E77: Tech work culture, crypto regulation, stablecoins, $NFLX & more w/ Coinbase CEO Brian Armstrong

0:00 Bestie Intros + a new Bestie Guestie! 4:37 Coinbase CEO Brian Armstrong reflects on his "mission-focused company" blog post, work culture in tech/Silicon Valley, realigning culture at Coinbase 26:25 Crypto regulation and adoption 46:37 Brian's takes on different types of stablecoins 51:14 Netflix's major headwinds 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://blog.coinbase.com/coinbase-is-a-mission-focused-company-af882df8804 https://www.theverge.com/2021/5/12/22433437/apple-hire-antonio-garcia-martinez-out-petition-investigation https://www.theverge.com/2021/5/20/22446059/apple-employees-palestinians-support-internal-letter-tim-cook https://www.theverge.com/2021/6/4/22491629/apple-employees-push-back-return-office-internal-letter-tim-cook https://www.wsj.com/articles/revolt-in-disneys-florida-kingdom-ron-desantis-bob-chapek-11650578648 https://variety.com/2021/film/news/dave-chappelle-netflix-ted-sarandos-i-screwed-up-1235093098/ https://sacks.substack.com/p/your-startup-is-a-movement?s=r https://twitter.com/brian_armstrong/status/1435439291715358721 https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/09/fact-sheet-president-biden-to-sign-executive-order-on-ensuring-responsible-innovation-in-digital-assets/ https://www.investopedia.com/terms/h/howey-test.asp https://www.wsj.com/articles/crypto-thieves-get-bolder-by-the-heist-stealing-record-amounts-11650582598 https://techcrunch.com/2022/04/06/axie-infinity-creator-raises-150m-round-to-compensate-victims-of-625m-ronin-hack/ https://twitter.com/balajis/status/1402030233319088139 https://nypost.com/2022/04/21/ex-mcdonalds-ceo-rensi-companies-have-no-business-in-politics/ https://www.pbs.org/newshour/arts/netflix-loses-200000-subscribers-projects-even-deeper-losses-this-spring https://www.google.com/finance/quote/NFLX:NASDAQ https://ycharts.com/companies/NFLX/market_cap https://www.bloomberg.com/news/articles/2022-04-20/ackman-loses-more-than-430-million-on-three-month-netflix-bet https://www.google.com/finance/quote/FB:NASDAQ https://www.google.com/finance/quote/GOOG:NASDAQ https://twitter.com/elonmusk/status/1516600269899026432 https://summit.allinpodcast.co/

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

• 0:00Jason Calacanis?

  Brian Armstrong, what's up, bro?

• 0:02Brian Armstrong?

  What's up?

• 0:03Jason Calacanis?

  How are you?

• 0:03Brian Armstrong?

  Good to see you.

• 0:04Jason Calacanis?

  It's good to see you as well.

• 0:05Brian Armstrong?

  Yeah, Jason just pinged me yesterday and he's like, why don't you just come on as a guest randomly? And I was like, okay, great, let's do it.

• 0:11Chamath Palihapitiya?

  It's so good. I'm really excited to hear what J Cal's intro is for you.

• 0:15Brian Armstrong?

  Oh, man. Yeah, you guys keep getting watered, watered on this.

• 0:35Jason Calacanis?

  Hey, everybody. Welcome to episode 77 of the All In Podcast, less than 30 days for the sold out All In Summit. And there's a waitlist, but sadly, I don't think we're going to get to anybody on the waitlist. We've got a great, great episode for you. I thought I'd bring a bestie Guestie in, but not tell my bestie. So we'll see if they can figure out who's coming on the pod today. But let's get the intros over with. He's investing in SAS at different stages, coming off a Miami Bender for the ages, doing shots with Reboy and Vanilla Ice. The Rain Man is back. He's twice as nice. David Sacks, everybody. How are you, sir? How is your adventures with Vanilla Ice?

• 1:16David Sacks?

  Good. I'm still here.

• 1:18Jason Calacanis?

  You're still here. And so Vanilla Ice, that costs $1,600 to get him to show up? What does Vanilla Ice cost to show up for a party? That's about 10K. I think it's about 10 to 20K.

• 1:29David Sacks?

  No.

• 1:30Jason Calacanis?

  A little bit more, really?

• 1:32David Sacks?

  A little more.

• 1:32Jason Calacanis?

  And did you go onstage and do Ice Ice Baby with him?

• 1:36David Sacks?

  I didn't, but there were some like Teenage Mutant Ninja Turtles type dancing around with him and whatever. It was interesting.

• 1:43Jason Calacanis?

  It was interesting.

• 1:43David Sacks?

  People liked it. It was fun. It was fun.

• 1:45Jason Calacanis?

  Ah, very nice, very nice. And you're still in Miami for whatever, Tech Week, okay? So he won't eat your meat, but he'll take your MDMA. He's very interested in your DNA. When he's in the lab, he's in heaven. He hasn't been the same since that rave in 1997, the lord of the laboratory, the Sultan of Science, David Friedberg. How are you, sir? That was my favorite one. I liked that one. Yeah, I'll have you do this. You peaked in 97. Yeah. At about 2:00 AM. You were peaking at about 2:00 AM.

• 2:15Chamath Palihapitiya?

  Did you say he doesn't want your meat, but he wants your MDMA?

• 2:18Jason Calacanis?

  Yes, he won't eat your meat, but he'll take your MDMA. Shout out to producer Nick who really crushed it this week. Ah, his bank of... This one is too funny.

• 2:31Jason Calacanis?

  It's hard to keep it together for these sometimes. His bank account would make a crown prince jealous. His knitwear collection is overzealous. When he's on CNBC, he makes a scene. Last time he did leg day was 2019. Supreme leader of Sacks, the dictator himself, Jamal Polly up to you.

• 2:47Chamath Palihapitiya?

  I've been actually spending a lot of time working out on my legs.

• 2:50Jason Calacanis?

  Really? I have been working on shoulders and chest and my legs have always been diesel. I will be doing a shirt off selfie this summer. Jake, it looks like you have not bought new shirts since you lost all the weight. Cause that shirt looks about five sides too big. Here's what I bought this one halfway through. The weight loss and now it's still too big. So I got another slimmer. I got the slim fit. No, I got the normal fit and then I got the slim fit. From peak to now, you've lost what like 50 pounds? 213 pounds was my peak like four years ago. And I was 167, 168 the other day. So whatever that is. 45 pounds? It's awesome. Something I feel incredible. I've started running again and you know, I did 40 days of skiing this year and I'm going to take up kite surfing. I think this summer I want another sport to do, you know, in the summers.

• 3:34Jason Calacanis?

  Are the people around you annoyed at your increased energy levels? Yes, people who work for me are annoyed. I'm sleeping better. Everything's just going better. I highly recommend everybody, you know, just try to lose some weight. Lot of options out there for you, including Munich. All right. We have a very special bestie Guestie today. He's a lean, mean crypto machine who sort of looks like Mr. Clean. If you need some tokens, you know who to call. Satoshi has his picture hanging on his wall. His NFT game is never lacking. If you talk about politics at work, you might send you packing the king of coins, the tycoon of tokens. Who is he?

• 4:09Chamath Palihapitiya?

  Brian Armstrong.

• 4:11Jason Calacanis?

  Brian Armstrong.

• 4:12Chamath Palihapitiya?

  Brian Armstrong.

• 4:12Jason Calacanis?

  You guys got it. Brian Armstrong is with us. Hey, Brian, how are you?

• 4:17Brian Armstrong?

  What's up, y'all?

• 4:18Chamath Palihapitiya?

  You could have gone Vitalik at the first part, but it became Brian by the office part.

• 4:24Jason Calacanis?

  Anyway, welcome to the show, Brian. We've obviously talked about you a whole bunch and you've been on This Week in Startup. And I think you know all the fellas here, but thanks for joining the pod.

• 4:33Brian Armstrong?

  Thanks for having me. This is awesome. I listen to your show every week.

• 4:36Jason Calacanis?

  Oh, thanks for that. So I guess, you know, the, the topic we all have talked about a whole bunch is work and keeping people focused at work. You took a very bold step, which Tobia Chopava, I think, followed. And you said, listen, if you're coming to work, our mission is crypto. Can we stop talking about every other thing in the world and just stay focused on that? And I think that was maybe, was that a year and a half ago?

• 5:03Brian Armstrong?

  Something like that.

• 5:04Jason Calacanis?

  You did that. Everybody wants to know how that worked out for the company. So maybe you could tell us what it was like to go through that. Cause I mean, you were a target for, for, for a period of time. We all thought seems reasonable. And then how has that actually impacted day to day life for the people who decided to opt into working at a single focused Coinbase?

• 5:27Brian Armstrong?

  Yeah. So I would say, you know, short term, it was quite a painful transition. I think it created a lot of consternation. There was, you know, some folks in the media decided to go call a bunch of people who'd left the company and, you know, write hit pieces and all that kind of thing. And frankly, you know, about 5% of the company opted into the exit package. So there was some teams that were shorthanded. A lot of people had to work extra time to fill in the gaps. But long-term, I think it turned out to be an incredibly positive decision for the company. I do think there's a lot of companies in Silicon Valley right now and probably elsewhere is that, you know, the CEOs and the management team almost feel like they're being held hostage by employees. And I feel for some of these organizations, you know,

• 6:04Brian Armstrong?

  Sundar probably has an incredibly difficult job right now. We saw that, that video from Microsoft, I think, last year with, with Satya and it kind of was with people talking about their hair color and stuff and. They don't feel like that they can really lean in and move the company in the direction they want and they're fearful of kind of all these internal dynamics. So, you know, I think there's probably a better way to do it than what I did, which is if you're starting a company today, just make that clear upfront. I didn't make it clear upfront and so the company culture started to diverge and drift and I had to kind of realign it, which was a painful process. If I was doing it over again, I'd probably just set that as the expectation upfront and then there wouldn't be this, you know, public awkward realignment. But yeah, I think I'm really glad that I did it. I think Coinbase has been very productive since then

• 6:48Brian Armstrong?

  and we've been able to attract a lot of the best and brightest people from some of these other companies that are like, "I don't want to be in those companies anymore. I want to work at a company where we just focus on the work and the mission because that's actually important." So I'd say it's been positive.

• 7:00David Friedberg?

  Brian, I've always talked about this as being like the difference between a hard culture and a soft culture, where hard cultures are companies that really define what they do and what they don't do and what they spend time on and what they don't spend time on. And sometimes what you don't spend time on can relate to products, sometimes it can relate to things outside or externalities to the business. Do you think that that's become kind of a trend where, you know, soft culture in Silicon Valley is more about like appeasing a very fickle employee base and as a result you kind of aren't as clear about what you're not going to talk about and are going to talk about and suddenly the troops rule the day and things get kind of sidetracked and productivity goes down? I mean, can you talk a little bit about what you've seen,

• 7:42David Friedberg?

  you know, with other cultures around the Valley and how that's kind of affecting work and what employees are choosing to go to and not go to?

• 7:48Brian Armstrong?

  Yeah, so I think, you know, Ben Horowitz always talked about like wartime CEO, peacetime CEO and frankly, you know, I'm kind of a conflict-avoidant person, right? I never thought of myself as like wartime CEO. We're just like, "We're all going in this direction. Let's go, go, go." You know, I never really thought of myself like that, but I think what I'm trying to do now is find the happy medium between these two. So the company should have a really ambitious mission and then I think you as a CEO, you do have to say no to things which are off track from that. You do have to part ways with people who are not helping raise the talent bar in the company. And so in some ways you have to be, I guess, hard in that sense, but I don't think it's, it's not like, you know, "We're only here to make money and it's like it's bonus time or you're out" or whatever. It's like we actually have a much softer culture than that,

• 8:32Brian Armstrong?

  I think, in Silicon Valley, which is most of the missions of these companies are trying to do great humanitarian efforts and they're trying to improve the biggest problems in the world. And so people sign up for this because they want to have a real impact. And you know, we take time to like go for exec offsites and we walk in nature and you know, we have like coaching, we do all this touchy feely stuff. So I think it's kind of a mix of both is the right balance. I don't think of myself as like, you know, a Wall Street hedge fund or like the most touchy feely culture you can imagine.

• 9:01Chamath Palihapitiya?

  Why do you think companies now have sort of veered into this place where they have to kind of appease these fringes on either side? How, do you, did you spend time trying to figure out like, how did we evolve there from just being mission focused to having to deal with all this other stuff?

• 9:16Brian Armstrong?

  Yeah, I mean, one theory I have on this is that in Silicon Valley, especially pre pandemic, we were all, it was so competitive to get talent, right? You know, Google and Facebook, they were just kind of one upping each other on like higher and higher salaries. And so I, I know as a CEO of a company that was rising at that time, I felt incredible scarcity. Like I had people leave to get up, who got better offers and it was like a real issue. And so I was doing anything I could to retain people and keep them. And so if, if an employee said, hey, I want, you know, another flavor of water in the kitchen or whatever. I was like, okay, maybe we should do it, right? But I think, you know, during the pandemic, we were moved, we moved to remote first as a culture, the talent, like the talent we could get opened up by a hundred X of people all over the world who were really hungry and like frankly thankful for these jobs. And that actually changed the scarcity

• 10:01Brian Armstrong?

  mindset a little bit to say, hey, you know, if you don't want to be here, that's fine. We can, we have other people we can go recruit and hire in who really are going to value it. That's probably just one piece of it. It's, it's a much more complex issue than that. I think one other, one other thing is that, you know, like Google and Facebook, I think kind of made this a common trend in the valley where companies would host these open mic Q and As on every Friday or every two weeks or whatever. And it was almost like a town hall. It felt like a democracy, right? And in a democracy, like the leader, you know, works for the people, they're elected by the people. But what got very awkward was that these open mic Q and As, it became, you know, this kind of like hostile thing of like, how can we make the person squirm? And let's ask them these difficult societal issue questions that aren't actually related to the company and what we're all building.

• 10:46Brian Armstrong?

  You know, I think that was actually a mistake in Silicon Valley. We've since gotten rid of these open mic Q and As because it really encourages people. I'd say we were like 150, 200 people. Everyone was on the same page. Everyone was asking good questions. Once we got to like 500, 700 people, it started to feel like there was a little bit of an us versus them. And then, you know, the questions got very off track. And I realized at a certain point, this is not a democracy. I want everyone's input. I'm not going to rule like with an iron fist, but ultimately, you know, I'm the CEO. I need to help guide this company in one direction and force the hard decisions. Not everyone's going to like them. So we're not going to allow people to do grandstanding, open mic stuff. There's just a little bit of a risk for that. You know, 99% of people don't do it, but if one person does it and it kind of creates this snowball effect. So we got rid of the open mics.

• 11:31Brian Armstrong?

  People can still submit questions, but they're, they're, nobody else can see them. We read them ahead of the Q and A. And if there's a good theme in the questions, we address it. But you can't like grandstand with an open mic.

• 11:41Chamath Palihapitiya?

  I saw this, it was in Twitter, Nick, maybe you can find it. But it was like this general that had commanded all of these different battalions. And he was talking about what it was like in all the different theaters in which he's operated. And he basically said, you know, 80% of the men and women that served for me were just absolutely incredible. You could always rely on them 100% of the time. They were 100% aligned. And then he said, there was 15% that was wishy washy. And what they were looking for was how you managed and dealt with the 5%. And the 5% of folks were always trying to push the boundaries and try to figure out where the escape valve was, or where the exception was, or you know, whether they would be grandstanding, or whether they tried to break a rule.

• 12:27Chamath Palihapitiya?

  And he said, his entire energy was focused on keeping those folks extremely focused and on point or out. Because that was what solved for the 15%. Because the 80% would be fine, but if you didn't deal with the five, the 15 would go crazy. And then the 80 would get dejected. And it just kind of, the whole thing would rot. And it was a really interesting reminder that there's these people that come into these companies almost with a desire to see these companies go sideways or just waste their time, which is completely counterintuitive because you think you joined for the mission. But they don't all the time.

• 13:00Jason Calacanis?

  And to be fair, you, I think, told people, listen, you, you could, as a group of people off-hours, create your own, you know, dinner party and talk about whatever topics you want. This is just when I'm paying you to come to work for those eight hours, you know, on the company servers, if you're using Slack or whatever, you know, communication platform you're using, let's just stay focused on getting the work done. So this could be a viable enterprise. But you were fine with people if they wanted to self-organize and do that on their own time, correct? You weren't saying you can't have political beliefs. You can't care, not care about BLM or some right-wing thing.

• 13:38David Sacks?

  That was one of the biggest, um, sort of misnomers or mis-

• 13:42Jason Calacanis?

  Characterizations.

• 13:44David Sacks?

  Yeah, exactly. Deliberate mischaracterizations about the policy is that it somehow silenced people or prevented them from, you know, taking positions on issues or donating to causes they cared about. The policy never said that. It just said that while we're in the office together on Coinbase time, we're going to engage in Coinbase's mission and avoid fractious debates that divide us.

• 14:04Jason Calacanis?

  Yeah.

• 14:05Brian Armstrong?

  That's right.

• 14:06Jason Calacanis?

  And there's a time for those debates and it just might not, I think a lot of this has to do with Slack. I'd be totally honest.

• 14:12Brian Armstrong?

  Yeah.

• 14:13Jason Calacanis?

  When people are in a Slack room and they're frustrated and people can have valid frustrations, like there are things in the world that are horrible. And yeah, you want to talk about it. And yeah, you build friendships at work. It's completely understandable that people would want to blow off steam. And, but just people have to look at Slack as not an AOL chat room. It's not Reddit. It's not AOL chat. Maybe you could talk a little bit about electronic communications. And then I think David has a follow-up.

• 14:34Brian Armstrong?

  Yes, I agree with you. Slack, I think, you know, is an amazing tool, but it does start to turn into social media. Once you get more than, I don't know, 500 people in a room or 1,000 people. A lot of CEOs I've been talking to, we're all trying to figure this out because we still think Slack is a net positive to productivity, but it has a huge negative in terms of both distracting people with lots of things popping up all the time, but also these kind of social media flame wars that emerge and mob-like behavior. So some of the things, I mean, we've been trying is, for instance, if we get any kind of a Slack room that has, say, more than 500 or 1,000 people, we'll often try to limit it. So only, you know, you can, you have to be a VP or level nine and above can only post in there. And otherwise it's read only. So we're trying to, you know, Dunbar's number is 150 people, right?

• 15:17Brian Armstrong?

  You're trying to think, who, who can you remember everyone's name and have some sort of group affinity with them? And any too much above Dunbar's number, we try to like cap it. So it's a read only chatroom. But I think these tools need to keep evolving and I hope some, I know there's a couple of startups, y'all might have funded some of them that are working on this.

• 15:33Jason Calacanis?

  Yeah, there's an actual neat feature you can do in Slack now where like that level nine person can post and everybody else can post in the thread. Like you can reply to the thread, but the opening salvos in thread have to be started by somebody in that sort of group. So, but Slack definitely needs to double down on this. I also think they put that random room in there and you put the random room. It's like basically waving the flag like it's random, put stuff in there. I think you gotta delete that if you're running. I tell all startups, delete the random room and tell people do not post memes and jokes. David, you had a follow up?

• 16:03David Sacks?

  One thing I was gonna say is, so Brian, I agree with everything you said. The one place maybe where I would nitpick in a way that gives you a little more credit is you found a Coinbase back in 2012, right?

• 16:14Brian Armstrong?

  Yeah.

• 16:14David Sacks?

  So if you had created this policy on day one, I don't think you or anybody could have predicted that these issues would arise the way they have. I remember 2012 is the year I sold my company to Microsoft. We never had to deal with any of this stuff and we were using, we didn't have Slack back then. We were using Yammer, very open culture. People could communicate on anything. We never had sort of hyper activist employees. The word woke didn't even exist yet and it just wasn't an issue. So it would have required you, I think, to see ahead so many years. And I think what's happened is over the last several years, there's been this drift towards, you know, employee activism inside these companies. I don't think it's coming from both sides of

• 16:55David Sacks?

  the political spectrum, to be honest. I think it's coming from the sort of hyper woke employees and they engage in petitions and letter writing campaigns and threats of boycotts and they sort of Hector and Mao Mao, these CEOs to basically give in to them. And we've seen it at Apple, the way that the Apple was pressured to fire Antonio Garcia Martinez and they gave in and now they have a letter writing campaign every month. And you just saw it in Florida. I think Bob, what's his name? Bob Chapek at Disney?

• 17:22Jason Calacanis?

  Chapek, yeah.

• 17:23David Sacks?

  I don't think he's gonna survive the year after what just happened at Disney. And it's because he gave in to the employees, took sides against the, you know, governor in Florida. In the legislature and they just ripped away Disney special privileges in Florida. You saw it at Netflix where Ted Sarandos was sort of mau-maued by these employees who want to cancel Dave Chappelle. He ultimately stuck by Chappelle, but only after grovelling to these employees. And so I think we're seeing these issues did not exist even five years ago, I would say. And I think the reason why the Coinbase story is so relevant to a broader audience and what you did with your policy is so relevant is I just think every company is going to have to make a decision sooner or later on where they stand.

• 18:08David Sacks?

  Do you give into these petitions and mobs and boycotts? Do you allow unlimited activism inside the four walls of your company? Or do you take some sort of more neutral stance where you say, listen, we're all going to leave our politics to the door. So we can effectively work together on the company's mission. I think every company eventually is going to have to either be Coinbase or be Apple. You're going to have to be Coinbase or be Disney. You're either going to have to give into the mob and suffer the consequences. Or you take the short term pain of doing what Brian did. And you basically realign everyone around the mission. And a year later, you're very happy with where you are.

• 18:45Chamath Palihapitiya?

  The good thing with Netflix and Disney though, is that they're going to be very clear examples of the business impact of getting distracted. And I think that, you know, Brian took leadership. But the business impact, at least from the outside looking in, was not really measurable. Obviously, he felt it, the team felt it, whatever they did, and that business is working. But it wasn't done as a public company pre and post, so the counterfactual is hard to measure. In the case of Disney and Netflix, it's really clear to measure, right? Meaning in all of this confusion, Netflix has completely botched their business model. In all of this fighting now internally inside of Disney. Not only are they going to lose essentially a fiefdom inside of Florida, but it's going to have repercussions with respect to taxes,

• 19:29Chamath Palihapitiya?

  with respect to debt, with respect to the quality of the service they can deploy. And that'll eventually flow through the business and that'll be measurable by investors. And I think David, I think probably what I think, which is a slighter. Sort of more modified version of what you just said is in the next few quarters. I think CEOs will actually be better equipped to numerically point to why taking Brian's path is the value creating path for shareholders and for stakeholders. And the cost of getting distracted, quote unquote, can be really expensive if you if you are a for-profit company.

• 20:04Jason Calacanis?

  And you also have the option to run your company and say, you know what? We care about this issue a whole bunch. We really care about human rights here. We really care about communications and freedom of speech. And I'm going to run Twitter as a freedom of speech company. And everybody has to align behind that. If you believe in censoring, this is not the right company for you. If you believe in policing speech or you're uncomfortable with uncomfortable speech or speech that makes you feel uncomfortable, you don't have to work at Twitter. So it's not like you have to, you know, do what Brian did and say, hey, we're just

• 20:36Chamath Palihapitiya?

  You gotta decide.

• 20:37Jason Calacanis?

  You have to make a decision and be intentional about it. I think it's the higher order bit.

• 20:41Chamath Palihapitiya?

  No, I was just gonna say, my only point is in the absence of intentionality, Jason, you'll slip into one realm or the other and not really know what you're trying to do. I agree with you. And my only point is that you'll be able to measure the impact of unintentionally slipping and sliding around.

• 20:54Jason Calacanis?

  Yeah.

• 20:54Chamath Palihapitiya?

  Versus picking a course and sticking to it.

• 20:56David Friedberg?

  Let me ask you guys a question. If you're an individual and you want to affect social change, where is the forum in the theater that you think you would go to first? You spend most of your time at work. And maybe you don't have as much free time to go march and protest in the streets. And if you did, no one would pay attention to you there anyway. So Sax, like, I know that you'll probably have a point of view on this, but like, if you're giving a 19-year-old who has a strong point of view, or a 25-year-old who has a strong point of view about something that they want to see change in society, what's the right forum for them to have their protest and to make their voice heard?

• 21:34David Sacks?

  I think that companies are a great change agent. I think we all do. Being in Silicon Valley, creating startups, we all believe that startups are a great way to change the world. Those startups have missions. Brian's company has a mission around crypto and expanding, democratizing access to the financial system based on crypto. Elon has a company that is accelerating the world towards sustainable transport and sustainable energy.

• 21:59David Sacks?

  He wants to make where I quibble a little bit with what Jason said about free speech. I think Elon wants to make free speech restore its place back in Twitter's mission. So it's not like a separate thing. It's actually like should be very core to what they do. I think that there's a mission driven company out there for any young person who cares about that issue.

• 22:21Jason Calacanis?

  Right.

• 22:21David Sacks?

  And if there's not, if there's not a for profit vehicle, there's a 501. You can go join a nonprofit company.

• 22:26Jason Calacanis?

  Or start one.

• 22:28David Sacks?

  Exactly.

• 22:28Jason Calacanis?

  Start one, donate money to a cause. You have the whole weekend, you got media, you can write a blog post.

• 22:33David Sacks?

  What I don't think would work is when you have people who don't, who aren't really mission driven, their mission is whatever the current thing is. And so they're just kind of like oscillating from the, the one, the, you know, from one current thing to the next current thing. And every three months, there's an issue du jour that, that, you know, they care about more than anything else in the world. Look, there's not going to be a company that can accommodate that sort of fickle activism.

• 22:57David Friedberg?

  Brian, can I ask you a question? Are there any systems, decentralized systems that kind of give individuals, you know, that you've viewed interesting models that give people the ability to affect social change in a way that kind of historically may have been more of a hill to climb where people can kind of aggregate resources and aggregate a voice in a way that can kind of affect outcomes? And do we think that that kind of becomes a mechanism for social change in the future?

• 23:25Brian Armstrong?

  You make, you're making me think of DAOs and things like that, but I think a lot of that is kind of unproven. Like DAOs are probably good ways to get new kind of governance systems in place for allocating capital or maybe even managing a city or, or a society. But I, you know, I kind of agree with David. I think the best way to affect change right now today is for young people is start a company or join a company. I think young people are sometimes a little enamored with like becoming an activist, but I think fundamentally that's, you're, you're sort of giving up your power by saying like, well, they have the power and I don't, and so I'm going to speak truth to power. But I think, you know, there's context for that historically where that may have been more true. But I think today, a lot of people, they have more power than they realize. And if you go start a company, which by the way, companies are decentralized too. You can have lots of little companies all over the world.

• 24:10Brian Armstrong?

  They're not like, you know, monolithic usually. And so if they start a company, they can have a good impact, I think, on the biggest issues out there.

• 24:18Chamath Palihapitiya?

  And I think over time as well, the way that you have real impact is that you prove yourself in the market of ideas to have a high reputation and to be really reliable. And that is not something that you can just overpower, you know, because you're 19 or 20 and you're really upset by something. At some point, you're going to have to really invest your time and dedicate yourself to something that you really, really care about. And then the world tends to move to the good ideas. So I think part of like what we also need to remind folks is that this is a, like, if you want to make real sustainable change, it's hard. It doesn't matter in which area you pick, it is just really hard. But if it's really worth it, you should give your life to it.

• 24:59Chamath Palihapitiya?

  But what I think people push back on is the more superficial forms of just virtue signaling and saying, yeah, in this moment, I really want to pretend I care about something, but when push comes to shove, I'm not really willing to take the next step. I don't, I think that most people find that very unreliable.

• 25:15David Sacks?

  Yeah, I think a good question to ask for somebody who purports to really care is like, what do you care about that's not currently in the news? You know, that's not like the hot thing that everyone is basically obsessed with.

• 25:27Chamath Palihapitiya?

  Well, and then how are you changing it? And what is your plan to change it over the next decade or two? Like you have a nice long life.

• 25:33David Sacks?

  Yeah, because it takes, it takes, it takes many years to effectively create a startup, you know, five years, 10 years. And so if your issue du jour is whatever's in the news, you're not going to be able to create that kind of change. You know, I do think there are a lot of similarities between mission-driven startups and political movements. You know, I wrote a blog post called Your Startup is a Movement where I basically say that, you know, good marketing is about evangelism. It is, has everything in common with what good political leaders do. Basically, they critique the status quo. They tell you what the world likes, looks like today, what the problem with that is, and where the world needs to get to, what the solution is, and then how they're going to deliver that solution. So you can, I think, as a leader of a company, be very mission-driven.

• 26:16David Sacks?

  You can bring about that change you want to see in the world. You just have to attach a business model to it. If you don't have a business model, you're just collecting donations.

• 26:24Chamath Palihapitiya?

  Let's build on that, Brian. What is the stated mission today of Coinbase?

• 26:29Brian Armstrong?

  Yeah, our mission is to increase economic freedom in the world. And if for people aren't familiar with that term, economic freedom is kind of an economics term like GDP, but it looks at the measures of different countries of the world and it looks at factors like are there property rights enforced, how stable is the currency, how easy is it to start a business, you know, is there corruption and bribery prevalent and things like that. And what's really cool about economic freedom is that it basically countries with higher economic freedom, you know, like Singapore and the United States and Ireland, they tend to correlate with all kinds of things we want in society, not just better economic growth, but even higher self-reported happiness of citizens, better treatment of the environment, better income for the lowest 10% in society.

• 27:09Chamath Palihapitiya?

  Gender equality, all that stuff.

• 27:11Brian Armstrong?

  Yeah, gender equality and then, yeah, countries with low economic freedom, you know, Cuba, North Korea, Sudan, these are some of the lowest, they tend to have, you know, even things we don't want, like higher corruption, higher war, higher infant mortality. So it's basically when I read the Bitcoin white paper back in 2010, I had this thought eventually that was like, maybe cryptocurrency is this unique moment in history, this unique technology that allows us to inject economic freedom into the countries all over the world, especially now that more and more people have a smartphone. And we can basically put good financial infrastructure, good property rights, you know, global trade, a stable currency into 200 countries all over the world as one small group, relatively small group of

• 27:54Brian Armstrong?

  people. And hopefully it has all these positive downstream impacts. So that's the mission of Coinbase.

• 27:58Jason Calacanis?

  When you look at the regulatory environment, it has been far from clear what's allowed here in the United States. In fact, you had a pretty strongly worded tweet storm back in September of 2021, some really sketchy behavior coming out of the SEC recently story time. Maybe you could talk a little bit about the SEC's approach to cryptocurrency versus securities, XRP comes to mind.

• 28:28Jason Calacanis?

  And knowing your customer, you've obviously taken a very conservative approach to what tokens you put on the platform. And then you have competitors who are offshore, who it's kind of YOLO, anything goes. What is the current administration doing right, wrong, and what needs to happen here in the US to, for us to be competitive in crypto while still protecting citizens from, you know, being bag holders?

• 28:53Brian Armstrong?

  Yeah, it's a big question. So, you know, as a startup, you're always trying to thread the needle here. You don't want to wait too long for clarity because sometimes these things take five, 10 years, and so you'll just never launch a product. But if you, if you're too aggressive, you can blow the place up. And so what we always did in the early days of Coinbase is we said, we want to go do what we think is going to be required in the future, go get licenses, go do KYC, go do AML, anti-money laundering. And so we tried to basically do the right thing, go and talk to these regulators proactively. Now, the US has actually been pretty forward-thinking on this. I'd say every year we get more and more clarity. So Coinbase is now a very regulated financial service business. You know, I can go through the whole list. We have a license from the CFTC, a federal regulator. We acquired

• 29:37Brian Armstrong?

  some broker-dealer licenses, which the SEC regulates. We have money transmission licenses. We're a bit licensed in New York, et cetera, and not just in the United States. So we're in many, many countries around the world. So how do we get more clarity? Well, one thing I'll just say is it's actually better for there to be lack of clarity than to be clarity that is punitive or bad. So it's good that there's a little bit of lack of clarity, as long as it's not curtailing the industry. But what would be even better is to have clarity that does provide that right balance of good consumer protection, you know, make sure that there's a fair level playing field for all the players. And then it allows innovation to flourish. And so what's good now is that in the US, you know, the Biden administration put out an executive order recently, kind of asking all of the

• 30:20Brian Armstrong?

  different agencies and departments to come back with a clear plan. And they did recognize the potential innovation in crypto in that, in that executive order, which I was really pleasantly surprised to see. So what's happening now is that there was a little bit of jockeying, I think, there where the SEC said, hey, these all look like securities to us. And I don't think that's quite true. You know, the CFTC is, regulates commodities, while some cryptos are going to be commodities. I think here's what I'm realizing is that crypto is going to be many different things. It's not just going to be one regulator doing it. So, you know, think about cryptocurrencies like Bitcoin. That's pretty clearly a commodity or Ethereum, right? Like, many of these are commodities that probably should be regulated by the commodities regulator, the CFTC. Now, if people want to raise money for their company, a security token, that should be regulated as

• 31:04Brian Armstrong?

  a security by the SEC. That'd be great to have more clarity on that. Let's have, we would love to keep working with the SEC to make that a well-trodden path that any company can go raise money and that's how it would get listed on an exchange like ours and we could register as a broker-dealer or whatever license is needed. Separately, there's also some cryptocurrencies that are going to be currencies, like stable coins, and, you know, maybe the Treasury should regulate those. And finally, there's going to be cryptocurrencies that are none of the above. They're artwork or something that probably shouldn't even be regulated. And so, the US, with various financial, you know, international bodies like G20 and FDEF and all these IMF are probably going to put some policy papers together. We're going to eventually end up with some kind

• 31:46Brian Armstrong?

  of a test that says, is this cryptocurrency a commodity, a security, a currency, or something else like artwork? And then maybe, and by the way, maybe five more things we haven't even thought of that'll end up being in the future.

• 31:57Jason Calacanis?

  What would you make the test for this is a utility token versus speculative

• 32:04Jason Calacanis?

  security? Because that seems to be the one that's really hard for people to figure out. If 99% of people are buying a token on Coinbase because they want to see it appreciate and they want to see it gain value, and only 1% are using it for the actual utility of it, is it then a security? Is it by the percentage of people who use it? How would you, as the, you know, the leader in this industry, you know, actually define it? What's your definition?

• 32:33Brian Armstrong?

  Yeah, so I think, look, I don't want to be presumptuous here. I think that we can put some policy papers together, but I don't want to be, you know, it's the policymaker's job to come up with a policy, so I don't want to step on anyone's toes. But that being said, I think there's some existing case law out there, like, you know, the Howey test is something from a long time ago. We could probably build upon that. So the Howey test kind of says, you know, is this an investment in a common enterprise with an expectation of profit? And that would make it, that would make it a security. So there's a lot of pieces to that. You know, is it an investment? Well, if you're just giving the tokens away, I guess people aren't investing, right? Is it a common enterprise? Well, maybe if it's decentralized and you don't actually control this entity, like, you own, you know, less than a majority share or something, maybe then that's not a security, right? Or if

• 33:15Brian Armstrong?

  there's not an expectation of profit, people are using it for something. So every startup right now in the space has basically had to hire a bunch of expensive lawyers to go tease apart these old, old rules that some of them were created in like the 1930s, you know, before the internet and everything, and try to understand where they're falling. And so I think, building upon that Howey test, but it could be something that includes a commodities definition, something, a currency definition. You know, I think we should, basically, it's on us and the other crypto companies out there to go hire a really smart lawyer who has drafted legislation before and a bill, and actually get a draft of it out there. And then we can start to circulate it with various policymakers and get their feedback. And maybe they take it and run with it. Maybe they say, thanks, we have, we've got it from here. But that's our next step.

• 33:58Jason Calacanis?

  Friedberg, Sax, Jamar, would you go with the Howey test? Or do you have thoughts on how to, how the government here in the US should say, this is a security, this is a utility token?

• 34:09Chamath Palihapitiya?

  I think what the EO did was basically, kind of give people enough regulatory safety in the sense that something reasonable will probably happen in the reasonable future so that people could keep building and iterating. My big takeaway in the last sort of like nine months is that this thing is now too big to fail. And the government basically has to just find a reasonable framework to enable something because the, the real big issue, Jason, would be if they did something crazy and now, you know, retail would just get completely smoked. Because I think they are the

• 34:43Jason Calacanis?

  Do you think it's reasonable?

• 34:44Chamath Palihapitiya?

  I think Congress has to basically pass a sensible set of legislations that clearly demarcate exactly what Brian said. This realm of stuff goes to the CFTC, this realm of stuff goes to the SEC, now you guys go and implement. And if left to their own devices, those two will use these arcane laws and try to negotiate amongst each other. Who should be covering what, but they can't arbitrate that decision. And so as a result, nothing will, nothing reasonable will happen. Um, so I think that's what has to happen. Congress has to get together and write something reasonable.

• 35:10Jason Calacanis?

  Friedberg, you are building companies at the production board. Every year you build a couple of companies. Uh, you have to go through securities law, you have to, you know, raise money from accredited investors. You do it in the traditional way. Um, but you must be looking at crypto saying, well, I could launch Kana, Munich, whatever project and have a token associated with it and raise money and raise it globally or start a DAO. What do you think is a reasonable way for people like yourself who are playing by the existing rules? To be able to embrace this new technology and these new platforms and paradigms. I think a little. How should the government handle it?

• 35:47David Friedberg?

  Well, some perspective is important, which is, you know, go back to kind of the 1920s in the United States and there were pre 1920s. Folks would go around and tell tall tales about interesting business ideas or business concepts or things that they were going to do with, if they got a bunch of money from investors. And investors gave them money and they didn't actually deliver on what they said they were going to do and they got swindled. And there was swindle story after swindle story that you can read about. And we saw this even with the ICO craze of a few years ago, right? Where people tell a tall tale, you expect some value or some asset that you're kind of putting capital into that will pay off over time. And there's a swindle behind it.

• 36:28David Friedberg?

  And that's really the origin of securities laws in large part is to protect the individual from being swindled. To protect the storyteller that can take money away from people and figure out how to kind of rip them off. Um, and create a set of laws that the government can then enforce through the risk of imprisonment against doing those things. The challenge becomes when there's this. More thoughtful way of running capital markets on the other side. And how do we actually resolve to some medium ground here? I'm not sure that you're going to have as quick of a resolution to say, well, let's go back to the old way where anyone can say anything to anyone they want and anyone can put money into any project that they want. Because the role of the arbiter is to protect those from being taken advantage of.

• 37:12David Friedberg?

  If 85% of those projects are great and 85% of the investors are intelligent and know what they're doing, it's the 15, it doesn't matter, it's the 15% that the government is here to protect. And that's the reason we have an institution called the government is to create systems of protection for those who are otherwise unable to protect themselves. Now, a free market libertarian might say, we should have at it. But the problem is, we all have, we all feel as a group, at some point, a moral obligation to protect those who are unprotected. And that's why these systems emerge over time and that's why these institutions exist. That's why the government exists and it's why these securities laws exist.

• 37:51David Friedberg?

  And so it's difficult to assume that we can just go back to the kind of, you know, prototypical days of, you know, let me raise money for anything with any story without any regulation and assume that it's going to work out well. Because all it's going to take is a few of these stories before you have folks standing up in Congress saying, this is unbelievable, we can't let this happen anymore. Let's go shut down the miners, let's go shut down the data centers, let's go after every asset we can. And by the way, they will, because look at what just happened with Russia. The way that governments can kind of coalesce around digital systems now and make significant change and block things from happening. I don't know if there is a world where we can assume that even with a free and open internet, that these systems can truly be decentralized, given the reach that governments have.

• 38:35David Friedberg?

  And it is going to be, in my mind, I've said this in the past, kind of the great tension of the 21st century socially, is the decentralized systems that really want to challenge what we believe to be a lot of overreach that's happening by governments against the government's believed role to be protecting those who are, who need the protection. And so, I don't know, that's a very long-winded moral statement. Well, I mean, I think it's a very interesting one. Brian, what do you, what do you think of this?

• 38:59Brian Armstrong?

  I get it. These are complicated issues, right? We want to balance protecting people, but we also want to not have the government be in a position where it's picking winners and losers. And so... You know, just because something is legal doesn't make it a good investment. I guess, you know, you could have owned Netflix last week or something like that. And you guys might talk about that in a minute. But, look, I think we all want to get rid of fraud, right? So if you commit fraud, meaning you lied to investors,

• 39:28Brian Armstrong?

  then that should be a crime, right? Like, I want to work with anybody in government to go make that stuff not happen. The danger is if we ever get into a place where we say, "Well, only wealthy people can now invest" because somehow there's an accredited investor test. That's inherently exclusionary. I don't like the accredited investor laws. If we ever get into a place where the government is saying, "Well, you have to have XYZ criteria and a person with this many years of experience on their resume." And then now we get into like the government sort of designed by committee to pick winners and losers. And that's inherently flawed because, you know, a lot of true breakthrough innovation, they look like bad ideas at the beginning. They're the kind of things that a government body would never invest in or put money into, right? So that's the inherent tension we have to worry about.

• 40:10Brian Armstrong?

  We're protecting people but not putting the government in the role of picking winners and losers.

• 40:14Jason Calacanis?

  Zach, do you have any input on this sort of framework? You are investing traditionally in stocks, but you have also allocated some money to multi-coin capital and other folks who are buying tokens. And then you have to distribute them and you have to deal with these downstream legal issues. How are you dealing with them? And then what do you think is a proper framework here in the US for protecting consumers while allowing innovation?

• 40:36David Sacks?

  I think the big picture framework that we have is correct, which is you kind of have this dichotomy between security tokens and utility tokens. So, security tokens, basically it's a token that's issued that it's basically like a share of stock or fractional ownership in some business. Doesn't really have a lot of functionality associated with it. That's kind of an end run around the securities laws. They should be treated like securities. On the other hand, though, there are a lot of tokens that are issued as part of creating a new kind of technology network. And... Those tokens have real functionality and if you were to subject them to securities laws and impose KYC and accreditation, you have to go through all these hoops just to add one to your wallet.

• 41:18David Sacks?

  It would destroy the potential functionality created by these systems. So where there's real utility like that, I think the government should foster innovation by having a lighter hand. Don't subject them to securities laws. And really what entrepreneurs need in the space are some safe harbors, some really clear lines around what would trip them up and have them cross over from utility token and security token, so they know to avoid those things, so they can continue innovating on their core project.

• 41:48Jason Calacanis?

  I think that's well said. I have three ideas, Brian, I want to run by you. Number one, a sophisticated test for investors in crypto and in startups. So just like you get a gun test or you know, a test for a driver's license. We come up with a way for people to become sophisticated. They take a simple test, maybe it's a, you know, whatever number of questions. And then second, maybe some safe harbors around the scale of a project. So any crypto project under 10 million can be an experiment and you know, it's kind of like no need to have rules. People just have to sign a disclaimer or a waiver. This is an experiment. Then things maybe between 10 and 100 million. You implement KYC and maybe throttle the number of-

• 42:27David Sacks?

  Jason, those are some good ideas for when you're talking about the bucket of security tokens. If you want to start imposing those kinds of rules on utility tokens, you can't have a functioning network with like all these sort of frictional-

• 42:40Jason Calacanis?

  Well, hold on, but if then if the project gets scale, then you just have to file a little more, have a little more KYC. And then finally, the founders of these projects, they can just launch them and disappear. They have no director-like duty to the project. Do you think there needs to be something similar to directors in corporations? So just three ideas there that I've heard other people talk about or I've been thinking about, Brian.

• 43:07Brian Armstrong?

  Those are pretty good. I like those actually. I mean, the nice thing about a driver's license test for financial literacy is that it doesn't measure how much money you have. So it would allow- Smart, you know, aspiring people who didn't start with a lot of money, like a lot of us to also be able to participate early on in these, which would be really great. Yeah, I think it's, you know, some kind of a safe harbor or sandbox provision, I think is is a really great idea as well. And lastly, yeah, I mean, if you were to able to, um, I basically, I think your three ideas are great, so those are good.

• 43:37David Sacks?

  I think that they're good for securities, but I mean, should, if you just want to buy gas on a blockchain to run your program, where you're a user of a, of a application that's being run on a blockchain, you just want to buy a token for gas, do you really have to go through all these like KYC type hoops?

• 43:52Brian Armstrong?

  Hopefully not, especially if it's, if it's a utility, I mean, self custodial wallets and DApps or decentralized apps are this huge area of innovation that, you know, you wouldn't want to like, imagine if the US government had said you need to come in and register to make a website or something like that, that, that would have been a terrible thing for innovation globally. So, and you have to remember too, that a lot of this is going to flow to the country with the most permissive laws. So, a lot of governments around the world, not the most permissive, but the most well structured that balances all the, all the pros and cons.

• 44:20Chamath Palihapitiya?

  Maybe clear?

• 44:21Brian Armstrong?

  Yeah.

• 44:22Chamath Palihapitiya?

  The thing that I would just add to this though, is that there's a lot more than just AML and KYC guys that has to happen for this to be a functioning ecosystem. We average, I think, one hack a week in the crypto ecosystem, right? This Beanstalk hack happened, what, just a few days ago? That was almost $200 million. Last month, Axie Infinity, what was that, almost $600 million? So, there's a lot of stuff where in the, in the normal securities world, like if you're a director of a company and you don't have these adequate procedures, and Brian, you live this every day, where there's like an audit committee and there's somebody that chairs audit, that has to go and think about information security and blah, blah, blah, and all these disclosures have to happen. Insurance. But all these disclosures are really about actual work being done.

• 45:08Chamath Palihapitiya?

  If you don't do that work and then you get hacked, you're actually liable, right? There's no version of this in a world where it is a little bit of the Wild West, so that stuff also has to exist. This is what I, what I mean by, I actually think Congress just needs to kind of like update the set of laws that actually allow the CFTC and the SEC to do their job, to include this and say, now go and incrementally figure this out. Because even if you get the AML and KYC stuff right, then there's all this other stuff where, you know, these folks that had, they're basically, you know, all this, all this value deprived, who do they go to to try to get the money back? You know, in, in the case of Axie, I mean, this is, it's an incredible thing, but like, you know, they went to Andreessen and they raised a new round, they're like, we're just going to make everybody whole, but that's insane, right?

• 45:51Chamath Palihapitiya?

  That's like not, you can't expect that to happen with every single project or every single company. It's not going to be possible.

• 45:56Brian Armstrong?

  Yep. Well, I think a couple of things will happen. I mean, in the, in the custodial world of crypto, there'll be more regulation, there already is, right? Like, we, we have a New York Trust company that we get audited for various control environments and safety and things like that. But in the self-custodial world, everyone is going to start to be in control of their own assets. And I think that, you know, the tools are getting better and better for that, like, you know, social recovery of keys, if you, if you forget your password and these kind of smart contract wallets. And so, you know, both are growing. And I think in the future, people may actually start to take more responsibilities for storing their own wealth if, if they want to choose to do that. And that'll allow them to kind of access a broader ecosystem of, of things.

• 46:37Jason Calacanis?

  Let me ask you a question, Brian. Everybody seems to be very concerned about Tether. You, I don't believe, participate in the Tether ecosystem at Coinbase, is that correct?

• 46:47Brian Armstrong?

  Uh, well, we're not participating directly, but we support as many assets as people want to use. And that is one of the ones that we've supported people to deposit and withdraw on Coinbase.

• 46:57Jason Calacanis?

  They've been banned in New York, they've had regulatory action in Canada, people are concerned about their attestations or lack of clarity on their commercial paper. What do you think of these stablecoins getting very big? And maybe USDC seems to have it pretty tightly covered, but there's all these concerns and regulatory actions against Tether. Is that a, a big nothing burger? Or does it concern you that there's a lack of transparency into their holdings?

• 47:30Brian Armstrong?

  Yeah, so I would say, you know, some of the early stablecoin efforts definitely didn't have all their ducks in a row from a reputational point of view. You know, I'm not, I'm not an expert on Tether. My understanding is that there have been some investigations and enforcement actions which have required them to go in there and clean up some things. And, um, you know, our, our digital asset listing group kind of looked at a lot of this in depth and made that judgment call that where they, where they were and where they are now. But yeah, I do think that we're seeing the emergence of new groups like, you know, USD coin is, is one of those that I think has some better controls around it. And there's actually a bunch of, um, set, stablecoins now that are decentralized. You know, DAI and Frax.

• 48:12Jason Calacanis?

  Explain what that is and why it's important.

• 48:15Brian Armstrong?

  Well, so, okay, so it really comes down to trust. I mean, you know, you can trust, uh, you can decide to trust something like USDC that has kind of audit requirements and, you know, a big four accounting firm come in and look at it and things like that. Or you can look at smart contract code and, you know, thousands of people around the world can look at that and there's an inherent bug bounty if you find an issue there. And if it hasn't been found, then you can start to think about trusting that. Now, I think stablecoins like, like DAI and others, they've been able to create these relatively complex systems that have sort of, um, that one asset which is intended to be stable, but another one which is sort of the collateral. And you could imagine various black swan events where, you know, the peg would get broken and things like that, but it really hasn't happened yet in DAI and it's shown

• 48:58Brian Armstrong?

  a lot of resiliency, which I've been very impressed by. There, there's one, actually one other, um, type of coin, which I think is even maybe more interesting than just wrapping a fiat, uh, like a dollar or a rupee or something like that, because frankly, you know, the dollar is seeing a lot of inflation. You guys have talked about it many times on this show. So do you really want to have a stable, quote, stablecoin that is inflating, you know, eight percent a year?

• 49:21Jason Calacanis?

  Right, exactly.

• 49:21Brian Armstrong?

  There's, there's some new coins coming out, which I've been really excited to see, which are, I think, you know, biology calls them flatcoins, but they're basically looking at the consumer price index and they're trying to, basically have flat purchasing power and assume that the dollar and various fiat currencies around there are actually going to go through more inflation. That's a pretty cool idea and you can do that in a creative way on a blockchain by having. Various oracles, which are these sources of truth. And if enough of them, you know, 51% of them tell you the CPI we think is this this year, it can kind of keep pace with CPI, which is a really cool innovation, I think.

• 49:54Jason Calacanis?

  Thank you so much for Brian Armstrong for joining us for the first hour. And now we'll continue on with our Netflix discussion. Brian's fantastic. He was very honest. He answered a lot of questions very honestly, and he's a super fan of the show. That business is a great business. That business would be a great business. He's thoughtful. We like somebody who's thoughtful.

• 50:10David Sacks?

  I really think that the challenge that Brian faced a year and a half ago and the policy decision he faced is now being faced by every CEO across America. And that's the broad relevance is, you know, what are they going to do? Did you see this this quote by the McDonald's CEO? The former McDonald's CEO Ed Renzi on Wednesday said companies have no business being in politics and has launched a new advocacy coalition to fight woke corporate politics. He said corporations have no business being on the right or the left because they represent everybody there and their sole job is to build equity for their investors.

• 50:43Jason Calacanis?

  Wait, the people who make Filet-O-Fish are not going to chime in on Ukraine anymore?

• 50:48David Sacks?

  Yeah, but but think about that because that actually is a pretty radical.

• 50:53Jason Calacanis?

  It is a line in the sand. Yeah. He's standing on Brian's shoulders. Let's be honest. I think, you know.

• 50:58David Sacks?

  The CEO of McDonald's, I mean, that's like a big, you know, traditional Fortune 500 type corporation. And they're saying like, we're not doing this anymore.

• 51:05Jason Calacanis?

  Well, you know what? They were more than willing to do it if it scored them points. What they realized was it's going to be a never, once you engage that, you're never going to be able to disengage from it. All right, let's pivot over to Netflix. They reported a drop in net subscribers for the first time in 10 years. And the stock dropped 35% market cap from 155 billion to about 98 billion. According to Bloomberg, as of Wednesday, Netflix was the worst performing S and P 500 so far in 2022, stock down 63% year to date. Ackman dumped his entire stake and booked a $430 million loss. And a large part of this was because they didn't hit their

• 51:48Jason Calacanis?

  2.5 million or so target increase in subscribers. And they, in fact, lost all 700,000 Russian subscribers as part of boycotting Russia because of the Ukraine.

• 52:04Jason Calacanis?

  War?

• 52:06Jason Calacanis?

  What do we think is happening here? Is this a bellwether, Chamath, for something more important going on? Or is this just Netflix not executing well?

• 52:17Chamath Palihapitiya?

  I think there's a macro thing and then there's a Netflix-specific thing. The macro thing is that we are learning the broad sweeping impact of Apple's privacy changes, in my opinion. You first saw it flow through into Facebook's earnings and basically them saying, "This is going to be really tough." And you had Netflix, even if you add back the Russian subscribers, basically spend almost $600 million in the quarter on customer acquisition to effectively, they would have generated 500,000 subscribers net of churn, right? Which was still about a million and a half under where they needed to be. So, the point is that I think Netflix, in some ways, was a little bit of a canary in

• 52:56Chamath Palihapitiya?

  the coalmine for the shrinking effectiveness of online advertising. And I think that's why you then saw, two days later, Facebook got taken to the woodshed in two days, was down, you know, now it's down, I don't know, 15%, 20%. Google, I think, has been down a lot today. It's just getting absolutely smoked relative to the market. So, that's the macro issue, which is, I think, it's really hard for these ads to be as effective as they used to be. And it's only going to get worse because Google has also said that they're going to implement a lot of the same versions of what Apple did inside of Android. So, customer acquisition is going up. So, if you look at then all the companies that have to live and die on CAC, it's going

• 53:39Chamath Palihapitiya?

  to be an expensive road. That's the macro thing, I think, that not enough people are talking about. I think the micro thing inside of Netflix is that, you know, people churn out of a service when there isn't enough value. And I think that's the most basic explanation of why so many people are leaving Netflix, is that it's not that valuable. So, when you're spending $20 billion a year on content... But people more than ever are leaving the service. You have to inspect how much are you really spending in these areas and what is it actually creating in terms of like library value? You know, Disney Plus, I think, has gotten, has done an incredible job in a much shorter period of

• 54:21Chamath Palihapitiya?

  time. Apple, after only a few years, wins the first Oscar of any of the streamers, right? Beating Netflix, even though they've been in there and spent a hundred-

• 54:30David Friedberg?

  For Best Picture.

• 54:30Chamath Palihapitiya?

  For Best Picture, but I'm saying, so when you put all these things together, I think Netflix probably has lost a little bit of the script, but they're also suffering from a really macro headwind, which is the advertising business is broken.

• 54:42David Friedberg?

  I would imagine that like total subscribers to streaming services, and if you were to add up total subscription service dollars, it's probably growing a lot.

• 54:51Chamath Palihapitiya?

  Oh, for sure.

• 54:51David Friedberg?

  Netflix's relative share is going down because the quality of the competitors is improving so much. Even companies that are not able to deliver, like CNN shut down CNN Plus this week after investing $300 million in trying to build out the service. I mean, folks are putting serious dollars behind these projects. And so the competition is fierce and they've got deep content libraries behind them. I personally think HBO Max is the best streaming service now.

• 55:17Chamath Palihapitiya?

  Awesome.

• 55:18David Friedberg?

  Followed by Disney Plus, followed by maybe a mix of Amazon, Netflix, and, you know, Prime. And so like Netflix's relative value is going down because there's so much other content. When I'm kind of thinking about what to watch, I'm looking at Disney Plus, I'm looking at HBO Max, and I'm like, hey, you know, what should I watch tonight? And then I look at Netflix. Netflix doesn't have a monopoly in content anymore. And so when I've got limited dollars, I personally, I looked at this after we were texting about it, I subscribe to seven streaming services right now. And if I didn't care as much about how much I was spending per month, I would probably cut three of them. And Netflix would probably-

• 55:57Chamath Palihapitiya?

  It's under a hundred.

• 55:58David Friedberg?

  Yeah.

• 55:58Chamath Palihapitiya?

  You're also then highlighting the second, I think, macro thing that is actually equally important, maybe even more important, which is, you know, the first rule of capitalism says that excess returns will always get competed away. So, you know, Netflix had the run of the place where they were an effective monopoly.

• 56:16David Friedberg?

  Totally.

• 56:16Chamath Palihapitiya?

  And now, when everybody else woke up and got religion, they decided to invest and they've created some really compelling content. And so, all of those returns will now get spread across seven or eight or nine competitors, which means that just by definition, mathematically, Netflix can't win the way that they used to.

• 56:32David Friedberg?

  And the network advantage in the streaming model is content and consumers. So you have better content, you get more consumers, you get more money from consumers, you spend more on content. At some point, you get diminishing returns in that network model. And now, we're seeing those diminishing returns hit Netflix. They haven't built advantages in search and discovery, or in other, or in social sharing, or other features into the app or into the service, that will give them more of a lock-in value. Because all I'm doing is buying, is watching.

• 56:59Chamath Palihapitiya?

  They're also three times the price.

• 57:00David Friedberg?

  And I can go do that elsewhere.

• 57:01Chamath Palihapitiya?

  They're also three times the price of Disney Plus and other services. So, they're, in the competition space, people are starting to look at and go, is this worth, you know, a Disney and an NBC? Or is this worth a Hulu and an NBC streaming service? Sax, you had some to add?

• 57:16David Sacks?

  Well, I mean, I agree with that. I would just add one factor to this, which is what Elon said, which is, he said, "The woke mind virus is making Netflix unwatchable." I mean, the quality of the programming has gone down. I mean, Netflix used to be really good. I can't think of, like, a show now that I watch on Netflix. And I do watch HBO Max right now and Disney Plus, because they got some shows that I like. So, I think somehow, the programming people at Netflix have gotten out of touch.

• 57:45David Friedberg?

  Yeah. Are they pandering to that audience, Sax, do you think? And, you know, similar to kind of how Disney ended up pandering? And do you think that there's broadly this kind of media problem of trying to pander to the wrong audience?

• 57:55David Sacks?

  I mean, they almost threw Chappelle off, who's the number, by far, the number one comic in, you know, in American comedy. And they absolutely would have thrown Chappelle off and done what a lot of those employees wanted, if they didn't have such a big deal with him, if he wasn't such a big deal.

• 58:09Chamath Palihapitiya?

  No, I think they held the line pretty.

• 58:11Jason Calacanis?

  Pretty.

• 58:12David Sacks?

  There's a lot of grovelling. There's a lot of grovelling.

• 58:14Jason Calacanis?

  I mean, I think they reasonably heard the concerns of their employees and said, we reasonably disagree.

• 58:19David Friedberg?

  Can I ask you guys a question?

• 58:21David Sacks?

  Yeah, but Jason, it showed, it showed, but yes, but what I, look, yes, maybe, but what I'm saying is that that episode revealed that the people are doing the programming at Netflix, obviously. I like, they're not like, I think they've lost touch with where most of the country is.

• 58:37Chamath Palihapitiya?

  I will give a shout out. I have not watched a series on Netflix in probably a year.

• 58:42David Friedberg?

  Ozark? No.

• 58:43Chamath Palihapitiya?

  No, no, but I will give a shout out to Never Have I Ever, which Mindy Kaling created. She's amazing. And that series is incredibly funny and poignant and cool and awesome. But outside of that series, I cannot think of a single reason why I would actually pay for Netflix.

• 59:01David Friedberg?

  You got, let me ask you guys a question. So going back to, cause you know, there was the whole Disney pandering.

• 59:05Chamath Palihapitiya?

  HBO Max, however, oh my God, so good.

• 59:08David Sacks?

  The whole industry is suffering this problem. Do you remember the Oscars? We don't even watch it anymore.

• 59:12David Friedberg?

  This is the question I have for you. Do you guys think that there's a difference culturally in the management of the media companies? So let's go through them. Warner Media, Disney, Netflix, Amazon. And do you think that that cultural difference may create an advantage and success? Do you think that Warner Media is operating HBO Max differently? Because they're culturally different.

• 59:35Jason Calacanis?

  Yeah.

• 59:35David Friedberg?

  Because they're culturally different.

• 59:36Jason Calacanis?

  HBO has always been culturally different. They have been for all tours.

• 59:40Chamath Palihapitiya?

  HBO has.

• 59:41David Sacks?

  HBO sucked for years. They got a few good shows now. It's, it's more like luck.

• 59:46Jason Calacanis?

  They've always been for all tours. They always have gone with the vision of the director, the vision of the writer, and taken a lot of risk. When you hear that HBO logo, you know it's gonna be a high end.

• 59:57David Sacks?

  I agree with you. They have some really good shows right now, but until the last couple of years, it was like pretty dismal.

• 1:00:02Jason Calacanis?

  Business, but I mean, I too, Freebrooke's point, you know that Netflix.

• 1:00:06David Sacks?

  I would say, I would say Disney has Marvel and that's why they have Marvel and Star Wars.

• 1:00:10David Friedberg?

  And that's, and that's kept them extremely relevant.

• 1:00:13Jason Calacanis?

  And Pixar.

• 1:00:13Chamath Palihapitiya?

  Uh, yes, the IP, there are IPs.

• 1:00:15David Friedberg?

  I cannot tell you how much, and, and the advantage Disney has is the rewatchability of their content. I don't know how many times your, your kids have all watched Moana. My kids have watched, I've had to watch Moana a hundred and seven times already.

• 1:00:29Chamath Palihapitiya?

  Go ahead, let's hear it.

• 1:00:30David Friedberg?

  And start, yeah.

• 1:00:31Chamath Palihapitiya?

  Felt out of Moana.

• 1:00:32David Friedberg?

  And, and, and.

• 1:00:33Chamath Palihapitiya?

  You're welcome.

• 1:00:34David Friedberg?

  Yeah, you're welcome. And the, um, and the Star Wars content, as you guys know, you could rewatch Star Wars and Marvel. I mean, like the, the content is very different on Pixar movies too. You could watch a hundred times over. That's very different content. HBO Max is thrilling and engaging and doesn't feel like it's pandering.

• 1:00:50Chamath Palihapitiya?

  HBO right now is operating at the next level. I mean.

• 1:00:53Jason Calacanis?

  So many good shows.

• 1:00:54Chamath Palihapitiya?

  It, it for me.

• 1:00:55David Sacks?

  But Netflix was five years ago, so.

• 1:00:57Chamath Palihapitiya?

  I understand, but we're not talking about the past. We're talking about today.

• 1:01:00Jason Calacanis?

  Netflix went with these very big deals with big celebrity names. And, you know, I think they just lost their uniqueness in terms of risk taking. So they went with Adam Sandler, no offense to Adam Sandler fans. And they're doing a lot of reality TV now. And if you look at Hulu, like Dopesick and then the dropout. If you look at Apple TV, Ted Lasso, we crashed. Uh, and then you look at HBO Max with just, uh, you know, Euphoria and some other great shows.

• 1:01:28Chamath Palihapitiya?

  I, I can actually.

• 1:01:29David Friedberg?

  Euphoria, can you imagine Euphoria on Netflix? It would never be on Netflix.

• 1:01:33Chamath Palihapitiya?

  It would never get made. It would never get made on Netflix.

• 1:01:36David Friedberg?

  That's the point, right?

• 1:01:37Jason Calacanis?

  Yeah, they don't want to take risk. HBO is like for adults, it's paid and they're going to take risk and Disney doesn't, can't touch that. I think Hulu is a sleeper. I mean.

• 1:01:45Chamath Palihapitiya?

  Hulu is great. Have you guys watched the series called The Great on Hulu?

• 1:01:49Jason Calacanis?

  No.

• 1:01:49Chamath Palihapitiya?

  It's about Catherine the Great. It is incredible.

• 1:01:52David Friedberg?

  I canceled my Hulu subscriptions.

• 1:01:55Chamath Palihapitiya?

  So good.

• 1:01:56Jason Calacanis?

  I'm watching Severance right now. That's amazing. It's like really likes, you know, ephemeral.

• 1:02:00Chamath Palihapitiya?

  By the way, I started paying for YouTube TV so that I could get streaming cable.

• 1:02:04David Friedberg?

  Oh yeah, I do YouTube TV.

• 1:02:05Jason Calacanis?

  Hulu, I do.

• 1:02:06David Friedberg?

  That's my number one, my number one watch thing is YouTube TV because I don't.

• 1:02:09Jason Calacanis?

  Do you have YouTube without ads?

• 1:02:11David Friedberg?

  Yeah, I do YouTube Premium and YouTube TV.

• 1:02:13Jason Calacanis?

  Such a game changer.

• 1:02:14Chamath Palihapitiya?

  How do you do that?

• 1:02:15Jason Calacanis?

  YouTube Premium. YouTube Red or Premium? YouTube Premium it's called.

• 1:02:18David Friedberg?

  It's nine bucks a month a month, you can afford it.

• 1:02:21Jason Calacanis?

  You see no ads on YouTube.

• 1:02:22David Friedberg?

  Ask your assistant to ask her assistant to sign you up and, and you won't have to watch ads on YouTube anymore.

• 1:02:27Jason Calacanis?

  Are you functionally not able to use the internet now, Trumh?

• 1:02:30Chamath Palihapitiya?

  I actually have people that do it for me.

• 1:02:33David Friedberg?

  Do they type in your email password for you?

• 1:02:34Chamath Palihapitiya?

  Yes.

• 1:02:36Jason Calacanis?

  You're like, how does this work? And they're like,

• 1:02:38Chamath Palihapitiya?

  There's a person right there.

• 1:02:39Jason Calacanis?

  Netflix button on the remote.

• 1:02:40Chamath Palihapitiya?

  If I can't get the mouse to work.

• 1:02:43Jason Calacanis?

  He's got the VP of Product from Queston, who lives in a little shack in the house next door, who comes over and uses the remote for him. Thanks for tuning in, everybody, for the dictator himself, the Sultan of Science, David Sacks. We have a jam packed agenda. My God, the summit is going to be amazing. Let's just do a little recap here of what's happening. We've got some pretty great speakers. Ryan Peterson, Nate Silver, Claire Thicke, Brad Gersner, Palmer Lucky's coming, Elon's coming, Keith Rabois coming, Jelawn Dale, Tim Urban.

• 1:03:16David Sacks?

  Wait, did you say Elon's coming?

• 1:03:19Jason Calacanis?

  Oh, is that what it says on the website? Yeah, he's on the website now.

• 1:03:20David Friedberg?

  Elon Musk?

• 1:03:21David Sacks?

  Elon's coming?

• 1:03:22Jason Calacanis?

  He's coming.

• 1:03:22David Sacks?

  Nice.

• 1:03:23David Friedberg?

  Of PayPal?

• 1:03:24Jason Calacanis?

  Antonio Gracias. I mean, we've got just an all star.

• 1:03:28David Sacks?

  You're kind of very good there. And I think Glenn Greenwald and Matt Taibbi are coming.

• 1:03:32Jason Calacanis?

  Yeah, that's going to be amazing. And so it's going to be really great. All right, everybody, we'll see you next time on the All In Podcast. Bye bye.

• 1:03:42Speaker 05

  We'll let your winners ride.

• 1:03:45Speaker 05

  Rain Man David Sacks.

• 1:03:49Speaker 05

  And instead, we open source it to the fans and they've just gone crazy with it. Love you, S. I'm the queen of Kinoah.

• 1:04:02Speaker 05

  Besties are gone.

• 1:04:05Speaker 05

  That is my dog taking a piss in your driveway.

• 1:04:10Speaker 05

  Oh, man. My other dasher will meet me at the.

• 1:04:13Chamath Palihapitiya?

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

• 1:04:21Speaker 05

  What? You're the bee. What? What? You're a bee. Bee? What? We need to get mergers. I'm going all in.