E55: Valuing crypto projects, Rivian worth $100B+, inflation: causes and corrections and more

0:00 Bestie intro and Solana Breakpoint talk 4:43 Covering the censored segment from last week, how to value crypto projects and general investing, what to take away from the podcast 30:45 Rivian's >$100B valuation, greatest CNBC hit of all time 42:06 Inflation: reacting to the CPI number, problems with MMT, strategies to curb it 1:01:34 Xi Jinping becomes China's "Supreme Leader" 1:08:35 GE, Toshiba, and J&J break up into separate businesses: is this the end of the conglomerate? Insights from PayPal breaking off from eBay, what buybacks signal 1:24:44 Besties wrap the show Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://www.wsj.com/articles/us-inflation-consumer-price-index-october-2021-11636491959 https://twitter.com/denverbitcoin/status/1458900776747737093/photo/1 https://www.dtnpf.com/agriculture/web/ag/crops/article/2021/11/10/nitrogen-fertilizer-prices-shatter-1 https://www.wsj.com/articles/u-s-tests-israels-iron-dome-in-guam-as-defense-against-chinese-cruise-missiles-11636455224 https://twitter.com/Sen_JoeManchin/status/1458443966135902221 https://fredblog.stlouisfed.org/2017/02/two-tales-of-federal-debt https://www.wsj.com/articles/chinas-xi-gains-power-as-communist-party-designates-him-historical-figure-11636635312 https://www.cnbc.com/2021/11/09/ge-to-break-up-into-3-companies-focusing-on-aviation-healthcare-and-energy.html https://www.wsj.com/articles/toshiba-like-ge-plans-to-split-into-three-parts-11636700609?st=e6zgv5yq433lvr3&reflink=article_imessage_share https://www.wsj.com/articles/toshiba-like-ge-plans-to-split-into-three-parts-11636700609?st=e6zgv5yq433lvr3&reflink=article_imessage_share https://investor.pypl.com/news-and-events/news-details/2021/Response-to-Market-Rumors-of-Discussions-Between-PayPal-and-Pinterest/default.aspx https://www.marketwatch.com/story/apple-spent-nearly-20-billion-on-stock-buybacks-in-q4-at-average-prices-below-the-vwap-2021-10-29 https://www.nasdaq.com/articles/which-companies-spend-the-most-in-research-and-development-rd-2021-06-21

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

• 0:00Chamath Palihapitiya?

  Sax is old, doo doo doo doo doo doo Sax is old, doo doo doo doo doo doo Sax is old.

• 0:07Jason Calacanis?

  Really?

• 0:07Chamath Palihapitiya?

  And old.

• 0:08Jason Calacanis?

  This is almost dead.

• 0:09Chamath Palihapitiya?

  J Cal's fat, doo doo doo doo doo J Cal's fat, doo doo doo doo doo.

• 0:14Jason Calacanis?

  J Cal's not fat anymore. He's getting the cannons back.

• 0:18Chamath Palihapitiya?

  Doo doo doo. Friedberg's not human, doo doo doo doo.

• 0:24Jason Calacanis?

  He's a robot.

• 0:25Chamath Palihapitiya?

  Doo doo doo doo doo.

• 0:26Jason Calacanis?

  He's a robot.

• 0:28Chamath Palihapitiya?

  Doo doo doo doo doo. He's a robot.

• 0:30David Sacks?

  Don't quit your day job, Chamath. That's all I can say.

• 0:33Jason Calacanis?

  Bro, you don't remember Baby Shark? I mean, how many? No, he doesn't know his kids' first names or birthdays. How does he know Baby Shark?

• 0:40David Sacks?

  Let your winners hide.

• 0:43Jason Calacanis?

  Rain Man David Sax.

• 0:47David Sacks?

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

• 0:51Jason Calacanis?

  Love you, best. I'm the queen of Kenwa.

• 0:55Jason Calacanis?

  Hey, everybody. Welcome to episode 55 of the All In Podcast. With us again this week, the dictator himself, Chamath Palihapitiya, the queen of Kenwa, David Friedberg, and coming back from Portugal and the Solana Conference, riding his.

• 1:13Chamath Palihapitiya?

  Where heroin and prostitution are legal.

• 1:16Jason Calacanis?

  Well, we were gonna, we were gonna double click on that, but you jumped the gun here on the docket. So, David, how was the heroin in Portugal?

• 1:25David Sacks?

  Great.

• 1:26Jason Calacanis?

  Great, okay.

• 1:28David Sacks?

  I was, I was fully drinking the Kool-Aid at the Solana Conference. It wasn't heroin, it was Kool-Aid.

• 1:33Jason Calacanis?

  It was, it was literally Kool-Aid. How many people were at the Solana Conference in Portugal? Why is it in Portugal? What happens at a Solana crypto conference?

• 1:46David Sacks?

  I think there were thousands of people there and it was, I mean, easily. And, I mean, it was kind of a madhouse and people were trying to get in last minute. Nobody could get in because the conference was like totally sold out. It was a lot of crypto developers, a lot of people with projects. And why Portugal? I think because there's a lot of conferences happening in Portugal right now because they are easier on the COVID restrictions than a lot of other countries. So you can actually get in there and host a conference.

• 2:15Jason Calacanis?

  What was it? Indoors with no masks?

• 2:18David Sacks?

  Um.

• 2:18Jason Calacanis?

  For masks optional?

• 2:19David Sacks?

  Um, I can't remember if like masks were required or not. I did see people wearing masks indoors.

• 2:24Jason Calacanis?

  So were you required to be vaccinated? They do.

• 2:27David Sacks?

  I did show, I think I did show a vaccine pass when I checked in.

• 2:31Chamath Palihapitiya?

  I just did my booster.

• 2:33Jason Calacanis?

  I'm going to do my booster.

• 2:34Chamath Palihapitiya?

  It kind of, it kind of, uh, it was a little, I would say the same kind of shitty feeling as the second one.

• 2:41Jason Calacanis?

  Hmm.

• 2:41David Sacks?

  Which kind of?

• 2:43Chamath Palihapitiya?

  I just got five. I mean, I had the first two were Pfizer. So I took Pfizer. She was the, the, the nurse actually gave me a choice. She's like, you can do whatever you want. Pfizer, Moderna, or J and J. I just, I didn't know any better. I texted my doctor. So I just took, um, Pfizer, although the interesting thing is Moderna is the only one that's dose regulated for the third dose. So there's a, they, they, they actually give you less specifically, but Pfizer is the same.

• 3:06Jason Calacanis?

  I think we talked about this on the pod. There's one theory, which they told you get whatever one you can get was the instructions, because it's more important to just get one than which one you get. But they said there's a Swiss cheese theory, which is if you took two slices of Swiss cheese from two different bricks of it, the holes would not be the same and therefore you overlap them. So whichever deficiencies each one had, maybe the other one doesn't.

• 3:27Chamath Palihapitiya?

  So I should have gotten Moderna is what you're saying.

• 3:28Jason Calacanis?

  That would be, I, if you believe in the Swiss cheese there, I don't know, free burger or science.

• 3:32Chamath Palihapitiya?

  I should ask Aaron Rodgers what he thinks.

• 3:35Jason Calacanis?

  I mean, he just straight up lied about being vaccinated, huh?

• 3:38Chamath Palihapitiya?

  I think so. And I think the NFL is not doing anything about it. Yeah.

• 3:42Jason Calacanis?

  That's not cool. I, why would you lie about it? I mean, but he's not, he would have still been allowed to play. So there was no reason to lie about it. I, I'm not totally up on that story.

• 3:53Jason Calacanis?

  The rumor is that Kyrie is going to be playing basketball soon because.

• 3:57Chamath Palihapitiya?

  Cause Eric Adams is going to lift the vaccine restrictions.

• 4:00Jason Calacanis?

  Uh, you will not need to be, show a vaccine card or, or a mask.

• 4:05Chamath Palihapitiya?

  Bro, I don't think.

• 4:06Jason Calacanis?

  Or maybe you'll just get a PCR test every day.

• 4:08Chamath Palihapitiya?

  I, I don't think it's going to matter because the Warriors are shooting the lights out and Klay hasn't even come back yet. And so.

• 4:14Jason Calacanis?

  That Gary Payton, uh, the second.

• 4:16Chamath Palihapitiya?

  Did you see Gary? Did you see Gary Payton?

• 4:18Jason Calacanis?

  Yeah.

• 4:19Chamath Palihapitiya?

  Junior, uh, these clips?

• 4:21Jason Calacanis?

  Oh, the second. I mean, I mean, he's like living above the rim and just shrank and Weisman. His Weisman back and then, uh, Wiggins is playing great basketball. I mean, the Warriors are going to win this year. I don't know.

• 4:32Chamath Palihapitiya?

  Steph is otherworldly right now.

• 4:35Jason Calacanis?

  Yeah, I think Steph's got something to prove. Um, even though he doesn't, but he's playing like he's got something to prove. Okay. So, um.

• 4:43Jason Calacanis?

  Do we want to just cover the elephant in the room? There, the last episode, I think we should just get out of the way because it relates to Solana. There was, we took something out of the last podcast. So people understand we have an agreement between the four of us. If there's something that somebody doesn't want on the pod after we record it, we'll take it out because we don't want anybody. I mean, I think the philosophy, we haven't said this out loud, is we don't want anybody to say something they regret that could cause damage to other people or to themselves. So if they want to take something out that they said, that's fine with all of us. And basically each of us has veto right on something. So last week, two people took their veto right on something and we took something out. You want to explain our thinking on that, Sax, and why we're reversing it?

• 5:27David Sacks?

  Yeah, okay. So a few weeks ago on the pod, there was an oblique reference between me and Chamath regarding Solana. And so, and so some internet theorists claimed that we were trying to engineer a pump and dump in Solana, which if you actually listen to what we said, it certainly is not a pump. Let me explain what it was. So Craft is the beneficiary because we invest, we're the first investors in multicoin. We were kind of like their seed investor, invested in their, we put in something like 40% of the money for their special opportunity fund. They were one of the first investors in Solana. So we are the beneficiary of about a billion dollars of Solana. So thank you, multicoin.

• 6:09David Sacks?

  At some point, well, so, so they have started doing distributions. But at the time I texted Chamath, they hadn't really started doing distributions. I didn't know how deep and liquid the market for Solana was. I just asked Chamath, like, I'd heard Chamath may have said something that he was long Solana, wanted to accumulate. So I sent him a text saying, hey, are you interested? You know, I thought maybe we could do an OTC transaction at some point when we get our Solana. He basically, you know, we had a brief exchange about that and then he mentioned on the pod. That was the extent of it. What I didn't know at the time, but learned subsequently is that the market for Solana is very deep, about three and a half billion notional is traded every day. So there's no need, even if we wanted to fully get out of our Solana position, which by the way, we don't even have.

• 6:55David Sacks?

  You know, MultiCoin still has most of it. We, it's not necessary to do an OTC transaction. We could just sell it.

• 7:01Jason Calacanis?

  Explain what OTC transaction is.

• 7:03David Sacks?

  It just means over the counter. It just means that instead of going to like an exchange, you would deal with like a trading desk, or it could just be direct, like for me to Chamath. So that was basically the exchange. Chamath and I talked about it for maybe two minutes, and then it came up on the pod for 20 seconds. So then some internet theorist basically clipped it and tried to accuse us of organizing a pump and dump. Well, obviously, if you're talking about selling something, it's not a pump. It's also not a dump either. So, anyway, the reason why we said cut it out last week is because we didn't want to give oxygen to this stupid like conspiracy theory that somebody had invented on the internet with like no basis whatsoever, because you could spend all day trying to like shoot this stuff down. But then,

• 7:49David Sacks?

  at the Solana conference, enough told me, enough people told me that this was becoming a meme that I thought was worth addressing. And what, and look, what you have to understand with crypto is that for every cryptocurrency like Solana, there are haters because they're invested in Ethereum or Cardona or whatever.

• 8:05Jason Calacanis?

  Everybody's talking up their books. There are pump and dumps, and there are armies of anonymous Twitter accounts that will coordinate attacks and or memes, etc.

• 8:15David Sacks?

  Right. So they're trying to spread the rumor that like VCs are big holders in Solana and are gonna dump it. The reality is that MultiCoin has a large position, but they have LPs. They are slowly distributing their positions to LPs.

• 8:29Jason Calacanis?

  In the forms of the tokens. They're not selling them and giving you cash. They're giving you the tokens. You get to decide what you do.

• 8:34David Sacks?

  Yes. And by the way, that's what we'd like to do as well. We're currently working through those mechanics because it's actually complicated for a VC firm to distribute, you know, in kind through tokens, but.

• 8:44Jason Calacanis?

  If you had to give them to your LPs subsequently.

• 8:47David Sacks?

  That's what I would like to do. Exactly.

• 8:48Jason Calacanis?

  Well, actually, people are doing that with Coinbase. So Coinbase is providing that as a service now, if I understand.

• 8:52David Sacks?

  Right. So we're, so we have to work through with our LPs, but that's what we're gonna try to do, is distribute it in kind, so everyone can make their own decision.

• 8:59Chamath Palihapitiya?

  I, I have a couple of things to say. So I've only been a buyer. I've never, I haven't sold a single.

• 9:08Chamath Palihapitiya?

  Solana token. And so we are, you know, net buyers and we're buying a bunch of stuff. But I hate acknowledging that. And this is why, you know, my tone was more

• 9:22Chamath Palihapitiya?

  non-committal when we did the pod is that I really don't like this culture that's emerged via Twitter mostly, where

• 9:33Chamath Palihapitiya?

  you all of a sudden have to be this maximalist that basically falls on their sword and never sells in order to be legitimate. And I think that that's a really dangerous place to be. So, you know, look, if I take a Why is that dangerous? Well, if I take a much, much bigger step back, let me put Solana in the context of crypto and let me put crypto in the context of the markets. And where we are today at the end of the week after, you know, Q3 earnings in November of 2021, we have the stock market at absolute all time highs. Ripping. We have crypto at absolute all time highs. Ripping. We have the art markets. I don't know if you guys saw Phillips and Christie's and Sotheby's this past week at absolute all time highs.

• 10:17Chamath Palihapitiya?

  Sold another people for 25 million. We have inflation at a 30 year high. We have 10 year breakevens at a 25 year high. We have, you know, 1 point some odd trillion dollars that we just approved last weekend. We're still horse trading on another three, you know, 1.8 trillion dollars of stimulus that we're going to put in. And so when you and then you have, and I think the, the most important thing, which is the two most important founders of our generation, the two smartest people who have really consistently won Elon Musk and Jeff Bezos have collectively sold more than 11 billion dollars of their holdings this year alone.

• 10:56Chamath Palihapitiya?

  And if you can't take all of that and decide for yourself what's right for you and your family, you're doing yourself a disservice. I think it's important for me to never sort of like, you know, be forced to tell folks whether I'm buying or selling, although I'm willing to do it in moments where I think it's important.

• 11:13Chamath Palihapitiya?

  But I think it's really important to understand the context. And so I think like these folks that like think derisively about individuals who are managing risk, I think it's really naive. And I think it's it creates a lot of missed opportunity for them as well. If the smartest people in the world are now selling their core holdings that they told you they would never sell, and you are not reconsidering your position on things, you're either much smarter than them, or you're being really, really reckless.

• 11:48Jason Calacanis?

  All right, there you have it.

• 11:51Jason Calacanis?

  Yeah, and I, we, you should people also know inside baseball, we have a docket of stories that we talk about on our group chat that make up the docket for the show. But I'll bring stuff up, and I didn't bring that up in some way to cause trouble or anything. I thought you guys would want to clear the air about it. And I understand Schumacher's position of hey, you don't want to give these things oxygen or whatever, but I think

• 12:11David Sacks?

  I didn't, I didn't even know that we needed to clear the air until, you know, I went to the conference and enough people mentioned it, so.

• 12:17Chamath Palihapitiya?

  But what's so funny is half the people on Twitter spend all their time in crypto land saying things like never gonna make it, have fun staying poor. They're extremely, Jason, as you said, tribal. I'm not sure that they're doing first principles analysis of these things.

• 12:31Jason Calacanis?

  They're toxic.

• 12:31Chamath Palihapitiya?

  They've got exceptionally lucky.

• 12:34Jason Calacanis?

  Yeah.

• 12:34Chamath Palihapitiya?

  Some of them are exceptionally good, but many people broadly speaking have gotten exceptionally lucky. And I think a little bit of it is getting to their head where they become, you know, very virulent against people that they think, you know, whose perspectives may actually be negatively affecting their position without actually understanding what David said, which is these are incredibly deep liquid markets. And one person's opinion is can't do much of anything.

• 12:57David Sacks?

  Right. I mean, that's a really good point. I mean, I'd like to give my opinion on Solana, but the thing, or just crypto in general, the thing that's like hard about it is that it's hard to talk about the benefits of say the Solana blockchain without being seen as a pumper of soul or a dumper of ether or whatever, because all these things are so intrinsically connected. I mean, I learned a lot of really bullish things about Solana, you know, at this conference. Uh, I mean, the biggest thing is I mean, there's basically a battle for the hearts and minds of developers going on right now between Solana and Ethereum. That's why Solana has raced up to, you know, over 200. I don't know what, like 7,000% increase or some, something incredible like that. The reason is because Solana as a blockchain gives confirmations back in something like 400 milliseconds.

• 13:42David Sacks?

  Whereas Ethereum takes, you know, minutes. And, you know, a transaction that might cost tens of dollars, 10, 20, 30, $50 of gas on Ethereum costs pennies on Solana. And so that's revenge.

• 13:54Chamath Palihapitiya?

  Yeah.

• 13:55David Sacks?

  Yeah, exactly. It's also, you know, a lot of developers feel like the tools, the developer tools that they've created are easier than building on solidity. The thing that Solana gives up, the trade off that it makes is decentralization. There's basically, basically that transactions are processed by 20 validators and they're a top 20 based on holdings of Sol. So it's kind of like this proof of stake model. So anyway, there's some trade offs there. I can tell you that, you know, it's a view of, you know, our friends at MultiCoin. And, you know, I heard a lot of this views at the conference, although obviously you have to take it with a grain of salt because these are the biggest believers. But their view is that Solana over the next year will flip Ethereum based on developer activity, that there's real companies being created.

• 14:40Chamath Palihapitiya?

  We spend a lot of time actually before we do anything is that's the only thing we've been looking at, you know, and Syndica, Fractal. A lot of the stuff that we've done, DSO is purely driven by developer interest. When we see developers in the open source ecosystem, building things on top of this stuff, making stuff that's composable and usable by other people and building infrastructure. You know, we don't really second guess that because they are spending their, the most important currency, which is not monetary capital, but human capital.

• 15:12David Sacks?

  Yeah, their time, their skill.

• 15:14Chamath Palihapitiya?

  Their time and their skill and their reputation.

• 15:15David Sacks?

  To another project. Yeah.

• 15:16Chamath Palihapitiya?

  And so when enough developers, so I, I've always thought you just follow the developers and as more and more projects get started. You just have to unemotionally support that. I think the writing is on the wall, which is Bitcoin is gold. Ethereum looks like it's trending to be silver and Solana could be the first, but there will be others that come after it. Of real developer ecosystems that can be built on top of it. The other, the other thing that I would offer up to people for them to think about is. Before you blindly go and rush into crypto, one way in which I try to think about these things is in the following way. You see these projects get started all the time. And I would view each of these projects as a mini economy and really try to think,

• 16:00Chamath Palihapitiya?

  what is the economic value of what's happening under the hood? So, simple example, you know, Helium is an interesting project that's trying to build a completely decentralized, you know, 5G infrastructure, right? Render is a really interesting project that's trying to build a completely decentralized, you know, graphical processing infrastructure, right? GPUs essentially. In both of those things, you can quantifiably economically measure what the value is that people get, right? In the case of Render, you're basically displacing an AWS instance. And so that has a price and a value. And so, you know, for Render to be valuable, there's an economic value that it replaces. If you're joining a hotspot that has an economic value where you had necessarily

• 16:44Chamath Palihapitiya?

  have to pay, you know, to get internet connectivity, if you all of a sudden are on the Helium network, that displaces a measurable economic quantum. Understanding that is probably, and taking the absolute value of that, is the best way of really understanding which projects have potential. So if you take those two ideas and marry them together, where is their developer interest? And where is their measurable economic activity? At the intersection of those, I think are the really compelling projects that can win.

• 17:09Jason Calacanis?

  Well, the thing that complicates all of this is that the developers are not just picking based on which language or technology or stack they think has the most potential. They also have acquired economic stakes in it. So, a developer who might be objective and say, "Hey, this new platform is better than Ethereum," might be sitting on millions of dollars in Ethereum and they're like, "I want to keep my bet going here and I'm going to keep talking my book."

• 17:34David Sacks?

  Possibly, but I do think that developers in general will choose the platform that's easiest and cheapest and fastest for them to develop on.

• 17:43Jason Calacanis?

  Which would mean the list on CoinMarketCap of market cap ones that has been static for a decade of crypto almost, you know, or largely the top 10 doesn't change that much. It's XRP, it's Stellar, Ethereum, Bitcoin, Tether. That could be up for grabs. That whole thing could change now that people are actually building projects and the projects are getting competitive with each other. And that's that flippanting we're talking about, correct, Sacks?

• 18:06David Sacks?

  Yeah, I think that what's tricky here again is I never want to give anyone investment advice. I mean, that's just not my job. And if there's anyone out there listening to the show because they're trying to get like tips or tricks, whatever, for investment. Like, I'm not really comfortable telling people what to do.

• 18:23Jason Calacanis?

  Sure.

• 18:24David Sacks?

  So, you know, everyone just has to understand that. I did, I do feel like what I saw at this conference over the past week in terms of developer enthusiasm and activity was very bullish. Actually, it was a lot like I went to the Ethereum conference, I think it was back in 2017, several years ago, and it felt a little bit like that. Although I would say that this time it felt less academic, like several years ago, it felt more like white papers. Now it actually feels like real projects and businesses that people are trying to create.

• 18:50Jason Calacanis?

  Still infrastructure and less applications or more applications?

• 18:53David Sacks?

  Well, Chamath mentioned Chamath mentioned a couple of them. So there's helium, which is creating a decentralized network for Wi-Fi. There's render, which is creating a decentralized network for GPU. There's one called Hive Mapper. I met the founder. It's a decentralized network for people to map the world. You can think of, you know, the concept of a miner that Bitcoin invented, think of them more as like a resource provider to a network. So with Bitcoin, you know, we call them miners, but they're the validators of transactions. And we're trying to incentivize them through block rewards, basically through small bits of Bitcoin that get released to to provide these valuable computing resources to the network.

• 19:31David Sacks?

  And so people are figuring out now how to create massively decentralized networks where you have, you know, thousands or millions of resource providers provide a little bit of something to the network for everyone's benefit. In exchange, they get some coin. That's like a really interesting model that couldn't exist before crypto. And so, yeah, I mean, I think it's very interesting, but you know, in order for that to work, you have to have like very, you need fast, efficient, scalable blockchains. And the feeling as, I mean, I'll give credit here to Tushar, who's one of the GPs of MultiCoin. His view is that this was the iPhone moment for blockchain, that that what Solana has built, because it's massively scalable and also very cheap. I mean, again, you can run a lot of transactions for pennies.

• 20:16David Sacks?

  Now, all of that is obviously very bullish for Solana. The thing I wrestle with is, and Chamath kind of alluded to this, is I think everything's kind of in a bubble right now because of monetary and fiscal policy. And so, you know, I guess I, you could say that I'm long Solana versus ETH, but I do kind of worry that the whole world right now is very bubbly. And so as a GP, like, what do you do about that? I can tell you right now, like this second, we are sitting on Solana that we have not sold. So, you know, I am long in that sense. However, sometime over the next, whatever number of years, we will distribute out our position of Solana to LPs.

• 20:51Jason Calacanis?

  And then the LPs will make their decisions.

• 20:53David Sacks?

  And then they'll make their decisions.

• 20:54Jason Calacanis?

  Might specialize in crypto and want to keep it. Other ones might not want to hold assets and need that money to fund their endowment to give scholarships to students, or whatever your LPs particularly do. Well, yeah, I mean, and so I guess to the issue of, hey, we're not giving investment advice here, we are all capital allocators and startup creators. So we're talking about our day-to-day lives here. Nobody should interpret this as investment advice. And especially not in a world now, I don't know if you guys saw what happened with Rivian this week. I don't know how we don't talk about a company with essentially no public sales. They've sold 148 cars to their employees. It's worth $120 billion. Any, Friedberg, did you see this IPO? Any thoughts on it?

• 21:40David Friedberg?

  Seems like a high.

• 21:41Jason Calacanis?

  Do you have investment advice for the audience that you'd like to give? Tell me what Rivian does.

• 21:47David Friedberg?

  Can you play that video that you found that you shared with everyone? You have that video?

• 21:51Jason Calacanis?

  Okay, well, I, we do have it. We can queue it up. Did you see this yet, Sax?

• 21:55David Friedberg?

  Who is this guy?

• 21:56David Sacks?

  No, I haven't. Oh, that. Yeah, yeah. Well, but just, so I don't want to beat this point to death, but I just think it's so important for the audience that what they should be getting out of the show, if they're fans, is maybe like advice on how to think.

• 22:06David Friedberg?

  Yeah, critical thinking.

• 22:07David Sacks?

  Critical thinking and like how we think about investments, not tips.

• 22:11Jason Calacanis?

  First principles.

• 22:12David Sacks?

  Exactly. So, look, if you want to invest in crypto, first of all, like, go understand like what all these different projects or blockchains do and figure out what is the purpose of the token in that system? What are the token economics?

• 22:24David Friedberg?

  What's the utility?

• 22:25David Sacks?

  Yeah, does it even make sense? Or is it just a scam? Then if it's a, if it's something like a blockchain, go research how many projects are, have developers on them and how much code is being checked in.

• 22:36Jason Calacanis?

  And maybe open a wallet and buy some NFTs and buy some ETH and transfer it and learn just how to set up your internet connection.

• 22:43David Sacks?

  Right, right.

• 22:44Jason Calacanis?

  You know, this was 1995.

• 22:45David Sacks?

  Right, exactly. And then on top of all that, you've got to consider macro forces because, I mean, and I think, you know, my friends at MultiCoin would fully concede this, that, you know, it could be the case that if there's a crypto bust over the next year, and this thing, you know, crypto has gone through boom and bust cycles for many, many years.

• 23:02Jason Calacanis?

  That is the standard.

• 23:03David Sacks?

  It's the standard. So you could have a situation in which, for example, Solana flips ETH and yet still goes down in value because there's an overall bust cycle. So, you know, you have to consider the macroeconomic factors as well. So there's a lot of things to consider here. And then you also have to consider your own risk tolerance and, you know, what is appropriate for your portfolio. And it may be different than us.

• 23:22Jason Calacanis?

  When do you need your money? Are you a 25-year-old?

• 23:24Chamath Palihapitiya?

  Everything is at all-time highs and the two smartest men in the world are selling.

• 23:30David Friedberg?

  Not just, not just them, by the way. There are other guys that are heavily on the other side, waiting for this whole thing to go. Like Druckenmiller has been very vocal about this. And he's, uh, he's been the best macro trader in the last 30 years. So.

• 23:44Jason Calacanis?

  His position is what exactly?

• 23:46David Friedberg?

  That we're printing too much money and we're in a lot of trouble. So, you know, look, I mean, generally there is, um, I think a good point of view being shared here, uh, which is, you know, understanding how to think about what you're investing in and what your, uh, your expectations are versus relying on someone's advice or opinion on what to do. If you have to rely on someone else's advice or opinion on what to do, you're gonna eventually lose money.

• 24:12Jason Calacanis?

  You should not be in that investment category.

• 24:13David Friedberg?

  You should not be in the market. Cause guess what? Anyone that's giving you advice or opinions is gonna make money if you do what they tell you to do. If you do what they tell you to do. End of story. So at some point, they're gonna all make money and you're gonna end up losing money. And it's a, it's, you know, it's, it's, it's a better game to play to learn how to kind of be thoughtful about where's your money going? What are you investing in? And it takes a lot of time and a lot of money. I've been sitting here silently as you guys have been talking deeply about Solana and Ethereum and Bitcoin and, and the crypto markets because I realized. So much of, you know, what's needed to be successful in entering this market is a depth of understanding and a depth of knowledge. My time is highly limited. I have spent no

• 24:54David Friedberg?

  time understanding crypto markets because it's so deep and it's so fluid. It's changing every day. It's changing every week. So if I can't get smart enough to feel confident about the opinions and decisions that I would be making as an investor, I decide not to invest and I stay out. And so I'm not an active crypto investor.

• 25:10Jason Calacanis?

  And you're a specialist and you're on the razor's edge on synthetic biology and so many other.

• 25:16David Friedberg?

  Whatever. There are other areas where it's better for me to spend my time and my energy and I've chosen to do that versus being drawn into what feels like a very exciting kind of turbulent time. There are other areas that I kind of spend my time on and I just kind of try to recognize that maybe I don't know what I'm doing if I were to try and get involved here. And so I'd rather stay out. And I think that's counsel for anyone. You know, if you're going to make an investment, it's important to feel confident about the knowledge and the depth needed to kind of be different than the rest of the market.

• 25:44Chamath Palihapitiya?

  I'll build on your point. Like when I, when I started doing my Sacks, I started to write these one-pagers and those one-pagers were artifacts for me to hold myself accountable for how I saw something in a moment in time and then to be able to see whether it was tracking to that. And then also to share it to other people, a starting point. As David said, a journey where they should then, if they're curious, go and do their own work. It turned out not enough people were doing the work. So then I had to start adding disclaimers to these things, saying, hey, guys, I'm not telling you to buy this. Please be abundantly clear. These next Sacks that I will eventually launch, you're going to see an entire like inbred block letters, like, please don't buy this.

• 26:28Jason Calacanis?

  Right.

• 26:29Chamath Palihapitiya?

  Because to your point, it doesn't matter what you say. People want a lazy, easy way out. And so I just want to reiterate what all of you guys said. None of us are dispensing advice. We are not telling you to do anything. Please do your own work and please come to your own conclusion.

• 26:44Jason Calacanis?

  Do the work.

• 26:45Chamath Palihapitiya?

  It is your responsibility. And if you're not sure, go and look at your children in the face or your significant other in the face. You are responsible to them. And so do your own work.

• 26:56David Friedberg?

  I'll say one more.

• 26:59David Friedberg?

  Point on where I sit as an investor, I choose to only participate in investing in what I call productive assets. That is, you put some money into something and whatever that thing is, it's generating money in some way, or it's trying to generate value through a set of activities, like a business, or owning an apartment building where you're making rent, you know, anything that, or, you know, a group of people that are trying to have some breakthrough or some discovery. Those are productive assets. There's a lot of what's going on now that is what I would call speculative assets, which is the only way you make money is if someone else pays more in the future versus what you're paying.

• 27:41David Friedberg?

  And there isn't an underlying productive asset to what you're putting money into.

• 27:45Jason Calacanis?

  You're describing every ICO or shitcoin.

• 27:48David Friedberg?

  Every ICO, every NFT and the art market, right? These are examples of unproductive assets. They're speculative assets in the sense that you're speculating that at some point the price of them are going to go up and someone...

• 27:58Jason Calacanis?

  Somebody wants that NFT more than you.

• 28:01David Friedberg?

  Someone down the road will pay more for that asset than what you paid. But that underlying asset, that capital that you just put in, didn't go in to build something.

• 28:09Jason Calacanis?

  There's no revenue generation, there's no IP.

• 28:11David Friedberg?

  It went into someone else's pocket that sold that asset to you, and you're eventually going to try and sell it to someone else. And so, you know, there's a real attraction here. Because what we just talked about is really hard to do, having fundamental analysis and understanding of businesses, and a fundamental understanding of what's working and what's not, and when to shift, and oh my gosh, you know, are things different or are they not? To do that is really hard. So people end up relying on opinions of others, or they end up running into speculative markets. And the speculative markets are easy to understand. Someone just paid more for X than the other person did, therefore there's a trend line, it's going up. It's like playing roulette and, you know, black keeps coming up and you're like, okay, it's going to be black again.

• 28:49Jason Calacanis?

  It has to be black, there were seven, correct?

• 28:51David Friedberg?

  There were seven blacks. And so I think that that's a really important kind of takeaway for folks that might be new as investors.

• 28:58Chamath Palihapitiya?

  We're all susceptible. We're all susceptible to this. Like I was just looking, you know, at my own performance coming into the end of this year. And, you know, I did a lot of Sacks this year, but I also did these pipes, which are these third-party deals.

• 29:14Jason Calacanis?

  Private investment in public entities.

• 29:16Chamath Palihapitiya?

  Exactly. Other people's deals that they were bringing to the market where they said, "Chamath, do you want to be a part of it?" And, you know, and I did. And part of it was I was...

• 29:27Chamath Palihapitiya?

  Looking at these things and you know, Friedberg, doing my work, but in the end, it turned out I didn't do nearly as much as I probably should have because I ended up sitting on top of other people's work versus the original or underwriting that I would do if it was my own deal itself, right? Anyways, the net, net of it all, it's like, you know, that was very inefficient capital deployment. And as I look at it now, it's like, you know, I'm down, well, I'm technically up 19%, but that's really because of one deal. If I take that one deal out, which was a total outlier, I'm down 17% on about $200 million of investment.

• 29:59Jason Calacanis?

  When you were a fast follower, not the originator, it wasn't your idea. This is critically important. There are many different ways to make money, but you have to specialize and you have to have first principles and your knowledge.

• 30:09Chamath Palihapitiya?

  I trusted other people. I did the same thing that I, that I'm saying to other people not to do. Do not just copy other people. You have to do your own principal work. And even when you do your own principal work, it may not be enough. And you have to be willing to basically see the forest from the trees and walk away. And so all these pipes, I'm in the midst of sort of cleaning up and selling down. And they've been just a kind of a disaster for me.

• 30:30Jason Calacanis?

  You know, hold on, I want to build on this for a second because I think it's critically important. What you said as well, Friedberg, you have to be comfortable with the investments you're making. I look at these companies and I look at the underlying customer, the product, you know, and what kind of revenue it's going to generate. And people thought I was dunking on Rivian yesterday. And I said, listen, you know, when Tesla went public, people forget their valuation was 1.5 billion.

• 30:52Chamath Palihapitiya?

  1.7.

• 30:53Jason Calacanis?

  Okay, so 1.7 billion when they went public. Now, they already had thousands of roadsters and they had already had the.

• 31:01Chamath Palihapitiya?

  No, they had 93, 93 million of revenue in year one.

• 31:04Jason Calacanis?

  So this was dramatically different than what Rivian had. Rivian is being valued at, you know, whatever that is, 120 billion, I think, yesterday. Rivian has 17 billion in cash. Somebody asked me at the poker game last night, what I value Rivian at. I said, 17 plus 3, 17 million in cash plus 3 billion, double roughly what Tesla's was. The market's hotter right now, whatever. But I put them at 20 billion and people were giving me a hard time about it. I said, I think that's actually the realistic valuation for this company. And we are in a very dangerous moment in time right now where I think people are, whether it's meme stocks or crypto or NFTs, suspending disbelief, in some cases Sacks, because they're not all created equal. And certainly in private companies, we're seeing this, where people are giving people.

• 31:48Jason Calacanis?

  An amount of credit which makes no logical sense and is getting further and further disconnected in from reality. So as an investor, you have a choice. Either you have your fundamentals, which I'm not going to change my fundamentals. I'm going to focus on the fundamentals that got me where I am, and I'm not going to be involved in a hundred billion dollar market cap company that hasn't launched a product yet, let alone a hundred twenty billion dollar one. I'll stay focused on startups.

• 32:12David Friedberg?

  But what you're saying is also important because you're highlighting how you value that company. You individually said, I think that company's worth some multiple of how many cars have been sold in the past. Elon sold, you know, thousands of cars. He was worth 1.7 billion. These guys have sold. And other people are coming in and looking at this company and saying they've built facilities, they've built assembly lines, and they've got pre-orders and bookings for lots and lots of cars down in the future. And clearly, they've gone in and, you know, some people have gone in and seen these plants and seen these cars actually working. So, you know, it's really important to take note that your point of view is one point of view in a very diverse market with many points of view. And everyone's going to come into this market. And that's why unless you individually

• 32:53David Friedberg?

  as an investor, have a strong point of view and can show that you can apply your unique insights to consistently beat the market, making decisions, investment decisions like that, you're eventually going to lose because those other points of view will be a bigger view of the truth, and you'll lose money. And that's why, and that, by the way, that's why picking stocks is ultimately a loser's game unless you have some unique ability and insight. For most people historically, in an up market, everyone looks like a genius.

• 33:19Jason Calacanis?

  Right? You need to have an edge. And the public markets are hard to say that.

• 33:22David Friedberg?

  There's some unique competency. Yeah, there's some unique competency that you need to bring to the game.

• 33:27Jason Calacanis?

  I mean, if we double click on what you just said as the things that would be reasons to bet on Rivian, number one, they have 48,000 orders of pickup trucks against the F-150, which is now electric from Ford, and a million Tesla trucks.

• 33:40David Friedberg?

  I don't know why you're arguing this, right? Like, you're just making a point that we don't have someone on the panel right now, but someone else could come in and argue the other side.

• 33:47Chamath Palihapitiya?

  Okay, go ahead, Chuma. And I would just say, this is a part of the conversation, to be honest, Jason, to give you feedback I don't like, because Rivian, just in defense of Rivian for a second. What I have heard is that it's a it's a well engineered car or truck rather. They've done a very smart path to market, which is essentially to, you know, build these delivery trucks for Amazon that allowed them to even frankly, you know, be default alive.

• 34:15Jason Calacanis?

  Sure.

• 34:15Chamath Palihapitiya?

  Versus, you know, to use the Paul Graham term instead of default dead. I think the point that's more important here is that it doesn't affect you. So let Rivian do well, you know, and this is part of the

• 34:27Jason Calacanis?

  Oh, you shouldn't have an opinion publicly?

• 34:29Chamath Palihapitiya?

  No, no, no. I'm just saying this is the part of the cycle that I don't understand where people legitimately have these zero sum points of view about companies. And this is where I think Friedberg is more right than anybody else, which is there are the market is the sum of all these collective points of view.

• 34:51Jason Calacanis?

  Sure.

• 34:51Chamath Palihapitiya?

  And I think it's fine. I think it's fine to have one. I think it's a little superficial, your point of view, because it's not really

• 34:58Jason Calacanis?

  How so?

• 34:58Chamath Palihapitiya?

  You know, sitting on top of a model or anything else. And I think it's the same kind of superficiality that the Tesla Q guys had about Tesla for many years as well. It takes a long time. As somebody that does this every day, and I just want to point this out, it takes an enormous amount of time, an enormous amount of work to be 55% right.

• 35:17Jason Calacanis?

  I've invested in 350 companies. I meet with 2,000 companies a year.

• 35:20Chamath Palihapitiya?

  Jason, it's different in the public markets.

• 35:22Jason Calacanis?

  My companies are going public now. So I take exception to what you're saying. I know a fraud when I see it. I've seen them before.

• 35:26Chamath Palihapitiya?

  Oh, that's a really big statement. That's not a fraud.

• 35:29Jason Calacanis?

  No, but the distance between the valuation and reality is in the 50 to 100 billion.

• 35:35Chamath Palihapitiya?

  I know, but that's not in control of Rivian. That's not in their control. Okay, that's in a bunch of external market participants' control. So you can't pin that on them. My point is

• 35:45Jason Calacanis?

  What I would pin it on is the market right now seems dysfunctional and is not properly measuring things.

• 35:50Chamath Palihapitiya?

  I know, but throwing shade, that you then you should throw shade at Tiro, Fidelity, all these people that are bidding up your companies, by the way, because they are the ones that are taking Rivian to 120 billion. It's not Rivian's fault.

• 36:01Jason Calacanis?

  And Jason, what's really going on in the market?

• 36:03Chamath Palihapitiya?

  I think it was public speculators.

• 36:04Jason Calacanis?

  No, what's really going on is not, you can't sell $16 billion.

• 36:08David Friedberg?

  In an IPO to speculators.

• 36:11Jason Calacanis?

  Well, that was at a much lower price.

• 36:12David Friedberg?

  But these are institutionally, these are institutionally placed trade orders. But regardless, the market is clearly right now in productive assets, businesses. The market is looking at a time horizon that it has never looked at before, which is making bets that are 10, 15, 20 years in the future. And that's because of the condition that we're in right now from a monetary policy point of view. Interest rates are so low, there's nowhere to get yield in other assets. So you have to look further and further out to find value.

• 36:39Jason Calacanis?

  I accept that.

• 36:39David Friedberg?

  So the market, the market is betting, is making 10 year bets, which is like a VC type bet.

• 36:43Jason Calacanis?

  More than a 10 year bet.

• 36:44Chamath Palihapitiya?

  And Jason, sorry, can I just, can I just finish my last point? Cause before you interrupt me, my issue, Jason, is I think you are an exceptional angel investor. But just the same way you derided a bunch of late stage guys, remember last night at poker? When we were talking about late stage folks entering into the angel market and the series A, you were extremely dismissive because you know what the job is to be done to do that job well. And they have a different skillset. Similarly, what I would just offer for you to think about is the people that really underwrite public market stocks well, do things and have a skillset that is extremely specific. And it is well trained as well. And I think that.

• 37:24Jason Calacanis?

  Okay, no, I accept that.

• 37:25David Sacks?

  I'm gonna, I'll defend me, I'll me jump into Jake's defense.

• 37:28Jason Calacanis?

  Since you want to defend me, that's the people are in shock right now. So you're speaking, way to get yourself back in the game.

• 37:33David Friedberg?

  This guy is purple, this guy is purple, the moon is, the moon is set.

• 37:37David Sacks?

  Hell is freezing over right now.

• 37:40David Friedberg?

  Hell is freezing over.

• 37:42David Sacks?

  So here's where I think Jake, I don't know anything about this Rivian company, but where I think Jake is right is we've seen over and over again that when a company gets, when a startup gets a billion dollar plus valuation without a product, invariably it ends up somewhere between a disappointment and outright fraud.

• 38:00Chamath Palihapitiya?

  Jason's law.

• 38:00David Sacks?

  Whether, you know, it was Theranos or Magic Leap or Quibi or whatever. I'm not saying they're all frauds. I mean, I think just Theranos was.

• 38:10Jason Calacanis?

  Trainwreck frauds.

• 38:11David Sacks?

  Trainwreck frauds, whatever. So I think it's reasonable for any, let's say seed or early venture investor to develop the. heuristic that I'm not going to invest in anything with a billion dollar with basically unicorn valuation without seeing the product first because we've learned we've got our hands burnt so many times from these overhyped companies and I well here's where I agree if I can't see and use the product I'm not investing I'll invest in a seed stage but I will not invest at a unicorn stage no way.

• 38:39Chamath Palihapitiya?

  I agree with that but what I'm saying is when a company is going public like that there is demonstrable proof of concept there okay the only market in which that's not true is in biotechnology.

• 38:49Jason Calacanis?

  Well, I would say for Fisker and Nicola, two related companies, those ones seem very, very shaky.

• 38:54Chamath Palihapitiya?

  You can debate about the scalability of these things and you can debate that people didn't do the diligence but they had to at least put a proof of concept out there for you to judge. If people don't do the work, I agree with you like if you're rolling a truck down a hill, sure.

• 39:07Jason Calacanis?

  Outright fraud.

• 39:08Chamath Palihapitiya?

  No, but my point is if you were there and you did your work, you would have seen what you needed to see. What I have heard from people who were investors in both Lucid and Rivian is that they have sat in the cars, they've driven the cars, they've spent time with them, they've seen the factories and it's very much real. Now what they're debating is ramp and velocity and scale. I don't know, I don't have a position in either.

• 39:29Jason Calacanis?

  Neither do I.

• 39:30Chamath Palihapitiya?

  I have the bigger macro point of view, which is important to me, which is it's it just because these things are in the public markets, I think people think it's easy to judge and I think actually modeling them and making good decisions is just as hard as it is for private companies.

• 39:44Jason Calacanis?

  Okay, we need to roll this clip because there is somebody who is giving exceptional advice on CNBC. Let's roll the clip.

• 39:51Speaker 04

  Yeah, so well, Upstarts up about 25% just in four days since we since we bought it. We bought it on about four days ago. So that's actually made a nice little move in the short term, probably a little extended right now, but longer term, that's a that's a good looking name, very powerful, very strong earnings. These stocks are actually doing well.

• 40:11Speaker 05

  What do they do?

• 40:14Speaker 05

  Uh, excuse me, what does Upstart do? Uh, well, I'm, I'm, I'm, I'm sorry. What kind of company is it? Yeah, I'm not, you're, you're breaking up. Oh. Well, I guess we've got an audio problem here, Mark. I'm sorry.

• 40:29David Friedberg?

  Fucking God.

• 40:30Chamath Palihapitiya?

  Brutal.

• 40:31David Friedberg?

  Who is this guy? Who is he?

• 40:33Chamath Palihapitiya?

  I have no idea.

• 40:34David Friedberg?

  Jake, hell, is that, is that, is that like your uncle or something? Who is that guy?

• 40:36Jason Calacanis?

  I, listen.

• 40:37David Friedberg?

  Yeah.

• 40:38Jason Calacanis?

  I, I, I mean, just to the point. You're on CNBC? Well, you know, the guy's been on many times.

• 40:44Chamath Palihapitiya?

  But doesn't this prove what we were saying, which is that you've got to do your own principal work here?

• 40:49Jason Calacanis?

  That, that is why we wanted to play.

• 40:50David Friedberg?

  Here's a talking head who's probably getting paid for selling some books and giving advice who knows nothing about what he's telling you.

• 40:56Jason Calacanis?

  You can join his membership club for 1,000 a month.

• 40:59David Friedberg?

  Yeah, I'm sure he's publishing lots of papers that show that he's a highly successful, profitable investor and look how smart he is. He doesn't even know the company he just promoted on CNBC. It's incredible.

• 41:09Jason Calacanis?

  On a, um, mechanical basis here, Chamath, you and I have been on CNBC many times. In that moment, uh, what, what is going on? What do you think is going on in the host's mind? And the, the producer who has to dump this call? Cause they're watching this.

• 41:26David Friedberg?

  Let's move on.

• 41:27Jason Calacanis?

  I just, the breakdown where he says, I'm sorry.

• 41:30Chamath Palihapitiya?

  I, I, I have no idea.

• 41:31Jason Calacanis?

  Uh, what do they do?

• 41:32David Friedberg?

  I think the point's been made. I think the point's been made.

• 41:34Jason Calacanis?

  Oh, my Lord.

• 41:35Chamath Palihapitiya?

  Everybody should do their own work.

• 41:36David Friedberg?

  Yeah.

• 41:37Jason Calacanis?

  Do your work. Zach, you look like you want to say something.

• 41:42David Sacks?

  I mean, it just shows the agenda. Yeah, look, I mean, there is a massive agenda in corporate journalism. There's an agenda by the people on these shows to promote positions. There's an agenda by the reporters themselves, uh, and on and on and on it goes. So to Chamath's point, if you just take them at face value, you're, and you don't do your own work, then you're buying into someone else's agenda.

• 42:04Jason Calacanis?

  Trust yourself. Okay. Uh, one thing that we are trying to all understand, uh, is inflation. The CPI, uh, has gone up 6.2% in October, highest jump in 31 years since 1990, according to the Wall Street Journal, fifth largest straight month, fifth straight month of inflation above 5%.

• 42:27Jason Calacanis?

  You know, somebody tweeted out, we'll pull it up here, Denver Bitcoin put out a year-over-year commodity chart, we can throw up on the screen. And then I think Friedberg, you shared in the chat, the average weekly retail prices around fertilizer. What are our thoughts on the nature of inflation and how that affects our investment?

• 42:53Chamath Palihapitiya?

  I think it's persistent. And the reason I think it's persistent is that there's a, the, all of these things are intertwined. And so, you know, if you want to just bear with me for a second, like when, when this, let's just go to the, the, the entry level economic job, right? So you're a barista at Starbucks, or you work at McDonald's, and you're making seventeen to twenty dollars an hour. What that does is it shifts labor. And eventually, there are other people that are entering the workforce, or, you know, may shift jobs. And essentially, it just causes this leaky bucket effect where everybody else has to then accommodate itself. So, you know, you have a guy like, you know, you have a company like Amazon, which is now going to pay twenty-five or thirty dollars to keep folks, right? Because otherwise, they may say, oh, you

• 43:37Chamath Palihapitiya?

  know, if I make fifteen or sixteen dollars an hour, I'd rather work at McDonald's, it's simpler.

• 43:40Jason Calacanis?

  And free college.

• 43:41Chamath Palihapitiya?

  It's not backbreaking work, blah, blah, blah. So then they start to increase the amount that they pay, they increase their benefits and the like. Didn't, I saw this thing this week, there's a crazy thing that's happening, though, which is it's now pulling people from non-traditional job classes into those jobs. There are teachers that are leaving teaching to go work at an Amazon warehouse. There are firefighters that are quitting being a firefighter to go work at an Amazon warehouse, because you make the same or more, plus you have all of these other benefits, and the job is structurally a lot easier. And so people are making different optimizations. And to that point, I think we talked about this, and Nick, you can put it in the group chat.

• 44:25Chamath Palihapitiya?

  In Reddit, as an example, there is more engagement in the subreddit around having a simple work life than there is now in Wall Street Bets, right? So there's been a structural, cultural change where people need to get paid more to do the same amount of work. And then, at the same time, you have all of the, all of the supply side getting more expensive. Fertilizer makes corn more expensive, lumber makes house prices more expensive, chip prices makes the iPhone and cars more expensive, or completely backlog. You know, yesterday, a poker sunny was showing us he bought a Tesla and the delivery period is October of 2022.

• 45:05Jason Calacanis?

  Yeah.

• 45:06Chamath Palihapitiya?

  It's freaking crazy. So I, I think that it's a, it's, this is the beginning of a persistence.

• 45:11Jason Calacanis?

  I think those are all like really valid points. The thing I'm seeing now is I think we've moved into what I'll call a contagion phase of inflation, which is people are hearing about inflation, they're seeing it in some places, my gas went up a little bit, my milk went up a little bit, whatever. And they're saying, well, I guess if everybody's raising prices, I need to raise the prices as well of whatever I provide in the world. So I can just keep up with everybody else. And they're not looking at their inputs necessarily and saying, I need to charge more, or that's the best business decision. They're just saying, everything's going up around me. And so they raise prices. I've literally have this happen three or four times. And I went to buy a car and they wanted 15K over sticker and I didn't buy it based on principle, but I'm sitting here going like, maybe I'm an idiot, maybe I should just pay the 15K over sticker.

• 45:55Jason Calacanis?

  What are your thoughts, Sacks, on inflation and the contagion?

• 45:58David Sacks?

  My thoughts are, I told you guys like six months ago about this.

• 46:01Jason Calacanis?

  Yeah.

• 46:02David Sacks?

  Can we just replay what I said on episode 32?

• 46:05Jason Calacanis?

  It's got his researchers in the background giving.

• 46:08Chamath Palihapitiya?

  Written down what you said on per episode basis?

• 46:10Jason Calacanis?

  Absolutely, no, this guy's in the fucking debate club, Stanford debate club over here.

• 46:14David Sacks?

  Some of us, when we make predictions, take them seriously. So, you know.

• 46:17Jason Calacanis?

  Was that a dig at Professor Ice Cold Takes?

• 46:20David Friedberg?

  I'll give you guys a link to a prediction that was made.

• 46:22David Sacks?

  Here's, I mean, I just want to replay the 20 seconds I said about this back in May.

• 46:26Jason Calacanis?

  Here we go, the two Davids dueling again, just like in the group chat. All right, here's Friedberg, January 1st, 2021. If you don't think inflation is already here, you missed what happened to the stock market. Companies aren't performing better. We're just inflating everything, financial assets first, everything else will follow.

• 46:41David Sacks?

  That was a good one.

• 46:42David Friedberg?

  Sacks, just make your point, just make your point.

• 46:44David Sacks?

  Just add the clip. I'm beginning to wonder if Biden's going to be a Jimmy Carter here because frankly, all he had to do was leave things well enough alone. Covid was winding down, we had a vaccine, all they had to do was distribute it to as many people as possible, end Covid, let the recovery take shape, and instead, they pushed this insane $10 trillion agenda. He's going to backfire massively. Look, if the economy turns, we were set for a post-Covid boom, and right now, that is all at risk because, like you're saying, they're keeping the economy closed, or parts of it, way too long. They then overcompensate for that by printing a ton of money, and then they overcompensate for that by raising taxes too much.

• 47:26Chamath Palihapitiya?

  Just to build on that, so that second step of their overcompensating their inability to open with money is so true, because then what happens is your labor force stays impaired because people make enough money by not working.

• 47:41David Sacks?

  It was true when I said in May, it's even more true now.

• 47:44David Friedberg?

  He said it was, there was inflation. Okay, so there's inflation. Okay, so now, great, good job.

• 47:49David Sacks?

  Somebody made a prediction, it was proven true.

• 47:51David Friedberg?

  Yeah, I made one in January that said the same thing. Now, look, you can do three things to, you can do three things to curb inflation. Raise rates, right? When you raise interest rates, you slow spending, prices come down, inflation slows, but the issue, when you raise rates, is obviously you see things like job loss and economic growth declines, and it can very quickly spiral the other way. This is the big challenge of Fed tapering.

• 48:16David Friedberg?

  The other option, as we've seen a significant attempt at lately, is to raise revenue, right? So, increase tax rates, tax a broader swath of people at a higher rate, or a broader swath of business at a higher rate. So, it's very likely that, you know, tax revenue could kind of present itself again as a driver if inflation continues to spiral up. And the third, which is the least likely, is cut spending, right? The federal government, spending the way it does right now, makes a very inefficient way of kind of putting capital into the system and inflating. We've seen historically that anything the federal government spends money on, like healthcare and education, the costs very quickly spiral out of control. Super inefficient, why not just give that money to the free market to make decisions on how to spend it? It would be more efficient, etc. And the market would effectively find balance

• 49:00David Friedberg?

  where buyers and sellers are equivalent, as opposed to having the federal government driving the price of everything up. The fourth option that people don't talk about, which I think may end up becoming an important option, not kind of oblique option, but more kind of backdrop, is to start a war. And, you know, when you start a war... Wag the dog. Yeah, when you start a war, you stimulate the economy without needing to pump additional capital in. So you can increase growth and avoid the risk of stagflation. And you can source resources that otherwise wouldn't be kind of flowing in the trade or basically in a land grab type situation. But it doesn't necessarily mean that policymakers would say, hey, let's go start a war to decrease inflation. Taiwan.

• 49:45David Friedberg?

  But the premise that conflict can improve the economy is a important backdrop that starts to play into policy decisions that might get made over the next couple of months and quarters. And that's really important, whether or not the posturing is one of partnership and reducing the tension with foreign nations or one of increasing the tension. It's more likely that we would want to increase the tension when we're in an inflationary environment. That's quite a conspiracy there. So what do you think, Sacks?

• 50:15David Sacks?

  Okay, we got to go back to first principles on this thing. We're not going to start a war to tame inflation. Okay, but let me just explain what inflation is because I'm not sure people like fully understand like how this works. Inflation is very simple. It's too much money chasing too few goods. Okay, and we have both sides of the equation going on right now. On the supply side, on the goods side, we've got shortages. We've got the ports backed up. We've got paying people not to work. We still have the 2 trillion of COVID relief passed earlier this year, which was responding to a problem that was largely winding down. So we have these labor shortages. We have people dropping out of the workforce in record numbers. And the number that just came out showed more people quitting their jobs than ever before.

• 50:58David Sacks?

  So we have a shortage in terms of the production of goods and services that people want. At the same time, we have this monetary and fiscal expansion coming out of Washington. You've got, and again, they did the 1.9 trillion of COVID relief. They did 1.2 trillion of infrastructure. Biden's still talking about another 2 trillion of social welfare. You have the Fed still printing money with QE. So you've got this massive expansion in the amount of money. So, look, too much money chasing too few goods creates this problem. And it was very predictable. And so what I said back in May, this is what I was warning about. And it goes back to the Druckenmiller clip that we that we were talking about all the way back in May.

• 51:39David Sacks?

  He said the same thing, that we had a reckless fiscal and monetary expansionary policy coming out of Washington. At a time we didn't need it, because if you looked at like retail spending back in May, it was back to above trend. So, you know, in other words, like, there was no demand problem. The economy was back and they've just been pumping and pumping out of Washington.

• 51:59Jason Calacanis?

  We made a, we had, we had good intent. We wanted to make people not suffer. We wanted to get the economy on top. We may have just made a bigger bet than we needed to.

• 52:07David Sacks?

  We overdid it.

• 52:08Jason Calacanis?

  We overdid it clearly.

• 52:09David Sacks?

  A little bit, but look, who wants to be the politician, quite frankly?

• 52:12Jason Calacanis?

  Yeah, it's not going to get you.

• 52:13David Sacks?

  Who ends the, who ends the eviction moratorium, right?

• 52:16Jason Calacanis?

  The gravy train, yeah.

• 52:17David Sacks?

  Nobody, well, nobody wants to be the politician who says, okay, now you suddenly have to pay your rent. But obviously people have to pay their rent.

• 52:24Jason Calacanis?

  And we're taking away your bonus unemployment. I mean, people have to go back to work at some point when there's 10 million jobs open. Just as a, uh, I've been watching the Taiwan situation like a hawk. And I don't know if you saw this this week to go off on another tangent, but the US is testing Israelis' iron dome in Guam as a defense against Chinese cruise missiles. Obviously, um, for possible deployment in Taiwan. And I don't know if you're watching, and it's can't turn the NBA, uh, but he has been going on CNN and stuff like that now, talking about China. Pretty amazing.

• 53:01David Friedberg?

  I predict, I predict escalating global conflict. That'll be my prediction to mark the Q4.

• 53:07David Sacks?

  Well, I think that's, I think actually that's a pretty valid prediction, but I just think it's a little bit separate than inflation.

• 53:14David Friedberg?

  Like I said, it's not an explicit decision, but I do think that in the backdrop of an inflationary environment where you have something that can temper the condition at home, that at the same time, you know, might sell politically.

• 53:25David Sacks?

  But we don't need, but it's not going to solve anything politically. Okay. I mean, World War II, you know, famously got us out of the Great Depression because that did stimulate demand. But in the situation we're in today, we have too much demand. We have, retail is trending way above curve. What we have is a supply shortage and devoting resources, taking them away from the productive economy to go to war would only exacerbate the problem and make it even worse. What we need right now actually is for Washington to back off, to stop pumping demand with this, with, you know, now they're still talking about this two trillion dollar.

• 53:57Jason Calacanis?

  Slow the money printing machine.

• 53:58David Sacks?

  Slow the money printing. That's what we need. We need them to go away and to, to stop these disincentives for production and work. So you have, I mean, Manchin was exactly right about this. Okay. Do you remember when Manchin, when he was resisting this $2 trillion social welfare bill? I mean, the things he said are already coming true. I mean, he said this months ago. He said that we should take a strategic pause because he said, this is a quote, "By all accounts, the threat posed by record inflation to the American people is not transitory and is instead getting worse. From the grocery store to the gas pump, Americans know that the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day." That's what he was saying this past summer, several months ago, and they rolled right over him.

• 54:43Jason Calacanis?

  The psychology of this could be, could be self fulfilling as well because what's going to happen is you're going to have everybody raise prices because it's now become an escalation. You know, your hairdresser, your, you know, whatever, you know, services you're using, whatever product you're buying, whatever restaurant you're going to is going to put $2 on every appetizer and $5 on every entree. Everything is just going to keep going up. And then what happens is people who in the middle class or, you know, who are consumers of products in a large way will say, you know what, I'm going to put off buying a car. Then we're going to be driving all this supply up and then people are going to say, you know what? Fuck it. I'll just drive this one for two more years. And that's going to cause stagnation and this big whiff of.

• 55:22David Sacks?

  It's called inflation. It's what we had in the 1970s. And you're right. It's called an inflationary spiral, which is the future expectations of increasing prices means that people start increasing them now and that feeds on itself.

• 55:33Jason Calacanis?

  Yes.

• 55:34David Sacks?

  And that's what we had in the late 1970s. And the thing that broke that was Paul Volcker jacking up interest rates. It was very painful, caused a very severe recession in the early 1980s. But then the economy came roaring out of that by 83. It got Reagan elected in 84 and you had 30 straight years of declining interest rates. And that led to a stock market boom. So the problem we have now, okay, here's the problem we have is there's going to be no Paul Volcker. Why? We can't afford to jack up rates because the federal government's debt is so much bigger than it.

• 56:04Jason Calacanis?

  And we are not on a fixed rate. We're on a variable rate. All of the debt we take.

• 56:08David Sacks?

  The average maturity of government debt right now is five years. Okay, so that, I mean, that means the whole debt rolls over within five years. So if they jack up interest rates, we have almost 30 trillion of US federal debt right now. So every 1% that they increase interest rates, that means another 300 billion a year.

• 56:26Jason Calacanis?

  That can't be spent on programs.

• 56:28David Sacks?

  Exactly.

• 56:29Jason Calacanis?

  That means you can't spend it on programs.

• 56:30David Sacks?

  Exactly, so there's going to be enormous pressure on the Fed not to raise rates. You already are hearing Biden rattling the saber, saying that Powell may not be his choice for a second term. By the way, Powell is very dovish. He's basically saying we can't raise rates right now because of this and that. So, and, and the Biden administration, nobody in Washington ever wants rates to go up, right? They want to keep these low rates forever. This is the problem is, look, at the end of the day, I don't know what the inflation picture is going to look like next year. But what concerns me is we don't have effective tools to fight it anymore. Because we've given up our ability to raise rates because it would, it would increase the cost of the debt so much.

• 57:09David Sacks?

  And I mean, so with just one article, just to share with you guys, is this, again, my, one of my favorite sources of economic information is the, the Fred blog, which is from the.

• 57:17Jason Calacanis?

  Fred blog's right.

• 57:18David Sacks?

  From the St. Louis Fed, okay?

• 57:19Jason Calacanis?

  Super great.

• 57:20David Sacks?

  They wrote a blog talking about two tails of federal debt, okay? And, and the article is about, here's why there's so much disagreement on whether the federal government debt is too high. So the first chart shows debt to GDP. This was always the way of looking at government debt was simply looking at the ratio of debt to GDP. It's now something like 125% in peacetime. I don't think we've had a higher peacetime ratio. That would tell you things were out of control. But for the last decade, while this has been going. On you had this whole school thought, the MMT, Modern Monetary Theory, all these economists and experts and politicians in the media were eager to buy in because they want to spend the money. Okay. And what they said is, no, it's not debt to GDP. You should look at debt service to GDP.

• 58:00David Sacks?

  This is the second chart on that blog. And so debt service to GDP was was staying constant or even going down as the debt to GDP was going up. Why? Because interest rates were so low. The problem is, what was so foolish about this point of view is it is assumed that interest rates were going to last forever. Well, if that was your point of view, why didn't you do what Trump actually suggested several years ago when he suggested having a hundred year T bills? They should have locked in much, much longer duration maturities on the federal debt. And instead, and Yellen rejected this. Okay. And so you've got a five year average duration, which means that if interest rates go back up, the debt service cost is going to explode.

• 58:41Jason Calacanis?

  Yeah.

• 58:42Chamath Palihapitiya?

  In 1980, we changed the goalposts for CPI. So even as a measurement to know what we look at. And I think Jack Dorsey tweeted this out. So Nick, you may be able to find this tweet, but you know, we changed the measurement of how CPI measures. And so if you go back to the original measurement, it looks like inflation and CPI is much more pernicious than we would otherwise think it if we just look at the the new CPI that we that we started to look at as of 1980. So that's another sort of like point.

• 59:12Jason Calacanis?

  We did this. We did the same thing with

• 59:13Chamath Palihapitiya?

  I just go back to what I said early on.

• 59:16Jason Calacanis?

  Had given up.

• 59:16Chamath Palihapitiya?

  The two smartest people that we both know are net sellers.

• 59:22Jason Calacanis?

  Well, they're selling some. Yeah. I mean,

• 59:25Chamath Palihapitiya?

  I'm just saying the two smartest people we know.

• 59:27Jason Calacanis?

  I mean, we don't want to give financial advice here, but should everybody be moving to cash? No. Where do you put your money?

• 59:33Chamath Palihapitiya?

  I'm just saying, I'm totally confused.

• 59:35Jason Calacanis?

  This is, I think, the admission.

• 59:37David Friedberg?

  Just buy productive assets, great businesses that have durability and let them ride for 20 years.

• 59:44Jason Calacanis?

  I like your answer. The fact is, we're all confounded as to what to do at this moment in time. We're all trying to figure this out and we do this for a living.

• 59:51David Friedberg?

  But then you're trading the market like everyone else all the time. Like, you know, why trade the market when you can just buy great businesses, own stakes in them? And let it rest.

• 59:59Jason Calacanis?

  No, I'm just talking holistically where to put money.

• 1:00:01Chamath Palihapitiya?

  I mean, my practical issue is that I don't have infinite money. And so in order to put my money into productive assets, I have to sell other productive assets.

• 1:00:09David Friedberg?

  Well, if you've got other productive assets, leave them in. Why sell?

• 1:00:12Chamath Palihapitiya?

  Well, then it's like, then I'm basically, you know, doubling down on a worldview that may be old and dated, right? So if I'm long a bunch of software companies and I really want to do something in climate science or biotech, what am I supposed to do?

• 1:00:24David Friedberg?

  Don't try and time the market, shift your assets, right? Why do you care?

• 1:00:27Chamath Palihapitiya?

  No, no, I'm not trying to time, I'm not trying, trying to time the market. I'm just saying, if, if my worldview shifts to really want to double down on climate science or alternative finance or biotech, I have to raise capital to do that.

• 1:00:38David Friedberg?

  You have to raise capital, is what you're saying.

• 1:00:41Chamath Palihapitiya?

  Right, but, but for me, I'm not raising it from other people. I'm raising it for myself. So I have to sell things I already own.

• 1:00:45Jason Calacanis?

  To me, the best place to be right now is

• 1:00:50Jason Calacanis?

  in the company formation space, because when you create a company, um, like Friedberg does every three months, there is so much value being created at that moment in time and so much further capital getting poured into it, that if you are the originator of the company and you get some big slice of the cap table for doing that, which is completely valid, you originated the company, whether it's Munich or Callon or whatever it is, man, that is a great moment of creation, of wealth creation. And when you're the person putting the money in at the billion dollar valuation before the company, whatever, Callin, I'm sorry, Clubhouse, went from a hundred million to four billion with no revenue. I don't know what's happening in the world, but

• 1:01:31Jason Calacanis?

  pretty crazy. Do you want to go on to, um, Xi Jinping and his, he's going to be speaking with Biden on Monday?

• 1:01:37Chamath Palihapitiya?

  It's done. He, he got it done before his, his video, his Zoom with Biden.

• 1:01:42Jason Calacanis?

  Oh, yeah. So they're doing that.

• 1:01:43Chamath Palihapitiya?

  He's now the supreme leader.

• 1:01:45Jason Calacanis?

  Xi Jinping hasn't left China in eighteen months. Explain what this means, uh, Chima from the story.

• 1:01:50Chamath Palihapitiya?

  Um, I mean, I think the basic, the basic takeaway is that they've been working inside the body politic inside of China to basically reflect Xi on the same level as Mao and, um, and effectively what this means is that it allows him To remain the leader of China indefinitely. And so there is no transition of power. Typically, what had happened was these, there were these 10 year windows and you know, you, you, you go, uh, Jiang Zemin, Hu Jintao, you know, 10 year cycles and then they pass the baton. But it now looks like we'll be living with Xi Jinping until, um, until, you know, he, he joins the afterworld. So, uh, he's a ruler for life of China, basically. Crazy.

• 1:02:34David Sacks?

  I think that's exactly right.

• 1:02:36Chamath Palihapitiya?

  What an incredible feat of political maneuvering without judging it, just to say, how, what a complicated Byzantine political infrastructure he must have had to navigate. I don't know how he played this three dimensional chess with all these people, the slow systematic dismantling of the old guard, placing all of his people in, then slowly moving towards this, this kind of recognition for him.

• 1:02:59David Sacks?

  You sound a little bit admiring Chamath.

• 1:03:01Jason Calacanis?

  Yeah, no, the dictator got his name for a reason. Somewhere Donald Trump and Steve Bannon are like, what did we do wrong? We were so close. January 6th, we almost, if Pence would have just played ball, sacks, you'd still be in power, huh? Your guys dropped the ball. And we wouldn't have inflationary. Just think, if Trump was leader for life.

• 1:03:21David Sacks?

  You know, Jason, given how accurate my predictions have been, you should have a little bit more respect for my, uh, political positions.

• 1:03:28Chamath Palihapitiya?

  What do you guys think happens now that Xi basically is ruler for life? You know, he, I think the Chinese term for it is historic figure, which is their parolons of saying, you know, you're, you're basically, uh,

• 1:03:41Jason Calacanis?

  You're a made man, basically. You can't get whacked. Nobody can touch you. You're good for life. The end. Nobody can question you.

• 1:03:48Chamath Palihapitiya?

  I mean, can you imagine Mao Zedong, you know, Deng Xiaoping and now Xi Jinping? Incredible. Like he is at that level.

• 1:03:57Jason Calacanis?

  Well, it means if you start a war and a serious military conflict that nobody can question you, right? You're the supreme leader. So it's sort of like Putin and MBS. Like MBS can go kill a journalist and he's got nobody to answer to. It means he has nobody to answer to.

• 1:04:13Chamath Palihapitiya?

  Mao Zedong initiated the revolution and, you know, Deng Xiaoping was really the architect of free markets that has made China the economic powerhouse that it is today. Their internal reflection of Xi Jinping is on the same scale of that. Now, I mean, I can't claim to know enough Chinese.

• 1:04:29Jason Calacanis?

  But what is his vision for the future of China?

• 1:04:31David Sacks?

  Yeah. What is the accomplishment that's going to really put him in that league? And you'd have to say it's the annexation of Taiwan. I mean, that's the thing that he must be looking to do before, you know, his time runs out.

• 1:04:43Chamath Palihapitiya?

  To reunify China.

• 1:04:44David Sacks?

  That's the thing that could put him in that league. And so that is the tripwire that, to Friedberg's point, that could lead to, you know, a conflict.

• 1:04:54Chamath Palihapitiya?

  I think they, you know, I hate to say that Friedberg is wrong because I don't think in this case I can. I do think that there is some left tail risk for like a crazy wag the dog moment in Taiwan. It would be really scary. Really scary.

• 1:05:10Jason Calacanis?

  Right now, if I was looking at the sizes of the navies, people don't know this, Japan actually has a very large defensive navy. The UK and the United States obviously have very large ones. China's is large, but not on a tonnage basis. They have a lot of ships. But together, I don't know if you saw the military exercises going on, but New Zealand, Australia, the United States, UK and Japan were basically, I think South Korea were basically driving their ships around the South China Sea. This is going to be, I think.

• 1:05:41David Sacks?

  Yeah. So, you know, I did, I did a really interesting interview with the historian and commentator Neil Ferguson.

• 1:05:46Chamath Palihapitiya?

  Yeah.

• 1:05:47David Sacks?

  Who is also a pretty avid China watcher. And I did an interview with him actually on my app. You don't want me to say the name.

• 1:05:56Chamath Palihapitiya?

  The app shall not be named.

• 1:05:57David Sacks?

  Yeah. But anyway, so he had a really great line, which is, he said that the issue of Taiwan, it's basically like the issue of

• 1:06:09David Sacks?

  Cuba and Berlin and the Persian Gulf all rolled into one. So it's like Cuba and the Cuban Missile Crisis because it's right there off the shore of China. It's like Berlin, you know, because that was basically the dividing line between freedom and, you know, totalitarianism, you know, where the Berlin Wall got built. And it's like the Persian Gulf because the new oil are the semiconductors, the chips that are fabbed in Taiwan at TSMC. And so all the resources that we're dependent on for the new economy are all right there. So

• 1:06:43Chamath Palihapitiya?

  Super smart framing.

• 1:06:44David Sacks?

  Yeah, it's, I thought it was a clever line.

• 1:06:46Chamath Palihapitiya?

  The thing we have to remember about Xi is that his father was, was a commander for Mao and was in a vice premier. And so, you know, his historical, he is the original princeling, right? Remember, you know, there's this context of these Chinese princelings. But he is, he is one of these originalists. And so his motivation will be, it seems at least, to bring China back into that spectrum of power, which is really about a consolidated country and a single nation state. And that has to include Taiwan. It can't, it can't not. So to your point, David, it's almost more motivation for him to go off on some crazy adventure and try to reclaim it.

• 1:07:27Jason Calacanis?

  Crazy time, Chris. It's really interesting to look at the tonnage of ships and the number of ships. The United States has over 6,000 tons of ships, 949, according to globalsecurity.org. China has only 2,000 tons and 1,000 ships. They have a lot of smaller ships. And then Russia, UK, India, Japan, France, Indonesia, Turkey, Germany, Italy.

• 1:07:46Chamath Palihapitiya?

  These are warships, Jason, or?

• 1:07:47Jason Calacanis?

  Yeah, this is their, their navy warships. And so they're fighting. But Japan has a very large one. I wasn't aware of this because I thought they were not doing military buildup, but they have what's called a defensive navy, which can do offensive stuff. So this is, I think this is really problematic.

• 1:08:04Chamath Palihapitiya?

  How many of these ships are smaller than Sacks's yacht that he rented this year?

• 1:08:08Jason Calacanis?

  Yeah, Saks's tonnage would kind of put the United States over the top, I think, in this

• 1:08:12Chamath Palihapitiya?

  The gross tonnage of Saks's yacht.

• 1:08:13Jason Calacanis?

  Bezos is going to be donating his new yacht to the.

• 1:08:16Chamath Palihapitiya?

  No, for sure it's bigger than Indonesia. I see Indonesia on this list. Turkey. I mean, how big could their yacht be?

• 1:08:21David Sacks?

  In my defense, it was a starter yacht.

• 1:08:23Jason Calacanis?

  In my indefensible.

• 1:08:27David Sacks?

  Next one, next one will be bigger.

• 1:08:29Jason Calacanis?

  Yeah, Solana is going to make sure of that, right? Yeah, you can buy yachts with Solana. All right. I think we covered enough. GE and Toshiba can't run their businesses, so they're each separating into three separate companies.

• 1:08:39Chamath Palihapitiya?

  Let's talk about that.

• 1:08:39David Sacks?

  That's interesting, actually.

• 1:08:41Chamath Palihapitiya?

  And Johnson and Johnson.

• 1:08:42Jason Calacanis?

  Yeah, we should talk about it today. All right. So on Tuesday, GE announced they were splitting into three separate companies, aviation, healthcare and energy. Toshiba reported a similar plan.

• 1:08:51Chamath Palihapitiya?

  Johnson and Johnson today?

• 1:08:52Jason Calacanis?

  Johnson and Johnson was today. This is in direct conflict with the consolidation and the creation of conglomerates and.

• 1:09:01David Friedberg?

  But not conglomerates. I think this is an important point, Jake Al. You know, in the 80s and 90s, it was cool to create conglomerates, meaning you would kind of stick businesses together that were.

• 1:09:10Jason Calacanis?

  RJR, yeah.

• 1:09:11David Friedberg?

  Somewhat disparate because you could financially engineer a way to do it that would juice shareholder returns, right? You could borrow money, add lots of scale, the cost of debt goes down, you could increase your debt load, et cetera. And, you know, the challenge is like when you're scaling a business, you either need to grow your revenue organically or you need to acquire. And when you're acquiring, you're either acquiring horizontally or you're acquiring vertically, meaning you're kind of integrating your supply chain or you're integrating or you're adding ancillary businesses that you can cross-sell. So you're either reducing your costs or increasing your cross-selling ability. So there's some inherent synergy in the acquisition. The problem with conglomerates is there is very little synergy, meaning like when you acquire a new business, like

• 1:09:53David Friedberg?

  an aviation business, it doesn't create synergy for your healthcare business. And, you know, there was always a rationalization that these managers of these big conglomerates had, which was like, oh, well, we could do this and we could do that. At the end of the day, it was financial engineering where they simply kind of used debt to reduce, you know, the cost of capital and increase the shareholder returns. And now everyone's kind of waking up to the fact that you're actually decreasing value. Because an investor that wants to own an aviation company doesn't also want to own a healthcare company. So the investor doesn't buy those shares. And the investor that wants to own the healthcare company doesn't want to own the aviation company, so they don't buy those shares. So the way to increase shareholder value is to actually split those businesses up. And then the investors that want to own the aviation business will pay more, and the investors that want to own the healthcare business will pay more.

• 1:10:36David Friedberg?

  And the overall value of those two businesses goes up by having them be separate. And that's what the market's kind of waking up to, and this is kind of a trend that's been going on for years now. You know, going back to kind of 2013, 14. Where the market started to kind of rationalize some of these silly conglomerate business ideas. And break them apart into more kind of, you know, targeted businesses that can actually spin out or, or, or, yeah, or break off.

• 1:11:00Jason Calacanis?

  Breakups, yeah.

• 1:11:01David Friedberg?

  That can basically attract shareholders to bid on each one of those businesses individually and drive value up. You know, we saw one business I was close to that I saw this with was Dow DuPont. Where they, you know, Dow merged with DuPont. And then they split into several businesses that each were focused on a particular vertical. And it made a lot of sense to drive value for, for, for the, for the overall shareholders. So at the end of the day, you know, these conglomerates are about kind of driving economic outcomes. And the only folks that you see doing this well are folks like Warren Buffett. Where the job is really about capital allocation. Where, you know, you can allocate capital to the best business. And that business on its own will grow organically. Versus taking a bunch of crappy, low-growth, no-growth businesses, levering them up to kind of juice the returns on each other.

• 1:11:45David Friedberg?

  And we're seeing this slow unwinding happening. So I think it'll, it'll continue to. And you could probably go and pick a bunch of these conglomerates and you'll see the activist shareholders doing this. They'll, they'll, they'll buy a bunch of shares, they'll instigate and say, hey, you guys should break up. The share price will go up by 20, 30%. So if you want a stock tip of the day, you know, go find the next set of conglomerates that are going to get attacked and broken up.

• 1:12:04Jason Calacanis?

  It's interesting, Chamath, and, you know, with public markets, Dell is spinning out VMware. And that's going to create a massive amount of cash and shareholder value. They're doing a huge dividend. So I guess my question to you, Chamath, is when do we start to see this hit? Not from a point of weakness, but from companies that are strong and see this as, hey, this is a way to just unlock shareholder value. Will we see an Amazon spin out AWS, a YouTube or an Instagram come out of their parent companies?

• 1:12:37Chamath Palihapitiya?

  I think it's very rare that these things happen on the offensive foot. I think it's typically a defensive maneuver that's driven by really poor returns over long periods of time, or activist investors who want to push for value unlock.

• 1:12:50David Sacks?

  Totally. I was about to bring that up. I mean, do you remember how hard that eBay, remember like John Donahue was the CEO, he like fought that so hard. I remember getting a phone call from him asking if I would support them. He had rounded up Reed Hoffman and other people support eBay. I'm like, no, I can't.

• 1:13:09Chamath Palihapitiya?

  No, wait, wait, no. Do you remember this? We were in Vegas and Donahue called and we were working on a plan and then you went and walked Donahue through the plan. Do you remember this thing? We were.

• 1:13:19David Sacks?

  No, what happened?

• 1:13:20Chamath Palihapitiya?

  We were in Vegas. You were gonna try to do a hostile spin out of PayPal. I can't, I can't. No, no. Donahue either called you or called me and I said, you should talk to Saks. And we sketched out a plan for what PayPal should do.

• 1:13:32David Sacks?

  I remember that. Oh, yeah, yeah. I do remember that.

• 1:13:35Chamath Palihapitiya?

  And that was on Saturday afternoon. We sketched out this plan.

• 1:13:37David Sacks?

  Yeah. So I told, I told John, no, I'm sorry. I can't support you because I believe it should be spun out. And so in the only two, the only two people from the original PayPal team who said that publicly were me and Elon. And we said that if you could get PayPal out from under, you know, this, you know, this sort of eBay bureaucracy, it could be a hundred billion dollar plus company.

• 1:13:59Chamath Palihapitiya?

  The bar for acquisitions is extremely high. Like, I think the, the last really two acquisitions that were really done well was Zuck's acquisition of WhatsApp and Instagram. But since then, the bar is extremely high for these conglomerates. So as an example, PayPal was rumored to be buying Pinterest. And, you know, there was such an incredible shareholder revolt that they had to put out a press release saying, we have absolutely no interest in acquiring Pinterest. But what that, all that did was just, you know, accelerate the bleeding because then people were saying, wait a minute, how strategically lost must you be?

• 1:14:33David Sacks?

  Totally.

• 1:14:33Chamath Palihapitiya?

  That you would want to buy Pinterest as, and so then it then as a result, the PayPal stock price has gotten absolutely.

• 1:14:39David Sacks?

  Yeah, it was over a trillion dollar company. And it lost the entire value of Pinterest, basically.

• 1:14:45Chamath Palihapitiya?

  Here's the big issue that I think we have in American.

• 1:14:49Chamath Palihapitiya?

  Economics and company building. You know, we've gone through 20 or 30 years of really under investing in R and D at the sake of share buybacks, at the sake of, you know, market consolidation, private equity, you know, driven take privates. And so all of this capital misallocation has really put us on the wrong foot. And the pandemic basically showed that we were really ill positioned. So a lot of these conglomerates, it doesn't make sense today because we've proven that the compensation schemes for CEOs, the incentives for executive management are way too perverted. And they just create horrible outcomes. A

• 1:15:33Chamath Palihapitiya?

  different example I saw, in the last, I think, 15 or 20 years, IBM's market cap has gone down to 113 billion. In the meantime, they've bought back $132 billion of stock.

• 1:15:46David Friedberg?

  What?

• 1:15:47Chamath Palihapitiya?

  Could you imagine the kind of R and D that IBM could have affected with that 132 billion and where they could be? So we have-

• 1:15:56David Friedberg?

  They're not, they're not good capital allocators.

• 1:15:58Chamath Palihapitiya?

  Well, we have horrible capital misallocation. So-

• 1:16:00David Friedberg?

  Well, look at Apple. I mean-

• 1:16:02David Sacks?

  I don't think they know how to spend the money on R and D.

• 1:16:04David Friedberg?

  Yeah, they're not, they're not good at it. That's the point.

• 1:16:06David Sacks?

  They're not good at it. They're better off, they're better off taking those massive, they're better off taking those massive R and D budgets and putting it into M and A budgets, not for like a $50 billion Pinterest acquisition that doesn't make any sense, has no synergies, but on smaller acquisitions of teams that have built really interesting technology.

• 1:16:22Chamath Palihapitiya?

  IBM, IBM could have bought a lot of different things.

• 1:16:24David Friedberg?

  They don't seem to know how to innovate or operate. Those guys don't seem to know how to do anything. So like-

• 1:16:29Chamath Palihapitiya?

  My, my, my point is now we're in this cycle where these conglomerates will get ripped apart so that a brighter, fresher, and probably younger group of executive management-

• 1:16:42Chamath Palihapitiya?

  Can take a different spin on these companies and actually do some. So for example, like the J and J spin out is really exciting because you take med devices in pharma and you separate it from a really struggling, complicated consumer goods, you know, package business, you know, the shampoo, the Q tips, the Listerine, get all that off balance sheet. Now you can actually, you know, make drugs and med devices. And that's a really interesting business that the right CEO can really do a lot of interesting things with.

• 1:17:06David Sacks?

  I heard an interview with us, the CEO of GE, I think Kulp, who was putting forward this plan. The line that I remember that kind of resonated with me, he said, the benefits of focus are immediate. The benefits of synergy is are hypothetical. And I think that's really the key point here. And it's what's going to fuel all this sort of deconglomeration is that the benefits of focus to a company are so huge that, you know, that, but, but the reason why it doesn't happen is because of this instinct that all these managers have for empire building, right? So when times are good, they can keep building their empires and then something badass to happen to force them to focus.

• 1:17:46David Friedberg?

  By the way, the motivation, they're not, they're not owners. They're typically not founders. And so what you end up seeing is their comp goes up linearly with market cap. So the bigger the business, the more money.

• 1:17:57David Sacks?

  Right. And this is just to, just to close the thought out on that whole eBay PayPal thing. I mean, it was so obvious that eBay should spin out PayPal, but the management, the management resisted it and it took an activist shareholder. I think Icon came in there.

• 1:18:11Chamath Palihapitiya?

  It was Icon, yeah.

• 1:18:12David Sacks?

  It was Icon who came in there.

• 1:18:13Jason Calacanis?

  Yeah, but Carl Icon is in the lobby. You're fucked.

• 1:18:16David Sacks?

  Well, but, but Icon shouldn't have to come in there. The reason why there's opportunity for Icon is the managers want to do the right thing.

• 1:18:21Chamath Palihapitiya?

  He unlocked a quarter trillion dollars of value. He was incredible.

• 1:18:25Jason Calacanis?

  No, I mean, they spun that out for 40 or 50 billion. Now it's worth five times that amount.

• 1:18:28Chamath Palihapitiya?

  It's a quarter trillion dollars.

• 1:18:30Jason Calacanis?

  Yeah, it's crazy. And just to, to put this all in perspective, the stock buybacks that are going on right now, Apple did almost $20 billion less quarter. They've done 77 billion less year. And you want to talk about the impact of tax policy on innovation. Well, you've got on one hand here. Apple is looking at, well, I'm gonna have to pay all these taxes. I might as well just increase the amount on buying back and be neutral. Why would I want to show any kind of a profit here? I'll just buy back as many shares as possible. The company will eventually be private. I mean, this is, you gotta be really careful with how you do this because there's no incentive for people now to put money into R and D or other stuff. They're just buy back the stock. Might be the most efficient thing to do, correct? In terms of like the share.

• 1:19:10David Sacks?

  If you don't know how to spend the money.

• 1:19:11Chamath Palihapitiya?

  It's the dumbest thing to do. It basically shows you're an idiot.

• 1:19:14David Sacks?

  Well, it shows you got enough thing better to spend the money on. So maybe, maybe, maybe that's maybe buying back the stocks better than throwing it away. But yeah, it means you're out of ideas. It means you're out of ideas.

• 1:19:23Jason Calacanis?

  Or you, or a, or a combination of, my God, this core business is throwing off so much money that we can't come up with enough ideas. At that time, I think that's.

• 1:19:32Chamath Palihapitiya?

  No, it just means you're not ambitious enough.

• 1:19:34Jason Calacanis?

  I mean, what would you spend 20 billion on? I mean, Zuck is having a hard time spending 10 billion on creating the metaverse a year. I mean, you're talking about 80 billion a year. What would you put that towards? What should Apple put it towards?

• 1:19:47Chamath Palihapitiya?

  No, Apple, Apple could even more aggressively double down to enter the car market. They could have done it

• 1:19:52Jason Calacanis?

  Fair.

• 1:19:53Chamath Palihapitiya?

  much sooner than they have.

• 1:19:54Jason Calacanis?

  They could spend 20 a year on that. Sure. You're right.

• 1:19:56Chamath Palihapitiya?

  You know, easily. They could actually enter, I don't know, power. They could.

• 1:20:01David Sacks?

  Yeah, I mean, but they're, but they're, you know, Apple, their, their culture is to have very few products as a company. They're always very proud of that. It's the Steve Jobs focused thing. I mean, I think it's worked pretty well for them. I know you're second guessing it. The, the thing that I hear.

• 1:20:13Chamath Palihapitiya?

  No, I just don't like buybacks because I think it comes at the sake of R and D for most companies. I think.

• 1:20:19Jason Calacanis?

  It's an easy choice of increasing shareholder value.

• 1:20:21Chamath Palihapitiya?

  Companies are different, but everybody else, what you see is R and D is like one or 2% of, of, of their, you know, it's, it's a shame.

• 1:20:28David Sacks?

  Look, Apple could definitely be more aggressive, but I wouldn't judge the Tim Cook era until we see what happens with glasses. Because this is the product that I hear is coming, is gonna be their, you know, their AR glasses. And that's gonna be a new computing platform that they open up to developers. And I guess Cook's been there for what, a decade? But I think he doesn't wanna retire until this comes out and he can see this is gonna be his signature product, I think. But I'll tell you, just the other thought that just went through my head as I saw this news about GE. It really was kind of the end of an era. You've got to remember that back in the eighties, nineties, I think even as late as 2000, GE was the number one company in America by market cap. It was the top of the S and P 500. It later subsequently got kicked out of the Dow Jones.

• 1:21:08David Sacks?

  But the thing that went through my head is, you know, when I was a kid growing up, the only two business names that I even knew were Jack Welsh and then Lee Iacocca, you know, that was it. They had their posters on your wall.

• 1:21:21Jason Calacanis?

  GD and Chrysler.

• 1:21:21David Sacks?

  Far across it in between the two of them. It was Big Jack Welsh and Iacocca. And now you don't even know the name of the GE guy. I mean, like, I know it because I watched some interview and I saw him up there. But, I mean, you can't think of a business leader today who's not in tech. And really a tech founder or somebody who's handed the ball by the tech founder. So we know Tim Cook because Steve Jobs handed him the ball. But otherwise, it's all tech, all tech founders. You don't hear about any of these old, like Dow Jones type companies anymore. It's just the business, the business environment, the economy has changed so much since the eighties and nineties. It's all totally dominated by tech now.

• 1:22:01David Friedberg?

  But Sacks, I would argue that the disruptive business and the disruptive business leader are always the icons. Back in the day, the chemical companies were the icons and everyone knew the chemical companies and the guys running them. Then it was the industrial companies, you know, then it was kind of the financial, you know, then it was these guys in the eighties and nineties.

• 1:22:18David Sacks?

  Yeah, but Welsh and Iacocca weren't founders, you know.

• 1:22:20David Friedberg?

  But they were in different ways.

• 1:22:22Jason Calacanis?

  Tell me the top two companies on R and D spending, top two companies without looking on R and D.

• 1:22:27David Friedberg?

  In the world?

• 1:22:28Jason Calacanis?

  Yeah, global.

• 1:22:29David Friedberg?

  In the world?

• 1:22:29Jason Calacanis?

  Number one, number two, give me number one, number two.

• 1:22:32David Sacks?

  I'd say Microsoft is up there.

• 1:22:33Chamath Palihapitiya?

  No, it depends on classification, but I would say Saudi Aramco.

• 1:22:37Jason Calacanis?

  Free Bird, what do you got?

• 1:22:39David Friedberg?

  Yeah, I would probably put Exxon up there.

• 1:22:42Jason Calacanis?

  You guys need to think about who was been some of the most innovative leaders. Amazon, 42 billion in 2020.

• 1:22:48Chamath Palihapitiya?

  No, but Jason, that's an accounting thing. If you're saying in the world, Saudi Aramco, their exploration, their E and P budget is probably $200 billion a year.

• 1:22:56Jason Calacanis?

  Okay, I guess maybe because that's not, that's a, is that a corporate entity technically? It wouldn't be on the list.

• 1:23:03Chamath Palihapitiya?

  It's a public company.

• 1:23:04Jason Calacanis?

  Yeah, so.

• 1:23:04David Friedberg?

  Google's got to be spending 25 billion a year.

• 1:23:07Jason Calacanis?

  With 27 billion.

• 1:23:08David Friedberg?

  Oh, off by two.

• 1:23:09Jason Calacanis?

  Huawei is third, 22. Microsoft is fourth, 19. Apple is fifth, 18. No, this is all companies. Samsung, Facebook.

• 1:23:18David Sacks?

  Some of this is just accounting categorization.

• 1:23:20Chamath Palihapitiya?

  Accounting categorization.

• 1:23:21David Sacks?

  Because the engineering budget is basically what goes into R and D. So the more engineers you have on staff, the bigger your R and D budget. Doesn't mean you're producing anything, by the way.

• 1:23:30David Friedberg?

  Bigger industrial companies, traditional companies that list things as R and D, you know, most of those dollars flow out to third-party companies like enterprise software companies, services, businesses. So it doesn't end up, it gets accounted for as quote-unquote R and D because they get to capitalize it. But that spend is typically not paying in-house salaries to engineers. And that's the distinction between true tech companies and other companies that are quote-unquote going through a digital transformation or, you know, have a quote-unquote R and D budget. They're outsourcing R and D and typically paying three times as much and typically getting one-tenth in the return. And I think that's the, maybe a good heuristic for how you might kind of want to look at what differentiates a true tech company.

• 1:24:13Chamath Palihapitiya?

  Depending on accounting, Saudi Aramco spends 37 and a half billion to 50 billion, depending on how you're accounting.

• 1:24:19Jason Calacanis?

  All right, so that puts them at, you know, probably tied with Amazon for all intents and purposes.

• 1:24:22Chamath Palihapitiya?

  It just means I was right, Jason. That's what I care about.

• 1:24:24Jason Calacanis?

  Well, I mean, I'm wondering, well, you know, the reason I think that this might, they might not be listed is because they're...

• 1:24:29Chamath Palihapitiya?

  I'm just kidding, I'm just kidding.

• 1:24:30Jason Calacanis?

  No, no, it is, it's a really good insight.

• 1:24:31David Friedberg?

  Jay Cal was reading a BuzzFeed article and he had...

• 1:24:34Jason Calacanis?

  No, it was Barron's, it was Barron's. But anyway, putting it aside, I think the issue might be that they are recently public, right? So maybe they're, you know, they've only been filing public for two years or something? All right, I think that's everything. How's everybody doing otherwise? How's everybody's personal life? Are people losing their mind? What's people's plans for the end of COVID?

• 1:24:53David Friedberg?

  I'm gonna go have beer and pizza on the beach.

• 1:24:56Jason Calacanis?

  Nicely done.

• 1:24:56David Friedberg?

  So I'm ready to get out of here.

• 1:24:57Jason Calacanis?

  Nice. Yeah. I mean, I'm exhausted. Are you guys exhausted? This has been a fucking crazy run.

• 1:25:03David Friedberg?

  I don't know what day it is anymore. I'm like, I'm ready to wind the year down.

• 1:25:07Jason Calacanis?

  I am so exhausted. I mean, this has been the craziest pace I've ever experienced in my life. The number of deals going on, the amount of inbound.

• 1:25:15David Sacks?

  Oh, my God. I tell you, at that conference, every single, so I have all these founders come up to me and pitch me what they're doing. A couple of them, like, that sounds really interesting. Can we participate in that? It's like, no, the rounds are subscribed. I'm like, why'd you come up to me and pitch me this then?

• 1:25:28Jason Calacanis?

  How dare you? What?

• 1:25:29David Sacks?

  Yeah, so I tweeted, I tweeted a new terms of service. If I, this is only if I'm at a conference, okay? If you set up an appointment at my office, it's fine. That's like an opt-in. But like, if you come up to me to pitch me your idea at a conference, then, and I say, okay, I want to invest, like, give me an allocation. Like, don't come to me and pitch me if you're not going to give me an allocation.

• 1:25:47Jason Calacanis?

  Yeah, no, that's not cool. That's like being like, oh, my God, I know the best restaurant in the world. It's open tonight. They've got the greatest steak and you're like, okay, I'll go. No reservations.

• 1:25:56Chamath Palihapitiya?

  Guys, tell Sax about the white truffles from yesterday.

• 1:25:59David Friedberg?

  We had dinner at Chamath's house last night. It was incredible. He got these white truffles from Alba.

• 1:26:03Jason Calacanis?

  Best meal I've had in a year.

• 1:26:04David Friedberg?

  I mean, it was really incredible. I really appreciated it. It was amazing.

• 1:26:07Chamath Palihapitiya?

  And 2000, like, it was 1996 white burgundy, Leroy.

• 1:26:12Jason Calacanis?

  The white Burgundy is 2009. I'm not a wine drinker. I'm not saying that your guy, your chef beat Sax's from two weeks ago.

• 1:26:21David Friedberg?

  Sax's, wasn't Sax's chef, your old chef, Chamath?

• 1:26:26Chamath Palihapitiya?

  Uh, I think one of his chefs.

• 1:26:31Chamath Palihapitiya?

  David lives in a stratosphere burn. He lives in a stratosphere burn. That's just at a different, he's next level.

• 1:26:37David Sacks?

  Chamath, are you eating my sloppy seconds?

• 1:26:41Jason Calacanis?

  No, no, I think. I think you gotta beat that one out. I don't know what that term means what you think it means anymore, Sax.

• 1:26:46David Friedberg?

  But by the way, there was a, there was a dinner conversation last night, Sax, to your point. Chamath, it's up to you to decide if you want to disclose the dinner conversation, guess. But this guy said that there was a guy that applied a Y combinator. That had $750 million in crypto. And so he's like applying to Y Combinator with his

• 1:27:07Chamath Palihapitiya?

  For 150K.

• 1:27:09David Friedberg?

  For 150K to give up some percent of his company.

• 1:27:11Chamath Palihapitiya?

  Seven percent.

• 1:27:12David Friedberg?

  And they're like, all these stories of these guys are like, I will pre-fund my own Series A with $15 million to create this business inside of the YC machine.

• 1:27:20Chamath Palihapitiya?

  That was incredible.

• 1:27:21David Friedberg?

  There is such an incredible, like inexplicable, inexplicable, undescribed, I think in the mainstream media, story of crypto wealth creation that's been going on. And these crypto, yeah, these crypto hundred millionaires, billionaires are emerging and doing their own kind of innovation completely under the radar right now.

• 1:27:40Chamath Palihapitiya?

  The smartest people that we know are selling right now.

• 1:27:47Jason Calacanis?

  Yeah, and I think they changed their conversions for the YC safe. They're now getting preferred shares they used to do common. And they now, I think it happens post-conversion, so they want their 7% fixed, you know, after your next round of funding is my understanding. I don't know if that's, but yeah, so they got more aggressive, but.

• 1:28:07David Friedberg?

  That's brutal.

• 1:28:09Jason Calacanis?

  It's, you know, what's happening is like the accelerators have to move earlier back to incubators. So the idea of somebody, you know, Grin or some of the other companies we funded, coming to the accelerator with 20,000 or 50,000 in revenue. In some cases, they may be able to raise money without. And certainly crypto companies are raising $25 million. They're outpacing regular companies, regular startups, non-crypto startups. And they raise it in 10 seconds from a bunch of ETH for buying tokens. They've created a whole shadow economy that doesn't have to play by any of the.

• 1:28:40David Friedberg?

  Yeah, do you really need venture anymore? Like.

• 1:28:43Jason Calacanis?

  Well, if you want to obey the law, I guess you do. But in a lot of these cases, like.

• 1:28:48Chamath Palihapitiya?

  I did this.

• 1:28:49David Friedberg?

  I don't know. This whole new economy could emerge completely offline, right? Completely off the.

• 1:28:54Jason Calacanis?

  I mean, the SEC and Gensler do want to get this thing tightened up. They don't want people doing this.

• 1:28:59David Friedberg?

  I'm not surprised.

• 1:29:00Chamath Palihapitiya?

  20, I think it was 2015, I presented to Amazon at Irisone. And one of the things that I did was we calculated what Bezos's investment track record was, right? Because he basically took all his free cash flow and reinvested it in the business and you could measure. What his return on invested capital was and it was like 42% and on a really big number on 10 to 12.

• 1:29:21Jason Calacanis?

  You're saying his IRR on the money Amazon deployed in R and D projects like the Kindle or AWS.

• 1:29:26Chamath Palihapitiya?

  42% over like a multi-decade period.

• 1:29:30Jason Calacanis?

  Double what a venture firm would do or top.

• 1:29:32Chamath Palihapitiya?

  I mean, he's in a class by itself, but my takeaway in that moment was, wow, this is the, you know, smartest investor of our generation. That's what I said to Bezos at the time. And, you know, Bezos had a track record of selling roughly a billion dollars of Amazon stock every year. And this year, he, you know, Snap sold 6.6 billion.

• 1:29:53Jason Calacanis?

  Which, you know, when we talk about the percentage of selling, we're talking about selling 5%, 10%. So, you know, they're not diluting their whole positions, but these are big numbers. You're right.

• 1:30:02Chamath Palihapitiya?

  I think it's a signal.

• 1:30:03Jason Calacanis?

  Jake, are you going to close this out? All right, everybody. It's been another amazing episode, episode 55 of the All In Podcast from, uh, yeah, whatever. We're, you know, where people are coming from. Uh, the All In Summit will be in the spring at some point. I'm going to go to Miami and look at the locations.

• 1:30:19Chamath Palihapitiya?

  March 11th through 15th. I can't because I'm playing poker.

• 1:30:21Jason Calacanis?

  Yes. Okay. You got your poker trip.

• 1:30:23Chamath Palihapitiya?

  And undisclosed location.

• 1:30:25Jason Calacanis?

  If I can go, listen, is there any way I can deal? Can I deal the game?

• 1:30:29Chamath Palihapitiya?

  Big boy poker.

• 1:30:30Jason Calacanis?

  You need to have a funny guy there. I mean, I'm not a great dealer, but can I be a waiter or something?

• 1:30:33Chamath Palihapitiya?

  I mean, I think the game starts at 2000, 4000, but it could get a little spicy.

• 1:30:37Jason Calacanis?

  Spicy. Zach, you've had a good year. Maybe you should go. Yeah, maybe you should have Solana play because get the Solana chips.

• 1:30:44Chamath Palihapitiya?

  Oh, he can play. David's invited.

• 1:30:46Jason Calacanis?

  Zach's had a lot of week, uh, be quiet in this year. Here's what you do. You chip off 10 million Solana, you put it in LLC and then you buy into the game and then whoever agrees.

• 1:30:56Chamath Palihapitiya?

  That may not be enough.

• 1:30:57Jason Calacanis?

  All right. 20, whatever.

• 1:30:58Chamath Palihapitiya?

  20 is enough.

• 1:30:59Jason Calacanis?

  For the queen of Kinoa, the dictator and Rain Man David Sacks. I'm Jake Allen. We'll see you next time on the All In Podcast. Subscribe to the channel.

• 1:31:29David Sacks?

  Besties are back.

• 1:31:31Jason Calacanis?

  That is funny, a dog taking a piss in your driveway.

• 1:31:39Chamath Palihapitiya?

  We should all just get a room and just have one big U-Journey because they're all just... It's like this sexual tension, but they just need to release somehow.

• 1:31:47David Sacks?

  What your... Beep. What your... What your feet? Beep. What? We need to get merch. Besties are back.