E54: Spread trading big tech, capital allocation, Zillow's misfire, Progressives suffer losses

Show Notes: 0:00 Besties do a Microsoft-themed intro 7:53 Spread trading big tech, amazing power of Google and Microsoft 17:28 Sacks speaks about Bird going public from the NYSE, understanding distributions and evergreen funds, why Friedberg went the startup studio route 30:36 How DAOs fit in to the capital allocation landscape, the balance of consumer-facing products and infrastructure solutions for web 3.0 35:24 Zillow's iBuying implosion 46:05 Wokelash: Progressive democrats take huge hit on election day 2021, what are American voters looking for? 1:14:57 New CO2 to starch conversion discovered by Chinese researchers, future climate incentives 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/Suhail/status/1455553539552382979 https://www.bloomberg.com/news/articles/2021-11-01/zillow-selling-7-000-homes-for-2-8-billion-after-flipping-halt https://twitter.com/RTanuku/status/1456324783809826819 https://www.nytimes.com/news-event/elections-2021 https://www.nytimes.com/2021/11/04/nyregion/stephen-sweeney-durr-nj-election.html https://www.seattletimes.com/seattle-news/politics/republican-ann-davison-defeats-nicole-thomas-kennedy-to-become-seattles-first-woman-city-attorney https://www.nytimes.com/2021/11/03/us/politics/democrat-losses-2022.html https://www.nytimes.com/2021/11/04/us/california-math-curriculum-guidelines.html https://nypost.com/2021/11/01/mcauliffe-claims-everybody-clapped-after-classroom-comment https://www.newsweek.com/cnn-van-jones-glenn-youngkin-delta-variant-trumpism-1645303 https://twitter.com/patrickruffini/status/1454792424488902656 https://www.shorenewsnetwork.com/2021/10/17/if-taxes-are-your-issue-njs-not-for-you-murphy-says-comment-taken-out-of-context/ https://www.science.org/doi/10.1126/science.abh4049 https://twitter.com/friedberg/status/1454482267707899909 https://www.theguardian.com/environment/2021/sep/28/blah-greta-thunberg-leaders-climate-crisis-co2-emissions https://www.wsj.com/articles/climate-finance-china-india-11636039142 https://www.wsj.com/articles/tariffs-climate-change-greenhouse-gases-manufacturing-steel-11635862305 https://twitter.com/elonmusk/status/1454808104256737289

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

• 0:00Chamath Palihapitiya?

  My body is a wonderland.

• 0:03Jason Calacanis?

  If that wonderland is white, soft and mushy, sure.

• 0:07Chamath Palihapitiya?

  And hairy too.

• 0:11Jason Calacanis?

  You know, the worst thing about skin on skin sleeping with a newborn is that, you know, sometimes she roots and she goes after the man, the male nip.

• 0:18Chamath Palihapitiya?

  I know.

• 0:18Jason Calacanis?

  Problem is my nipples covered in hair. It's really awkward for everybody.

• 0:24David Sacks?

  Did you start gagging?

• 0:25Jason Calacanis?

  I'll tell Tully that story when she's 18 or at her wedding. It'll be even better.

• 0:46Jason Calacanis?

  Hey everybody, welcome to another episode of the All In Podcast. I am wearing a blue shirt. I am a pasty white old Greek man who's balding and obnoxious. And with me today is.

• 1:03Chamath Palihapitiya?

  No, no, no, no, you have to, you have to say your pronoun, bro.

• 1:05Jason Calacanis?

  And I, oh, and my pronouns are, uh, oh, wait, what are my pronouns? My pronouns are beep beep. And most people just call me a jerk. With me today, of course, is my Sri Lankan Urkel looking, wearing a furry sweater.

• 1:22Chamath Palihapitiya?

  Hello, everybody. My name is Chamath. I have, uh, salt and pepper, black hair, brown eyes. Uh, I am tall, uh, six foot two. I go by the pronouns we, king and stud muffin. And, uh, uh, I'm here to talk to you about, uh, internet security protocols. Wah wah wah wah.

• 1:44Jason Calacanis?

  I look like Urkel. I think people should just come up and say, well, I don't look like Urkel.

• 1:48Chamath Palihapitiya?

  The closest like.

• 1:49Jason Calacanis?

  I don't look like Urkel. I look like a Bollywood movie star.

• 1:54Jason Calacanis?

  You're kind of like the Sri Lankan Urkel to us. Welcome to the All In Podcast. Two out of the four of us are canceled. Next up for cancellation, Sacks.

• 2:03David Sacks?

  Yes, I'm coming to you here from the floor of the New York Stock Exchange, which was once land that belonged to the Mohegan, the Montauk, the Oneida, the Erie and the Arakoi tribes.

• 2:17David Sacks?

  Since time immemorial.

• 2:20Jason Calacanis?

  You forgot the Irish. We own the seven points.

• 2:23Chamath Palihapitiya?

  Oh my god. You really did it. You went for it, Sacks. I love you.

• 2:28David Sacks?

  I'm, isn't it important that we, at any moment that we're successful, we have to flagellate ourselves or remind ourselves that at one time, all of this land was owned by somebody else. We stole it.

• 2:44Jason Calacanis?

  Also, the Greeks conquered the Romans and so I'd like to apologize for that. But you forgot to mention, you're also wearing a Brooks Brothers shirt that is four sizes too large.

• 2:57David Sacks?

  This is my slim fit, so.

• 2:58Jason Calacanis?

  That slim fit? Oh no, here we go again. Sacks has been upgrading the wardrobe. He's changing it up.

• 3:03Chamath Palihapitiya?

  Wait, before Friedberg does the intro, Jacob, you want to tell them why we're doing these intros like this?

• 3:08Jason Calacanis?

  Yeah, I gotta pause before I get, okay, yesterday on the internet emerged a series of videos that were clipped of Microsoft presenting their new suite of developer tools, yada, yada. And corporate people got up and without any explanation, started describing their physical appearance, their pronouns, their ethnicity, their skin tone, and their hairstyles. And the entire internet was like, oh my god, this is crazy woke-ism. Like, what is happening here? No, I thought it was a skit. I thought it was a Saturday Night Live skit.

• 3:43David Sacks?

  And so then as soon as they got called out by the entire internet, they claimed that they were doing this for visually impaired people, which kind of begs the question of why visually impaired people need to know what race you are. Like, it's still playing into this like crazy race consciousness. But then on top of it, it wasn't just that. We know it's not that because then they start doing this all.

• 4:03Chamath Palihapitiya?

  But hold on. Also, if you're blind and technically can't see, you may not even know what blue means. Because you will have never seen the color blue or blonde.

• 4:12Jason Calacanis?

  Okay.

• 4:12Chamath Palihapitiya?

  Right?

• 4:13David Sacks?

  Right, but they were also identifying their races, which kind of begs the question of why that's important.

• 4:17Chamath Palihapitiya?

  But if you were born blind, you would not know what that means either. You're literally colorblind.

• 4:21Jason Calacanis?

  Well, I think that people have explained to people the context of those things.

• 4:24David Friedberg?

  Putting you on the same footing as people who are not visually impaired.

• 4:26Chamath Palihapitiya?

  No, no, I'm saying, if you're visually impaired, you're using the wrong language. That language is for the sighted people.

• 4:32Jason Calacanis?

  Okay.

• 4:33David Sacks?

  Yeah, but I'm just calling bullshit on their stated explanation that it has anything to do with visually impaired, because then they went on to basically recite the names of 10 tribes, Native American tribes that no one's ever heard of, on which the Microsoft campus used to belong to. So, which is why I was kind of making fun of that in my initial statement. But, so, look, this is just woke capitalism. This is woke-ism out of control. Obviously, they didn't see the election results earlier in the week.

• 5:01Jason Calacanis?

  It's clearly there was some level of virtue signaling. I think in their defense, they were trying to do it, I think, for the visually impaired. The problem was, they didn't explain the context and they didn't give instructions to the people on what to do. So, the people came out.

• 5:15David Friedberg?

  But, J Cal, that video, that was a clip pulled out of a broader context too, right? So, like, apparently, this is common on campus or common there that this is happening all over. So, we just saw a snippet.

• 5:25Jason Calacanis?

  Well, no, it isn't common, because I asked people online to...

• 5:27David Friedberg?

  Well, it was optional. It was optional. It's optional, apparently.

• 5:29Jason Calacanis?

  But, to the common point, I think the reason the internet reacted the way it was, was I asked every single person who came at me, because the woke left came at me, I just said, "Can you show me another clip of this on YouTube of any event where this occurred?" And nobody could. So, I think this was kind of a first.

• 5:44David Friedberg?

  When did you stop being a member of that woke left, J Cal? What was the moment?

• 5:48Jason Calacanis?

  I've never liked the historical side. I've never been for Bernie. I've never been for Elizabeth Warren. I've always been moderate. Always.

• 5:53Chamath Palihapitiya?

  Wait, can I hear Friedberg's intro?

• 5:55Jason Calacanis?

  Yeah, Friedberg, can we hear yours?

• 5:58David Friedberg?

  My identity is an illusion. It's an illusion created by the viewer, and you can call me whatever you want. I sit on the ground where during the Hades period, there was lava and magma and nothing but CO2 and methane. And I represent those gases that are now lost to the oxygenation and the cyanobacteria that swarmed over this earth and took everything over and led to the formation of eukaryotic life. And here we all sit today in our privileged existence. Thank you.

• 6:27Jason Calacanis?

  Are you saying that you want to...

• 6:29David Sacks?

  Friedberg is just electrons hitting neurons in interesting ways.

• 6:32Chamath Palihapitiya?

  Yeah, I know. He's like, "It, it." His pronouns are "it, it."

• 6:35Jason Calacanis?

  His pronouns are proton, atom, dark matter.

• 6:38David Friedberg?

  Biochemical, quantum bath, fuzz, quantum foam is my pronoun.

• 6:44Jason Calacanis?

  So, would you like to formally apologize for colonizing the dark matter during the Big Bang now? Or would you like to have your lawyer release his statement?

• 6:54David Friedberg?

  It wasn't fair when the cyanobacteria took over the face of the earth and sucked up all the CO2 and created all the oxygen. And for that, we all apologize. For the genocide of...

• 7:06David Friedberg?

  For the genocide of CO2 and methane. I mean, those molecules were really happy. And they had a very kind of like peaceful existence on this earth. And, you know, We just came in and ripped it away. Cyanobacteria just took it all away from them. And, you know, and then the offspring ended up being us. And here we are. So apologies. All right. All right. Welcome to episode 54. Everybody's canceled.

• 7:33Chamath Palihapitiya?

  The final episode.

• 7:34David Friedberg?

  Everybody's horrible.

• 7:37David Friedberg?

  I don't think that the Microsoft thing was bad. And when you hear the broader context, it was like, you know, that's just, you know, I think it's a reasonable thing that visually impaired people.

• 7:47Chamath Palihapitiya?

  I'm still long Microsoft and Google and short the rest of big tech. So I'm fine with it.

• 7:51David Friedberg?

  There you go. Back to the stock price. Actually, I... Jamal, do you think that the Google long Netflix short play is the right play?

• 7:57Chamath Palihapitiya?

  I think the best trade on the internet, the most obvious, simple money making trade is long Microsoft, Google, short big tech, short the rest of big tech.

• 8:05David Friedberg?

  Short IBM, short Netflix.

• 8:07Chamath Palihapitiya?

  No, no, no, no, no. Meaning, you can very comfortably short Apple, Facebook, Amazon, Netflix and be long Microsoft, Google. So as a spread trade.

• 8:16David Friedberg?

  Right, right.

• 8:17Chamath Palihapitiya?

  It's the most, it's the best risk parity trade on the internet right now. I mean, period in the markets.

• 8:21David Friedberg?

  Can you explain a spread trade?

• 8:23Chamath Palihapitiya?

  So look, I tweeted this a while ago, but it's like, and again, the, I think like, well, let me be constructive and say the people on Twitter that respond to these threads are not totally stupid, although I think they're kind of idiotic. I said, you know, here's how you can effectively, you know, I said something about, you know, big tech. And I said, oh, I can comfortably put my short on. And I'm kind of trolling people when I do that because I'm not telling them the full trade. And the real trade, whenever you put anything on, in my opinion, is all about managing risk. And the best thing about the internet and the stock market is that, you know, when you're betting on internet stocks, you don't necessarily have to be naked long or naked short,

• 9:04Chamath Palihapitiya?

  which comes with a lot more risk than if you were long one security and short another against it. So for example, over the last 10 years, you would have made a lot of money by being long Amazon and short a basket of traditional commerce companies, offline commerce. I'm going to make up a basket, but Macy's, JCPenney, you know, Kmart, Sears, right? So if you were short those and long Amazon, that's what's called a spread trade. You're basically playing the gap between your longs and your shorts.

• 9:36David Friedberg?

  It's independent of where the market generally trades is one of the key points.

• 9:39Chamath Palihapitiya?

  Irrelevant of the market. You're basically saying-

• 9:41David Friedberg?

  Because those stocks could go up, but just not anywhere near Amazon.

• 9:47Chamath Palihapitiya?

  When you put that trade on, for example, it's, I'm going to bet that if everything goes up, Amazon will go up more than Kmart, Walmart, Sears. And if the stock market goes down, Amazon won't go down that much, but these ones will go down a lot. And you're playing the spread. So just to be very explicit, you know, there was a very, and I talked about this last week, but this idea wasn't mine. It's a borrowed trade from somebody who's a very well-known hedge fund manager, who put it on in massive size and, you know, to be honest, not knowing much of anything, I just copied it. But he's, his initial trade was long Google, short Facebook. And that trade basically was at parity, which meant that the long and the short canceled each other out

• 10:31Chamath Palihapitiya?

  for about the last four years. Until the last year, it completely blew out and it returned about 80, 85%. So if you had put a hundred dollars in, you would have made about 85 bucks on this trade by being long Google, short Facebook.

• 10:47Chamath Palihapitiya?

  The bigger trade at scale is actually long Google and Microsoft and short the rest of big tech. And there's a lot of vagaries why that this idea makes a lot of sense.

• 10:57Jason Calacanis?

  What you're saying is they'll outperform the other basket of tech.

• 11:00Chamath Palihapitiya?

  On a relative basis.

• 11:01Jason Calacanis?

  On a relative basis. So it's not like you're saying Airbnb can't go up or Facebook can't go up. It could. It's not going to go as much as those other two.

• 11:09David Friedberg?

  He's saying that the trillion dollar market cap companies, not the Airbnb's.

• 11:14Chamath Palihapitiya?

  Oh, okay. And the reason and the reason why focusing there makes sense is they're hyper liquid markets. They have tremendous ways in which you can have massive size on. So you could put a trade of 10 billion long versus 10 billion short. I mean, you can put mega size on on these things if you if you have real conviction. And then the third thing is when the banks look at that kind of position, they actually, from a risk management perspective, treat it differently than if you were just naked long, any one of these things.

• 11:45Jason Calacanis?

  Naked long would be just making one bet.

• 11:47Chamath Palihapitiya?

  Yeah, or, you know, or naked short, which is even more dangerous.

• 11:50David Friedberg?

  Because if the market collapses by 30%, both stocks might go down 30 roughly, but one will go down 32 and the other one will go down 28. And so you're really only exposed 2% as opposed to the 30% of the whole. So all the market risk is taken out when you make trades like that.

• 12:07Chamath Palihapitiya?

  Yeah.

• 12:07David Friedberg?

  The reason it's possible also today to do so at such a scale, right, Chamath, is interest rates are so low. So when you borrow on margin to go long, the rate is very low. And when you short the stock, if it's a highly liquid stock, it doesn't cost a lot to borrow to short.

• 12:21Chamath Palihapitiya?

  That's right.

• 12:22David Friedberg?

  So your actual, you know, carrying cost on that trade ends up being pretty low relative to the upside you expect.

• 12:29Chamath Palihapitiya?

  So just to just to give you a sense of it, my, you know, when I tweeted that tweet out, to complete the picture, I was actually long something against my proposed short. And I put it on in pretty meaningful leverage and it's worked out really well because I was playing the spread. I was basically betting that, you know, the safest company on the internet today is Google because they're both a platform company. And to the extent that they're at risk at being an app company. The risk is to Apple, but because they pay Apple so much for search, they're inoculated. And so in many ways, Google is the safest. And it's also, as we've said before, the purest money-making machine on the internet.

• 13:08Jason Calacanis?

  You're referring, of course, to Google paying Apple $10 billion to be the default search in their phone.

• 13:14Chamath Palihapitiya?

  They own Android, so one platform, and on the other platform, they pay them so much that they're going to be always protected. And the second best company is Microsoft. And we even saw it, by the way, this past week, I don't know if you guys saw that, but Microsoft decided to take a broadside attack against Notion, which is a productivity app that's been growing very well. I felt this when I was on the board of Slack. When Microsoft put its gun sights on us, we always thought that they could not out-compete with us. And what it turns out is, when you have a massive distribution advantage, feature parity is enough, and you can actually be slightly less than good enough on the features, because distribution and bundling and packaging overpower a customer's desire to adopt a product.

• 13:57Chamath Palihapitiya?

  So in the case of Slack, it was very difficult, I think, for us to compete against Microsoft's bundling of teams with all this other software that they were selling. And all the discounting that they could do made it very difficult for us to compete because we had a single product. And lo and behold, 18 months later, the only real long-term protective solution for Slack shareholders was to basically get bought by Salesforce so that you could be part of a bigger whole. This past week, Microsoft decided to go after Notion. And it's going to be, I think, a very similar story where, you know, once they decide to sort of go after this product experience, they only need to be 80% as good. And then the distribution and bundling and packaging will take care of the other 20%.

• 14:38Jason Calacanis?

  It doesn't kill the other company, but it creates headwinds that basically...

• 14:40Chamath Palihapitiya?

  Massive headwinds, because a company like Notion cannot be fully valued over long periods of time, simply being an SMB company. At a minimum, you'll have to move into the mid-market. You may necessarily never have to go to the enterprise, but you probably have to go to the mid-market. And in that is a very troublesome path, because Microsoft has so much... You know, tentacles, so many tentacles inside of those businesses. So anyways, the long, Microsoft long, Google is a pretty obvious kind of like monopolistic, you know, pair trade. The question is, what are you short against it so that you can take up the market volatility and you can play spread? Again, Apple has severe, you know, headwinds with respect to inflation pressures and margins and supply chain issues.

• 15:25Chamath Palihapitiya?

  Amazon has pretty meaningful headwinds now relative to pricing power and competition. Facebook has pressure with respect to regulatory oversight.

• 15:35Jason Calacanis?

  I just came up with one. What about Airbnb versus the airlines? Could that be a good spread trade?

• 15:40Chamath Palihapitiya?

  You're talking about smaller rinky-dink ideas.

• 15:43Jason Calacanis?

  Well, listen, I'm not playing the same chip stack issue. I wasn't there on Tuesday night. I'm on a Thursday night, so would that be a good spread for me?

• 15:49Chamath Palihapitiya?

  No, that's a stupid idea, and I'll tell you why.

• 15:51Jason Calacanis?

  Okay.

• 15:52Chamath Palihapitiya?

  If you're going to put these things on, go to where the deepest liquid markets are, because those are the safest.

• 15:57Jason Calacanis?

  Okay.

• 15:58Chamath Palihapitiya?

  Right? Like, like, don't try to be different. Being the same here.

• 16:02Jason Calacanis?

  Well, tell me why Airbnb, which is an incredible margin business that's incredibly well-run and growing, versus airlines which are horribly run and low margin, why wouldn't that be a good spread trade? I'm just thinking out loud here.

• 16:14Chamath Palihapitiya?

  I think it's a very, very, you're picking two random companies out of a hat.

• 16:19Jason Calacanis?

  Well, no, they're both in transportation and vacation and travel.

• 16:23Chamath Palihapitiya?

  They're completely different businesses with completely different motivations, with different capital pools, with different people that own the stock. There's no point trying to get cute on these things. My point is, if you really want to be hedged against market risk.

• 16:36Jason Calacanis?

  Got it.

• 16:37Chamath Palihapitiya?

  Code it where it's safest. Find the simplest, most obvious thing. Don't overthink it, or don't put it on.

• 16:45Chamath Palihapitiya?

  So, another obvious one, here's it, here's it. So, obvious is within big tech, figure out which ones you want to be long, which ones you want to be short. That's a spread trade that, over the next four or five years, where if you expect a lot of market volatility, it makes sense to maybe put some of this kind of stuff on, right? A different version of this idea, which makes sense, is in autos. Again, trillions of dollars of market cap, and you can make a decision. Do I want to be long Tesla, Lucid, and Rivian, and short the traditional autos? That could be a trade. You know, but trying to like trying to go after like, let me pick Airbnb versus United Airlines is too random for me. And I don't think they're correlated enough for it to make any sense.

• 17:28Jason Calacanis?

  All right. Speaking of the stock market, Sacks, you've got the background of the New York Stock Exchange as your Zoom background today. What's that about?

• 17:36David Sacks?

  Yeah. So Bird listed on the New York Stock Exchange today. This is a company that I've been involved in pretty much since the beginning. We led the series A round back in 2017. It was actually the first tech I wrote as a VC to lead around. At Kraft and four years later, public company on the New York Stock Exchange. Pretty amazing.

• 17:56Jason Calacanis?

  And so you're literally at the New York Stock Exchange as we speak. First remote bestie.

• 18:01David Sacks?

  Yes. And you can see behind me.

• 18:05David Sacks?

  That is the floor of the New York Stock Exchange. It's not like, you know, if you see the movie Trading Places, it's not like that anymore. There are no stockbrokers. There's no like paper flying around.

• 18:14Jason Calacanis?

  Got it.

• 18:15David Sacks?

  I'm not really sure what the purpose of all those monitors are down there. It feels to me a little bit like a movie set.

• 18:20Jason Calacanis?

  It is like a movie set. Yes.

• 18:22David Sacks?

  Yeah. And so people like us come here to record things, but as we all know, the all the trades are really happening inside giant machines.

• 18:30Jason Calacanis?

  Can you turn around and just start yelling, booyah, booyah? Let's see if security comes in.

• 18:37David Sacks?

  No, I'm in, I'm elevated above the floor. No one could really hear me here. I'm in like this sort of broadcast booth.

• 18:45Jason Calacanis?

  So take us behind the decision to go public as a four year old company. We were expecting, you know, Airbnb, Ubers and Lifts took over 10 years to go public. Now here we are sitting on a four year old public company. Is that a good thing, a bad thing, something in between? And how does the the board and the management team make that decision to go public?

• 19:05David Sacks?

  I think it's a good thing because the company, well, the company wanted to, I think it had the opportunity to it. It grew very, very quickly before COVID. Then you had COVID was like sort of a huge setback. They, I mean, basically the scooter industry just stopped for at least six months because of lockdowns. But then coming out of COVID, they bounced back really strongly. They kind of pivoted their model. To it was called a fleet manager model where basically they're putting a business in a box for a local operator or local entrepreneur. To buy the scooters with financing and manage the fleet themselves. So it's a much more highly virtualized model. Uh, and so as a result of that in Q two, they just did sixty million in revenue in the last quarter.

• 19:48David Sacks?

  And I think um it was the gross profit of something like twenty seven percent and. Uh, it was had a loss of like twelve million. So they're very, very close to getting to profitability. And uh, you know, the company's only four years old, you know, it took Uber twelve years or whatever to get to be public. So. It's been pretty, it's been a pretty amazing ride. There've been a lot of big ups and downs, but uh, so it's kind of a. Pretty sweet event.

• 20:16Jason Calacanis?

  What is it trading under now? I know it was Switchback was like the SPAC name.

• 20:20David Sacks?

  Right. So it's it today was the first day it started trading under the ticker symbol BRDS. I guess all birds took. B I R D. So we took BRDS. And um, you know, there's a total number of shares outstanding of, I want to say roughly three hundred million. So it's about a. Two point four uh billion dollar market cap, you know, as it stands right now. Which, you know, for a series A investor is pretty great.

• 20:45Chamath Palihapitiya?

  Really happy for you, Saxon. Yeah, congratulations. It's great.

• 20:48Jason Calacanis?

  Congrats, dude. We heard last week Sequoia is going to do the Sequoia Fund, this Evergreen Fund, keep owning shares. Now, as a VC. Um, do you distribute after four years of this investment and you made multiple investments? Or do you make the decision, hey, we think it's undervalued. We have. You know, conviction in the company. We were going to be in it for ten years. Or do you just take the quick win and give everybody their shares?

• 21:11David Sacks?

  Well, I've I'm gonna, I've agreed to be on the board for the next year. So, you know, I'm planning to do that. And we have a traditional six month lockup. And so at that point, we'd have to make a decision about. When or how much to distribute the shares. And it is the first time I've been confronted with the decision. I mean, Craft Ventures. Is only a four year old firm. And like I said, this is actually the first. Round that I led as a VC. So it's the first time I've been confronted with a distribution of this magnitude. We've had some smaller distributions. So, yeah, we still have to make those decisions. We haven't decided yet what we're gonna do.

• 21:44Jason Calacanis?

  If you, if the stock is up, let's say meaningfully in the next six months and you get to that, you know, six months and a day and you have the ability to distribute. And it's up twenty five percent. And you're looking at it, business is thriving, you're on the board. Do you consider holding for a year or two so that you can distribute at $16, $25, or whatever your price target is?

• 22:07David Sacks?

  Maybe. I mean, we haven't, we haven't gotten to that point yet. So yeah, I mean, I guess what I would say is that our bias would be to distribute shares to our LPs so that they can make their own decisions about whether to hold or not. Um, as long as we think the stock is, you know, priced fairly. If for some reason we thought it wasn't, then there'd be an additional reason to hold on to it and make the distribution later.

• 22:32Jason Calacanis?

  Chamath, what are your thoughts on this, given it's come up before? And a number of us are going to be faced with this decision. And then we see Sequoia has got LP buy-in for an evergreen fund.

• 22:42Chamath Palihapitiya?

  Well, I think an evergreen fund is different from having to figure out how to do distributions. So, um, they're, they're solving for two different ideas. The evergreen fund is really good because you don't have to do this continual fundraising process and you can basically roll gains back into, um, the next tranche of invested companies in an easier way. I like that idea. Um, it was pretty rare at the time. I remember when I was starting Social Capital, the only fund that did it really well was Sutter Hill. Um, and for a whole host of reasons, I decided to not do an evergreen fund. In hindsight, I think for me, that turned out to be better because then it was easier for me to wind down and have a clear demarcation of when it was just myself and other LPs versus

• 23:28Chamath Palihapitiya?

  when it was just my capital. But there were some really good reasons to do it. The hardest thing I think that Sequoia is going to find in this new iteration is at some point, somebody's reputation will be on the line for judging public equities. And it's still not clear to me that people who live and breathe venture can context switch well enough to then live and breathe public equities. So just the best example I would say is like Tiger Global. When you look inside that organization, which is incredibly well-run, there are two superb investors that carved the universe up, right? You have Chase Coleman that runs a public book and you have Scott Schleifer that runs a private book.

• 24:11Chamath Palihapitiya?

  What does it prove? To me, it proves that it's just very hard to find a person that can do both. And the context switching is very complicated. So maybe Sequoia finds an incredible public market strategist that can then manage these positions. Otherwise, I think that-

• 24:25David Friedberg?

  But Chamath, they've done this for a few years, right? They've, um, Sequoia, I don't know if people realize this, they set up-

• 24:30Jason Calacanis?

  Heritage Fund.

• 24:31David Friedberg?

  The Heritage Fund, and they set it up with only GP's money. It's got billions under management, and it's been making late-stage private, but mostly public equity investing.

• 24:41Chamath Palihapitiya?

  I know, but that's a fund of funds. What I'm saying is, I'll be very honest with you, if I was an LP of Sequoia, I would want the money back. And the reason is, I'm not sure that Sequoia can compound money in the public markets anywhere near what I could. So-

• 24:56David Friedberg?

  Do you buy the point that they make that, like, exiting some of these left most of the, you know, kind of value creation on the table?

• 25:03Chamath Palihapitiya?

  No, no, I think what, they're saying something much more subtle, which is, they exited and they have regrets for selling. You have to remember, when Sequoia distributed Google, every single partner got Google shares.

• 25:17Chamath Palihapitiya?

  Now, had they held those shares, they wouldn't be saying any of this. And famously, I'll tell you, when I-

• 25:21Jason Calacanis?

  They held their shares. I know that. I actually do.

• 25:25Chamath Palihapitiya?

  Fair enough, but maybe they did, maybe they didn't. But let's just, let's just put it out there that, for example, I know explicitly, when I almost merged Social Capital with Kleiner Perkins, like, six years ago, I spent so much time with John Doerr. The most incredible thing that I was so impressed with Doerr was, he was, he told me, he had never sold a single share of Amazon that was distributed to him, and he had only sold a handful of shares of Google, only to fund future capital requirements at Kleiner at the time. So, I just think that ultimately, I think probably what Sequoia was saying is, man, I wish I had not sold my Google shares when they were distributed to me. Because otherwise, they wouldn't make that claim.

• 26:04Jason Calacanis?

  No, I think what they're saying is more subtle. I think they're saying, you as our LPs should have held them. We are on the board of these companies from day one. We have better insights in the second decade than in the first. Production Board founder David Friedberg, how do you think about early exits distributing capital? Because you do have, also with a startup studio structure, which you should explain to the audience how a startup studio works, because you create companies, which is- You know, it was a terrible place to be maybe five or 10 years ago, but it turns out you're in the best place because zero to one is where all the value is created. Explain the two things. What a startup studio is for people who don't know. And then what's your view of selling early if a company of yours goes public?

• 26:45David Friedberg?

  I think there's a big, there's a bigger kind of framing here, which is a lot of investors, you know, professional money managers have tried to find ways to create what is called permanent capital, which is a vehicle whereby they can continuously make investments, decide when to sell those investments and recycle the capital into new investments. With the idea being that over time, they're not at risk of capital outflows, meaning investors pull their money out and they're not at risk of, you know, needing to kind of go out and raise more money and they can, they can share in the value creation as they grow their book value over time. Years ago, a bunch of hedge funds set up public reinsurance companies. Dan Loeb did this, what's his name?

• 27:30David Friedberg?

  Einhoor did this.

• 27:31Jason Calacanis?

  Bill Ackman did it.

• 27:32David Friedberg?

  And basically, Bill Ackman did it. What they did is they set up a public company and you public company, a reinsurer. And then they use that, that reinsurer to underwrite reinsurance. And when you underwrite reinsurance, you get all this capital that you can then go invest. And then the hedge fund managed that investment. And because it's actually a public company, it's got a balance sheet, the shareholders can't pull their money out, right? It's just got a balance sheet. And the hedge fund was managing that balance sheet and, you know, generating good returns. And this is effectively what Warren Buffett does. And everyone looks to Berkshire Hathaway and Warren Buffett is kind of the, you know, the key kind of long-term here, which is, hey, look, if you can keep investing and keep compounding value, this thing can grow, you know, exponentially over time.

• 28:16David Friedberg?

  So, you know, the way we set up the production board, I had the option of raising a fund and being a fund manager. I chose to set up the production board because I was much more interested in, I think, the similar sort of vein of what Sequoia is saying, which is like, how do you become a longer term? A builder and a longer term holder and where you don't have these incentives to return capital because you only get paid if and when you return capital and you know and then you're kind of making these decisions to you know because your shareholders are saying, well, you had a good return, quickly give me the shares back and let me and mark your profit and take your share. And I was also more interested in, look, the fact is over time, there's always going to be opportunities to chase with the capital. So if we have a great gain, if something works out really well, we can take the gain and we can reinvest

• 28:59David Friedberg?

  that capital and building new things. There's no shortage of opportunities to pursue for the rest of my life. So that's why I set up the production board initially in partnership with Alphabet. And then later on, we brought in, you know, Bill Gates and other Alan and Co. And other kind of investors that have a similar sort of mindset, which is like, let's just, if we have an exit, recycle that capital and continuously

• 29:18Jason Calacanis?

  Because they're not looking for a quick win.

• 29:20David Friedberg?

  They don't have pension payments to make, right? They don't have a reason to distribute cash. And so same with me, like, I don't have a reason to take cash out. So the objective was just build this thing over time and grow value over time. And that's why I set it up the way I did. And I think it allows us to make, you know, really long term bets that are super risky. Most of what we're doing is super technical and difficult and maybe very hard to pull off, many of which are still after many years in a very early

• 29:46Jason Calacanis?

  So you need very patient capital.

• 29:48David Friedberg?

  Patient capital and also the, you know, the preference for not trying to find exits. But I have found this, I'll tell you one thing, I have been through a number of circumstances where I have seen businesses I've been an investor in or involved in that have traded long term value for short term opportunity, meaning there's an opportunity to make a business that you can then go raise capital against. You change your strategy to do that, then you go raise VC funding, and now the business looks like it's working. But the 10x or 100x opportunity was taken off the table because you ended up going down this different path that was a sure thing, that was more likely to work, that created value in the short term that allowed you to mark up your investment or raise capital against that, but you gave up the big long term thing. And I think that's something I've been trying

• 30:31David Friedberg?

  to avoid with the structure. And it certainly makes sense with some of these other folks and what they're trying to do.

• 30:35Jason Calacanis?

  So what we're getting at here, Sacks, is decision making by capital allocators. And on behalf of their LPs or letting the LPs make those decisions, inevitably, the crypto world says, well, why aren't you just doing this in a DAO? And, you know, having some decentralized authority make the decisions. I had Vinnie Ling, I had a conversation with our friend Vinnie Lingum after the Solana stuff and multi coin capital. And we were talking about DAOs for early-stage investing or syndicates and just brainstorming, hey, is there a way to do this? And the problem I came to every time was, should a bunch of folks be making decisions

• 31:17Jason Calacanis?

  who are not meeting with the companies or meeting with 2,000 companies a year? What are your thoughts on a DAO representing sort of what we collectively do, but we all do it, obviously, in different flavors?

• 31:30David Sacks?

  Does this actually exist? Yep.

• 31:33Jason Calacanis?

  Well, there have been DAOs that have existed to vote on buying NFTs. So yes, for collectibles.

• 31:38David Sacks?

  I mean, I kind of feel like I'll let you know when it actually gets here.

• 31:42Jason Calacanis?

  So open-minded to it, but who knows?

• 31:44David Sacks?

  Yeah, but I mean, we talk about these things as if they already are here and they're not quite here. I mean, technically, I know they exist, but people haven't really figured out how to use them to, you know, to be a fund manager, for example.

• 31:56Chamath Palihapitiya?

  I think David's right. I think the, look, I, there are these three immutable features of Web 3.0 that we're going to have to figure out over the next few years. So the obvious ones are decentralization, right? That makes sense. The second obvious one is the level of composability, which means that you're plug and play with everything. But the third one is this idea of democratization and governance, right? And that's where DAOs come in. And David's right, we don't really know what the boundaries of that feature is. I think it exists in some small level scale, but we need to have many iterations of companies get built to figure out what it'll mean.

• 32:40Chamath Palihapitiya?

  So I don't know, I'm taking a pretty traditional approach, Jason, which is that, you know, it's kind of like a crawl, walk, run strategy. Right now I'm in the crawling phase and I'm kind of saying, how did Web 1.0 and Web 2.0 develop? And I'm just copying it. So, you know, in Web 1.0 and 2.0, you needed companies like Sun Microsystems and Cisco and, you know, all of the plumbers.

• 33:04Jason Calacanis?

  Foundational stuff.

• 33:05Chamath Palihapitiya?

  To build plumbing for the internet to allow the thousand flowers to bloom at the application level.

• 33:12Chamath Palihapitiya?

  And you know, we had a very good reference model, by the way, for Web 1.0 for most people. If you want to look at it, it's called the OSI reference stack. And if you actually look at that OSI stack, you can translate that to all kinds of value creation over the first, you know, two arcs of the internet over 20 years. Trillions of dollars was created by just following each of those substrates. And in those transitional layers was where these great, beautiful companies were built. And I think similarly, we're going to do that again, but we need a different stack to represent what Web 3 is. So, yeah, you know, this week we did something which was pretty straightforward, which was this idea that if you're going to build all these apps, you're going to need a distributed compute infrastructure, which means you're going to need very simple building blocks like remote procedure calls, RPC,

• 33:58Chamath Palihapitiya?

  that exists in Web 2.0. It's kind of a, not something you don't really think about, but in Web 3 doesn't exist. And so it's all this AWS, you know, GCP-like infrastructure that has to get built. And that's what Syndica does.

• 34:10Jason Calacanis?

  I think that's a really very interesting observation there because everybody is trying to go to the application level and talk about the consumer experience, but before you even have the ability, you know, we're talking about cars before we've even made a transmission or, you know, an ICE engine.

• 34:28Chamath Palihapitiya?

  That's exactly right.

• 34:29Jason Calacanis?

  This is why crypto comes across as so delusional and strange sometimes. They wrote 3,000 ICO papers. None of them were about infrastructure. They were all about some sort of end game.

• 34:38Chamath Palihapitiya?

  The thing is, it's a very delicate balancing act, right? You need a handful of companies that capture consumer imagination,

• 34:45Jason Calacanis?

  Right.

• 34:45Chamath Palihapitiya?

  that then incentivize all of the plumbing companies to come in and build underneath it, right?

• 34:49Jason Calacanis?

  They have a customer.

• 34:50Chamath Palihapitiya?

  It's a very delicate balancing act, right? So you needed CompuServe in order to enable a bunch of companies. Then you needed AOL in order to enable another set. Then you needed Yahoo. Then you needed Google. And in all of that, what happened was people were pulled through, right? You needed Amazon Commerce to justify AWS. So we're in that world where it's going to be a little back and forth, where the pendulum will swing back and forth between consumer experiences that capture imagination, get to some level of scale, that then create incentives for the developer ecosystem and the technology infrastructure to catch up.

• 35:23Jason Calacanis?

  Zillow, which we talked about previously, became an eye buyer. What's an eye buyer? That means you buy a bunch of single-family homes, in all likelihood. Like Open Door and Redfin have been doing, and then you hope to flip them, maybe improve them and maybe lower costs to the consumers by taking out real estate brokers. This has created a lot of bad feelings amongst real estate brokers. A TikTok video trended a couple of months ago where a broker said or accused Zillow of buying up these homes in order to do price fixing and to corner the market on homes. Well, it turns out that Zillow, which has an incredible CEO in Rich Barton and has done tremendously over the decades.

• 36:08Jason Calacanis?

  According, ahead of their earnings call this week, Bloomberg reported Zillow is trying to offload 7,000, 7,000 homes for 2.8 billion. That's about a 400K average per home and Zillow shares dropped 37% this week alone from 100 to 66. Their market cap has dropped 9 billion throughout the week and they're down 70% from a peak valuation of 48 billion just in February, about six months ago. Zillow is going to reduce its workforce by 25% over the next few months. I'm assuming that's all those iBuyers. Anecdotally, a lot of what I'm hearing is they bought homes indiscriminately. The anecdotal stories that are breaking on Twitter and other forums with real estate

• 36:49Jason Calacanis?

  brokers are they would look at a home, they didn't know that it had a noisy neighbor or where it was near power lines or whatever. The people who came in bought them indiscriminately, maybe too fast, whereas some other companies, maybe Open Door or Redfin were more considered. I actually had Glenn from Redfin on the pod not long ago and he said it's a very hard operational business. You have to be very careful on what you buy in your entry price. That seems to have turned out to be true. What do you think, Friedberg?

• 37:14David Friedberg?

  Rich Barton, who runs Zillow, is considered a legend in Silicon Valley. You know, he has been involved in some of the most successful internet companies. And, you know, when he stepped back in as the founder of Zillow, stepped back in to run the business a few years ago, it was viewed as kind of a second. You know, resurrection of this business and he was going to take it into new areas. And then three and a half years ago, he announced the side buyer program, which everyone thought was such a, you know, incredibly strong move and obviously chased open door, which Chamath is involved in, and I'm sure we'll share more on. But it was such an obvious opportunity that if you could add liquidity to the real estate market, the residential real estate market, there's an incredible amount of value to be had.

• 37:58David Friedberg?

  Now, the way that they wrote about it, when they talked about it initially, and then the way that they've kind of talked about it in their earnings report this week, was that they were trying to be a quote market maker in the business. And it turned out that what they were really doing was being more of a speculator, right? A market maker looks at bids and asks in the spread and then tries to create a gap in that spread and make, and take some share of it. And by adding that liquidity, the idea is the spreads can narrow and they can make money. In this case, they were looking at the historical velocity of selling prices of homes and using that as a way to kind of project what was going to happen, which makes them much more of a speculator than a market maker. And they clearly got this wrong and their kind of quote unquote models on, you know,

• 38:43David Friedberg?

  where are prices headed, ended up getting them in trouble. There's also the inherent conflict where they are now competing in a way with the brokers that generate a lot of revenue for them and are a big part of their core business. And they were clearly, you know, cannibalizing their own business where the Zestimate and some of the other scoring that they provide as a data and analytics platform to both sides of the existing market starts to get blown up because they're coming in and saying, we're going to put our, you know, our foot down and say, this is what the value is. And it inevitably kind of cannibalizes a core product that they provide to both sides of the market. So, you know, one could argue this was flawed from the beginning. The execution clearly was way off and it begs the question, you know, where was leadership and kind of tracking what was going on here as these guys were buying homes at market

• 39:26David Friedberg?

  prices that are well above what they were actually selling for in the market. No one was actually doing on the ground work. They were all doing kind of speculative models and saying, this is what we think will happen. And then they woke up way too late and lost way too much money. I think they lost $300 million in the quarter. So, you know, really a lot of questions and... And a lot of challenges on this. I'm sure Chamath has a point of view on, you know, what makes Open Door distinct from Zillow. But there's a really important kind of, you know, underlying here.

• 39:55Jason Calacanis?

  They went way.

• 39:56David Friedberg?

  Yeah, the maturity of a Silicon Valley entrepreneur who's crushed it so many times doesn't mean that they're perfect. And you know, this was a big miss.

• 40:05Jason Calacanis?

  You can go really too fast into a turn here and clearly they flipped the car. Chamath, I don't know how comfortably you are talking about this.

• 40:12Chamath Palihapitiya?

  Oh, I'm very comfortable.

• 40:13Jason Calacanis?

  Okay, well then here we go.

• 40:16Chamath Palihapitiya?

  Number one, you know, I'm not on the board.

• 40:18Jason Calacanis?

  Of Open Door.

• 40:19Chamath Palihapitiya?

  Of Open Door.

• 40:20David Friedberg?

  Maybe tell us about your history with Open Door, Chamath would be super.

• 40:23Chamath Palihapitiya?

  Well, look, I, look, I am one of the largest individual shareholders of that company. I think somewhere between three and 4% of the business I own. We, you know, I came to own those shares with a large investment as well as through the transaction where we merged

• 40:42Chamath Palihapitiya?

  one of our Sacks into it and took it public.

• 40:44Jason Calacanis?

  Is that IPOB?

• 40:46Chamath Palihapitiya?

  Yes. Couple of things to say. The first is about the CEO and founder of Open Door. Eric Wu is special, special, special. So let me just leave it at that on that topic. The second is I think that Rich Barton is very special, but it speaks to two big mistakes that Zillow made. The first is that catching a wave of disruption is very difficult when you have an old line business that is fundamentally competitive with the new line of business. And Zillow, as David said, had this thing called Zestimate, whose entire job was to directionally drive top of funnel traffic into the rest of their media business.

• 41:32Chamath Palihapitiya?

  Now imagine you go to a website to look up your house value or somebody else's house value.

• 41:38Chamath Palihapitiya?

  Accuracy is a bug. The feature that makes Zestimate work is a highly inflated house price. Right? Like if you go and you see a crazy house price number, that's interesting. That's more click-worthy than if you go in there and it shows some depressed value. You'd think the site sucks. That's the unfortunate psychological reaction. So I think whether we believe it or not, or whether Zillow knew it or not, Zestimate over time basically calcified this idea of price inflation. So the accuracy was never a goal. So then if you take that business and then you try to orient it towards home buying and you use probably Zestimate or some version of it to underpin how you buy and take risk,

• 42:23Chamath Palihapitiya?

  it creates a lot of risk and I think this is essentially what played out where they were overbuying homes and they didn't know how to price this stuff accurately. So you know, my partner Ravi tweeted this out, but you know, the open door margin on average is about 10%. The Zillow margin on average was 3%. So they had a much more razor-thin margin of safety here, which again speaks to pricing. And then it speaks to this third thing, which is that if you start doing one thing and do it really well with software, the gains over years really compound. And so when somebody else shows up and tries to pivot their business to try to copy it, it's very, very difficult. The classic example is Google versus Yahoo. Yahoo had a beautiful directory-driven business.

• 43:08Chamath Palihapitiya?

  But when Larry and Sergey, really Larry, invented PageRank and then invented that first version of a Google search index, as we saw it play out over the next 10 or 15 years, it was impossible for Yahoo to really invest the technical capital necessary to catch up with Google. And every day and every week and every year, as Friedberg talked about last week, those technical gains compound and compound and now Google is completely unassailable with respect to search. I suspect we will look back and the ability to accurately forecast price and volatility and the ability to sell these assets at a defined margin of safety in a predictable way.

• 43:52Chamath Palihapitiya?

  Is something software can solve? And it seems that Open Door is the first. It doesn't necessarily mean it'll be the only one. But it has an enormous head start now. And as long as they can keep iterating, those gains will compound. Um, so that's what I think. I just think this is a wonderful business run by an incredible CEO.

• 44:14Jason Calacanis?

  To wrap up this Zillow story, Sax, uh, any thoughts on, you know, Chamath's point here, you know, you're the rating agency and you add this business and the business it might be orthogonal to the existing money printing machine. On a strategic basis, what do you think? Any lessons or mistakes here? Uh, in terms of when you handicap Zillow or do you want to just move on and talk politics?

• 44:36David Sacks?

  I mean, look, I'm a, I was a seed investor in Open Door because Raboy invited me to the seed round. So, you know, I'm, I'm a little biased here, but I think it's pretty obvious what happened. Uh, Zillow tried to copy them. The business is much more operationally complicated than they realized. It's a low business, low margin business with the, which requires a ton of capital. So if you're off a little bit, the losses can be huge. And Zillow couldn't figure it out. They underestimated the difficulty. That's what frequently happens when a big company tries to copy a smaller sort of upstart company. So, I mean, that to me is what happened in a nutshell. Quite frankly, we're an hour into this pod and we haven't discussed issues, any issue that I think is broadly relevant to most Americans. I think this is one of our worst episodes and we're going to bore everyone to tears. I frankly don't understand what the you're doing.

• 45:21David Sacks?

  I don't even know why we have a topic list. When you start pulling shit out of your ass like DAOs and I don't know what the else.

• 45:27Jason Calacanis?

  All right, all right, fine. We'll talk about politics.

• 45:29Chamath Palihapitiya?

  Yeah, I thought the DAO question sucked.

• 45:31Jason Calacanis?

  All right, I'm just giving you the opportunity.

• 45:36David Sacks?

  That we shouldn't even be talking about.

• 45:37Jason Calacanis?

  Cut it out of the show.

• 45:38David Sacks?

  This whole episode should be cut.

• 45:40Jason Calacanis?

  Jesus Christ.

• 45:41David Sacks?

  I think this is like one of the stupidest episodes you've ever done.

• 45:44Chamath Palihapitiya?

  Yeah, I agree. I think we should cut all that.

• 45:46Jason Calacanis?

  It's going great. What are you talking about?

• 45:48Chamath Palihapitiya?

  Jason, I agree that, that part where we.

• 45:50Jason Calacanis?

  Cut it. That's all right. Fine. You got some fucking loser. I'm trying to give you guys the benefit of the doubt to just because it was a No one cares. All right. Fuck. Calm down, everybody. You want to talk about politics? We talk about politics. It's okay, Sax. Go ahead. Tell us about the election.

• 46:04David Sacks?

  Okay, I'll just rattle off some of the key results here from blue states. We have a woke clash going on all across the country. That's the important thing. In Virginia, a state that Biden won by 10.

• 46:16Jason Calacanis?

  He's cranky.

• 46:17David Sacks?

  Huge upset Republican Glenn Youngkin beat Terry McAuliffe, a former governor there. He was, this was a huge upset. McAuliffe was supposed to win. Youngkin won 51 48. So that's a 13 point swing versus where Biden was just a year ago. In New Jersey, a state that Biden won by 16 points, the Democrat held on to it, but only by 1.5 points. And I bet you anything. The RNC is kicking itself that it didn't give any money to Chad Orelli, who's the challenger, who I think almost who came very, very close. And there were down ticket seats that went Republican. So the, um, this is really interesting.

• 46:58David Sacks?

  In South Jersey, which is a blue collar bastion for Democrats historically.

• 47:03Jason Calacanis?

  Sweeney versus Burr.

• 47:04David Sacks?

  That's right. The Democratic State Senate Leader Steve Sweeney lost to a truck driver named Ed Durr, who spent a grand total of $153 on his campaign. Okay. So those were some, and then we had some other.

• 47:16Jason Calacanis?

  Was he a write in? Like he was printing out cards to say, write me in, I think.

• 47:19David Sacks?

  I don't think he was a write in, but, but in any event, so, so implications for 2022. Dave Wassman of Cook Political Report calculates somewhere between a 44 and 51 seat game from the GOP. They only need five seats to win the majority. So it's looking very bleak for the Democrats in 2022. And then I think you also had some very interesting local elections in Minneapolis. Voters rejected a proposal to defund the police with 56% of the vote. They, there was a ballot proposition to change the police department into some sort of larger public safety group. Voters were having none of it.

• 47:56David Sacks?

  In Seattle, which is a very liberal city, they voted for a literal Republican as city attorney, which is the office that prosecutes misdemeanors, so against a police abolitionist who said she would stop prosecuting misdemeanors.

• 48:10Chamath Palihapitiya?

  You're forgetting that in Virginia, it wasn't just Glenn Youngkin that won, but basically, it was Terry McAuliffe, and then a lieutenant governor who was some milquetoast individual, and an attorney general candidate who was caught in blackface, which, by the way, there is no more racist thing you can do just to let you guys, let everybody, all the non-colors, okay, that are, guys, please don't do blackface or brownface, it's such a bad, it's, it's not, it's no good.

• 48:38David Sacks?

  No, you're right, it was a sweep, so, so the lieutenant-

• 48:40Chamath Palihapitiya?

  And, and Youngkin, and it was a, it was a black female lieutenant governor and a Latino attorney general-

• 48:45David Sacks?

  That's right.

• 48:45Chamath Palihapitiya?

  And they swept, right?

• 48:47David Sacks?

  That's right, that's right, so the lieutenant governor was Winsome Sears, uh, she's a, a black woman, Republican, if you've seen the photo of her, she's frequently photographed with a giant assault rifle in her hands, uh, that's her, and then, uh, a Hispanic attorney general, Jason Miori's, uh, one as well, so, yeah, it was a huge sweep, and then, you know, in Long Island and Staten Island, which again are blue counties, you had two Republican prosecutors beat the local sort of incumbent Democrat decarcerations DA's.

• 49:17Chamath Palihapitiya?

  Staten Island, a bit red, just, I think, I think this is very clear, which is, um, Trump was behaviorally extreme, and after four years, people were sick of it. Nobody wanted that behavioral extremism because it was unpredictable, and people felt frankly in danger, and I think that that was legitimate. He also turned out to be extremely lazy and probably pretty dumb. Now, what we're realizing is a different form of extremism, which is policy extremism, will also be met with the same response, which is that you, you can't sustain election results and wins, right? So people care consistently about three things, they care about the economy, they care about the education of their children, and they care about safety.

• 50:01Chamath Palihapitiya?

  And the thing that Glenn Youngkin did, which I thought was-

• 50:06Chamath Palihapitiya?

  At least a playbook for centrists and the right. And it's also a playbook for the Democrats if they choose to embrace it is to understand that these things are reaching a tipping point where, you know, again, we've said this before, it is possible to live in a state of mind where you believe in Black Lives Matter and you believe in law and order, right?

• 50:26Jason Calacanis?

  Shocking.

• 50:27Chamath Palihapitiya?

  And when you try to pit those two things against each other, for example, like you would have thought the one place where they would have basically defunded the police in its entirety would have been Minneapolis after George Floyd, but instead even they drew the line and said, no.

• 50:42Jason Calacanis?

  Or New York.

• 50:44Chamath Palihapitiya?

  Or New York. There was a, there was a really compelling quote, actually, by this woman, I think it was in the New York Times. And what she said was, "I didn't elect Joe Biden to be FDR. I elected him to tack to the middle and just calm things down so that everybody could exhale, so that we could reset."

• 51:01Jason Calacanis?

  Same with me.

• 51:02Chamath Palihapitiya?

  And what's

• 51:02David Sacks?

  Yeah, that was Abigail Spamberger, actually. She's a Virginia Democrat. Yeah, she's a Virginia Democrat who won a seat in one of those blue counties that just flipped red to vote for Yonkin. And since she got elected, I guess she got elected last year, she's been telling the Democratic, but she's the one who called out Pelosi in that, you know, caucus meeting, saying, "I don't ever want to hear the words 'defund the police' again. That is electoral poison." And then she said, "Yes, nobody elected Biden to be FDR. They elected him to be normal and stop the chaos." And so, yeah.

• 51:33Jason Calacanis?

  Certainly my vote, yeah.

• 51:34David Sacks?

  Yeah, there's a big backlash going on because Biden has decided to start governing like Bernie Sanders. No one elected him to do that.

• 51:40Jason Calacanis?

  So Sax, is the lesson Dems learned this time around is it's very easy to beat Trump, but it's very hard to beat a moderate Republican?

• 51:50Chamath Palihapitiya?

  No, no, it's not that. It's that you just have to be a rational, normal person.

• 51:54Jason Calacanis?

  That's what I mean by a moderate Republican.

• 51:57Chamath Palihapitiya?

  Well, you just have to be moderate. I don't think it matters.

• 51:59Jason Calacanis?

  Okay, moderate.

• 52:00Chamath Palihapitiya?

  But this is the key takeaway.

• 52:01Jason Calacanis?

  Dems, it was so easy for them to use Trump and be Trump.

• 52:04Chamath Palihapitiya?

  But these three topics are not a Republican tent pole, nor are they a Democratic tent pole. They are the tent pole of reasonable people.

• 52:12Jason Calacanis?

  Yes.

• 52:13Chamath Palihapitiya?

  Meaning.

• 52:13Jason Calacanis?

  Which most people are reasonable.

• 52:14Chamath Palihapitiya?

  Hey, guys, get out of the way so that we can, you know, have a reasonable life in an economy. Hey, folks, please make sure my kids, when I send them to school for eight hours a day, come back reasonably educated and please keep my streets safe. And I'm not really willing to decarcerate ad hoc to such a degree that all of a sudden crime gets out of control. Those are not Democratic or Republican tent poles. Those are just moderate centrist rational things to believe in.

• 52:38Jason Calacanis?

  Yeah, and also behave normally. Like, I think whatever happened with these progressives where they couldn't pass, you know, the stimulus bills and things that almost everybody agreed on.

• 52:48Chamath Palihapitiya?

  Glenn Youngkin was not behaviorally extremist.

• 52:52Jason Calacanis?

  Yes.

• 52:52Chamath Palihapitiya?

  And from a policy perspective, was pretty much down the middle. Eric Adams, Eric Adams is not behaviorally extreme and he is politically down the middle. The mayor of Buffalo who got reelected is not behaviorally extreme and he's politically down the middle. Do you start to see a pattern here?

• 53:10Jason Calacanis?

  Yeah, nobody wants AOC, Bernie, Elizabeth Warren, or Trump.

• 53:14Chamath Palihapitiya?

  I think it's not, it's not a question of AOC or Bernie or Trump. It's just that right now, the temperature of America is, let's just all exhale and just re-center ourselves as a country.

• 53:26Jason Calacanis?

  Yeah.

• 53:26Chamath Palihapitiya?

  And so moderation and centrism is actually what calls for today. I don't know how to predict what happens in 15 or 20 years. And maybe AOC is the canary in the coal mine for where the country goes by a plurality of people in 15 or 20 years. But what's clear is it's not where it goes today. And I think that it all behooves us to just take a real step back and exhale and just read the tea leaves because every single thing that the Democrats tried to do to sort of like make this extreme really didn't work. The race baiting, all of that stuff really kind of failed. And I think that that's important to listen to. You know, because you had a lot of black, Indian, Chinese families that just showed up, Hispanics,

• 54:08Chamath Palihapitiya?

  you know, that, again, reliable Democratic voters and voted for Glenn Youngkin in a way that was surprising to me, right? And then, so if you compare New Jersey and, and Virginia, Biden won Virginia by 10.

• 54:25Chamath Palihapitiya?

  He, the Democratic nominee lost. Biden won New Jersey by 16 and Phil Murphy barely squeaked by. It was like 10,000 votes.

• 54:34Jason Calacanis?

  Jersey's always had a Republican kind of leaning group. They're very tuned to taxes.

• 54:40Chamath Palihapitiya?

  Biden won by 16. This should have been a cakewalk.

• 54:42Jason Calacanis?

  Yeah, but I think that 16, how much of that is get Trump out of office is what we, I think the Democrats need to parse. And they blew it by going too radical.

• 54:50Chamath Palihapitiya?

  We're repudiating behavioral extremism and policy extremism. So I think we just need to realize rational, normal, chill people who can do reasonable things, get our kids educated. So for example, on the education front, I don't know if you guys saw this because I tweeted and you can put this Nick in the group chat, but in California right now, there's a battle over math class.

• 55:11Jason Calacanis?

  Ridiculous.

• 55:12Chamath Palihapitiya?

  Right? Where the title, I'm just going to read the title because it sets it off. California tries to close the gap in math, but sets off a backlash. Proposed guidelines in the state would de-emphasize calculus, reject the idea that some children are naturally gifted, and build a connection to social justice. Critics say math shouldn't be political.

• 55:32David Sacks?

  Well, of course, the way that those articles are always written, it's always about the backlash, you know? They don't talk about what, what the people in charge are trying to do to basically degrade the curriculum. Of course, there's a backlash because parents don't like what the people on these school boards are doing. This was the sleeper issue in Virginia was the school board issue. You had, you know, parents were already angry that the teachers unions that kept the schools closed for a year and a half during COVID. And while their kids were at home, you know, were doing classes over Zoom, parents got a good look at what some of their kids were learning and didn't like what they saw. I mean, we're talking about lessons plans that incorporated CRT and, you know, the 1619 Project View of America, singling out kids by their race, making them focus on difference.

• 56:16David Sacks?

  And then there were some, you know, rather explicit materials at young grade levels about, you know, LGBT issues. And so this led to a whole bunch of confrontations at school board meetings where parents of all races objected to, you know, these lesson plans for their kids. And the school boards and administrators just dismissed their complaints out of hand. And, you know, their message was, well, we're not teaching CRT to your kids. But if we were, it's a good thing and only white supremacists would object. So, you know, that was sort of what was happening in the background. And then McAuliffe comes along and makes this gigantic gaffe in the last debates about two weeks before the election where he says, I don't think parents should be telling the schools what to teach.

• 56:58Chamath Palihapitiya?

  What?

• 56:58David Sacks?

  Yes, this is-

• 57:00Chamath Palihapitiya?

  Who's the customer? No, he said that on a debate and it was like-

• 57:03David Sacks?

  He said that on a debate about two weeks before the election. McAuliffe was leading through this whole thing until that debate where, and this was sort of a Kinsey gaffe in the sense that, you know, Michael Kinsey said a gaffe is when a candidate inadvertently says something true. You know, this is McAuliffe's view is that the teachers' unions should be controlling the schools, not the parents. Well, um, yes, so this is what Yonkin jumped all over, all of his ads in the last two weeks of campaign, really focused on this issue, you know, poured gasoline on a fire. And then the most tone deaf thing McAuliffe did is he had Randy Weingarten, who was the head of the, uh, the big teachers' union, come in and campaign for him at the 11th hour. Well, of course, that's not going to save him because people are sick and tired of the teachers' unions.

• 57:47David Sacks?

  So, you know, this was basically the big sleeper issue, CRT in the schools in Virginia. And, you know, this is, this, I think specifically is what the Democratic Party has to wake up to is that these progressive ideologies are not popular.

• 58:04Chamath Palihapitiya?

  The other thing I'll say about Glenn Yonkin is that this is another thing that the, that the Republicans should hopefully pay attention to, which is you can look normal, act normal, be normal. You know, this is not an extremist in any way. This guy was the co-CEO of Carlyle, which is a huge and very successful private equity firm. So this is a very rational, reasonable person who, um, you know, didn't embrace anything that was really that pro-Trump. And that should be a real wake-up call to the Republicans, which is, hey, let's just run a fleet of normal people.

• 58:39David Sacks?

  I think what you saw, I think Chamath is right, that what you saw in Virginia is that the playbook that Gavin Newsom just used to defeat the recall in California did not work. In Virginia, which is he tried to paint Yonkin as a Trump proxy. And Yonkin very deftly, you know, avoided that. He got Trump's, yes, he got Trump's endorsement, but very early in the process. He did not have Trump come to the state. And you'd have to say it also helped Yonkin a lot that social media, that Trump wasn't all over social media because he's been banned. So, you know, in a weird way, Facebook and Twitter deserve an assist here because they helped keep Trump out of the Virginia race.

• 59:19David Sacks?

  So, you know, this playbook that Newsom defined that worked very effectively from California, which is simply to keep running against Trump. I think Democrats thought they'd be able to win elections for years based on that. That playbook didn't even last two months. So, you know, so I think Democrats are going to have to find a new playbook here.

• 59:38Jason Calacanis?

  Okay, so Friedberg, on this California issue around education, one of the key or most controversial concepts is de-tracking. In other words, instead of having high-performing students go to a high-performing track and then everybody else stay behind, maybe keeps, in not all cases, but keeps some of the students together because there is some research that shows if done right, if you track people together, the higher performing students will pull up the ones who are slightly behind. Other people say we're basically throttling people who could be the next Einstein or the next world-class leader in science, math, et cetera. Any thoughts on the concept of de-tracking since I'm assuming you were in the high-speed track in science and math?

• 1:00:25David Friedberg?

  Maybe we should get rid of like JV and varsity sports teams as well and, you know, AAA baseball and Major League Baseball as well and, you know, any distinction of performance or exceptionalism goes away.

• 1:00:41David Friedberg?

  And that is kind of the key social question is are we going to give up exceptionalism to minimize the distance between the exceptional and the average?

• 1:00:53Jason Calacanis?

  Apparently, if it makes people feel bad.

• 1:00:56David Friedberg?

  But I've said this point before, you know, we're doing it when we try and think about, you know, the billionaire tax or what have you. As soon as you start to limit progress, you reduce inequality, but you limit progress. And the same will be true, not just in science, not just in business, but also in sports and athletics and any other kind of system where you will have exceptionalism, you will have an average, you will have a distribution amongst human performance. And as soon as we try and limit the difference in that distribution, we move the entire curve to the left.

• 1:01:34Jason Calacanis?

  Here's the counter, Friedberg. What some studies have shown is yes, you will throttle the high performers, but we're seeing along race lines, certain demographics being left behind, other ones excelling, and that you can get...

• 1:01:49David Friedberg?

  Yeah, it's an ethics and values question, right? Like, do you think that individual freedom and the opportunity to pursue your exceptionalism should be taken away from you, such that others who aren't as exceptional as you are given, you know, greater progress than they would have had on their own? And that's the key crux of what all of these social systems are grappling with, whether it's in sports, or business, or finance, or education, is what's the right thing to do? And that ethics question is going to be defined by the social agenda of the moment, and, you know, the means of the moment, and what we all think is the right thing to do. And it's different all over the world, and it's different within political systems, but

• 1:02:31David Friedberg?

  it's a very divisive point, that I think folks who find themselves on one end of that exceptional spectrum in different aspects are going to have one point of view, and folks on the other end of that exceptional spectrum are going to have other points of view, and everyone's going to be sensitively tuned to where they fall in that spectrum. I will say one thing, though. On that spectrum, exceptionalism is rarer than the average. Therefore, it is likely the case that over the next years and decades, we will see the idea that we should remove exceptionalism in business, and exceptionalism in education, and exceptionalism in sports. Because it benefits the majority and and no one kind of recognizes and a lot of folks don't recognize the progress that is made by exceptionalism.

• 1:03:13Chamath Palihapitiya?

  Right.

• 1:03:14David Friedberg?

  And and that's and then we're going to wake up one day and be like, oh, wait a second. We don't have the the best sports teams winning all the gold medals. We don't have the smartest kids. We don't have the best businesses. China and Europe and Brazil and whomever else the emerging markets are going to India are going to start to have them.

• 1:03:29Chamath Palihapitiya?

  Such a good point.

• 1:03:30David Sacks?

  I think this is a very old debate. It's the debate between equality of opportunity and equality of results.

• 1:03:35Chamath Palihapitiya?

  Yeah.

• 1:03:35David Sacks?

  And the progressive left is absolutely obsessed with equality of results or outcomes, which they now call equity, which is we're going to take people at the finish line and we're going to move them around. We're going to redistribute the the outcomes to achieve a more proportional representation or something more fair as opposed to giving everybody as much opportunity at the outset as possible. That is the fixation right now. That is why they're taking out advanced math in the schools. They're trying to level people. It's not going to work. It doesn't lead to a more we want to have an exceptional society where I think we should be focusing is creating as much opportunity for everybody. The way to do that would be to let every child go to the to the school of their choosing so that we would stop trapping kids in bad schools.

• 1:04:20David Sacks?

  But back to because to bring this back to the election for a second, because I think it is a very clear repudiation of this progressive mindset. And I think there's essentially two sets of reactions to it. If you look at sort of all the left wing commentators, the the one who I thought seemed to get it the most was CNN's Van Jones actually had, I thought, you know, a rare moment of introspection where he said it was this was that the results were a five alarm fire. He said it was a big, big wake up call for the Democrats to stop annoying voters with woke hectoring. He he actually advised Biden to start triangulating against the woke left in the way that Bill Clinton did. I mean, which is something that I've been suggesting on this this pod.

• 1:05:03Chamath Palihapitiya?

  So you're saying something super important. The game theory now is for Biden to put to the test the progressive left because now he can go firmly to the center and he can put all of the pressure on the progressive left in the House and Warren and.

• 1:05:22Jason Calacanis?

  Bernie Sanders in the Senate.

• 1:05:24David Sacks?

  Well, he's right. That's the first thing he should do is he should pull a sister soldier on Bernie Sanders. He can't keep delegating the domestic agenda to Bernie Sanders. If he wants to save his presidency, he'll start triangulating in the way that Bill Clinton did. I'm not sure. He's going to. I think there's already a misperception that the reason why they lost selection is because they didn't deliver the goodies in this House reconciliation bill. That in other words.

• 1:05:49Jason Calacanis?

  I don't think the public cares about the goodies. I mean, they care about this normalcy and centrism. Yeah.

• 1:05:54David Sacks?

  There's a part of the Democratic base that does want the what's in that House reconciliation bill. But here's the thing. Democratic turnout in this election was extremely high. The Democratic turnout for McAuliffe was higher than the Democratic turnout four years ago for the Democrat who won. The turnout that in New Jersey was higher than what Murphy got four years ago when he won. The problem the Democrats have is that Republican turnout was extremely high, even without Trump, showing that Trump doesn't matter that much to turnout. And the independents came out in a big way for Republicans. So this idea that Democrats can just win elections by delivering, you know, programs for their base, that's not going to work. So I think that's a misperception.

• 1:06:39David Sacks?

  I think Van Jones has the right idea. They need to triangulate, but you turn the channel to MSNBC and they were just blaming the whole thing on white supremacy.

• 1:06:46Jason Calacanis?

  They were basically hysterical. Just on the detracking thing, this shows to me a severe lack of creativity. If you look at what happened in the NBA, they had this developmental league, which they didn't kind of run, then became the G League. They now have the ability to bring players fluidly from the Warriors G League team up to the Warriors or the Knicks team up to the Knicks. What this means is you don't have to say there's two different tracks and the two never shall meet. In the season, they can move up and down. In math, a very easy solution to this would be to have the high track for high performers, have the regular track and then spend with all this money we have. Say, hey, every school is going to be open from three to five o'clock, four days a week. If anybody wants to

• 1:07:29Jason Calacanis?

  attempt to get into a higher track of math. Math, just stay after school for two hours. Anybody can go and get one-on-one tutoring and just double the number of teachers.

• 1:07:38David Sacks?

  The whole country wants excellence. They don't want leveling. They don't want equity. They don't want a quality of results. They want to have a quality of opportunity.

• 1:07:46Jason Calacanis?

  They do want other people to move up. They do want to see

• 1:07:49David Sacks?

  That's true.

• 1:07:50Jason Calacanis?

  Black and brown students and immigrants do better at math. That's what you're missing.

• 1:07:53David Sacks?

  Yes, and that's about a quality of opportunity. Absolutely.

• 1:07:56Jason Calacanis?

  No, it's not just about a quality of opportunity. They're so far behind statistically that you need to do something new. What we're doing is not working, David. That's why people are picking this bad decision.

• 1:08:05David Sacks?

  They're, they're, they are eliminating advanced math because they don't want to actually look at the, the problem.

• 1:08:12Jason Calacanis?

  What do you see the problem as?

• 1:08:13David Sacks?

  Well, if there's an underperformance in certain groups, then you should work hard to raise them up, not eliminate the subject.

• 1:08:18Jason Calacanis?

  Give me a suggestion.

• 1:08:20David Sacks?

  Charters and school choice.

• 1:08:22Jason Calacanis?

  Okay.

• 1:08:22David Sacks?

  Look, I mean, if you're, if you, if you're going to define structural racism as conditions that, that trap people of color in poverty across generations, seems like a pretty fair definition. Then you have to say the number one cause of structural racism is the school system.

• 1:08:38Jason Calacanis?

  Hundred percent education, yeah.

• 1:08:39David Sacks?

  It's the school system because we know poor kids are trapped in schools that aren't very good. Why? Because they're controlled by the education unions.

• 1:08:46Jason Calacanis?

  They don't have a choice. They don't have money.

• 1:08:48David Sacks?

  So who is making that argument on, on the side of the left? No one. Why? Because everyone knows the unions, especially the education unions, are the number one donors to the Democratic Party. So the Democrats won't even look at this problem. All they'll do is blame white supremacy.

• 1:09:03Jason Calacanis?

  Could build their base is by saying, we want to fix education. That would be if you fix education.

• 1:09:09David Sacks?

  What do you think Yonkin just did in Virginia? By the way, 55% of Hispanics in Virginia voted for Yonkin. So minorities are shifting on this issue of charters and school choice.

• 1:09:20Jason Calacanis?

  Yeah, because these are the new Private chat.

• 1:09:22David Sacks?

  These are the new quality of life issues.

• 1:09:24Chamath Palihapitiya?

  If Yonkin has a good four years in Virginia, he's, he can run for president and crush this thing.

• 1:09:29David Sacks?

  Can I show you just one, one chart and then we can get off the politics thing? Which is, it was this chart from this guy, Patrick Ruffini, who's a pollster. And I think it really illustrates the problem that progresses. The Democratic Party has.

• 1:09:41Jason Calacanis?

  Chart for the listeners.

• 1:09:41David Sacks?

  Okay, so. What this chart shows is it basically shows where the Democratic, the Democratic Party is and the Senate Republican Party is in relation to the center of the country. Okay. And basically, as you'd expect in a democracy, whichever party is closer to five wins. Okay. So in 1994, when Bill Clinton was president, the Democratic Party, the center of it was smack dab as five. The Republicans weren't that far away. They were a six. So the party, even though there is a lot of partisan warfare, the, the, the political differences actually weren't that great. And Clinton, I think, more accurately found that dead center. Okay. Fast forward to 2004. So George W. Bush is president now. The

• 1:10:25David Sacks?

  Democrats are at four, Republicans are at five. That's why Republicans won. Okay. Now, go to 2017, these poll numbers he did, and this is a few years ago. The Democrats are all the way at two. Okay. And the Republicans are at six and a half. So it's true that both parties have moved all the way from the center. The Republicans are one and a half points away from the center, whereas Democrats are three points away. So the Democrats have actually moved further away from the center. If you look at who are the activists in the Democratic Party, who is the base, who is the energy, who does all the work, who does the contributions? It is the progressives, right? This is why McAuliffe ran as, McAuliffe is not a progressive. He was a Clinton Democrat, you know, going way back to the nineties.

• 1:11:08David Sacks?

  Okay. He was Bill Clinton's, you know, right-hand man in the party back in the nineties. But he nevertheless ran as a progressive in Virginia who supported the teachers' unions. Why? Because he was appealing to the base of the party. Gavin Newsom did the same thing in California. Gavin was never a Bernie bro. I mean, he's always been liberal, but he, he has moved very far left. And Biden has moved very far left as president. Why is that? Because the base of the party has moved very far left. So unless that gets fixed, I see maybe a decade-

• 1:11:40Jason Calacanis?

  So you're appealing to the party's base, but not the country's?

• 1:11:43David Sacks?

  Exactly. So you're going to need a strong Democrat who can basically give the Heisman to that part of the base. Or they're going to keep losing elections. I think this could be a Republican decade. I know it doesn't seem like it right now because you had Trump and the Republicans lost, but look how quickly the Republicans turned around their electoral fortunes with Trump on the sidelines.

• 1:12:03Chamath Palihapitiya?

  Then that's just a huge detriment to the Republicans.

• 1:12:07David Sacks?

  If Trump is the nominee in 2024, all bets are off, but in 2022, he's not the nominee. He's still censored from social networks.

• 1:12:15Chamath Palihapitiya?

  He's really nowhere in sight and people, people have a very short memory, it turns out. They've moved on very quickly. Yonkin checked the box because he felt he had to to get the nomination and to run on the Republican platform. But then you think Yonkin's going to talk to Trump once? No, not once.

• 1:12:35David Sacks?

  And I, and I think, and I honestly think this election is going to help Republicans move past Trump because what a Republican believes in, in like that the electoral system is rigged now, right? I mean, all these blue cities and states just delivered big results for Republicans. So where exactly is the ballot stuffing? Where exactly is the stole, where are the stolen elections?

• 1:12:55Chamath Palihapitiya?

  That's going to, that's going to stop now too. They're going to stop talking about that.

• 1:12:58David Sacks?

  It's going to stop overnight, right? Because I mean.

• 1:13:00Chamath Palihapitiya?

  By the way, Kristin Sinema probably knows this, like, you know, the, the, the funny thing about all of this is when Peter Thiel put in $10 million into this PAC for Blake Masters, who used to work for him, and said, you know, in Arizona, I'm going to run this guy against you. Sinema tacked hard to the center instantly. So she, she knew too.

• 1:13:19David Sacks?

  Yeah. Well, so, so just, just a small point of interest. So Blake is running against the other guy, um, the astronaut guy. I'm spacing on his name, but, but yeah, but, but Sinema is up.

• 1:13:28Chamath Palihapitiya?

  So to speak.

• 1:13:28David Sacks?

  Uh, in the next election cycle. So she's got a little bit more time. But you're right, like Sinema is attuned and Manchin is attuned. They're some of the few Democrats that are attuned to where the center of the country is. You heard Manchin in the wake of this election said, this is a center-right country. These guys better wake up. Um, you know, they should really, now, look, I think, I think what's going to happen in the wake of this election is that this infrastructure bill is going to sail through. Because one of the crazier things that the progressives were doing was holding that bill hostage. It might have helped McAuliffe. I don't think it would have, I don't think. Call it with a one, but it might have helped him by a point or two if they had gotten that infrastructure bill done because a lot of those programs are going to be popular in a state like Virginia.

• 1:14:09Jason Calacanis?

  Okay.

• 1:14:09David Sacks?

  But I mean, but, but I think that, you know, this House reconciliation bill, they just seemed hell bent on jamming it through with all these tax increases. I don't think that's not popular. You know, what the big issue in New Jersey.

• 1:14:20Jason Calacanis?

  For them, yeah.

• 1:14:21David Sacks?

  One of the big issues in New Jersey, where you almost had this upset within one point was taxes. You know, um, there was a, a gaffe by Murphy who said something like, you know, he said, he said that if, if taxes are someone's chief concern, he said, quote, maybe we're not your state. Can you imagine that?

• 1:14:38Jason Calacanis?

  Wow.

• 1:14:38David Sacks?

  And he almost lost the election because of that. So I don't think all these big tax increases are what the country wants. And, you know, if Biden insists on allowing Bernie to dominate the agenda and Warren, I think it's good, you're going to see 40 to 50 seat losses by the Democrats in 2022.

• 1:14:57Jason Calacanis?

  Okay, moving on to our final topic, crazy update out of China, a research team has developed a method of converting carbon dioxide into starch. Science magazine published this paper from a research team, a hundred grams of catalysts converting five grams of CO2 per hour into starch. And Friedberg, I'm sure you tweeted that this is 10 times more efficient than corn plants. What's the impact of something like this? Could it hit scale? Would it have an impact on food security, carbon, global warming?

• 1:15:34David Friedberg?

  Yeah, so I tweeted this paper out because it's just, it's a fantastic demonstration of what's possible in this new emerging, not emerging, it's been around for a long time, but kind of, you know, in the state of art in, um, in biomanufacturing. You know, photosynthesis is the system by which most starch is produced on planet Earth today. That is, plants convert sunlight and use water and carbon dioxide to make starches and starches and, and sugars, which are what carbohydrates are, account for 60% of human calories. And we get all those calories from rice, wheat, potatoes, which You know, are grown on about 60% of our acres that we farm on planet Earth. So, you know, in plants, there's a series of these chemical reactions.

• 1:16:18David Friedberg?

  And what these guys did is they isolated and created a couple of specific proteins, which are a class of proteins called enzymes. And what an enzyme is, is it's a protein that can take different molecules and combine them and force them to react and make something new. And they identified a couple of enzymes and engineered a few enzymes and put them together in a cell-free system, meaning there's no cells involved. It's just a tank with a bunch of fluids in it. And they stick in some carbon dioxide that they can suck in from the atmosphere and they can, and they have to drive it with some hydrogen gas, which we can just get from water. And the system basically converts that carbon dioxide into starch,

• 1:17:02David Friedberg?

  which is being done at a rate that's almost 10 times higher than what we see with corn plants. So it's an incredible demonstration. There's several steps to the system, like six steps. And I did some back-of-the-envelope math. And my back-of-the-envelope math on what they demonstrated, and by the way, everything they did is publicly available for reproducibility. So people are gonna try and re-

• 1:17:23Chamath Palihapitiya?

  Open source, yeah.

• 1:17:24David Friedberg?

  Open source, so people are gonna try and copy this now. But my back-of-the-envelope math is, you know, this system can produce about 10 grams of starch per liter per day, which would mean it would take about 2.7 trillion liters to suck up all of the carbon dioxide that all of humans are putting in the atmosphere every year from all of industry. That would require about 27 million tanks that are about 40 feet tall and about 8 feet wide. That whole, all of those tanks could fit in an area about 25 by 25 miles. You could attach one nuclear reactor to it to suck up the water and convert it into hydrogen gas and feed this system.

• 1:18:06David Friedberg?

  And those tanks, 25 miles by 25 miles, would take out all of the carbon dioxide on planet Earth and convert it into usable starch. And that starch, by the way, that system could be tuned not just to make starch for consumption, it could be used to make biofuels, it could be used to make bioplastics, it could be used to make anything that's hydrocarbon-based. And so you can kind of think about this being the entry point to a series of production systems that we could use to make stuff.

• 1:18:32Chamath Palihapitiya?

  Why, Friedberg, why did they open source it?

• 1:18:35David Friedberg?

  So they're a research team of scientists from China and they've been iterating on this this process. This isn't the only process, right? And so what they're showing is that this is possible. And what I think we will see is a lot of people rattling their brains now saying, not only do we use proteins and enzymes that we find in nature, but we're going to start to engineer our own proteins and our own enzymes that are even more efficient than what we see in nature. And that's what's starting to happen. This system alone, what I just described, this 25 mile by 25 mile system, which is tiny, is the equivalent of starch production from 42 US corn belts. If you took all the corn growing in the United States, it's 42 times that is what it would produce. That's my back of the envelope math of kind of what these guys did.

• 1:19:19David Friedberg?

  And so I think what they're showing is this is possible.

• 1:19:22Jason Calacanis?

  I mean, what's incredibly, yeah.

• 1:19:23David Friedberg?

  Yeah. And the implications, we could go in 100 directions and we could talk for an hour about what this means and what you could do with it. But I think it really catalyzes this point that we're kind of, everyone's always like, how are we going to get all this carbon out of the atmosphere? What are we going to do with this? Where there's a will, there's a way. The science is here today. 27 million tanks made out of plastic, you could probably get that stuff produced, you know, a couple billion dollars. Find a piece of land that's 25 by 25 miles, that's near some water and put a nuclear power plant there and you could suck up all the CO2 in the atmosphere every year.

• 1:19:55Jason Calacanis?

  Anybody want to take, anybody want to take a guess of how many people on the team were in advanced math courses?

• 1:19:59Chamath Palihapitiya?

  The funny thing about this that I think is really interesting is that it came at the same week where we were ending, you know, what was this political theater of COP26? You know, Greta Thunberg, who's, you know.

• 1:20:13Jason Calacanis?

  How dare you?

• 1:20:14Chamath Palihapitiya?

  How dare you?

• 1:20:15Jason Calacanis?

  Blah, blah, blah.

• 1:20:17Chamath Palihapitiya?

  She had this, well, she had this very funny comment, which is like, ah, you know, it was a bunch of corporate nonsense and the same old blah, blah, blah was her description of COP26. You know, we had this great. trickle of like, you know, agreements. There was like on Monday, there was an agreement to stop deforestation. And then you realize it's a non-binding agreement. And you're like, oh, okay. Well, I guess we're not going to stop deforesting. We're just going to keep, you know, doing that. And all of this stuff just kind of like took a lot of my enthusiasm. And I was a little despondent about what was going on. And then when I saw this thing, I was, I was really quite impressed. I will say that there's a very tricky thing happening right now, which is that developing countries basically said, listen, if you want us to go

• 1:21:01Chamath Palihapitiya?

  after climate change, we want 1.3 trillion dollars a year to support us. And so, you know, the Western world will have to figure out whether we're willing to pay, you know, what is the equivalent of, you know, six or seven percent of US GDP to a whole bunch of other countries every year for them to slow down. And if we don't make these payments to India and China and a bunch of other developing nations, they, they have said, we're just going to continue to do what we're going to do.

• 1:21:27Jason Calacanis?

  Here's an idea. Take half of that money and put it towards science.

• 1:21:29David Friedberg?

  Yeah, take half that money and go build a plant that uses this system that was just demonstrated and put it in South Texas and suck up ocean water and convert that ocean water into hydrogen gas.

• 1:21:39Jason Calacanis?

  Create jobs.

• 1:21:40David Friedberg?

  By the way, ocean water can be turned into hydrogen gas by running electricity through it. So you're putting a nuclear power plant to make the electricity, you run it through ocean water, you create hydrogen gas, you pump it into these frigging tanks, and it sucks up all the CO2 and it makes stuff that humans can consume and that we can use. And suddenly you have this abundance of material, you have this abundance of food, and you can turn this and jobs, and you can turn this into a lot of different things. And, you know, this kind of goes to the point I've been making for a while. If we want to invest in infrastructure, this is the sort of thing that both solves climate change, creates jobs, and has extraordinary economic return potential built into it. So.

• 1:22:17Jason Calacanis?

  But how does it get politicians reelected?

• 1:22:19David Friedberg?

  You know, I think the private market may come after this stuff. I'll be honest. I'm, you know, I'm like, I'm talking to people looking at this being like, why don't we make a plant that we can make biofuels and bioplastics and food and other stuff out of this, this technique? And there's going to be other iterations of this technique. But it's such a no brainer.

• 1:22:34Jason Calacanis?

  What would a prototype cost? Like a functional prototype of this?

• 1:22:37David Friedberg?

  Like a small prototype? Nothing, right? I mean, a couple million bucks. Yeah, like nothing. So, um.

• 1:22:42Chamath Palihapitiya?

  The other thing that happened this week beyond this request for 1.3 trillion dollars is that, you know, we're now seriously considering carbon tariffs. And we talked about this on a pod before, but. You know, I've said, I think this is the most disruptive thing in the capital markets and geopolitics that can happen in the next 10 or 20 years is an effective carbon tariff, which is to say that when a good or service enters the borders of a country, they will levy some tax that they think represents its drag on the environment. And so, you know, the simple example would be a car, you know, you make a car, you make a Tesla in Texas, but the minute it crosses the border to Canada, Canada says, well,

• 1:23:23Chamath Palihapitiya?

  here's the true carbon intensity of this car, all of the energy that you put into the aluminum, to the batteries, you know, to the, to the buildings where the engineers sat that were, that were building FSD, and, uh, you know, I'm going to charge an $8,000 tax on this car.

• 1:23:40Jason Calacanis?

  Or iPhones coming out of China.

• 1:23:42Chamath Palihapitiya?

  Yeah, that's happening. I think that's coming. So I think that, you know, the combination of tariffs and these transfer payments is going to create a real economic incentive for folks to make these kinds of big technological leaps. So I'm pretty bullish on all of that. I'm less bullish on politicians' ability to organize because unfortunately, again, this is the first time I really paid attention to COP, and it just looked like a bunch of really, you know, useless political theater. There's just a lot of political theater.

• 1:24:10Jason Calacanis?

  Sax, does this science conversation about saving the planet do anything for you? Would you like to get back to politics?

• 1:24:14David Sacks?

  No, I mean, I think it's the way to solve the problem is you have to figure out new technologies to actually take carbon out of the atmosphere because you're not going to do it through, you know, these political programs. I mean, you know, China, India, paying them and another developing nations 1.3 trillion a year. I mean, foreign aid already is one of the least popular parts of, of the government's budget. You're going to now pay 1.3 trillion to these countries so that they...

• 1:24:41Jason Calacanis?

  Nonsense.

• 1:24:42David Sacks?

  It's nonsense, and you're going to pay China on top of it.

• 1:24:44Jason Calacanis?

  Put that money into our education system and create science and technology that solves the problem.

• 1:24:48David Sacks?

  Nobody's going to stand for that. Yeah. And, you know, the taxes as well.

• 1:24:51Jason Calacanis?

  Pour it into our education system. Pour it in.

• 1:24:54David Sacks?

  Yeah, I don't think there's a political solution to this problem that's going to be palatable to people. I think it's going to have to be solved through new technology.

• 1:25:02Jason Calacanis?

  Now, let me ask you a question for you, Berg. You said there's a six-step process. Given your experience building science and technology products, is it possible for each of those six steps to get but 20% more efficient a year?

• 1:25:15David Friedberg?

  Yeah, look, I mean, I just say that to describe that there's a series of steps in the system that, you know, but at the end of the day, this is a demonstration of science that has been, you know, probably funded to some small amount. But, you know, if you start to iterate on this approach and think big picture and think infrastructure solution here, there's a lot of room for improvement, I'm sure.

• 1:25:36Jason Calacanis?

  So in other words, your back of the envelope 25 by 25 mile, if this is getting 50% more efficient, 25% more efficient year over year, we could see it becoming, you know, twice as efficient every two to three years, and your 25 mile might be a five mile radius city.

• 1:25:52David Friedberg?

  I mean, think about going to Mars, right? What are we going to do on Mars? We're not going to grow frigging fields of corn and grow cows and stuff, right? You're going to need a system that literally takes the molecules that are in the atmosphere there, uses some electricity that's probably going to be produced by a nuclear power plant, and convert those molecules into what you want to make and consume. And that's what we can do on Earth today. The systems are going to get better, they're going to get cheaper, they're going to get faster. And that's why I'm highly optimistic about solutions to climate change in the century. It's not about an if, it's about a when. And, you know, the when is going to be defined by the willpower of how we are going to allocate our people and our capital resources to solve these problems in the near term. We have the tools to do it.

• 1:26:31Jason Calacanis?

  I love the fact that we're sort of hitting this fork in the road where it's like, do we just want to give the money to a bunch of governments to pretend they're going to solve this and grifters? Or do we want to put it into science, technology, innovation, and entrepreneur hands?

• 1:26:45David Friedberg?

  I know it's a former.

• 1:26:46Jason Calacanis?

  That execute, execute. What'd you say?

• 1:26:49Chamath Palihapitiya?

  I picked the former.

• 1:26:51Jason Calacanis?

  We should, yeah, let's give it to politicians who don't know what the fuck they're doing. I mean, it really is like when, you know, I don't know if you saw Elon say like, yeah, if you want to solve world hunger, can you make a spreadsheet?

• 1:27:02Chamath Palihapitiya?

  Oh my God, let's talk about that. That's just so beautiful.

• 1:27:04Jason Calacanis?

  I thought that was like the greatest, that's dunk of the week.

• 1:27:06David Friedberg?

  Nothing, nothing gets me up in the morning like funding shenanigans.

• 1:27:09Chamath Palihapitiya?

  Go ahead, J. Cal, tell the stories.

• 1:27:11Jason Calacanis?

  Well, I mean, just, somebody was like, oh, Elon, you know, made more money, Tesla stocks going up.

• 1:27:16Chamath Palihapitiya?

  No, no, an article, it was an article that was written.

• 1:27:18Jason Calacanis?

  Sure. And then he's like, well, if you want to solve world hunger, I'm willing to sell shares of Tesla.

• 1:27:21Chamath Palihapitiya?

  Jason, can you describe it? You're doing such a shitty job today as a moderator.

• 1:27:24Jason Calacanis?

  What are you talking about?

• 1:27:25Chamath Palihapitiya?

  Okay, I'll play a role.

• 1:27:26Jason Calacanis?

  All I did was put a cyst in your hand, you guys dunked everything. That's it, I'm out.

• 1:27:30David Friedberg?

  But to the audience, do it in J. Cal's voice, do it in his voice, yeah.

• 1:27:33Chamath Palihapitiya?

  Hey, guys, there was an article. There was an article that was written that basically said, you know,

• 1:27:42Chamath Palihapitiya?

  You know, $6.8 billion, uh, which is, you know, what Elon made like in a day or something, could cure world hunger. And then the head of the, you know, uh, UN World Food Program retweeted that again, trying to further dunk on Elon. And then, um, Elon responded, "Well, if you can just show me a plan and just please reply in line here on Twitter, and it's credible and detailed, I'll just sell, you know, this stock and I'll give it to you." And, uh, everybody was like, "Oh my God." There was this, "Oh my God" moment, like, "Wow, can this really happen? Ending world hunger sounds like a beautiful idea." It can only, it only costs, you know, $6.8 billion. And obviously it went nowhere because

• 1:28:26Chamath Palihapitiya?

  the guy didn't have a plan and it was just a complete joke. But that's what happened.

• 1:28:31Jason Calacanis?

  Yeah. And, uh, he's like, "Yeah, just put all of your, uh, put all of your expenses out there. Show us your plan." And it was like, "Oh, crickets. Nothing." All right, everybody. On behalf of the dictator, Chamath Palihapitiya, the queen of quinoa, the sultan of science, David Friedberg, and for the Rain Man himself, reporting from, definitely reporting from, yeah, he's reporting from the New York Stock Exchange. Congratulations again to my bestie, David Sacks, on the triumphant IPO of Bird. We'll see you all next time on the All In Podcast. Bye-bye.

• 1:29:10Jason Calacanis?

  Rain Man David Sacks.

• 1:29:28Speaker 04

  Besties are gone.

• 1:29:38Chamath Palihapitiya?

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

• 1:29:46Speaker 04

  What your B, what your B? What? We need to get merch.