E28: Current state of public & private markets, Archegos debacle, US debt issues, wealth tax & more

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 Referenced in the show: Axios - Changes to capital gains taxes omitted from Biden's infrastructure plan https://www.axios.com/biden-infrastructure-plan-capital-gains-taxes-318224d2-84f8-4c48-b5db-bbcec5fdd74f.html Cal Matters - A wealth tax could sabotage California's recovery https://calmatters.org/commentary/my-turn/2021/03/a-wealth-tax-could-sabotage-californias-recovery Healthline - COVID-19 Vaccines May Help Stop Virus Transmission: Here's What We Know https://www.healthline.com/health-news/covid-19-vaccines-may-help-stop-virus-transmission-heres-what-we-know Show Notes: 0:00 Besties intro, state of the public & private markets 18:54 Chamath receives inspiring note re: last week's longevity talk 21:17 Archegos debacle, issues with trading on margin 32:26 Biden's infrastructure bill, US government becoming overleveraged 45:45 Potential tax hikes, inefficient deployment of capital, California wealth tax impact 52:59 Trade off between freedom & equality, how free markets spur innovation, generational changes 1:05:14 Is a wealth tax constitutional? Vaccine update

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

• 0:00Chamath Palihapitiya?

  My name is David Sacks and I have a broomstick in my [bleep]. That is why my voice is so deep. I have never had friends in my life. Somebody be my friend who I don't pay.

• 0:17David Friedberg?

  What a mood we're in today, huh?

• 0:20Jason Calacanis?

  What a vibe.

• 0:40Jason Calacanis?

  Hey, everybody. Hey, everybody. Welcome to another episode of the All In Podcast. With us today, the rotating cast of characters that you've come to know and love and follow on the Twitter, the Queen of Quinoa, David Friedberg is here. And the Rain Man, David Sacks, calling in from one remote location that is undisclosed. And the Dictator, Chamath Palihapitiya, with us again. Gentlemen, how's everybody doing?

• 1:09Chamath Palihapitiya?

  I'm punchy.

• 1:11Jason Calacanis?

  You're punchy?

• 1:13Chamath Palihapitiya?

  I'm punchy.

• 1:13Jason Calacanis?

  Chamath is in a mood. Is he in a mood? What's happening, Chamath?

• 1:17Chamath Palihapitiya?

  Nothing. I just, I just finished a workout, so I think I'm high on endorphins.

• 1:21David Sacks?

  How much money did you lose in the market today?

• 1:25Jason Calacanis?

  Wow. Sacks comes in with just a flagrant foul on the first play of the game.

• 1:30David Sacks?

  No, he said, he said he wasn't happy, so I was just, I was just hypothesizing what maybe the cause.

• 1:36Chamath Palihapitiya?

  I am happy. No, no, I am happy. I'm about to go on Easter vacation, so I'm happy about that.

• 1:41Jason Calacanis?

  You've accepted Jesus?

• 1:43Chamath Palihapitiya?

  No, I mean, can I just tell you, March, March 2nd, or whatever that day was, was an absolutely ludicrous day. We've kind of clotted all back. We're doing pretty decently for the year again. And but I got to say, my gosh, like, I've really learned to to to to deal with drawdowns in the last 30 days. It's been an amazing learning process. I'm a better person for it.

• 2:05David Sacks?

  You did look pretty shell shocked that episode.

• 2:08Chamath Palihapitiya?

  Dude, I I mean, I I've lost more money than I ever thought I would make. I could bail out a small country, you know, and it just it just it just vanished. It just evaporated in a day. It was incredible. Then it came back and then.

• 2:21David Sacks?

  Came back.

• 2:23Chamath Palihapitiya?

  That's okay.

• 2:24Jason Calacanis?

  Well, what do we what do we think is happening in the markets right now in terms of retail investor participation and the number of Sacks that are coming into the market? I saw a statistic today that in Q1, there were 245 Sacks raised in Q1, or 250. That's on top of the 250 that were raised last year.

• 2:47David Friedberg?

  More capital was raised in Q1 than 2020, 2019, and 2018 combined in Sacks.

• 2:54Chamath Palihapitiya?

  Just to.

• 2:54David Friedberg?

  And just in Q1.

• 2:56Chamath Palihapitiya?

  Just to put some put some further color on this. You had all these folks raise money. You had some really questionable sponsors, to be completely honest with you. I'm not going to call any of these guys out because I don't want to give them any airtime. But like, you know, you literally had people who ran companies into the ground, people who were kicked out of their companies for, you know, sexual impropriety. It didn't matter. Any random dog and cat was able to raise a SPAC in Q1. And now, on the back end, you're going to start seeing some real difficulty. So, deals are getting retraded constantly, which means that, you know, IPOs that should have been done at at price X is getting discounted

• 3:39Chamath Palihapitiya?

  by 20 and 30% to get the deal done. There are all kinds of side deals getting cut left and right. And this is just the beginning. And the reason is because that free brokerage, you say 265?

• 3:51David Friedberg?

  A hundred bit. There was, there was about 110 billion raised in Q1, it looks like.

• 3:55Chamath Palihapitiya?

  But how many deals? 260 deals?

• 3:56Jason Calacanis?

  298.

• 3:57David Friedberg?

  Yeah.

• 3:57Jason Calacanis?

  Raised in Q1.

• 3:59Chamath Palihapitiya?

  So those 300?

• 4:00Jason Calacanis?

  248 in 2020, just so I remember correctly.

• 4:02Chamath Palihapitiya?

  So we're still in the first inning, right? If you think about it, these, these Sacks have two years to put the money to work. So we're only max 90 days in to a two-year shot clock, a 700-day shot clock. And so you're going to see some really crazy behavior, I predict, in November of 2022, right? Like the last six months leading into the expiration of all these Sacks. And between now and then, I think the market is really going to hold people accountable. So like when we see a pipe opportunity now, we're incredibly firm on like, hey, listen, the 2025 projections, we're going to back off of those. We want to see 2023 numbers. We're going to price it to that. We're going to price it with a margin of, of safety. And so these people come back and recut the deals constantly.

• 4:43Chamath Palihapitiya?

  You know, there's a situation where this one deal retraded three times before a price got done. And it was ended up being 35, 40% below where they started.

• 4:54David Friedberg?

  I sent Chamath a note I got this morning from my friend who works at one of the banks and one of the bulge brackets. And they said there was like 50 pipes in the market last week. And they think only five of them are going to get done. 50. And like, you know, Chamath, what, like a quarter or two ago, like 100% were getting done or 80% were getting done, right? I mean.

• 5:11Chamath Palihapitiya?

  Yeah. And, and I'll quite honestly, they were meaningfully oversubscribed. And now we're demanding, the people that look at these pipes, I'm one of them. But so I, I've talked to some other people who do it and we're all in the same situation because we're demanding much better terms. And so it's going to, it's going to, the pressure is going to come on not the founders and the companies, but it's going to come on the sponsors because I think sponsors will really have to put up a lot of their money to get these deals done. And this is where you're going to separate the wheat from the chaff because most of these sponsors are doing it for a quick buck. And you'll see, without debating who you think it is, when you see people unable to post the money to get a deal done and that deal go away, that is the charlatan.

• 5:53David Friedberg?

  Right. Chamath, it seems like there's also a deleveraging happening with the funds that bought a lot of these Sacks and deSPAC listings in the aftermarket, right? Which, which kind of creates a bit of a logjam on the backend for a lot of these.

• 6:05Chamath Palihapitiya?

  So, you know, it's for those that are interested in some of these market dynamics, one thing that I have learned in the last little while is that. Depending on who you are, risk is managed really differently. So for example, like there's, there's a friend gave me this language and I'm going to repeat it because I think the way he said it was very elegant. There's what's called inception to date risk and then there's year to date risk. So what is the difference? If you're a hedge fund, you're really in the year to date business, meaning how am I doing in this current moment in time? Because your compensation is driven from that. And so you're very much forced to manage short-term volatility in your portfolio. And a lot of it is very parametric. When, you know, something goes down by X percent, then you have to sell.

• 6:50Chamath Palihapitiya?

  And then if something goes down by Y percent, you sell more. And if something goes by, down by, you know, Z percent, you have to shut the position out. And those are extremely codified. And so when you have a lot of hedge funds who are parametrically running year-to-date risk and you have, you know, all of a sudden, you know, the threat of inflation, bond yields go up, factor rotation attack, it's a running to the exits. Then you have other people who manage what's called inception to date risk. I would say Buffett is in that category. You know, for us, for the most part, we are inception to date risk because we don't have external LPs. And so you can manage these different risk buckets differently, but you have to appreciate

• 7:33Chamath Palihapitiya?

  that a lot of this volatility is a lot of year-to-date risk. Now then you layer on top of it, these exogenous events like what happened this week with Archegos. And it's just absolutely incredible because it just further amplifies all these people who would otherwise have made very rational decisions, made, forced to make irrational year-to-date risk management decisions. And that's what causes these massive swings and all this malaise in the market.

• 7:58Jason Calacanis?

  Sax, what are we seeing on, in private company valuations? I know that while we're seeing the retreat in Chamath's part of the world and people buckling down and maybe some more guardrails, if we will, or maybe a tighter screening process for these companies going public? You didn't say Fisker-Chamath, but that was the one that had me. Like what Fisker didn't they fail twice already? What are you seeing on the private market sex?

• 8:27David Sacks?

  Yeah, it's a very frothy time to be honest. I think valuation levels are, I mean, they're probably the highest I've seen. I'm seeing seed deals now, hot seed deals, not every seed deal get done in the high twenties.

• 8:42Jason Calacanis?

  Same.

• 8:43David Sacks?

  Yeah, exactly. Yeah, pre-revenue. It used to be that like, you know, I remember when you're pre-revenue C deals were more like a five to 10 cap and then like that a little bit of revenue might be a 15 cap and like the hottest company out of Y C.

• 8:57David Friedberg?

  Just explain what that means, Sax.

• 8:59David Sacks?

  The hottest company.

• 9:00David Friedberg?

  No, no, no, a cap, cap.

• 9:02David Sacks?

  The cap is a valuation. It's a $15 million valuation effectively. It's just done on a convertible note called a safe. So it's, but for all practical purposes, it's a valuation. So it used to be, you know, pre-revenue C deals used to be in the five to 10 million dollar valuation range. Then, you know, a little bit of revenue be 15, the hottest Y C deal might be an 18 to 20 million dollar valuation. Now we're seeing hot pre-revenue C deals going for like 27 to 30.

• 9:33Jason Calacanis?

  And what percent, what amount of capital is going into that round?

• 9:37David Sacks?

  It's usually like a 10 to 20% dilution event. So it's.

• 9:40Jason Calacanis?

  Three million to six million.

• 9:42David Sacks?

  Yeah, exactly.

• 9:43Jason Calacanis?

  And they're not calling this the series A. They're still calling this the seed round.

• 9:47David Sacks?

  It's the first money in the company. So it's still a seed. And I mean, just, we also do obviously A and B and increasingly some growth investments. Everything, the price levels are basically double where they were just, I would say, like a year ago, you know, these same C deals.

• 10:03Jason Calacanis?

  Same thing I'm seeing and it's making me think as a private market investor, that maybe the right thing to do is to stop investing in some, as many new companies and work with the existing portfolio to raise capital. So I told my team, let's go through the portfolio. Let's see who needs capital and let's help them shore up their balance sheet when the market's hot and valuations are high as opposed to going and trying to get into every deal. So I think I'm going to do maybe 30% less deals and redeploy my time at getting the current portfolio cashed up and it's working. What do you think of this strategy Chamath or Sax or Friedberg?

• 10:43Chamath Palihapitiya?

  I personally like it. I think that venture investors are typically trained, I was trained this way early on, which is to invest through the cycle, right? Just to think about this as a constant patter of capital. And to be honest with you, I have issues with doing that, Jason. And so I more agree with what you're saying, which is that I think like active risk management, especially I guess if it's your own capital, but I just think active risk management is important. It's important to acknowledge that the incremental SaaS company may not be that great as it is. And so at 30 pre may be really stretching the bounds of reality. Whereas to your point, you know, what Sequoia has proven more than anything else to me is the value of doubling down and backing up your winners. And so

• 11:27Chamath Palihapitiya?

  to the extent that money isn't infinite, which it isn't for all of us, that's when I do think it's worthwhile saying, well, I have a certain amount of money in my fund. If I think COM can 10x from here, then I'd rather put in a big check there. And you know, that's better than putting a bunch of C checks into companies which will have a 90% failure rate at very, very high prices where I don't own that much. So I do think active risk management makes sense in moments like this.

• 11:52David Sacks?

  I mean, I guess my philosophy is a little different, J Cal. I mean, so I, my philosophy as a VC is that the market sets the price of the deals, that I'm ultimately a price taker. And my only decision really is which deals I want to be in. Like, I don't really get to set the prices. It's too easy for entrepreneurs to run a process and get competing bids. So all I can really do is decide which deals I want to be in. And I think the more that you try to chase value as a VC, I think the more you end up investing in companies that aren't really that great. Like, you're trying to, you're trying to find things that are mispriced as opposed to just investing in the best companies. So now, look, does

• 12:32David Sacks?

  do price levels affect my returns? I think, yes, I'm sure the vintages do matter to some degree, but.

• 12:40David Sacks?

  The most important thing is just to be in the right, in the right companies.

• 12:43Chamath Palihapitiya?

  Can I just, can I just, I'll give you the counterfactual to what you just said. You know, if I, if I look at my three big private funds. Fund one was healthcare, education, fintech and some deep tech. Fund two was a massive over indexation into SaaS. And then Fund three was a return to our knitting and a bunch of deep tech stuff. And a lot of Fund three's decisions was basically me saying enough of this SaaS. And the reason was because I didn't like the valuations, David. And I thought on the margin, if I'm going to invest $10 billion, I'd rather get a 3D printing spaceship company off the ground than the N plus for a SaaS business. And it's turned out to have been in that cohort, the right decision.

• 13:28Chamath Palihapitiya?

  So I don't know, I think it's, I think that can also be true, which is like chasing what was the hottest thing was not in 2016 was not a good idea.

• 13:37David Sacks?

  Yeah. So, so, so just let me just respond to it real quick, Jason. Cause so, um, so I do like SaaS investing, but I was doing it before it got hot. You know, it's just, that's kind of my area and I want to build a franchise in that area. Cause that's where my expertise are. And so I can't like very well, just say, Hey, the store is closed this year because price levels are high. Otherwise like founders won't come.

• 13:58Chamath Palihapitiya?

  You have to invest through this.

• 13:59David Sacks?

  Yeah, exactly. So I'm, I'm trying to create like a very specific franchise in being the leading VC and bottom up SaaS. And look, sometimes the price levels be favorable during COVID. There was like a four month period where the markets were off, what 50% everyone like, it felt like we had the market to ourselves, the VC market, I mean, nobody else was investing. We did more deals during that four month period than I think any other four month period. So like sometimes the price levels can bounce in your favor, but you know, my view on it is I just want to invest the best companies and kind of the, the price levels was work themselves out.

• 14:31Chamath Palihapitiya?

  The counter, I would have to your counter, David was.

• 14:35Jason Calacanis?

  If there are other startups who are of equal value, which pool you decide to go fishing in matters. So you know, this $30 million deal, if I was to put $3 million into it, that could equal me putting with our accelerator, which not everybody runs an accelerator. It's arduous. It's painful. It takes a ton of work. But that equals for me 30 deals at 100K each. So I'm looking at it going, do I get one bet in this YC overpriced company with 50, you know, tier three venture capitalists and dentists backing up the truck and now family offices who don't know anything are now competing against the people they are LPs

• 15:16Jason Calacanis?

  in their funds? Or do I just say, you know what, if everybody's fighting in the market for the apples, I'm going to plant more apple trees and I'm going to run a better orchard. And that's what I decided to do is maybe I'll just move up to the orchard a little bit. But I guess there's multiple ways to win in what we do.

• 15:31David Sacks?

  Yeah, you guys are broader in your strategy than I am, right? Like you guys actually do invest in lots of different kinds of companies. I've kind of gravitated away from that because I'd rather just focus on my speciality, which I feel like is big enough for me to be successful. Right?

• 15:46Jason Calacanis?

  Yeah. But what if there's a new category that comes out like on demand and something like Uber comes along or Airbnb and it doesn't fit the framework?

• 15:53David Sacks?

  Well, I invested in those companies, but so marketplaces.

• 15:56Jason Calacanis?

  Would you do it now? Or would your team say, you know what, don't bring this to David? He's going to say no. Cause your team is doing the first round interviews, right?

• 16:04David Sacks?

  Yeah, but, but we do marketplaces and my partner Jeff.

• 16:07Jason Calacanis?

  Those didn't look like marketplaces originally though. Those were not considered like eBay or Craxis.

• 16:11David Sacks?

  I invested in them because I thought they were marketplaces. So, you know, so look, we do marketplaces and we do SaaS. That's a huge part of the market. We're never going to suffer for, for deal flow focusing on those things. But look, will I do chips? No. Will I do pharma? No. Cause I don't know anything about those things.

• 16:26Jason Calacanis?

  Yeah, no, those are too deep.

• 16:27David Sacks?

  Or quantum computing or something like that. You know, these more esoteric hard tech subjects that I kind of make fun of Friedberg for, or at least, you know, when he starts giving his Qubit lecture.

• 16:39Jason Calacanis?

  Yeah. Well, actually, you know what's a big one? I actually think we need to really rethink our investment strategy here. I forgot to tell you guys.

• 16:46David Friedberg?

  I'm going to start investing in laundromats.

• 16:48Jason Calacanis?

  I want to, yeah, it's not a bad idea. I mean, one of our mutual friends, one of our besties, who's a stealth bestie, was really into the Domino's chains. And boy, was he right about that. That stock went crazy. I want to get into this. Is it Archegos?

• 17:05Chamath Palihapitiya?

  Archegos.

• 17:06Jason Calacanis?

  Archegos? Machiego? Geez, I want to get this Archegos thing. But I also want to point out two things from just housekeeping. Number one, I redirected Wet Your Beak to a type form for people to pitch the besties. Guess how many pitches came in in the first week?

• 17:29Chamath Palihapitiya?

  How many?

• 17:31Jason Calacanis?

  Over 1,000. I now have three researchers going through it and categorizing it. They're going to share a Google sheet back with y'all of by stage where they are to start going through them. But it's pretty amazing. I think there is some, I think there is some magic that's going to happen here where we're going to find a deal where all four besties can be in deal because we've got two besties in Pipe, we're both in Cabana Sachs and I and a couple of other companies. But we got to get a four, we need to get four of a kind. We've never had four of a kind. We've had, we've hit sets, we've hit a pair, but we've never hit that. Go ahead, Sax. What do you want to do? You want to talk about me stealing your deal flow?

• 18:06David Sacks?

  Yeah, exactly. I just wanted to put out a, I need to put out a little PSA. So if you're a founder out there listening and you have a SaaS deal that's post-revenue, send it to me at Craft Ventures. And if it's everything else, you can send it to Jason on his little, his.

• 18:23Jason Calacanis?

  There were a lot of SaaS companies, actually. And so what we should do is, I can set the type form up if you want. If you give me an email address, anybody who picks SaaS, I could have it email you or, you know, Kevin or whoever on your team, you want me to. And I could just redirect it in real time. But that could wind up being hundreds of emails. But I think that's what you want.

• 18:42David Sacks?

  All right. Well, no, actually, well, Jason, you should divvy up, Jason, you should divvy up all these pitches by subject matter and send it to the bestie who it's most relevant for.

• 18:52Jason Calacanis?

  All right, sounds good. We'll do that. Sure. And then second, on the housekeeping front, people were really interested in this longevity discussion.

• 19:02Chamath Palihapitiya?

  Oh, read the thing. Read the thing. I think I want to, because I want to talk about it again.

• 19:05Jason Calacanis?

  So Ben sent this in to the All In Twitter handle, which is, I think, the All In Pod. And it's got 70, do you guys know we have 70,000 followers on that Twitter handle? It's crazy. Hey, just wanted to reach out with a positive message after listening to the podcast from two Fridays ago. If you could pass the message along to the besties, I think that's us. After Chamath's recommendation regarding longevity, I suggested to my dad, age 56 and perfect health. So he's 10 years younger than Sacks looks, um, to go get a calcium dye test. It turns out he scored well above any safe number and a critical heart failure was inevitable. Now he's taking proactive steps with a cardiologist. It's hard to even fathom what would have happened if Chamath had impassionately recommended this action.

• 19:50Jason Calacanis?

  Thank you guys so much for providing value, week in, week out.

• 19:54David Friedberg?

  I want to, Chamath saving lives.

• 19:56Jason Calacanis?

  Chamath saving lives and making billions.

• 20:00Chamath Palihapitiya?

  No, don't, don't joke around. It's stupid on this topic. I really want to say this again. If anybody hasn't done it after the age of 40, you can get a CT angiogram. Most health services provide it. I would really ask your primary care physician. If they say no, tell them to go fuck themselves and find somebody who will give it to you. But this is one of these things where if your calcium score is greater than zero, it doubles every year and there's a certain score right above several thousand where you are guaranteed to have some meaningful cardiac issue. And so whether it's for you or your parents, just ask the question, have you had a contrast CT angiogram? And if not, go and find a doctor who will prescribe it to them and get it done. It's just a no brainer.

• 20:45Jason Calacanis?

  I, um, I took it.

• 20:46Chamath Palihapitiya?

  It's a no brainer.

• 20:46Jason Calacanis?

  It's a no brainer. And I, I had my yearly physical and I got the, um,

• 20:52Chamath Palihapitiya?

  Hard flow?

• 20:53Jason Calacanis?

  No, I just did my physical, but I I'm gonna do that um full body scan you recommended.

• 20:58Chamath Palihapitiya?

  Pre pre newvo.

• 20:59Jason Calacanis?

  Pre newvo I'm doing. And then I got on the Nat Plus Booster, the true Nigen that um

• 21:04Chamath Palihapitiya?

  Yeah.

• 21:05Jason Calacanis?

  I think uh

• 21:06Chamath Palihapitiya?

  Friedberg suggested.

• 21:06Jason Calacanis?

  That Friedberg suggested and I'm taking it seriously. And I started with my personal trainer two Tuesdays ago. And I changed my entire diet and I'm just really taking it seriously now because I hit 50.

• 21:17Chamath Palihapitiya?

  So let me let me tell you about Archegos. So here's a guy. This is incredible. So this guy ran Asia Pac for Julian Robertson. Julian Robertson is a legend of finance and capital markets and was the founder of Tiger Tiger Management. By the way, I heard this incredible story. Um, why did Julian uh name it Tiger Management? Apparently, he had a he was incredibly bad with names. And so he would just call everybody Tiger. Like, hey, Tiger, how you doing, Tiger? Tiger, Tiger, Tiger. And so when he started this fund, I think his son apparently told him, Dad, you're not going to remember anybody's name. You're not even going to remember the name of the company. Just call it Tiger Management and you'll remember it. Anyways, Julian is famous for having um attracted an incredible roster

• 22:01Chamath Palihapitiya?

  of people to work for him. It's what the PayPal mafia would look like if it were disguised as a hedge fund. All these amazing people worked for Julian, went off and did these other incredible things. And um, one of this guy, one of these guys was this guy, Bill Huang, who ran Asia Pac for Tiger. He leaves, he starts his own fund. And somewhere in 2011, he gets pinched uh by the feds for insider trading some Chinese bank stocks. He pays a $60 million criminal and civil penalty and he's forced to give back all of his outside money. And so now he's a family office. Then he takes however much money he had and he runs it up to somewhere between five and 10 billion dollars. So this is a guy who managed to just hit the ball out of the park.

• 22:44Chamath Palihapitiya?

  And then what he does is he goes to these banks and he says, you know what, guys? I'm going to make a bunch of concentrated bets in a bunch of Chinese internet companies and media companies like Viacom and Discovery. So what he does is he does an equity swap. And what an equity swap is, to get through all the noise, is just a very simple way for you to bet on the appreciation of a stock relative to an index and hedge it against an index. And what it synthetically allows you to do is take big risk, own huge positions and not be listed in disclosures.

• 23:18David Friedberg?

  Without buying the stock?

• 23:19Chamath Palihapitiya?

  Yeah, so if you don't want to know.

• 23:21Jason Calacanis?

  So the word synthetic, just so, because I'm confused. Synthetic means you're not actually buying the stock. You're doing this in the ether?

• 23:28Chamath Palihapitiya?

  If you went and bought 4.9% of Viacom, nothing would happen. The minute you got to 5%, you'd have a regulatory filing obligation that would say Jason Calacanis owns 5% of Viacom. Then at 9.9%, nothing else would happen, but then at 10%, there's another incremental thing. So this was a way of him accumulating up to 9.9 or 10% of these positions without having to disclose because he's not actually buying the stock. He's having Morgan Stanley, Goldman Sachs, Nomura, Deutsche Bank, Credit Suisse buy the stock for him using these over the counter derivatives.

• 24:05David Friedberg?

  But they're not, in some cases, didn't even buy the stock. It was like a forward purchase agreement almost, right? Like, these were contracts for difference. So they didn't even have to buy the stock in a lot of cases, right?

• 24:16Chamath Palihapitiya?

  Right. And then I think it was hedged by the S and P, right? So they basically hedged it out with the S and P and it was like factor weighted. Anyways, long story short, what happens is that the guy starts to get stopped out on a trade. And then they have to close out all these positions. And so all of a sudden, they realize, oh, my gosh, we actually, each of us gave this guy five or 10 times leverage. So instead of a $5 or $10 billion hedge fund, it was $50 billion of notional exposure. And so in one day, you had Viacom go down 30%. Discovery went down thirty or forty percent.

• 24:49Jason Calacanis?

  And we were playing cards, looking at the market, saying, what's going on?

• 24:53Chamath Palihapitiya?

  What's going on?

• 24:54Jason Calacanis?

  Yeah.

• 24:54Chamath Palihapitiya?

  So weird. But another, another example of like asymmetric information and a lack of transparency in financial markets.

• 25:01David Friedberg?

  There were two drivers of this. Number one is the guy traded via the swap, these, these over the counter transactions. So he didn't actually have to go buy the stock on the market. And number two is they, uh, uh, the, the guy relied on a number of exemptions as a family office, right? Chamath, so he didn't have a lot of reporting requirements that say, um, you know, a lot of other funds might, might, might have to disclose. Um, and so there was a kind of, uh, opacity to the transactions that were going on. So ultimately, when, um, when everyone kind of looked under the hood, it was like, oh, oh. This is a lot like that long-term capital management, uh, fiasco that happened in 1997. I think we talked about it on one of the, the shows, but they had a book with like 60,000 derivative contracts

• 25:43David Friedberg?

  with over a trillion dollars of notional exposure on a $5 billion book of business. So if the, you know, if the overall, uh, portfolio that they held moved by whatever it is, you know, half a percent, the whole thing collapses. And that's effectively what happened when stocks got volatile in 1997 during that currency crisis. And then all the banks looked under the hood and they're like, oh, wait, I need more collateral. There was no collateral to post because everything was levered up. And then everyone's struggling to get a piece of the pie and, you know, of the cash that's left, everyone was fighting to get a piece of it. Cause if everyone had to sell off, the whole portfolio would collapse and everything starts to spiral out of control. And that's sort of what happened on Friday, right? Cause as they started to sell off these positions via big block trades, the stock went down and made it even harder.

• 26:25David Friedberg?

  And then everyone piles on and starts shorting the stock and it becomes this uncontrollable fiasco.

• 26:29Jason Calacanis?

  I have a really dumb question for the, why are people giving this amount of leverage and letting people make these trades? Is it because they have no responsibility, the brokerage houses or whoever's clearing these trades?

• 26:39David Friedberg?

  They're gonna lose money. I mean, I think JP Morgan, Omura, these guys are all gonna lose billions of dollars because there's not enough cash in this guy's actual account to cover all the losses now.

• 26:48Jason Calacanis?

  Why would they let him do this is my really simple, stupid question to somebody who doesn't know.

• 26:53David Friedberg?

  Cause they make money.

• 26:54Chamath Palihapitiya?

  They make money.

• 26:55David Friedberg?

  I mean, if you're making five, I mean, think about it this way, it's sort of like an insurance deal, right? Like, if I can make five cents by taking a dollar of exposure with you, but that exposure only pays out if something terrible happens that's very unlikely in my assessment, I'll take that five cents all day long. You know, I'm collecting nickels. But once in a while, something really bad happens, and then they got to pay out a dollar.

• 27:17Jason Calacanis?

  How many more Manchegos are out there?

• 27:22Chamath Palihapitiya?

  Well, I think it depends on how you define the problem. But if you say that leverage, everybody's levered. I think the question is, by how much? I think it's pretty rare at this point that you're not levered. We don't run leverage, but it's tantalizing, I got to tell you, because like, you know, I could run, I don't know, 100, 150 billion dollars of exposure. And then all of a sudden, you know, you only have to return, you know, 1% or 2% to make a ton of money.

• 27:47David Friedberg?

  Yeah, Chiba, what would your margin interest rate be if you were to run your book levered?

• 27:52Chamath Palihapitiya?

  I could run it 10 times and pay 1%, 2%.

• 27:57David Friedberg?

  Right. That's crazy, right? So with 10 times leverage on your money, you basically just have to beat 1 point or 2 point of return, and you make money. That's why it's so attractive right now.

• 28:06Chamath Palihapitiya?

  That's why it's so attractive. And that's what, that's what, that's what a lot of these other organizations do. The business model that they've perfected, which I think is very reasonable, by the way, says, again, back to sort of like, you know, managing year-to-date risk, right? They manage extremely small movements in stocks, because instead of saying to, you know, if the four of us were running a hedge fund, hey, each of you do your best, and we're going to run 1x notional. It's much better to say, I'm going to severely constrain the parameters in which you guys can take risk, and on the back end, I'm going to lever the whole thing up 10 times. My only goal is for you guys to make me 1% a year, right? Because if I lever it up 10 times, now I've made 10%. And that 1% a year, now

• 28:49Chamath Palihapitiya?

  all of a sudden, divided by 12 months of the year, means you're generating, you know, you only have to do 80 basis. So all of a sudden, the math starts to work in your favor, where everybody says, wow, let's raise as much money as possible. Let's make sure there's extremely tight risk parameters. Let's just tell David Friedberg and Jason Calacanis and David Sacks, just give me 80 basis points. And on the back end, I lever up. That's the whole business model of most hedge funds. And then, you know, you have some folks at the edges, as Friedberg says, you know, the insurance policy rarely pays out, but then every now and then you have this cataclysmic set of events and the long tail hits and you're wiped out. And that's what happened here.

• 29:26David Friedberg?

  And by the way, you know, there are stress tests against the banks to, and where they basically look at scenarios of, you know, how bad can the overall portfolio get that the banks are exposed to, you know, all these clients that they have as counterparty risks. Because remember, like, when they sign a contract with this hedge fund, they're not actually taking a position. What they're doing is they're taking, they're creating an obligation where this hedge fund has to pay them in the future. Now, if the hedge fund effectively goes bankrupt, then they're not going to get paid. On the mean, on the back end, they're expecting to get paid $2 billion, or whatever the amount might be, to cover the, you know, the trade that they put in place with the guy. So this whole thing basically becomes a loss that they get exposed to. And so the stress tests are meant to kind of expose how bad can the loss be to make sure that the bank doesn't ultimately

• 30:10David Friedberg?

  go bankrupt if a really bad scenario were to take place. Now, there's a lot of debate about whether those stress test methodologies actually work and whether they adequately reflect the true risk in the markets and the true risk that these banks take on. And that has always been a debate. The problem is if you make the stress tests too limiting, the cost of capital goes up and it's very hard to trade and liquidity goes down in the market. That's the, the counterargument to why you wouldn't want to be kind of more regulatory on this front. And so it's, it's an ongoing kind of fluid debate about what's the right way to stress test banks and make sure that they have adequate capital reserves while still creating low cost capital and having liquidity in the markets.

• 30:45Jason Calacanis?

  But you add the risk of ruin. So literally-

• 30:48David Friedberg?

  It's really hard to balance.

• 30:49Jason Calacanis?

  You're playing with your entire net worth on the poker table. You're not just buying in with 1% of it or 10% of it.

• 30:55David Sacks?

  Whenever you read a story about some rich person going broke, it's, there's always debt involved, right? Because like, let's say, let's say you got like, I don't know, like a big number, like $100 million, right? And, and let's say you're fully invested, the market goes down 50%. You still got 50 million bucks. You're still like a very rich person.

• 31:14Jason Calacanis?

  In the game, yeah.

• 31:14David Sacks?

  Yeah. But now let's say that you took that 100 million and you levered it up to, I don't know, whatever, a billion. And then the market goes down 50%. You're worth zero.

• 31:25David Friedberg?

  Yeah, or in that case, the market could go down 10% Saks, and that's what happened here.

• 31:29David Sacks?

  Right, right, only 10%, right, exactly.

• 31:31David Friedberg?

  The guy levered it up, and this is what always, this is what happened with LTCM. In LTCM's case, the trades they had, the whole portfolio only moved like 5%, but it caused a cataclysmic collapse of hundreds of billions of dollars of notional exposure. And that's sort of like what happened with this guy. He was so levered up.

• 31:48Jason Calacanis?

  It's so weird, you know, I searched for this guy on YouTube just to kind of figure out who he was on Saturday.

• 31:53Chamath Palihapitiya?

  Oh, the Christian YouTube thing you sent?

• 31:55Jason Calacanis?

  I sent it to the group, but there's like all these videos of him talking about Jesus and it was just a, I'm fine with him being deep into Jesus, especially, you know, on the way to Easter. God bless you, praise Jesus, but it was very weird. This person has a very unique philosophy, clearly, and Nomura, the prime broker, on Monday warned of significant losses estimated at $2 billion from the unwinding of these trades.

• 32:25David Sacks?

  Let me ask, let me ask a question to you guys. If we all agree it's a really bad idea for individuals to get over levered like this, how bad an idea is it that the US government is getting so over levered? We now have 130% of our GDP, we are now in debt. It's the first, I mean, I think it only recently crossed 100%. So we have now borrowed as a country more than our entire GDP.

• 32:53Jason Calacanis?

  Yeah, but I mean, if you look at that by country, there are other countries that are way over that.

• 32:59David Sacks?

  Like Japan, just about. There aren't that many. There aren't that many, and Japan's had a horrible decade partly because of all that debt.

• 33:05Jason Calacanis?

  Italy, Portugal, Greece, and Japan, yeah.

• 33:07David Sacks?

  Yeah, not a club you want to be part of.

• 33:09Jason Calacanis?

  Not a club you want to be part of.

• 33:10Chamath Palihapitiya?

  I think that I'm more sympathetic to governments being over levered because I think, because governments effectively are, at this point still, that may not be the case in the future. The the only form of too big to fail that I think we can tolerate. I have a much bigger issue with private market participants being over levered because I think that is a level of greed and risk that shouldn't exist.

• 33:36Jason Calacanis?

  Unnecessary.

• 33:38Chamath Palihapitiya?

  In large part because the governments themselves are so levered on the way in. So maybe that's the way to think about it, which is if we have to isolate risk and we know we can't tell governments to stop spending, then I think we should probably make sure that risk is better managed at the individual level, you know, people and companies.

• 33:54David Sacks?

  Why can't we, why can't we tell governments to stop spending?

• 33:56Jason Calacanis?

  Yeah, I was about to say, I think we can tell them that because we vote them in. But I mean, this, I want to open up.

• 34:02Chamath Palihapitiya?

  People vote in spenders. People don't vote in cutters.

• 34:04Jason Calacanis?

  Well, this is the thing. You know, the Republicans were supposed to be the spendthrifts.

• 34:07David Friedberg?

  Yeah, no one ever gets elected saying, I'm not going to do anything, right? I mean, Donald Trump may be the first president to have ever actually said that and, you know, actually do something in that vein when he put a bunch of guys in charge of like the CDC and the Department of Energy and they just cut heads. But, you know, you always go in and you say, I'm going to do X that isn't being done today. And as a result, over generations, it adds up. And all of a sudden, you wake up and the United States is 250 years old and we have debt equal to 130% of our GDP and we're struggling to maintain the growth rates needed to fund that debt. And you're like, oh, that's the biggest challenge with democracy and keeping it alive is, is the fact that ultimately, everyone wants more. And so over time, you vote for more and over time, it gets more expensive and

• 34:52David Friedberg?

  over time, it becomes really difficult to maintain.

• 34:55David Sacks?

  Can I, can I just count up the bill for just this year? So as we know, Biden already passed it. Well, yeah. So the bill so far for this year, first of all, the government is, is running like a four and a half trillion dollar deficit. A lot of that is, you know, COVID related. But in any event, Biden's already passed a 1.9 trillion dollar COVID bill. They're now about to pass a at least $3 trillion infrastructure bill.

• 35:21Chamath Palihapitiya?

  Two, two, two. The proposal came out, it's two. No?

• 35:24David Sacks?

  Yeah. Uh, well, okay, sorry. It's, it's two for the infrastructure plan, but then there's another one to two billion that they're talking about doing, sorry, trillion, that they're, they're planning as a second package called the American Families Plan, that they're calling infrastructure, but it's, it's not. It's more like social programs. Uh, they're kind of relabeling that as social infrastructure or human infrastructure. And they're trying to figure out whether they can do them as two separate bills. Um, there, there's this issue with reconciliation and they need, they need a ruling from the Senate parliamentarian on whether they can do the second bill through, through reconciliation. If they can't, they may have to combine it into one bill. Otherwise they'll do just two separate bills. Um, but you're looking at

• 36:06David Sacks?

  total, like for about four trillion across those two bills. You know, in addition to the 1.9 we've already passed. So we're looking at like six trillion of spending this year. I think we had about six trillion of COVID emergency spending last year. And so the numbers are getting really big, really fast.

• 36:25Jason Calacanis?

  This reminds me of our last trip. This reminds me of our Las Vegas trip with Chipriani and then your markers. This was, I think we're, we may need to have some austerity measures. We might need to go to Olive Garden instead of Chipriani.

• 36:39David Friedberg?

  Part of the issue, Sax, is, um, you know, I think if you guys will remember on election night, I told you the thing I was most concerned about was this Georgia runoff. And if the Senate takes, if the Democrats take the Senate, you have no balance of negotiation, um, in this process of, uh, of passing these bills and finding a point of fiscal responsibility versus social necessity, or what might be deemed necessity by some, but, but, um, uh, you know, exuberance by others. And, um, and it's, it's frightening because, uh, you know, with a, with a single party system, right? A single party, um, uh, legislative branch or, um, right now, we have a real issue with the, um, the fact that any bill can kind of be come up, uh, can kind of be defined by one party, by a small group of people. They

• 37:24David Friedberg?

  can get it passed, they can get it signed. And, you know, it's going to be a challenge for, uh, for us to all kind of support this level of debt for generations to come. Um, and it's, uh, It's not going to stop anytime soon. I mean, you know, before the midterms, we've got another year and a half of this.

• 37:39David Sacks?

  A hundred percent. And that's why I was rooting in the, the, the last election for gridlock as well. And, and we, we almost had it. I mean, it was supposed to be a divided Senate. Purdue won that Senate seat and then he lost.

• 37:51Jason Calacanis?

  And Trump just decided to burn the entire Republican Party on the way out. Congratulations, David. You destroyed the Republican Party.

• 38:01David Sacks?

  Look, you, you, you, Jake, you have a little bit of a point there because the reality is as of election night, this was supposed to be a divided Senate. And then what happened in the two months that followed turned voters against those Senate candidates. So you have, you definitely have a point there. But, but the, the price tag for that one Senate seat is going to be about $6 trillion.

• 38:21Jason Calacanis?

  Yep. It's pretty disturbing that our, our debt to GDP ratio is now worse than Spain and Portugal. I mean, we're catching up to Italy and Greece.

• 38:32David Friedberg?

  I think it's worth just explaining to people why that matters, right, Sax? I mean, like, when you, when you issue debt.

• 38:37Jason Calacanis?

  You have to pay, you have to pay the.

• 38:39David Sacks?

  Well, here's, here's the thing. Here, here's the thing. Everyone's been, everyone's been lulled into a false sense of security because interest rates are so low. So the debt service has actually been relatively small. But if interest rates ever go back up, say because of inflation, like the debt service will be one of the biggest chunks of federal spending. We won't have money left for all the programs that we need, you know, including entitlements, including defense, including everything else, you know, that the country wants to do. And so it's very dangerous. And, and, and the, the real problem I have with it right now is everybody can see the economy is getting better, right? It's, it looks like we're about to have the roaring twenties. The economy looks like it's rebounding. It's about to boom. Goldman Sachs

• 39:22David Sacks?

  says we're going to be down to like 3% unemployment by the end of the year. It's coming back really fast. Covid is going to be over in May. I mean, everything is trending the right way. And we're acting like, you know, like there's an emergency happening still. I mean, I understand the six trillion last year during the middle of Covid to prevent a depression. But what is the rationale today when the economy is already coming back for this level? Re-election, David, reelection. To consolidate democratic power and to get reelected. Right, pump the, prime the pump. But, you know, we're, we're breaking the glass in case there's an emergency when there is no emergency. And what happens if there is another emergency?

• 39:59Chamath Palihapitiya?

  We'll go to 150%.

• 40:00David Friedberg?

  Look, I don't think it's as, as intentional as getting reelected. I do think that the politicians and the people involved in the legislative process have very good intentions and think they're doing the right thing. And they got elected and they spent their whole lives and their whole careers dreaming of a day when they could create these programs using government money, dreaming of a day when they could make these opportunities real. And here's a moment in time where they can and where these visions for what they believe to be a better society and a better government and a better country for all its citizens, they have this moment now and they are, and so I'm not criticizing anyone.

• 40:35David Sacks?

  I am.

• 40:35David Friedberg?

  I think it's just, it's, I think it's, look, you, yeah, no, you could totally disagree with the point and, and I think in many cases I agree with you. But I, I do think that there isn't like this, this kind of evil incentive or this evil reason for folks doing it. I think, you know, a lot of people that work in government or, or politicians, they spend a lot of time thinking about doing what's best for their, you know, their, their, their kind of people that they represent. And here's this moment where I can create all these programs and create all these jobs and spend all this government money to give my people locally, all these, all the support that I always thought that I, I always told them I would give them one day. And it's a moment where everyone's kind of rushing and because there's a single party system right now, everything's getting done and it's all getting piled on top of pile. It's like leading, eating cupcakes and then cake and then pancakes and then, you know,

• 41:19David Friedberg?

  ice cream and then having a milkshake, you know, it's, it's, it's going to have a really nasty stomach ache at the end.

• 41:24David Sacks?

  Yeah, I agree. It's, it's, we may have a sugar rush over the next year or two. Maybe, maybe Biden gets reelected based on this, but you know, eventually the, I like, I like your term stomach ache. Biden seems to me a little bit miscast. It's like he's cast from a different era. And, you know, this is not 1933. We don't need this massive amount of pump priming by the federal government. We're not in a depression. We're not even in a recession right now. We're coming back really strongly. And so it just feels like we're passing all this anachronistic pork barrel.

• 41:56David Friedberg?

  Right.

• 41:57David Sacks?

  Spending, you know, like for why? It's like, almost like it's just habitual as opposed to having a real need.

• 42:03Chamath Palihapitiya?

  I think that's a more nuanced take, which I agree with, which is like, if you actually see what that $2 trillion infrastructure bill looked like, there was a lot of stuff which did feel incredibly anachronistic where I was like. I mean, paving a fucking road. I mean, we had China trolling us because the contents of it was just so stupid. Right? It's like, I mean, it's like paving a road is this one time event that does nothing. And we're, we're much, we're much better off building ongoing capability of things we need. So if we're going to like green the economy and, you know, we're going to go through, go through an energy transition. There's all kinds of ways to spend the money. And so then you think, who's advising these people? And then, and then I think it comes back to lobbyists. Yeah, lobbyists and donors. Yeah.

• 42:48David Friedberg?

  Let's go through this list, right? So of the $2 trillion, it looks like about 620 billion is going into transportation infrastructure. Like Chamath said, bridges, roads, public transit, et cetera. Now, if you think about the benefit to society, there's the benefit of having better roads, which we can debate. Does it, you know, do all of these need this care? The $620 billion worth of care? Uh, I think some people would say, yes, some people would say no, but, um, the question of where that, those dollars actually go ultimately. If you kind of look at how government contract work is done, there will be a few people that own the majority of these contract service providers that will benefit heavily from this capital coming out of the government's coffers and will go into their bank accounts. And yes, there will be some jobs, but they will be temporary jobs and there will be temporary salary and wage support through this.

• 43:31David Friedberg?

  Um, a lot of that capital will go to the people that own the businesses that are doing all of the construction work and supporting this industry, um, development. So, you know, it, it's concerning when you look at how much money is going to get funneled into effectively corporate contracting.

• 43:45Chamath Palihapitiya?

  I don't care. I don't care what side of the aisle you're on, but if you see $620 billion of spending that's going to happen in the next few years for anything. If you're thinking anything other than this will be wasted and inefficient, you're being really naive. So, you know, the, the good, a good microcosm example of this is the one that you use, Friedberg, which is how much money did California give to A- Anderson Consulting or, you know, to build that COVID website? It was.

• 44:13David Friedberg?

  Yeah. It was like a hundred million bucks, like all in with the service cost and the customer support and all the stuff that was attached to it.

• 44:18Chamath Palihapitiya?

  And realistically, you could have built it for 90 bucks using Wix. Squares, squares.

• 44:23Jason Calacanis?

  Use the promo code twist. Come on, use the promo code twist.

• 44:26Chamath Palihapitiya?

  So my, uh, so my, my, my thought is that exactly like people should look at this irrespective of whether you're on the left or right, think, well, of that 620, how much will actually get into the hands of people in a thoughtful way? Meh, probably like 300. How much of it will go into like lining the pockets of shareholders and folks in very specific companies who just print an enormous amount of profit over the next few years? Probably another 150 or 200 billion.

• 44:51Jason Calacanis?

  Wait a second. Sax, did you, did you send my red pills to Chamath's house? What's going on here? Those are my red pills. They got me lit.

• 45:01David Friedberg?

  But let's have the counter argument, right? The counter argument is for decades, and I'll, I'll make it, right? So for decades, roads have been crumbling, infrastructure in this country has been falling apart. We haven't taken care of federal highways. There's all this work that needs to be done to make sure that airports address rural communities and ports can take ships in so the economy can grow. And someone's got to build all that stuff at some point. So, you know, rather than deal with this down the road, let's take advantage of the single party, you know, governing system we have right now and pass this bill and get it all done and get, and get America ready for the future. That would be the argument, right?

• 45:33Jason Calacanis?

  I'll, I'll give you the most cynical argument. The most cynical argument is let's ratchet up spending, make everybody concerned about the debt so that the solution is raise taxes and let's create a wealth tax and let's create this tax and that tax.

• 45:46David Sacks?

  Well, Biden is raising taxes.

• 45:47David Friedberg?

  He's raising the corporate tax rate to 28%.

• 45:49Chamath Palihapitiya?

  But that was brilliant.

• 45:50David Sacks?

  And individual.

• 45:51David Friedberg?

  Individual, yeah.

• 45:52Chamath Palihapitiya?

  Like, I think raising the corporate tax is a no brainer. We should absolutely have done that. But David, I mean, Friedberg, back to what you said before, what I would have said is like, look, the, the counter, the counter argument would have been, let's take this $620 billion and plan the future. So the plan, the future would be, you know, um, why is it that like Elon can, can bore a, a, you know, a traffic? Bearing tunnel at a million dollars a mile and the next best equivalent is 20 million a mile. Okay, maybe we should give these guys a bunch of contracts.

• 46:23Jason Calacanis?

  Capitalism, yeah.

• 46:24Chamath Palihapitiya?

  Well, just and technology, I would say, and and less graft and less waste. So let these guys build a bunch of tunnels and maybe they can figure out a way to build bridges too. Or, you know, if you really want to care about like future jobs and the national security of America, let's secure our own precious metals and minerals and let's have an entire supply chain that's, you know, independent of China. Well, you could spend a couple hundred billion dollars on that easily. So there's all kinds of ways to spend it. We could build high speed rail, you know.

• 46:53David Friedberg?

  They do have 580 billion, so almost a quarter, a little over a quarter of this bill going to American manufacturing, R and D and job training, right? So creating the next generation of jobs for Americans and

• 47:04Jason Calacanis?

  Yeah, we like that.

• 47:04David Friedberg?

  You know, re domesticating industry here.

• 47:07Chamath Palihapitiya?

  I mean, honestly, those words sound nice. What are the

• 47:10David Sacks?

  Yeah, exactly. You like the words. You like the words. You really think

• 47:14Chamath Palihapitiya?

  Love the words. Love the words.

• 47:15Jason Calacanis?

  Great. I mean, I like, I mean, one that I think nobody can argue with is universal pre kindergarten. That's easy. And I think community college tuition being free is a great one as well. If people have a certain score to get in there, so it's a little bit of merit.

• 47:27David Sacks?

  Jason, what are these things even, what are these things even doing in an infrastructure bill? I feel like I think Friedberg has a point that like infrastructure is like one of the last things that people believe that the government should be spending money on. So now they're just branding anything that they want to do as infrastructure. They're, you know, it's human infrastructure.

• 47:45Jason Calacanis?

  It's supposed to be bridges and roads.

• 47:47David Sacks?

  Right.

• 47:47Jason Calacanis?

  Not as a education and childcare and college. That's education should be a different bill. But didn't, I mean, Obama tried to get infrastructure passed. He couldn't. Trump tried.

• 47:56David Sacks?

  He did. No, no, no, Obama passed close to a trillion. I think it was like a 920 billion dollar bill. Remember the shovel ready projects? It was supposed to be a trillion dollars of shovel ready projects. They did it. Where'd that money go?

• 48:12Jason Calacanis?

  Well, speaking about money, speaking about money disappearing.

• 48:16David Friedberg?

  Can you make a little shrug emoji con like the? I don't know.

• 48:21Jason Calacanis?

  There's mine.

• 48:22Chamath Palihapitiya?

  Here's the brown version in.

• 48:25Jason Calacanis?

  Here's the white, here's the pale white version.

• 48:27Chamath Palihapitiya?

  Here's the brown version.

• 48:28Jason Calacanis?

  Here's the brown version. And it looks like you're the tan version, Free Burge, you got a little sun.

• 48:34David Friedberg?

  A trillion dollars? Me no know. I don't know.

• 48:37Jason Calacanis?

  Well, we can all go to Vegas and we can lose money and just come up to our wives and go like this.

• 48:43David Sacks?

  I just think like the government's so bad at like properly dispensing all this money. Like, that's the problem that, you know, and then that would look, I think if you're ever going to do infrastructure, the time to do it was in 2009 when Obama did it, like the economy was in absolute, like a great recession, that made, that made sense. But now, when the economy is doing, is rebounding so strongly, do you really believe that these, you know, $100 billion line items are going to be wisely spent? You know, and, and most of it's borrowed money, so.

• 49:15Chamath Palihapitiya?

  No, and the problem is like by the time it gets into the details, well beyond what Biden is capable or has the time to learn about, it will be just completely misallocated and, you know, some lobbyists will insert something that gets, something that's important to some politician, the money and that, and that, and that's the, that's the sad truth of it all. And we just have to hope that there's enough good that comes out of it.

• 49:37David Friedberg?

  And now taxes are coming for you.

• 49:40Jason Calacanis?

  Well, I mean, that's, that's the next thing is the wealth tax is where that conversation is.

• 49:45Chamath Palihapitiya?

  What happened in that, what happened in the bill?

• 49:47Jason Calacanis?

  Well, ACA.

• 49:48Chamath Palihapitiya?

  I saw, I saw the corporate tax went up from 21 to 28, but what else happened, Jason?

• 49:52Jason Calacanis?

  Well, there's a wealth tax in California being discussed again, who knows?

• 49:55Chamath Palihapitiya?

  Okay, but at the federal level, was there anything in the bill?

• 49:57Jason Calacanis?

  No, I didn't hear anything about a wealth tax. I mean, I don't know if that's possible.

• 50:01David Sacks?

  The first, the first bill is going to be funded by, like you said, an increase in the corporate tax from 21 to 28%. The second bill, the Families Act, is going to be funded in part by personal income tax increases, which I think will be more controversial. They're going to bump up.

• 50:19David Sacks?

  The campaign statement that Biden made was individuals, no one making under 400,000 would see a tax increase. So the plan was 400,000 going up to 39.6%. But here's, here's where I think it could get very controversial is that the White House is already making noises that it wasn't 400,000 per individual. It was $400,000 per family, which would mean $200,000 per individual, which would be I pretty much a camp, a broken campaign promise. So if that's where it ends up being, I think Biden could take a lot of heat for that. And but, but the problem is if he sticks to 400,000 per individual, I'm not sure that it will raise enough. The tax increase will raise enough money to pay for everything he wants to pay for. So it'll be.

• 51:02Jason Calacanis?

  Well, I would be, I would be totally okay with this when I was 30 years old. I'm just putting that on the record.

• 51:09Jason Calacanis?

  I'm not okay with it right now.

• 51:10Chamath Palihapitiya?

  This may sound dumb, but what is the federal tax rate? Like, what, what is it going from?

• 51:14David Sacks?

  I think the top, the top rate is like 37 and a half, something like that.

• 51:17Chamath Palihapitiya?

  So it's a 2%.

• 51:18David Sacks?

  It's not a big, it's not a gigantic increase at all.

• 51:21Chamath Palihapitiya?

  So it's a bit of big nothing burger. Okay.

• 51:22Jason Calacanis?

  Yeah. And this is income tax again, not capital gains.

• 51:25David Sacks?

  It'll be, yeah. And then there's a bunch of questions about whether like, so capital gains is still a big question mark and.

• 51:32David Friedberg?

  Capital gains will all go to income.

• 51:34David Sacks?

  Yeah.

• 51:35David Friedberg?

  Oh, no. There's, there's a big push. Yeah.

• 51:36Jason Calacanis?

  No way. I don't think.

• 51:38David Sacks?

  There's a big push, but they haven't said yet. So this is going to be part of the second bill, which they're talking about doing, I think in October. So, you know, watch out.

• 51:45Jason Calacanis?

  Okay. Wait a second. If they go, if they, if the capital gains happens, then the whole idea of being a capital allocator, it's going to change everything, won't it?

• 51:53Chamath Palihapitiya?

  I think it's a bigger issue than that. It has less to do with that, but you have $30 trillion sitting in 401ks and IRAs. And the idea that you'll tax all of those gains in a differentiated way, I think is going to be a very complicated proposition.

• 52:07David Friedberg?

  Well, those aren't taxed.

• 52:08Chamath Palihapitiya?

  Well, they're taxed on the way out, right? You still pay something.

• 52:11David Friedberg?

  Not if you hold them until you're 55.

• 52:13Chamath Palihapitiya?

  But I mean, whatever, you're going to live to 110. So.

• 52:15David Sacks?

  So yeah, Axios actually had a story just today that the infrastructure bill like does not include capital gains taxes. But the big question is what they'll do in the next bill. You know?

• 52:26Jason Calacanis?

  Yeah. And that's, and then so you combine that, let's just say the federal government decides capital gains. We don't want to invest in companies anymore. We don't want to treat stock gains the same because we want to have more equity, equality, whatever. Then you combine that with this wealth tax proposal in California, ACA8 is a resolution to propose an amendment to the Constitution of State, co-authors have proposed a wealth tax described as a 1% surcharge for amounts over 50 million and 1.5% for amounts over 1 billion. So if you're a billionaire, you're gonna have to pay 15.

• 52:59David Friedberg?

  Can I make a case to you guys? I've kind of been thinking about this, but I'd love your feedback on it. So I feel like there's a trade-off between freedom and equality. And what I mean by that is if you give a market freedom, a market of people doing things freedom, you maximize progress that that society achieves. And the United States is the best case study of this in history. In 250 years, we went from a bunch of people living on plantations or living on small farms to the largest economy in the world. And so the more freedom you provide, the more innovation there is, the more entrepreneurship

• 53:39David Friedberg?

  there is, the more of inventing new stuff there is. The problem with progress, progress takes everyone forward, but progress is always asymmetric, meaning some people end up in a greater point further ahead than a lot of other people do. Whereas like a socialist state with less freedom.

• 54:00Jason Calacanis?

  And incentives.

• 54:01David Friedberg?

  And incentives, you take everyone forward together, but you don't make as much progress. And so if you want to have freedom, you have the most amount of progress, but you have the least amount of equality over time. Even though everyone is further ahead than where they started 200 years ago, or 100 years ago, or even 10 years ago, everyone's in a better position than say they were some period of time ago, because we've all got better social security programs and whatnot. There are some people that get so much farther ahead, like Elon Musk and Jeff Bezos, and these people that you can now look to and say, this is unfair. This person's taken so much capital and I've only made a 10% increase in the last 10 years. And so as a result, in a democracy, there is always this tension between freedom and equality. And those are the two things that cycle in terms of what

• 54:46David Friedberg?

  voters vote for. We're coming into a Now where we're going to start to vote down freedom and vote up equality. And this is sort of what the wealth tax in my mind represents is this this kind of redistribution or this returning to a kind of the mean or reversion to the mean in terms of like, get everyone back on the same page. But as a result, we're going to see much less progress economically. We're going to see much less progress in terms of innovation. And other places that have more freedom and enable more innovation and infrastructure and entrepreneurship are going to be able to kind of leap ahead and have greater progress than us. That's my kind of rant and thesis, but I'd love you guys.

• 55:22David Sacks?

  I would amend your your thesis slightly to say that freedom produces prosperity.

• 55:27David Friedberg?

  Right.

• 55:28David Sacks?

  And prosperity does produce some inequality because there are always people like Elon or Jeff Bezos, whatever, who are just going to be like super producers, especially in the era of technology where you can create a machine to produce goods and services. And that machine can be thousands or millions of times as productive as the ordinary person. So they're going to build extraordinary wealth. But the but look, the the free, the the basic idea of liberal society is you have a free enterprise system where people are generally free to create their companies and their businesses. And then you have a social safety net that's paid for by the largesse of that system. And the thing about socialism is it can only make it, we talked about this last time. It can only make everyone equally poor.

• 56:12David Sacks?

  It never makes everyone equally rich. You end up killing the golden goose for everybody. And and you also end up with a lot less freedom because you end up with a gigantic state that exists to level everything and they accrue all this power for themselves.

• 56:27Chamath Palihapitiya?

  But is that actually true? Like, if you look at China, is that really what's happened in China? China's kicking everybody's ass and they're basically a socialist.

• 56:34Jason Calacanis?

  Yeah, this authority, they're authoritarian.

• 56:36David Sacks?

  Exactly, they're they're caught, they're sort of.

• 56:40Chamath Palihapitiya?

  Using using Friedberg's language, they don't have as much freedom or that freedom is granted by, you know.

• 56:46Jason Calacanis?

  Authority, a central authority.

• 56:48Chamath Palihapitiya?

  Yeah.

• 56:48Jason Calacanis?

  Which makes them authoritarian by definition, which means somebody like Jack Ma.

• 56:53David Friedberg?

  Can do amazing until he can't.

• 56:55Chamath Palihapitiya?

  But that's a perfect example. He's still doing fine. He's got 50 billion. Maybe he doesn't have

• 56:59David Friedberg?

  Right, but imagine what he could do if he could keep going. And this is a point I wanted to make, which is what if you got Elizabeth Warren or Bernie Sanders proposals enacted and Bernie Sanders gone on TV many times and said there should be no billionaires. If Jeff Bezos stopped building Amazon when he made a billion dollars because he was forced to by the government, at that point, all the future benefit of Amazon would have been lost. It's not like someone else would have been able to step in on top of that platform and build more and then the next guy steps in and makes the next billion. And I just want to remind everyone, the benefits of Amazon are extraordinary. I mean, imagine going back 20 years and being or being a kid and I can go in my friggin phone and I can say I want something and it shows up at my door the next day for very little for same day for very

• 57:42David Friedberg?

  little money. I mean, it is fucking mind blowing what Amazon has built for us, for society. It's an incredible business at the same time and we are all willing to give that business money because the benefit of what they do for us is so extraordinary. And if you had capped Jeff Bezos' wealth or capped his ability to kind of keep elongating what that business could do at some point, it would have been an absolute travesty. And I would argue that even though Jack Ma is doing fine, there are people in China who are limited in terms of what they can do because of the way that that government limits freedom and limits flexibility. And so to me, I'm observing this tension between freedom and equality where equality is becoming such a sticking point for people now that it is far more important than freedom. And as a result, we are going to start

• 58:25David Friedberg?

  to see these little things creeping in like a wealth tax or a limit on billionaires or all this sort of stuff that ultimately limits the ability for people to kind of push their businesses and elongate progress. And if you looked at the great scientific and technical discoveries of the last 30 years, so many of them came from the United States because of this this freedom, not from China. And China's certainly done fine, but They're a great photocopy machine and they're great at saying, hey, here's some slave labor. The innovation has been here. The innovation has been in the United States.

• 58:53David Sacks?

  Yeah. China observed what was working in the US and they realized that they should adopt markets because markets create prosperity, they create goods, they create services, they create, you know, wealth for their people. So they've embraced markets and then meanwhile, we're moving away from markets or we have such skepticism of markets. You've got this sort of extreme socialist sort of Bernie wing of the, of the party that is kind of moving away from markets. It's bizarre. You know, it's just.

• 59:21Jason Calacanis?

  And then you're just, look at the free market in the Amazon example. They demanded a $15 minimum wage. They got the $15 minimum wage and now they're still attacking Amazon and Jeff Bezos. And so it's never going to be enough for them. They want to see him get rid of all of his money.

• 59:38Chamath Palihapitiya?

  No, no, no, that's right. I think, I think that you're saying something else, Jason, which is really important. I think people, you have to think about the generation of kids that have been raised by boomers and, and that'll explain the psychology of why they think that way. You know, we had all kinds of failure modes growing up, you know, we, meaning, you know, I'm in my mid 40s. If you think of our generation and older, right? We all had failure modes. You wouldn't get into the schools you wanted. You, you know, basically had a lot more freedom where, you know, after school, you were latchkey kid, you know, you would have just all kinds of like very nominal ways of growing up. You didn't necessarily get to play on the school team if you didn't make it, you know,

• 1:00:21Chamath Palihapitiya?

  and those boundary conditions create these great stories like the Michael Jordans of the world. And then you fast forward to how boomers felt, and I think that boomers felt an enormous amount of guilt about their stresses on the system. And what did they do to millennials and Gen Z? You got, they got everything they wanted. It was kindergarten soccer. Everybody gets a gold star. And now you have an entire generation of people that quite honestly are like wondering like they actually have been raised in a quasi socialist setting. You know, if you go, if you go to school, there is no free speech. If you do a project and you know, your grades aren't good, you can get a redo. Everything's a redo. Everything's a retrade. Everything's a, we're going to manage to the middle.

• 1:01:00Jason Calacanis?

  You can't lose.

• 1:01:01Chamath Palihapitiya?

  And you can't lose. And in that not losing, I think people have forgot what it feels like to actually win and that humans are actually in many ways. Like Darwin's perfect example of winning, you know, like why us and not other strain of chimpanzee? Because we need, we wanted to win more than anybody else, as it turned out. And that's lost. We've lost that script. And so I think part of it is you have an entire generation of people who, whatever you do, it's not enough. It's because they were raised in a society where they never had to actually learn what functional winning and losing felt like. And or, or it's been deeply minimized.

• 1:01:39Jason Calacanis?

  Said another way that we've gotten soft and we're about to get our asses kicked by China if we don't start to realize that a vibrant competition of ideas and products and services is what wins.

• 1:01:51Chamath Palihapitiya?

  I think we have a more dangerous thing than that, Jason. It's not that that's gone. I think it's actually more this selective idea. So for example, like if you were a fashion designer, creating clothes on Shopify or Fashion Nova, you're allowed to compete and win. But if you build a technology that aggregates resources and that has these crazy gross margins and profit margins, you're not allowed to win. So we've actually gotten into this very contorted period where we want to choose how to define what winning feels like to us. And I think that's where it's dangerous because that's a very subjective thing and it ebbs and flows.

• 1:02:30David Sacks?

  Can we go back to the wealth tax for a second? Because I think this is like monumentally.

• 1:02:34Jason Calacanis?

  Yeah, hold on. Let me just finish the statistics on it. They claim there are 169 billionaires in California. So this wouldn't impact a lot of people and they estimate the wealth tax would generate over 22 billion. We've already seen Elon and.

• 1:02:46David Sacks?

  It won't. It won't. That's a static analysis. That's such a stupid analysis because it's completely.

• 1:02:52Jason Calacanis?

  Well, Keith Reboi left. Elon.

• 1:02:55David Sacks?

  They're all gonna leave. They're all gonna leave. Look, I've talked to a lot of people. I've talked to a lot of people about the, the wealth tax who would be subject to it. Okay. Every single one tells me the same thing, which is if California passes this, this is a red line for me. I'll leave the state. Every single one. So.

• 1:03:10Jason Calacanis?

  I've heard the exact same thing.

• 1:03:12David Sacks?

  Yes. You're not going to raise 22 billion from this. You're going to raise, it's actually going to lead to a decrease in tax revenue because so many of these people are going to leave the state and they're going to take investment with them, their businesses with them, their job creation with them. It's gonna actually.

• 1:03:26David Friedberg?

  More than half the tax revenue in the, in the state of California.

• 1:03:28David Sacks?

  Right.

• 1:03:29David Friedberg?

  From the, what is it? The top 1% is that the statistic?

• 1:03:31David Sacks?

  It will kill the California economy. Now here's the crazy thing about it, probably the most crazy part of that whole wealth tax proposal. And by the way, even if you support a wealth tax at the federal level, it's stupid for California to do it on its own, because it's very easy for you to leave California. You just move some other part of the United States. Much, much harder to leave the United States. So the idea that like California can just do this on its own is like the height of stupidity by these, by these legislators. So the stupidest part of the whole bill is that there's a 10 year look forward, which basically says that if you spend any time in California, we're going to try and tax your wealth for the next 10 years. So that means that for all of us thinking about this concept, if we think this wealth tax might pass in the next

• 1:04:14David Sacks?

  10 years, we might need to leave the state now. We might need to get ahead of the curve. And I'm hearing people now debating whether they should leave the state because they think it's inevitable that something like this passes. And the sooner they sever their nexus with California, the less likely they are to be roped into it. So just the mere fact they're proposing this bill, I don't think they're going to get the votes in this legislature. There's six Democrats have already come out against it. So I don't think it's going to pass this year or next year. But the fact that they're even putting it on the table is making a lot of people second guess whether California is the place they want to create their businesses. And what we really need is for the governor Gavin Newsom to come out right now and say, listen, like, this is a bad idea. I will veto it.

• 1:04:57David Sacks?

  I will not, you know, support this if I'm governor for the next, you know, five, six years. And his mere failure to come out and say what he really thinks about this is hurting the state, because a lot of people are already contemplating, do I need to leave now?

• 1:05:13David Friedberg?

  Sax, let me ask a philosophical question. Do you think that this kind of speaks to a broad challenge with democracy, as I kind of tried to point out earlier, which is at some point, the majority can take things away from the minority by just passing a law by voting. And when you make that vote, the majority of people aren't affected. Therefore, they'll say, sure, let me, I mean, I know that, you know, you, you have more background in this than the rest of us. But like, what is the political science principle here on how democracy? Kind of protects itself from having the majority eat the minority when the minority, you know, in this particular case, funds the state's budget, right?

• 1:05:50David Sacks?

  Right. Well, there's a famous

• 1:05:52David Friedberg?

  And the voter doesn't see that. Yeah.

• 1:05:53David Sacks?

  There's a famous line in political philosophy that democracy is not two wolves and a sheep voting on what they're going to have for dinner. Okay, that there's a concept, there's a concept in addition to democracy of rights, you know, that you have rights that the government can't just take away. And so part of the American founding wasn't just sort of the majoritarian machinery of government. It was a preoccupation with the rights of individuals and minorities to be protected against what majorities would do. That's why we have the Bill of Rights. So, yeah, I mean, there have to be rights of individuals that are protectable on some level. And I think it's a real constitutional issue, whether the wealth tax is even allowed.

• 1:06:37Chamath Palihapitiya?

  Well, that's I think where it's going to get fought and lost because the clever orator in the Supreme Court will say, if this, what comes next? Is it, are we going to go back and saying, you know, all of a sudden, the majority doesn't like certain kinds of other kinds of minorities? The word is a lot.

• 1:06:55David Friedberg?

  You can't have a certain kind of car or house.

• 1:06:57Chamath Palihapitiya?

  You can't have a certain car. Oh, wait, I actually don't like the tone of the color of your skin. Oh, wait, religious minorities. All of a sudden, we're back to the 1940s. And I just don't think this is going to pass because it's not justifiable. At the federal level, I do think that you can just basically jack up taxation and do a bunch of other things that that make it more fair. I'll be honest with you guys. I'm a little torn on this topic and I'll tell you why. On the one hand, if I had to pay one and a half percent a year, I'm like, okay, what is the marginal utility of that money for me? It's basically zero. So it's not as if I would feel that change of 1.5%. The thing that would upset me more is not having to pay the 1.5%, but then to see it wasted.

• 1:07:41Chamath Palihapitiya?

  That would drive me crazy because then I would think, you know, I could have bought potable water for, you know, a native Indian tribe in California. I mean, actually, here's a perfect example. I just found this out today. You guys would be shocked. There is an incredible shortage of clean water in the Central Valley. There are places today where you're and my fellow compatriots of California live, where they have to buy these huge $12 Arrowhead jugs of water because the water is completely poisoned. And when I heard that yesterday, I thought, in California, in the United States of America? And then he said to me, Chamath, you can give for two and a half million bucks, you can basically get 5,000 people clean water through this thing that he's working on.

• 1:08:25Chamath Palihapitiya?

  So for me, the thing that would be upsetting is not paying the 1.5%. It would see, it would be seeing nothing get solved from it. And then, and then what it would really prove is what I said earlier, which is it's just a bunch of belly aching from folks that actually just don't know how to actually seek success.

• 1:08:45David Friedberg?

  The good thing, Chamath, is that you can run for the governor of the state of California and fix that fucking problem. We should build a website. Yeah, that is the benefit of democracy is, you know, you can kind of run and you can step in and you can help solve these problems at the government level. We could start a podcast and try to use our influence or we could donate to things.

• 1:09:02Chamath Palihapitiya?

  Guys, I'll say something else. I also think that these kinds of bills are actually a shot across the bow to a handful of people that are not playing by the rules anymore. We're not toeing the line and standing in line and saying, I'm clearly demarcating myself as a Democrat. I'm clearly demarcating myself as a Republican. I'll play nice. Because think of what's really happened in, in COVID. You've had a massive explosion in D to C distribution. Right. Think of the platform that we've created out of nothing. Think of the platform that Elon Musk has out of nothing. And if you, if you take that writ large, it's extremely disruptive to people who is all about controlling the message which allows them to control power. And I think that a lot of these rules are these ways of almost like counter punching

• 1:09:46Chamath Palihapitiya?

  against it, but they're ineffective. I, what I would encourage all of us to do is actually become completely zen and instead continue to aggregate distribution power, because that will replace the one and a half percent tax that you have to pay. Because if you can talk to people directly and tell them your version of the truth and allow them to underwrite their version of the truth against what you said, that is modern power. And that's worth a lot more than the money that you'll pay.

• 1:10:12David Friedberg?

  Now, would you give that same power to Donald Trump? Because he's been cut out.

• 1:10:16Chamath Palihapitiya?

  Um, I think you have to in that model.

• 1:10:20Jason Calacanis?

  All right, everybody. Uh, we'll be taking next week off because it's spring break and you can take the week off as well. Anybody have any plugs or things they want to promote?

• 1:10:29David Sacks?

  Why are we taking the week off?

• 1:10:31Jason Calacanis?

  Because I don't want to take the week off. I'm fine with doing it. I think some people are going to be on vacation in there.

• 1:10:36David Friedberg?

  Someone's going to be somewhere really nice amongst us.

• 1:10:38David Sacks?

  Can't you call in? Chamath?

• 1:10:40Jason Calacanis?

  I don't know if the place Chamath is going to be has internet access. We'll send you a Starlink. We'll get Elon to send you a Starlink.

• 1:10:48David Sacks?

  All of my undisclosed locations have internet access.

• 1:10:51David Friedberg?

  For those of you who don't know, Chamath has rented the pyramids in Giza and he will be staying inside of them.

• 1:10:55Jason Calacanis?

  And he'll be dismantling them and NFTing them and turning them to dust.

• 1:11:01Chamath Palihapitiya?

  I will be getting wrapped as, yeah, exactly.

• 1:11:03David Friedberg?

  As a mummy in King Tut's tomb. He has robotic waiters serving him the whole time he's there. He's living out of sci-fi fantasy next week. So enjoy.

• 1:11:09Jason Calacanis?

  Well, you know what? I did tweet that we're going to do a live show after everybody gets vaccinated. We've been doing over three million a day here in California, starting tomorrow, April 1st.

• 1:11:19David Friedberg?

  Live poker.

• 1:11:21Jason Calacanis?

  Live poker can occur, but we are going to be hosting, I think Chamath and I, New York City. Saks is partial to Miami because it's El Fuego. Is that right?

• 1:11:33David Sacks?

  Am I?

• 1:11:34Jason Calacanis?

  I don't know. Are you? But Jason, can we just, can we just agree then, let's do this, guys? Let's do May, we'll do it, uh, uh, some, somewhere in New York City. And then June, we can do Miami. How about that?

• 1:11:48David Sacks?

  Well, June, it's gonna be too hot. I would, I would flip that. And I would, because, because it's gonna be too hot and maybe better. But also, I'll tell you the other reason.

• 1:11:56Jason Calacanis?

  Two city tour.

• 1:11:57David Sacks?

  Well, we could do both, but I also think that we should do Miami first because they're not afraid to come out to an audience. I think that people in New York and California still have, they have more PTSD.

• 1:12:07Jason Calacanis?

  We need to go where people are the most reckless. I agree. Let's go where people have absolutely, totally gone YOLO. I mean, the, just to close on this, Friedberg, as the, you know, man of science here on the, on the pod, at this point, these vaccines have been proven to not only keep you from dying, keeping you out of the ICU, we now found out this past week, correct, that you're not gonna carry it and infect other people in all likelihood.

• 1:12:34David Friedberg?

  Very true. And another interesting.

• 1:12:37Jason Calacanis?

  Sorry, sorry, sorry. Wait, what happened?

• 1:12:38David Friedberg?

  Yeah. And, and another interesting, um, point was made this week by a paper that was published showing that you have effectively 80% efficacy from your first, um, shot, uh, about, uh, two to three weeks after your first shot. And then you go to 90% after your second shot. Um, and then there's another paper that showed you're actually better off waiting, um, over three months for your second shot, not getting it three weeks later.

• 1:13:01Jason Calacanis?

  You were right. You said we should do one shot and then come back to the second.

• 1:13:06David Friedberg?

  And so there's now, there's now very good data that shows that that would have been a better move because we would have had double the throughput in terms of how many people we could have gotten shot in arms if we had done that. So everyone effectively gets 80, 90% protected or 80% protected after the first shot. And then it's better to wait three months. And so we could have done the back half of the year where everyone gets their kind of booster, second shot, and the front half of the year, give the whole United States a first shot, but.

• 1:13:29Jason Calacanis?

  David, David, what's the, where's the article that says you don't carry it if you've gotten the vaccine? I need to know that because that's like the thing that's always in the back of my mind.

• 1:13:36David Friedberg?

  Yeah.

• 1:13:36David Sacks?

  No, I tweeted it. I tweeted it.

• 1:13:39David Friedberg?

  I think Zach put it out too.

• 1:13:40David Sacks?

  I don't, I don't follow you on Twitter.

• 1:13:42Jason Calacanis?

  Experts, experts say it appears. I'm reading.

• 1:13:46Chamath Palihapitiya?

  I ratioed him, I ratioed him.

• 1:13:50David Sacks?

  I see you, I see you retweeting some of my ideas. You usually don't attribute them.

• 1:13:55Chamath Palihapitiya?

  Okay, because I'm your friend and I fucking love you.

• 1:13:56David Sacks?

  No, you usually, you usually.

• 1:13:58Jason Calacanis?

  You will say it back someday.

• 1:13:59Chamath Palihapitiya?

  You will say it back at some point. I don't know what I have to do for you.

• 1:14:02Jason Calacanis?

  Yeah.

• 1:14:03Chamath Palihapitiya?

  I mean, I mark, I mark up your deals. You know, I take care of your family. I mean, I'm there for you.

• 1:14:08Jason Calacanis?

  You did mark up that pipe deal. That pipe deal's gone supernova with that Chamath pixie dust on top of it. Experts say it appears COVID-19 vaccines can help reduce the transmission of the new coronavirus from person to person. They say this is accomplished by reducing the viral load in a vaccinated person's nose.

• 1:14:24David Friedberg?

  Besides the statistics on this, um, you know, there is no documented proof that someone was fully vaccinated and transmitted COVID to someone else. Um, out of 400 million total vaccinations globally. So there's a, you know, also like a really strong kind of point to make, which is show me the evidence that it can. Cause you know, everything about biology and you know, science would, would indicate, you know, in terms of how this would work. There's no reason the virus should be spreading and that you suddenly become infectious and contagious with a virus that you can't be infected with.

• 1:14:52David Sacks?

  This was like the most obvious study ever that, look, if you get the vaccine, it prevents you from getting sick. You're also not going to transmit it to other people. But let me ask a question. Why is it that every time a politician says that the experts required it, it's always the stupidest position? You know, because the experts on this show, we had Friedberg saying this stuff. We had Bob, Bob Walker from UCSF. Who, you know, runs UCSF saying that, you know, we should have just done the first dose first. Get everyone through on one dose and then come back and do the second dose. Of course, like no one in the federal government, a position of authority took that position. Fauci didn't take that position. And then we had Fauci on top of it saying that we might have to wear masks until 2022.

• 1:15:37David Sacks?

  But you know, because because because of this like asymptomatic, because you could be vaccinated and still spread it, which has now been totally disproven. So why is it that whenever somebody says we have to listen to the experts, they're always listening to the stupidest experts?

• 1:15:50Chamath Palihapitiya?

  Because David, David, we are in a culture where independent thought is not valued, where it is better to abdicate and look to an expert to tell you what to do now. That is, again, I go back to, we are in a cultural malaise of not wanting to make our own decisions.

• 1:16:07Jason Calacanis?

  I've been working on my Dr. Fauci sax. Mr. Sax, that's correct. Asymptomatic patients may in fact infect other people, but we don't know yet. So it's best to wear a mask, if not two masks, and to have proper distancing.

• 1:16:23David Friedberg?

  By the way, Chamath, the point you just made, I think is really important because I think it also reflects what I said earlier about economic inequality and economic progress. When you have greater economic freedom, you have greater economic progress, and then you will inevitably have economic inequality. The same is true with ideas. So when you give people the opportunity to have the greatest freedom in terms of sharing and expressing their ideas, you have the greatest progress, but you also end up with this issue where people have vastly different ideas and inequality arises. And right now, we're in a mode of cancel culture, and we're in a mode of telling people that they can't say certain things, and they have to be very careful about, you know, what they're saying and what context, and it limits this ability for people to feel free to express themselves, share their

• 1:17:07David Friedberg?

  ideas, and push the boundary and push the envelope and find the truth and find the best outcome. And so I do think that we're in this kind of rationalization kind of stage of our democracy where we're reducing our kind of degrees of freedom, and it's playing out in terms of the ideas forum and the economic forum. And it just feels very resonant to me that both are very, very linked right now.

• 1:17:26David Sacks?

  Can I try to answer my own question, actually?

• 1:17:29Jason Calacanis?

  Yeah, she never stopped you before.

• 1:17:32David Sacks?

  Here's what I just realized. Okay, listen, if you're gonna make an argument that fundamentally makes sense, you don't need to tell people, oh, go follow the science. You don't need to appeal to some external authority. You can just lay out your argument and it makes sense. When do you need to say to everybody, listen, you need to shut down your own brainies, to shut down your own logical thought process and just follow what that person over there says? The people who need to make that argument are the people who are making arguments that don't make any sense. I mean, this idea of wearing a mask after you've already been vaccinated never made any sense. This idea of locking down the whole economy instead of isolating the at-risk people for a whole year, it doesn't make sense.

• 1:18:12Chamath Palihapitiya?

  It's been done, David, it's been done by the left and it's been done by the right in equal measure. Whenever you have an opportunity to grab power, people will abstract and then they will aggregate and pull it in and they will make decisions for people by pointing to these abstract ideas. It has happened forever. This is not a new thing. It's just that now with social media, you can distribute this power grab more efficiently than before and then you can see it for what it is because you can debunk it. And that's the thing that's happened. That's why there's more anger around it because you can debunk all this nonsense. You can actually say, well, what's the data say? And but most people don't want to do that. It's easier to abdicate responsibility.

• 1:18:53Jason Calacanis?

  All right, we want to thank Dr. Fauci, our great guest today. You want to maintain social distancing. Don't think for yourself. The CDC has been very clear. The Chinese report from the WHO approved by Xi Jinping says it did not come from a weapons laboratory. We take Xi Jinping at his word.

• 1:19:11Chamath Palihapitiya?

  You know what you are? You're not even Fauci. You're that person. What's your name? The great actress, the comedian from SNL? She's got blonde hair.

• 1:19:18David Sacks?

  Oh, yeah. Katie McKinnon or something?

• 1:19:21Chamath Palihapitiya?

  Yeah, Kate McKinnon doing Fauci. That's what you are. You're like a babushka. You're like a babushka doll.

• 1:19:27Jason Calacanis?

  I just love that they have Ted Cruz being done by that other woman. It's like every time they want to troll the Republicans, they take.

• 1:19:35Chamath Palihapitiya?

  Okay, guys, Friedberg, Friedberg had to go. He's meeting, he's meeting [BLEEP] and a friend.

• 1:19:39Jason Calacanis?

  Oh, what are you meeting? Oh, be careful. Oh, it got dirty. He got ugly. Take that last part out, Nick. Beep, beep the last part out. That he's having dinner with beep and beep. All right, we'll see everybody.

• 1:19:57Chamath Palihapitiya?

  Love you, guys.

• 1:20:02Speaker 04

  Rain Man Div it's out.

• 1:20:06Speaker 04

  And it said, "We open sourced it to the fans and they've just gone crazy with it." Love you, S. I'm the queen of Kinoah.

• 1:20:19Speaker 04

  Besties are back. That is my dog taking a notice in your driveway. Oh, man.

• 1:20:29Chamath Palihapitiya?

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

• 1:20:37Speaker 04

  What, you're the bee? What, you're a bee? Bee? What? We need to get merch. Besties are back.