16David Friedberg?

  And there was a bidding war with Vista. And so it was a really rich kind of deal that got done here.

• 54:24David Sacks?

  Right, so my point is that people thought this was a really rich deal. And yet, the valuation multiples are so much lower than what private company founders expect. So remember last year, at the peak, founders were thinking 100x ARR was normal. 100x. And you could roughly say ARR is roughly equivalent to next 12 months revenue. It's not perfect, but it's roughly the case. So these founders were expecting a valuation multiple 10x what the public markets are paying. And actually, the public markets are half of where Tomo Bravo was in this particular deal. So the public markets right now are valuing-

• 55:08David Sacks?

  The median SaaS company at about five and a half times and a high growth, that'd be for like a 20% year-over-year growing company and they're valuing the high-growth companies at maybe eight times, you know, and Toma Rava did this at 10 times. So that gives you a sense of what the ballpark is and these are companies that are already public, they're at scale, they're doing roughly a billion dollars of ARR, they have already kind of won their category to some degree, whereas private companies are subscale, they're, you know, typically you're talking about companies with one, five, 10, usually under $20 million of ARR. They are, they're not de-risked, there's still a ton of risk. We've seen many, many SaaS companies fizzle out and plateau at 20 million

• 55:50David Sacks?

  of ARR, never get to 100 million, never mind a billion. And yet these founders think that they're entitled to, you know, even in this market, 30 to 40 times ARR, no way. I mean, like, it's getting to the point now where, you know, maybe it should be 10 times, 20 times, like, max, and that'd be for a company that's growing 2.5, 3X year-over-year. So I still think that, like, so I think basically what we're seeing here is even a good scenario, like a coop acquisition that was done at a premium, like, it's still a wake-up call to the private markets that the valuations are still completely and utterly out of whack.

• 56:26David Friedberg?

  Yeah. Let me ask you a question, Zach. So this company was growing 45% last year, they're growing 35% this year, and they got this multiple. Why is it not worth a significantly higher multiple if a company's growing 2.5 to 3X, which is 250%, 300%, and these guys are only growing 35%?

• 56:45David Sacks?

  Sure. I mean, it is, and that's what you're paying a premium for. But, so the, so the, here's the theory of it, is that if you can invest in a private company that's, say, tripling year-over-year, and they can do that for another five years or whatever, then you're-

• 56:59David Friedberg?

  You're paying for that outcome in a couple of years.

• 57:01David Sacks?

  Yeah, basically, well, think about it.

• 57:03David Friedberg?

  You're getting a discount to the outcome in a couple of years.

• 57:05David Sacks?

  Well, if you're paid 30 times today and it triples next year, you're only paying 10 times next year, and if it triples again, you're only paying three times. So if that keeps going, that's where your arbitrage is. But here's the thing you have to weigh against that, is that these early-stage private companies, many things go wrong. And they hit a plateau, they fizzle out, or their growth rate starts to, the bigger they get, the harder it is to grow.

• 57:27David Friedberg?

  So they should be priced at a discount, not a premium, because there's risk.

• 57:31David Sacks?

  There's more risk. They're growing faster, but there's more risk. But also, it's very hard. Once you get to a bigger number of ARR, 50, 100 million of ARR, it's extremely difficult to be doubling or tripling year over year.

• 57:43David Friedberg?

  Let me just point one thing out. So I looked at the numbers on Coupa. I think they had about 170 million of stock-based comp expense in the last nine months.

• 57:52David Friedberg?

  So those are employees that are getting 170 million dollars in compensation in the form of shares. So they get those shares. They can then sell those shares and get cash for them.

• 58:03Jason Calacanis?

  On the public market.

• 58:05David Friedberg?

  And then on the public markets and pay their bills. So when a company like this goes private, for those employees to just remain at their baseline comp, that stock-based comp needs to be replaced with something else, or else they're seeing their salaries reduced. So, you know, there's this balancing game when these companies go private in terms of how do you give them the comp that they're earning to keep them engaged in the business?

• 58:30Jason Calacanis?

  The answer is if you don't.

• 58:32David Friedberg?

  Versus, no, but versus cutting the expense.

• 58:34Jason Calacanis?

  You let them quit because you want to do a riff anyway.

• 58:36David Friedberg?

  Right. So, I mean, but for the people that stay, right? So there's a balance because it's not just, hey, cut the OpEx. You have to cut the OpEx, including stock-based comp. And this company generated about 100 million dollars, sorry, 210 million dollars of free cash flow or operating cash flow in the last 12 months. So if you, if you take out the stock-based comp, these guys are actually break even or losing money roughly.

• 59:02Jason Calacanis?

  Yeah, break even.

• 59:03David Friedberg?

  Yeah, break even roughly. So there's a real question mark on this business and businesses like this that go private, where if you actually cut the OpEx and you cut the salaries and you cut the headcount, but you have to find new ways to pay people because you've been paying them with stock in the past, how do you kind of bridge that gap? And I think that's probably a little bit of the balance and the art of what these guys do well.

• 59:22Jason Calacanis?

  Chamath, if I may, can you explain to the audience what a private equity firm's expectation is in terms of return when they buy a company like this? And then Sax, I saw your tweet that you want to feature and you'll go next. Go ahead, Chamath.

• 59:35Chamath Palihapitiya?

  Well, I think it's changed over time, and this is what's so powerful about the private equity industry. Look, you have to think about what their incentive is, because it kind of guides the outcome. Yes. Early on, they were very much like venture capitalists. They were out in the, you know, edges of risk-taking, doing all kinds of very difficult, gnarly deals. So if you look back in the history of private equity, you know, these huge crazy deals like RJR Nabisco or TWA Airlines were the first of the industry, and they reaped enormous returns, but there was a lot of risk, and it required very heavy-handed management. Oftentimes, what that meant was firing a lot of people.

• 1:00:18Chamath Palihapitiya?

  Over time, private equity has gotten institutionalized, and they don't generally

• 1:00:26Chamath Palihapitiya?

  feature themselves as a place to get the best, necessarily, returns, but they are places where you can put enormous amounts of money, where the likelihood of loss is extremely zero, and you generate very good rates of return.

• 1:00:43Chamath Palihapitiya?

  Now, again, this depends on whether you want to look at IRR or DPI, right? So a lot of people will market IRR,

• 1:00:52Chamath Palihapitiya?

  which, you know, I think is kind of like a gamable metric, but, you know, those IRRs can be 20, 25%. If you look at DPI, which is really how much cash you get back, you know, private equity firms can generate 1.5 to 2X of the money you give them, but they do it consistently, and they very rarely lose money. So all of that is important into understanding what's going to happen in this cycle. These folks are going to buy a ton of these private software companies. I think that they are going to fire lots of people. I think they are going to make these companies run hyper-efficiently, and they will make sure that they generate that 1.2 to 1.7X that has been historical.

• 1:01:35Chamath Palihapitiya?

  Very rarely will they lose money in these things. By the way, that's going to mean that a lot of these other companies will have to reset valuation. So you saw yesterday, Checkout.com went from a $40 billion valuation down to 11.

• 1:01:50Chamath Palihapitiya?

  You're seeing some companies only go down 10 or 15%?

• 1:01:54Jason Calacanis?

  But it's a process, isn't it Chamath? Isn't this just like what happens in real estate where?

• 1:01:57Chamath Palihapitiya?

  Beginning of this process.

• 1:01:59Jason Calacanis?

  Yes, because in in real estate, my understanding, having lived through these boom, bust cycles, is the person living in the home still believes their home is worth, you know, this incredible evaluation. And then the people who want to buy it are like, that doesn't match reality. And then the real estate brokers go back and forth trying to get people to, you know, go through this messy middle and come to true price discovery. A private company, it's hard to get true price discovery until they're on the brink of insolvency. They don't have the money.

• 1:02:24David Sacks?

  Right, well, we just got some data on that, actually. Can we bring this Cooley data in?

• 1:02:28Jason Calacanis?

  Let's do it.

• 1:02:29David Sacks?

  Yeah, so Cooley looked at.

• 1:02:32Jason Calacanis?

  A law firm in Silicon Valley.

• 1:02:33David Sacks?

  Yeah, they're a prominent Silicon Valley law firm. They looked at 1,000 deals over the last three quarters of this year. And what they saw is that you're the later the stage, the bigger the valuation correction. So, series D rounds went from three and a half billion to 527 million. That's an 85%.

• 1:02:49Jason Calacanis?

  One seventh.

• 1:02:50David Sacks?

  Yeah, that's an 85% drop. Series C went from 502 million to 130 million. That's a 74% drop. Series B went from 164 to 90. That's a 45% drop. And then series A went from 58 to 45. That's only a 22% drop. There's just less room to compress there. But the point is that series B roughly a 50% drop, series C roughly a three quarters drop, and series D roughly a 85%. Yeah, one seventh drop. So I think founders right now are they're just like a little bit delusional about this money they raised last year. They're still way too anchored on last year's valuation.

• 1:03:31David Sacks?

  And if only they would think in terms of this capital they raised last year, in terms of of its real dilution, in terms of what the company is worth now, I think they'd be treating it more more precious. So for example.

• 1:03:45Jason Calacanis?

  But sex.

• 1:03:46David Sacks?

  So for example, hold on.

• 1:03:47Jason Calacanis?

  It's like they won the lottery and they don't want to, they don't realize they won the lottery. I had this conversation with the founder.

• 1:03:52David Sacks?

  This is the only money they're ever going to see is the bottom line. And they're spending it like they're going to win the lottery every year. So for example, let's say you take a company, yeah, let's say you take a company that raised 200 million last year at 2 billion. So it was 10% dilution. So in their heads, they're thinking, oh, well, this isn't that expensive, like 10% dilution's a rounding error. But really. Probably the company is worth maybe 400 million now, right? Because it's gone down 80%. This 200 million of your 400 million is half the value of the company.

• 1:04:21Jason Calacanis?

  Yes.

• 1:04:21David Sacks?

  And you're squandering it, you're squandering it at a rate of 100 million a year. So you're basically burning up 25% of the value of your company this year and then next year. And then, by the way, you're going to be in crisis after that because you're probably

• 1:04:33Jason Calacanis?

  It's like a lottery winner buying like a giant super yacht.

• 1:04:36David Friedberg?

  I had an observation that a lot of the investors that sit on the boards of these companies,

• 1:04:42David Friedberg?

  they have an incentive to not see those valuations come down too quickly, do they not? And so there is this sort of like interest in, hey, I don't want you to have to go reprice the company or do a down round because then my portfolio gets written down. And then I'm in the middle, everyone's always in the middle of a fundraising cycle with LPs. And then I'm going to have a tough conversation with my LPs about my, my values. So do you not see VCs and investors playing an active role in trying to keep the valuations propped up to some extent, particularly where they have big markups? 100%. Either by extending bridge rounds or doing other sorts of, you know.

• 1:05:20David Sacks?

  Look, nobody, nobody likes to go through a down round and that includes founders and existing investors in the company. That being said, we're not talking here about new financing conversations. What we're talking about is advice that are, is happening in board meetings. And, you know, maybe other VCs aren't pushing as hard as we are, but the advice I'm giving in board meetings is what I'm telling you publicly today, which is this is the last money you may be able to raise on attractive terms, if at all. You need to treat it much more preciously. The world has fundamentally changed. And by the way, we haven't even gotten into what's coming, the demand contraction that's coming next year.

• 1:05:57Jason Calacanis?

  Explain what demand construction is for the audience, please. Thank you.

• 1:06:00David Sacks?

  Okay, look, there's going to be three major sources of slowdown for software companies next year. Number one, new business is going to dry up. Companies are just going to be spending a lot less money next year because they're all cutting costs. So you should expect your new business to be roughly 50% of what it was. Next year, it'll be 50% of what it was last year. My rule of thumb for most companies, new business down 50%. Number two, churn is going to be higher. We haven't seen that much logo churn yet, but next year, a lot of companies are going to start going out of business. And it's going to happen over the next two years. So you're simply going to see logo churn rates, say amongst small businesses, go from like a historical norm of 15% to maybe 25 or 30.

• 1:06:45Jason Calacanis?

  In other words, your customer, the logo goes poof.

• 1:06:50David Sacks?

  Yes.

• 1:06:50Jason Calacanis?

  That's what a logo means, yes.

• 1:06:51David Sacks?

  Yes.

• 1:06:52Jason Calacanis?

  The actual entity.

• 1:06:53David Sacks?

  Yes, logo churn means the entity doesn't exist. Then you've got seat contraction, which is these companies are not hiring as fast. In fact, they're doing layoffs, so they're simply not going to buy as many seats of your software as you need to in the past. For the last decade, we've had a tailwind, an enormous tailwind for software companies of seat expansion, which is every year your existing customers would buy more seats of your product for their new employees. Now they're actually going to have fewer employees or maybe headcount freezes. So they're actually buying fewer seats.

• 1:07:24Chamath Palihapitiya?

  By the way, if you, if you take all those three things, the deal of the century was Figma selling to Adobe for 20 billion. Because if you take those three things, I mean, oh my God, they just absolutely top tick before any of this stuff was known. So today Adobe could probably buy this thing for like 7 billion instead of 20 billion.

• 1:07:45Jason Calacanis?

  So does that mean they try to do a breakup fee and get out of the deal?

• 1:07:50Chamath Palihapitiya?

  I don't know, but if I was, if I was Figma, I'd try to close this thing ASAP and get that money back.

• 1:07:54Jason Calacanis?

  Yeah.

• 1:07:55David Sacks?

  Yeah, you're right about that. And by the way, what I'm seeing from founders is that they still want to grow 100% plus over the next year. The problem is that the headwinds are going to be intense. So if you're flying a plane and the headwinds are extremely intense and you try to maintain your speed, you're going to burn an enormous amount of fuel. You're going to be incredibly inefficient. It's better to basically just moderate your speed. Let the headwinds basically pass. We're going to have major economic headwinds for the next four to six quarters, call it year and a half. It's okay to have a slower growth rate, preserve your cash, don't burn up your fuel.

• 1:08:32Jason Calacanis?

  Yeah, bunker down.

• 1:08:33David Sacks?

  So what we're trying to do is we're trying to give permission to our founders to grow at a slower rate because they feel this enormous pressure from their VCs to grow at insane rates.

• 1:08:44Chamath Palihapitiya?

  Can I build on this? I think Freebrooke said it very well. The scan in venture capital is demonstrated in the following chart. This is using Cambridge and our friend Brad Gersoner helped put this together. So what is this? This goes back all the way to 1997 and the gray bar is what venture capitalists share with their limited partners as to how well they are doing. The top quartile of venture capitalists. And this is the top 25%. Okay, so this is, this is a venture capitalist and you know, our, our returns have been consistently top quartile. So instead of cherry picking anybody else, I'll just use us, but it could be Sequoia, Benchmark, you name it. We would go back. We're in there. Launch, you would go back to folks, craft, you would go back to folks and say, hey, guys,

• 1:09:29Chamath Palihapitiya?

  the total value of our portfolio is three times your money in 1997's vintage. Okay? It, it was four times your money in the 2010 vintage. Feels really good. But again, the job of the venture capitalist is to convert the gray bar into the purple bar. And historically, there's been a decay. So for every dollar of gray bar that you show, you typically only get 73 cents actually returned to people. Okay? The paper value, the book value versus. The valuations that you get when you sell your company or goes public end up being 73% of what you marked at the peak, what you said they were worth.

• 1:10:12Chamath Palihapitiya?

  Exactly right. And the actual value of this purple bar, going back, you know, 30 years, is 1.7X. So just to put numerical numbers on this, if you were a venture capitalist, you would raise a hundred dollar fund. At the peak, you would actually show that that hundred dollars became 200 and about 28 dollars. But when, when push came to shove and when it was all said and done, you would return 170 dollars back to your investors. That's the rough equation. So what's the problem? Well, the problem, as you can see in this chart, is right around 2015.

• 1:10:52Chamath Palihapitiya?

  Which is all of a sudden, you know, what we've started to see are these continually elevated gray bars. Yes, this stuff is worth seven times, six times, five times. But we have not seen the purple bars catch up. Now, some people will say, well, yeah, but you have to give it time and, you know, this is probably what other vintage look times. And all you need to do is do what's called a regression and you need to regress these things to the mean and make the following assumption. Assume for a second that this time is not different. Assume that these historical averages, 2.2X, 1.7X holds.

• 1:11:34Chamath Palihapitiya?

  Well, that's what the, the black line here shows. You can calculate the area above the curve as the value at risk, right? The amount of money we will destroy because of all these shenanigans that Free Bird just talked about. Propping up marks, not willing to look at actual market clearing prices. Well, if you do the math, the sum of the area above this black line is almost a trillion dollars around the world and it is about $600 billion for US venture capitalists. This is the dynamic that the private equity industry is going to prey on. So if you saw Tomo Bravo just closed a $32 billion round, you know, Vista's raising a $20 billion round, everybody's stepping into tech, they are going to destroy

• 1:12:19Chamath Palihapitiya?

  those gray bars. Would you describe that as bottom feeding? No. They are, they are the rational actor who is finding the true market clearing price. Again, I will say this, I think the private equity industry is unbelievably precise and talented in being dispassionate and telling us what these things are worth. They're cutthroat. They're logical. No, no, it's not cutthroat. They're just smart.

• 1:12:42David Sacks?

  That opportunity for the private equity industry is going to be created by profligate founders. And look, you could blame VCs for the high marks last year as well. They were profligate too. But look, if you're a founder, if you don't start acting in a more capital efficient way and preserve your cash, your company is ultimately going to be owned by a private equity firm and they're going to make all the money.

• 1:13:02David Friedberg?

  Well, here's an important.

• 1:13:03David Sacks?

  Because, because, because when you sell to them at a low price, all you're going to end up doing is paying back the liquidation preference. And then that private equity firm that was willing to do, or less, but that private equity firm will be willing to do what you were not willing to do, which was simply act, but cut your burn, cut your costs and act in a more capital efficient way. And they will end up making all the upside for your decade of hard work. Because you got basically addicted to venture capital and the high valuations and refused to, again, adjust to the regime change that we're describing.

• 1:13:35David Friedberg?

  I'll give you an alternative. I'll give you an alternative. The alternative is that the majority of acquisitions made by private equity firms are not actually pure acquisitions. They're bolt on acquisitions, meaning that these are companies that are added to existing platforms that they own. So this acquisition they're doing of Coupa, I think it's very likely over the next couple of years, you will see like the playbook in private equity includes not just cost cutting, but also synergy building. And they typically do bolt ons and add ons, and this happens across all private equity platform deals of new products and services that can be sold through the existing sales channel, the existing customer base. And as an add on to the existing service or product that's already offered. So one of the feet, one of the things that I think you may see in Silicon Valley

• 1:14:17David Friedberg?

  over the next couple of years is a rationalization away from funding feature companies and thinking much more carefully about what can be true standalone product companies.

• 1:14:26Jason Calacanis?

  Sure.

• 1:14:26David Friedberg?

  And many of these companies that have raised a ton of capital and have gotten crazy valuations. At the end of the day, they're more likely better equipped to be a feature of another platform than they are to be a standalone platform company of their own. And that's where the majority of these acquisitions will likely end up going.

• 1:14:43Jason Calacanis?

  Yep.

• 1:14:43David Friedberg?

  In, in, in the private equity landscape and they will be vacuumed up and attached to existing platforms that these private equity guys are building out. And by the way, just look as an example at what Oracle did over the years, what Salesforce did over the years, what Google did, so many of these companies.

• 1:14:57Jason Calacanis?

  Bolt on acquisitions.

• 1:14:58David Friedberg?

  By bolt on acquisitions, by building a channel, building a platform and then adding on top of that. And I think that's one of these guys are going to try and mimic.

• 1:15:06Jason Calacanis?

  Two critical points. Number one, what about the bottom 75% of VCs? Oi.

• 1:15:10Chamath Palihapitiya?

  If you show that chart just for one more second, I just want to remind everybody, that is the absolute cream of the crop VCs. This is the best of the best. These are folks, I mean, again, I'll just say us, Sequoia Benchmark, we've consistently been top quartile.

• 1:15:24David Friedberg?

  Thank you.

• 1:15:24Chamath Palihapitiya?

  Launch craft. These are, these are top quartile return streams.

• 1:15:27Jason Calacanis?

  Thank the Lord.

• 1:15:28Chamath Palihapitiya?

  What about the bottom 75%?

• 1:15:30Jason Calacanis?

  They're not going to be able to raise funds, man. It's over. A lot of these people who raised first-time funds in the last three or four years.

• 1:15:35Chamath Palihapitiya?

  But it's also, it's also the companies that Sacks said, because like, like, it's like, the, today is the mo-, now is the moment for the sober founder and the sober venture capitalist to sit and say, what is the real valuation?

• 1:15:47Jason Calacanis?

  Let's grind.

• 1:15:48Chamath Palihapitiya?

  What do we need to do to make sure that this company has a chance? Because what Sacks said is so true. Otherwise, all these profit dollars will be made by the private equity firms.

• 1:15:57Jason Calacanis?

  In order to win today, you're going to have to grind. You're going to have to work 50, 60 hours a week. You're going to have to be absolutely embrace the age of austerity, and you're going to have to focus on your customer, your product, and your bottom line. The age of excess is over. If you're not working 50, 60, 70 hours a week, you're not going to cut it in Silicon Valley. Also, key second point, profligate. Extravagant are wasteful in the use of resources. Just so we get the word of the day from David Sacks. That's David Sacks's word of the day. After a very powerful bullwinkle.

• 1:16:28Chamath Palihapitiya?

  This is, this is.

• 1:16:29Jason Calacanis?

  That went cra-, did you see the, Trumath? Bullwinkle went, uh.

• 1:16:32Chamath Palihapitiya?

  Bullwinkle.

• 1:16:33Jason Calacanis?

  Bullwinkle went, uh, went, went viral.

• 1:16:36Chamath Palihapitiya?

  This is, I think, Elon's biggest, uh, non-obvious impact in this moment.

• 1:16:40David Friedberg?

  Jay Cal, here's your, uh, one answer to your question about what happens to the, the, the bottom 75% of venture firms. It's equivalent to what happens with the, you know, kind of, this is the bottom of the top, the slide that I just shared. It's the one we looked at a few weeks ago. And I keep referring to it because it's just such a staggering, like, demonstration of what people call the power law, which is how, you know, kind of excess returns accumulate to minority of investments. So just a few investments make up the bulk of value, that the, you know, market cap of 43% of companies that have gone public since 2020, uh, is $750 billion. The market cap of 300, the other 300 is

• 1:17:25David Friedberg?

  only $26 billion. And the cash that went in to the $750 billion is 136, and the cash that went into the 26 is 107. And so the cash that went in to generate that 26 billion, that 107, that's your bottom 50%. And the top 50% put in 136 to make 750. And I think it gets even narrower as you move further up to that top quartile. So, you know, it's just

• 1:17:51Jason Calacanis?

  I can tell you what LPs are saying, because it's a hard business.

• 1:17:54David Friedberg?

  And by the way, this is, this is the companies that went public. So this is also of the top company, of the top funds and the top companies that were actually able to IPO. And so it highlights how much of a power law actually plays through. And so the majority of these companies, as in Chamath, even in your chart, you show the top quartile. The bottom 75% or the bottom 50%, I've looked at this data as well, of those various vintages are below 1.0. They lose money for their LPs.

• 1:18:21Jason Calacanis?

  Oh, consistently.

• 1:18:22David Friedberg?

  And it's, it's a cycle. And so what ends up happening is the next generation comes through and LPs, they make a portfolio of bets. And they hope that they make enough bets in the right VCs that their portfolio generates greater than, you know, market returns, greater than, call it 15, 20% target, 15% target. But they're going to expect that the majority are not.

• 1:18:40Jason Calacanis?

  I have an LP report. I'm, I'm out there raising Launch Fund 4 right now, and I moved from like the accrediteds, the individual investors.

• 1:18:47David Friedberg?

  Are you allowed to say that? Oh, yeah, because you're

• 1:18:48Jason Calacanis?

  Yeah, I'm on 5060. Yeah, yeah. So I'm, I'm publicly raising it. And I've moved on from individual investors, $45 million in commits after five webinars. Amazing. Now I'm talking to, no, it was amazing. It's just 5060 is going to change the entire industry, letting the, you know, the masses have some access to this capital. And this opportunity accrediteds and QBs is going to change the world, I believe.

• 1:19:11David Friedberg?

  Do you have to do, deal with everyone, one of them, or is it easy to administer?

• 1:19:14Jason Calacanis?

  It's incredibly complex because you have a large number of people and they all want to talk to me. So I did webinars, five webinars, and it resulted in hundreds of commits, hundreds of commits for $45 million.

• 1:19:24David Friedberg?

  But you'll be able to pull, you'll be able to get all those capital commitments drawn down when you need to? Like you have to go ping a couple hundred people and get them all to wire money to you every time you got a best.

• 1:19:32Jason Calacanis?

  You need to have more operations people and we only do four.

• 1:19:34Chamath Palihapitiya?

  We, we let them. One thing, one thing you may want to do is like for, for these smaller slugs is you can pre-wire. You can set up an escrow account where you pre-wire 100% of the capital.

• 1:19:44Jason Calacanis?

  Yes. And then you also don't have to, you take it down when you're going to deploy it. So you keep your IRR correct. So we're actually looking into those solutions. I'll talk to you offline. But I just did my first two meetings with endowments, et cetera, fund to funds. The entire discussions right now are around, what is your secondary strategy?

• 1:20:01Jason Calacanis?

  How are you getting in earlier, not later? And how are you building a larger position? It is, and even like some of the QPs who are sophisticated and are in over 10 venture funds. The entire discussion, governance of these companies. Are you taking board seats or not? How early are you getting in and building a larger position over 10%? And what is your secondary strategy? When are you going to start taking some chips off the table? So the, and I gotta say, if you're an LP who didn't sell into the upmarket at all, and you're on your first fund, you know, and you had all these great marks and they're getting, they're coming crashing down, they're not going to deal with you. They just have too many options of top funds in the quartile.

• 1:20:40Chamath Palihapitiya?

  I don't think they've, they've started to come down yet. I don't think we know what the top quartile is really going to look like over these last few years. I think that's going to take four or five years to really sort out.

• 1:20:50Jason Calacanis?

  Yeah, of course.

• 1:20:50Chamath Palihapitiya?

  Um, so I think that-

• 1:20:52Jason Calacanis?

  Explain why, Chamath, just so people understand. I understand.

• 1:20:55Chamath Palihapitiya?

  Well, I think, I think that there are lots of valuations that have supported huge TVPIs. These, you know, paper gains that have allowed venture funds to raise enormous amounts of incremental capital in new funds. And so they are going to try to wait as long as possible before they're held accountable for that. And the best way to do that is to not change the valuation. And so it will happen slowly. It'll be a trickle of these things. And I think that takes probably four or five years for it to really sort itself out. But in the meantime, companies will still need to get financed. Companies will still need to get built.

• 1:21:38Chamath Palihapitiya?

  That's why I think like the public markets, I think what Sack says is true. Giving us a signal of what these true market clearing prices are will eventually slip into these, you know, Series D or E companies because a venture capitalist who has now taken some big write downs in one part of their portfolio, I suspect will now be very open to selling to private equity for another part of their portfolio so that they can return capital.

• 1:22:01Jason Calacanis?

  Totally, totally agree. Yeah, it's gonna be rough out there. You guys watch White Lotus? Yeah, I just started season one. I'm uh, the third episode in.

• 1:22:11Chamath Palihapitiya?

  Okay, we won't say anything.

• 1:22:12Jason Calacanis?

  What a treat. We won't say anything, but how great was uh, season two? Oh, the rap was awesome. It's just incredible. The last, the last two episodes were extraordinary. Yeah, let's not say anything.

• 1:22:22Chamath Palihapitiya?

  Nat and I just finished watching all of Handmaid's Tale, which I will tell you is, that is a fucking stressful show. Uh, it's like, it's like you're putting in work. When you're done, those episodes, you're like, oh.

• 1:22:34Jason Calacanis?

  Emotional labor. You know, when they said this emotional labor, watching that show is like, it could, could, it could not be more sadistic and insane.

• 1:22:42Chamath Palihapitiya?

  Oh my god.

• 1:22:43Jason Calacanis?

  Uh, it is brutal. Uh, but you can't look away. Incredibly well done. Uh, all right, listen, this has been an amazing episode and this is news for the other besties. Friedberg and I have been secretly collaborating. No. We have come to a plan that we're working on a joint plan for All In Summit 2023, because we are both helping each other out on secret projects. I'm ready to tip, guys. Ooh, I love it. The tip. Are you, are you, ooh, the tip. That's it. We don't need you, Sax.

• 1:23:15David Sacks?

  I'm a permanent no.

• 1:23:16Jason Calacanis?

  That's all, that's fine. We know that. You're locked in no. I love that I have Sax as my anchor on this one. I can always float back that way if I need to.

• 1:23:22Jason Calacanis?

  This thing could flip, but Friedberg and I. I'm like an octopus floating in the ocean right now.

• 1:23:27David Sacks?

  Money is the root of all evil.

• 1:23:28Jason Calacanis?

  Totally. In this case, but power and influence is something that you, that's Friedberg and celebrity. Friedberg had so much of a good time at All In Summit 2022, that his hatred of my producer fee is less than his joy from the event. And we are collaborating on Supergut. Supergut, I have made up for my producer's fee by using Supergut and becoming a big proponent. I have announced a debate. Use the promo code twist.

• 1:23:57David Sacks?

  How much has he paid you for that? That's the quipro quote going on here.

• 1:24:00Jason Calacanis?

  Oh, yes. Yes. You, listen, no conflict, no interest. To go along with doing the uh, No conflict, no interest. Supergut bars, amazing. So tasty. Use the double mocha.

• 1:24:10David Sacks?

  The only, the only person that you haven't taken money from is SBF. I mean, pretty much you're worth it for anybody else.

• 1:24:17Jason Calacanis?

  By the way, can I point out on the most loathsome person in tech? Uh bracket. Oh wait, can we go through it? How am I? Do not name the, do not name the podcast.

• 1:24:27David Sacks?

  I'm eliminated already in the first round?

• 1:24:29Jason Calacanis?

  This is bullshit. And Chamath was eliminated. No, I thought you won. No, he lost. He was crushing. Okay, let's pull up the bracket. Do not mention the podcast. Come on, let's hear it. How did Andy Jassy get on here? Do not, I, I only want the bracket. Do not mention the podcast. We're not giving them any. Just blackout that, um, in post, I want you to blackout the logo.

• 1:24:49Chamath Palihapitiya?

  Make it easy.

• 1:24:50Jason Calacanis?

  I don't want to give these guys any credit. So here we go. The worst person in tech. This is great marketing. Chamath and Sax, we won't say it's a B podcast. Uh, that's run by literal socialist.

• 1:25:01David Sacks?

  Oh, well, look, Chamath got a very tough draw. I mean, of course you're gonna lose to SBF.

• 1:25:04Jason Calacanis?

  Of course I'm gonna lose to SBF. Yeah, that's ridiculous. That's just, you know what? You went up against the Warriors with KD. It is no way to win.

• 1:25:11David Sacks?

  That's tough. That's a tough draw.

• 1:25:13Jason Calacanis?

  You had no shot. You guys should have been on the other side.

• 1:25:14David Sacks?

  I had an easy draw.

• 1:25:16Jason Calacanis?

  Easy draw. Sax versus? In the most hated person in tech? He edged you by 1%. That's bullshit.

• 1:25:22David Sacks?

  Nobody knows who Andy Jassy is. I don't get it.

• 1:25:24Jason Calacanis?

  Andy Jassy is a complete gentleman. Andy Jassy is delightful.

• 1:25:28Chamath Palihapitiya?

  I gotta be honest with you.

• 1:25:30Jason Calacanis?

  Sax is a horrible human compared to Andy Jassy.

• 1:25:32Chamath Palihapitiya?

  Just in spice.

• 1:25:34Jason Calacanis?

  That is, I want a recount.

• 1:25:36David Sacks?

  No, I wanted to win.

• 1:25:37Jason Calacanis?

  Sax.

• 1:25:37David Sacks?

  I want a recount.

• 1:25:38Jason Calacanis?

  This is election interference.

• 1:25:40David Sacks?

  They mentioned union busting.

• 1:25:41Jason Calacanis?

  This is election interference.

• 1:25:42David Sacks?

  I get, hold on a second.

• 1:25:43Jason Calacanis?

  Something you're a specialist in.

• 1:25:44David Sacks?

  I guess it's worse to be a union busting Amazon CEO than a reactionary conservative investor.

• 1:25:50Jason Calacanis?

  Yeah, I don't get it. This is ridiculous. I just want to point out that the biggest travesty here is that I did not make the list. There are, and you know what? These guys are trolling me. These guys, shout out to producer Nick who just retreated.

• 1:26:08Chamath Palihapitiya?

  I mean, you basically, you basically picked the, what is it? The 30 most relatively well-known people in tech. That's what tilts J Cal the most.

• 1:26:15Jason Calacanis?

  This is terrible. Worst person in tech. I don't make the list. I'm gonna double down this year.

• 1:26:20David Sacks?

  Yeah, because you're constantly kowtowing to the media. You're, you're.

• 1:26:22Jason Calacanis?

  You're right. You're right. I need to be horrible. Stop with that. I need to be a worse human like you, Sax. I'm gonna try my best this year to work against humanity and society and be more loathsome than you. I'm really gonna redouble my efforts. Obviously, I can't catch up with Chamath.

• 1:26:38David Sacks?

  You buy into all their phony narratives.

• 1:26:40Jason Calacanis?

  I'm too kind. I got a big heart. I care. I have empathy.

• 1:26:42David Sacks?

  You're buying into all their phony narratives.

• 1:26:44Jason Calacanis?

  I know my empathy. But here's the problem. These guys left me off on purpose. If you can pull up the replies.

• 1:26:49Chamath Palihapitiya?

  Who won between Andreessen and Bill Gates?

• 1:26:52Jason Calacanis?

  Oh, Andreessen. That's a lock. That's Andreessen. Of course. Andreessen crushed them.

• 1:26:58Chamath Palihapitiya?

  A16 co-founder and man of terrible deeds.

• 1:27:01Jason Calacanis?

  I mean, Mark Andreessen is a world-class shitposter. And Bill Gates is hiding somewhere. Nobody, Bill Gates is, doesn't tweet. Mark Andreessen blocks, unblocks, he shitposts with the best of them. He's up there. I mean, that guy's a dark meme lord.

• 1:27:18Jason Calacanis?

  Any other, I mean, I really, I really sympathize with you, Chamath. You got your ass handed to you there. That's just, that's like going up against the dream team.

• 1:27:25Chamath Palihapitiya?

  Hold on, hold on, slow down, bro. You're not even letting us read these things.

• 1:27:28Jason Calacanis?

  All right, give me a chance.

• 1:27:29Chamath Palihapitiya?

  Okay, wait, oh, look at this one. Twitter former idiot CEO versus Airbnb CEO making housing more accessible.

• 1:27:37Jason Calacanis?

  Oh, God, it's so brutal.

• 1:27:40David Friedberg?

  Oh, my God, that's so well-written.

• 1:27:41Jason Calacanis?

  Brian, we saw Brian this weekend. He's a great guy.

• 1:27:44Chamath Palihapitiya?

  Guy, guy who really tried to make us believe Web 3 was going to happen versus World Coin and OpenAI.

• 1:27:50Jason Calacanis?

  Of course, Crit Dixon wins. Much more loathsome than Sam Altman.

• 1:27:54David Friedberg?

  Okay, I got one.

• 1:27:55Jason Calacanis?

  Guys, this has been fun. Listen, Friedberg, you didn't even come, I want to just congratulate Friedberg on an amazing, the best Science Corner ever, an amazing product at Supergut that has helped me lose weight. I feel great. And for, you know, recovering from whatever illness you had. All right, everybody, I love you besties. Shout out to David Sax. Love you, guys. And we'll see you all next time on the All In Podcast. Love you, besties.

• 1:28:22Chamath Palihapitiya?

  Love you, guys. Bye.

• 1:28:25David Sacks?

  Let your winners ride.

• 1:28:45Speaker 05

  Besties are gone.

• 1:28:48Speaker 05

  That is my dog taking a piss in your driveway.

• 1:28:56Chamath Palihapitiya?

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

• 1:29:04Speaker 05

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