E97: SPAC updates, public/private market overview, Putin's end game & more

0:00 Bestie intros! 1:03 SPAC updates, state of the public/private markets 20:26 US VCs have $290B in dry powder and raised a record amount in H1 2022, is the market nearing a bottom? 31:14 Risks of backing Putin into a corner, Russia's end game, conditions for conflict 50:45 Government-heavy climate plans, Dilbert/ESG backlash 1:01:20 Poker plans, chess cheating scandal Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://youtu.be/AODfsBMGzGQ https://twitter.com/chamath/status/1461453308623659010 https://marketbrief.edweek.org/marketplace-k-12/byjus-releases-delayed-audit-report-showing-large-losses-2021 https://pitchbook.com/news/reports/q2-2022-pitchbook-nvca-venture-monitor https://techcrunch.com/2022/05/10/tiger-global-hit-by-17b-hedge-fund-losses-has-nearly-depleted-its-latest-vc-fund https://www.nytimes.com/2022/09/10/world/europe/russia-ukraine-retreat-putin.html https://warfarehistorynetwork.com/douglas-macarthur-atomic-bombs-will-win-the-korean-war/ https://www.nytimes.com/2022/09/10/world/europe/russia-ukraine-retreat-putin.html https://sites.tufts.edu/css/mip-research/#:~:text=According%20to%20our%20data%2C%20the,these%20missions%20occurred%20after%201999 https://www.brown.edu/news/2021-09-01/costsofwar https://www.wsj.com/articles/gavin-newsoms-2024-climate-platform-california-40-climate-bills-energy-electricity-blackouts-11663702766 https://twitter.com/UncommonYield/status/1572743593508638722 https://twitter.com/Jason/status/1572399621389062145

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

• 0:00David Friedberg?

  I'm in a very Daniel Plainview mood this week. The, there will be

• 0:03Jason Calacanis?

  I have a competition in me. I don't want to see other people succeed.

• 0:07David Friedberg?

  That's right. Best scene ever.

• 0:08Jason Calacanis?

  You are the furthest from that character. Like, that is not your spirit animal.

• 0:13Chamath Palihapitiya?

  Oh, there will be blood? That guy, Daniel Day-Lewis?

• 0:15Jason Calacanis?

  He has nothing to do with you.

• 0:17David Friedberg?

  I've watched it about a hundred times. Incredible.

• 0:19Chamath Palihapitiya?

  You must be so stormy and roiled on the inside.

• 0:24David Friedberg?

  Oh my gosh, I mean like, did you not see my roast at Sax's birthday?

• 0:28Jason Calacanis?

  It's just a roast.

• 0:28Chamath Palihapitiya?

  Did I not see it? I lived it. It was the most off-color, disgusting, egregious, mean diatribe I've ever heard.

• 0:37Jason Calacanis?

  My lord, I have a competition in me. I don't like to see others succeed. I can't stand that J. Cal is a good moderator.

• 1:03Jason Calacanis?

  I guess everybody wants to know, Chamath, you've wound down two SPACs.

• 1:08Jason Calacanis?

  Thank you for doing this for IPOF specifically because people are replying to me every day, asking, what are you going to SPAC? But IPO, D, and F, the money has been returned to investors.

• 1:20Chamath Palihapitiya?

  No, it's going to be returned.

• 1:22Jason Calacanis?

  Going to be returned to investors, thank you. And Bill Ackman, of course, he wound down his SPAC, returning $4 billion. There's over 500 SPACs out there looking for deals. Tell us why this decision?

• 1:34Chamath Palihapitiya?

  Well, I've raised 10 SPACs, six in technology and four in biotechnology. And I've done six deals, two in tech and two in biotech.

• 1:44David Friedberg?

  Four in tech.

• 1:45Chamath Palihapitiya?

  Sorry, four in tech, four in tech, thank you, and two in biotech. So, the reason to shut it down is pretty straightforward. It's like, you know, when we launched these things, the stock market was in a much different place than it is today. And so, over the last two years, looking at deals, it's gotten harder and harder to find a good risk reward. Now, why is that? Well, the thing with the SPAC is you do a deal today, but it doesn't usually close for six or seven months in the future. And so, you have to do a deal where you have a really good sense that in six or seven months, when the deal comes to close, that the price will be the same or even higher than what it is today.

• 2:29Chamath Palihapitiya?

  And if it isn't, all of the investors that you've brought along in the SPAC have a right to redeem, which is to say they file a notice that says, "You can complete the deal, but I want my money back." And what they get back is the initial $10 that they used to buy the stock in the first place. Because when we started the SPAC, we sold stock at $10. And so from my perspective, I was looking at this and I'm like, you know, this is a super volatile, ugly point in the market. This last year has been really problematic. And I kind of said this last November, and Nick, we can play the clip after and we can come back to it. But basically, my decision was that at this point, to do a deal would probably, you know, put a lot of capital at risk.

• 3:13Chamath Palihapitiya?

  And in all of these deals, I'm typically investing $100 million at least in each of them. And so I couldn't justify that. I couldn't see a good risk reward. And I thought the right thing to do, the responsible thing to do, was just to wind these things down. You know, I'll lose, I don't know, 10, 15, 20 million bucks for having set these things up. But we gave everybody their money back, that $10. And I think that's actually better over the next five or six months than what it'll otherwise do if you're invested in the market. Now, that's a belief that I have. But hopefully, when people get the $10 back in the next few weeks, if they want, they can go and put that money back in the market. And hopefully, they'll do well. But you know, from my perspective, the risk reward was not good.

• 3:53Jason Calacanis?

  Is part of the issue the inventory that's available of great companies as well? That's one of the things I heard speculated on CNBC. It's hard to convince a private company to go public.

• 4:02Chamath Palihapitiya?

  Here's my experience. You know, when I was talking to all of these CEOs of these Silicon Valley companies, initially, there was a lot of misunderstanding about what SPACs were. And I think we were able to dispel that because we had some really successful transactions. Then there was a lot of interest in being a part of it. In this phase, we were suffering from two very important things. One was that valuations were just completely up in the air. People had a huge question mark on late-stage valuations because we would come in, we would do the work, and we would say the company is worth X. And that number typically was 50 or 60% lower than their last private valuation. And so when it came time for us to negotiate, you know, doing the deal,

• 4:47Chamath Palihapitiya?

  even if the founder was roughly on board, the rest of the board was not. Because a lot of them would have seen some pretty meaningful markdowns in their private assets. And when the company had enough money to kind of like, you know, at least stay private for another year or so without having to raise money, on balance, those investors felt it was more prudent for them to not take the mark and to not take the deal at such a lower discount. So that was a big issue that we ran into because every time we would price a deal, again, we're trying to create a margin of safety for us and our investors. Again, because it's going to take six to nine months to close a deal. And so ideally you want this thing- So a lot of valuation indigestion. And then, sorry, the second thing was just volatility.

• 5:31Chamath Palihapitiya?

  So when you see volatility in the public markets, you know, for a CEO, and I can understand this, it's much easier to go public in a point where the markets are generally going in one direction because it gives them the confidence to be able to learn the ropes because it is a complicated process being public. And when you introduce tremendous market-based volatility, independent of your company, I think a lot of CEOs and CFOs and IR people were a little nervous. You want to take the risk. And that was the second piece. But by and away, the first one was valuation. We could not find market-clearing prices- Makes sense. -for assets. And by the way, and I'll talk about one company in specific, which just this week had a pretty public blow up around this whole issue.

• 6:16Chamath Palihapitiya?

  And look, I've been pretty clear about this since November. The marginal trade should have been to be trimming risk. And Nick, maybe you can play the clip because I really want to make sure that it's very clear and on the record what I said almost an entire year ago. Let me put crypto in the context of the markets and where we are today at the end of the week after, you know, Q3 earnings in November of 2021. We have the stock market at absolute all-time highs. Ripping. We have crypto at absolute all-time highs. Ripping. We have the art markets, I don't know if you guys saw Phillips and Christie's and Sotheby's this past week, at absolute all-time highs. Sold another vehicle for 25 million.

• 6:56Chamath Palihapitiya?

  We have inflation at a 30-year high. We have 10-year breakevens at a 25-year high. We have, you know, 1.8 trillion dollars that we just approved last weekend. We're still horse trading on another 3, you know, 1.8 trillion dollars of stimulus that we're going to put in. And I think the most important thing, which is the two most important founders of our generation, the two smartest people who have really consistently won, Elon Musk and Jeff Bezos, have collectively sold more than 11 billion dollars of their holdings this year alone. And if you can't take all of that and decide for yourself what's right for you and your family, you're doing yourself a disservice. I think it's important for me

• 7:38Chamath Palihapitiya?

  to never sort of like, you know, be forced to tell folks whether I'm buying or selling, although I'm willing to do it in moments where I think it's important. But I think it's really important to understand the context. And so I think like these folks that like think derisively about individuals who are managing risk, I think it's really naive. And I think it creates a lot of missed opportunity for them as well. If the smartest people in the world are now selling their core holdings that they told you they would never sell, and you are not reconsidering your position on things, you're either much smarter than them, or you're being really, really reckless. The reason I said all of those things...

• 8:23Chamath Palihapitiya?

  Was because I was getting really worried about where we were. And then, and then I think on the heels of that, I published a tweet and I, and I said, I'm starting to sell. You know, and I sold like a hundred million dollars of SoFi, but then I was a systematic seller through the end of last year and through this year. To try to manage my own liquidity because it changed profoundly as I saw what was happening in the markets. So, you know, I think that it's just an important thing to call out that things don't always go up. And you have to pay attention to a mosaic of information. And you have to do the work yourself because, you know, your situation is unique to you. Nobody else understands it.

• 9:06Chamath Palihapitiya?

  And so you can't outsource that decision to somebody else. Obviously you can use it as a guide. You know, it's fair to say, you know, when the 13 F's of important hedge funds come out, do I read them? Of course, because I'm trying to figure out, you know, what don't I know? What may I be missing? Maybe there's a great company in there that I, that I should be taking a look at. So, you know, I'm not dissimilar to everybody else in that I use other people that I look up to or respect as a leading indicator of what to buy. But I still take responsibility for my own decisions and I manage my liquidity as best as I can based on my conditions and those are always changing. And so I think this is just a good reminder that everybody else has to do the same.

• 9:45David Friedberg?

  So Chamath, what do you think happens to the remaining 500? Every SPAC sponsor friend of mine that I know is not seeking targets anymore. They're all expecting to wind up and return capital. How many of the 500 do you think will actually find a target? And how many do you think of remaining SPACs? How many of them will wind up and return capital?

• 10:04Chamath Palihapitiya?

  I mean, I, I think that there's still some really good deals to do. They're not necessarily in tech per se. So, you know, I think you did a really great deal in ag tech. I think that that's, that's really interesting. So time will tell how that does. I think there's some really interesting deals in energy. In fact, we spent a lot of time actually pivoting and spending time in energy, looking at, you know, everything from, you know, producers of nat gas and oil to, you know, folks that were building terminals to LNG facilities and the... But it's just a very different return profile than what we were used to. So I think if you can understand some of these other markets and you can underwrite to a different rate of return. Some decent deals will get done.

• 10:47Chamath Palihapitiya?

  The overwhelming majority of the tech SPACs, I think, probably will just wind up. Some folks will be really focused on trying to monetize their founder promote. So they'll do any kind of deal. The problem, as you see, is even whether you do a good deal or a bad deal, with the kind of volatility we're seeing in the market, the likelihood is that it's going to trade down pretty significantly. So I think most will not find a home. I think some will find some really interesting targets. In areas like energy, I think are really interesting. Agriculture, like what you did, Friedberg, I think is a really interesting deal. And then, you know what? It'll be an opportunity for us to retool the SPAC. I don't think it's going to go away.

• 11:32Chamath Palihapitiya?

  I think that it is a useful tool in a toolbox of many tools. So there's IPOs, there's direct listings, there's SPACs, there's obviously private fundraising, there's convertible, there's structured deals. So it is a tool. And I think when used properly, it can be really helpful. You know, for the companies that we worked with, it would have been impossible for them to raise the quantums of capital that they did. Primary capital from sophisticated hedge funds and mutual funds. You know, we raised billions and billions of dollars for companies like SoFi and Open Door. And I think that that's going to go a long way for them to achieve their goals. So I think it's going to be a good tool, but we're going to go through a washout of most of these folks who are not going to be able to successfully find targets.

• 12:17Jason Calacanis?

  Sacks, when we look at private companies, especially the late-stage ones, you and I are involved in a number of them. They're doing RIFs, they've got headwinds, and their valuations are underwater in many cases. How are they thinking about the public market windows? SPACs, direct listings, or just a traditional IPO?

• 12:34David Sacks?

  I don't know if they are thinking about it. I just think, I think like going public seems like a fantasy at this point. I think the whole public markets exit idea is frozen for two years.

• 12:45Jason Calacanis?

  Two years?

• 12:45David Sacks?

  I think that's, yeah, I think that's probably what people are thinking.

• 12:48Jason Calacanis?

  What are these late-stage companies that raised mega rounds doing to work out valuation issues? Because as Chamath just pointed out with SPACs, one of the problems was clearing market, the late-stage investors who came in, maybe they, you know, don't want to accept the haircut in valuation, even if they have productive.

• 13:05David Sacks?

  Probably not enough. I mean, what they're doing is using their war chest to grow into their valuations, which is the smart strategy. And if they're really smart, they'll be slashing their burn while they do that. But yeah, it's no different than what we've talked about before. I think that the main significance of this past week is that you had the Fed meeting, it raised another 75 basis points. There's no surprise to that. That was predicted. What was new was the forecast. They're now saying that they expect to raise another 1.5%. Just two months ago at the last meeting, they were saying 75 at this meeting plus 50 after that. Now they're saying 150 after this. So, you know, in just two months, they've

• 13:50David Sacks?

  they're now revised their forecast for an extra 100 basis points of rate increases. Why? Because inflation is worse than they thought. So, things are worse than we thought two months ago. The last inflation print didn't get better as fast as people wanted. We talked about that last week. Now the Fed is revising its forecast. The trajectory is bad and getting worse. And you finally had Powell kind of throw in the towel on his rhetoric around soft landing. I mean, first it was, well, we can raise rates and we won't have a recession. Then it was, we might have like a mild recession. Now, he's basically saying hard landing if you if you read these FOMC comments. So, I think this was a really bad

• 14:34David Sacks?

  week for the economy. And you're seeing it in the markets this week. I mean, we are retracing almost within 5% of the June lows with the growth stocks being the ones that are hardest hit.

• 14:45Jason Calacanis?

  By the way, speaking of growth stocks, have you guys been following this trials and tribulations with Baiju's, which is like the one of the largest valued private companies, but it's a private Indian ed tech company?

• 14:59Chamath Palihapitiya?

  Essentially, I think like, you know, there was this delayed audit.

• 15:03Chamath Palihapitiya?

  And Deloitte couldn't certify a bunch of things. And then finally, they were able to come up with a report that essentially showed instead of like breaking even or making money, they lost almost $600 million this year. And that a lot of the revenue that they were booking were actually loans to millions of Indian families who had basically zero probability of paying them back. So a lot of the revenue was not real as well. And this is like a who's who of investors. It's everybody from, you know, Sequoia, Tiger, UBS, BlackRock, Chan Zuckerberg. It's incredible.

• 15:36Jason Calacanis?

  I think when the tide goes out, we find out, right? And this is what's happening. The tide's out and you're going to find all the weakness in the system. It's all going to get flushed.

• 15:44Chamath Palihapitiya?

  I think this is a bit of an outlier, obviously. Like, I don't think that, you know, all these companies that are worth tens of billions of dollars are running so close to the sun. But it just goes to show you that, you know, how does

• 15:58Chamath Palihapitiya?

  how does this happen? Like, how do you not get a data room?

• 16:01Jason Calacanis?

  We saw this on the seed stage in Series A. We would ask for a data room. The person would say, you're the only investor asking for it. And you're putting in, you know, 10% of the round. These other people aren't even asking for it. We said, okay, can we still see the data room? And it turned out there wasn't one. People were just making bets. They were making blind bets. They were betting without even looking at their cards or thinking about the other people's cards in the hand.

• 16:23Chamath Palihapitiya?

  This goes back to what Friedberg was saying before, you know, I think, I think there's a, there's a sliver of the retail investor base that is not dissimilar to a sliver of the private equity and hedge fund and venture capital space, which is, these folks are not willing to do the work. I think most people are, and most people want to come to their own conclusions. But some people want to just take the easy momentum driven decision. And they typically always get punished.

• 16:48David Friedberg?

  Over time, there's this concept of adverse selection, which is that the negative actors will find them, will seek them out, and it will be a match. And so they'll ultimately get adversely selected into the deals that blow them up.

• 17:02Jason Calacanis?

  So the bad deals, what you're saying is the bad deals would find the bad investors who don't do the work, and then they spiral and crash together. That's a really brilliant observation. Yeah.

• 17:11Chamath Palihapitiya?

  Yeah, I think, I think the other, that's what I'm here for. I think the other thing is like, you have this situation where If it wasn't that, it's folks outsourcing their diligence to the person that did the round before. Totally. You know, oh, Silver Lake did it. Same problem. Tiger did it. Okay, they're, these guys are very sophisticated investors. I don't need to do the work. It turned out you did because, you know, it was a very

• 17:37Chamath Palihapitiya?

  cavalier way of recognizing revenue.

• 17:40Jason Calacanis?

  There was a specific playbook here too, that I don't know if you saw this, Sacks, in the early stage, where people would get their friends to invest in the company or some, you know, high net worth individuals. And then you look at the deal and the valuation didn't make sense. And then you say, well, we would always ask, how much money is each person putting in? And we're like, well, their normal bet size in the seed is 750 or 1.5 million. But they're putting 50K into this or 100K. What's going on here? And it was, oh, they're friends with them. They worked at a previous company together. They were in the same, they went to the same college. And so people were using social proof, but manipulating it to get some other sucker at the table to pay full price and not due diligence. Really strange behavior.

• 18:20Chamath Palihapitiya?

  I was in Singapore this week. There was a I had this great meeting with this young investor, really dynamic guy. And he was telling me about a company in Indonesia that he didn't invest in. But it turned out that the, that this founder was literally running two parallel sets of accounting systems. And so he was, you know, showing a business and fundraising from this set. But the, the real books were over here and it looked a completely different system. And it was basically like a Ponzi scheme. And, you know, he was telling me, it's like, it's like impossible to root these things out. So what he said he relies on is like, you have to have a network when you're doing these frontier country deals.

• 19:02Chamath Palihapitiya?

  Where, you know, he says, I need to find at least 10 people that know this person. So that there is sort of like a moral social proof and moral diligence that happens because that person will never try to commit something that egregious in the face of all of their friends. And so, you know, that's a mechanism of filtering this stuff out. But I thought that was a really interesting way of of designing a diligence process, at least in a frontier market. Here, I don't think you have that much time to do these really, you know, fast paced deals. And the social proof matters less because you theoretically, you know, are looking for signals of traction.

• 19:39Chamath Palihapitiya?

  But there has to be a better systematic way of getting this diligence done because these things should be pretty obvious.

• 19:44Jason Calacanis?

  Sax, did you have-

• 19:45Chamath Palihapitiya?

  Well before it's a multi-deck a billion dollar company.

• 19:48Jason Calacanis?

  Sax, last year when people were moving really fast saying they don't have time for diligence, you're going to lose the deal, yada, yada. How did you approach diligence during those peak periods? And did you have those experiences where people were trying to push you to close without talking to customers or looking at bank statements, yada, yada?

• 20:03David Sacks?

  No, we wouldn't play that game because we always run SaaS metrics. That's always the starting point for us.

• 20:07Jason Calacanis?

  Got it.

• 20:08David Sacks?

  But you know, most SaaS companies, they have SaaS metrics. I mean, they, it's so standardized that it would be such a red flag if they didn't.

• 20:15Jason Calacanis?

  Yeah.

• 20:15David Sacks?

  I think it might be companies that are, you know, have unusual business models, or maybe they would say something like that, but-

• 20:22Jason Calacanis?

  Got it.

• 20:22David Sacks?

  No, we could never do a SaaS investment without SaaS metrics.

• 20:26Jason Calacanis?

  All right, well, this is a good segue because right now, US venture capitalists are sitting on $290 billion in dry powder. We had talked about this last year, how much dry powder was there. The market has obviously collapsed, but here's a chart from our friends over at PitchBook. Just extraordinary how much has built up and how much has been raised. USVC funds raised $121 billion during the first half of this year, 2022. So LPs still have an appetite, which kind of makes sense, that investing into the down market for private companies means you're going to get better deals. And you have a 10-year horizon. USVC has raised $139 billion in all of 2021. So if you put those two numbers together, yeah, you're looking at $260 billion in the

• 21:10Jason Calacanis?

  last 18 months. And this is all record numbers being put up on the board. What does this say for private companies, Sax?

• 21:18David Sacks?

  I dispute this analysis a little bit. I think there's a couple of things going on that needs to be taken into consideration. First of all, new funds don't get announced till after the process completes, and then-

• 21:33David Sacks?

  You know, it may even be some time after that when the VC firm feels like they want to make the announcement. You can't announce a fund until the process is completely over. You get subject to all sorts of additional SEC rules. So, you know, these funds might be announced in 2022, but they may have actually been raised in 2021. So that I think is a really important point. Moreover, a lot of the funds may have already deployed capital before the crash. So there was that, I think, remarkable story that we talked about months ago in TechCrunch on how the latest Tiger Fund, which wasn't even announced till March or April of 2022, but it had already been two-thirds deployed by the time they even announced it. And so

• 22:15David Sacks?

  that was pretty stunning. So I, I think that we don't really have a great sense of how much of this so-called dry powder has already been deployed, how much of it was really raised before the crash. It is true that LP relationships with VC firms that have done well are sticky and good LPs stick with their partners during a downturn. So, look, I mean, the VC world's not going out of business or anything like that, but I would tend to think that this is an overly optimistic, overly rosy scenario. Do VCs have new funds that they're going to be ready to deploy in great companies? Yes, but does this mean it's going to be easy? No, I think that the bar has gone up, valuations have gone down. Founders looking

• 23:00David Sacks?

  at this tweet storm, I would not get lulled into a false sense of security.

• 23:05Jason Calacanis?

  Yeah, I, I agree with that. Just to explain that, there's probably a six-month lag on when these funds are announced. The reason is there's 506B and C designations. Most people raise under 506B, which means you cannot even say that you're fundraising. Therefore, PitchBook can never have that data. So there's a lag and people were deploying at a very high velocity. Therefore, this number could be off. Thirty-five percent.

• 23:28David Sacks?

  Well, if people were deploying at a pace where they thought they were going to go back for a new fund every year, which is what it was looking like in 2020, 2021, you know, if that six-month period might mean you've deployed half the fund. So, but look, if you just go back to a two-and-a-half or three-year pace of deployment, and before, in 2021, we're at a one-year pace of deployment, divide the availability of capital by two-thirds, I mean, you know, only one-third as much will be deployed in any given year, that's a, you know, significant reduction. So, yeah, I think founders should just be aware that the market's going to be a lot tighter. And I think, given what we're seeing in the public markets this week, it doesn't look to me like it's going to get any better.

• 24:11David Sacks?

  It looks to me like we're headed for, I mean, I called it a double-dip recession, I think, a couple of months ago, that's exactly what it's looking like. In fact, the Fed basically said as much. The Fed said that would be just marginally positive next quarter, so would bounce back to slightly positive growth on a real basis, but then, you know, expect it to go negative again, and, you know, recession, once all these interest rates kick in. And by the way, I mean, kudos to Chamath for basically calling that, you know, when the Fed just a couple of months ago was saying that so-called neutral would be three to three-and-a-half percent, Chamath was saying, no, it's going to be four-and-a-half, five percent plus. Now, the Fed, just in two months, has revised to saying that neutral is 4.6% or something

• 24:55David Sacks?

  like that, and, and they don't think there's going to be any rate reductions in 2023. So, this is not looking good.

• 25:03Jason Calacanis?

  How much, Chamath, of the issue here is, we don't, the data that we're seeing, the ground truth we're seeing, as you would often say, might be very different than, like, the reports that are coming out. People are talking about inflation from, you know, 60 days ago, job reports that are 30 days old, 60 days old, we don't really have live data. It seems like our government doesn't use live data when they make these decisions. Is that accurate?

• 25:29Chamath Palihapitiya?

  Well, they unfortunately don't have access to it really. You know, they are, they have empirical sampling. But to say that, you know, the, the US economy is automated in a way where, you know, they can sit in front of some dashboard and, you know, see in real time what the true on the ground data is, is, is not really accurate, unfortunately. Maybe there's a Manhattan project type, you know, effort to do that at some point for the United States, but it's not now. I'll give you a bit of bad news and a bit of good news. And this is just me kind of, you know, again, looking at the mosaic and, and kind of judging where we are today. The bad news is I think that it's going to be a really tough, sticky time for the US

• 26:14Chamath Palihapitiya?

  consumer, probably over the next 18 months. And so I tend to think that, you know, through the course of this year and through 2023 and possibly even a little bit of 24, it's going to be a grind. Unemployment will go back up. Inflation will be sticky. Real earnings will shrink. Consumption will ebb. And earnings will not be that great. But the silver lining is I think that we are starting a bottoming process for the equity markets. And I think that by the end of this year or the early part of next year, most of that

• 26:59Chamath Palihapitiya?

  will be done. And the reason is that, you know, the equity markets, I think, do a reasonable job of one, looking at the bond market and then two, looking six to nine months into the future and pricing in that future today. And so by the end of this year, beginning of next year, I think that we will have kind of bottomed and we'll start to build a base. The thing to remind us, though, is that, you know, let's just say a stock goes down twenty, fifty percent. Even if it rallies fifty percent from there, it's still twenty-five percent off from where it was.

• 27:33Jason Calacanis?

  Yeah, people don't understand that.

• 27:34Chamath Palihapitiya?

  And people don't understand that.

• 27:35Jason Calacanis?

  How hard is it to climb back up the mountain?

• 27:37Chamath Palihapitiya?

  So I would just, I would just think, you know, um, tell people that, you know, I think that David is right. I think that it's gonna, uh, we're gonna feel this for a while. Um, it's, this inflation, as I've said for a long time, is going to be sticky and persistent. I think you're gonna see Fed funds at or breaching five percent. And, uh, but I think that in terms of, you know, risk assets, will bottom out by the end of this year, beginning of next year.

• 28:06Jason Calacanis?

  Robert, what are your thoughts? You think we're in the process of bottoming out and it's gonna be a year of this kinda slog through the muck? And what signs are you looking for that maybe we're getting out of it or turning a corner?

• 28:20David Friedberg?

  I mean, Larry Summers had some good tweets this week. The weird, you know, the weird thing is Larry Summers seems to be like almost trying to make the case and make certain points because he's not being listened to. Uh, it's, it's, it's so ironic and sad to watch, uh, because he's such a thoughtful economist and has such a, a great point of view and experience that, uh, to leverage here. And clearly, you know, he was banging the drums last year and no one was listening. And then he got public about it and now he's more repeatedly public about things. The point that he's made, which I think plays into the, the political cycle question, which

• 29:02David Friedberg?

  is where the tension arises, is in order to resolve ultimately, uh, the inflation problem, you're gonna have to see a significant increment in unemployment. And, and so when you raise interest rates, uh, you know, generally purchasing goes down, demand goes down, revenue goes down, layoffs happen, uh, some businesses go bankrupt, et cetera. So then there's this trickle in the economy of, of less people being employed. And when that happens, it ultimately drives. A political response, which is, hey, we're losing our jobs. People start asking their representatives, do something about this in Congress. And then these programs and these things get passed, which themselves are inflationary.

• 29:46David Friedberg?

  And that's why it's very hard to predict ultimately when and how this all gets resolved, because we seem to have an administration that is enacting and embracing inflationary policies to support what they consider to be economic growth and improved employment conditions in this country. And the unfortunate effect of many of those policies is inflation. And then it forces this difficult central bank decision-making cycle. And so there's a tension right now that doesn't seem to have a clear path to resolution. That is why it's very hard to have a clear prediction here. We also have a very significant question overhanging all of these markets related

• 30:28David Friedberg?

  to the price of energy, which is a key input to so many industries and drives cost, as well as food, and also the military conflict in Eastern Europe. And, you know, and then there's in the financial markets, this big overhang question on what's going to happen with various countries that may default on their debt, as well as China's real estate bubble bursting. So I made this point, I think, a few episodes ago, but there's no easy answer that I can just say deterministically, here's my prediction of what's going to happen. As Chamath uses the term, I think it's a great term, there's this mosaic of things that are under consideration right now, and there's a tension between them all. And that's what makes it difficult. I'm sorry, I didn't really answer the question, but that's kind of how I think about it.

• 31:12David Sacks?

  There's a lot of geopolitical risk. I mean, we're kind of, you know, ignoring what happened this week where Putin basically is putting nukes back on the table. Now, I'm not saying that's likely to happen, but...

• 31:25David Sacks?

  I don't know how, again, I don't know how this market gets a lot better with the risk of war three in over our heads. I mean, who wants to enter the market with that on the table?

• 31:33David Friedberg?

  And by the way, the nukes, just to be clear, you know, you can hear certain military commanders speaking publicly about this, but in the Russian military playbooks, there is specifically defined actions that can lead to tactical nuclear weapon use in the field. There's no direct indication that these things are going to be used right away, but the, as Sacks says, there's like this weird, like, turning up the volume happening on, hey, maybe we're getting closer to a point where if Putin is having tactical failure in this conflict, there's more weaponry he can use that has greater impact. And unfortunately, there are these tactical nukes in his arsenal. And, you know, a guy that maybe has a certain

• 32:18David Friedberg?

  psychology that has, as our friends have said, his back against the wall, he's not a person who, in his career, or in his history, has ever acquiesced to defeat.

• 32:29Chamath Palihapitiya?

  Alex Karp was on CNBC. He was really, really sharp and concise about this, which is that, you know, in the West, when leaders fail in their objectives, they just get elected out and somebody else takes their place.

• 32:43David Friedberg?

  Yeah.

• 32:45Chamath Palihapitiya?

  But for somebody like Putin, there is nobody to take his place because it's a very zero-sum situation. And so his actions will, as a result, also be zero-sum. And I think folks-

• 32:54David Friedberg?

  He's never acquiesced in his life. And, yeah.

• 32:57Chamath Palihapitiya?

  Yeah, we've never, we've never really, kind of like, we don't understand, well, what zero-sum decision-making looks like when it comes to stuff like this.

• 33:04David Friedberg?

  He needs the Golden Bridge, right?

• 33:05Jason Calacanis?

  You're gonna need to give him the-

• 33:06Chamath Palihapitiya?

  He does. But I'll just say two things. One is that I think it's been made pretty clear that both India and China will not stand beside Russia if they do something like this. And I think that that is important because they still are the two biggest purchasers of Russian oil. And so I think that matters a lot because you're talking about a lot of revenue that would, that would go away. And then the second is, I mentioned this last week, and this may sound dumb to some of you, but don't sleep on the Russian mothers. And what happened this week-

• 33:37David Friedberg?

  Oh, you're 100% right on that.

• 33:38Chamath Palihapitiya?

  Well, what happened this week was really interesting, which is that he calls up all these reservists. These reservists are not coming from the major cities of Russia. You're starting to see protests. You're starting to see young people saying, I don't want to do this.

• 33:49David Friedberg?

  Yeah.

• 33:49Chamath Palihapitiya?

  And who's that really activating? It's activating the moms.

• 33:52David Friedberg?

  Yep.

• 33:53Chamath Palihapitiya?

  And so don't sleep on the Russian moms.

• 33:55Jason Calacanis?

  300 people are being drafted, you know, to basically go fight. And I actually think

• 34:01Chamath Palihapitiya?

  But David's right. Oh, sorry. Sorry. Go ahead.

• 34:03Jason Calacanis?

  The question I have for you is, do you think, I know you don't agree with this, but do you think the strategy is to back him into a corner? Um, and then have this like rhetoric spike to then force a resolution. I know it's a dangerous strategy. It's a crazy chess move. But do you think that's actually what the West is thinking?

• 34:21David Sacks?

  I see no evidence that we have any, uh, intentions of seeking, uh, a diplomatic off ramp. I see no evidence that they're looking for to give him a golden bridge, like you said.

• 34:32Jason Calacanis?

  Then do you think they're trying to break him and have regime change?

• 34:35David Sacks?

  I think Biden stated the policy, which is this man cannot remain in power. I think he blurted out the truth of his policy. This is a regime change policy. That's what they're going for. They're, they are backing him into a corner.

• 34:44Chamath Palihapitiya?

  Jacob, I thought that you were right this whole time, which is we're going to build a golden bridge. We're going to find a way to egress this guy. And I'm now sort of in the David camp, which is I think that

• 34:56Chamath Palihapitiya?

  the, the stated strategy of the Western alliance is essentially to cause him to make such a categorically catastrophic mistake. So as to become a pariah, so as to either get overthrown or, or, you know, something. So I, I do think that on balance, the risk is now for things to escalate, maybe not in quantity, and I'll use this word in the wrong way, but you know, quote unquote, like the intensity of, of it. So, um, I, I think David's right. It's a lot of pressure to the economy and to, to

• 35:27Jason Calacanis?

  It's a high risk strategy.

• 35:28David Sacks?

  High risk strategy. There's a high risk strategy. We got a good thing going over here. I don't see the need for all this risk. So, look, and, and

• 35:36Jason Calacanis?

  Well, the risk would be the reward. What would you see the reward if Putin was removed? Oh my Lord.

• 35:40David Sacks?

  Well, it depends who replaces him. What if we get a hardliner? You gotta remember Putin's taken out all the liberal reformers. All that's left are hardliners. So I know, I know there's moms protesting in the streets, but he's also under intense pressure from his, his right wing, that, you know, he's got Hawks on his side who basically have been criticizing him for making this a special limited military operation instead of a war. They're Like, why did you try to do this with 200,000 troops? We should have gone in heavy with a million.

• 36:07Jason Calacanis?

  Oh, is that right? There's criticism internally of him.

• 36:09David Sacks?

  There was a New York Times article about this. He has his own, you know, military hardliners in his security state.

• 36:16Jason Calacanis?

  His hawks.

• 36:17David Sacks?

  So that, so he's not just under pressure from peaceniks who are protesting in the streets. He's also under pressure from hardliners in his own government who think he's been too soft.

• 36:26Jason Calacanis?

  Hmm, yeah, it's a, it's a challenging situation. He said, and he said, he's gonna be 70 years old. How many years does he have left? We just need to contain him for a decade.

• 36:35David Sacks?

  Time was on our side.

• 36:36Jason Calacanis?

  Yeah, contain him for more and more decade. That's my best idea. Contain him for a decade.

• 36:40David Sacks?

  The thing I have the most trouble with is if you look at the media portrayal of this. So I said last week, when, you know, we had this successful counteroffensive, that maybe we'll get what we want, which is Russian morale collapses. They just tuck their tail between their legs and go back to Moscow. Or maybe, you know, the Russians really do see this war as existential for them. Putin sees it as existential for himself and he escalates. Well, what happened this week? We went up a rung on the escalatory ladder. Basically Putin drew down 300,000 more troops. And he's basically indicated his, his willingness to use tactical nukes. And he's basically said, I'm not bluffing. So now what is the reaction in the American press? He must be bluffing.

• 37:19Jason Calacanis?

  I mean.

• 37:20David Sacks?

  That basically is the reaction. And look, I don't know how you know that. You know, in poker, what you, in poker, what do we do when someone might be? We put them on a range. It's called a hand range, right?

• 37:31Jason Calacanis?

  Yes.

• 37:32David Sacks?

  You can't possibly know exactly what they're gonna do or what cards they're holding. So you put them on a range of possible hands and then you evaluate the story in light of their past actions. What do they do before the flop, on the flop? And you, you basically come to a assessment of what is likely based on their story. Now, take Putin's story, like Freebird said, he's never backed down in his life from anything. Um, he has said this war is existential. You know, he basically threatened to invade and so he did. I mean, like, I don't know how you can immediately jump to the conclusion this is just a bluff. Maybe it is, but.

• 38:04Jason Calacanis?

  Well, it could still be, it could still be a bluff, but then to your point, the range of outcomes does include shoving on the river, moving all in. He could move all in. I mean, he's a KGB agent. Do you wanna play poker with a KGB agent with nukes? It's.

• 38:17David Sacks?

  Right, and so Jason, you said throughout this guy's a madman. Well, exactly. I mean, personally, I think he's more like a ruthless mafia boss than a madman. But but let's say you're right that he is a madman. What is the story about what we're doing that makes sense if he is a madman? Why would we want to basically back him into a corner like that? Why wouldn't we give him the the golden off ramp? And by the way, just on this idea that no one would ever use tactical nukes, let me just give you three data points. First of all, we use them. We dropped two atomic bombs on Japan and to end World War II. We could have won that war without doing it, but we didn't want to lose the troops.

• 38:52Jason Calacanis?

  Well, no, wait, those aren't tactical nukes. Those are just.

• 38:54David Sacks?

  They were tactical nuke sized atomic bombs. Number two, MacArthur wanted to use 20 to 30 atomic bombs to end the Korean War. He had a whole plan. Truman fired him. He thought he basically had jumped the shark. But MacArthur was the most respected and admired American in 1950. And the reason why Truman could not run for your elections because he fired MacArthur. MacArthur would have used basically the equivalent of tactical nukes to win the Korean War. And his plan to prevent China from reinvading from the north was to irradiate the border so completely that Chinese troops could not go through it.

• 39:29Jason Calacanis?

  Keep in mind, there wasn't as many nukes at the time. So we weren't up against nine different nuclear enabled countries.

• 39:34David Sacks?

  I understand, but we had an American commander ahead of our military who was willing to use nukes to win a war. So this idea that he wouldn't, I mean, we've been willing to do that. And the third example is obviously the Cuban Missile Crisis. All of Kennedy's military advisers were willing to get to use nukes. I mean, and the best thing Kennedy did was not listen to his military advisers. They were all super hawkish. And Kennedy, what did he do? He looked for a way out. He looked for a compromise. He sent Bobby Kennedy to go cut a secret deal with the Russians where Kennedy agreed to pull the our Jupiter missiles out of Turkey if the Russians would pull their missiles out of Cuba. And then he lied to the American public about it because he didn't want to be perceived as backing down. But that's the kind of, you know, flexibility and mental acuity that I think

• 40:19David Sacks?

  you would need in a nuclear showdown to avoid a catastrophe. If things do escalate to the point of a nuclear showdown, do we believe that we have leadership on the level of a Jack Kennedy or a Bobby Kennedy who can basically show the flexibility and adaptability to cut a deal to basically pull us back from the brink?

• 40:36Jason Calacanis?

  Yeah, it doesn't seem like that.

• 40:37David Sacks?

  What was Biden's response? It was he gave this speech to the United Nations in response to Putin. And it's more of the same, it's more of this, I call it the Abe Simpson speech, this old man, you know, yelling at the cloud. I mean, he's basically just yelling at a teleprompter. Now, I think the strategically smart play would have been to say, listen, Putin, you said that you want the people of Ukraine to decide where these territories go. Okay, we can hold a referendum, we want it administered by the United Nations so it'll have, so it'll have some credibility behind it. I mean, why not throw that out there as a potential way to get diplomacy started?

• 41:14David Friedberg?

  It felt like at the end of last year, you guys remember I thought like conflict was likely this year? I don't think that the conditions that

• 41:27David Friedberg?

  I was referencing have really gotten better. I think they've gotten worse. And that's why I think we all talk about this in a rational way, meaning like how the conscious mind would, you know, debate the merits and challenges and risks of having a golden bridge or continuing conflict.

• 41:47David Friedberg?

  But if you look historically, the US has often been in the middle of or at the tail end of

• 41:56David Friedberg?

  some either recessionary cycle or inflationary cycle when conflict escalated externally.

• 42:03Jason Calacanis?

  Wag the dog you're referring to?

• 42:05David Friedberg?

  I don't know if I would call it that, but I think that there is an innate human anxiety. When things aren't going well, you feel like you have to do something about it and you're either going to have internal conflict or external conflict as a result to try and resolve. When things are going great, the economy is booming, you don't enter a war, you don't start a conflict with a nation when people are happy at home, when your constituents and, you know, the unemployment rate is low and job wage growth is high, the economy is growing.

• 42:39Jason Calacanis?

  Are you referring to the United States or Russia in this case?

• 42:42David Friedberg?

  I'm referring to the US.

• 42:43Jason Calacanis?

  Okay, I know, I was just curious if you would.

• 42:45David Friedberg?

  Yeah, coming out of COVID and coming out of the big question marks that loomed over our economy at the end of last year around inflation, economic growth.

• 42:57David Friedberg?

  Interest rates and the effect, and now we're in the middle of the turmoil. Markets are down 30%, and in some cases 70 to 80% for high-growth markets. There's an inevitability now that unemployment is going to rise. There is an inevitability now that the economy is going to contract. Leadership is more likely in that scenario to find an outlet, to find a place of conflict.

• 43:22Jason Calacanis?

  Explain why in this theory, explain why.

• 43:26Chamath Palihapitiya?

  Wag the dog.

• 43:27Jason Calacanis?

  Is that what you're saying, Friedberg, wag the dog?

• 43:29David Friedberg?

  Yeah, I don't think it's a conscious decision. I don't think that it's like, hey, let's go start a war with Russia because the economy is bad. I think it's this anxiety, the economy is bad, and there's not a lot we can do about it. And over here, on the other hand, there's a problem and there's something we can do about it. We can build strength and we can build integrity, and we can build support, and we can get people to get behind something together. And we can get something to create a driving mechanism to achieve something big.

• 43:55Jason Calacanis?

  Like a distraction, you're saying, yeah.

• 43:57David Friedberg?

  Yeah, and I don't think that psychology is as simple as a distraction or a wag the dog. Or, hey, it's not even as simple as the military-industrial complex will see revenue growth and wage growth, and that'll drive the economy. But I think all those things together are true. And I think in whole, we are more likely to want to pursue conflict right now than we were even a year ago.

• 44:18Jason Calacanis?

  You buy any of that, Chamath?

• 44:19Chamath Palihapitiya?

  I think he's more right than wrong. I think that when things aren't easy, you need to find sort of distractions essentially to get people to focus on other things so that the core problem isn't as obvious. We have in the United States, I think.

• 44:40David Friedberg?

  Yeah, let's go create another problem that's solvable.

• 44:42Chamath Palihapitiya?

  Yeah, like, the best, I think the best way that I can describe this is I see it as institutional rot. And the more that we're left to our own devices, that amount of institutional decay becomes more and more obvious. Our governments don't work the way that they should. You know, our state assemblies are basically co-opted by special interests. The federal institutions we rely on to make rules are not that great. Enormous amounts of money get wasted every day. And as more and more people become aware of these things... It's it just the trend is just so bad, you know, civic engagement goes down, everything just gets worse. And so when you take that, and then on top of that, you sit it on a on a poor economy,

• 45:26Chamath Palihapitiya?

  that is a real powder keg, I think. And so folks like to, I think if you're a politician, it's easier to kind of go and point to Taiwan and say, you know, we're going to go and defend these folks if there's a war, point to Russia and say this, point to all these other things. It's a, whether it's implicit, as Freebrooke says, or it's more explicit of a strategy, I don't know. But the underlying cause is the same, which is that if the foundation of the house is not strong, and you're not sure what to do to fix it, or you don't have the courage to fix it, the better strategic alternative is to distract and talk about your neighbor's house.

• 46:02David Friedberg?

  Coming out of, coming out of the financial crisis in 2008, 2009, Obama recommitted to Afghanistan and sent 17,000 troops to Afghanistan in early 2009, when he took office. We entered the Persian Gulf with the Gulf War in 1991, coming out of the Great Recession, or the the mild recession, 1990 to 1991. 2000, 2001 dot com crash, we, you know, we obviously entered, entered Iraq.

• 46:27Jason Calacanis?

  Yeah, well, that was post nine, post nine 11.

• 46:30David Friedberg?

  Nine 11, but it was also in the midst of a recession and coming out of the.

• 46:35Jason Calacanis?

  But that was, that one was clearly a reaction. It sacks you by this? You think this is a wag the dog or?

• 46:40David Friedberg?

  And by the way, you can do the same, you can do the same analysis on the time we entered the Korean War and the time we entered the Vietnam War, they were both tied to recessions. And, and so I don't, I don't know, I don't know how explicit this, this action and behavior is, but I just think there's some data to it.

• 46:55David Sacks?

  There was a study that just came out by Tufts University on American military interventions throughout American history. And what they found was that.

• 47:06David Sacks?

  We had the least in the period before the Cold War, then the second most was during the Cold War. But actually, the most hyperactive period of American military interventions was post-Cold War. So, since the unipolar moment, even though it's been the safest period for America, right?

• 47:24Jason Calacanis?

  Explain unipolar for people who don't know.

• 47:26David Sacks?

  Just that there's only one great power in the system. Before, during the Cold War, it was a bipolar world, whereas basically, America versus the Soviet Union, and the U.S. basically had the NATO and the Western Alliance, the so-called free world, and then you have the...

• 47:39Jason Calacanis?

  Perceived check and balance.

• 47:41David Sacks?

  Yeah, you'd have the Warsaw Pact on the other side.

• 47:43Jason Calacanis?

  And now we have unipolar moving to bi...

• 47:45David Sacks?

  Well, it was, yeah, we were unipolar for a couple of decades, but now we're moving towards multipolar, or at least bipolar with China.

• 47:53Jason Calacanis?

  Yeah. Multipolar would be, maybe including India, maybe including... India, Brazil, China.

• 48:00David Sacks?

  In the future, in the future. But, so, the irony is that the safer America has become, the more we've gotten militarily involved overseas. And part of that is because there's no great power in the system to oppose us. But it's also gotten us in a lot of trouble. I mean, all of these wars in the Middle East that cost us something like $8 trillion. Another survey, cost of war study, the direct number of deaths from these wars, from the War on Terror, was over a million lives lost, $8 trillion. And that doesn't even include the excess mortality caused by the destruction of infrastructure, wastewater treatment, famine, all that kind of stuff, which could be as high as 5 million.

• 48:41Jason Calacanis?

  And you know the crazy part about that, Sacks? That $8 trillion, if we had deployed that in energy independence, solar, nuclear, whatever, the whole reason to be in the Middle East was oil and energy. And we could have just deployed that to be energy independent in the West and not had all of this pain and suffering. Not the whole, I mean, not the whole reason. I think the reason to be in Afghanistan was to kill some of the... With the exception of 9/11 and maybe...

• 49:03David Sacks?

  We could have done that without taking over the whole country and gone on this 20-year...

• 49:07Jason Calacanis?

  Yeah, that could have been done very strategically.

• 49:08David Sacks?

  I mean, actually, that was really proven when, well, first of all, we did kill... We did kill Bin Laden in Pakistan with just a raid by the SEALs, you know, infiltration. So we didn't need to occupy that country. And then more recently, we finally got Zawahiri in Afghanistan, using a drone after we left the country. So what the hell do we need to be there for? For 20 years? When we could kill these guys using drones and, you know, a helicopter team?

• 49:34Jason Calacanis?

  Yeah, this is where we needed to have an adversary who could check our power. It would have been healthier, I guess, the premise to the tough study.

• 49:41David Sacks?

  Right. But, but look, I think to Freiburg's point, is it, do we become more militaristic when things aren't going well at home? I don't know, but it feels to me like just in general over the last 30 years, we've become hyper militaristic. It's the use of military force is typically the first option. And we resort to it too quickly and we don't use diplomacy enough. And you can see that in just the number of lives lost, the failure of these wars, and the enormous deficit we're running.

• 50:09Jason Calacanis?

  As you know, Sacks, I can't stand Trump. The two things he got right, no wars, and he was the dictator whisperer. That guy knew how to talk to a dictator. You know, whether it was North Korea, China, Russia, he just knew how to bond with them. It was like a superpower for him. Okay, we have three directions to go.

• 50:27David Sacks?

  If that keeps us out of wars, great, you know?

• 50:29Jason Calacanis?

  I mean, it's literally his only saving grace. All right. Gentlemen, we have to talk about what's going on in Iran. We have to talk about the Wall Street editorial boards, California.

• 50:40Chamath Palihapitiya?

  Bro, talk about, talk about, talk about Newsom, because there's a bunch of energy stuff happening in the United States, which I think is important.

• 50:44Jason Calacanis?

  All right. So the Wall Street Journal editorial board, which obviously has a side, wrote an op ed on California's grid issues. Some of the quotes from the op ed, "California can barely keep the lights on as its climate policies bite the electric grid, but Gavin Newsom is undaunted. On Friday, he signed no fewer than 40 new climate bills to amp up California's green energy shock experiment, even as gasoline prices nationwide have fallen to an average of 3.68 a gallon. Californians are still paying 5.45 a gallon. Californians' electric rates are already more than double those in neighboring states. This is what happens when politicians try to eliminate fossil fuels with a Molotov cocktail of

• 51:27Jason Calacanis?

  regulation taxes and renewable mandates and subsidies."

• 51:31Chamath Palihapitiya?

  The coda to this is, um...

• 51:35Chamath Palihapitiya?

  I'll send it to you Nick, but can you please play the clip as well of Rashida Tlaib trying to skewer Jamie Dimon where he just destroys her?

• 51:43Jason Calacanis?

  Oh my god, that's embarrassing.

• 51:44Chamath Palihapitiya?

  That was embarrassing.

• 51:45Jason Calacanis?

  I mean, we should play it. I mean, it's... She made no sense.

• 51:49Chamath Palihapitiya?

  Nick, can you play that clip, please?

• 51:51Speaker 04

  You have all committed, as you all know, to transition the emissions from lending and investment activities to align with pathways to net zero in 2050. Do you know what the International Energy Agency has said is required to meet our global 2015 net zero targets of limiting global temperature rise to 2.7 degrees Fahrenheit or 1.5 degrees Celsius? So, no new fossil fuel production starting today? So, that's like zero. So, I would like to ask all of you and go down the list, because again, you all have agreed to doing this, please answer with a simple yes or no. Does your bank have a policy against funding new oil and gas products, Mr. Dimon?

• 52:35Speaker 05

  Absolutely not, and that would be the road to hell for America.

• 52:38Speaker 04

  Yeah, that's fine, that's fine. Sir, you know what? Everybody that got relief from student loans has a bank account with your bank, should probably take out their account and close their account. The fact that you're not even there to help relieve many of the folks that are in debt, extreme debt because of student loan debt, and you're out there criticizing it.

• 52:56David Friedberg?

  My favorite was when she said "celsius".

• 52:59Jason Calacanis?

  That was, yeah, I was like, "Okay." It's just so much theatrics.

• 53:05Chamath Palihapitiya?

  Rashida Tlaib represents the 13th congressional district in Michigan. The median age in that district is 35.9 years old. The 2020 poverty rate is 28.2%, so more than, almost one in three people. And the 2020 median household income is $37,601. So, you know, she represents a group of people...

• 53:34Chamath Palihapitiya?

  That, you know, I think at best is lower middle class. And the idea that she doesn't even basically understand what would happen in her district if you actually did not have cheap LNG. Again, just kind of speaks to the institutional kind of decay in Washington. She is not the person that should be advocating for this. Like, you know, it's districts like this more than any other that don't have the money to spend on, you know, very expensive solar installations that cost thirty and forty thousand dollars. These are the districts that need coal, coal-fired plants, LNG, oil

• 54:16Chamath Palihapitiya?

  to keep going, to sort of minimize the impacts of inflation. And so, you know, that was just like a grandstanding moment. Moving to California-

• 54:24Jason Calacanis?

  I just hate these hearings because, Jamar, these are important discussions and they've become theatrics and this is a chance to educate the public with some charts and data.

• 54:34Chamath Palihapitiya?

  She's either so hungry for power that she actually doesn't care about her constituents or she's scientifically and numerically illiterate.

• 54:44Jason Calacanis?

  That's, I think, the latter is probably the issue here.

• 54:47Chamath Palihapitiya?

  And so, this is, this is what's such a shame. On the, on the, on the other side, you know, at the end, at the, at the other end of the coast in California, the cost of power generation, just so you guys know, has fallen by ninety percent when you look at renewables. And that is because of a good job that the federal government did in introducing subsidies that essentially gave the, the right sets of incentives for people to build this infrastructure. But while the cost of generating renewable power has fallen by ninety percent, you know, virtually it's on par and it's cheaper than any other form of generation, your electricity costs have doubled and are probably going to double again in a state like California. So, you know, we're cagering our, our, our utility rates by, you know, seven to eleven

• 55:32Chamath Palihapitiya?

  percent every year. That is unsustainable in California. And what do you have? You have, again, a different version of the same flu that Rashida Tlaib has, which is you run forward to kind of virtue signal and to try to do all of these things. You don't spend enough time to really understand what's happening on the ground and you make it impossible. For people to make the decisions to actually be resilient for themselves. At the end of the day, there are tens of utilities in America, but there are 100 million households. And the only path to energy independence is to get every single 100 million household to be resilient, which means they need their own solar panels, they need battery storage, they need their own potable water.

• 56:16Chamath Palihapitiya?

  And all of these systems are now affordable and available. And now the federal government with the IRA has created the financial incentives to pull it forward. So, I don't know, I just think like this is a hugely stark reminder about how poorly our energy policy has been managed. And if you leave it to the hands of the progressive left, they will do things that don't map to what people on the ground actually need. People in California, most people in California, cannot pay utility rates that are going to double every six and seven years. Just like people in the congressional 13th district of Michigan cannot afford to pay for solar if Rashida Tlaib is able to get, you know, all these banks to not finance LNG,

• 57:00Chamath Palihapitiya?

  coal and, and other forms of hydrocarbons as a bridge fuel.

• 57:04Jason Calacanis?

  You have to look at all 40 of these bills independently and you have to think about...

• 57:09Chamath Palihapitiya?

  Forty bills? I mean, who's reading these things? What is in these things?

• 57:13Jason Calacanis?

  I mean, each one has to be addressed individually. Like, one of them could be to help people put solar panels on top of schools and batteries in there. That could be a good bill. But they're definitely...

• 57:23Chamath Palihapitiya?

  We have that mechanism at the federal level. The IRA passed an incredible set of incentives, both for the producers of these things and for the, for the end companies that actually deploy them.

• 57:33Jason Calacanis?

  Yep.

• 57:33Chamath Palihapitiya?

  And so we've solved that problem, you know? So I, I just think like it just goes to show you, a ton of regulation does not actually add and get to the solution that we want. The government will not solve your problems. I hate to be the bearer of bad news, but they are going to make things more complicated and more expensive and the resilience that you expect out of your utility infrastructure. By the way, we saw just what happened last week. There was a massive fire in a massive battery installation that California installed, 182 gigawatt system, megawatt system. Could you imagine if that had actually lit on fire two weeks earlier in the middle of this crazy heat wave that we had? So even even utility scale renewables are very complicated projects to undertake.

• 58:18Jason Calacanis?

  Look at Texas. I mean, people are dying there because the grid keeps going down.

• 58:22Chamath Palihapitiya?

  It is much safer and more reliable if is if if every homeowner in the United States took responsibility and and use these incentives to basically become your own little virtual power plant and you will.

• 58:34Jason Calacanis?

  Technology is there. I mean, and people are getting generators for natural gases backups. We're going to have to figure out how to take the load off the grid and build resiliency into it. I don't know if you guys saw in a related story that all this ESG stuff is kind of coming to a head, but Dilbert got canceled this week in like 200 newspapers. Did you see this?

• 58:52Chamath Palihapitiya?

  What?

• 58:53Jason Calacanis?

  Yeah.

• 58:53Chamath Palihapitiya?

  How's that possible?

• 58:54Jason Calacanis?

  Well, because he's been going after ESG in his cartoon. And so I'm interested in your take on this. But here, I don't know the characters in Dilbert except for Dilbert, but he says, this person who is in charge says, our ESG score will drop if we open a new factory that adds CO2 to the atmosphere. But we can balance that out by adding more diversity to our board. And I guess the cat says, how much CO2 do you plan to add? And he said, one non nine binary board members were showing the E S and the G being put together makes no sense. But that that panel obviously got him canceled.

• 59:32Chamath Palihapitiya?

  What does he mean? He's canceled? Like, he was fired from national newspapers?

• 59:36Jason Calacanis?

  I think one of the 177 newspapers, because they're all part of chains now. And I guess some of those.

• 59:41Chamath Palihapitiya?

  Because of that cartoon?

• 59:43Jason Calacanis?

  That cartoon plus it's like a series going after the social governance part of, you know, environmental and pointing out, he stated on his podcast that he wants to kill a ESG. So this whole ESG debate, he's trying to further it. But I guess that, yeah.

• 59:59Chamath Palihapitiya?

  Well, I mean, the the concept of ESG makes a ton of sense. I think the problem is that.

• 1:00:04Jason Calacanis?

  It does?

• 1:00:05Chamath Palihapitiya?

  This, yeah, this version 1.0 implementation was financialized by people that have no care about ESG at all. And so all it's done is create complexity and consultants and, you know.

• 1:00:17Jason Calacanis?

  But you said it makes sense or it doesn't make sense?

• 1:00:19Chamath Palihapitiya?

  No, the words E, S, and G make a lot of sense.

• 1:00:23Jason Calacanis?

  They have commas or periods between them, I guess, is the question.

• 1:00:25Chamath Palihapitiya?

  That's fine, too. But my point is, saying that you want, you know. Diversity and you want sustainability and you want better governance.

• 1:00:33Jason Calacanis?

  All good.

• 1:00:34Chamath Palihapitiya?

  All of these things are really great ideas. It's just that in this first implementation, it got financially perverted. And so what you have are folks that are, you know, probably not the best positioned or should not really have an opinion about ESG, opining about things that they never were given the authority to opine on. And then as a result, what it's really created is a cottage industry of consultants that can basically make, you know, hundreds of millions of dollars writing all of these reports. And I think that that's why this implementation doesn't work. So ESG today is broken and I think it's largely meaningless. The concept of what people want is a very good idea. We just need a better way to implement.

• 1:01:13Jason Calacanis?

  I agree with that. You can't connect these things. We're going to put social and governance with environment. It's all that's going to do is hold back the environment, right?

• 1:01:20Chamath Palihapitiya?

  Sax, Sax, we're having olive fed beef tonight.

• 1:01:23Jason Calacanis?

  Oh, this is the greatest.

• 1:01:24Chamath Palihapitiya?

  You need to try it.

• 1:01:25David Sacks?

  I'll see what I can do.

• 1:01:26Chamath Palihapitiya?

  No, you have to do it. You have to do it, Sax. Once you have to say.

• 1:01:29Jason Calacanis?

  Come on Sax, commit, no bullshit anymore.

• 1:01:31Chamath Palihapitiya?

  Sax, you cannot imagine what does a beef look like that has been only fed green olives? Pitted green olives at that?

• 1:01:37Jason Calacanis?

  I can tell you, I can tell you how it looks. Delicious.

• 1:01:40David Sacks?

  Is it green?

• 1:01:41Jason Calacanis?

  It's the most delicious steak you've had in your life.

• 1:01:43Chamath Palihapitiya?

  It's the most delicious.

• 1:01:45David Sacks?

  All right, I'll come for that.

• 1:01:46Jason Calacanis?

  It's incredible.

• 1:01:47David Sacks?

  Sax, are you going to drive me with your driver? Text me your address so I know where to get you.

• 1:01:51Jason Calacanis?

  Oh, I love it. Oh, this is going to be great. Game on.

• 1:01:54Chamath Palihapitiya?

  Listen to this lineup. Me, J Cal, [bleep], Friedberg, Sax, uh, [bleep] is flying it. This thing, this game is going to jump up. This game is going to pop.

• 1:02:07Jason Calacanis?

  No more flips. The flips are ridiculous.

• 1:02:09Chamath Palihapitiya?

  Okay, you know what? Now, now that Sax is coming, I'm going to tell him to break out the early white truffles.

• 1:02:14Jason Calacanis?

  What?

• 1:02:15Chamath Palihapitiya?

  I'm just kidding.

• 1:02:16Jason Calacanis?

  You're sending the truffle pigs out?

• 1:02:18Chamath Palihapitiya?

  Nat, Nat just walked to my office. She looked at me when I said white truffle. She's like.

• 1:02:24Jason Calacanis?

  For bestie dinner, it's happening, everybody.

• 1:02:27David Friedberg?

  Oh, it's happening, it's happening! You know what I saw was Hellmuth the other day on one of his heads-up matches where he got in that huge fight with that guy, did you guys see that? I think that's every match, you just described every match he's ever played. Yeah, this was like some heads-up thing. And the guy had flopped some insane, I think it was like quads or something, and Hellmuth had like top pair except the board pair. Top pair, yeah, yeah, yeah. And Hellmuth folded on this guy, it was incredible to watch the play, like the read from Hellmuth was unbelievable. He is incredible, he's a friggin' phenom, that guy.

• 1:02:54Jason Calacanis?

  He's pretty great.

• 1:02:55Chamath Palihapitiya?

  He's got unbelievable.

• 1:02:56David Friedberg?

  There's a reason he's the greatest poker player in the world, he really, his reads are unbelievable.

• 1:03:00Jason Calacanis?

  Do you think that, what percentage of it is, obviously he is an incredible player, but there's another piece of this that we all see, which is people play into him, they want to be in a hand with him, they want to bust him, so in those tournaments, what do you think?

• 1:03:15Chamath Palihapitiya?

  No, I think, I think what's happening is at the highest level, there's like all these people that have gone in this one direction, and by the way, this is probably a good, we could talk about chess in the same way, which is that you have these solvers, right, there's poker solvers, and now there are these chess solvers, and the young generation spends all this time training on the solvers, so that they know every permutation of every move, and what is what people call game theory optimal, or GTO. The problem with GTO is that you can actually be very exploitative against somebody that's actually playing perfectly, because the AI is perfected around what is the rational set of decisions in every spot, and so you can set people up to make a lot of really bad mistakes, and I think Hellmuth understands that.

• 1:03:58Chamath Palihapitiya?

  And so because he is one of like this dying breed of people that plays live, he's able to just be so exploitative, and these folks that are basically playing from broke memory, right? What is the GTO move in every spot, they end up making a bunch of mistakes and feeding chips into him. And so I think like it's probably the same as sort of this Magnus Carlsen, he kind of knew what to expect from people, and the minute this get deviated into this realm where you were like, how could you make that decision? Probably because, you know, the computer AI is able to calculate, make a slightly losing move now, three moves later, you're gonna actually be ahead. It caught him off-guard where he was basically like, I think this guy's cheating.

• 1:04:43Chamath Palihapitiya?

  Really, really crazy, but I think like if you have a bunch of GTO kids...

• 1:04:49Chamath Palihapitiya?

  Folks that are a little bit older, that have been playing in a live situation can be hyper-exploitative.

• 1:04:53David Friedberg?

  By the way, this is a good point generally about this gaming is that computation has played, and computers have played such an incredible role, it almost becomes questionable on how much can the human really differentiate anymore in these games and in these systems. You guys watch the chess players on YouTube, and they'll have solvers live, and they'll be getting live scoring as they kind of walk through a match or walk through.

• 1:05:20Chamath Palihapitiya?

  By the way, Free Bird, that's the same with poker. You have these HUDs, these heads-up displays, and a lot of the poker sites have basically given up. They try to spot the cheating, and it could, because you have this basically layer that's helping you, and it's effectively impossible, because you know, these things run locally, they're screen scraping locally, and you just have no idea, except when they make moves that are just so unpredictable from a human and could only come from a machine.

• 1:05:47David Friedberg?

  Yeah, and ultimately, all, yeah, all games maybe become obsolete, because there is no real way to qualify the performance of one human against another, when the AI itself, or the technology, or the computing itself, you know, overshadows human potential and human capability.

• 1:06:02Chamath Palihapitiya?

  You guys may not know this story, but when I met Demis, the founder of DeepMind, I got introduced by Thiel, like in 2011 or 12, so like a decade ago, and I met him in London. I'll never forget this, at the, we were having breakfast at the Conde Hotel, and he explained to me DeepMind in the context of a game, because at that time, how they were building the first versions of the AI was perfecting how to play certain video games. And I can't remember the name of the video game, but it was one of the famous first-person shooter games. And the whole idea there was like, you know, if you can perfect an AI that basically plays GTO and can win the game, what you've effectively solved for is like a layer of AI that can then solve other generalized problems. I

• 1:06:46Chamath Palihapitiya?

  was blown away. I thought, this is the craziest thing I've ever heard, a decade ago.

• 1:06:51Chamath Palihapitiya?

  So it's it's pretty natural that they've taken this stuff and adapted it to meet every game. It's a little sad though, too, no? Don't you think?

• 1:06:58David Friedberg?

  Yeah, but I mean, maybe there's a different model of performance for humans that really changes what the gaming is, right?

• 1:07:05Chamath Palihapitiya?

  Well, augmented.

• 1:07:07David Friedberg?

  I don't know what it is. I mean, I think that these games themselves completely, you know, the intent of a game, which is to measure one's kind of decision-making abilities gets obsoleted because the software ultimately is a better decision-maker than the human. So the question then is, what is the human going to rise to that creates a new playing field? And I think there's probably elements of creativity and actually using the software to become part of the game that opens up a whole new opportunity for what gaming is. I mean, we've been talking about a little bit about video games, but you could see artificial constructs in gaming that arise from the human interacting with the computer and then creating a new sort of playing field in gaming.

• 1:07:47Chamath Palihapitiya?

  Yeah. Sax, what do you what do you think about all this? You're a big chess player.

• 1:07:51David Sacks?

  Yeah, I've been following it for the last couple of weeks. It's obviously been the big story in the chess world. What basically happened is that a couple of weeks ago, Magnus Carlsen lost that game to Hans, what's his last name?

• 1:08:04Chamath Palihapitiya?

  Nimad, I think.

• 1:08:05David Sacks?

  Nimad, yeah, exactly. And the next day, he pulled out of the tournament. This is the Sinkfield Cup. And he's never pulled out of a tournament before. Everyone was sort of speculating, is he sick? Or have COVID or something like that? And then he tweeted out a video from some soccer coach saying, I can't talk about it, I'll get in trouble.

• 1:08:23Chamath Palihapitiya?

  Yeah.

• 1:08:24David Sacks?

  Yeah. So clearly, he was in a passive-aggressive way of making an accusation. And then he doubled down a few days ago. He was in another tournament, and he had to play Hans, I keep forgetting the guy's name.

• 1:08:39Chamath Palihapitiya?

  Hans Nimad.

• 1:08:39David Sacks?

  Nimad, yeah. He had to play him, and he resigned on move two. So basically, he doubled down in his accusation. And he won't specifically say what leads him to believe that this guy is cheating, but he thinks he is.

• 1:08:53David Sacks?

  He's a young player, he's something like 18, and he's had a pretty meteoric rise in the chess world. I think his rating's gone up a couple hundred points over the last two years. It's the fastest rise in chess rating that anyone's ever had before. It's been the case that players have, and young players especially, have risen quickly, but this is, it's a pretty, it's the biggest rise that's happened.

• 1:09:21Chamath Palihapitiya?

  How is he cheating?

• 1:09:22David Sacks?

  Well, that's the thing. So, the issue is that it's easy to cheat in online chess, but in over the board, you would either need to have a device or to be signaled by somebody in the crowd. You'd need human assistance or the assistance of a device. It'd almost be like, you know, a casino or something where they're using the contraption on the guy's leg to signal, you know, information to him. So, nobody really knows how he would have done it, and of course, he wasn't caught doing it, so he can never prove that he wasn't. So, there's just a real question here.

• 1:09:58Chamath Palihapitiya?

  But they did make some changes after Magnus Carlsen resigned. They put the feed on a 15-minute delay. You know, I think like at some point, you're gonna have to start wanding people and having them go through a metal detector.

• 1:10:12David Sacks?

  Yeah, they're gonna have to toughen up all of the anti-cheating standards.

• 1:10:17Chamath Palihapitiya?

  One of the grandmasters was like, "We should play naked in a locker room."

• 1:10:21David Sacks?

  Yeah, there was an online site that basically offered to pay Niman a lot of money to play basically naked to prove that he could, you know, really do what he's been doing. The theory on why he's not cheating and the rise is justified is that, in theory, this is the argument, is that he's grown up learning from all these neural nets, these, not just chess engines, the first generation of chess engines were like stockfish. They were just computational machines that were programmed by humans with thousands of rules on how to play chess, and then they could just crunch the lines better than a human could. More recently, thanks to deep

• 1:11:02David Sacks?

  It's a whole different type of machine. It's basically these neural networks where all they're programmed with are the rules of chess. And then they it plays thousands of games or millions of games against itself and it learns the best way to play chess. And the the neural nets play in a whole different way than the than stockfish than the pure engines. The the engines is play like a human that's able to calculate really well. Whereas the neural nets do things like um.

• 1:11:32David Friedberg?

  This is what I mean. There are sacrifices that a human would never make.

• 1:11:36David Sacks?

  Yeah, they'll make they'll make sacrifices for just for peace activity. So, you know, normally when a human makes a sacrifice, they they'll recapture the material within a few moves. Whereas um deep mind will sacrifice a pawn and, you know, just for the positional advantage or for the peace, the increase.

• 1:11:52David Friedberg?

  Which doesn't show up for many, many moves.

• 1:11:55David Sacks?

  Right, exactly. It's exactly.

• 1:11:57David Friedberg?

  And so the ability to model like 12 moves out is is really.

• 1:12:00Chamath Palihapitiya?

  But that's where I think people thought that Magnus picked up on something because it's like, those sorts of moves are rare in the absence of some layer of intervention because typically it's like, you know, and Sax, you know this much better than I, but it's like, you know, the opening and the closings of all of these chess matches are so tightly regulated. There's not a lot of creativity. It's sort of in the midgame that you have these slight positional advantages and disadvantages. And so I think it was amplified that one of these positional sacrifices made no sense in the context of that game unless you had the ability to, you know, think really conclusively about six, seven moves from now. By the way, it's the same. It's the same thing in poker. So there's a thing, if you guys want to download it, it's called, I think it's called Poker Snowy. It was like the first layer of a pretty basic AI.

• 1:12:44Chamath Palihapitiya?

  But it's gotten better and better. And really what it allows you to do is in every situational spot, whether it's heads up all the way to a six handed ring game, you can really understand. You know, what to do. Now poker is meaningfully more complicated than chess, as it turns out, because again, you have, you're not playing against one player, you're playing against some umpteen number of players. You know, we don't know when each of them is going to step into a pot.

• 1:13:08David Friedberg?

  And there's a chance.

• 1:13:09Chamath Palihapitiya?

  And then there's all of those elements. So it's a little bit more complicated to build a true kind of like neural net around it. But even still, you can kind of get a sense of, of what you should be doing in different spots. And what you see is that there's literally like trillions of actions. And so it really is impossible for a human being to really memorize in every single situation, what the true, you know, probabilistically weighted GTO optimized move is going to be. And, and so this is why I think a lot of people, I guess led by Magnus was saying, how could you have known this unless you were aided by something?

• 1:13:47David Friedberg?

  It's pretty clear that this guy cheated. It's pretty, I think it's, what's profound is that mastery of the game may not be achievable by a human. But mastery of any one of these games may actually be achievable by neural nets. And I think that's what's really frustrating to Magnus and to other top tier players in the world that are the best humans at a particular game, is they're now realizing, you know, that they really aren't the true masters, that the true masters are the neural nets. And more than just the guy cheating, which may feel like bad sportsmanship or whatever, fundamentally, one's ego being built entirely on one's mastery of the game and being the best at the game is fundamentally challenged because a computer is better at the game than you. It's a really profound moment for humans.

• 1:14:30David Sacks?

  I think, I think that, that ship sailed a long time ago. So I mean, I know the chess world very well.

• 1:14:35David Friedberg?

  But he's experiencing it, right?

• 1:14:35David Sacks?

  Yeah. Well, no, it was, so it was way back when, remember when Kasparov played Deep Blue, which was the IBM?

• 1:14:43David Friedberg?

  Yeah.

• 1:14:43David Sacks?

  That was the first.

• 1:14:44David Friedberg?

  Which wasn't even a sophisticated neural net. That was just a almost deterministic modeled, yeah, it was a deterministic modeled system.

• 1:14:50David Sacks?

  It was like Stockfish, it was just a number cruncher. And that was when computer intelligence and chess tipped to be able to beat the world champion. Since then, there's no looking back. I think every human who plays in the chess world understands that computers are better and there's no way for a human to be better than a computer. So, and certainly not a neural net. I mean, Magnus certainly knows that. I don't think anyone's bothered by that. I think that everyone understands that humans play in a certain way and their goal is to be the best human.

• 1:15:21David Sacks?

  I think the concern is just, obviously, if a human, it gets aided during a game by computers. But the way that chess works now, the preparation is all about working with computers. These top players spend huge amounts of time researching openings and looking for novelties in openings, using computers to help them do their research. So, you know, working with computers has now become an integral part of the game. It's kind of like, you know, in many sports where the technology has enabled the athlete to get better, you know, and, and it's really technology becomes the key vector of competition.

• 1:15:57Jason Calacanis?

  This actually happened in the NBA. This happened in the NBA where there is a special technology for three-point shooting and your form, etc. And the Knicks, actually, and a couple of other teams implemented it a couple of years ago, and you saw the entire team became better at three-point shooting. So people who were, you know, 200%, 300%, you know, moved up 10, 20% each. But this kid is clearly cheating because he cheated in the past. And people who cheat in the past cheat in the future, is my basic belief. So this guy Niemann publicly admitted that he used electronic devices to cheat when he was just a kid on online games when he was 12 to 16 years old. So then the question is, like-

• 1:16:33Chamath Palihapitiya?

  No, but Jason, it's worse than that, I think, because then chess.com came out and said, actually, the cheating was more rampant than just those two incidents.

• 1:16:40David Friedberg?

  Their algorithm determined it, yeah.

• 1:16:41Jason Calacanis?

  Yeah, he's definitely cheating. So why are people playing with him?

• 1:16:45David Sacks?

  Well, because he said that, he said that was, those games were not for money, and he was his grandpa was rating fast, and-

• 1:16:55Jason Calacanis?

  It's like the poker guys who cheat. If you're a poker guy and you've cheated before, you never play with those players again. They're cheaters, it's obvious.

• 1:17:01David Sacks?

  Well, the issue here is that this was an over-the-board tournament where, the one that Magnus pulled out of in order to protest. So the question is, how could he have been cheating?

• 1:17:13David Friedberg?

  Right.

• 1:17:14David Sacks?

  Now, I think what, what adds to the complexity of it is that you have to remember that when you're dealing with a player, look, if it was us playing Magnus, we'd need to cheat on every single move. But if you're a 2600 or 2700 player- And Magnus is at 2860 or something, the higher the rating, the better in chess, it's called the Elo. But in any event, if you're like a 26, 2700 player like Nimon, you only need help with a few moves in the game. In other words, if you could get a tip at a critical moment of the game, that might be all you need to put you over the top. You wouldn't need to, in other words, to beat Magnus, you wouldn't need to cheat on every move. You could just, if you just cheat on two or three moves at the right time, that could put you over the top.

• 1:17:56Jason Calacanis?

  So something could vibrate on your leg four times and then two times over to tell you which piece to move.

• 1:18:03Chamath Palihapitiya?

  That's what they were saying, Jake, like he had like a vibrator in his like, what?

• 1:18:06Jason Calacanis?

  Where was the vibrator?

• 1:18:08Chamath Palihapitiya?

  In his shoe.

• 1:18:09David Friedberg?

  There was a meme that became like a whole thing where it was like he had something in his butt or something.

• 1:18:14Jason Calacanis?

  An anal chess computer, an anal chess computer is what you're saying?

• 1:18:17David Sacks?

  Okay, no, look, that's not real. Somebody speculated on Reddit.

• 1:18:20David Friedberg?

  Yeah, and then it became a meme.

• 1:18:21David Sacks?

  Somebody did a Reddit post saying that he was being communicated with through vibrating anal beads and then that went viral. Elon tweeted it, although I think he deleted it. Look, it's absurd, but the point is there is a question of how would he have done it if he did it? And there have been cases before though of people getting caught, yeah, people getting caught going to the bathroom and then, you know, checking their phone.

• 1:18:45Chamath Palihapitiya?

  Yeah, there was a, there was a grand Bulgarian grandmaster, he got caught in the bathroom checking his phone and, oh god.

• 1:18:50David Friedberg?

  Metal detectors on the way in and they have RF detectors in the room, right? So they look for any sort of communication. I think, did you remember that going into this event?

• 1:18:59Jason Calacanis?

  You just could have nobody watching live, make it a half hour delay.

• 1:19:03David Sacks?

  The, the Seinfeld Cup added a 15 minute delay after these accusations. So yeah, I think there's gonna be, there's gonna be more precautions basically, but we still haven't heard from Magnus what made him think that there was foul play here in this particular game and he's been very reluctant to, he won't say anything. It's, it's sort of passive aggressive. Now, the full side of it is that Magnus Carlsen has been the number one player in chess for over a decade. And he's a very classy player. I mean, I don't, you know, everyone's, never heard a word said about him that, you know, was, now he can be cocky. He can definitely be cocky, but he's a very classy player. So I just don't see him doing something like this lightly. So that's what's so.

• 1:19:45Jason Calacanis?

  Dramatic about this?

• 1:19:46David Sacks?

  Hard to understand about it. Dramatic is, yeah, it's really hard to understand how Niman could have cheated, but also Magnus doesn't seem like the kind of player to just make a wild impulsive allegation. So this is why the chess world's just been really roiled by this.

• 1:20:00Jason Calacanis?

  Is there like a, any kind of equivalent of like PED scandal here? Like people taking Adderall or Provigil or any other kind of nootropics to, to get an edge?

• 1:20:10David Sacks?

  No, no one's ever said that.

• 1:20:12David Friedberg?

  There's a good documentary, I think it was on Vice, on how a lot of the top chess players actually get ready for matches. And they're incredibly diligent about their sleep, their workout routine, alcohol, they do take supplements. I forgot who made the documentary, but it's actually incredibly intense how physical these people are.

• 1:20:30David Sacks?

  Well, like one game of classical chess can burn like over 2,000 calories or something like that. Like the amount of calories that get burned just by using your brain so intensely.

• 1:20:40Chamath Palihapitiya?

  Adderall is rampant in the poker community, especially in tournaments. So when you play the, the higher tournaments, and I played them and I just kind of step in and, and it's, I felt very underpowered relative to the, to the kids I was playing with because they were all on Adderall.

• 1:20:55Jason Calacanis?

  Well, these are 12 hours, well, it's 10 hour sessions over 12 hours typically, right?

• 1:20:58Chamath Palihapitiya?

  It's exhausting. It's really, really physically exhausting to play. That's why I stopped playing tournaments about a decade ago. I just couldn't sit there for that long.

• 1:21:06Jason Calacanis?

  You can't justify the time suck of it too. It's like...

• 1:21:08Chamath Palihapitiya?

  It's just so, it's just so physically and emotionally demanding to be able to play that well and make no mistakes over 10 hours. And so, you know, the only solution that all these kids would turn to was, was Adderall. And I was like, this is not worth it for me. So I stopped, I stopped playing in tournaments and which was too bad because I, I thought like I could have a real chance of actually doing reasonably well in some of these things and I just gave up. By the way, the other thing I wanted to mention is there's, there's been like cheating in all these other kinds of sports and it always gets exposed, like whether it's, you know, the Tour de France, it turned out that everybody was using PEDs or, you know, the Russian Olympic team, everybody was using PEDs.

• 1:21:45Jason Calacanis?

  New England Patriots stealing signals.

• 1:21:47Chamath Palihapitiya?

  Yeah.

• 1:21:48Jason Calacanis?

  All right, listen, let's just talk about the Iran protest for a moment. Iran has shut off internet access, internet access in parts of Tehran and blocked access to Instagram and WhatsApp to try to stop these protests. The protests started after the death of a 22-year-old Kurdish woman while in police custody. Masa Amini was detained on September 16th for allegedly wearing a hijab headscarf in an improper way.

• 1:22:14Jason Calacanis?

  She later died in police custody. And activists are saying she suffered a fatal blow to her head.

• 1:22:23Jason Calacanis?

  And now you have 15 cities with very large crowds. Women are burning their hijabs and it seems to be escalating at a pretty fast pace. Iranian authorities are denying that they had any part in her death. Thoughts on this?

• 1:22:41Chamath Palihapitiya?

  It's horrible.

• 1:22:43Jason Calacanis?

  Yeah.

• 1:22:44David Sacks?

  I wish them well.

• 1:22:45Jason Calacanis?

  If you look at the demographics of Iran, it's pretty amazing how many young people there are here. This feels like a country that could turn over.

• 1:22:52David Sacks?

  That'd be great. And you want to know why it has a chance of working? Because we're not the ones behind it.

• 1:22:57Jason Calacanis?

  I mean, absolutely, yeah. We cannot, uh, yeah. Run the revolution. The revolution has to be done, but to the women and young people of Iran protesting, you have our support and we're rooting for you. And don't let the bastards grind you down. All right, everybody. For, uh, David.

• 1:23:19Chamath Palihapitiya?

  Forgot her names.

• 1:23:19Jason Calacanis?

  Did you forget her names? No, I'm just, I was going to try to come up with a new name for Rageberg, like Friedberg.

• 1:23:27Chamath Palihapitiya?

  David Plainview. I'll take David Plainview. Rageburger.

• 1:23:29Jason Calacanis?

  Rageburger Plainview.

• 1:23:33Jason Calacanis?

  The David the Dove and the host with the most, Chamath Palihopetia. I'm the world's greatest moderator.

• 1:23:41Chamath Palihapitiya?

  I'm so excited to see all three of you, honestly.

• 1:23:43Jason Calacanis?

  Big cut.

• 1:23:44Chamath Palihapitiya?

  Socks, don't flake. I love you guys. I really want to see you.

• 1:23:46Jason Calacanis?

  Don't flake, Socks. Don't curl up in a ball.

• 1:23:47Chamath Palihapitiya?

  We should roll down together.

• 1:23:49Jason Calacanis?

  Let's roll, baby. Big game. All right. We'll tell you the results of the game. Love you, bestest, bye.

• 1:24:15David Sacks?

  Besties are gone. That is my dog taking a piss in your driveway.

• 1:24:22Chamath Palihapitiya?

  Oh, man.

• 1:24:25Chamath Palihapitiya?

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

• 1:24:33David Sacks?

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