E85: SBF's crypto bailout, Zendesk sells for ~$10B, buyout targets, US diplomacy, AlphaFold & more

0:00 Bestie intros 4:09 Assessing SBF bailing out major crypto players & the state of the market 18:24 Classifying crypto assets, high-yield crypto lending 34:17 Zendesk sells for $10B, accounting for stock-based comp, evergreen standard in tech 1:01:24 Buyout targets, public market "regime change" 1:08:21 Russia/Ukraine impact on markets, could US diplomacy have prevented the war? 1:28:35 Science Corner: Friedberg breaks down the newest breakthrough AlphaFold application 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.wsj.com/articles/crypto-fund-three-arrows-ordered-to-liquidate-by-court-11656506404 https://www.cnbc.com/2022/06/22/sam-bankman-fried-rescues-crypto-lenders-blockfi-voyager.html https://www.coindesk.com/business/2022/06/25/morgan-creek-is-trying-to-counter-ftxs-blockfi-bailout-leaked-call-shows/ https://twitter.com/ForbesCrypto/status/1541893168152690690 https://californiahealthline.org/news/article/tech-titans-want-the-richest-californians-to-pay-for-pandemic-preparedness/ https://twitter.com/DavidSacks/status/1540732780501381121 https://www.marketwatch.com/story/gensler-labels-bitcoin-a-commodity-as-crypto-prices-stabilize-11656340239 https://www.coinbase.com/price/bitcoin https://www.coinbase.com/price/ethereum https://www.blockchaincenter.net/en/altcoin-season-index/ https://techcrunch.com/2022/06/24/zendesk-drama-concludes-with-102-billion-private-equity-acquisition https://techcrunch.com/2022/02/11/zendesk-spurns-17b-private-equity-takeover-offer/ https://investor.zendesk.com/ir-home/press-releases/press-releases-details/2022/Zendesk-Announces-Fourth-Quarter-and-Fiscal-Year-2021-Results/default.aspx https://investor.zendesk.com/ir-home/press-releases/press-releases-details/2022/Zendesk-Announces-First-Quarter-2022-Results/default.aspx https://cloudedjudgement.substack.com/p/clouded-judgement-62422 https://techcrunch.com/2022/02/25/zendesk-terminates-4-1b-surveymonkey-acquisition-after-its-own-investors-reject-deal/ https://www.google.com/finance/quote/CRM:NYSE https://www.google.com/finance/quote/WDAY:NASDAQ https://www.google.com/finance/quote/NOW:NYSE https://www.issgovernance.com/library/resurgence-of-evergreen-features-in-ipo-equity-plans-restrict-investor-say/ https://www.bloomberg.com/news/articles/2022-06-25/jana-partners-pulls-zendesk-proxy-fight-after-9-5-billion-deal https://cdn.manscaped.io/assets/investor-relations/manscaped-investor-presentation-slides-2022.pdf https://investor.onepeloton.com/node/9271/html https://investors.buzzfeed.com/node/7426/html https://kalshi.com/events/CPI-22JUN/markets/CPI-22JUN-T0.9 https://www.washingtonpost.com/national-security/2022/06/17/long-war-ukraine/ https://twitter.com/missy_ryan/status/1537944064703619074 https://www.reuters.com/world/kremlin-says-nato-expansion-ukraine-crosses-red-line-putin-2021-09-27/ https://www.reuters.com/markets/stocks/putin-warns-russia-will-act-if-nato-crosses-its-red-lines-ukraine-2021-11-30/ https://theconversation.com/ukraine-war-follows-decades-of-warnings-that-nato-expansion-into-eastern-europe-could-provoke-russia-177999 https://www.nytimes.com/2021/06/16/world/europe/biden-putin-geneva-meeting.html https://abcnews.go.com/amp/US/wireStory/us-officials-land-solomons-discuss-china-pact-concerns-84238211 https://amp.cnn.com/cnn/2021/09/01/politics/ukraine-volodymyr-zelensky-biden-white-house/index.html https://www.state.gov/u-s-ukraine-charter-on-strategic-partnership/ https://apnews.com/article/moscow-russia-europe-ukraine-belarus-6d9818ff922a2650de107734a7c3faf5 https://news.yahoo.com/blinken-says-no-change-nato-193615967.html https://www.scmp.com/news/china/diplomacy/article/3182517/does-chinas-demotion-its-deputy-foreign-minister-signal https://www.science.org/doi/10.1126/science.abm9326 All-In E79 on RvW leaked draft: https://youtu.be/qH696z3ml1Q

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

• 0:00Chamath Palihapitiya?

  Let's go, Jason, start. Let's go. Do you have any intros? Let's go, let's go, let's go, let's go.

• 0:03Jason Calacanis?

  All right, if you want intros.

• 0:06David Sacks?

  We're not willing to pay for them, so don't even go there.

• 0:09Chamath Palihapitiya?

  Sax is awake.

• 0:10Jason Calacanis?

  All right, well, then we'll start with you, Sax.

• 0:13David Sacks?

  If you want to do your job, you'll do the intros. And if you want to, if you want to slow roll your effort, because you think you're negotiating with us, don't, we don't give a shit.

• 0:22Jason Calacanis?

  Listen, I'm doing all the projects.

• 0:23David Sacks?

  You think we care about your intros? Do a bad job. We don't care.

• 0:28Chamath Palihapitiya?

  It's so true. Waiting in the wings. All we do is.

• 0:31Jason Calacanis?

  All right, well, then I'll just do three Sax intros in a row.

• 0:34Chamath Palihapitiya?

  Oh, my God, it's so true. Do, do a couple of bad jobs so that we can boot you off the show. Oh, that'll be so cool.

• 0:39Jason Calacanis?

  All right, here we go.

• 0:57Jason Calacanis?

  All in Summit, I packed the joint, but Sax won't give me an extra point. His crypto holdings, they can't find a floor. Going to have him fly in commercial for the first time since 2004. Welcome, David Sax, back to the program, the Rain Man.

• 1:11David Sacks?

  Good to be here.

• 1:12Jason Calacanis?

  Ah, now Friedberg, I never wanted to see him go, but you got to show up for work. You can't do every other show. The Sultan of Science, he's certainly not a fad. But again, did you see those ratings with Brad? Welcome back, the Sultan of Science.

• 1:26Chamath Palihapitiya?

  By the way, our show beat Brad's ratings, so thank you very much, Jake How.

• 1:30Jason Calacanis?

  Okay, well, a little drama always builds a little audience. Okay, here we go. Chamath.

• 1:34Chamath Palihapitiya?

  A little healthy competition.

• 1:35Jason Calacanis?

  Well, Chamath, he's in Italy, living a life so grand. His next SPAC, a luxury wine and sweater brand. This market is leaving him in a daze, so he's been tipsy in the Mediterranean for the past 10 days. Welcome back, the dictator.

• 1:47Chamath Palihapitiya?

  Thank you.

• 1:48Jason Calacanis?

  Thank you. I just, I put them on stun. I didn't want to do any kill shots there, since everybody's a little on edge, including the audience. The audience had a lot to say about whether we cover a lot of the controversial topics, um, Roe v. Wade, January 6th, and Ukraine. All, I did a bunch of surveys. 50% of people want us to talk about it. 50% don't. So we'll see which ones we get to say, yeah.

• 2:13David Friedberg?

  Do you think we should be surveying the audience to ask them what they want us to talk about? Because when we started the show, we just talked about stuff that we thought was interesting.

• 2:21Jason Calacanis?

  Sure.

• 2:21David Friedberg?

  And people happened to like it and listen and tune in for it. If you end up asking the audience what they want, don't you end up becoming like a Fox News or like any other

• 2:30Jason Calacanis?

  Yeah, I mean.

• 2:30David Friedberg?

  kind of media company where you just ultimately use the feedback loop to drive.

• 2:34Jason Calacanis?

  Yeah, I mean, I wouldn't. Every week of the show, I will tweet like, hey, anything you want on the docket? Because sometimes people have good ideas. Um, but yeah, certainly you shouldn't base it on like a survey. No.

• 2:45David Friedberg?

  I think we should talk about what we find. Yeah, we were just, yeah, that's how we started was we were just kind of being intellectually honest with each other and curious about stuff we were interested in. And it, and it worked. And if people don't like it, they don't like it. I mean, I don't think we should.

• 2:57Jason Calacanis?

  The, the big controversial thing.

• 2:58David Friedberg?

  Like a, like a vote for your topics and that's what we follow.

• 3:01Jason Calacanis?

  Definitely not. We should, I think we'll agree on that. I think just, there is an ongoing debate amongst the audience of what percentage of this show should be politics? And when should we talk about politics and are we doing too much politics? And so I think let's start with markets.

• 3:13David Friedberg?

  Let me ask you one more question. Do you think our objective should be to grow the audience? Or should our objective to be talking about the things we want to talk about?

• 3:19Jason Calacanis?

  Yeah. What do you think?

• 3:20David Friedberg?

  I mean, what do you think, Sacks?

• 3:21David Sacks?

  Yeah, I don't think it's a good idea to poll the audience about what we want to talk about.

• 3:24David Friedberg?

  Is the objective to grow the audience?

• 3:27David Sacks?

  Yeah. Well, I think it's good to have an audience. Otherwise, what are we doing? But yeah, um, but look, what the audience showed is that half of them wanted to talk about those topics roughly and half didn't. I suspect that most topics are going to be like that, you know?

• 3:40Jason Calacanis?

  Well, not markets and people like, I think 80, 90% of people want to hear us talk about markets and startups.

• 3:46David Friedberg?

  Yes.

• 3:47Jason Calacanis?

  Like our core stuff, right, David?

• 3:49David Friedberg?

  I'm just saying, if your objective function is to maximize your audience, you're going to end up making a TikTok video of people twerking or something. You know, it's not like the show.

• 3:57Jason Calacanis?

  Did you just volunteer to twerk on the show?

• 3:58David Friedberg?

  I'm not going to do that now.

• 4:00Jason Calacanis?

  No.

• 4:02Jason Calacanis?

  I think I'm pretty sure it's a moth. Well, I have the video of Free Bird twerking at All In Summit anyway.

• 4:08David Friedberg?

  Yo.

• 4:08Jason Calacanis?

  Hey, who? All right, let's get started with, um, I think what's going on in crypto because people do want to hear about that. And it's been quite stunning. A British Virgin island court ordered the liquidation of Three Arrows Capital, 3AC, after creditors sued the crypto hedge fund for failing to repay its debt. They had $3 billion in assets under management. They had a huge position in the now defunct stablecoin Terra and its token Luna. And they were trading on some massive amount of margin. How much and what deposits they were using to do this? We will find out. Now they're being forced to liquidated, to be liquidated. 3AC owed Voyager Digital 650 million, could not pay it, which sent Voyager stock down 60%

• 4:53Jason Calacanis?

  and caused them to need a bailout from Sam Bankman-Fried, which has led to SBF, as he's known in the industry, bailing out a couple of other major folks in crypto. He provided a $200 million credit line to Voyager Digital. This is a Canadian crypto lender. They'll lend you money against your crypto. And FTX provided a $250 million credit line to BlockFi. FTX is obviously SBF's company. And according to early BlockFi investors, the FTX credit line would wipe out all existing shareholders. So we're starting to see the really onerous term sheets to keep these things alive. This is, of course, in the face of an entire crypto collapse,

• 5:37Jason Calacanis?

  with many crypto coins seeing what we saw in growth stocks. Is this the end of crypto? Is it going to rebound again? What are your thoughts, Chamath Sacks, Friedberg, who wants to start on crypto?

• 5:50Chamath Palihapitiya?

  Did you guys see the chart that I posted into the group chat? That showed Bitcoin activity as a function of year and value? Can you just put that up just so that we can look at that together? The crazy thing about this chart, when you look at it, and it's pretty obvious, is that we are collectively, in one way, shape or form, basically trading up ever since 2018, really, with all the stimulus. Because if you look at the mean price of Bitcoin... About 2018, it was a nothing burger. You know, what we were talking about was, you know, a price that was sort of between a few thousand dollars, two, three thousand. Ten thousand. Three thousand, you know, and then all of a sudden, when all of this stimulus money hit the market, look what happened to it.

• 6:34Chamath Palihapitiya?

  But I think something unique also happened, which is that people really understood how to run these very complicated off-chain Bitcoin ARbs. And I think we should explain what those are because those are what's behind the Three Arrows Capital. It's behind, you know, I think Sam had this kind of oblique tweet that said, you know, some of these exchanges are actually already insolvent. They're already the walking dead. So the first thing to keep in mind is that, you know, this is a completely unregulated market. Right? There are no middle maker, uh, market makers per se that actually have reporting requirements to any regulatory authority. There aren't any clearing houses. There isn't a way for us to understand systemic risk as it builds in the crypto market.

• 7:18Chamath Palihapitiya?

  So what happened, starting in 2018 and 19, is people realized the following things were true. It's sort of what we talked about last week. You go and do some crazy round. You, uh, you know, mark up some phantom equity in a company. That company then issues tokens. You then list the tokens, not on, you know, a blockchain per se, obviously, but, uh, in a place where trades can happen off-chain. Right? And there's a bunch of exchanges where these things happen off-chain because it's one, you know, uh, company and then they have a bunch of segregated sub-accounts. And what happens is when these things initially get listed, retail goes crazy. The price goes up, folks basically dump on retail.

• 8:03Chamath Palihapitiya?

  And, you know, you spin that loop as fast as you can and you can extract an enormous amount of money. Along the way, all these things like DeFi all of a sudden popped out of nowhere. And it's like, hey, you can earn 15, 16, 17, 18% just deposit the Bitcoin. And so folks would deposit Bitcoin. But then what would happen is like the places where those deposits were held would then need to obviously find places to make that 11, 12 or 13%. And so then they would go off-chain to some other random person who was offering to pay them even more than that and they would try to arb the difference. But it all catches up with you, because when something like a Terra goes to zero,

• 8:42Chamath Palihapitiya?

  all the Bitcoin that was used to basically, you know, run that DeFi process around Terra vanishes. You know, and then all of a sudden, you, the lender, are like, hey, can I have my Bitcoin back? And the broker is like, well, actually, I don't have it. I lent it to somebody else. Let me ask that someone else. And they're like, I'm sorry, I don't have it, but I have these Terra coins. You know, because I was running some arb and now it went to zero. And that's essentially what we're seeing right now. So we have two big problems. And then I think we have a third that's kind of funny. The first big problem is like, obviously, in the absence of any regulatory oversight, this stuff is going to happen. Systemic risks are going to build up. That's what we're facing right now.

• 9:24Chamath Palihapitiya?

  Is an enormous amount of systemic risk largely around Bitcoin. A bunch of this money, I think, has been essentially just vaporized.

• 9:34Chamath Palihapitiya?

  And so all these people that try to find their deposits, especially in custodial accounts in off-chain brokers, may be SOL at some point. And I think that's just going to be a huge shit show if that actually happens.

• 9:48Jason Calacanis?

  And to be clear, Chamath, they don't have the keys to their own Bitcoin. They gave money to a custodial account. They then did this lending, went out to get them to 15%. And they don't have any recourse here. They can't get their Bitcoin.

• 10:04Chamath Palihapitiya?

  Well, look at this article now.

• 10:05Jason Calacanis?

  This is why real Bitcoin owners put them in a wallet and own the keys.

• 10:08Chamath Palihapitiya?

  Does anybody have recourse to this Three Arrows Capital and all of this other interrelated parties that are now, you know, gone completely bankrupt because of this scam? The answer is absolutely not.

• 10:19Chamath Palihapitiya?

  So that's the first problem. You have absolutely zero oversight, which means systemic risk has been built up in the system.

• 10:27Chamath Palihapitiya?

  The second thing is that, exactly what you just said, Jason, is that people don't even understand chain of custody here. Which is that you thought that you owned this Bitcoin. It turns out you actually may not actually own them at all. You thought that you were properly lending them out. You actually don't. There is no enforceable contract, it turns out. And so I think that's going to be an entire set of different legal issues that are now going to come to the service, because people who actually legitimately lent this stuff out. For example, like if you short a stock and you go and borrow stock from any one of us, there are really tight guardrails, you know? If you wanted to go and put a credit derivative swap on against debt, there's a central clearinghouse that makes sure you're not overlevered. You know, you have to go and get audited by a bank to even get the kind of account that

• 11:10Chamath Palihapitiya?

  allows you to put these derivatives on. None of that was possible in crypto. And then the last thing, which I think is kind of funny, is that we've had to listen to every millennial and Gen Z market observer in crypto tout how this is not like boomers, and they turned out to be the same, same, same, same. I mean, this is the funniest thing of all. It's like of all of the times you've had to hear how it's so different, it turns out it is entirely the same. Entirely, entirely. In fact, worse.

• 11:39Jason Calacanis?

  The custodian issue is definitely a major one. Sax, what do you think is happening in crypto right now?

• 11:44David Sacks?

  The price is obviously going down a lot. I don't really have a new point of view on it. I'm mainly pissed off that SBF is trying to raise my taxes in California.

• 11:54Jason Calacanis?

  Explain that.

• 11:56David Sacks?

  Sam Bankman-Fried, he runs FTX, and his company, he lives in the Bahamas. Okay? And there are probably reasons for that related to liability or taxes or something like that.

• 12:06Jason Calacanis?

  Can you tell us what FTX does?

• 12:08David Sacks?

  They're like a Coinbase competitor, but they obviously think it's beneficial to be offshore and not under US jurisdiction.

• 12:14Jason Calacanis?

  And they're very profitable, right?

• 12:15David Sacks?

  Yeah, supposedly they're super profitable. I mean, he's worth like $10 or $15 billion. That's my understanding. So he's been very successful at this. I don't know why they're in the Bahamas. I think either they're in there for securities regulation reasons or for tax reasons, but it's one of those two. In any event, he doesn't live in California, and yet he is sponsoring a ballot initiative here that would add a 0.75% tax on incomes over $5 million to finance a pandemic prevention institute of his design. He's doing this with Dustin Moskovitz, another billionaire, doesn't know what to do with his money. He was, may remember that Dustin was the guy funding Chase Budin. In any event, this would

• 12:58David Sacks?

  be, this pandemic prevention institute would be governed by an unaccountable board. As opposed to something like the University of California. This is like them using the ballot initiative system to fund their pet philanthropic projects. I mean, there's really no need for this. I mean, first of all, this is.

• 13:15Jason Calacanis?

  Sounds like something that should be done federally.

• 13:17David Sacks?

  Yeah, exactly. It's well, first of all, it's looking in the rearview mirror in terms of like a budgetary priority. But even if you believe this was a priority, I don't know why it'd be the responsibility of California taxpayers exclusively. And even if it was, you'd want to do it under, say, the UC system, some sort of accountable board as opposed to having a report to, you know, Sam and Dustin. So it makes no sense, and this is really going to hurt the California tax base because if you start raising taxes on, you know, California millionaires, more of them are going to leave the state. And then that tax revenue leaves the state, and so it actually hurts the general budget. And that's why, you know, California Teachers Association, for example, opposes this is because they know that this is going to have

• 14:03David Sacks?

  a negative impact on core services.

• 14:05Jason Calacanis?

  What is?

• 14:06David Sacks?

  But what's offensive to me is, I mean, so first of all, this is just a stupid idea in like every possible way. But what is a guy who lives in the Bahamas doing funding ballot initiatives in California to raise our taxes, thereby worsening the California fiscal situation to fund his pet philanthropic projects? If you're worth 10 billion, just fund it on your own, you know? Do it through your family foundation. I don't know why you need to raise the taxes on all of us.

• 14:31Jason Calacanis?

  Yeah, that's very bizarre. Why is he giving?

• 14:35Chamath Palihapitiya?

  Well, the simple answer is because I think it helps curry favor with politicians that he needs for other things. That's why you would do it. That's why I would do it.

• 14:44David Sacks?

  This is currying negative favor because first of all, every millionaire in California should be up in arms over this. But even I'd say.

• 14:53Chamath Palihapitiya?

  I don't think we know his game plan.

• 14:55David Sacks?

  Yeah, I mean, but I'd say even liberal politicians and interest groups in California. Like the, like the teachers association don't want this because the money's not going to a cause they support and it will probably, it will almost certainly drive down the state's tax base, right? Because people on the margins are going to leave. We already have the highest taxes in the nation. We're at what like 13.3% for the top end.

• 15:21Jason Calacanis?

  We have a hundred billion dollar surplus for a reason. All these IPOs, all of these venture capitalists, CEOs and rank and file tech workers are just paying massive amounts of tax here and they're leaving.

• 15:32David Sacks?

  Right, but that's highly levered to capital gains, right? And so last year we had a boom market. We now know in hindsight that it was inflated. That was all driven by this liquidity bubble. So do you think that's going to be the case this year? I think we're due for a huge budget shortfall next year because there's going to be no capital gains.

• 15:49Jason Calacanis?

  They better hold on to that hundred billion for sure.

• 15:52David Sacks?

  The California tax base is highly leveraged to this boom bust cycle and driving the top earners out of the state is only going to worsen that impact. So, you know, but again, I question why is a guy in the, it'd be one thing if it was just Dustin doing it, I guess, but I don't understand why Sam's taking the lead when he's not even a California taxpayer.

• 16:12Chamath Palihapitiya?

  Because I think he's a very sophisticated player in not just crypto, but frankly, regulated and unregulated finance. And look, he, I think he spends a lot of money in DC as well. And I think that he has a very thoughtful game plan. And then, you know, when you look at who his parents are, his parents are really, really smart, thoughtful people as well. Two law professors at Stanford. And so I suspect, not knowing and having spoken to him, that I think that there's a really specific strategy that these guys have around who they need to influence and what they care about and then willing to, as a pass through, fund those

• 16:55Chamath Palihapitiya?

  things in order to create the, you know, influence that he needs for the things that he cares about. And I suspect that it's that kind of horse trading, which is, I think it's pretty typical in US politics. The, the question though, is what will happen? If FTX has to really talk about, you know, everything that's actually happening in crypto, crypto, you know, I'm sure that FTX could do a lot to help understand a lot of this off-chain activity, some of the, you know, especially the stuff that's really in the gray, especially the stuff that's going to come to light over the next few years is, I mean, you have to understand, guys, like, you know, we've torched $2 trillion and it's not of institutional capital, you know, this is overwhelmingly retail capital.

• 17:35Jason Calacanis?

  All of this is going to inspire a lot of district attorneys and DOJ activity. The discovery is going to be bonkers and it's all going to be regulated to the point of in which it kills a lot of the opportunity. I think this is going to become the most regulated space we've ever seen.

• 17:53David Sacks?

  Well, I don't know. I mean, if the goal here was to curry favor, then I think Sam must think there's not going to be a red wave in November because I don't think Republican politicians are going to look very favorably on a guy who's using his money to raise taxes in a state he doesn't even live in.

• 18:10Jason Calacanis?

  All right. Well, let's move back to the crypto piece.

• 18:12Chamath Palihapitiya?

  Let's move back to crypto.

• 18:13Jason Calacanis?

  Yeah, let's move back to the crypto piece here.

• 18:14Chamath Palihapitiya?

  That's the bigger thing, not a few million dollars of lobbying.

• 18:18Jason Calacanis?

  At this point, with this many retail investors, well, actually, let me, let me start with this, Friedberg. Is there a real technology here? And how much of what we've just witnessed with this crypto collapse and the crypto boom bust cycle, how much of this is based on what you would perceive as real technology that is going to advance the human species forward? And how much of this was hype? If you were to put a percentage on it, you know, trillions of dollars in assets, you know, created and then wiped out. How much of this was actually real technology? How much of it was a complete utter waste of fucking time and a grift?

• 18:52David Friedberg?

  I'm no crypto expert and I've not been an investor in cryptocurrencies. I read the original Bitcoin white paper.

• 19:01David Friedberg?

  Makes sense. Bitcoin itself, to me, makes sense as a potential... Initially, it was kind of interesting as a potential alternative currency, but the transaction fees were very high, and so it never really seemed to make sense as a replacement for traditional financial networks until those transaction fees dropped below those of the traditional financial networks. The biggest concern I've always had, which I've mentioned multiple times on this show, is that whenever anyone talks about a "cryptocurrency," they talk about the price of it in dollars. And if it really is meant to be an alternative to the US dollar, why are you talking about

• 19:43David Friedberg?

  it in the price of US dollars and it's up and it's down relative to dollars? And that implies ultimately that the intention would be to transact back to US dollars, which implies that the intent is not to be a replacement for the US dollar, which was a lot of the early prognostication of Bitcoin, was it was going to be a replacement for the US dollar, it's going to be an alternative to traditional monetary systems. But ultimately, if you're just measuring this in dollars and it's up and it's down, everyone's freaking out every day about crypto's up, crypto's down, that means it really is more like a security, except securities definitionally are supposed to have a secured interest in some underlying set of assets, and there's no underlying asset. It's not actually a security because it doesn't provide you a secured interest in anything.

• 20:28David Friedberg?

  So it is effectively a bet on some systems of computers that are meant to facilitate some set of activities that, you know, ultimately people really only seem to value in US dollars. So I don't know. I mean, like, where does it all go? It seems like I mentioned at our predictions episode last year that all of these smaller things are going to get blown out, these "cryptocurrencies," even though many of them don't really act like a currency. And, you know, maybe Bitcoin itself persists, and it seems to me like that's always going to have good staying power. As an observer, I'm not a participant. And, you know, anytime someone telling you something's in dollars and it's going up and it's going down and you're betting on whether it's going to go up or go down and your intention

• 21:12David Friedberg?

  is to transact back to dollars, you know, and there's no one...

• 21:15Jason Calacanis?

  These have been securities the whole time.

• 21:17David Friedberg?

  Yeah, if there's no underlying...

• 21:19Jason Calacanis?

  This is the problem I have with it. This has been, you know, a shadow securities stack that was created in parallel to the existing one with a lot of, you know, oversight. And what did we think would happen if you created a global casino with no rules?

• 21:35David Friedberg?

  Other securities have an underlying interest in something. This has an underlying...

• 21:38Jason Calacanis?

  Sure.

• 21:39David Friedberg?

  ...interest in some line on the blockchain of that particular network.

• 21:43Chamath Palihapitiya?

  That's exactly what it has.

• 21:45David Friedberg?

  Yeah, it's a secured interest in a line of code in, on a distributed...

• 21:49Chamath Palihapitiya?

  No, it's a, it's a, it has a secure, a Bitcoin has a legitimate, non-fungible entry in a blockchain that says it and only it represents that thing. And I think that that, you know, is, I guess, the link...

• 22:04David Friedberg?

  The security interest.

• 22:05Chamath Palihapitiya?

  Some may call it tenuous, but I, I mean, I tend to think at this point Bitcoin probably has to be regulated like a security, even, even if it is not and it's more of a commodity only because of the, the volume and the sheer size of both the market and the secondary markets.

• 22:24Jason Calacanis?

  The potential fallout is the way you're saying it, right? The potential fallout when things go off the rails is so great, you kind of need to have some rails.

• 22:30Chamath Palihapitiya?

  Yeah, I mean, I mean, like, like, again, as I've said, like, look, if you're a, a market participant trying to trade, you know, very sophisticated, you know, derivatives of any kind, for example, in the credit markets, we have to go and we create these things called ISDA's, they're called ISDA's, you know, and it's basically a kind of an account that allows us to go and, you know, take risk in some of these very esoteric markets, but the, the underlying principle around that is a common set of parameters, a clearinghouse, the ability to monitor risk, none of those things exist here. And I think that's really what folks have to solve for now. Secondary is what were all these kind of like shadow activities, you know,

• 23:12Chamath Palihapitiya?

  it just, it turned, you know, it seemed too good to be true when you would hear, wow, this DeFi protocol will yield you 24% and you're just like,

• 23:20Jason Calacanis?

  Who was paying the 24%?

• 23:21Chamath Palihapitiya?

  It never made sense really, but then none of us really questioned it, you know?

• 23:25Jason Calacanis?

  I, you know, I had people on this week in startups, I questioned it all the time and they could never explain it to me. And then now the explanation was, well, we were giving you, we were giving short-term loans to other people who basically wanted a margin loan, you know, they want to, they don't want, they want to hodl their Bitcoin. But that was only four or 5%. What they were also doing was giving you tokens in some other cryptocurrencies that they were basically originating. So they basically were like, we'll give you 4% on your Bitcoin loan. Somebody else will pay that, you'll pay that. But then the other 11% is coming from some tokens we're giving you that actually, you know, airline miles.

• 24:01Chamath Palihapitiya?

  We have to answer.

• 24:02Jason Calacanis?

  Giving you airline miles.

• 24:03Chamath Palihapitiya?

  We have to answer a really important question. If you, we've, we, you know, look, the, the markets have incinerated

• 24:12Chamath Palihapitiya?

  many trillions of dollars. I just saw like, for example, there was 1.7 trillion, you know, that was just torched in ETFs alone, just in the, since the beginning of this year, right? We've done that or more in the crypto side. We've done that or more on public equities, right? We're probably going to do that or more in other markets. But every other market is regulated and there's a full accounting of the P and Ls, of the dollars that are won and the dollars that are lost. And here, some folks have just, you know, basically escaped with billions and billions and billions of dollars. And the bag holder is just, you know, a retail investor. So the real question is, are regulators going to actually care to try to do something?

• 24:56Chamath Palihapitiya?

  Because the level of grift that's happened in this market is extreme. And especially when, especially when everybody was telling you, no, this time is different, this market is completely different, it's transparent, it's on-chain, you can see everything, and it turns out, actually, most of it was not on-chain, it was off-chain.

• 25:15Jason Calacanis?

  And they were using, they were using this, hey, have fun being poor, this like psy-ops to get you to participate, okay, boomer, you don't get it. Gensler, I was talking to Kramer on CNBC, here's the quote, "Some like Bitcoin," and that's the only one, Jim, I'm going to say, because I'm not going to talk about any of those, these tokens, that my predecessors and others have said are a commodity, and then he said, "Many of these crypto financial assets have the key attributes of a security." Aside from Bitcoin, he believes, you know, that these things are securities, and that makes sense, because 99% of people buying them, Sacks, were buying them because they wanted to see them appreciate. They were never using these as utility tokens, they were buying them to, you know, see them appreciate

• 25:58Jason Calacanis?

  and to flip them. So what do you think, Sacks? Is there, is there, when we look back on this whole mess in 10 years, is it going to be like the dot-com era, where we're like, yeah, it got overheated, but Amazon and Google came out of it, or are we going to look at it and go, well, that was tool-up season?

• 26:11David Sacks?

  Well, I think there is a future technology platform here with crypto, but, I mean, I've been saying this for the last year, that just because there's a future technology platform doesn't tell you what the pricing should be, and the price action got decoupled from the level of progress in the space. You know, you should always be looking at, what is the real usage, use cases, customers, revenue, things like that, and people stopped doing that. And I think part of the reason why the narrative was so powerful, if you go back to last year, then the chart that Chamath showed about the, the increase in the price of Bitcoin, which is really the root of everything, right? Because, you know, first,

• 26:54David Sacks?

  Bitcoin appreciates, and then, if you think about it, like Ethereum is, Ethereum's market cap is like a derivative of, of the Bitcoin market cap, it's been roughly 40%, and then the altcoins sort of get, the, the market cap of the altcoins is sort of derivative off. ...market cap. So the whole thing kind of moved up in in sync. And the reason why Bitcoin moved up so much is that as the Fed kept printing more and more money, you had fans of Bitcoin saying, look, the Fed is debasing the US dollar. We're going to need an alternative currency. That was a powerful narrative that the Fed seemed to be vindicating. And there was a positive feedback loop, which is the more the Fed debased the currency,

• 27:36David Sacks?

  the more that the price of Bitcoin went up. Now, the reason the price went up was not because they were debasing the currency. It was because they were creating so much liquidity that that it created a liquidity effect that then drove up the price. And so

• 27:50Jason Calacanis?

  So consumers had money that they could buy Bitcoin because there was more money in the system.

• 27:55David Sacks?

  Yeah.

• 27:55Jason Calacanis?

  You created more buyers of Bitcoin.

• 27:57Chamath Palihapitiya?

  That's exactly what happened. They, I mean, all of this idiotic narrative. Sorry, go ahead, Sacks.

• 28:02David Sacks?

  Yeah, you saw an increase in speculative investments across the board, including but not limited to crypto. So again, you know, when the Fed prints too much money, it creates asset bubbles. But there's a powerful reinforcement because as the Fed was printing, Bitcoin and supporters of Bitcoin had a really great explanation for why Bitcoin was going up, which is they're destroying the US dollar. We're going to need an alternative soon. Now, I think in the very, very long term, could Bitcoin be a non fiat currency? Yes. I mean, I actually think the technology works. You could create a a new kind of currency that's backed by math and by cryptography as opposed to fiat government. But that could take a really long time. I mean, that could be decades in the future.

• 28:46David Sacks?

  And but what happened is the market started thinking, well, that's going to happen soon. And that's where it just got ahead of itself. That was the tulip part of it.

• 28:53Chamath Palihapitiya?

  Yeah, I think that I think that they found all of these words, you know, written in these economic textbooks that allowed them frankly to justify what a lot of people were doing in a lot of other markets, which is just straight up speculation because the money printer was going burr. And you know, if you look at this 92% correlation to the equity markets, I suspect in Bitcoin and crypto is probably closer to even 100%. Because it really was the furthest out on the risk curve and it just made the most sense when you thought money was, you know, effectively infinitely going to be available to just buy the riskiest risk assets.

• 29:31Jason Calacanis?

  Think about the friction taken out of this, Jamath. You could buy these, you know, cryptocurrencies so easily. You could trade them so easily. You could create one so easily. People were popping up forks of these things. So in a way, what technology has done over the last 30 or 40 years, from cloud computing to software to open source, has made it very easy to pop up a startup. Well, you could pop up a currency and then you could get an incredible reward. And you get this incredible reward before you actually make a product for consumers.

• 30:02Chamath Palihapitiya?

  And?

• 30:03Jason Calacanis?

  And?

• 30:03Chamath Palihapitiya?

  Absolutely zero rules and oversight.

• 30:06Jason Calacanis?

  No oversight, yeah.

• 30:08Chamath Palihapitiya?

  The feature that was touted was actually the first one to get thrown away, which was transparency.

• 30:15Jason Calacanis?

  Yeah.

• 30:15Chamath Palihapitiya?

  When all of this activity was actually happening off-chain, this is why you have this systemic risk issue now. When Sam is saying some of these exchanges are actually insolvent, what he's saying is, well, that exchange has one master wallet address. Every time you open an account and transact on such exchange, you're actually just transferring between a database entry inside of that company. And so it may look like it is fine, but it is actually not fine. That's what he's claiming. This is the problem with all of this. So all of this activity, you know, built on these principles of openness and, you know, defensibility and, you know, you can't inflate it and, you know, devalue it and debase it,

• 31:01Chamath Palihapitiya?

  turned out to not even matter because the fundamental principle that would allow us to verify all of that was violated right from the get-go, which was transparency. All of it is happening in the dark. Most of this stuff is happening off-chain. And if you think that, you know, it's okay to torch a trillion dollars of equities, well, at least there's rules on the equity side. But to torch two and a half trillion dollars in crypto where there are no rules, it'll be really, you know, it'll be a very telling sign to see if these folks get their act together. And but meaning regulators and politicians and do something.

• 31:33Jason Calacanis?

  Well, then we made this crazy hybrid where we had the venture community. And I'm not going to talk about any specific firm here. And to be clear, you know, nobody knows exactly what's happening. But you had coins.

• 31:43Chamath Palihapitiya?

  You can't know, by the way, you can't know because it was happening off chain.

• 31:47Jason Calacanis?

  Exactly. So somebody would originate a coin and I was, you know, offered these deals. And you would, as a venture capitalist, be buying some equity in a company. And then some amount of tokens would be created before the token was released to the public or before anybody had insights into this, these tokens were swapping around. Everybody had different rights. Some people could sell early, some people could never sell. And it was as if, you know, you took the process of going public and you gave that to a seed stage or a series A company before they launched their product. So you're taking a company public essentially before they go.

• 32:20Chamath Palihapitiya?

  But if you, if you subpoena.

• 32:21Jason Calacanis?

  You know, they launched their product.

• 32:23Chamath Palihapitiya?

  If you subpoena the exchanges, all of this gets turned over.

• 32:27Jason Calacanis?

  Yeah.

• 32:27Chamath Palihapitiya?

  Because the exchanges are the honeypot of off chain activity.

• 32:32Jason Calacanis?

  Yeah. So and that's what's going to happen, I think, in all of this. And it's going to be really funky. This is, and what's terrible about this is this is why the accreditation laws exist is like, oh, only sophisticated people, top 6% of Americans are allowed to participate in private companies. And what did we do? We allowed 100% of people on the globe to participate.

• 32:51Chamath Palihapitiya?

  Backed by pure math backed that less than 1,000 people in the world actually understand. That makes no sense.

• 32:57Jason Calacanis?

  What could go wrong? What could go wrong?

• 32:59Chamath Palihapitiya?

  You cannot buy a stock, but you can buy this cryptographically secure.

• 33:04Jason Calacanis?

  You're not allowed to buy a share of LinkedIn or Uber or Airbnb, even though you stated in Airbnb, we're an Airbnb host, you're too stupid to buy Airbnb shares when it's private. But you can buy this cryptocurrency that doesn't even have a product in market.

• 33:17Chamath Palihapitiya?

  No, and, and here's this white paper that has, you know, university level pure math as the explanation of why it, nothing can go wrong. And you tend to, turns out it can, because nobody actually understood in the first place.

• 33:29Jason Calacanis?

  This is gonna be a decade of discovery.

• 33:32Chamath Palihapitiya?

  If you look at that, if you look at that price chart, what it really means is like, again, you know, we talked about this. If the equity markets have to rebase and get all this QT or QE out of it.

• 33:41Jason Calacanis?

  Yeah.

• 33:42Chamath Palihapitiya?

  Right? And then you have to rebase for earnings if you believe you're in a recession and then you have to rebase for margins if you believe that there's rampant inflation. Those three things have to happen in the equity markets. We're in the midst of that.

• 33:53Jason Calacanis?

  Yeah.

• 33:54Chamath Palihapitiya?

  But that also has to happen on the crypto markets, in the crypto markets. And if you look at that chart, what it really tells you is that the baseline price of Bitcoin, where things seemed, you know, where rational supply and demand were meeting each other before all these, you know,

• 34:07Jason Calacanis?

  Five, 10,000?

• 34:08Chamath Palihapitiya?

  3,500 to 5,000.

• 34:10Jason Calacanis?

  Yeah, I'd say about 5,000.

• 34:12Chamath Palihapitiya?

  That's still 75% from you.

• 34:14Jason Calacanis?

  Yeah, it's 20,000 now. So yeah, we got, we got, we got, we could have ways to go. One thing that I thought was an interesting sign of potentially bouncing along the bottom. Um, Zendesk has agreed to be acquired by an investor group in an all cash transaction. They're basically going private here. Uh, for around 10.2 billion. Uh, if you don't know Zendesk, it's a help desk software company. It's a SaaS software company. They turned down a similar acquisition of 17 billion earlier this year. Their market cap is 9.1 billion in the public markets. It's gone up obviously since this announced. This was announced, but um, they have a billion three in revenue. They're up 30% year over year. So this is a strong company. But the acquisition price is 7.7 times their 2021 multiple.

• 34:57Jason Calacanis?

  Sorry, did you say they're up 30%? Year over year. The revenue's up 30%. Revenue is up 30% year over year. They have 1.5 billion dollars in cash and securities, uh, that are, you know, marketable securities. So they're cash rich. Small loss, 223 million for the year in 2021. So they have six years of runway if nothing were to change. Yeah. What do you make of this, Sax? Is, why would they do this? They don't have to. So, and is this to you like the sign of a bottom? If we start seeing a bunch of these companies that went public that are seemingly strong, start to go private? And to go maybe clean up their balance sheet and go public again in three years? What's going on here?

• 35:36David Sacks?

  Well, I mean, this isn't a horrible outcome. And by the way, I mean, I remember we shared, uh, when I was doing Yammer a decade ago, we shared a floor in our, an office building at 410 Townsend with, um, with Zendesk.

• 35:49Jason Calacanis?

  They launched a TechCrunch 50.

• 35:51David Sacks?

  Yeah, exactly. So we had, I think, 5,000 square feet and they had the other 5,000 square feet and we were in a standoff. Both of us were expanding and we needed the other half of the floor. And it was like, who had moved first, basically. And anyway, they ended up moving and we took over their space. But so, I mean, look, this is a company that, you know, was worth 100 million bucks 10 years ago. So whatever it was, I mean, they were still, you know, they were very early stage. So this is still a great outcome. So they have taken the 17 billion. Sure, with 2020 hindsight, that would have been better. Uh, but look, you're seeing the valuations here being roughly reflected. The SaaS index is now down to about five and a half times revenue, I think, next 12 months revenue

• 36:32David Sacks?

  for them, for the median SaaS company. And the median SaaS company is growing about 20%. If you're a high-growth company, which starts at 40%, you're trading at about eight times next 12 months revenue. So Zendesk is sort of in there. I mean, that is what they're trading for. And SaaS founders.

• 36:49Jason Calacanis?

  Why go, why would the founders, the board?

• 36:51Chamath Palihapitiya?

  I'll tell you.

• 36:52Jason Calacanis?

  Want to go private is the question on people's minds.

• 36:55Chamath Palihapitiya?

  It's not, it's not that they wanted to go private. I think that they wanted to stay public and they wanted to build a large business, but this is where the law of large numbers catches up with every company. That's why it's so rare to have an Apple or a Google or a Microsoft or a Facebook or Netflix, where you can grow for 20 years at 25 plus percent, because at some point 25% growth over last year just becomes too hard of a mountain.

• 37:20Jason Calacanis?

  It's a big number.

• 37:21Chamath Palihapitiya?

  And so what Zendesk suffered from is what most of these SaaS companies not, and I'm not trying to disparage them, just calling it out, will have to go through, which is the following.

• 37:32Chamath Palihapitiya?

  The easiest kind of SaaS company to start and the one that folks, you know, really talented investors like Saks will fund overwhelmingly over others are what's called bottoms up SaaS, right? Things that sell to the low end of the market, things that sell into, you know,

• 37:48Jason Calacanis?

  Individuals can buy them in a corporation as opposed to the CIO.

• 37:51Chamath Palihapitiya?

  Yeah, the unfortunate part of that growth curve is that it's pretty terminal within seven to 10 years. And after that, you're forced to go to the mid-market and that eventually you're forced to go enterprise. But when you go to the mid-market and you're selling to 500, you know, 1,000, 2,000 person companies and then eventually even enterprise, you're talking about massive investments of OpEx, people, engineers, product managers, salespeople, and all of that stuff costs money and it's not clear that your product is any good. So in the Zendesk's example, it's not to say their products were bad, but all of a sudden, they were going up and selling a CRM tool, Salesforce automation tool, and now you're going head to head against companies like Salesforce who are going down market.

• 38:36Chamath Palihapitiya?

  And all of a sudden Salesforce and Microsoft and all these companies can play very aggressive pricing games with their products. They can bundle all kinds of other things in for free. They can give you discounts. And it's very hard to compete as a single individual company. So your growth starts to stall. So I suspect what happened at Zendesk is they said, we can make it and we believe in ourselves. And they found that it was hard. Then instead of organically growing, that's when they turned down the $17 billion offer. They tried to grow inorganically. They looked at SurveyMonkey, right? Which our friend Xander runs and said, we're going to try to buy that for $4.1 billion. And the market said, uh-uh, no. And then the market basically

• 39:16Chamath Palihapitiya?

  contracts. And now they're like, well, if we go and now torch our EBITDA goals and tell the market, we're going to go and spend all that billion dollars we have to try to go up against Salesforce and Microsoft with a product that we don't know is going to work, our stock's going to be at a dollar. And so I think that that's sort of the parade of terribles that happened for them. But it's a little bit of a warning sign for how difficult it is to get big. Like what Salesforce pulled off, right? And what Workday is starting to pull off, what ServiceNow has pulled off. I mean, you can't underestimate the quality of these teams.

• 39:51Jason Calacanis?

  I mean, Google, Apple, Facebook.

• 39:53Chamath Palihapitiya?

  No, I'm saying specifically enterprise.

• 39:55Jason Calacanis?

  And SaaS, yes.

• 39:55Chamath Palihapitiya?

  Those companies, ServiceNow probably being the last one that's really did it. Incredible. So difficult. Palo Alto Networks is probably the next closest one now.

• 40:05Jason Calacanis?

  Salesforce did through acquisitions. Let's be clear, right? Salesforce kept adding.

• 40:09Chamath Palihapitiya?

  Doesn't matter how you get there. Organically and organically, it doesn't matter. The point is, it's very hard. Most CEOs fail. Nobody accomplishes.

• 40:16Jason Calacanis?

  So is this going, but okay. So my original question is, is this the bouncing along the bottom moment?

• 40:20Chamath Palihapitiya?

  No.

• 40:21Jason Calacanis?

  Because we have Peloton, Buzzfeed, we have so many of these companies.

• 40:24Chamath Palihapitiya?

  This is a warning sign.

• 40:26Jason Calacanis?

  Okay.

• 40:28Chamath Palihapitiya?

  This is not yet the bottom. Well, this is a warning sign that says you cannot go into a massive investment cycle for all companies unless you can prove that you can sustain margins, sustain growth, and minimize OpEx.

• 40:45Jason Calacanis?

  But isn't this a very sophisticated buyer taking it private? They must have a thesis of how they're going to get their money back. Right? So that's my point is, Sax, you think that this is like, if the company's already public and somebody thinks, hey, you know, if I take this private, I can do better than if it's public and I'll reintroduce it to the public markets to get liquidity later. Isn't that what's going to happen here in all likelihood?

• 41:08Chamath Palihapitiya?

  You're making that statement in the absence of understanding how these things are financed.

• 41:12Jason Calacanis?

  Well, it's got a billion five and it's break even almost. So what is it?

• 41:16Chamath Palihapitiya?

  What about the billions of dollars of debt they're going to take out and slab off in this company? Right? What about the number of people they may?

• 41:22Jason Calacanis?

  You're talking about post going private.

• 41:24Chamath Palihapitiya?

  At the end of the day, the private equity firms are not trying to make, you know, this $10 billion go to 25. They're trying to make the $2 billion of equity they put in go to three. And there's a lot of ways that two can go to three before 10 goes to 25.

• 41:40Jason Calacanis?

  So they want a modest return.

• 41:42Chamath Palihapitiya?

  It's not a modest return, it's 50% return. It's a lot. It's making a billion dollars. It's hard.

• 41:48Jason Calacanis?

  Yeah, but but compared to the management team and the board's view of being a public company and growing 20% a year, or actually in their case, 30, would that be a better opportunity for those shareholders? That's what doesn't add up here. Sax, what do you think?

• 42:00David Sacks?

  If I had to guess, I mean, I haven't talked to Michael about why they're doing it. I think that they're operating at a new stage of the business. I don't think it's as fun to be growing a company at, call it 20 to 30% a year. And now all of a sudden you have to generate cash flow and you're being valued on that. I mean, they're past the high growth phase.

• 42:17Jason Calacanis?

  So management burnout is your thesis?

• 42:18David Sacks?

  I don't know. I mean, it's it seems.

• 42:20Jason Calacanis?

  A potential thesis.

• 42:21David Sacks?

  I think that's basically why people sell good businesses. Like, I actually don't think there's a problem in their business. I think that growing 30% a year with 1.3 billion in revenue, plenty of cash in the bank. I think they have a good product. I don't think there's anything wrong with the business.

• 42:36Jason Calacanis?

  Yeah.

• 42:36David Sacks?

  I think that that I do think founders get burned out and this is an exit. And I do think that the phase of their business they're in right now is not going to be as fun as the high growth phase. Look, when you're growing 100, 200% a year and investors are willing to fund that growth and they don't really care if you're profitable, that is just more fun than growing a business 20 to 30% a year and investors are breathing down your neck saying, when are you going to deliver cash flow? And what the private equity guys do is they're going to go in there and they're going to restructure the business to deliver cash flow. Now, I think ultimately, these types of businesses, they're great, the software business, they're great businesses to own because they're high gross margin.

• 43:17David Sacks?

  And, you know, they've got a subscription base that just keeps growing organically if they've got positive net dollar retention. So you've got a, let's call it a $1.3 billion subscription base that will grow to 2 billion over the next, whatever, half dozen years. And quite frankly, I bet you the private equity guys are going to take out half the cost structure. There's no reason this thing couldn't be generating 500 million a year in free cash flow.

• 43:42Jason Calacanis?

  But the management team would be unwilling to do that because it would suck. It kind of sucks to do that every day, to come in and fire half the team that you hired and take that hard medicine. It just is a bummer for that personality type.

• 43:55David Sacks?

  I think it is a different kind of management challenge and yeah, I don't think it's that fun. And but look, the thesis behind software companies, the justification for them burning money was, look, we're gonna, we're gonna spend every dollar in revenue that we make and then some because we're building a subscription revenue base that again has positive net dollar retention. So one day, okay, one day, we won't have to keep investing so much in sales and marketing. We won't have to keep investing so much in R and D. We'll still keep investing to some degree. We'll make the product better, but it's gonna be a little bit more maintenance mode. We will get to maturity.

• 44:33Jason Calacanis?

  And then you can lay off a third of the staff and all of a sudden.

• 44:35David Sacks?

  And then, and then all of a sudden the company is gonna be super profitable. And the fact of the matter is, is that day never came because the markets never demanded it.

• 44:42Jason Calacanis?

  And now that day is here.

• 44:44Chamath Palihapitiya?

  No, no, no, hold on. It never came because the markets kept demanding more growth. If you look at their long-term operating margins, you know, when they first, when they first came out public, it like had like a negative 30% margin. Two years later, they had a negative 50% margin. And over the last seven years, so that was 2015, up to now, they've crawled their way back to negative 13%. So at some point, I think investors said, oh, my gosh, this company has never made money. It needs to keep investing more in order to grow. And I think, David, to your point, maybe the decision that he didn't want to make was to flip it to a cash cow.

• 45:21David Friedberg?

  I don't think that's true. I looked at, um, these guys have been generating cash. Their reported GAAP earnings are negative because of the stock-based comp expense, meaning that they're issuing shares to employees.

• 45:31Jason Calacanis?

  Well, there's a big topic to discuss here.

• 45:33David Friedberg?

  And I think that that's actually worth highlighting because this is an important one because people have been talking about this considerably lately. So this company's been making money every quarter. They generate cash. But in the last quarter, they issued $60 million in stock to employees to compensate them for the work that they do. So that's 250 million roughly of dollars per year of stock-based comp, which is 2.5% of the total shares outstanding in the company are issued as employee comp every year. That number results in a dilutive effect to shareholders over time. Even though the business is generating cash, your relative ownership as a shareholder in a business that's generating cash is going down by 2.5% every year

• 46:17David Friedberg?

  because of all the new shares that are being issued to compensate employees for the work that they're doing. And I think that's part of the issue that a lot of folks kind of have taken for granted. This was well rooted in, I would say, probably Google, who became very generous very early on with issuing RSUs and stock in their publicly traded securities to employees as part of their compensation package. But Google has a 30%, 40% EBITDA margin in terms of incremental contribution of new revenue. And they can afford to take a point or two of dilution. Google, by the way, is actually not dilutive. They buy back shares with their extra cash. So as a shareholder, you actually benefit from this considerable cash generation. But a lot of software businesses and tech companies in general

• 47:02David Friedberg?

  have had to rely on issuing shares to compensate employees for the work that they do. So even though the core fundamental of the business is generating cash and cash is going up every year, the business doesn't know how to get out of this cycle of how do you pay these engineers $400,000 a year without diluting shareholders by issuing all these new shares every year? And you'd have to do that more likely as a private company to figure out how to consolidate earnings, how to trim headcount, and actually get the thing to generate the cash it needs to generate.

• 47:29Chamath Palihapitiya?

  But Friedberg, isn't that a real, like, you're pretending like it's some fake costs?

• 47:33David Friedberg?

  Yeah, it's not. It's a real cost. It's a cost to shareholders, for sure.

• 47:36Chamath Palihapitiya?

  But why the asterisks?

• 47:39David Friedberg?

  Well, no, there's a specific reason, because the business itself operates- The business isn't running out of cash. It's not burning cash. The business is growing its cash balance. But in order to compensate employees for that cash balance, they're diluting you, the shareholder, right?

• 47:51Chamath Palihapitiya?

  Look, when you own a share of a company, okay?

• 47:55David Friedberg?

  Which, by the way, is another way of saying that the company is effectively issuing 2.5% new stock every year to fund its operations. I mean, that's another way to think about it.

• 48:03Chamath Palihapitiya?

  Look, I'll give you the Warren Buffett school, and you can tell me that it's stupid, but it kind of makes sense, which is you take the number of shares you own. You divide it by the total number of shares outstanding. You look at the total profits and you say my look through earnings equals that percentage times the total profits.

• 48:19David Friedberg?

  Yeah, and your percentage is going down every year with stock-based comp. That's the problem.

• 48:23Chamath Palihapitiya?

  And so the question is, it's also going down because you're buying real estate, you're hiring people, you're paying them more, like, it's going down for a whole host of reasons. That asterisk is an irrelevant asterisk, in my opinion. Like, at the end of the day, you spend money to grow. How you spend the money is not that important to me.

• 48:38David Friedberg?

  Let me say two, two quick things on the topic. One is, um, yeah, I totally agree. It's an expense. On enterprise software, and Sax, you're, you're the, the, the master of the art, but, um, you know, as an observer, it seems to me that many of these companies, once you have an enterprise account, you benefit from being able to cross-sell new products into that account and you can grow this net revenue retention number over time and ultimately generate cash. Many of the big enterprise software companies that we've talked about, from Salesforce to Workday and others, have succeeded in doing that. Autodesk is another good example, and Carl Bass, I think, is on the board of Zendesk. They've done, um, they've done this successfully by bulking up their product categories. And they're, they're, they've done acquisitions or they've done build-outs.

• 49:20David Friedberg?

  And so over time, your incremental cost to, uh, to, to, to sell a, a new product and generate, um, uh, incremental gross profit goes down and the business performs better with scale. This seems to be one of those businesses where ultimately they couldn't bulk up through acquisition and they couldn't organically build new products. And they tried. And so the challenge is they're kind of a, I don't want to say a one-trick pony, but the portfolio of things that a business like this can sell into and ultimately increment gross profit is very limited. And that business becomes challenging to operate as a public company because you really do have to show that momentum as a, as a scaled enterprise software business, that you're actually generating real cash over time. The other thing I just want to say on stock-based comp, and, and sorry Sax, I'll come back there in one sec.

• 50:03David Friedberg?

  But Chamath, and, and you guys, I don't know if you realize this, but the standard in Silicon Valley today, um, when a company goes public in an IPO, is to have what's called an evergreen stock grant proposal. Um, and evergreen, um, basically means that every year, the company is authorized, the board automatically authorizes the issuance of some percentage of new shares per year. This is typically in the range of 4%. And ISS and other, you know, kind of institutional shareholder advisory services actually vote against these shareholder proposals and push back against them. But most of the companies in Silicon Valley that go public automatically include Evergreens as part of their, you know, kind of IPO prospectus.

• 50:46Jason Calacanis?

  I mean, can we agree it's out of control?

• 50:47David Friedberg?

  Yeah, which means that every year they can dilute shareholders by 4%.

• 50:51Jason Calacanis?

  Independent of how the business operated that year.

• 50:54David Friedberg?

  Which is effectively the same as doing a 4% secondary cash offering every year. Because it's this, you're issuing those shares into the public market and instead of getting cash, you're paying your employees with them. And so it avoids you having to use your own cash balance to pay your employees. So you're effectively raising money every year and you're allowed to raise up to 4% dilutive effect to shareholders to do that every year. And it's become a real topic and it seems to me that a lot of the big portfolio managers of big institutional funds are starting to pay really close attention to this quote unquote standard in Silicon Valley that stock-based comp expense has become so high and Evergreens have become kind of a standard as almost like an ordinary course of business.

• 51:35David Friedberg?

  And it's become, um, you know, a really contentious topic and I don't think it would be too surprising, uh, number one, to see cash salaries go up and number two, as a result of that, to see salaries become rationalized in Silicon Valley where engineers may start to get challenged on the standard 400K per year that everyone's become used to. Um, you know, in terms of, you know, high tier, uh, you know, Silicon Valley.

• 51:56Jason Calacanis?

  Remote work, maybe there is a compromise that could be had, but this compensation, you have to remember, has been outrageous in some cases, especially for senior management. And so it makes the core business look broken, but what we actually have is maybe people who are on these boards are also in on this compensation and it's just bad hygiene and it's not related to the performance of the company, right?

• 52:19David Friedberg?

  I don't think, I don't think the board people are quote in on it. I think that's, it's just, it's, you have to pay an engineer 400K a year to compete effectively in Silicon Valley today.

• 52:26Jason Calacanis?

  Well, I was talking more about the management's, the management's stock comp. The management's stock comp is different than the engineers, you would agree, Freddie. Like, there have been some enormous stock grants.

• 52:35David Friedberg?

  The board, yeah, yeah, certainly.

• 52:36David Sacks?

  If you want to run the company. As a high growth startup with employing these high paid engineers and executives, including stock compensation. That is a certain kind of way of running the business. But again, if you're trying to run the business for profitability, that's a different way of running the business. And just to add a layer to what happened here, that Zendesk was under intense pressure from an activist investor called Jana, who was basically trying to replace the board of directors. They're running a proxy battle against them. So Jana has been pressuring them to replace the board, to make all these changes. That to take the seventeen billion dollar offer, I guess back in March, they didn't do it. Now they did a lower offer at ten billion. Why?

• 53:18David Sacks?

  I think because the market has clarified, we now, it's it's clear that we're in this regime change. What the market is valuing is is free cash flow as opposed to profitless growth. And my guess is, again, without having talked to Michael, my guess is they probably just threw up their arms and said, listen, you know, like, it's not going to be fun to run the company this way. But you also have to, you have to ask the question, why are these highly sophisticated private equity firms buying it for ten billion? I think they're going to make a lot of money. And the way they're going to make a lot of money.

• 53:48Chamath Palihapitiya?

  More than a billion, yeah.

• 53:50David Sacks?

  They are going to slash the hell out of the cost structure. They're going to run it to be highly profitable. They'll probably bring the growth down from thirty percent a year to twenty percent or fifteen percent. But the benefit, the offsetting benefit to reducing the growth a little bit will be, they could probably generate three, four, five hundred million of free cash flow on that business. If it's doing one point three billion and they stop investing in R and D and they stop and they bring down the sales and marketing, that could be a, that could be a cash cow, like you said. So I think that's probably what's what's going on here is the.

• 54:21Chamath Palihapitiya?

  I just want, I just want you guys to know, not to burst this bubble, but when people talk about free cash flow, they touted a lot, tech companies touted a lot because. You're allowed to add back in stock-based comp as if it didn't exist. The problem is that stock-based comp is non-cash. So when your only source, so if you see a company that has negative EBITDA, negative everything, all of a sudden they're like quote-unquote free cash flow positive. It's because they were able to add back in stock-based comp, but that money is not real. So when the only source of free cash is stock-based comp, that free cash flow doesn't reflect the company's true profitability. This is what I mean by people play these shell games with these numbers to allow, you know,

• 55:04Chamath Palihapitiya?

  oh, let's value something based on EBITDA. Actually, no, because you know, our stock-based comp is off the charts. Let's actually go to something else, you know, we'll do a non-GAAP EBITDA measure, you know, you know, adjusted EBITDA. And then, oh, actually, wait, sorry, look at free cash flow because you can add back in this gargantuan amount of stock-based comp. I mean, it's crazy. I'll just, the quote from Warren Buffett- Community EBITDA, we work. The quote from Warren Buffett summarizes the best. If compensation isn't an expense, what is it? And if real and recurring expenses don't belong in the calculation of earnings, where in the world do they belong? I think what we're seeing- And he's right.

• 55:45David Sacks?

  My point is, is not that comp isn't an expense. It is, but rather that it's an expense that you can control by reducing the amount of staff.

• 55:52Chamath Palihapitiya?

  No, I hear you.

• 55:54David Sacks?

  I think these private equity guys are gonna basically whack the cost structure of this business.

• 55:57Chamath Palihapitiya?

  I'm just saying you can distort free cash flow as well because you can add back in stock-based comp. It's a joke. It's a little bit of a shell game going on. It's like the dirty secrets.

• 56:05David Friedberg?

  Let me ask you, like, an important investing accounting question. Let's say that a business like Zendesk is generating $100 million of free cash a year.

• 56:17Chamath Palihapitiya?

  No, no, what does that mean?

• 56:18David Friedberg?

  Well, hold on. So every year, their cash balance goes up by $100 million. They have a business, it generates $100 million of incremental cash. Every year, the cash balance goes up. So you, as a shareholder, own shares in a company that is creating $100 million of incremental capital per year. However, your shares that you own are going down because they're getting diluted every year by roughly 2.5%, 3%. And that's 2.5% is ZenDex's actual number. So every year, you're getting diluted by 2.5%. Would you rather have a business that you are getting diluted by 2.5%, but it's incrementing its overall balance by $100 million? Or would you rather own shares in a company that's burning cash each year?

• 56:59David Friedberg?

  And I think that's where this ended up, from a market perspective, getting rationalized. Is shareholders said, "I want to have the safety and security of cash generation, and I'm willing to take on the dilution for it." And that's how this became, you know, as standard as it is.

• 57:13David Sacks?

  When I think about funding a new startup, and I look at the competitive landscape, when I see that the competitors have all been acquired by private equity companies, I generally think, "Okay, there is room for innovation here." Because I know that the first thing the PE firms are going to do when they acquire a company is like, zero out R&D, or just put the product on maintenance mode. There's no innovation that happens with the product once the PE firms buy it, right? So the reality is, I think-

• 57:42David Friedberg?

  So those are good targets for startups to go after. They'll do acquisitions, right, Sax? I mean, they'll find some-

• 57:47David Sacks?

  Yeah, they'll do rollups, right? Because they will do financial innovation. They will innovate the structure of the business.

• 57:54David Friedberg?

  They'll cut all the wasteful spending and all the nonsense and- Lunches.

• 57:58David Sacks?

  Yeah, exactly.

• 57:59David Friedberg?

  Chamath say once, like, cut out all the kind bars?

• 58:01David Sacks?

  Yeah, the kind bars are gone.

• 58:02Chamath Palihapitiya?

  Yeah, the exposed brick walls, like, all this nonsense. It's so stupid.

• 58:06David Sacks?

  So who do you think-

• 58:07David Friedberg?

  The Vegas trip, yeah.

• 58:08David Sacks?

  The stock-based compensation's going to go away, because they're going to get rid of all the high-priced engineers, they're going to get rid of a lot of the high-priced executives, they're going to probably, they're going to have to keep customer support.

• 58:17David Friedberg?

  They're going to increase cash salaries, probably.

• 58:19David Sacks?

  They'll bonus people. They'll just do bonuses for hitting targets, instead of giving people as much equity in the business. And they'll run it like a, you know, private equity type play.

• 58:30David Friedberg?

  Why don't you do this, Sax?

• 58:31David Sacks?

  It's not fun. It's not interesting to me.

• 58:33David Friedberg?

  Right.

• 58:35David Friedberg?

  Yeah, I mean, we're gonna see. It's not like you're building a new product.

• 58:38Chamath Palihapitiya?

  I think, David, the other reason why it wouldn't be fun is like, it's a, it's a level of financial engineering, which is highly sophisticated. I think for some people it is fun. I think for us it's less fun because you're not necessarily

• 58:47David Friedberg?

  Creating anything.

• 58:48Chamath Palihapitiya?

  company per se.

• 58:48David Friedberg?

  Not innovating. You're not being a product person. You're.

• 58:50Chamath Palihapitiya?

  But I would say that it is highly sophisticated and the folks that do it at these places, that these private equity firms are incredibly.

• 58:57David Friedberg?

  They're very good at it.

• 58:58Chamath Palihapitiya?

  Savvy at how they do it. And it's, it's all the twists and turns of how you, you know, lever this up and use debt and blah, and use a margin loan and pre-fund the, I mean, it's not the stuff that necessarily we want to be thinking about.

• 59:12David Friedberg?

  But.

• 59:12Chamath Palihapitiya?

  That's what you'd have to do as well.

• 59:14David Sacks?

  I totally agree with that. And look, I'm, I'm happy they exist in the ecosystem because we need firms, we need more exits, right? And we know that right now in Washington, the, the regulatory regime is very difficult. It's very hard to get deals through. So at least you have private equity firms that are providing some exits and we need, the ecosystem needs.

• 59:36Jason Calacanis?

  And those exits you're saying, Sacks, don't trigger like competitive concerns with Lena Kahn and her group, right?

• 59:42David Sacks?

  Yeah.

• 59:42Jason Calacanis?

  Like, oh, some private equity firm took this private, okay, Salesforce didn't buy it, so we don't need to get through regulators. You're gonna see a lot of.

• 59:49David Sacks?

  We need exits in order to justify the risk capital that goes in at the earliest stages, which in most cases is going to be a zero.

• 59:57Jason Calacanis?

  And just to give you some other numbers out there, Manscaped, which is a company that sells razors for guys, they had 315 million in net loss in 2021 with 310 million in stock-based comp.

• 1:00:09David Friedberg?

  By the way, that number can also be distorted. Just to be clear, if you give a one-time big grant to an executive, like a CEO, the way that the accounting works on stock-based comp, it's not the kind of thing you can have a very simple kind of descriptor on, but you can have these very significant short-term costs associated with a big grant that could vest over a long period of time.

• 1:00:29Jason Calacanis?

  Sure.

• 1:00:29David Friedberg?

  That, that has very high strike prices. I mean, when Elon got that massive grant at Tesla, the stock-based comp expense was significant.

• 1:00:38Jason Calacanis?

  Yeah, but you know what the interesting?

• 1:00:39David Friedberg?

  Way into it.

• 1:00:39Jason Calacanis?

  It was, that was, there were 20 targets or something crazy like that, and all of them were based, or a lot of them were based on the stock price and the delivery of cars. So that's one of the things that I think is broken.

• 1:00:49David Friedberg?

  Yeah.

• 1:00:49Jason Calacanis?

  Yeah. So this is one of the things that's broken in Silicon Valley is that. The comp in the stock-based comp is not tied to performance. It's like just giving people guaranteed salaries. In fact, I was gonna say, Jason, I could be wrong.

• 1:01:01David Friedberg?

  Like, there is more sophistication, to be clear, in executive comp in public technology companies.

• 1:01:06Jason Calacanis?

  I think that should trickle down to the junior people, too. I think everybody should rise and fall with the company's performance. That's my personal feeling. I mean, this is the problem with entitlements, you know, and people being entitled. Sorry to be like a red-pilled here, but we should have like, performance should be lauded and compensated for, not just showing up and hanging out. There's gonna be a bunch of companies in this position, so look for this as a trend. Peloton, 964 million last quarter in revenue, lost 757 million in the quarter. They have a $3.1 billion market cap. They've only got $879 million worth of cash. I'm just looking at these numbers. Hopefully, they're tight. And they have a billion for an inventory. That company's gonna get taken out. BuzzFeed, I don't know why that even went public. They're down 84%.

• 1:01:49Jason Calacanis?

  They had $91 million, a media company, $91 million in Q1 revenue. They lost 45 million. Their market cap is down to 210 million. And they've only got 74 million in cash or so. It's some, you know, maybe 100 millions in accounts receivable. So there's a bunch of companies right now that are public, that are about to hit in a couple of quarters, running out of cash, going into a recession. Are we gonna see some big flameouts, do you think? And are you watching specific companies? Because the private equity folks must be salivating watching this.

• 1:02:21David Sacks?

  Well, I mean, look, Jake, how you asked what the takeaway was around this. And I think the takeaway is there's been a regime change in the public markets. The way that investors look at these companies is changing. It's not about growth at all costs anymore. They're not just looking at revenues. It's also about margins and cash flow. And, you know, we talked about in the last pod how I think a lot of founders understand intellectually that we're headed for a downturn, if not a recession, but they weren't taking the medicine of basically reducing their burn. Well, This is an indication of what investors are valuing. If the only way for Zendesk to create value as a public company is to sell to a private equity firm,

• 1:03:02Jason Calacanis?

  I'd cut half the staff.

• 1:03:03David Sacks?

  Is going to cut half or some huge number of staff to run it for free cash flow. That's just an indication of the regime change. So, you know, we need founders to start internalizing this information so they can run their businesses more efficiently. You know, what investors want right now, they still want growth, but they want it with low burn. High burn operations are going to get punished.

• 1:03:24Chamath Palihapitiya?

  I've transitioned most of my public markets time to focus on debt. And I've been looking at these companies because, yeah, because there's a lot of these really interesting tech companies with a lot of, because what David said, I think is 100,000% right, what Sax just said. There is a massive, massive regime change here.

• 1:03:44Jason Calacanis?

  Yeah, and shocking if you don't take the medicine.

• 1:03:48Chamath Palihapitiya?

  And, and what, what's funny is like so many of these companies have been left for dead. But what is really juicy is the few companies that you think will survive. And specifically making sure you're protected in the capital structure, which means to own the debt, because the debt is always senior to the equity. And there's some really, really interesting companies out there that are in that situation. And it's just like, it's a much better risk reward in a moment where, again, you know, we talked about this, but why would you give up your liquidity today? I don't know the answer. Why?

• 1:04:22Jason Calacanis?

  Let's go around the horn.

• 1:04:23Chamath Palihapitiya?

  You've used this term, Jason, before, like skipping along the bottom. I just think it's like psychological wishful thinking as opposed to sort of like a rational summation of the actual. Jerome Powell just said, I will tank the economy in order to beat inflation. He just said it in the Wall Street Journal.

• 1:04:40Jason Calacanis?

  But people believe inflation might be turning over. Do you buy that or not?

• 1:04:44Chamath Palihapitiya?

  No, as I've said, I think you're going to see eight and nine percent inflation prints for at least the next three or four months, minimum. I think that things could get. Marginally better after that, but I think the thing we don't know, and again, it just touches, and I don't care what the fucking audience thinks, touches Russia and Ukraine. So sorry to bring up politics, but these things are inexorably intertwined. And if people want to go and venture and gamble in the stock market, you might as well understand this because I think, you know, many of the scenarios will trade because of what's going to happen with Putin.

• 1:05:20Jason Calacanis?

  Let me ask the question here. How many quarters will this recession be? If we had to pick a range, pick a two-quarter range, I'm thinking three to five. What do you think?

• 1:05:29Chamath Palihapitiya?

  I have no idea.

• 1:05:30Jason Calacanis?

  Okay. Friedberg, you got a...

• 1:05:33David Friedberg?

  What's the question?

• 1:05:33Jason Calacanis?

  If this is the second, how many quarters, plus or minus two, let's say, is this recession going to be? So five plus or minus two, four plus or minus two, plus or minus one? What are you thinking will be the bottom out point?

• 1:05:46David Friedberg?

  I don't like the term, I've told you guys, I don't like the term recession as if it's some absolute negative thing. I mean, negative GDP growth coming off of inflated GDP doesn't feel to me as systemically challenging to the economy as, you know, some other circumstance where, for example, there was a global financial crisis, or 9/11, or some other kind of factor that drove things, that really affected the core economy. We're certainly, we had something that affected the core economy in COVID, then we had massive stimulus. So I think there's this unfortunate general characterization of quote-unquote recession being an absolute

• 1:06:31David Friedberg?

  negative. And I think that there's relative growth. And if your relative growth is negative off of an inflated number, but over a...

• 1:06:40Jason Calacanis?

  Okay, let me give you...

• 1:06:41David Friedberg?

  Let me just finish, but over a historic two- or three-year period, you're still growing the economy considerably because jobs are growing and production is growing. It's not as negative as it's being made out to be. So I'm not going to...

• 1:06:55Jason Calacanis?

  Okay, I get you.

• 1:06:55David Friedberg?

  Get into that.

• 1:06:56Jason Calacanis?

  Let me ask you this way then. How many more quarters will we have of stocks and real estate and assets declining in value or being flat?

• 1:07:05David Friedberg?

  That's a financial markets question, which I think is a different one. And one thing I've realized is that financial markets in the short term, you know, the old Warren Buffett quote, or whomever it is, that over the long term, equities are a weighing machine. In the short term, they're a voting machine. As we've seen with crypto, it was a voting machine that everyone voted on the hot thing du jour. And now everyone's voting against it. So I don't know.

• 1:07:29Jason Calacanis?

  They're weighing it now, yeah.

• 1:07:30David Friedberg?

  Well, yeah, I mean, at some point they'll have to weigh it. You hold a cryptocurrency long enough, you'll find out how much fundamental productive value it's creating. And the same is true for owning businesses or other real assets. You'll find out over the long run how much productive value they're creating. So.

• 1:07:45Jason Calacanis?

  So you don't want to answer the question of when we hit a floor. Okay, Sacks, when do you think we hit? Are we hitting a floor now? We have a lot more to go down.

• 1:07:52David Friedberg?

  I'll tell you one point of view. I am looking at buying high-quality share businesses, buying shares of high-quality businesses right now. I think that there are things that are cheaply priced, and if I own them for a long enough period of time, the underlying productive value of that business will return my capital to me. And so.

• 1:08:08Jason Calacanis?

  You have one that you might want to mention here that you're looking at?

• 1:08:11David Friedberg?

  I don't.

• 1:08:12Jason Calacanis?

  Because you don't want to.

• 1:08:13David Friedberg?

  I shared some stock tips at the summit with our friend Sonny. His trades are up, but like I told him, these are longer-term trades.

• 1:08:19Jason Calacanis?

  Sacks, what do you think in terms of, and then we'll go to some of the political stuff that affects markets after this?

• 1:08:24David Sacks?

  Well, I mean, I think it's all related. So there's three things going on here right now economically, or three underlying causes. One is rate expectations have changed massively. Interest rates have gone up and rate expectations are going up even more, fueled by inflation. And until we see where we're at on inflation, whether that gets controlled, that issue is not going away. The second big issue is economic slowdown, the recession. So the first one is Wall Street. This is Main Street. And these two things are related because companies are slamming on the brakes because they're seeing that the capital availability is greatly getting reduced by this rerating, this regime change in markets. So we're seeing an economic slowdown that threatens to turn into a recession.

• 1:09:09David Sacks?

  And consumer confidence is part of that, right? When your wages don't buy you as much because food and gas prices are through the roof, that reduces consumer confidence and that also plays into that. So that's the second big issue. And I don't think we're going to know about recession. It's going to take, you know, potentially through the rest of the year before we figure out what's happening there. And then the third part of this is the overhang of this war in Europe, the Ukraine war, which is now threatening to become a forever war. There was a pretty stunning article in the Washington Post this week in which the administration officials were quoted as saying that they would effectively prefer, or countenance

• 1:09:48David Sacks?

  was their word, a global recession and famine over letting Russia keep the Donbass region. So they are committed now to basically prying Russia out of the Donbass, even if it means global recession. Not to mention-

• 1:10:03Jason Calacanis?

  Did they say specifically the Donbass or specifically standing up to Putin? Because that's kind of minimizing-

• 1:10:08David Sacks?

  No, no, what we're talking about is, is the Donbass region. What's happened is, look, the Russians lost the first few weeks of the war in which they tried to strike, they, they basically went for a knockout blow to take over Kyiv, topple Zelensky. I think we accomplished something in preventing that. But since then, they have achieved their objective of taking over this eastern portion of the country, this Donbass region, in which this is where most of the ethnic Russians live. And these Ukrainian separatists, who are ethnically Russian, they've been fighting alongside the Russian troops. And the Russians have basically won that part of the war. And so the question is, what do we do now? And what you had is, you had administration officials saying that they would not accept

• 1:10:51David Sacks?

  the status quo, that they are willing to fight on for years. You know, the same geniuses who gave us the forever wars of the Middle East are now giving us a forever war in Eastern Europe. And they are saying that they are willing to basically continue this fight even if it means global recession. Now, I don't think the American people ever voted for this, but- This is what the administration is pursuing. And you know, you got to remember that there's always the risk that this war spins out of control, that we get a nuclear escalation. So I think that this is a huge overhang on markets. It's a third big problem that we have. So I don't see how we get out of this bear market until you get clarity and resolution

• 1:11:31David Sacks?

  of inflation and rates, number one, slowdown and recession, number two, and basically this war in Europe, number three.

• 1:11:38Chamath Palihapitiya?

  And it's reflexive because these next three months, as I, as I kind of indicated last week, I think we're going to see inflation prints that are really high, in part because things like rents, which haven't, you know, which are on a lag, will get folded back in. So we're going to be printing eight and nine percent. And then guess what, Jason, it's the fall. It starts to get colder. You know, Russia's depriving Europe of nat gas. Where's the oil going to come from? OPEC is basically still stiff-arming the United States with respect to expanded production capacity. Why? Because they didn't like the way that we were strong-arming them and a whole bunch of other topics, you know? And so where do we stand? You could have $180 a barrel oil by November, December, when it's cold, not just here, but

• 1:12:23Chamath Palihapitiya?

  in continental Europe. Now all of a sudden inflation gets, kicks right back up again. It could be seven, eight, nine percent again. I, so I just think all of these things are now so inexorably intertwined. I think David's right. We need to put this war to bed. And the unfortunate consequence is that right now, if we want to fight a proxy war, there is no elegant off-ramp that I see. So.

• 1:12:52Jason Calacanis?

  The prediction markets, just so people know, are predicting 0.8, 0.9 percent additional inflation in June over, and I think that's over last month, and last month was 8.6.

• 1:13:03Chamath Palihapitiya?

  So we're going to be at nine and a half. Jason, could you imagine what the markets do if we print a double-digit inflation print? 10 and a half percent? 10.1? Just the psychology of that?

• 1:13:13Jason Calacanis?

  Well, consumer psychology is really low right now.

• 1:13:16Chamath Palihapitiya?

  No, not consumer psychology. I'm thinking market psychology.

• 1:13:19Jason Calacanis?

  No, market too. Yeah. So we put those two things together. And then if this war is never ending, and the famine that, and the impact on 40 million people, or something like that, that Friedberg predicted is actually going to happen in the next six months, this is going to feel quite chaotic to people around the world. So we do need to put this war to bed for sure.

• 1:13:38David Sacks?

  There's no deal on the table right now, but the deal that we've talked about on previous shows, there was always the broad construct here, even before the war began, was there were three pieces to it. Number one was that Ukraine had to remain a neutral state as opposed to being brought into NATO and having American troops, weapons and bases on Russia's border. That was always a red line to them. And in exchange for neutrality, Ukraine would get security guarantees. Piece number two was that in the eastern region, where you had these Russians, these Russian speakers, that their rights would be respected and that they would have some autonomy. And again, that was something that Ukraine agreed to under the Minsk Accords,

• 1:14:19David Sacks?

  but it was never properly implemented. And the third piece was that Russia got to keep Crimea, which again was a fait accompli that happened in 2014. Smart observers of this conflict have been outlining that three-point plan for over a year. And that is what we're going to end up with. The only difference is that it's going to be implemented by force, and Ukraine will be destroyed in the process. That is basically where we're at right now. Russia has, they've taken over the Donbass, they've taken over this eastern 20% of the country. They have Crimea, and Ukraine, basically, the rest of it, will not be part of NATO. That is basically what the Russians have done, is implement by force

• 1:15:01David Sacks?

  a plan that frankly, we could have agreed to through negotiation a year ago, and avoided all this death and destruction.

• 1:15:08Chamath Palihapitiya?

  My counter is...

• 1:15:11Jason Calacanis?

  Maybe. I mean, we don't know Putin's intent, and that's the wild card here. He is a bit of a madman. I mean, he's pretty much of a wild card here. He's a dictator who invaded another country.

• 1:15:20Chamath Palihapitiya?

  My calculus is slightly different. I think I see two things in order to get us back to a state of relatively predictable growth and price stability. Number one is we need to reset supply and demand by taking $30 trillion out of global markets. And then the second is we need an off-ramp to this Ukraine-Russia war so that there is predictable energy and food supply to the world so that folks can just get back to what they do best. And if those two things can happen, then the markets will have found the bottom. But until those two things happen, in my opinion, and by the way, the first thing doesn't actually have to happen entirely, you just need to see a path for it. And, you know, we're the

• 1:16:02Chamath Palihapitiya?

  only one that's doing quantitative tightening right now. The ECB hasn't even started taking all this crazy money out. You know, I don't know when the Bank of England is going to do it. When is, you know, the Bank of Japan going to do it? So this has to be a global coordinated effort before we find the bottom. And this war has to stop.

• 1:16:21David Sacks?

  Can I go back to this unpredictable madman narrative, Jason?

• 1:16:26Chamath Palihapitiya?

  Yeah.

• 1:16:26David Sacks?

  Look, if what you're trying to say here is that Putin bears moral culpability and moral responsibility, the blood is on his hands for this war, I agree with you on that. Okay, however, this idea-

• 1:16:38Chamath Palihapitiya?

  How could you not? I mean, he's the person who invaded, yes.

• 1:16:40David Sacks?

  Right, but-

• 1:16:41Chamath Palihapitiya?

  Just logic there.

• 1:16:42David Sacks?

  Right, but the idea that this war was unpredictable or could not have been predicted is simply false because many experts did predict it, and they did tell us exactly what's going to happen. And the reason they knew it was going to happen is because Russia's been saying, since at least 2008, when there was this Bucharest summit and NATO declared its intent to bring Ukraine into NATO, the Russians have been saying that is a red line. And Russia experts, Biden's own CIA director, a guy named Bill Burns, he was then our emissary to Russia, and he wrote a memo to then Secretary of State Condoleezza Rice. And what he said is that the idea of bringing, expanding NATO to Ukraine- was a red line for the entire Russian elite, not just Putin. So, and if you go back and

• 1:17:26David Sacks?

  look about what other Russian leaders said about NATO expansion, Gorbachev said it was a humiliation to Russia, Yeltsin was against it, they've all been against it. And so Bill Burns warned in 2008, this was a red line, and the Russians have been saying this since 2008. And they were saying it all of last year. If you go look at contemporaneous headlines describing the tensions between the US and Russia, this is the headlines of articles I can provide to Nick, we can put on the screen, they were saying this was an absolute red line for them. So the idea that this conflict was unpredictable because Putin's a madman, listen, you can call him a dictator, you can call him a thug, but this was highly predictable.

• 1:18:06Jason Calacanis?

  Yeah, okay. And you know what's also highly predictable? Is that China considers, you know, Taiwan a renegade, you know, province. Like, yes, dictators, you know, will tell us what they're going to do. The question is, does the free world want to stand up to dictators? And so while, you know, it's messy to stand up to a dictator, the West, you know, kind of doesn't have a choice to stand up to dictators, or else they will roll into other countries. History has shown that. So as messy as this is, and as terrible as it is for the economy, I do think that we have to stand up to dictators.

• 1:18:39David Sacks?

  There are plenty of dictators where we work with. Biden has

• 1:18:42Jason Calacanis?

  They're not invading other countries. They're not invading other countries. And that's the difference here, Sax. You're giving Putin a bit of a pass here. He invaded the country. We must stand up to dictators who invade other countries.

• 1:18:54David Sacks?

  Well, look, look where you're standing up has got there.

• 1:18:56Jason Calacanis?

  I don't mean just America. I mean the free world.

• 1:18:58David Sacks?

  Yeah. Well, look, look where you've got us then with this policy, you and the people who could have avoided. Yeah, because you are basically spouting this, this nonsense that, look, the question is

• 1:19:09Jason Calacanis?

  Nonsense that we stand up to dictators who invade other countries. I think you would agree that's a good idea. Jay Cal, let him talk. Let us discuss, okay, Free Bird?

• 1:19:16David Sacks?

  Okay, listen, th- th- there's no question that Russia has been the aggressor, but the question is, why did they do this? You don't really have a theory on that, Jason, except that you believe that on February 24th Putin woke up and went nuts. That's basically your explanation for what's happening in the world.

• 1:19:32Jason Calacanis?

  We know it's a debated, we know it's a debated region. We know that they've had this conflict for a long time. I'm not naive to that. We've discussed it here on the pod many times.

• 1:19:40David Sacks?

  Every, every president from Bill Clinton to Obama, who has dealt with Putin, has written largely the same account of him in their memoirs, which is, look, they know that he's a thug, they know that he's a dictator. However, they always said, they always said he's very businesslike, he's very direct, he told them what their issues were, okay? Putin was very direct. He and Biden had a summit in June of last year. The Russians have been very direct. Your attempt to bring Ukraine into NATO is a red line for us. Why? It's a violation of our security interests. The idea of bringing a country into NATO, it has huge security externalities for them. By the way, we understand this in other contexts. We understood in the, in the context of Cuban

• 1:20:24David Sacks?

  Missile Crisis, we didn't say that Cuba had the right to join any military alliance that it chose to, because we wouldn't be able to sleep as well as at night if Cuba had nukes pointed at us with a first strike capability.

• 1:20:37Jason Calacanis?

  We've had this conversation. Do you think NATO should invite Sweden, should Sweden and Finland be invited into NATO?

• 1:20:43David Sacks?

  I would table that issue until the war is over. I don't know why we need to basically deal with that right now. But listen, we don't even have to go back to the Cuban Missile Crisis. Right now, okay, there's a country called the Solomon Islands, about 3,000 miles off the Australian coast. They entered into a deal with China, a security deal, and the US has been up in arms about that. So, you know, and the reason is, we don't want China extending its footprint in Asia. Okay, so we treat that deal as having a security externality for us. And yet we refused last year to recognize that there'd be any security externality for Russia if we brought Ukraine into NATO. The Russians were abundantly clear about what they needed. So my point is this.

• 1:21:25Jason Calacanis?

  We've had this conversation on the pod.

• 1:21:26David Sacks?

  Yes, my point is this, that this war was easily avoidable through the use of diplomacy. The administration chose not to.

• 1:21:32Jason Calacanis?

  You believe that, you don't know that. You believe that, you don't know that. You don't know that.

• 1:21:36David Sacks?

  We never even tried. We never even tried.

• 1:21:37Jason Calacanis?

  You actually don't know that. You actually don't know that.

• 1:21:40David Sacks?

  It's worse than that, Jason, because here's what happened after the June 16th summit in Geneva between Putin and Biden last year, okay? Putin tells Biden to his face, this is a red line, as they've always said. So what does the administration do? Not only do they not negotiate with the Russians, they invite Zelensky to the White House on September 1st of last year.

• 1:22:01Jason Calacanis?

  Yeah, we talked about it.

• 1:22:02David Sacks?

  And then on November 10th, they published a massive 10-year charter agreement. This was a huge finger in the eye to the Russians. And on the heels of that November 10th charter agreement, the Russians basically delivered an ultimatum to the US, demanding a written guarantee that Ukraine not join NATO. And then in January, Blinken was tasked with negotiating with Lavrov, and Blinken said, "There has been no change, there will be no change, NATO's door is open and will remain open." This administration was incredibly stubborn. They absolutely refused to use diplomacy to defuse the crisis. Now you say, "Well, we can't know what it would have done." Well, but the point is, they never tried.

• 1:22:37Jason Calacanis?

  Is Ukraine a sovereign country?

• 1:22:39David Sacks?

  Yeah, they are, but the point is...

• 1:22:41Jason Calacanis?

  Do they get to pick what they do and their fate?

• 1:22:43David Sacks?

  Look, this idea that there's a...

• 1:22:45Jason Calacanis?

  Do they get to pick their fate as a sovereign country? I think you would agree, yes. Okay.

• 1:22:50David Sacks?

  Well, here's the question, is you're, what you're trying to do is, is create a doctrine, okay? You're trying to create a new doctrine that a country gets to join whatever security alliance they want, whatever military alliance they want. That is not a doctrine we believe in when it comes to the Solomon Islands, it's not a doctrine we believe in with respect to Cuba and the Cuban Missile Crisis. And the fact of the matter is, is that the nations of the world are engaged in security competition. And the, and if, if a country like Ukraine joins a new military alliance that has huge externalities. And so, we do not believe in that doctrine, Jason. This is a doctrine that did not exist until February.

• 1:23:28Jason Calacanis?

  Wait, we don't believe more people should be able to join NATO? While Sweden and Finland are being...

• 1:23:33David Sacks?

  No, we clearly believe that, but this, this doctrine that the countries of the world should be able to join whatever military alliance they want, that is not a, that is not, we do not practice that doctrine. That is not a doctrine we believe in.

• 1:23:44Jason Calacanis?

  And your example is Cuba.

• 1:23:46David Sacks?

  Cuba and then more recently the Solomon Islands.

• 1:23:48Jason Calacanis?

  Okay, yeah, I mean, listen, I I I'm not saying this war is not a mess. All wars tend to be a mess. I'm not saying we shouldn't try to resolve it with everything we have. I do think the people of the Ukraine, you know, get to pick their fate. And and I am in support of them picking their fate. And I am in support of the of NATO being stronger and stronger. And I'm in favor of isolating Putin, you know, and using diplomacy as the primary tactic to do that and making sure he doesn't run over countries. Because he won't stop at one. I I think that's the the big question, I think, is will he stop at one? Do you think he'll stop at one country? History has proven he won't.

• 1:24:22David Sacks?

  You just said you want to use.

• 1:24:23Jason Calacanis?

  Are you okay with stopping him?

• 1:24:25David Sacks?

  Listen, you you just said that you want to use diplomacy as the primary tactic. Okay, so we agree on that. The question is what you're willing to give up? Because the administration was not willing to engage on the key Russian concern, which is the admission of Ukraine into NATO.

• 1:24:40Jason Calacanis?

  Do you think Russia will stop with Ukraine or or Donbass? Do you think that's actually the stopping point for Putin?

• 1:24:46David Sacks?

  Listen, I think there's a few ways to come at that question. One is to ask, what is their motivation? Which is very hard to know because it's inside Putin's head. Okay, so the second is what are their interests? And the third is what are their capabilities? The capabilities question is pretty easy to answer. I mean, they have had a very hard time winning this war. They've won this eastern region of the Donbass because I think.

• 1:25:07Jason Calacanis?

  Why is that? Why did they have a hard time?

• 1:25:10David Sacks?

  Well, because their military capabilities are obviously not as great as people thought. And.

• 1:25:14Jason Calacanis?

  And Ukraine got a lot of weapons from the West.

• 1:25:17David Sacks?

  From from NATO, exactly. So this idea, listen, I've said it before. The EU's GDP is 10 times greater than Russia's. And, you know, economic strength is the foundation for military strength. Moreover, we've seen that these NATO weapons are incredible. The US's weaponry, I mean, it's.

• 1:25:35Jason Calacanis?

  So you're in support of providing weapons to Ukraine? NATO, the EU, European countries.

• 1:25:41David Sacks?

  I'm not in favor of creating a forever war in Eastern Europe. That is basically what's in the cards. But the question is, Jason, you just said that we have to isolate Putin. We have to deprive him of any, of any positive outcome from this war.

• 1:25:55Jason Calacanis?

  No, no, no. I said we have to stop him from invading countries. That's what we, stop him from invading more countries that are.

• 1:26:01David Sacks?

  He's not gonna invade NATO countries because he's so outmatched.

• 1:26:04Jason Calacanis?

  Well, not NATO, but I mean, there's a lot of countries that are not in NATO. So, I mean, I think that's the thing. But I mean, listen, we discussed this a million times here, Will. I think we both agree we want the war to end. I think we might just have a different view of Putin.

• 1:26:14David Sacks?

  What are you willing to do to end the war? And, you know, my, my point is this, that the deal.

• 1:26:19Jason Calacanis?

  The question is, what is Putin willing to do in terms of starting wars and invading other countries? And what does the West have to do to react to that? You know, I think that's what we're talking about here. We didn't start this war, you know? But anyway, let's move on. I think.

• 1:26:30David Sacks?

  Well, hold on a second. We, we know have started this war, but we failed to prevent it through the use of diplomacy. That's always been my point. I think this war, I think this war was. I think this war was easily preventable if we had listened and engaged in diplomacy. Easily, yes.

• 1:26:44Jason Calacanis?

  Okay.

• 1:26:44David Sacks?

  Yes.

• 1:26:45Jason Calacanis?

  I'm, I'm not sure that's what.

• 1:26:47David Sacks?

  Let me just tell you right now, the deal that would end this war is the same deal that was on the table last year with zero bloodshed, which is Ukraine remains a neutral state. There's autonomy for the Russian speakers in the Donbass and Crimea basically remains part of Russia. That was the deal. That is the deal. That will be the deal. The only question is, does the whole country have to be destroyed?

• 1:27:09Jason Calacanis?

  All right. Well, we're gonna find out in the coming months.

• 1:27:12David Sacks?

  And does the world have to go through a global recession and famine?

• 1:27:15Jason Calacanis?

  These are big questions. Uh, yeah. It's not, the, the sacrifice it takes to stand up to dictators is very significant. And especially ones with nuclear bombs. And it will be even worse with Taiwan. I mean, if we think that this is difficult, can you imagine this kind of escalation with a capable adversary? If Russia is not super capable and their weapons turned out to not be as strong? My God, what would Taiwan look like?

• 1:27:38Chamath Palihapitiya?

  Did you guys read this story where, um, it was the deputy foreign minister got demoted? And there was all this, um, speculation like, why did he get demoted? And one of the things that came out was that, you know, he was very, very pro Russia and.

• 1:27:57Jason Calacanis?

  And G is not.

• 1:27:59Chamath Palihapitiya?

  And G is not. And G is much more hedged and moderate.

• 1:28:02Jason Calacanis?

  Yeah.

• 1:28:02Chamath Palihapitiya?

  You know, wanted to have more optionality and felt that he was cornered because I think there was some, what was the quote? I mean, Nick, you can pull it, but it was something about like, you know, the, the strength between basically China and Russia is infinite. But that was, that was a quote that he said that was a little bit off the reservation, it seems. And so.

• 1:28:19Jason Calacanis?

  Yeah, this guy jumped the fence. Yeah.

• 1:28:21Chamath Palihapitiya?

  Yeah. Yeah. Yeah.

• 1:28:22Jason Calacanis?

  You know, it's an important story as well. I mean, and, you know, it's one of the things that we can look at what's happening in these political situations. I think we probably have 50, 60, 70% of the information.

• 1:28:31Chamath Palihapitiya?

  Not even, not even.

• 1:28:32Jason Calacanis?

  Really quick, tell us what's going on in AlphaFold world. Sultan of Science.

• 1:28:36David Friedberg?

  There was a paper published about two weeks ago in the journal Science. It's actually an important paper because it used AlphaFold to do some really important work. And the work is to actually create a 3D structure, 3D model of the nuclear pore complex. And that nuclear pore complex is really the scaffolding that makes up the nucleus of a cell. So all eukaryotes, you know, all plants and animals have a nucleus in our cells and the nucleus holds the DNA. And the big question.

• 1:29:11Chamath Palihapitiya?

  Friedberg's internet connection is getting bored.

• 1:29:14Jason Calacanis?

  Zoom it.

• 1:29:17Jason Calacanis?

  These guys are such jerks. Just let him finish his sentence.

• 1:29:20Chamath Palihapitiya?

  Did it break up?

• 1:29:21Jason Calacanis?

  Yeah, you're fine. Keep going.

• 1:29:22Chamath Palihapitiya?

  No, your internet connection fell asleep because it was so boring what you're talking about.

• 1:29:26Jason Calacanis?

  Keep going. So what does this mean in terms of?

• 1:29:29David Friedberg?

  Well, hold on. So, so what this team did, and this is a, the problem that's kind of been around for decades is we've never really understood what the physical structure of the nucleus in a cell looks like. And this is important because the physical structure regulates how molecules get into and out of the nucleus and how DNA is expressed and how the RNA that comes out of the DNA goes into the rest of the cell. And this regulates so much of human health. In fact, it's been shown and demonstrated that dysfunction. In the nuclear pores, the nuclear pore complex in the cell can lead to things like viral infection, brain injury, cancers, cardiovascular disease, many diseases, their

• 1:30:14David Friedberg?

  underlying driver may result from dysfunction in the transmission of molecules into and out of the nucleus of the cell. And so scientists have always tried to figure out, what does that transport mechanism look like? What does that infrastructure look like? And so for the first time, and scientists have published theories on this, and they've shown using x-ray imaging, you know, some theory around what these complexes look like. And what this team at Harvard did, that they published two weeks ago, is a really groundbreaking, extremely detailed view of the entire nuclear pore complex around the nucleus of the cell by combining both x-ray imaging and alpha fold.

• 1:30:59David Friedberg?

  And so what they did is they took the predicted physical structure of those proteins from alpha fold and used that to construct a sample of what the, you know, the nuclear pore complex looks like.

• 1:31:11Jason Calacanis?

  How do they know it's accurate?

• 1:31:12David Friedberg?

  And so using this x-ray imaging, they've been able to kind of verify some of the assumptions that alpha fold yields. And now they've created this 3D model. And this 3D model now gives, and by the way, just to think about this physically, what it means like for a second, the nuclear pore complex, think about it as like a fence, like a spherical fence that sits around the nucleus. And some parts of that fence open and close, some parts are static. And the way that certain things open and close, and what can fit through them, and how they fit through, and how stuff gets stuck, is really important to understand as a way to both understand the underlying cause of diseases like cancer, but also how we can create therapeutics, and how we can target specific things that we can fix, and

• 1:31:53David Friedberg?

  how we can get molecules into the nucleus of the cell to regulate DNA expression and edit the DNA inside of cells.

• 1:31:59Jason Calacanis?

  That's mind blowing. So wait, if I were to translate this from nerd, you basically, alpha fold, predicted, no, I'm being sincere, there's a map here that we were not able to see through x-rays and through, you know, physics. But AlphaFold predicted some of that and filled in the gaps, so now we have the map has been filled.

• 1:32:18David Friedberg?

  That's a great, that's a great way to describe it. And so now we have this incredibly detailed 3D image, and Nick can share the images on our YouTube stream here, of what the nuclear pore complex looks like and how each of those pores work. How do they open and close? What's the structure of them? This isn't simply like a circle. This is like all these weird tentacles and little things sticking out. And that can help us predict what molecules get stuck and how one error in one of those proteins can cause things to get stuck.

• 1:32:45Jason Calacanis?

  I.e. like a cancer or something like that.

• 1:32:47David Friedberg?

  Yeah, how this can cause certain DNA to be overexpressed or underexpressed, causing things like cancer.

• 1:32:52Jason Calacanis?

  So we're gonna live forever.

• 1:32:54David Friedberg?

  And that now opens up a whole new area of research in medicine, gene therapy, and new things that we can think about targeting to fix a lot of these underlying diseases. And so this was a groundbreaking paper. Incredible work by this team at Harvard.

• 1:33:06Jason Calacanis?

  What's the name of the paper? Can we just get the name of the paper so people can Google it? We'll put it in the show notes as well. It's been an amazing episode.

• 1:33:11David Friedberg?

  Yeah, so it's a team out of Harvard. We'll send the link in the, in the show notes. "Structure of cytoplasmic ring of nuclear pore complex by integrative cryo-EM in AlphaFold." Terrible naming, not for the general audience.

• 1:33:23Jason Calacanis?

  No, no, it's okay. Sacks is printing it out right now, and he's gonna use it for his kit, his new kittens' little box.

• 1:33:29David Friedberg?

  But I just wanna highlight, you know, because we talked about AlphaFold, I think, last year or the year before, and how it was gonna open up all these new areas of research.

• 1:33:35Jason Calacanis?

  And here we are, a year later.

• 1:33:36David Friedberg?

  This is an incredible example of how AlphaFold's been used to solve this really misunderstood or never really well-understood aspect of biology that is at the root cause of so much of disease and creates all this opportunity for medicine and therapeutics, research and discovery.

• 1:33:51Jason Calacanis?

  All right.

• 1:33:52David Friedberg?

  And so it's, it's great to see this breakthrough.

• 1:33:54Jason Calacanis?

  Sorry we didn't get to January 6th or Roe v. Wade. We'll get to those the next episode.

• 1:33:58Chamath Palihapitiya?

  No, no, no, listen, I think Roe v. Wade, I'm not sure there's, I mean, we can do something about the reactions, but we did a pretty thorough episode. So folks really want us to double-click. We double-clicked with two of the most prolific constitutional experts in the space when it first got leaked, so please go and watch.

• 1:34:14Jason Calacanis?

  Yeah.

• 1:34:15Chamath Palihapitiya?

  Or listen to that.

• 1:34:16Jason Calacanis?

  All right.

• 1:34:16Chamath Palihapitiya?

  Which episode is that number? I don't know which number.

• 1:34:19Jason Calacanis?

  We'll put it in the show notes. It'll be in the show notes for everybody, and we'll see you all next time. Bye-bye.

• 1:34:23Chamath Palihapitiya?

  Bye-bye.

• 1:34:24Jason Calacanis?

  Love you, Sacks.

• 1:34:34David Sacks?

  And instead, we open source it to the fans and they've just gone crazy with it. I'm the queen of Kinoah.

• 1:34:47David Sacks?

  Besties are gone.

• 1:34:50David Friedberg?

  That is my dog taking a piss in your driveway.

• 1:34:58Chamath Palihapitiya?

  You should all just get a room and just have one big huge orgy because it all just feels like... It's like, it's like sexual tension, but we just need to release that out.

• 1:35:06David Sacks?

  What, you're the beef? What, you're the beef? We need to get merch.