E105: Tech culture wars: Elon vs. SBF, Sabotaging Republicans with Trump

0:00 Bestie intros! 2:19 Trump announces 2024 presidential bid 26:07 Each bestie names their most important policy issue for 2024 59:03 Big tech belt-tightening, activist investor calls out Google, professional-managerial class culture 1:17:23 SBF's leaked DMs, Elon's culture shift 1:38:22 Sacks's big chess victory, Friedberg's public company analysis, and more Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://twitter.com/ianbremmer/status/1592951330955759616 https://twitter.com/DavidSacks/status/1592970866312482816 https://twitter.com/DavidSacks/status/1593041589685063683 https://www.washingtonpost.com/national-security/2022/11/14/trump-motive-mar-a-lago-documents https://twitter.com/IAPolls2022/status/1592271468045684736 https://deadline.com/2022/11/donald-trump-2024-new-york-post-ivanka-trump-1235173748 https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDGDPA188S https://en.wikipedia.org/wiki/List_of_countries_by_public_debt https://fred.stlouisfed.org/series/FYFRGDA188S https://www.theverge.com/2022/11/17/23465169/amazon-layoffs-continuing-2023-ceo-andy-jassy https://www.tcifund.com/files/corporateengageement/alphabet/15th%20November%202022.pdf https://twitter.com/antoniogm/status/1593606745955348481 https://twitter.com/DavidSacks/status/1590110462347444224 https://twitter.com/g_shullenberger/status/1590069877288886274 https://compactmag.com/article/the-email-caste-s-last-stand https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy https://twitter.com/bgurley/status/1593448516394881024 https://twitter.com/Jason/status/1593653573329436672 https://cointelegraph.com/news/sbf-received-1-billion-in-personal-loans-from-alameda-ftx-bankrupty-filing https://s.wsj.net/public/resources/documents/FTXFILING.pdf https://twitter.com/balajis/status/1593141361582444544

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

• 0:00Chamath Palihapitiya?

  Can I tell you a funny story? So I, I was in, I was in and then I, when I landed, there was a, an assistant message on the plane and then the pilot texted me like, hey, bad news. We're not going to be able to take you tomorrow. There's an error message and if we can't resolve it, we can't fly. I was like, okay. So I text Sax, I'm like, hey dude, I'm in a really tough spot. Is there any way that I, you know, I could catch a flight? You know, with you tomorrow? Absolute dead silence. Uh oh. Three hours later. Paul, pilot Paul texts me and says, good news, cleared us. We're going tomorrow. I text Sax right away. Hey, no worries. It's all resolved. In eight seconds, he responds, awesome with an exclamation mark.

• 0:46Jason Calacanis?

  Yeah, yeah. No, he tested the delay. Also.

• 0:49Chamath Palihapitiya?

  He had zero intention of bringing me and my family with him. Zero.

• 0:53David Sacks?

  I filibustered.

• 0:54Jason Calacanis?

  He filibustered.

• 0:56David Sacks?

  No, the truth is the plane was with me. I was using it. I'd be happy to let you borrow the plane if I'm not using it.

• 1:01Chamath Palihapitiya?

  Here's Sax, the last time we went to dinner. Ready? The check comes, Miller and Lux lands on the table. Here's Sax. What you're seeing, see that? You know what that is? Sax going for his wallet. You can just count it.

• 1:12David Sacks?

  This is ironic because I can't remember the last time.

• 1:14Chamath Palihapitiya?

  He's almost there.

• 1:15David Sacks?

  The last time you picked up a check, J Cal.

• 1:17Jason Calacanis?

  What are you, every time I pick it up on the way in?

• 1:19David Sacks?

  Maybe for a slice of pizza.

• 1:21Chamath Palihapitiya?

  Come on. Sax is one of the most generous people I know. I remember we went to a bar once. We barely had time to get a glass of still water, a Diet Coke and some of the free nuts. And then J Cal was like, guys, it's on me.

• 1:35Jason Calacanis?

  I pulled out a 20, I gave it right to the bartender. That's true.

• 1:38David Sacks?

  My turn, my turn.

• 1:39Jason Calacanis?

  I got it. My turn.

• 1:44David Sacks?

  Chamath, you got the, the white truffles and the filet mignon last week. I think these bar nuts are on me. It's, it's only fair. Yeah, throw in some cashews too. Throw in the cashews and raisins, the trail mix. I'll get the trail mix because you got the truffles last time, Chamath.

• 2:01David Sacks?

  Oh my God.

• 2:19Jason Calacanis?

  All right, everybody. Welcome to the All In Podcast. We're still here. Episode 105. I don't know if you saw, boys, last week, the pod hit a new high watermark, 16 overall in the world. So congratulations.

• 2:33David Sacks?

  That's incredible. I thought we peaked at 14, actually.

• 2:35Jason Calacanis?

  Was it 14?

• 2:36David Sacks?

  14, yeah.

• 2:36Chamath Palihapitiya?

  People listen to this pod? When I was in DC this week, I had a bunch of meetings and so many of the staffers listened to the pod. And they came up to me, they're like, hey, love you guys, listen every week. It's really, it's really crazy, actually, the reach of this thing. It's really cool.

• 2:52Jason Calacanis?

  Now, when you were in DC, how gleeful were they about Sacks's absolute shellacking last week? That must have been high fives all over. The Dems, like, they won twice. Trump announced and Sacks lost.

• 3:05Chamath Palihapitiya?

  Listen, we, we talked a lot about-

• 3:07David Sacks?

  How nervous are they about SBF and how much money he gave them in order to stop that red wave?

• 3:13Chamath Palihapitiya?

  Take it easy. I talked to a lot of folks, and what I would say is, we talked a lot about energy policy, life, life sciences, obviously, two areas that I invest a lot of money in, and foreign policy. And actually, David, you'd be surprised by how many fans you have there.

• 3:28David Sacks?

  Well, I mean, like General Milley, like we talked about last week, he's come around. Jake Sullivan, just this week, said that he told the Ukrainians, it was reported that they can't have Crimea back, get realistic. So Jake Sullivan and Milley are like the voices of reason now in the administration on this. And they're just saying the same thing I've been saying, for which I was excoriated by the foreign policy establishment. And I got into a little Twitter spat with Ian Bremner this week, because all of a sudden, he posted, oh, everybody has been privately saying that we need to negotiate. No, no, you haven't. You were criticizing, you were denouncing Elon as a Kremlin agent when he posted that Twitter poll suggesting that Ukrainians should negotiate. So you were publicly denouncing

• 4:11David Sacks?

  those of us who are calling for negotiations. And now, all of a sudden, you're saying, well, this has always been the position. But I think what's significant about that is, the guy's just a weather vane for the blob and the foreign policy establishment. And so the weather vane is now pointing towards negotiations. So that's the good news here.

• 4:28Chamath Palihapitiya?

  Do you think that if DeSantis wins the presidency, you will be nominated as Secretary of State?

• 4:34Jason Calacanis?

  Treasury, what would you take? Treasury?

• 4:36Chamath Palihapitiya?

  No, no, no, state.

• 4:38David Friedberg?

  If you were offered a cabinet position, would you take it?

• 4:40Chamath Palihapitiya?

  He should, you should take it.

• 4:41David Sacks?

  What you, what you have to understand is that my position on foreign policy or Ukraine specifically is not, it's not, uh, it's not adopted by either party. I mean McConnell and the Senate Republican leadership are very much on board with the Biden administration's policy on this. They are very, very hawkish. It's really the uniparty on this issue. There's really just one consolidated blob.

• 5:04Jason Calacanis?

  Okay, but back to the question, would you, would it be a dream of yours? Would you find great joy in having a White House position?

• 5:12David Friedberg?

  To serve your country.

• 5:14Jason Calacanis?

  To serve your country. Would you serve?

• 5:17David Sacks?

  Would I serve? If, if, if the President of the United States calls you up and, and asks you to do something, obviously you have to, you have to serve your country, but it's not something I'm actively looking for.

• 5:28Jason Calacanis?

  That's a yes.

• 5:29David Friedberg?

  What if he asked you to serve as the US ambassador to Burkina Faso?

• 5:35David Sacks?

  Where?

• 5:36Jason Calacanis?

  What?

• 5:40David Friedberg?

  The ambassador roles are so funny. It's like you have to compete for the good ones and then some people get stuck with the bad ones.

• 5:46Jason Calacanis?

  Those are, those are available for purchase.

• 5:48David Friedberg?

  Yeah.

• 5:49David Sacks?

  Yeah, exactly. You know, there's like, um, there's like a menu of these things, like these ambassadorships, like, I don't think it's like written down anywhere, but it's kind of like unspoken. It's like, if you want the ambassadorship to the UK, that's like $10 million and then, you know, like

• 6:05Jason Calacanis?

  Affordable.

• 6:05Chamath Palihapitiya?

  No, no, the, the, the thing with, with UK and France, it's every, every embassy, every ambassadorship comes with an annual budget. But the cost of actually running that embassy and really throwing the parties is much more. So for the UK and France, the gap is 10 million a year that you have to fund out of pocket. So you gotta be really willing, you know, to put the money up. Uh, but apparently

• 6:27Jason Calacanis?

  You gotta pay for the parties?

• 6:28Chamath Palihapitiya?

  My, my friend, my friend was, was the ambassador to the UK, uh, under Obama and I went to a party there. It's unbelievable. And he has the best life because like, you know, he was meeting everybody in the world you can imagine goes through the UK and then wants to meet the US ambassador. It was a great job for him.

• 6:44David Sacks?

  Right, but the money I'm talking about is the cost of buying one of these sinecures. You have to typically raise that much money. Yeah, you bundle that much money for whoever. This is what I've heard. I mean, I don't know. This is what I've heard is that.

• 6:56Chamath Palihapitiya?

  Well, does that mean that SBF's parents, if Elizabeth Ward wins the presidency, SBF's parents are gonna get some ambassadorship?

• 7:02Jason Calacanis?

  Right now, the Illuminati right now just revoked all of our Illuminati cards. We're not supposed to talk about this, guys, that you can buy an ambassadorship. But speaking of buying politicians and coverage, let's get an update on FTX. So. Wait, what about Trump? Speaking of politics, I mean. You know, you bring it up, because if I bring it up, I didn't want to tilt Sacks in the first five minutes.

• 7:24David Sacks?

  The only thing I want to bring up is, I think I'm entitled to, and I told you so on this. There was a story where the FBI said that the reason why Trump kept the boxes in his basement, they've now, the FBI has definitively said it's because he was just trying to preserve mementos, not try to sell state secrets to the Saudis or something like that. Like some people were making wild conspiracy theories about. So Jake, it looks like I was, I was right about that. In fact, I think we had that very discussion on this pod.

• 7:54Jason Calacanis?

  Yeah, I mean, we, I, I said I thought he was keeping it for like keepsakes, like mementos. That was my position too, because he's a hoarder.

• 8:01David Sacks?

  You didn't, you didn't support the Saudi conspiracy theory?

• 8:03Jason Calacanis?

  Let me ask the question, because I heard that. I mean, I wouldn't put it past him. He's a maniac.

• 8:07David Sacks?

  I think if you believe that this was about mementos, which the FBI has now said it was, I think you also have to say that the FBI's approach in raiding his home with armed, you know, soldiers was heavy handed. Now, I'm not saying they didn't have the legal right to do it. I'm sure they checked all the right boxes, but it was heavy handed. But look, that brings me to another point. Why do they do it? I actually suspect now that what the Biden administration is trying to do is keep Trump in the news. I think they actually want to provoke him.

• 8:33Jason Calacanis?

  They want him to run.

• 8:34David Sacks?

  They want him to run. It's the exact, it's the exact same thing. Remember the, the 50 million that went into Republican primaries to support the, you know, the, the election denier candidate? Turns out that was a successful strategy for them, as much as I hate to admit it. It's as reckless as I think that was and hypocritical, because I don't think you can be out there claiming that these candidates. Are a threat to democracy at the very same time you're funding them. So I think it was completely hypocritical and sort of Machiavellian, but it worked. And I think in a similar way, what the Democrats are going to try to do over the next year is is keep Trump in the news as much as possible. And in fact, CNN ran his entire speech announcing last Tuesday, I think for this reason.

• 9:15Chamath Palihapitiya?

  If Trump wins the Republican nomination. He's going to. Then he will lose the presidency because if you look at all of these exit polls that came out of these midterms, he's just so massively unfavorable, but that's not what's going to be, you know, litigated in the primaries. In the primaries, it's just Republican on Republican and there are a non trivial number of paths where Trump actually beats DeSantis. And I think that's very scary to the Republicans who want to just move on and have a chance of actually consolidating power. And it's gleefully blissful for the Democrats because if again, and we saw this, look, if if if the Democrats were able to fund and field MAGA candidates in the Republican primaries that then lost in the general election.

• 10:00Chamath Palihapitiya?

  Well, the best MAGA candidate of all is Trump. So it David Sacks is completely right. Now, like the balance of power here should be if you're the Democrats, whatever you can do to keep him in the news, whatever you can do to induce him to run makes a lot of sense because he will he'll cripple the Republican Party. Let's go. He'll split and fracture the vote.

• 10:23David Sacks?

  Look at how Jake has got a big grin. He's admitting to the hypocrisy, which is for years. He's been screaming about what a threat. Hold on a second. You've been screaming about what a threat to democracy is, how he's secretly on the payroll of the Kremlin or foreign governments. And yet, and yet you want to keep him in the news. You want him to be the nominee.

• 10:40Chamath Palihapitiya?

  And you Republicans don't have the common sense to kick him out of the party.

• 10:44David Sacks?

  No, I do. I do. I do. Come on. I was on the DeSantis train before the midterms election.

• 10:49Chamath Palihapitiya?

  But you won't kick Trump out. You on this pod will never kick him out of the party. You should say, I think we, you guys should all disavow him.

• 10:58Jason Calacanis?

  Publicly disavow him.

• 11:00David Sacks?

  How? I've already said I support DeSantis. I said it before the midterms. What else do you want me to do? But by the way, I don't think.

• 11:06Jason Calacanis?

  I'm talking about the party writ large.

• 11:07David Sacks?

  I think, I think you're, I think you and many other people on the Democrat side in the media are being very hypocritical about this because you want to claim that he's this unique threat to democracy while playing this game where you want to keep him in the news. You want to basically provide him with as much oxygen as possible because you think he's more beatable. And by the way, I agree that he's less electable than DeSantis, which is why, part of the reason why I'm on the DeSantis train. I also think that DeSantis, hold on, I also think DeSantis would get more done. But look, I don't think it's a foregone conclusion that he's going to be the nominee. Did you see the new polling that came out after the midterms? DeSantis is now the favorite in, among Republican primary voters, among every different slicing that you want to do of whether it's likely

• 11:51David Sacks?

  Republican voter, primary voters, whether it's Fox News viewers and on and on and on. DeSantis is now ahead of Trump by about.

• 11:58Jason Calacanis?

  Okay, wait, hold on. I need to be able to state my position because Sax interrupted me seven times. I just would like to get my position out here. Number one, you all backed somebody who is a horrible human being who made terrible decisions. And now you guys keep supporting him. At some point, you have to put your foot down and say, listen, we don't want this guy. You have to publicly say, January 6, you know, and this guy's approach, the election denial, you guys have to come out and just say, we don't want this person to run. I think you've been hedging too much. I think that's the problem. Now,

• 12:26David Sacks?

  Who has?

• 12:27Jason Calacanis?

  I am not, I did the Republican Party. Yeah, no, you always were a little bit like, because I did ask you on this very pod, hold on, hold on. On this very pod, I asked you, if he run, would you support him? Would you ever vote for him again? And you were like, wow. And you would vote for him again. If he wins the nomination, you'll vote for him. That's the truth. Republicans will still vote for him.

• 12:44David Sacks?

  Look, you know that before it was popular, before the midterms, I was on the DeSantis train. I was saying so on this pod for over a year when it was very unpopular, certainly in the area in which I live. And so, you know, and there are a lot of Republicans now, most Republicans now agree with me on this issue according to the polling that just took place.

• 13:02Jason Calacanis?

  But if he wins the nomination, you will vote for him.

• 13:04David Sacks?

  Jason is that you want us to buy into every bullshit narrative that you've ever told about this issue.

• 13:11Jason Calacanis?

  January 6th bullshit?

• 13:12David Sacks?

  No, it was.

• 13:13Jason Calacanis?

  Election denial is bullshit?

• 13:14David Friedberg?

  Let him finish. Let him finish.

• 13:16Jason Calacanis?

  He's interrupting me every two seconds. Stay out of it, Free Bird.

• 13:18David Friedberg?

  Oh, I just want you guys to, guys, I just want you guys to speak and then let the other person speak. That's it. I don't, I'm not on any side.

• 13:24David Sacks?

  My, my point is just.

• 13:26Jason Calacanis?

  Here we go again.

• 13:27David Sacks?

  I, I don't, I don't want to rehash every single thing in the past, but, but look, the, the point is that I think we have more electable candidates. I think we have candidates that would get more done in office. But, and I've already said so, but I, you know, but I, that doesn't mean I believe this whole like threat to democracy thing. I think that is massive inflation of the actual threat. But, but look, if you want me to say that we have more electable candidates, we have candidates who will get more done, who frankly would be less alienating to moderates and independents and could even win over some moderate Democrats the way that DeSantis did in Florida to win by 19 points. Yes, happy to say that. And I've been saying that.

• 14:07Jason Calacanis?

  I will just say, if I, if I, if I'm, if Friedberg allows me to make a point, I would like to say it is a threat to democracy, January 6th and election denial. Those two things are acute threats to democracy.

• 14:17David Sacks?

  Why did the Democrat party fund over $50 million to those candidates?

• 14:21Jason Calacanis?

  Cynical because they wanted to win. Cynicism, pure cynicism.

• 14:24David Sacks?

  Okay, we're on the same page about that.

• 14:26Jason Calacanis?

  Yeah, yeah, it's pure cynicism. Um, but do you, let me ask you a question and then we'll wrap on this because I know it's uncomfortable for Friedberg to watch mommy and daddy fight.

• 14:36Jason Calacanis?

  I know we're trading some childhood trauma. I know this has to do with some childhood trauma. It's cool. It's okay. Mommy and daddy still love each other, even if we fight sometimes.

• 14:46David Friedberg?

  It just makes me want to turn the volume down. Go ahead.

• 14:49David Sacks?

  We're almost done.

• 14:49Jason Calacanis?

  Anyway, I do think fielding moderate candidates is the path and I think Chamath, you brought this up a ton of times. So it's the race to whoever can get that moderate middle and I hope that they field better candidates. But do you think Sax, he's running, this is one of the cynical takes, is that he's running because it will help all the legal cases against him? Do you think there's anything to that?

• 15:11David Sacks?

  My guess is that, that they see him as an easier candidate to beat and they're going to do everything they can to try and keep him in the news. And, and I don't, I actually, I don't think that's your position. I actually think that you're being sincere, that you don't want him to win a second term. I mean, remember, like, we don't know, I think we all believe that we're going to have a pretty severe recession next year. So just because the Democrats cynical strategy in the midterms of promoting. You know what they called election deniers in the primary, that happened to work. But just because it worked last time doesn't mean it's gonna work next time.

• 15:41Chamath Palihapitiya?

  And abortion absolutists and a whole bunch of other things. I think, I think the point is pretty much this, which is that people gave Trump a lot of credit for being an idiot savant. But it looks like he's more of an idiot savant minus the savant. Okay, this is a, this is kind of a goofball. Who has a brilliant media strategy and he had his finger on the pulse in a moment.

• 16:04Chamath Palihapitiya?

  And then he just couldn't execute, couldn't put two and two together, couldn't put one foot in front of the other. And he was way too divisive and he got booted out and he lost fair and square. And now what the Republicans have to realize is if they don't figure out how to field somebody out of the primaries. That is different than Trump, the Democrats will win. Because if it is Trump, whoever the Democratic candidate is, I don't think it really matters, will crush Trump.

• 16:31David Sacks?

  Yeah, look, I, I think that's likely correct. I mean, I think, I think that, we talked about it last week. You cannot win the presidency with, call it 45% of the vote. I mean, Trump is capped at that amount.

• 16:41Chamath Palihapitiya?

  And the scary thing for Republicans, by the way, is Trump does a much better job than anybody else in getting his base activated. So the thing that all these polls get wrong, and I think they've consistently gotten wrong and, and as a result have underestimated him. Is they don't give him the credit he deserves duly. For being able to curate a fervent base of that 30 or 40% of America that will show up for him. And even if they didn't show up as much in the midterms, they sure as hell showed up in the primaries for his candidates oftentimes. So I just think it's a very dangerous cocktail that, that you can't sleep on. So the Republicans have to take this really seriously. If moderate Republicans want to have a chance of winning. You guys have to figure out how to beat Trump in a ground game.

• 17:25Chamath Palihapitiya?

  Because if his base shows up, he has a decent chance of winning the nomination, but then you will lose the general.

• 17:32David Sacks?

  Yeah, I think that's, I think that's pretty much spot on. I think Republicans really have to be smart and disciplined and think about, we have to nominate the, the most electable candidate. But here's the thing is, we're not even debating policy right now. No one, no one really says that, hey, on a policy basis, there's a huge difference between, say, Trump and DeSantis or some other folks. It's all about personal style. And is it really worth it to the Republicans to potentially lose the next election based on personals, based on style points? It's a silly reason to lose. You know, William F. Buckley, a long time ago, said that he would always support the most electable conservative candidate. He didn't always go with the most

• 18:13David Sacks?

  conservative candidate. He wanted to go with the most electable candidate who met a basic policy bar. And he sometimes got in trouble for that. For example, he supported Bush 41 over Jack Kemp. I know I'm going back a long way, but, but in any event, you know, having, thinking about electability is just really important.

• 18:32Jason Calacanis?

  There's one silver lining here. The head of the Republican Party, Rupert Murdoch, has absolutely dissed Trump. I don't know if you saw the New York Post, but he put on the cover of the New York Post, a little lower, like 10th, "Florida man makes announcement", and on page 26, he had the announcement of Trump running for president.

• 18:49Chamath Palihapitiya?

  And the funny thing was, the last-

• 18:50Jason Calacanis?

  You lose Rupert Murdoch.

• 18:52Chamath Palihapitiya?

  He didn't even name Trump as the presidential, the absolute last line of that column. And he said, oh, and he also happened to be the 45th President of the United States.

• 19:01Jason Calacanis?

  Yeah.

• 19:01Chamath Palihapitiya?

  It was very funny.

• 19:02David Sacks?

  What you're seeing a lot of Republicans saying, I think correctly, is that if you want to win elections, you have to look out the windshield, you know, not in the rear view mirror. And what we saw in the midterms is that even talking about 2020 was at minimum a giant waste of time and a distraction, and at maximum, potentially caused these candidates to lose. I mean, the fact of the matter is that, that a lot of candidates, including some I supported, in battleground states, who got lured into trying to relitigate 2020, they all got vaporized. And I just think it's stupid to be talking about the past. Voters want you to focus on the future, and especially when there's no policy outcome that matters, that's at stake, for you to be talking about a past election, instead

• 19:46David Sacks?

  of the future and the current election you're in. It's just politically stupid.

• 19:50Jason Calacanis?

  Friedberg, if I may bring you into this discussion uncomfortably, as uncomfortable as it might be. Would you vote for Biden, incredibly old, I don't know, he's gonna be 81 or 82 in the next election, would you vote for Biden or DeSantis?

• 20:05David Friedberg?

  As I go through the list of things I'm most concerned about in the world today, number one is the debt and spending cycle of the federal government in the US. I'm, I think it's the most kind of scary set of facts and conditions that we're getting set up for, kind of a major crisis 10 to 15 years from now, because you can't afford all the debt that we've taken on as a country, as well as the entitlement, as well as defense. And so something's gotta give, and there's a bunch of paths that could emerge from that set of conditions that are all really scary paths and not good. I'm more concerned about that than I am about nuclear war or climate change, just to be

• 20:46David Friedberg?

  clear, because I think that the social effects and the global geopolitical effects that arise from the US kind of destructuring because of our debt and spending cycle that we're in right now are far more significant than what we'll experience over the same period of time. And again, I do think that technology is gonna resolve a lot of our issues with climate change, and I think nuclear war, cool heads will prevail. Everyone's got a family. So that's what I'm most concerned about. So any kind of voting decision I make is made with that lens, which is what's the best path to supporting some sort of-

• 21:18Jason Calacanis?

  Fiscal responsibility.

• 21:19David Friedberg?

  -step back or step back to resolve those issues. As Charlie Munger said so well in this interview that was published this week, and I've said it a few times on the show, but he did, he's a much better speaker than I, uses far fewer words, but you know, in democracy, eventually the populace realizes they can vote themselves all the money. And, you know, that's what we see happen in an accelerated way in Latin America. We've seen that with a lot of these democracies and ultimately resolve to kind of socialism. And in the US, we're seeing a lot of this behavior where we're kind of voting ourselves all the money. We're putting in place politicians and the populace is saying, I want, I want, I want, and more money comes out. And it totally decreases the strength and the resiliency

• 22:01David Friedberg?

  of our nation and our economy. And it's the most concerning thing to me because the incredible innovation and economic engine that is the United States is threatened, and it really threatens a lot of stability in the world today.

• 22:13Jason Calacanis?

  Trumav, any final thoughts here as we wrap up the political discussion?

• 22:16Chamath Palihapitiya?

  I think

• 22:17Jason Calacanis?

  You're obviously a Democrat, so you're voting for Biden, but you also care about fiscal responsibility. So where are you at with your vote for 2024?

• 22:25Chamath Palihapitiya?

  I don't think that we know who's actually running on either ticket yet, just to be completely honest. So that's my perspective. My other comment is, I think what David said is so spot on. The single biggest issue that we have is that we have made a huge decision to deglobalize. And that deglobalization has the risk of introducing a hyperinflation loop. And we won't know how bad that is for another year or two.

• 22:52Jason Calacanis?

  Why would it do that? Why would it

• 22:54Chamath Palihapitiya?

  Well, think about it this way.

• 22:55Jason Calacanis?

  Deglobalization costs hyperinflation.

• 22:56Chamath Palihapitiya?

  So today, let's just say you buy a chip to make the iPhone. You buy that chip from, you know, TSMC that makes it in Taiwan, ships it to China, and the entire world is serviced with that supply chain that keeps that chip as cheap as possible. Now, with the CHIPS Act as an example, we will build resilient supply chains where now, instead of one place, it'll come from six places. Five of those six will be in allied territories: the United States, Western Europe, potentially Mexico. The thing with that is that that now is 6X more equipment that you're buying, right? Instead of one machine, you now have six machines. Instead of one person operating the machine in one country, you have six

• 23:41Chamath Palihapitiya?

  people in six countries. As you can imagine, when you layer up all these costs...

• 23:47Chamath Palihapitiya?

  There is no world in which that chip is as cheap as it was before. And so the cost of that has to be borne either by the consumer who pays a higher price. That's measured as inflation. Or by the government who subsidizes it at the point of import. That'll be measured by debt. And so one way or the other. In our, in our path now towards more resiliency and national security, which by the way, I think is the absolute right decision. Okay. Energy independence, all of this stuff we have to do today. We are at risk of a hyperinflationary loop if not managed well. And so you have to be really. On the levers of the economy and you have to understand it deeply.

• 24:33Chamath Palihapitiya?

  The person that deserves the most credit of preventing this hyperinflationary loop right now is Joe Manchin. And hopefully the history books, whatever Jay Powell does, I think has been good. But the fact that Manchin prevented six trillion more dollars of being pumped into the economy in the last two years. Is probably the single thing that prevented inflation instead of being peaking at nine from peaking at 15 or 16. I think it would have been a national disaster without that.

• 25:00David Sacks?

  Chamath is right, that extra six trillion that Manchin stopped would have been a national disaster, but let's also give credit to every Republican because they also voted against it. I mean, the fact of the matter is that.

• 25:09Chamath Palihapitiya?

  The pressure was on Manchin to do the thing and see the forest from the trees and he did that.

• 25:13David Sacks?

  Yeah, no, look, I agree, I, I agree that.

• 25:15Chamath Palihapitiya?

  Profound courage, that's a profound courage.

• 25:17David Sacks?

  I agree that he was in the hot seat, well, so was Sinema, by the way. Sinema didn't go for the three and a half trillion build back better. But then Manchin. You went along with the $750 billion version of BBB, which they renamed the Inflation Reduction Act. That was kind of a disappointment, so. Frankly, like I give more credit to the Republicans, they were against all of it and. The Democrats jammed it through. So if you're worried about all of this trillions and trillions of unnecessary spending, why don't you give the Republicans a chance?

• 25:45Chamath Palihapitiya?

  David, I'm talking about the delta between what was spent and what could have been. The entirety of the gap is really, was prevented by Joe Manchin.

• 25:53David Sacks?

  I know, but it was Joe Manchin siding with the Republicans. My point is just, look, neither party is perfect on spending. They both want to spend too much money, but at this particular moment in time, the Republicans are more restrained about spending than the Democrats.

• 26:07Jason Calacanis?

  Let's go to number one issue for each person. Hold on. Number one issue for Friedberg is fiscal responsibility. I was going to say the same thing. It is my number one issue in this next election. I want to see austerity, fiscal responsibility, and get this spending under control so that our kids do not inherit, you know, stagflation, hyperinflation, or whatever cocktail of disastrous economic policies we are handing to them. What is your number one issue, Sacks, for 2024? If you had to pick a number one issue, what would it be for David Sacks?

• 26:35David Sacks?

  Look, I think it's simple. The president's job is to ensure peace and prosperity. So you guys are talking about the prosperity side. I think we do need fiscal responsibility. We need to have a good economy. There's like a bundle of policies that go into that, starting with, I think, greater fiscal restraint. And then on the peace side, I think we need to adjust America's foreign policy to be less interventionist. We're, you know, we're involving ourselves here, there, and everywhere, all over the world. And I, I'm hopeful that what I'm hearing out of the administration in the last couple of weeks, from Jake Sullivan, from Milley, these are some good things that I'm hearing. But, you know, I would like to see us dial back on the foreign interventionism.

• 27:14Jason Calacanis?

  If you had to 60/40 that, or whatever, is one more important than the other? Are they both equal, and then we'll go to Chamath? Both equal for you? Which one's more important?

• 27:20David Sacks?

  They're both, I mean, look, how can you have a successful United States if we're either in a recession or at war? You don't want any, either of those situations.

• 27:29Jason Calacanis?

  So those are your top two equally. What is it for you, Chamath? What are your traditions for you?

• 27:33David Sacks?

  There's also a third one, which is culture, J Cal. So this one's a little bit hard to categorize, but I do think culture matters. And, you know, I want us to have a culture of excellence. I want, in the schools, for example, I think schools should have grades. They should have advanced math. We should hold our kids to a high standard. I think that we want to have safe cities. We want to, you know, have cities where crime's not out of control. Uh, we need to have, you know, a sound border policy. So I think there's like a collection of policies there under, you know, schools, crime, border, that are sort of broadly cultural, I guess. But or maybe you could call them quality of life issues. So, you know, yeah, we need to have a good economy. We need to stay out of foreign wars, but also we need to have a high quality of life.

• 28:16Chamath Palihapitiya?

  Can I steel man something for you? Because I I really agree with those three things, David, that you said, but I've I've spent a lot of time thinking about this and my formation is that there's one thing that allows us to solve all three, if you bear with me for a second, and I think that that is the energy independence of the United States. If you look inside of what's happening in the US today, the cost of generating energy is effectively as cheap as it's ever been and as close to zero as it ever has been, and it's only going to get cheaper. The problem that we have is that we have all of these decrepit laws and infrastructure and regulatory capture that causes us to always be in an imbalance. And as a result, we do all kinds of crazy things.

• 28:58Chamath Palihapitiya?

  We borrow enormous amounts of money to create subsidies. We go and we fight all of these, you know, foreign wars that don't make any sense. We wrap the energy problem and set in climate change language, which causes this cultural division. But my belief, quite honestly, is that the the reason the IRA was so important is it is the most clarified piece of

• 29:21Chamath Palihapitiya?

  legislation we've seen that essentially puts all forms of energy on a level playing field and has the chance to get America to permanent energy independence. And if the cost of energy is zero and we can abundantly create it in the United States, what I think happens, David, is we have energy to rebuild our supply chain much cheaper. So inflation gets under control. We don't borrow as much. We have a completely different lens on foreign policy so that this interventionism and fighting over resources is much harder to justify. And we put the climate change language aside and we use energy independence as a form of national security, which gives us the courage to battle all these other cultural taboos

• 30:03Chamath Palihapitiya?

  that we otherwise have to say we agree with, even if they don't necessarily make any sense. And there's a bunch of them. So I don't know. My my my my answer to your question, Jason, is that one thing, if we accomplish in the next five to 10 years. Has a chance to really change the course of the United States.

• 30:20Jason Calacanis?

  Right, and then so I'm guessing then Biden's your vote because if it is in fact Biden, because Biden is the one who pushed for these clean energy tax credits and this policy in it. Friedberg, what do you think?

• 30:31David Sacks?

  He also canceled our energy independence. I mean, look, we were energy independent based on fracking. You may not like fracking, but it did get us energy independent. You may think that there's environmental consequences to it that you don't like and that has to be balanced, but we did have energy-

• 30:46Chamath Palihapitiya?

  I've never been against fracking. I believe in nat gas. I believe in coal actually as a bridge fuel. I believe in all of these things. I believe that these are all more important than going off to all of these foreign lands and trying to justify spending trillions of dollars and putting tens of thousands of American lives at risk, essentially for resources that we can actually create for ourselves at home.

• 31:06David Sacks?

  Well, I agree with you on that 100%.

• 31:08Jason Calacanis?

  I'm fine with, I mean, I'll tell you like- Clean fracking as a way, as a bridge, go ahead to getting to, you know, more independence through nuclear and renewables. Go ahead, Friedberg.

• 31:16David Friedberg?

  Like I said before, China's declared that they're building 450 nuclear power plants. The net cost, effective cost of electricity production out of a nuclear power plant is somewhere between one and five cents per kilowatt hour. The US on average is paying 11 to 15 cents per kilowatt hour. Nuclear is just-

• 31:34Chamath Palihapitiya?

  No, through utilities though, Friedberg. That's with all the regulatory capture and all that trash that you have to spend. For example, we have to spend $220 billion a year to replace the power lines in America by law. That's $2.2 trillion just there.

• 31:47David Friedberg?

  Right, and so the cost for solar and wind off-grid I think is around three to seven cents a kilowatt hour in that range, right? So it gets nowadays, it's gotten much more competitive.

• 31:59David Friedberg?

  But I think that the nuclear solution is just not even being engaged in the conversation. Now, I want to go back to the previous point, which is- Because I didn't state the numbers before, so I just want to state them because they're so shocking, and this is what shocks me. The current federal debt is $30 trillion. Our GDP is around $23 trillion. 5% interest rates on $30 trillion is $1.5 trillion in interest payments alone every year. And our social security, so $1.5 trillion, I mean, that alone is about 6%, 7% of GDP. So you have to tax every transaction in the country by 6% or 7% just to pay the interest payments on the debt. And then we have Medicare and social security.

• 32:43Chamath Palihapitiya?

  That math is wrong because you have maturities of all different types with different yield to maturities and different coupons.

• 32:49David Friedberg?

  Right, so it's not today's numbers, it's what's happening over time. So as you look out and you look at the yield on treasuries and you apply that to the current debt level and the increment in the debt level, you'll get to that level, right? You'll get to a trillion five a year in interest payments that need to be made, plus another, call it, 3, 4, 5 trillion dollars a year in mandatory spending. And so that's where the country starts to run into a problem because at some point, when you have to tax so much to cover the cash payments that need to be made by the federal government, the economy really gets hurt and things start to cripple. And then if you were to take those entitlements away, social security, Medicare, you have a real problem with people's ability to support themselves in an economy where they're not working.

• 33:34David Friedberg?

  These are elderly retired people. So there is a need at work to pay these expensive medical bills. So there's a major crash coming if we don't figure out how to bridge our way to this gap. So if someone wants my vote and they're going to run for president, they would put up a simple chart like Bill Clinton used to do and show me a 10 to 30-year plan and just say, here's where we're headed, and here's what we're going to do to make sure that doesn't happen. And that chart alone, I think, can win the vote.

• 33:58Jason Calacanis?

  Okay, let's pull up the chart then. So here is the federal debt, total public debt as a percentage of gross domestic product. As you can see, in the seventies and eighties, we were at under fifty percent. The nineties, we started, you know, growing modestly.

• 34:11Chamath Palihapitiya?

  I don't think this matters. I think everybody, every self-proclaimed intellectual looks at this chart and says, oh, my God, we've exceeded a hundred percent. You know, the the empire is going to go to ruin. That's not why the empire goes to ruin. We have the reserve currency of the of the world, and there's an enormous amount of power that comes from that position. So what the right number is, is TBD. That's the most honest way to think about it. It was a hundred. It's at one fifty. It could go to two hundred. Many countries operate at levels above us and still haven't imploded, per se. The real thing is what part of what Friedberg said is, look, if you really want to look at what we pay, today, we pay four hundred billion dollars this year. That's the interest payments. Okay, that's when you calculate all of the different maturities

• 34:55Chamath Palihapitiya?

  we have, with all of the different coupons we have, that's what we owe today. And David is right mathematically, that if interest rates go to five percent and stay there forever, but we know that that's not how economies work. They ebb and flow. Okay, so the real problem that we have to understand is how do you actually create enough growth? And then the next time that we have a meaningful fall in interest rates, like every other person does, you know, look, a lot of people in America know how to refi their credit cards, refi their home loans, refi their mortgages. The United States could have had a much more aggressive and thoughtful strategy of refiing by pushing out these maturities way into the future. And again, Trump actually suggested that, but because he sounded like a goofball, everybody said,

• 35:39Chamath Palihapitiya?

  absolutely no way. But in hindsight, that one move would have saved us trillions of dollars over the next decade if we had done it. And this time around, we have to have politicians who are smart enough and have the werewolf fell to say, it doesn't matter where this idea came from. It's really smart. Rates are now back to two percent or one and a half percent. Let's now issue fifty and hundred-year bonds, and let's refi this problem out into the future. That makes a ton of sense, and we have to do it.

• 36:07Jason Calacanis?

  The refi makes a ton of sense. Just to pull up a chart here, and to counter your position now that it doesn't matter, maybe you can respond to, if you look at GDP ratios here.

• 36:21Jason Calacanis?

  Number one, two, and three, Japan, Venezuela, Greece, Sudan, and you know, you know, some smaller countries there, but United States currently number 12.

• 36:30Chamath Palihapitiya?

  None of these countries, look, this entire, this entire world runs on the US dollar complex. Whenever we raise rates, yes, it is true that on the one hand, our interest payments go up, but proportionately and on a relative basis, I think, I think maybe, let me take a step back. Look, one of the most important things in investing, which is appropriate here, is that people ask, what is the price of a stock? Well, before you go public, you're calculating what the intrinsic value of a company is. Okay. All the things that they do, all the money that they make, here's what we think it's theoretically worth. But the minute it goes public, the intrinsic value no longer matters. It's what is it valued relative to everything else? Okay?

• 37:14Chamath Palihapitiya?

  The United States is a relative, if it's a stock, if all these countries are stocks, we are valued relatively to others, not, not intrinsically. And the reason why we have so much power is because everybody else is actually valued relative to us. So this is why I think the right thing to look at, Jason, is the rate of change of debt to GDP for the entire G8 or G20 or the rest of the world. And what you'll see is something that goes up and to the right. Nobody in the world has been rewarded for not investing in their populations and basically borrowing from tomorrow to invest in today's humid capital.

• 37:52Jason Calacanis?

  Okay. So we have a disagreement here. Friedberg, you think this is a major issue?

• 37:55David Friedberg?

  Yeah, because I think you're also.

• 37:56Jason Calacanis?

  Schumacher, you think it's manageable? Friedberg, you have the floor.

• 37:58David Friedberg?

  I think there's two things that are missing. One is the inflationary effect. So you look at that list of countries that are there, they're paying higher interest and they're paying in the form of inflation. So they have less that they can spend on their people. And ultimately, what ends up happening, it's just simple arithmetic. It's not about relative value of a currency. It's the arithmetic that we have a check we have to write every month to pay for Medicare and social security. And it is written into law, what that check needs to be. And the rate at which we're having to write those checks, the increment of those checks is going up so significantly that when you add on the interest payments, and you look at those checks, and then you add on defense, something's got to give because you cannot raise taxes in the amount that's needed to fund all of that outlay without

• 38:42David Friedberg?

  this causing either number one, massive inflation, if you just take on more debt, or number two... You know, significant loss of services, either social security, Medicare, or defense. And so something's going to give. And the distribution, I think, is not being discussed.

• 38:58Chamath Palihapitiya?

  Sorry, just one, just one point. The president's budget, anybody who is a president of the United States gets hold of their annual budget. It's about five and a half trillion dollars this year. So you're talking about interest payments that are still less than 10% of their total budget. Now that includes the entitlement payments. Okay, so about $3 billion, $3 trillion, sorry, three and a half trillion is what you have to pay for.

• 39:17David Friedberg?

  Close 20%.

• 39:19Chamath Palihapitiya?

  No, $3 trillion is the sum of Medicare and social security. Okay, so the president still has one and a half to $2 trillion of leeway, of which a quarter are debt payments. So my, my perspective, quite honestly, is mathematically, there's a lot of room to run here before these things get really out of control. And even if they do, I think the relative problem is for the rest of the world will be so egregious that the ability for the United States to go to those banks and those economies and basically sell in more US debt is quite high because they cannot afford to own debt in their own country. So if you think that the United States is bad, go back to that list. Guess what? Those central banks in those countries are going to be buying US dollars faster than they can go out of stock.

• 40:02David Friedberg?

  Unless we see some union of India, China, Saudi Arabia, Russia, Japan, Brazil, obviously not Japan, but some, some of that consortia will become a closer trading partner and perhaps could cause a shift in the balance of the dominance of the US dollar. And that's one path to, to consider.

• 40:23Jason Calacanis?

  Sax, what do you think of the balance sheet here? Obviously, we have two opposing opinions here from Chamath and Friedberg. Where do you stand on the United States balance sheet? Are we over our skis?

• 40:31David Sacks?

  Yes, the balance sheet's a disaster. What are we at, like 130% of debt to GDP? I mean, we have like 30 trillion of. Yeah, it's not even stable. I mean,

• 40:40David Friedberg?

  Our spending is 27% of GDP right now. 27%. It should be 15%, right? So the spending is-

• 40:47Chamath Palihapitiya?

  Where does that number come from? Why?

• 40:48David Friedberg?

  There's a, there's a bunch of economists who have shared these papers-

• 40:51Chamath Palihapitiya?

  They're morons, morons, morons, fake experts, fake experts.

• 40:55David Sacks?

  No, no, no, hold on, hold on. If you look at, if you look at government tax receipts over time, with all different kinds of tax rates, including very, very different top marginal tax rates, what you see is that federal tax receipts as a percentage of GDP is in the 17% to 19% range. And like the best years, you make 19%, it's usually in a good economy. And in a bad economy, it's like 17%. And it really, it doesn't matter whether Reagan was president or Clinton, Bill Clinton and so on. So there's only so much blood you can get from a stone. And historically, spending was around 19% of GDP. And so you would have a 1% or 2%, you know, deficit every year. And that really accelerated. First, you had the, the financial crisis of 2008.

• 41:41David Sacks?

  And then you had COVID. And Friedberg's right, you know, we, we went from, call it, you know, 20% of GDP spending to roughly 30% or more during COVID as kind of this emergency measure. But like everything else in government, you know, the emergency measure becomes a permanent program. So now we're at 27%. It doesn't seem to be going down. And the Democrats want a lot more. I mean, we talked about it. Build Back Better would have been 3.5 trillion instead of 750 billion if they just had one or two more votes in the Senate, which they now have. So, so hold on. So, so Friedberg is right. There's like nothing stable about the point we're at. It's, the point we're at is bad on its own terms, having 30 trillion of debt. Let's say that interest rates stabilize at 3%, that's still a trillion a year of debt service,

• 42:26David Sacks?

  which is more than the entire-

• 42:27Chamath Palihapitiya?

  It's not a trillion.

• 42:28David Sacks?

  If interest rates stabilize at 3%, which is optimistic, and we're servicing a trillion, sorry, 30 trillion of debt, that's roughly a billion dollars a year of debt service payments. That could be spent, that could be spent on other things.

• 42:40David Friedberg?

  You guys keep saying billion when it's a trillion.

• 42:42Chamath Palihapitiya?

  The average yield, the average yield to maturity needs to be factored in there. So over a 15-year period, David, you would be right mathematically. If all matured, but that's not what this is because you you'd have to refi and reissue a bunch of debt that is at lower yield right now at these interest rates. I want to be clear.

• 42:59David Sacks?

  I don't understand how any of this is good. I mean, remember.

• 43:01Chamath Palihapitiya?

  Hold on, hold on, I I understand.

• 43:03Jason Calacanis?

  All right, let your mouth say why it's good or controllable.

• 43:06Chamath Palihapitiya?

  I'm not saying that this is a good or it's a trend. What I'm saying is I have this issue that all of a sudden people make up and you guys are doing it now. An arbitrary number with no rooting in history or fact and say this is bad. And all I'm saying is I know it feels bad to us and I think we would all run this country differently. If we could control the balance sheet, I would as well. I would try to get debt way, way down. I would try to get deficits way, way down. But all I'm saying is using this justification of an arbitrary number always falls flat. So I'm encouraging us all. Let's find a better model of reasoning. Because every time we point to some rando's book and say 127% is bad. Nobody listens. And I think the message that you should take away is this because it's imprecise and it's not rooted

• 43:51Chamath Palihapitiya?

  in any actual logic. And if there's a better building.

• 43:54Jason Calacanis?

  The reason I believe that this is concerning is I look at the top 10 countries that have, you know, debt ratios that seem out of whack. And I think, wow, what has their fortune been for the last 10 years vis a vis Japan and Venezuela?

• 44:06Chamath Palihapitiya?

  The right comparison, the right comparison would be to go back and say, look at, look at the British Empire. And when and what was the debt to GDP when it started to actually fall off? Does anybody know? I know. No, I'm saying, okay, was it triggered? Was it triggered by debt to GDP? And I think your answer will be.

• 44:23David Sacks?

  In part.

• 44:24Chamath Palihapitiya?

  I again, I just think.

• 44:26David Sacks?

  They took on runus debt and they couldn't maintain their empire anymore and the whole thing collapsed.

• 44:30Chamath Palihapitiya?

  I'm just asking for some numerical specificity.

• 44:34Jason Calacanis?

  All right.

• 44:35Chamath Palihapitiya?

  Any of you have numerical specificity.

• 44:37David Sacks?

  The last, the last time.

• 44:39David Friedberg?

  There's a lot of numerical specificity. There is a ton of work that's been done on this. It's not people pulling shit out of their ass. So tell us. That is historically the best way to manage the growth in an in a in a in a country is to have deficit spending be equal to or less than the growth rate of the economy of that country. So for example, if your income, the Tax revenue that's being generated by the government is equal to say 15% of GDP. You do not want your spending to be more than 17 or 18% if the economic growth rate is 2 to 3%. That's it. If you do anything more than that-

• 45:12Chamath Palihapitiya?

  So what happens?

• 45:12David Friedberg?

  No, if you do anything more than that, you're borrowing from the future to pay for today. That's the simple truth.

• 45:17Chamath Palihapitiya?

  Okay, so what happens?

• 45:19David Friedberg?

  And when you do that, the rates go up and the prices go up and eventually your currency doesn't work anymore.

• 45:24Chamath Palihapitiya?

  What does eventually mean?

• 45:25David Friedberg?

  So you're making a bet. Read the book that I talked about last year. The most recent Raedalio book. He goes through six stories with the economic data to prove it. The factual data, the history of what's happened with six empires over the last 500 years, where this exact same scenario has played out. This isn't some random arbitrary story.

• 45:43Chamath Palihapitiya?

  I read that book.

• 45:44David Friedberg?

  And everyone had the exact same perspective that you have when they were living in those days. And they said, you know what? We're gonna be okay because we're the reserve currency and the world loves us and we're the empire and we have influence everywhere. And they all lost primacy and their currencies collapsed and they all broke apart.

• 45:59Chamath Palihapitiya?

  I'm not saying that that can't happen in America. What I'm saying is you get so full-throated. I read that book. It's great narrative, but the numbers are brittle. Okay, they're fragile and they're mostly made up.

• 46:10David Friedberg?

  Everyone can read it and make their own opinion on that.

• 46:12Chamath Palihapitiya?

  So all I'm saying is, in the absence of numerical specificity, I agree with you that this trend is alarming and it's bad. I agree with you. And I agree that we should spend a lot less. What I'm saying is, when you say to the world, "Stop spending because XYZ number is bad", you have no credibility because it's not something that you can actually back up. And all I'm saying is, if you could find a better logical argument, you would probably get a lot more people to convince a lot more people.

• 46:42David Friedberg?

  You're just being ignorant. You're ignoring it. You're saying you don't want to actually believe it. The numbers are there.

• 46:47Chamath Palihapitiya?

  Show me the numbers.

• 46:48David Friedberg?

  And I'm not saying ignorant in a disparaging way. I'm saying you're literally just ignoring the data.

• 46:52Chamath Palihapitiya?

  Show me the numbers. Show it to me.

• 46:55Jason Calacanis?

  They get upset at us for fighting.

• 46:57David Friedberg?

  I'll make you a PDF, Chamath. I'll send it to you tonight. I promise. And I'll post it on our friggin' thing so people can watch it.

• 47:03Jason Calacanis?

  All right. Well, listen, the the group chat's gonna be on fire this weekend. Sax, final word for you.

• 47:07David Sacks?

  Okay, final word. Okay.

• 47:08Jason Calacanis?

  Final, please.

• 47:09David Friedberg?

  Chamath and I have never gotten into it before like this, but obviously, obviously on opposite sides.

• 47:15David Sacks?

  I think it's great.

• 47:15David Friedberg?

  I still, I still respect and love you, Chamath.

• 47:17David Sacks?

  If you, if you go back in history and look at debt to GDP levels, the only other time we're anything remotely like the level we're at right now is right after World War II, when we had just saved the world from Nazism. Okay, that was worth going into debt for. You look today, what is it that we've gotten into this 130% debt to GDP? What is this $30 trillion of debt for? What have we bought with all that money? Huge amounts of it have been squandered.

• 47:42Jason Calacanis?

  You're right.

• 47:42David Sacks?

  And Biden wanted more. If, if the courts didn't stop him, he would have spent a trillion.

• 47:47Jason Calacanis?

  Your, your argument.

• 47:48David Sacks?

  Forgiving a bunch of student loans to, for basket weaving degrees or liberal studies or what have you.

• 47:53Jason Calacanis?

  David, it's like the real enemy, graduate degrees at Brown.

• 47:56David Sacks?

  All right, hold on, let me finish. The, that's point number one is that this money is being squandered at levels we've never seen before. And the squandering is continuing. It's not like we've reached a steady state. It just keeps going and going and it will break at some point. I can't precisely, so I'll second, I can't precisely say when it's gonna break, but I do know it's gonna break. The other thing, the point number two, is about consequences today. There is a phenomenon economists call crowding out, where when interest rates go up, more and more money flows into the risk-free rate of return, and then that crowds out investment capital. And we've talked about it on the last pod, where if the risk-free rate is 5%,

• 48:37David Sacks?

  and then like high-quality corporate bonds are offering 8 to 10%, now equity investments must generate 15%, and VC must generate 20%, and there are very few VC investments that can generate that kind of IRR. So what happens? The money flows out of VC, and there's less money for risk capital. What drives our economy? Risk-taking and entrepreneurship. Hold on, so, hold on a second. So this massive debt service that we have, which drives up interest rates, will crowd out. The very kind of economic activity that the United States needs to stay on the cutting edge.

• 49:10Chamath Palihapitiya?

  Chama, rebuttal, rebuttal to the rebuttal to the rebuttal. No, you're so right. So why don't you just bookend the argument exactly the way you just did? My point is not that, you said it just before, that we don't know at what upper bound these things break or don't break. And all I'm saying is every time you throw up a random number, you guys sound like the boy who cries wolf. Okay, and you're shouting into a vacuum is, is just the, is the advice that I'm trying to give you guys. I agree with you. I spend my entire days investing in and trying to figure out what is the risk adjusted rate of return of the things that I'm doing. And I'm trying to tell you as somebody with some reasonable financial numeracy, every time I hear you or Ray Dalio or somebody else say, this number is where it all breaks and it doesn't, you lose a little bit of credibility. Then you go to this number and you're like, oh, at 127%.

• 49:55Chamath Palihapitiya?

  Okay, we get your point, Chama.

• 49:56David Friedberg?

  No, let me put it back to you, Chama. No, let me put it back to you, Chama. How much is too much? How much debt can we handle and how much spending as a percentage GDP should we handle? What is the limit in your mind?

• 50:10David Friedberg?

  And how do you decide what that limit can or should be?

• 50:13Chamath Palihapitiya?

  I think the honest answer is every time that I have been alarmed that we had hit a threshold that was meaningful. So for example, like I think under Obama, we passed 100. And it felt very scary because I was like, wow, that seems like a demarcation. It turned out to not be a demarcation at all. Because it's relative to every other country and what they're going through. And I understand that you don't want to believe that. But I do think that America's economic vitality is not an independent function. It is a dependent function on everybody else. We are relative to everybody else. If there's a, a different cosmos and a different planet somewhere, maybe this will all reset, but right now it's not. And so we all trade relative to the United States.

• 50:54Chamath Palihapitiya?

  And in that much, I would like to just say, I don't know enough to guess what this number is. And I'd rather focus on what David said, which is there are things that we need to do. That we need to incentivize people to invest in extreme risk-taking that create new businesses that move the world forward. You can have that conversation without belly aching and crying to mommy about a GD debt to GDP number because every time you throw it out there, nobody knows what you're talking about. Nobody knows what reaction to have and everybody feels over time, David Friedberg, that you're crying wolf. So all I'm saying is, I get that it's concerning to you and it creates anxiety, but every time, and you probably, this is not the first time you've had anxiety, you probably had anxiety at 50, 75, 100, 125.

• 51:39Chamath Palihapitiya?

  Guess what? I bet you'll have anxiety at 150. I don't know what it means. I do know what Sacks means though, which is that right now, we have a risk-free rate that's going to five. We have corporate bonds that'll be at 10. We have equity investing of the most risk-taking, which is the early-stage venture that has to return 25, and that is an incredibly high bar, but we need to do it and we need to do maybe fewer investments, quite honestly, with fewer participants, with less dollars that are more effectively put to work. Okay, maybe this is a good jumping off point to talk about all the waste in Silicon Valley. And that stuff can happen without debating incessantly this debt to GDP number, which honestly, this is subjective.

• 52:20Jason Calacanis?

  Hold on, Sacks, one thing I agree with you, Chumoff.

• 52:23Chamath Palihapitiya?

  All right, Friedberg Sachs, and then we're gonna move.

• 52:25Jason Calacanis?

  Go.

• 52:26David Friedberg?

  I agree with you. I've never had anxiety about debt to GDP. It's never been anything on my radar. The conversation I'm trying to have today is the amount of spending, the federal spending, including interest payments, as a percent of the GDP, as a percent of how much we can tax to pay all those, to make all those payments every year. And so what I'm concerned about is the ballooning cost of paying out all the obligations the federal government has to pay out every year.

• 52:49Chamath Palihapitiya?

  But now you're saying something different than what you were just saying. That's, if you were cared about only that, then refinancing the debt is an equally valid proposition and changing the duration.

• 52:57David Friedberg?

  It's not the only expense. It's not the only expense. So interest payments are ballooning. In addition to interest payments, social security and Medicare payments are also ballooning and defense spending.

• 53:05Chamath Palihapitiya?

  And out-of-control spending, everybody has their hand out, everybody wants an airdrop.

• 53:09David Friedberg?

  When you add those four big categories together, you don't have any room left over to do all the stuff you're talking about.

• 53:14Chamath Palihapitiya?

  I get it, but you're talking about, you're talking about this. Discipline in spending in defense. Great. I agree. You're talking about discipline and capping healthcare costs. Great. I agree. What does that have to do with this other orthogonal thing you've been talking about, which is this random number debt to GDP?

• 53:29Jason Calacanis?

  Okay, okay, we let's move on from that discussion.

• 53:33David Sacks?

  Can we make one final point then we can move on. So, so look.

• 53:35Jason Calacanis?

  Six time for the final point. Go. It's important discussion, apparently.

• 53:39David Sacks?

  Look, in the, in the interest of bestie harmony, I will partially agree with the point that Chamath is making, which is that for a long time in American politics, people have sort of cried wolf about debt to GDP. For example, if you remember way back in 1992, Ross Perot basically based his candidacy on the idea that the US was racking up way too much debt. You know what debt to GDP was in 1992? Forty one percent. Okay. So people used to care a lot about this. I remember when Reagan was president and jet to GP was 30%. People were saying that he was this like, you know, wild spender. Okay. But I think that precisely because nothing broke at 30, 40, 80%, 100%, you then had the rise

• 54:23David Sacks?

  of this theory called MMT or Modern Monetary Theory, which said that the debt to debts don't matter. If you're the reserve currency, you can print as much money as you want. And so people started indulging in this. And so now I actually think we are at a point, I can't say precisely where it breaks, but I do think that because debt to GDP didn't seem to matter for so long, I actually think we got carried away. And now we're at levels which are just going to be ruinous if for no other reason than our debt service is going to crowd out whether you want more guns or more butter in our federal budget. If you want more defense spending, you want more entitlements, you want more discretionary spending, there's no question that debt service is getting bigger and bigger is going to crowd out those programs.

• 55:08Chamath Palihapitiya?

  There's no question we need to spend less. I a hundred percent agree with you. Okay. But all I'm saying is we should spend less on defense because we have different ways of defending ourselves. That should be the logical argument for less.

• 55:20Jason Calacanis?

  And your energy independence is defense and a balanced budget could be defense as well.

• 55:24Chamath Palihapitiya?

  If you look at the IRA, that was less than a trillion dollars over a decade. Okay. That has the potential to shift trillions of dollars a year in defense spending. Yes.

• 55:35Jason Calacanis?

  Okay.

• 55:36Chamath Palihapitiya?

  So let me wrap.

• 55:37Jason Calacanis?

  Okay, let me wrap here for a second. Thank you, everybody.

• 55:39Chamath Palihapitiya?

  You can look at these bills in and of themselves and try to actually do the right thing for the country without wrapping up all of these random arguments. And I, by the way, just to be clear, I don't believe in MMT either.

• 55:52David Friedberg?

  Sax, don't do it. Don't do it, Sax. The world's worst moderator. Come on, J Cal.

• 55:57David Sacks?

  I want to go back to, actually, during the Obama presidency, we had a thing called the sequester. I don't know if you guys remember this.

• 56:02David Friedberg?

  Yeah.

• 56:03David Sacks?

  But Republicans and Democrats agreed that basically that because we had just had like these trillion dollar deficits because of the 2008 global financial crisis, they got together and said, listen, we're going to hold the line on spending and there'll be no increase on defense spending in exchange for no increase in discretionary spending social programs. And for a few years, we held the line on spending, actually. And then, of course, both Democrats, Republicans didn't want that for different reasons. And the sequester went away. We need to go back to something like that.

• 56:37Jason Calacanis?

  There are two things that are going to get us.

• 56:38Chamath Palihapitiya?

  One detail, like when you go and send a bill, so look, the way you pass a bill, right? You have to send it to the CBO to get scored. One of the things that I learned this week is that sometimes the CBO, and they're not really empowered to actually tell you how things get offset. So for example, like if you have a medicine, what they will do is say, well, we'll look at the population level, how much would this medicine cost if it's taken by the population? But if that medicine then all of a sudden has the potential to actually off-ramp you over here, those savings are not really factored in as well. So David, to your point, another way that we can refine how we build budgets to make sure that we're not overspending is to actually improve the toolkit and the data that like

• 57:22Chamath Palihapitiya?

  the CBO is given so that when they score things, they can actually look at the total impact. Like, for example, like the IRA, again, one of the biggest benefits will be to defense spending. If we choose to make those cuts, you will be able to do it differently once we have, you know, no reliance on foreign energy.

• 57:38Jason Calacanis?

  Okay, to wrap this segment, the first segment, which took 57 minutes, it's obviously a really, well, I think it's an important discussion.

• 57:45David Sacks?

  Hey, J Cal, would you vote for DeSantis to be promised his fiscal responsibility?

• 57:49Jason Calacanis?

  Well, here's the thing. I am going to take a look at the candidates. I'm going to make the best decision in terms of what I think is that best for the country. I'm answering like you, Sax. I'm answering like you, I'm giving no answers.

• 58:01Jason Calacanis?

  It depends on.

• 58:02David Sacks?

  If DeSantis gives you everything you want on fiscal policy, why wouldn't you vote for him?

• 58:06Jason Calacanis?

  If he stays out, if he's in favor of a woman's right to choose.

• 58:10David Sacks?

  For the first 15 weeks, that's Florida policy. Are you? Yes.

• 58:14Jason Calacanis?

  You know, I would take a look. I would take a look. I honestly would take a look.

• 58:17David Sacks?

  Not to vote for him. 15 weeks, right to choose, combined with fiscal responsibility.

• 58:23Jason Calacanis?

  I, uh, yeah. I'm voting for a moderate this time. And tax cuts. And tax cuts. Okay, but to wrap up here, the two things that matter, I believe, and based on our panel's discussion, austerity and excellence are what are going to get us out of this mess. Here is what the platform seems to be shaping up. Our 2024 platform, control spending. Everybody here thinks that's important. Energy independence. Everybody here thinks that's super important. Stop fighting unnecessary wars and maybe rethinking our foreign policy. I think we all agree on that. And the cultural focus on excellence, not excess. This is shaping up to be a little bit of an all-in platform here. Great discussion, everybody. Speaking of austerity measures, I think, you know, we should just talk right,

• 59:08Jason Calacanis?

  right up top here about what's going on at Google. Chris Hohn, I believe is how you pronounce his name. Chris Hohn, he sent a letter to Google and Amazon. Amazon today, after already announcing 10,000 layoffs, they just said again, and he said, prepare for more layoffs in 2023. And these are not factory workers. These are white collar, high-paying jobs that are being laid off here.

• 59:31David Sacks?

  They're surplus elites.

• 59:33Jason Calacanis?

  Surplus elites. It is definitely a part of the zeitgeist right now. So they're going to reduce headcount massively. But in this letter to shareholders, he points out, notably, not just, hey, Google needs to do a RIF, a reduction in force, but he points out a more granular point that I want the panel to talk about here, which is, he says, hey, you need to reduce the actual salaries at Google, the average salary being $296,000, 67% higher than an incredibly well-paying workforce. Microsoft, quote, "We acknowledge that Alphabet employs some of the most talented and brightest computer scientists and engineers, but these represent only a fraction of the employee base. Many employees are performing general

• 1:00:17Jason Calacanis?

  sales, marketing, and administrative jobs who should be compensated in line with other technology companies." And he says, "We need to establish an EBITDA." Margin target, as you can see in this chart, and reduce the losses on other bets, perhaps increasing share buybacks as well. So what we're looking at here now after

• 1:00:37Chamath Palihapitiya?

  What an incredible business. My god.

• 1:00:40Jason Calacanis?

  I mean, the business is nuts. Friedberg, you worked there. What in this range true to you or not? And then, how many people does Google need to employ to operate the business and invest in the future of the business in your mind? They have 187,000 employees at Google. It's grown 24.5%, rounded up 25% year over year. They grew 25% year over year in their business. How many people need to run this business to have it aggressively grow?

• 1:01:16David Friedberg?

  Look, I think there are two main drivers of the issue that Google, maybe Meta, maybe Twitter, prior to Elon's involvement, and really Silicon Valley as a whole, the bigger companies have faced. The first is the war for talent.

• 1:01:36David Friedberg?

  The war for talent started, I mentioned this last time, around 2004, 2005. Because prior to that, there weren't as many grads coming out of undergrad with computer science degrees, right? I think 10% of grads in the Bay Area schools were finishing with computer science degrees. Today, the number is like 60%. So, you know, around that time, the war for talent led organizations, particularly Google, down a path of offering more perks and benefits to their employees to create a workplace that was more competitive. And that ends up being a slippery slope. Because then other organizations try and find parity. And then other organizations try and overdo it and push it even further. So this leads to both wage inflation across the industry.

• 1:02:21David Friedberg?

  But it's also led

• 1:02:24David Friedberg?

  To almost like the acceptance or the allowance for degrees of complacency. And so I'm not saying that the workforce is all complacent. But I do think that complacency is forgiven, some amount of complacency. I'm going to take a Friday off. I'm going to take two Fridays off. All of a sudden, I'm not working any Fridays. The other thing that's happened is as this workforce has aged. I worked at Google 20 years ago. And a lot of the folks I worked with, almost all of them now have families. At the time, everyone was young. And as the demographics of Silicon Valley has matured, you have more people that are less about killing themselves and giving everything that they have to their organization. And they're more interested in being with their families and now spending less time at work.

• 1:03:08David Friedberg?

  Especially in light of the fact that compensation has ballooned to a point that you can now live a very, very comfortable lifestyle. And you don't need to have a big payday in order to be able to take really good care of your family, which was the case as a startup. And then the other issue is just one of innovation. At Google, if you work on a new project and it doesn't work, there's no loss. You still have your job. And they've started programs where they'll give you equity and new startup ideas, or they'll give you all this stuff. So they'll give you upside if you win. They'll give you bonuses if it succeeds. But there's no downside. And so the pain and the burn that you would feel as a startup founder or as someone building a new business isn't experienced or realized. And I cannot, I don't need to tell you guys this, but for anyone else that's listening that may not really be fully aware, the lack of pain, the lack of risk, the lack of downside,

• 1:03:53David Friedberg?

  the lack of having no safety net and falling through the pits removes all, so much of the incentive to succeed and to drive and to innovate. And I think that's become part of the complacency problem that's caused larger organizations to simply say, let's throw more heads at the problem. And when you just throw more heads at the problem, you have more of kind of talent war problem than I mentioned, number one. What is the average salary? 280,000? 300,000, rounded up, yeah.

• 1:04:20Jason Calacanis?

  That doesn't cl- I don't know if that includes benefits, whatever. Let's just call it 300,000, yeah.

• 1:04:24David Friedberg?

  And by the way, that doesn't mean that those people should all get fired. But I think it speaks to the fact, I think they're wonderful people there. Some of my best friends work at Google. It's a great organization. People do incredible work there. But in terms of return of dollars invested as a shareholder, that's the question, that's the analysis, that's the scope that the shareholder is looking at, is do I want to spend a dollar to make a dollar five? Or do I only want to spend a dollar where I know I'm going to get a dollar eighty back? And so if you just bucketed where the dollars are going, you would end up saying, you know what? I'd rather just focus on the places where I spend a dollar and I get two dollars back or a dollar eighty back. And I don't want to do any of the stuff where I spend a dollar and make a dollar five back. And that's called ROIC or return on invested capital.

• 1:05:07David Friedberg?

  And that includes return on invested human capital. And so the analyst in the stock, that's an investor in the stock, will look at it through that lens. Whereas everyone that's working there is still contributing meaningfully, they're still doing valuable work. But in terms of return on invested capital, a good chunk of the projects are not driving the majority of the value. A minority of the projects, a minority of the headcount, is driving almost all the value.

• 1:05:30Chamath Palihapitiya?

  I mean, if you sensitized it to what you said, David. If it was just seventy-five or a half that number, then, you know, the stock goes up thirty-five percent overnight. And if it goes up to the full number, the stock goes up sixty-five percent overnight.

• 1:05:48David Friedberg?

  I think that's totally feasible. And then I think what you do is you take ten billion dollars a year and you have a high accountability model that you speak to the street about. And you say, here's how we're going to hold ourselves accountable to investing this ten billion dollars every year. And not just have everything be a nebulous fifteen-year project. And then it's always a fifteen-year project and you're always just burning cash to go after those projects that are highly nebulous.

• 1:06:11Chamath Palihapitiya?

  If you had to steel man the other side, I think the argument would be...

• 1:06:16Chamath Palihapitiya?

  I would say they would make probably three arguments. Argument number one is like, look, don't get overly distracted by other bets because it's a small category of spend and we've contained that cost pretty rationally relative to the rest of the core business. The second thing that they would probably say is there's an enormous amount of work that is never seen by Wall Street that explains how good our service is, whether that's, you know, in early iterations of, you know, technical capability like GFS and Big Table to things like TPU, to things like TensorFlow. And all of that builds up, all the things that DeepMind does, all the compute we have to throw against search to support that. So I think they would probably say, well, people probably don't have a great sense of today

• 1:07:01Chamath Palihapitiya?

  that it's not just 25% of the team that's required. And then the third thing is what they would probably say is it's very hard to explain, but Google has all kinds of other things that they do for free to create the ecosystem so that the internet works well. You know, I heard this one thing where somebody was explaining that Google is like, you know, the DNS server, right? Google is the time server and all of this stuff they do for free. And all of it is just about making the internet work more efficiently and that has some cost. So that's probably how they would steel man how to build back up to some number. But it's probably there's still a gap between that number, David, and what their prevailing headcount is.

• 1:07:39David Friedberg?

  Yeah, I think that's totally true because the infrastructure team led by Erz is the most remarkable engineering organization on planet Earth, in my opinion. And they have laid fiber lines across the Atlantic. They have built their own data center infrastructure, their own switches, their own silicon. Like, everything is built by this team from the ground up, from first principles, and it gives extraordinary moats and advantages to the business. It makes the internet a better place. It allows, you know, ultra-fast, super-cheap YouTube video viewing across the internet. I mean, there's just so much of these core advantages in the business. But if you look at the headcount over time, you have to ask yourself the question,

• 1:08:17David Friedberg?

  you know, how many of these investments that are core are really, you know, captured in the headcount that blossomed from 2030? 14, 47,000 people, so that the business has gone up in headcount by 4x in the last nine years. One of the things that Jeff Bezos was always so incredible at, and I saw him give a speech on this at one point. Bezos gave a speech that I saw, and he said, "We are really good at failing." And he showed all these projects that Amazon tried, and he said, "We tried A9, we tried to do our own search. We tried to build our own cellphone, the Fire Phone. We tried to do this, we tried to do that. When they don't work, we kill them. And when they did work, they became multi-hundred billion dollar enterprise value creators for them, like AWS, which was one of these projects."

• 1:09:02David Friedberg?

  And so, Amazon was so good at taking the stuff that wasn't working, knowing when it wasn't working, and ending it. And they were still able to drive an innovation engine. One of the challenges I see with Alphabet is that they are so good at bringing the best talent to work on these innovation problems, but where they're not good is saying, "You know what? This isn't working. It's time to move on." And if they did just that, if they added that one disciplinary capability, then I think this, as you said, the market cap would go up by $600 billion.

• 1:09:29Chamath Palihapitiya?

  What about this, I just want your reaction to this thing that a lot of people whisper in Silicon Valley, which is part of what the big companies should do, it's part of the positive game theory, is to not let these talented people actually leave. It's better to pay them 300,000 or 200,000 or whatever and stay at Microsoft and Meta,

• 1:09:49Chamath Palihapitiya?

  and Google or whatnot, then go off and start up, build a startup that could actually then disrupt them. And so, you know, it's a cost worth bearing because it's actually mitigating-

• 1:09:58Jason Calacanis?

  Blocker strategy, yes.

• 1:09:59Chamath Palihapitiya?

  It's a blocker strategy, yeah. What do you think about that, Weaver?

• 1:10:02David Friedberg?

  Super interesting idea. I think that the people that are likely going to actually be able to execute on that are gonna leave and do it anyway.

• 1:10:11Jason Calacanis?

  Right. They're truly aggressive entrepreneurs are not gonna be blocked.

• 1:10:15David Friedberg?

  Look, I was not super, I had made a little money when I worked at Google, but I was not super wealthy, and I left the vast majority of my stock options and RSUs on the table when I left Google in 2006 to start Climate Corp. Because I could not help but do that. I could not help myself. I had to go do that thing.

• 1:10:32Jason Calacanis?

  Of course.

• 1:10:32David Friedberg?

  And I think the kinds of people that are gonna succeed in entrepreneurism cannot help themselves. It doesn't matter how much money is being thrown at them.

• 1:10:39Jason Calacanis?

  Here's the chart. Basically, these companies have been correlating their spend- And their headcount to their revenue, not what's necessary. You look at Alphabet, total employee changes 2018, 95.36%.

• 1:10:53Chamath Palihapitiya?

  I mean, I don't know. That looks pretty good to me.

• 1:10:54Jason Calacanis?

  Revenue, 132%.

• 1:10:57David Friedberg?

  That's pretty good.

• 1:10:59Chamath Palihapitiya?

  It doesn't look like they were massively over hiring, if you ask me.

• 1:11:02David Friedberg?

  Yeah, totally, totally.

• 1:11:03Chamath Palihapitiya?

  So what are you guys talking about?

• 1:11:05David Friedberg?

  So maybe I'm wrong. I will say, look, a big part of Larry Page's decision to shift the company from Google to Alphabet was he believed that the core business at some point would ultimately be disrupted, that the core advertising engine was going to be disrupted, and there wasn't going to be the sustaining long-term growth advantage in that business. Maybe he's been disproven, or maybe it hasn't been proven yet. But the concept was, we need to find the next Google, and we need to build the next Google. And so we want to allocate capital within a portfolio of bets, and have some number of those things, maybe not all of them, maybe not even a lot of them, maybe just one or two of them, turn into the next $100 billion revenue line for us. Now, he always said that that's going to take a long time.

• 1:11:47Chamath Palihapitiya?

  He definitely underestimated the quality of Google search and the dominance of it. Now, it probably stands to reason that if we have enough innovation at the fundamental model level in AI, particularly like a bunch of really powerful multimodal models, the new form of search can disrupt Google. But the problem is, they are so ahead of everybody else with respect to those models as well. So the real question is, even that next big leapfrog isn't going to happen without billions of dollars of capital invested. And, you know, the most likely folks that are able to do it, I think OpenAI at some level, but again, they're going to always have to raise money from other folks. Google can self-fund

• 1:12:30Chamath Palihapitiya?

  it, and it makes an enormous amount of sense to drive that technical mode. So it just seems like Larry may have just been wrong.

• 1:12:36Jason Calacanis?

  What do we think is going to happen here? Are they going to make the cuts or not? You think they'll have the ability to not make cuts and just ignore a 6% shareholder Chamath? Or are they just going to make them, and then we're going to go on to you?

• 1:12:48David Friedberg?

  I'll tell you, the dynamic will be how much Ruth is able to convey. Ruth Porat is the CFO. And

• 1:12:54Jason Calacanis?

  Right, she's hardcore.

• 1:12:56David Friedberg?

  She's hardcore. She's incredibly, everyone on that leadership team is incredibly impressive. But she has a very particular lens, a Wall Street lens, and she understands what the shareholders are thinking and looking at. And she will convey these points to the board. And there will be engineers, and Sundar is an engineer, and he will, and he's a very good, he's very good at gathering the different points of view and having balance around this. And he will share his points of view with the board. And I think ultimately it will come down to, my guess is like we just talked about, some portfolio allocation decisions. Which is how much risk and how much beta, how much alpha, and do we have the right mix in our portfolio? And it is inevitable there's going to be some cutting. So I think that there will likely be some reduction.

• 1:13:39Jason Calacanis?

  Five percent, 10%, 10,000 employees? That seems like the number that people are going with.

• 1:13:45David Friedberg?

  Yeah, yeah, let's see.

• 1:13:46Jason Calacanis?

  That's my guess. Okay, Sacks, what is your take on austerity measures? And moving to an age of excellence and efficiency, which is happening inside of the tech industry as we speak?

• 1:13:58David Sacks?

  I think Friedberg's right that these companies could operate a lot more efficiently. I think there's an economic argument there. But I want to up level it and talk about the cultural aspect of this for a second, and also bring in two of the huge stories this week. The SBF story, the interviews he did with the New York Times and Vox, and then this hysteria around, you know, what's happening at Twitter. Look, I think that there, something clearly has hit a nerve here in this last week, where you have all of these employees who have voluntarily left, creating all of this drama. And, you know, Antonio Garcia Martinez had a good quote about this.

• 1:14:38David Sacks?

  He said, "What Elon is doing is a revolt by entrepreneurial capital against a professional managerial class regime that otherwise everywhere dominates." And that same PMC, which includes the media, is treating it as an act of laissez-moi-je-estar. There's another version of this that came out a couple of weeks ago.

• 1:14:51Jason Calacanis?

  And by the way, laissez-moi-je-estar just means like you're insulting the monarch, the ruling class.

• 1:14:56David Sacks?

  Yeah, you're insulting the crown. There was a good one here. There's an article on Compact Magazine a couple of weeks ago, where the editor Jeff Schellenberger tweeted, "The layoffs at Twitter are no different than what's happening across Silicon Valley. But because the ideological antagonism of the professional left to Musk, they make clear what's at stake. The collapse of a jobs program for surplus elites." And then And then there's a great quote from this article, which again,

• 1:15:23Chamath Palihapitiya?

  My god, that's, that's so hard hitting.

• 1:15:25David Sacks?

  I know. It's no, it's really, it hits a deep nerve. I'll get into why.

• 1:15:28Chamath Palihapitiya?

  differently.

• 1:15:29David Sacks?

  Yeah, exactly. So a quote from this article said, one of the biggest and least talked about social questions in the West is how to economically provide for our own modern version of Francis impecunious nobles. That is, how to prop up high status people who can't really do much economically productive work. Wow. I mean, like, this was, this was

• 1:15:48Chamath Palihapitiya?

  That's pretty brutal. Yeah.

• 1:15:50David Sacks?

  Yeah. Now, so, so listen, I think this is really hitting a nerve because the fundamental quid pro quo of our civilization is that in order to achieve economic and social advancement, you go to college and get a degree and you submit to voluntary reeducation of yourself at one of these woke madrassas, one of these reeducation camps. That's the quid pro quo. And you get a degree. Now, some people

• 1:16:17Chamath Palihapitiya?

  Did your punch up guy write that intro?

• 1:16:19David Sacks?

  No, no. This is, this is what I believe for a while. Now, there are some number of people who get useful degrees like computer science or engineering, but huge numbers of people get degrees in, like we talked about, the basket weaving or whatever the, you know, politically correct degree is for sure. And they graduate with a quarter million dollars in debt and no marketable skills. Right? And

• 1:16:42Chamath Palihapitiya?

  Right.

• 1:16:42David Sacks?

  And what was propping up all of these people were these fantastically wealthy monopolies, tech companies that were hiring huge numbers of these people. Now all of a sudden, we get to a point where we're in an economic recession and these companies are starting to do layoffs and they're starting to do a little bit more soul searching about who's really adding value. And people are starting to get laid off. And I think there, this hysteria is coming from a place of deep insecurity. You had all these people go to college. They did not learn critical thinking skills. What they learned was that, listen, if we pay lip service to the right platitudes, then we will have career advancement. And now they're learning that that may not be

• 1:17:23David Sacks?

  true. And actually, the person who's pulled the mask off this entire regime is none other than SBF. And he did it in an interview with Vox. And we have to go to this. Okay?

• 1:17:34Jason Calacanis?

  He's deranged.

• 1:17:35David Sacks?

  He said, he's the devil, but he basically pulled the mask off this whole civilizational quipro quo. That is a sham. Okay. And here's what he said, that the Vox reporter said, you were really good about talking about ethics. For someone who kind of saw it all as a game with winners and losers. What did SBF said? Yeah. He, he, I had to be. It's what reputations are made of to some extent. I feel bad. For those who get fucked by it, basically all these people who incurred a quarter million dollars in debt and think they can just spouts the right. You know, platitudes. He says, by this dumb game, we woke Westerners play where we say all the right shit will last. So everyone likes us.

• 1:18:13David Sacks?

  How stupid does the New York Times feel right now? How stupid do all these nonprofits and foundations? Who received all this money from SBF? He played them. All he had to do was say the right words that say the magic woke words. And they would basically cover for the most enormous grift that's ever been perpetrated. That is basically the quipro quo of our civilization is be woke and you will have indefinite career opportunities, no matter how.

• 1:18:44Jason Calacanis?

  I mean, virtue signaling would be another way to say it. I mean, it doesn't necessarily have to be the work woke ideology, but virtue signal. And give donations to people. This has been a playbook of grifters for a long time. Bernie Madoff gave a ton of. You know, donations and he used the same playbook.

• 1:18:59David Sacks?

  How many donations did he give to the Republican Party? None. They're not part of the regime. How many, how many conservative?

• 1:19:05Jason Calacanis?

  Yeah, I'm not sure this is a political. I don't know that this is left versus right.

• 1:19:09David Sacks?

  I'm not making a political point. I'm making a cultural point.

• 1:19:11Jason Calacanis?

  Okay, good.

• 1:19:12David Sacks?

  Who were the charities that he donated to? It was all the right woke causes, not, you know, it was not.

• 1:19:17Jason Calacanis?

  Pandemic one was not woke. He was passionate about the pandemic stuff.

• 1:19:21David Sacks?

  Are you kidding me? Freaking out about the pandemic?

• 1:19:24Jason Calacanis?

  No, no, he wanted pandemic lockdowns. Has he explained it to me?

• 1:19:27David Sacks?

  The neurosis. It was the.

• 1:19:29Jason Calacanis?

  No, no, no, that was not what he was funding. Sacks. I actually talked to him about this when I interviewed him. He said he wanted to do pandemic. Uh, prevention and early warning systems and wanted to invest in strategies to fight the next pandemic.

• 1:19:41David Sacks?

  And definitely freaking out about COVID is, was a central neurosis of the professional managerial class for the last couple of years.

• 1:19:48Jason Calacanis?

  It is absolutely. Funding. I just want to make that point. Yeah.

• 1:19:51David Sacks?

  Whatever.

• 1:19:52Jason Calacanis?

  He wanted to do prevention. I mean, you could frame it as not, but I actually literally talked to him about it. He wanted to do pandemic prevention in the future.

• 1:19:57David Sacks?

  He wanted to steal money. No, no, no, no. He wants to steal money from California taxpayers via ballot initiative to fund his brother's organization, which would have dispersed the money in who knows what ways, probably not legitimate, out of a professed concern about the next pandemic. Why? Because the PMC is neurotic about the last pandemic. Come on.

• 1:20:20Jason Calacanis?

  Oh, you're saying he's pandering to them. I understand what you're saying.

• 1:20:23David Sacks?

  Yes, thank you. It's pandering.

• 1:20:24Jason Calacanis?

  I understand.

• 1:20:24David Sacks?

  It's absolutely pandering. Now, listen, why, well, hold on a second. Why did this work? Why did this work? Virtue signaling work? And again, why were they only charities and causes that appeal to the sort of the left? It's because they're the ones with the power in our society and in our culture to define what virtue is. When you're virtue signaling, who are you signaling to? The people with the power to decide what is virtue and what is vice.

• 1:20:50Jason Calacanis?

  Right.

• 1:20:50David Sacks?

  That is why people go to work at the New York Times. That is why they basically go into, you know, all these influential jobs at nonprofits and foundations. They're the ones deciding what virtue is. They're the dupes. They're the ones who are fooled. And now what's happening is there's an economic consequence to it, which is it is coming out. These people have no marketable skills and companies are tightening their belts. And now all of a sudden, they're starting to become deeply insecure about their own future.

• 1:21:13Chamath Palihapitiya?

  My comment is that, you know, when you look at Twitter as an example, Bill Gurley had a really powerful quote as well, which is when companies cut, you know, they don't cut nearly enough and they, and they misestimate and underestimate how resilient a company is. Back in, you know, Twitter had 200 million MAU, they had only 1,000 employees. And so clearly at that point, they knew what they were doing. And now the business has, you know, increased in MAU by, call it 50% to 300 million. But the employee base increased by seven and a half X. So clearly something is misaligned. And I think the thing that, you know, people are going to find out is

• 1:21:52Jason Calacanis?

  By the way, with contractors, probably 12 X.

• 1:21:55Chamath Palihapitiya?

  Right. So I think that, well, there you go. So I think that the, the thing that frustrates a lot of folks that are leaving or that are trying to throw bombs is they don't want Elon to be right. Because I think to David's point, if Elon is successful, he has uncovered this very uncomfortable truth that was frankly hiding in plain sight, which is that many of these technology companies using technology get so much operational leverage that they have some enormous efficiencies. And then it's only a decision by the professional managerial class to reward themselves with fiefdoms and kingdoms of employees and, you know, the serfs that work for them. I mean, it's really quite crazy if you think about it.

• 1:22:41Jason Calacanis?

  Well, Friedberg made this, you know, early on in the history of this podcast.

• 1:22:47Jason Calacanis?

  Well, hold on, I want to add to your position. Friedberg said something that adds to your position, which is early in this podcast, he said, "The nature of organizations is they want to grow and that's government or even these departments you're talking about." Anybody who runs a department is never going to say, "My department needs to be 20% less so we can hit the bottom line." They're going to say, "Give me 20% more because everybody else is getting 20%." Go ahead, Chuma, continue.

• 1:23:06Chamath Palihapitiya?

  And then if you, if you, if you layer in the Charlie Munger quote, "Show me the incentive and I'll show you the outcome." You can understand why, because the professional managerial class is rewarded by compensation that is actually independent of dilution. Right? Because if you look at these compensation plans, all of these professional stock owners, they complain all the time about stock-based comp. Right? And these companies have budgets between 2 and 5% a year that they give away. And so you have this situation where an engineer or an engineering manager or a sales manager or a marketing manager in success at 1,000 people

• 1:23:45Chamath Palihapitiya?

  can grow to 5,000 or 10,000, their compensation doesn't change. In any other organization, their compensation would change because let's say that it's a percentage of the profits that are distributed, unless the company is phenomenally growing. Eventually you'll see it in the bottom line of what you take home. And so these folks are incentivized to have these status signals of value. I have a 50, you know, you guys have heard this.

• 1:24:08Jason Calacanis?

  I have a 50 person team. I manage 300.

• 1:24:11Chamath Palihapitiya?

  I oversee 3,500 employees and you've, and everybody is conditioned to think, oh my God, that's incredible. You must be really important. And so we're going to sort of now see in real time, a questioning of that belief system. And if Elon proves to be right, it's a really important decision point for a lot of other technology companies. Cause if you are an 80 to 90% gross margin business, built on software, maybe you have a bigger responsibility than you've discovered to date to your shareholders and to the existing employees to find the efficient rate of return, right? What is the efficient frontier of headcount? The other thing is it now allows, let's just say that now Twitter goes to, I'm making up a number,

• 1:24:56Chamath Palihapitiya?

  2,000 employees after this whole Google form thing. The great thing about the 2,001st employee, for the 2,000 employees and for the shareholders, is that that 2,001st new employee is 100% aligned because they're coming into something eyes wide open. And I think that that's also an interesting thing that isn't getting enough recognition is he's putting out there what he stands for, this hardcore culture, irrespective of whether we think it's right or wrong, all the people that stay are voting that it's right. And you know, as long as it's not breaking any laws, he's allowed to do that. And so if people now want to join that organization, they should be allowed to do that too. Just like the people who don't want to should be allowed to leave.

• 1:25:38Jason Calacanis?

  Sax, you and I came up and we talked about this, I think on last week's show, or maybe it was two weeks ago, we talked about what the expectation was in Silicon Valley at a startup, what startup culture was in terms of just the effort that was required to build a winning company. And we all said 60 hours a week was the baseline. That's something that, you know, has been, I think a lot of people, you, you mentioned this, Chamo, people working two jobs for 30 hours a week and taking two salaries from two of the fan companies.

• 1:26:05Chamath Palihapitiya?

  Jake, go into TikTok and search for, you know, engineering salaries. You'll see some of the craziest TikToks. Kids are making 350K, working 30 hours a week. It's nuts.

• 1:26:17Jason Calacanis?

  And so I think we're going to have is a, I think we're going to have a cultural divide here. There are going to be a series of companies that say, this is classic Silicon Valley. We're going to, we're going to crush it. We're going to work aggressively. We're going to put in 50, 60, 70 hours a week and we're all going to benefit from that. And then there'll be another class of companies that says, hey, no, we want to have a more lifestyle business. And if people want to work 30, 40 hours a week and they contribute, we don't need to be perfectly efficient. And you know what? The playing field of, the playing field of capitalism will show who is right. Sax.

• 1:26:45David Sacks?

  Yeah. I mean, look, I actually went out of town a few days ago, so I wasn't keeping up with, you know, every detail of what was happening at Twitter. And I started getting all these text messages about how Twitter was dead or dying or whatever, like the site had been unplugged or what have you. And I'm like, what is going on? And, you know, you tweeted this morning, hey, is this working? And I'm like, yeah, like, like, yes, it's working. Like, and

• 1:27:06Jason Calacanis?

  Yeah, I tweeted this morning, is this working?

• 1:27:07David Sacks?

  Exactly. And so

• 1:27:10Jason Calacanis?

  My tweet went through.

• 1:27:11David Sacks?

  Yeah. So I came to learn what they're talking about is that all Elon did was give a voluntary offer that if you didn't want to stay, you could take three months severance. Now, remember last week, they had a riff, you know, which was basically economically required in which they gave employees three months severance, which is 50% more than what he had to. It was generous. Now, it seems to me that what if you're one of the employees in the other half that made the cut, but yet you're not really motivated to stay? And maybe you don't really want to operate like a startup. I mean, Elon's basically saying, we're going to go back to working and operating like a startup. That means that you might have to work nights and weekends like a startup. What if that's not what you signed up for?

• 1:27:54David Sacks?

  You may be sitting there at Twitter saying, oh, man, I wish I'd gotten riffed. Well, now Elon is offering you the opportunity to take the same package. So I'm like, how can this possibly be a bad thing?

• 1:28:06Jason Calacanis?

  It's actually the great management technique that Tony Hsieh, rest in peace, from Zappos created. He would say, when people went through their first couple of months of training, he'd say, now, if you don't want this job, I will pay you a month's salary. This is on their first day after they went through training, their first like day on the job. He said, okay, now that you've gone through the training, I'll pay you, I think it was $5,000 or $3,000 to not take the job. And something like one out of five people would do it. And so he said, listen, I don't have to fire them later on. This is going to make my management easier. It was, it's, it is actually a kind thing to do to give people the opportunity to leave.

• 1:28:40David Sacks?

  I don't understand how giving employees an option to opt out if they're not on board.

• 1:28:46Jason Calacanis?

  The reason people are upset, let's be honest, Axe, is some people, you know, live to work and some people work to live. And the people who are working to live find it crazy that hustle culture even exists. And people who are part of hustle culture, like the four people in this podcast, find it crazy.

• 1:29:03Chamath Palihapitiya?

  Hustle culture is just working.

• 1:29:05Jason Calacanis?

  Hustle culture is working above the hours you're being paid for. That's, that's basically what hustle culture is.

• 1:29:10Chamath Palihapitiya?

  That's not how it works when you're getting paid a salary.

• 1:29:12Jason Calacanis?

  That's how most people would define it.

• 1:29:13Chamath Palihapitiya?

  A salary is, is actually not you work for 40 hours. A salary means you get your job done.

• 1:29:18Jason Calacanis?

  Okay, that's how we look at it. That is not how other people look at it.

• 1:29:22Chamath Palihapitiya?

  Well, you have to, oh my God.

• 1:29:23David Sacks?

  Look, there's no, there's no question that Elon is gonna raise the bar.

• 1:29:26Chamath Palihapitiya?

  Can I just say, sorry, if we, if we lose American primacy, it's because of that, not because of GDP.

• 1:29:30Jason Calacanis?

  I agree with you. I'm just, I'm still on the other side. I'm still on the other side. People look at their salary and they look at themselves as getting compensated for 40 hours. And every hour above that, in this generation's mind, looks at as hustle culture.

• 1:29:44Chamath Palihapitiya?

  There are people that are working. There are people that are working 60, 70, 80 hours a week as a teacher to make 30, 40K. Firefighters, you know, working on oil rigs. And to hear somebody like hustle culture at a startup where you're making 350 grand and you're upset because like the matcha lot ran out or whatever. It's just so out of touch.

• 1:30:04Jason Calacanis?

  I'm not disagreeing.

• 1:30:04David Sacks?

  Yeah, look, my, my, my, my view on it is that people need to love their jobs and love what they're working on. Because I think the only way to be successful is to work hard. But the only way to work hard and be happy is to really love what you're doing. And if there's a lot of people at this company or others who don't really love it, and they are just there to pay the bills or whatever, then I actually think it's extremely generous for Elon to be offering them a package.

• 1:30:29Jason Calacanis?

  It's the right thing to do.

• 1:30:30David Sacks?

  It's the right thing to do. I, I don't understand how giving them an option was anything but positive. And yet, the media has gone berserk on it. Meanwhile, while giving SBS a virtual pass on the largest, one of the largest frauds in history, a Madoff-level fraud. You read the New York Times.

• 1:30:44Jason Calacanis?

  Alleged, alleged.

• 1:30:45David Sacks?

  No, there's no alleged, dude. It's come out. He loaned himself, like, this is just one data point. He loaned himself a billion dollars. And he loaned the head of engineering 500 million dollars off the balance sheet.

• 1:30:55Jason Calacanis?

  Nothing to see.

• 1:30:56David Sacks?

  What possible justification? And you know, and SBF in this interview.

• 1:30:59Chamath Palihapitiya?

  The reason, just say the words, just say the hard part out loud. The reason why these same publications are not covering this is because they were complicit in his reputation laundering.

• 1:31:09David Sacks?

  Yes.

• 1:31:09Chamath Palihapitiya?

  The New York Times, before that article, put out this other puff piece where they talked to him and they were excoriated on Twitter because it was like not a single question about the fraud or alleged fraud.

• 1:31:21Jason Calacanis?

  Alleged, allegedly.

• 1:31:22Chamath Palihapitiya?

  Allegedly, obviously.

• 1:31:24Jason Calacanis?

  Allegedly slash obviously.

• 1:31:25David Sacks?

  When $10 billion suddenly goes missing and no one knows where it is, I'm willing just to call that a fraud.

• 1:31:31Jason Calacanis?

  You're willing to jump the fence?

• 1:31:33Chamath Palihapitiya?

  They're busy scrambling to sort of save their own reputations, which is why they are trying to like hide the cheese effectively and point over here and say, hey, look at what's happening. Elon sent an email worth only one button. Yes.

• 1:31:47Jason Calacanis?

  I mean, let's be intellectually honest here.

• 1:31:48David Sacks?

  I love that meme that Elon tweeted out. Do you see that? The two rhinos.

• 1:31:52Jason Calacanis?

  No, no, please, no.

• 1:31:53David Sacks?

  It cracked me up so much.

• 1:31:54Jason Calacanis?

  No, don't. Oh, God. I mean, you know, this is all going to get reblogged.

• 1:32:01David Sacks?

  It's too funny. It's just too funny. It's too good.

• 1:32:04Jason Calacanis?

  It's too good to not put up on the screen.

• 1:32:06David Sacks?

  I mean, that nature photographer is the New York Times. It's.

• 1:32:10Jason Calacanis?

  Okay, yeah, people who don't see it, there are two rhinos.

• 1:32:14Chamath Palihapitiya?

  Copulating.

• 1:32:14Jason Calacanis?

  They're fornicating.

• 1:32:15Chamath Palihapitiya?

  Copulating, copulating.

• 1:32:17Jason Calacanis?

  Yeah, they're copulating, but rhinos fornicating is like it's two 2,000 pound animals copulating.

• 1:32:23Chamath Palihapitiya?

  Doggy style.

• 1:32:24Jason Calacanis?

  10 feet behind a nature. Please, shut your mouth. You can make it worse. Behind, I'm trying to be the world's greatest photographer. A nature photographer with a $6,000 tele, you know, photo lens that can shoot across the entire Serengeti. But he's 10 feet behind him are the two rhinos. The two rhinos, it says FTX losing over a billion dollars of client funds. And the photographer is center is calling for the FTC to investigate.

• 1:32:51David Sacks?

  No, but the important thing is the photographer is pointing in completely the wrong direction.

• 1:32:54Jason Calacanis?

  The wrong direction. He's just totally missing.

• 1:32:56David Sacks?

  He cannot see the thing that is obviously right in front of his face.

• 1:32:59Jason Calacanis?

  Right.

• 1:33:00David Sacks?

  That he should be photographing.

• 1:33:01Jason Calacanis?

  Yes, he's using that long telephone.

• 1:33:03David Sacks?

  And that is, that is the New York Times, that's Senator Warren, that's the SEC.

• 1:33:09Jason Calacanis?

  Point the arrow in the right direction. Yes. Point the camera in the right direction is the point. I just want to point out.

• 1:33:14David Sacks?

  Can I read one biology tweet on this in this regard?

• 1:33:17Jason Calacanis?

  Oh, God. Biology is not capable of one tweet. That's going to be 76 tweets in a story.

• 1:33:21David Sacks?

  Well, I'm going to pluck, you're right, it's a tweet storm, but it's a really good one.

• 1:33:24Jason Calacanis?

  Of course, it's a tweet storm, it's biology.

• 1:33:26David Sacks?

  He says, think of a regulator as a binary classifier. What's their false positive and false negative rate? BTF Bitcoin ETF blocked for years. FTX ignored for years. The actual filter is not, is this a scam? The actual filter is, is this a scam?

• 1:33:43Jason Calacanis?

  Ooh, spicy.

• 1:33:44David Sacks?

  It's not consumer protection, it's reelection.

• 1:33:47Jason Calacanis?

  Oh, that's an alliteration, it rhymes.

• 1:33:49David Sacks?

  Can Young Spielberg make a banger out of that?

• 1:33:51Jason Calacanis?

  It is a banger. It's not consumer protection, it's reelection.

• 1:33:54David Sacks?

  Listen, if you are part of these interlocking power structures that we call the regime, it's the New York Times, it's the regulatory state, it's the Democratic Party, you get a big pass.

• 1:34:06Chamath Palihapitiya?

  Hold on, let's be clear, your, your team now controls the House and so.

• 1:34:11Jason Calacanis?

  Whose team?

• 1:34:12David Sacks?

  David's team.

• 1:34:13Jason Calacanis?

  Oh, David's team.

• 1:34:13Chamath Palihapitiya?

  David, I understand, but starting in January, you know, there's any amount of congressional oversight hearings.

• 1:34:20Jason Calacanis?

  How's your Hunter Biden investigation going, Sax?

• 1:34:22David Sacks?

  Let's agree right now.

• 1:34:23Jason Calacanis?

  Investigation.

• 1:34:24David Sacks?

  No, no, hold on a second. Let me say this right now. The first investigation by the House of Representatives needs to be SBF and FTX, not Hunter Biden. SBF makes Hunter Biden look like a piker. I mean, you know, Hunter Biden was what, a couple million dollars of grift? This is $10 billion plus a grift, so I think.

• 1:34:42Chamath Palihapitiya?

  And it also, it also touches regulators, it could touch, you know, it's a big, it's a big deal.

• 1:34:46David Sacks?

  It's a systemic failure.

• 1:34:47Jason Calacanis?

  Hunter Biden knows how to party, so let's be honest here. I mean, that is the issue. I just think the quote of the week. Goes to John J. Ray, he's FTX's new CEO. He famously oversaw the liquidation of Enron. And he says, I have over 40 years of legal and restructuring experience. I have been the chief restructuring officer and or chief executive officer in several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance in Enron. Nearly every situation in which I have been involved has been characterized by deficits of some sort and internal control, regulatory compliance, human resources, and system integrity. Never in my career have I seen such a complete

• 1:35:29Jason Calacanis?

  failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. This is the person who oversaw Enron saying this is unprecedented. Enron was the previous unprecedented situation, which is now being framed as manageable by none other than John J. Ray. What a great name. Congratulations on being the chief restructuring officer of FTX.

• 1:35:56Chamath Palihapitiya?

  There was an article that showed, Nick, if you could please throw the picture up on the screen of of all the people that invested the universe of SBF.

• 1:36:07Jason Calacanis?

  Oh, my God.

• 1:36:08Chamath Palihapitiya?

  And the article headline was it's a who's who of VC. And my comment is actually, no, this list is a who's who of people who did no diligence whatsoever. And I just want to call one person, Nick, if you look at the Alameda research, this this firm called One Inch, J Cal invested in a firm named after the length of his penis.

• 1:36:32Jason Calacanis?

  Come on, come on. Maybe coming out of the cold plunge. Okay. But you're that cold plunge, they're shrinking, Shama.

• 1:36:40Chamath Palihapitiya?

  J Cal, was that an SPV? Was that an SPV?

• 1:36:42Jason Calacanis?

  One Inch SPV. Listen, I'm a shower, not I'm a grower, not a shower. All right. Listen, you guys coming out, everybody knows coming out of the cold plunge, it's it's not going to be the best performance for any of us.

• 1:36:54Chamath Palihapitiya?

  What a name.

• 1:36:55Jason Calacanis?

  Wait, why is it called One Inch?

• 1:36:57Chamath Palihapitiya?

  What is that?

• 1:36:59Jason Calacanis?

  We've lost the script on the show. Jesus, please, we got to wrap. I mean, it's just too much.

• 1:37:03David Friedberg?

  Do you guys not think that all these investors receive audited financials and you know, they got they had a lawyer, a legal firm that represented these financials?

• 1:37:12David Sacks?

  Did you guys see who FTX's auditing firm was? It's called Prager Metis and it says it's based in the metaverse? This is like the Hollywood upstairs medical college of the auditing world.

• 1:37:22Jason Calacanis?

  Their address was in Decentraland.

• 1:37:24David Friedberg?

  Bernie Madoff, I think his brother-in-law ran the accounting firm that did their audits, right? It was like, and it was in-

• 1:37:29Jason Calacanis?

  On a dead floor in the lipstick building.

• 1:37:31David Friedberg?

  It was in the same building, right?

• 1:37:32Jason Calacanis?

  On the lipstick building that had like a secret floor with nobody on it.

• 1:37:35David Friedberg?

  I feel like, look, I mean, even in that case, people relied on an audit from a CPA that said, here are the numbers. And those numbers were fraudulently conveyed. And I think that there's probably some, you know, some forgiveness necessary here that there was fraud. There may have been serious fraud that took place and I don't want to be too disparaging of all the smart people that we know. That work at these investment firms made an investment and they all got duped and the LPs got duped. And so I don't think this is just fundamentally like a failure of diligence.

• 1:38:01Chamath Palihapitiya?

  So we, we, we, we were part of the process where they tried to show, again, I have to be careful. My lawyers reminded me that we're still under NDA actually with FTX. So, but what I can tell you is we did not get any financials. So we were verbally described what was going on.

• 1:38:15Jason Calacanis?

  When you ask for it, when you double click on diligence.

• 1:38:17Chamath Palihapitiya?

  We sent a two pager of stuff. Anyways, I can't say more than that, but.

• 1:38:20Jason Calacanis?

  Yeah, don't get yourself in trouble.

• 1:38:21Chamath Palihapitiya?

  Oh, I want to, I want to say something else, by the way. Last Friday, David and I were at Yuri Milner's birthday party and there was a chess tournament. And Magnus Carlsen was there. And anyways, David was in the finals. Okay. It was David and his partner.

• 1:38:38Jason Calacanis?

  Look at the smile on David's face.

• 1:38:40Chamath Palihapitiya?

  Hold on, wait, I'm getting to a great punchline. Versus Magnus Carlsen and his partner. David won.

• 1:38:47David Sacks?

  Wow. Partner was, was, uh, should I say Yuri's daughter, who I think is probably what, like 10 years old.

• 1:38:52Jason Calacanis?

  Oh, she's incredible. Yeah.

• 1:38:53Chamath Palihapitiya?

  She's like second in America, right?

• 1:38:55David Sacks?

  Yeah, she's good. She's good.

• 1:38:56Jason Calacanis?

  She's incredible.

• 1:38:56David Sacks?

  Anyway, yeah, thank you to Yuri. That was a really unique event. It was partner chess. My partner was Pragnananda, who's an Indian grandmaster who's like a superstar. And look, playing, you know, with Magnus Carlsen was obviously, that was a real thrill. Yeah, there you go.

• 1:39:11Jason Calacanis?

  So when you rank this with the birth of your children, your marriage, uh, and this, where would that rank on the scale of one through five? This is up there for your pork kids.

• 1:39:23David Sacks?

  But you know what? Speaking of the pod.

• 1:39:25Jason Calacanis?

  Look at the smile. Zach is happy. Oh my God, I haven't seen him that happy since Trump won.

• 1:39:30David Friedberg?

  Guys, look at that document I just sent you.

• 1:39:32Jason Calacanis?

  We gotta wrap this thing.

• 1:39:34David Friedberg?

  But I want to show you this. Basically, I pulled all IPOs since 2020. So this excludes all SPAC mergers and real estate, finance, material, energy, utilities. So kind of the big bulky private equity type stuff. So it's mostly tech, consumer. 627 IPOs since 2020. More than half of them, or basically half of them, are trading at less, at point two times the total cash they've burnt. So you can kind of look at total lifetime capital burnt by these companies in the retained earnings line on the balance sheet. And so when you pull out the retained earnings, it shows you how much money they've burnt over their lifetime. And so the total money burnt by half of these companies is about $107 billion.

• 1:40:16David Friedberg?

  And the market cap of those companies is only $26 billion in aggregate. So a point two times return on capital invested to date in terms of enterprise value divided by total capital invested in.

• 1:40:29Chamath Palihapitiya?

  Sorry, let me say it in English and you tell me if I said it right. So 627 non-SPAC, non-real estate, non-finance companies went public. So basically, 627 tech companies went public since 2020. So two years.

• 1:40:46David Friedberg?

  Yep.

• 1:40:47Chamath Palihapitiya?

  And of those 627 tech companies, almost half, or 300 of them, 48% of them, are today worth about point two times all the money that went into them.

• 1:41:00David Friedberg?

  Yep.

• 1:41:02Chamath Palihapitiya?

  My gosh, wow.

• 1:41:03David Friedberg?

  Yep. And then on the other half, the other half is the ones that have worked. So this kind of goes back to a power law point. But as a venture industry, you think, once you get a company public, it's successful. And the reality is that many of these companies, from an economic perspective, are still not successful. It looks like half, and perhaps much more if you include all the SPAC mergers, which is another couple hundred, and I would guess the vast majority of those meet this criteria, are trading at less than the total. That's been invested in them.

• 1:41:37Jason Calacanis?

  Friedberg, this speaks to the age of excess that we just went through. We just weren't as efficient as we needed to be in running these companies. And now we're in the age of efficiency, austerity, excellence. And these, that's this great setup for a rebound, isn't it Friedberg? Like, I would be looking through these.

• 1:41:53David Friedberg?

  Look, I mean, one way to read this, I was speaking with someone who I, um, you can bleep him out. I was talking with **** two weeks ago, three weeks ago, and he showed me in their, um, how much should I say here? This is a big investment firm and they have a big growth portfolio. Less than, uh, they have about a hundred and sixty, uh, investments, a hundred and eighty investments in their growth portfolio. Eighty-five percent of the returns are generated by ten companies of the hundred and eighty. And that's in the growth portfolio. These are supposedly de-risk businesses.

• 1:42:23Jason Calacanis?

  The power law exists even in growth.

• 1:42:25David Friedberg?

  Exists in growth and as you can see here, the power law exists quite dramatically post-IPO as well. So, you know, as you can see here, only nine percent of these businesses have generated positive earnings over time. Um, forty-three percent, about half of them are worth more than the total cash that's been invested in them. Um, and that multiple on cash is-

• 1:42:48Jason Calacanis?

  Study here, by the way, this is your, done by your firm?

• 1:42:51David Friedberg?

  Yeah, yeah, yeah. It's off public data. So, the, um, the multiple on the value of the companies that are worth more than their, the cash invested is five point five times. So, in aggregate, IPOs since 2020 are worth four point three times the total cash that's been invested in them over their lifetime. Um, but the crazy statistic is half of them are worth significantly less than the cash that's been invested in them, only point two times. So, the power law dominates both early growth and, and clearly, uh, being public. But I think to your point, Jake Hall, it also seriously speaks to the, uh, amount of excess. And it's really going to rationalize probably based on the conversations we had today about Twitter, Meta, Google,

• 1:43:31Jason Calacanis?

  Amazon, Google.

• 1:43:32David Friedberg?

  Amazon and this as well. So, um, certainly-

• 1:43:35Jason Calacanis?

  Also, the good news here is- Friedberg, and, and correct me if I'm wrong here, Chamath, we want more companies to go public and have that discipline of being a public company. This was the big critique of this quiet era of companies taking ten, twelve, fourteen years to go public. This is going to be, uh, a strength for these entrepreneurs to have to fight it out in the public market under scrutiny. Correct, Chamath?

• 1:43:56Chamath Palihapitiya?

  Hundred percent. I think like the Chris Holmes letter, I think that there are a lot of VCs on boards of companies who would love to say the equivalent thing to their private company.

• 1:44:05Jason Calacanis?

  Private company, yeah.

• 1:44:07Chamath Palihapitiya?

  And part of the the dynamics, as as Friedberg just said, because it's such a power law and people believe that, you know, you being with other VCs are really important. It turns out that most of these VCs abandoned their role on these boards and don't really hold people accountable because they're worried it'll affect their deal flow. And the problem is it's a negative reflexive loop. It's but so these companies do poorly and then as a result, they're viewed as not an effective board member. And so the next deal they get is a poor and poor quality. So the highly correlated portfolios in Silicon Valley are the ones that will get torched because most of those companies will receive very poor or no advice. And then the few that will get to the end is because they have hard-nosed people on the board that will force them to make really hard decisions.

• 1:44:52Jason Calacanis?

  Yeah.

• 1:44:52Chamath Palihapitiya?

  That's it.

• 1:44:53Jason Calacanis?

  Uh, Sacks, any thoughts here on the public markets?

• 1:44:56Chamath Palihapitiya?

  Oh, sorry. Wait, last thing. And by the way, Sequoia, who has had exceptional returns, has always been known to be hard-nosed. You know, a lot of people, the critique against Sequoia from founders would would be that, oh, if I take Sequoia's money, they may fire me. Well, yeah, because if you're not good, it's the the mission of the business is bigger than your ability to be the CEO.

• 1:45:15Chamath Palihapitiya?

  And so, you know, you just have to remember, like, there is no free lunch. We were not giving out free money here.

• 1:45:20Jason Calacanis?

  The pendulum swung one direction too far. They used to, the tradition in Silicon Valley used to be you always replaced the CEOs, the founders with a professional CEO. Uh, and Google being the turning point there or maybe the last one. And then it became founders will control their companies with super voting shares forever. Hopefully, the pendulum now swings to some equilibrium. Sacks, what are you seeing in private markets?

• 1:45:41David Sacks?

  The the Jaws program for surplus elites is going away.

• 1:45:45Jason Calacanis?

  The Jaws program.

• 1:45:46David Sacks?

  That's the TLDR.

• 1:45:48Chamath Palihapitiya?

  Surplus elites is just.

• 1:45:49David Sacks?

  Plus elites is going away.

• 1:45:50Chamath Palihapitiya?

  Professional managerial class is under pressure. That's for sure.

• 1:45:54David Sacks?

  If you went woke, you may go broke because you have no marketable skills. Man, you're punching guys off in there. Is Dean giving you these one-liners?

• 1:46:03Jason Calacanis?

  Who's Dean giving you?

• 1:46:03David Sacks?

  You got somebody in the room with you? I have a bunch of guy.

• 1:46:06Jason Calacanis?

  Dean's helping you for sure.

• 1:46:07David Sacks?

  I think he's got somebody handing him notes. I'm setting myself up.

• 1:46:09Jason Calacanis?

  Who, Jackie the joke, like Jackie the joke man Marley handing you a little note there?

• 1:46:15Jason Calacanis?

  All right, four. The Sultan of Science, David Friedberg, and also the executive producer of All In Summit 2023.

• 1:46:25Jason Calacanis?

  And the Rain Man himself, chess master and champion, David Sacks, as well as the dictator, I'm gonna go on a little road trip, aren't we dictator? A little road trip for the dictator in J.Cow. Yeah. It's gonna be fun. I am the world's greatest moderator who couldn't control the panel today. I'll do better next week and we'll see you next time. Love you guys. Happy Thanksgiving. On the All In Podcast. Happy Thanksgiving, fam. Bye bye.

• 1:46:55Jason Calacanis?

  Rain Man David Sacks.

• 1:46:59David Sacks?

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

• 1:47:03Jason Calacanis?

  Love you, Sacks.

• 1:47:04David Sacks?

  I'm the queen of Kinoah.

• 1:47:12Jason Calacanis?

  Besties are back.

• 1:47:15David Friedberg?

  That is my dog taking a piss in your driveway.

• 1:47:17Jason Calacanis?

  Oh, man.

• 1:47:22Chamath Palihapitiya?

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

• 1:47:30Jason Calacanis?

  What your...

• 1:47:31David Sacks?

  B B.

• 1:47:32Jason Calacanis?

  What your...

• 1:47:33David Sacks?

  What your B.

• 1:47:34Jason Calacanis?

  B.

• 1:47:36Jason Calacanis?

  We need to get merch. Besties are back.