E112: Is Davos a grift? Plus: globalist mishaps, debt ceilings, TikTok's endgame & more

(0:00) Bestie intro, who gets credit for the podcast? (6:27) Top candidates for the Republican nominee in 2024: DeSantis, Youngkin, Haley; major 2024 issues, balancing the budget (19:13) WEF in Davos: is it a grift? Somber mood, globalist mishaps, evaluating the US free trade policy (39:51) Rebuilding infrastructure while avoiding the debt ceiling, immigration reform (1:00:42) TikTok's endgame in the US: banned, spun out, or something else? (1:17:22) Pharma meets AI, best AI business models Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://twitter.com/RitchieTorres/status/1616124738752987152 https://twitter.com/TalbertSwan/status/1616101666582892547 https://www.wsj.com/articles/at-davos-mood-is-somber-as-many-ceos-question-economys-future-11673952415 https://www.washingtonpost.com/world/2023/01/17/davos-globalization-wef-economic-seige https://twitter.com/ShellenbergerMD/status/1614782758328598528 https://www.facebook.com/worldeconomicforum/videos/8-predictions-for-the-world-in-2030/10153920524981479 https://www.weforum.org/agenda/2022/02/how-insects-positively-impact-climate-change https://www.zerohedge.com/geopolitical/dark-side-davos-revealed-global-elite-bookings-sex-workers-soar https://archive.wphna.org/wp-content/uploads/2013/12/04-03_The_National_Interest._Samuel_Huntington_Davos_Man.pdf https://www.nytimes.com/2023/01/15/business/auburn-tiktok-ban-students.html https://www.theinformation.com/articles/vc-s-8-billion-bytedance-headache?rc=g3wfdp https://www.wsj.com/articles/tiktok-tries-to-win-allies-in-the-u-s-with-more-transparency-11673836560 https://www.nytimes.com/2022/12/22/technology/byte-dance-tik-tok-internal-investigation.html https://www.ft.com/content/6670acad-8a5b-4c4a-b6a8-48dc307b6d4d https://www.hellopearl.com https://roboflow.com https://www.reuters.com/business/retail-consumer/brazils-americanas-shares-plunge-pre-market-accounting-inconsistencies-2023-01-12 https://www.wsj.com/articles/alec-baldwin-shooting-charges-involuntary-manslaughter-rust-movie-11674081157

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

• 0:00Chamath Palihapitiya?

  Jake Cal, you have a really long nose hair.

• 0:02Speaker 01

  Thank you.

• 0:02Chamath Palihapitiya?

  On your, on your left.

• 0:04Speaker 01

  This one here? This side?

• 0:05Chamath Palihapitiya?

  Yeah.

• 0:06Speaker 01

  Okay.

• 0:07Chamath Palihapitiya?

  You see it, Nick? You see it? See that? You can see it.

• 0:09David Friedberg?

  Take care of it.

• 0:09David Sacks?

  Every show, we have this issue.

• 0:12Chamath Palihapitiya?

  Every show, he's got all this like.

• 0:14Speaker 01

  I'm getting old man hairs. I feel like Sacks.

• 0:16David Friedberg?

  You gotta get a grooming tool.

• 0:17Chamath Palihapitiya?

  I am tired of treasure hunting.

• 0:18Speaker 01

  Send me a link for what he uses.

• 0:19David Sacks?

  You're a lawnmower.

• 0:20David Friedberg?

  Manscaped makes one.

• 0:22Speaker 01

  I'm gonna get it.

• 0:23Chamath Palihapitiya?

  Yeah.

• 0:23Speaker 01

  Just look in the mirror, bro. Can you come over on the way to Parker Friedberg and help me Manscaped?

• 0:28Chamath Palihapitiya?

  Yeah, you're not coming to poker. Don't come to poker.

• 0:30Speaker 01

  I said, if I Manscaped, can I come to poker?

• 0:49David Friedberg?

  Okay, so Jake Cal, you're gonna be a participant today. The world's greatest moderator is taking a week off to allow his voice to recoup, to recover, to heal. So he can come back blaring with his usual mid-sentence interruptions and excellent moderating tactics next week.

• 1:06David Sacks?

  With his foghorn, leghorn moderation.

• 1:09David Friedberg?

  We are gonna, we are gonna miss you at the moderation.

• 1:12Speaker 01

  Welcome to the top 20. Sacks, you're welcome. Welcome to the top 20 podcasts in the world.

• 1:16David Friedberg?

  Okay.

• 1:16David Sacks?

  Well, hold on. Who should be thanking whom? I mean, you've been doing this for 10 years. I walk in here off the street, all of a sudden we're top 20.

• 1:23Speaker 01

  Yeah, let me explain something to you. Number one blog in the world I created with my guys in Gadget. Okay, top five magazine in the world. Then I do a podcast with you three idiots and all of a sudden I drop down to top 20 in this medium.

• 1:34David Sacks?

  Drop? What are you talking about?

• 1:35Speaker 01

  Yeah, exactly. I drop.

• 1:37David Sacks?

  This has been A/B tested.

• 1:38Speaker 01

  No, I mean, this weekend startup is a niche podcast.

• 1:41David Sacks?

  You, but look at Twist's ratings compared to ours.

• 1:43Speaker 01

  This weekend startups is about startups. It is a niche audience by design and it's the number one startup podcast in the world.

• 1:50David Sacks?

  That's what you wanted this show to be.

• 1:51Speaker 01

  No, I didn't. This show is about all topics.

• 1:53David Sacks?

  Not on your view. Every time we try to talk politics, you're like, it's too much politics, Sacks.

• 1:58Speaker 01

  I think you're talking about Friedberg. I think you're talking about Friedberg.

• 2:00David Sacks?

  Let's focus on narrow, legalistic tech issues.

• 2:03Speaker 01

  Not true. You, we had this discussion, Sacks, and I said we should always do the top story of the week, even if it's politics.

• 2:09David Sacks?

  And now you're taking credit for my insight about McLaughlin Group. I saw you on some pod. Who was it?

• 2:15Speaker 01

  I absolutely designed this pod around McLaughlin. The fact that you also watch McLaughlin.

• 2:20David Sacks?

  I'm the one who said McLaughlin Group.

• 2:22Speaker 01

  Okay, it's possible for two people to have the same idea, Sax. We both grew up on McLaughlin Group. That's why we're both tankers assholes.

• 2:30David Friedberg?

  Moderator intervention. Cut it out. No one is individually responsible for this podcast.

• 2:36David Sacks?

  It was Tim Ferriss.

• 2:37David Friedberg?

  Yeah, Tim Ferriss.

• 2:38David Sacks?

  Here's what happened. So I was on YouTube and, you know, I'm not going to watch some two hour like podcast with J Cal, of course, but for some reason, for some reason, Tim Ferriss clipped.

• 2:51David Sacks?

  He clipped 10 minutes of J Cal and the video is called the origin of the All In Podcast.

• 2:56David Friedberg?

  I can't stand what he does. I can't stand what he does that.

• 2:59David Sacks?

  Yeah. So I'm like, okay, well, I gotta watch this.

• 3:01David Friedberg?

  In the partnership agreement, he said, here's the, the party line and J Cal will not stick with it.

• 3:05Speaker 01

  Yeah, we're going to recreate.

• 3:06David Sacks?

  I gotta watch this. I gotta see this alternative reality that J Cal is trying to create about the origin of the All In Podcast.

• 3:12Speaker 01

  I wrote, I wrote in our meeting agreement. History, yes, and I changed it.

• 3:15David Friedberg?

  No, the origin story that you signed up to, are you saying you changed the origin story?

• 3:20Speaker 01

  No, the origin story remains the same.

• 3:22David Friedberg?

  No, it doesn't.

• 3:23Speaker 01

  You called me after CNBC.

• 3:24David Sacks?

  Yeah, the origin story that he told Tim Ferriss, which is like a 10 minute story of how he created the whole thing. The concept was his, it was based on McLaughlin Group, which I'm the one who suggested that.

• 3:33Speaker 01

  Concept is mine, obviously by default. How I moderate the program is by my design. Yes.

• 3:38David Sacks?

  You didn't come up with this concept.

• 3:39Speaker 01

  Much to your chagrin. Of course I did.

• 3:41David Sacks?

  No.

• 3:42Speaker 01

  Of course I designed my moderation.

• 3:44David Sacks?

  Jamal was the first one who said, we should record us having conversations at the poker table.

• 3:50Speaker 01

  No.

• 3:51David Sacks?

  That idea came from him, right? That's why it's called the All In Pod.

• 3:54Speaker 01

  No, I came up with the name All In, number one. Number two, it was his idea to tape a pod because he came out of CBS. Anyway, who cares? The pod's here. It's successful.

• 4:03David Friedberg?

  Why do you keep going on podcasts telling everyone that you're the mastermind of the All In Pod?

• 4:08Speaker 01

  People are saying, J Cal, other podcasters, I'll explain to you, other podcasters are in awe of my ability to moderate you three malcontents.

• 4:16David Sacks?

  You did not have the idea for the foursome based on McLaughlin Group. That happened, that happened spontaneously as a result of the fact that, no, Friedberg was, I think, the first guest. I was the second guest. Then we did the four of us together.

• 4:30Speaker 01

  Okay.

• 4:30David Sacks?

  That was not your concept.

• 4:32Speaker 01

  How this is moderated.

• 4:34David Friedberg?

  It was a jam session that worked out. That's it.

• 4:36Speaker 01

  Okay, fine. The way, the way I moderate this is of note to the world's greatest podcasters. They want to know, J Cal, how do you take three misanthropic malcontents and make them actually palatable to the world? And I say, you know what? Because I am the world's greatest moderator and someone like Tim Ferriss wants to know.

• 4:53Chamath Palihapitiya?

  Excuse me, excuse me. What makes me a misanthropic malcontent? Exactly.

• 4:58Speaker 01

  Just your behavior and worldview.

• 5:00Chamath Palihapitiya?

  What is, what is, describe that. What is my behavior and what is my worldview?

• 5:04Speaker 01

  Your absolute contempt for humanity. You're rewarding over everybody. No, you're amazing. I'm, it's a joke. It's called a joke. It's called a joke.

• 5:14David Friedberg?

  Now you set him off, J Cal. You really, that, that hurt. You should apologize.

• 5:18Speaker 01

  It's called a joke. I think you guys are wonderful. I think you guys are wonderful.

• 5:22Chamath Palihapitiya?

  Well, I may, I may be misanthropic, but malcontent, I'm not.

• 5:25Speaker 01

  No, Saxon and Friedberg are the malcontents for sure.

• 5:27David Friedberg?

  I'm not malcontent. I'm pretty damn happy.

• 5:29Speaker 01

  You're happy? The last descriptor anybody who knows you would ascribe to Friedberg was happy.

• 5:35Chamath Palihapitiya?

  No, I would say, no, I think he's happy. He's anxious, but he's happy. Yeah. He's anxious, but happy.

• 5:40Speaker 01

  Did you see the roast? That was not a happy man.

• 5:44David Friedberg?

  That was tearing you up. That was funny.

• 5:46Chamath Palihapitiya?

  That was a misanthropic part of him. Yeah, that was venting. He was venting.

• 5:50Speaker 01

  Yeah, that was rage. It was pure rage.

• 5:53David Sacks?

  No, I think, I think when Friedberg tries to be funny, it comes out kind of mean.

• 5:57David Friedberg?

  Yeah, maybe that's true.

• 5:58Speaker 01

  It's a little bit of rage.

• 6:01David Friedberg?

  The only person that sets me off into making me unhappy is you, J Cal.

• 6:05Speaker 01

  The four of us could go to therapy or we could keep recording this podcast every week, which is cheaper. I think it's cheaper for us to just record the pod.

• 6:13Chamath Palihapitiya?

  You know what? I for one, am thankful to whoever gave you whatever sickness you have that causes you to not be able to talk this week.

• 6:20Speaker 01

  Okay, great.

• 6:21David Friedberg?

  You're talking a lot for a guy who can't talk. Let's cut it out.

• 6:24Speaker 01

  You guys are coming at me. I'm sick. Be nice to me.

• 6:27Chamath Palihapitiya?

  While we're talking about all kinds of random stuff. The number two thing that I see in the what's happening tab on Twitter right now is how Ron DeSantis is getting blasted for banning AP African American Studies because he thinks it falls under the Stop Woke Act. That's the headlines. It's going absolutely nuclear on Twitter right now. Here's some of the quotes. Shocking. Ron DeSantis has banned, all caps, the teaching of AP African American Studies in Florida. Florida has gone from don't say gay to don't say black. Next tweet. Claiming it violates the Stop Woke Act and has no educational value, Florida Governor Ron DeSantis has banned AP African American Studies from schools.

• 7:08David Sacks?

  Let me make a prediction right now. This will all redound to his advantage. The same people who said that he was death Santas for basically not instituting COVID lockdowns, he has proven correct. Then they said that this bill that prohibited the teaching of gender fluidity to five-year-olds, they tried to claim that was a don't say gay bill. Seventy percent of Florida supports that. That redoubt it to his advantage. I don't know the story behind this particular course, but if the question is whether CRT is going to be funded by the state and he's preventing that, again, I think it'll be a 70% popular issue. So let's just wait and see how this plays out.

• 7:44Chamath Palihapitiya?

  Fair enough. I just want to claim that my spread trade may be, it's tough to be the leader in the Republican nomination process in January of 2022. It's starting.

• 7:55David Sacks?

  Yeah, I agree. It's tough to be the frontrunner. It's tough to be the frontrunner in either party, but I'd say the bigger threat to DeSantis is there's a new poll where Trump came out on top. So Trump's still his biggest threat. Yeah. So unfortunately, Jake Hall may be right that the Republicans may do something stupid here and nominate a candidate who's, I think, less electable than DeSantis.

• 8:19Chamath Palihapitiya?

  I actually don't take any joy in it. I actually, I think Nikki Haley's going to come out of nowhere and win this thing.

• 8:23Speaker 01

  Well, it's possible. You know, I really would like to see some non-political, non-career politicians run for office, the Bloomberg, you know, sort of category. It feels like these career politicians.

• 8:37Chamath Palihapitiya?

  are just really, really bad at executing.

• 8:40Speaker 01

  Scumbags.

• 8:41David Sacks?

  You know, you know who likes Nikki Haley?

• 8:43Chamath Palihapitiya?

  Who?

• 8:44David Sacks?

  Democrats. Democrats. You guys.

• 8:47Chamath Palihapitiya?

  Why? Why do we like her?

• 8:49Speaker 01

  I mean, she's polarizing. She's polarizing.

• 8:51David Sacks?

  No, she's a safe establishment Republican who basically is not going to put up any fierce resistance to what the Davos crowd wants to do.

• 8:59Chamath Palihapitiya?

  I don't think that's true. I think she was pretty.

• 9:02David Sacks?

  She's not going to win the Republican nomination.

• 9:03Chamath Palihapitiya?

  I don't think she cares about Davos people to save her life. I think that she is a moderate, reasonable person who had to govern in a southern state and got everybody on board. That's, that's pretty crazy. She's a pro-life person who negotiated a 20-week support for abortion in 2014. So this is a person that knows how to get stuff done. South Carolina happens to be the state that's actually at the leading edge of climate transition. She's had more jobs and more money come in into a southern red state of people and companies willing to build for climate change than any other state in the country.

• 9:41Speaker 01

  So you like her as a candidate?

• 9:42Chamath Palihapitiya?

  I don't know. She's just, she's, so I, I just think that she's actually like normal and sane and not an idiot.

• 9:47Speaker 01

  Would you vote for her?

• 9:48Chamath Palihapitiya?

  Absolutely.

• 9:48Speaker 01

  Over Biden?

• 9:49Chamath Palihapitiya?

  Absolutely. Absolutely.

• 9:51Speaker 01

  Interesting.

• 9:52Chamath Palihapitiya?

  Hundred percent.

• 9:53David Sacks?

  Yeah, look, if you're really willing to vote for her, then that's interesting.

• 9:57Chamath Palihapitiya?

  Absolutely, I would. She's, you know, she's young. Her parents had a small business. She was a small business person. It's tough to be a winner at all of those levels and she managed to do it. I mean, how do you, as a brown woman, get elected to governor of South Carolina and do a lot of really good stuff? That's kind of tough.

• 10:18David Sacks?

  Yeah.

• 10:19Chamath Palihapitiya?

  So I don't know. I think she deserves a close look and she's the only one that didn't kowtow to Trump. She was able to play the game, manipulate him, get him to be on her side, and then still told him to go pound sand. That's pretty cool.

• 10:31David Sacks?

  Well, a lot of, a lot of governors managed to do that.

• 10:33Chamath Palihapitiya?

  No, no, I'm saying, I'm saying she got, she, she went to the United Nations. She did what she needed to do there. That was an important role at that time.

• 10:42David Sacks?

  Actually, Nikki Haley expressly has said she will not run if Trump runs. So she's kowtowed to Trump too.

• 10:47Chamath Palihapitiya?

  She wanted to be his VP, right? Like she was trying to shank Pence, right? That was her plan?

• 10:52David Sacks?

  Maybe it's a smart strategy, but she said she will not run against Trump. The main alternative to Trump in the Republican Party is DeSantis. And then I'd say the number three in the Republican Party after Trump and DeSantis is Glenn Youngkin right now.

• 11:03Chamath Palihapitiya?

  Based on what metrics?

• 11:05David Sacks?

  Based on interest in the party. And, you know, I've talked to people and I think the polling will eventually reflect this. He's very talented.

• 11:12David Friedberg?

  Jake Cal.

• 11:12David Sacks?

  You talk about appealing to independents. He was able to win a blue state. Remember, Virginia went for Biden by 10 points and Yonkin was able to win that state. If you've ever listened to him campaign, he's a very talented campaigner.

• 11:25Chamath Palihapitiya?

  I think Yonkin is very, very talented. Don't get me wrong. And I think that he would be an extremely credible candidate for president. Here's the thing that Yonkin will get destroyed on is he's literally not been in the job for but for a few, you know, 18 months. So he hasn't done anything. And I think that if it does boil down, now, it may not matter, right? Because, look, Obama was a senator for two years or whatever, right? So it may not matter, but to the extent that Republicans demand some bona fides, I think that you'll see Trump and DeSantis attack Yonkin more viciously in a presidential primary than they attack Haley on that dimension of you have no experience. And it'll be hard for him to back it up.

• 12:09David Sacks?

  Just one final point, you know,

• 12:10Chamath Palihapitiya?

  If you had to steel man the other side, that's what they would say.

• 12:13David Friedberg?

  Final, final point. We got it. We got to get started.

• 12:14David Sacks?

  Final point, Virginia has this wonky one-term term limit on governors. So, you know, he's got no choice but to make a play in 2024 because he's going to be termed out anyway.

• 12:26David Friedberg?

  Okay, Jake Cal, as a lifelong independent who's only ever voted Democrat, which of these Republican candidates would you vote for?

• 12:32Chamath Palihapitiya?

  25% Republican, to be clear.

• 12:34David Friedberg?

  Yeah, sure. So which of these candidates would you vote for?

• 12:36David Sacks?

  He voted for Republican one time when he was 12.

• 12:38Chamath Palihapitiya?

  Yeah, no, I voted three times.

• 12:40David Friedberg?

  You like D. J. Haley? You like Klein Yonkin?

• 12:42Chamath Palihapitiya?

  Three times I voted Republican.

• 12:45Speaker 01

  I would like somebody who's younger. And actually, I've been quite influenced by your framing of a person who can control the budget and reduce spending. Because I do think it's kind of the most existential. Risk we have right now. So I might be moving to more of a single issue vote for this presidential election. I love that issue. I love that about you. Which is, I just think like, we have to have somebody younger, who is not going to bankrupt the company. And the more these candidates talk about social issues and not economic ones, I think it's a tell that they're not the right person for the job. That's where I'm personally at. Is that this country has a serious financial existential crisis on its hands, and we have

• 13:27Speaker 01

  to get off social issues, and we have to get on to financial austerity.

• 13:31David Sacks?

  Excellent point. So I assume then, you support the Republicans in this looming budget showdown?

• 13:36Speaker 01

  I actually do, yes. I do think we should hold the line on spending.

• 13:41David Sacks?

  So you support the Republicans voting no on raising the debt ceiling?

• 13:46Speaker 01

  Yeah, I actually do. I think we should start pumping the brakes on spending. And I do think the Tea Party, now that doesn't mean I like those candidates, they're kind of whack jobs, actually.

• 13:57Chamath Palihapitiya?

  But you think George Santos is a whack job?

• 14:00Speaker 01

  Listen, it's the whack pack. The Republican Party has turned into some crazy Howard Stern whack pack. Sacks is appalled by it. He just can't. Some elements of both parties look that way.

• 14:12Chamath Palihapitiya?

  Sacks, would you, would you ever invite George Santos to your house? Who would you invite? Okay, actually, I have a real legitimate question.

• 14:17Speaker 01

  He'd steal the silverware.

• 14:18Chamath Palihapitiya?

  Who would you, who would you be willing to host a dinner for at your house? Not a fundraising dinner, but just invite to the house. You can pick between two people.

• 14:25Speaker 01

  Oh, no.

• 14:26Chamath Palihapitiya?

  Alexandria Ocasio-Cortez or George Campos? Who would you pick?

• 14:28Speaker 01

  AOC, for sure.

• 14:30David Sacks?

  I'd rather probably meet and talk to AOC.

• 14:34Speaker 01

  Of course.

• 14:35David Sacks?

  Because it would be interesting. Do I want to fundraise for her or no? But.

• 14:37Chamath Palihapitiya?

  No, no, I'm not asking fundraising. Who let in the door? Front door. Unlock the front door for.

• 14:42David Sacks?

  Unlock the front door of the mausoleum. I would talk to AOC.

• 14:45Chamath Palihapitiya?

  But what would you do to George? Would you not even return the email if he said, David, I'm in town?

• 14:49Speaker 01

  I wouldn't let him in the main house.

• 14:50Chamath Palihapitiya?

  I'd like to come for dinner. Don't let him in the main house.

• 14:52David Sacks?

  I wouldn't want to deal with him. Yeah, he might, he might steal the silverware or something.

• 14:57Speaker 01

  It's so crazy.

• 15:00Speaker 01

  I mean, it's so nuts.

• 15:01David Friedberg?

  Listen, hold on, hold on, hold on. We gotta get started. As your moderator, I'm gonna try and keep us on track.

• 15:06Speaker 01

  Good luck.

• 15:07David Friedberg?

  Yeah, no, look, it's a, it's an energetic day.

• 15:09Speaker 01

  Welcome to my world.

• 15:11David Friedberg?

  I appreciate my co-hosts and their enthusiasm for all topics.

• 15:14David Sacks?

  We didn't give Jake enough recognition for supporting the Republicans in this budget showdown. I mean, I'm like blown away by this.

• 15:20David Friedberg?

  I think it's great. I think it's great. As you guys know, just to restate, it's my number one concern on earth today.

• 15:26Speaker 01

  Yep.

• 15:26David Friedberg?

  And I, I think that the importance of this topic really needs to kind of rise above politics.

• 15:31Speaker 01

  Of all the things you've said, Friedberg, in the last like six months on this program, it's the one thing that stuck with me. And it's one thing that has like, actually now, I realize is the most important thing for this country, is fiscal responsibility, austerity measures, and looking at how we're spending money, and looking at immigration, and looking at economic velocity, and employment, and competing on the world stage with a solid balance sheet is, the balance sheet is how you compete. The balance sheet is how you compete.

• 15:59David Friedberg?

  I think it rises above social issues, and it rises above climate change.

• 16:03Speaker 01

  It dwarfs them.

• 16:04David Friedberg?

  You, you cannot address climate change, or social issues, or infrastructure, or unemployment, unless we have the ability to operate as a country over the long term, and have the ability to have the continuing credit of the United States dollar. And that's why I think it's so important.

• 16:21Speaker 01

  Friedberg, I'm dealing this with startups I have right now. And I tell them, the balance sheet is how you compete. If your balance sheet is flipped upside down, and you're gonna be out of business in nine months, you're not competing with these two other companies in your sector. You have to have a strong balance sheet, take the austerity measures, make the cuts, and then compete with a strong balance sheet. It's just so obvious. This country's balance sheet is getting flipped upside down. And we are gonna have so many

• 16:47David Friedberg?

  Yeah.

• 16:48Speaker 01

  very complex second and third order effects with the interest payments.

• 16:52David Friedberg?

  If you value austerity, if you value austerity, if you look back in history, and you actually ask, of the prime ministers or presidents of various countries, particularly first world countries, that have actually had an impact in implementing austerity, you know what? The unifying thing that I can say is, women do a much better job than men.

• 17:11Speaker 01

  Okay, you want austerity, you're better off with Margaret Thatcher than with a dude. AKA Nikki Haley. Enter stage.

• 17:21Chamath Palihapitiya?

  I'm totally.

• 17:22David Friedberg?

  I think it's a very hard position to be in as a politician. Because you have to position your objective as one of taking things away. And the primary way to get elected in a democracy, just like in junior high, when you run for president of the junior high class, is I'm gonna make the vending machines free. You get elected. And when you run in politics, you always promise your constituents what they're gonna get that they don't have today. And that's the model for getting elected. Whatever the issue is of the day, whatever the issue de jour, de decade, whatever, it's all about what I'm gonna give you that you don't have today. And so to flip that conversation around, we all have to sacrifice together for the long-term viability of our economic prosperity, we need to do, we need to give up the following things.

• 18:05David Friedberg?

  That is a very hard platform to run on when someone on the other side of the podium, on the other side of the stage, is saying, I'm gonna give you these 10 things. And it's very hard to get elected. And that's why democracies ultimately eat themselves. And I forgot who said it, but ultimately, all democracies end up realizing they can vote themselves all the money. And then you have this big cyclone.

• 18:23Speaker 01

  The Republicans did the most brilliant thing ever recently. They moved from stop the steal to stop the spend. This is a genius thing they stumbled into. Nobody wants to hear them talking about the election being stolen. That's complete nonsense. But stop the spend? We all understand that. Everybody is seeing it in their own personal balance sheets, they're seeing it in their companies, they're seeing it in their families, they're seeing it with their mortgage payment, they're looking at their, you know, college tuition bills, they're looking at their car payments going from $400 to $700, and they're seeing what variable interest does. We have variable interest debt. This stuff is gonna skyrocket. Whether it's Elon's payments for Twitter, or your payments for your mortgage, or our

• 19:06Speaker 01

  country's payments for our debt, we have to stop the spend.

• 19:09David Sacks?

  You're talking about effective interest rates.

• 19:12David Friedberg?

  Yeah, but guys, let's just continue the conversation and talk a little bit about this World Economic Forum gathering that took place in Davos. I know you guys wanted to talk about it this week.

• 19:23David Sacks?

  Can I just applaud J. Cal's intellectual honesty? I'm like blown away right now.

• 19:27David Friedberg?

  Because he's sick. Okay, so look, no, it's because I'm not.

• 19:30Speaker 01

  Moderating. When I moderate, I'm always trying to get the best out of you, Sax.

• 19:33David Friedberg?

  The budget conversation is an important one, as it relates also to the global economy and growth. So Davos took place, you know, over this past week. Just so everyone knows, and I remember, you know, working at Google 2004. I remember like how exciting it was for the executives to kind of start to transition into the Davos stage. It became this moment where you're kind of finally on the world stage. It's an exciting moment for CEOs, for world leaders, for global economists to get together, talk about the state of the global economy, where the world is headed, what we can and should be doing about it. And Davos is also this, this place of pride and prestige for being invited and being

• 20:14David Friedberg?

  a part of the party, the global elite party, as some people are now calling it. And that's what I think is the important conversation, is that the World Economic Forum gathering in Davos has recently been cast as this gathering of the global elites, those who are trying to take control and run the world as they see fit. And Sax, I'd love your point of view on how that transition has happened. Because one of the important ways that the Davos gathering has been cast and the World Economic Forum has been cast is in the negative light of being globalists. And globalism has had a really important role in driving global economic growth and prosperity, and it has had these adverse effects in the US as we've seen with wealth inequality,

• 20:55David Friedberg?

  loss of jobs, offshoring, gutting of industries, and so on. I think that there's a really important way that Davos has been politicized, but the risk of that is significant. Because if we do lean into this globalist notion and say it's all about elites trying to take control of our world, and we all become isolationists, that countries around the world can suffer deeply from the economic consequences of that shift. So maybe Sax, you can kick this off, and especially in light of our conversation today about the need for economic growth and the reduction of global debt to support, you know, a more prosperous world in the future. This idea that right now we're talking about Davos and the World Economic Forum as a gathering of global elites, and maybe Sax, you can kind of give us the history and the point of view on how that positioning's come about.

• 21:38David Sacks?

  Well, it's a meeting of, of global business and government leaders, so they are the elites. I mean, you add them all together and they do control a substantial portion of the world economy and most of the, you know, nations with the biggest economies. So there's no question, these are some of the most important people in the world. A bunch of the articles coming out of Davos reported the somber mood and tone of the conference, the level of anxiety and worry was very high. And I think that... For a brief moment, it looked like these people were staring in the mirror and realizing that their management of the global economy over the last couple of decades has been a bit of a disaster.

• 22:18David Sacks?

  I mean, you do have ruinous deficits and debts piling up in both the US and across the world, something like 350% debt to GDP globally, so we've talked about that. You've got this war in Ukraine that I and many people around the world think was easily avoidable and was a diplomatic failure. You're coming off of two years of badly botched COVID mismanagement, where the governments of the world pursued a horrible policy on COVID and made everything worse. You've got decades of energy policy promoted by the World Economic Forum, where they want to get people off fossil fuels and natural gas and get them on to less dense, less reliable energy, including promoting things like organic farming in Sri Lanka, which we talked about

• 23:03David Sacks?

  on the show, caused their economy to collapse. You've got the World Economic Forum promoting ideas like you're going to own nothing in the year 2030 and you're going to be eating insects because no one should be eating meat. So you've got these like wacky, extreme, you know, environmentalist ideas and anti-capitalist, anti-property ideas coming out of Davos. So I think the whole thing's been a bit of a disaster. And for a brief moment, it looked like these people, again, were self-reflecting on their role in creating these disasters, but of course, the tone quickly shifted to blaming disinformation on social media as the root cause of all these problems, as opposed to their decades of decision-making, running, you know, the leading nations of the world and the leading companies of the world.

• 23:48David Sacks?

  And I think that the blame is properly put, not on social media, but on these leaders for making, you know, bad decisions.

• 23:57David Friedberg?

  Do you believe in the benefits of global trade, where countries trade with one another and shift the sourcing of supply and labor to the cheaper source so that the buyer can benefit from having things at a lower price? And ultimately, the global economy grows as kind of being beneficial to the US over the last 30 years? Or net negative? Because we talked, you know, about the obvious consequences of global trade, where we've had industries gutted in the United States and now we're trying to onshore them again and build redundancy and so on, but that's becoming very expensive and ultimately leads to the inflation of goods and services. And so as you look at kind of the

• 24:37David Sacks?

  Yeah.

• 24:38David Friedberg?

  The positive agenda of the World Economic Forum over the last thirty years being about improving global trade and global relations to enable global trade. Are you an anti-globalist and, you know, do you start to see yourself falling more in that camp as you see and hear more of what comes out of Davos and from these organizations like them?

• 24:55David Sacks?

  Well, look, all economic prosperity comes from trade. If we didn't have trade, then we would all be subsistence farmers and hunters and gatherers. So we basically specialize in something and then create an overabundance of that and trade it for the rest of our necessities. The issue is that trade not only creates prosperity, it creates dependencies because you're dependent on the people you're trading with. And also, it has distributional effects in terms of geopolitical consequences. So trade with China has created some prosperity, but it's also hollowed out the American manufacturing sector while also making China very rich, which has basically turned China into a major

• 25:39David Sacks?

  geopolitical competitor for the United States. So I'm not like a free trade fanatic. I mean, I understand the ways that trade creates wealth, but I think it can also create these downsides that have to be managed. And the fact of the matter is that this unfettered free trade ideology contained the seeds of its own destruction because all the revisionist powers who are seeking to revise the US-led global order, they were basically enriched and built up by the very free trade ideology that neoliberals were promoting. So this neoliberal world order has kind of created the seeds of its own destruction. I think that it would have been much smarter for us two decades ago to be much more restrained

• 26:22David Sacks?

  in the China trade and to not throw open our markets to Chinese products. We basically gave them MFN status. This is back in the early 2000s and it was a bipartisan project and bipartisan decision. But the result of that has been the rapid rise of China at the expense of our manufacturing sectors.

• 26:40David Friedberg?

  And to the benefit of our consumer class, right? I mean, we do have $600 iPhones because of it and we do have cheap TVs and there has been a consumer market that's demanded these low-priced goods to, you know, live a better life, right?

• 26:52David Sacks?

  So, yeah, but so everyone gets cheap goods at Target, but in exchange for that, we now have a real peer competitor to the United States, which is capable of disrupting...

• 27:03David Sacks?

  Let's say our Primacy in East Asia and, you know, is creating a much more challenging world. So, look, I can understand the reasons why people bought into this two decades ago, but I think that if we had it to do all over again, I think most people would recognize that we should not have given China permanent MFN status and we should have been more temperate in our willingness to throw open our markets to these countries.

• 27:28David Friedberg?

  Timo, do you think that the World Economic Forum has kind of transitioned into this kind of neoliberal organization now that's promoting these neoliberal beliefs that aren't really tied to the original construct of global, enabling and supporting global trade and supporting the global economy and creating more prosperity and security around the world?

• 27:49Chamath Palihapitiya?

  I think it appeals to the insecure, overachiever elite.

• 27:53David Friedberg?

  Yeah.

• 27:54Chamath Palihapitiya?

  You know, nobody building anything really gives a shit about Davos. Nobody is thinking what's going on. Nobody even knows when it happens.

• 28:00David Friedberg?

  Right.

• 28:01Chamath Palihapitiya?

  So who cares about it? People who like status and went to fancy schools and wants to feel like they're in the club and that's how they've made it is going to this place, which underneath is a membership organization where people pay based on the number of people that get to go. So is it really that important? Substantively, no. But overachieving surplus elites in the West really value the signal that it represents to other overachieving surplus elites in the West. So that's what Davos is. That's what the Allen and Company Conference has become. A lot of these things started off much purer than what they are today, but these are all

• 28:43Chamath Palihapitiya?

  membership-driven, revenue-generating efforts. In 30 or 40 years, the Allen Summit will probably become that too. It's just the nature of things. So I wouldn't spend so much time focused on a group of people getting together. The funniest thing about Davos that I saw was Zero Hedge, which said that the amount of prostitution is at record levels in Davos. And so it just kind of boils down to what it is, which is like any other conference. It just happens to be with more security guards and less security guards. And the same stupid stuff happens at Davos that happens in Vegas at Name Your Conference, CES. It's just a different kind of attendee. So I think the bigger thing is that...

• 29:30Chamath Palihapitiya?

  We are learning that the world tends to have these policy perspectives that swing in a pendulum. And the problem with the pendulum is that it is at extremes. And Sacks is right. We went from an extreme where we were very closed off and we were essentially subsistence farmers. All of us were. And then the pendulum has essentially peaked probably in the mid teens of this decade or of this century where we realized too much globalization actually hollows out local economies. So we need to find the equilibrium point. And that inherently has more inflation, that inherently has higher prices, and that inherently has slower progress, but more consistent progress that benefits more people.

• 30:15Chamath Palihapitiya?

  And this is what is so ideologically disruptive to, again, surplus elites because they need the $600 iPhone. The idea that they can't upgrade every year drives them into such a tizzy that they need to export all the jobs. Whereas a $1,000 iPhone or a $1,500 iPhone may just mean that your upgrade cycle is two years. And just ask yourself, how many times have you upgraded as soon as the phone came out to realize, man, this phone is actually worse than the previous version? And I probably could have just waited. And there's a lot of work that actually goes into building these things to actually make them better. So all you're doing is you're giving up optionality.

• 30:58Chamath Palihapitiya?

  You're allowing your brothers and sisters to struggle to basically feed the profit motives of one company. That in hindsight doesn't need to happen. So there's an equilibrium. And I think that these next few decades will be about finding it. We have decided, it's categorical, that that level of globalization that we have had, this unitary, singular, monocultural way of thinking about things is over.

• 31:22Speaker 01

  And David's right, it's because that system has created too many threats to the hegemony that brought us there.

• 31:30David Friedberg?

  J Cal, you-

• 31:31Speaker 01

  That's a good thing, I think, in general. It'll be, it'll be more prosperity for more people, but it'll be slower and it will create points of friction that are represented in inflation and higher prices.

• 31:42David Friedberg?

  Right, that's right. So as J Cal, as you know, Chamath points out, like if you're upgrading every two years instead of one year, your economy doesn't grow as fast, you have less spending.

• 31:50Speaker 01

  Yeah.

• 31:50David Friedberg?

  If the price of things go up, you have inflation. The net cost of deglobalization is higher prices and lower economic growth. That's just fundamental kind of macroeconomics.

• 32:01Speaker 01

  No, that's not true. That's not true, because the deglobalization in an individual economy will actually create GDP, because you'll have to rebuild the things that you used to import.

• 32:10David Friedberg?

  That's right, yeah. And over a period of time, theoretically, you could catch up and accelerate. But J Cal, like when you weigh this conversation about Davos and globalization and US security against the one we just had, which is why I wanted to talk about this, we're running into a debt crisis, we have limited spending capacity, we have a significant amount of investment needed. If we are going to cut global trade ties that we've depended on historically and start to build redundancy, can we afford this as a country? Can the West afford this, given the economic slowdowns and inflation right now? And, you know, how do we balance kind of these conversations against our domestic challenges economically?

• 32:53Speaker 01

  Davos has a pretty serious PR problem. They have dubbed themselves like essentially a self-appointed Illuminati for the rest of us, and that they're going to set some global agenda. I think this year's agenda was like finding the future or defining the future. Nobody asked these people to be in charge. And if you look at what's happened in the world, the chaos of COVID, and you look at what's happened in terms of energy policy in Europe- And then this obsession with social issues and being told, you know, these farmers, these truckers, you're bad people, you're not woke, whatever it is. I think the public looks at Davos as the manifestation of these global elites who are lording over them some

• 33:38Speaker 01

  master plan, whether it's real or not, that they're not part of, and that doesn't take them into consideration, and that takes into consideration only their profits. And when you actually peel it back, as Chamath correctly pointed out, Davos is a huge grift. They recruited me to be part of their world leaders 15 years ago, after I'd sold my second company. And I met Claus, the guy who runs it, at some New York Four Seasons event, and then I got the bill. And to be a world leader was $40,000. And I was like, what, a global future leader? I don't know what that means, but I'm not giving you $40,000. Sorry, you had to pay?

• 34:23Speaker 01

  You had to pay to be a global future leader. And you didn't have to pay for a $6,000 TED ticket at the time. This was 40 large. And I just thought, you know, this is not for me. And I think people would much rather see some resiliency in the supply chain, and they would rather see the origins of COVID, and why we spent two years in a lockdown, and was that a cover up of the United States funding, gain of research, you know, being done in Wuhan? Like, and why are we shutting down nuclear power plants? And what exactly

• 35:06Speaker 01

  is the energy policy in Germany? People are looking at incompetent elites going to Davos, having a big party, and then setting an agenda for them that they don't understand or want. And I think this is where, you know, the contempt for Davos is peaking this year. And it should. If you're being invited to Davos, and other people are not being invited, and they don't have a seat at the table and a voice at the table, you can tell That all the journalists there are on an access journalism pass. What does that mean access journalism? They get to come there and they get to hang out with elites. If and only if their coverage fits a certain profile. And if you find me the top 10

• 35:47Speaker 01

  most critical anti-globalization journalists in the world, I can guarantee you that they don't have credentials. I think it's like a bankrupt organization that should just be shut down and the people who are going there are involved. No, I think it's culturally bankrupt.

• 36:01David Friedberg?

  You guys have so much disdain. It's interesting.

• 36:03Speaker 01

  No, I do. I think it's like not what the world wants right now. The world wants transparency. And the world wants ownership of all the screw ups. You know, from COVID.

• 36:15David Friedberg?

  Yeah.

• 36:15Speaker 01

  To energy policy. We want ownership of those issues, not a bunch of elites drinking champagne.

• 36:21Chamath Palihapitiya?

  I'd rather spend a week with entrepreneurs or frankly, spend a week with my kids or frank.

• 36:25Speaker 01

  Yes.

• 36:25Chamath Palihapitiya?

  Spend a week playing poker with my friends.

• 36:27Speaker 01

  Of course, let's do it.

• 36:28Chamath Palihapitiya?

  They're they're like umpteen things that are above the list. So it's kind of like, let them get together. I think it's fine for them to get together. They should do it. I just think that if you're not there, I would not weigh these things so heavily because it speaks more to your own insecurity than it does to their actual influence on things.

• 36:42David Friedberg?

  Yeah, the term elite is an interesting one. You you could companies need a CEO to run the company. It's not run by 10,000 employees. And governments need a president to oversee the government. And I think the idea that some small number of people that are in charge getting together is now being cast as an elite gathering and elitism in itself is the failure.

• 37:05David Friedberg?

  Is I think.

• 37:05Chamath Palihapitiya?

  I don't think it's an elite gathering. I think it's very important to get this nuance right. It's a gathering of elites. And that's very different than an elite gathering. An elite gathering is when like Michael Jordan and LeBron James and Steph Curry get together and work on their basketball game. That's an elite gathering. A gathering of elites is what's happening in Davos.

• 37:25Speaker 01

  That's a fair point.

• 37:26David Friedberg?

  But they are the presidents of their companies and the presidents of their countries.

• 37:30David Sacks?

  So I would differentiate between the people who are merely attending or paying the $40,000 who are probably a bunch of hangers on.

• 37:37Speaker 01

  It's now 250, by the way.

• 37:39David Friedberg?

  $250,000.

• 37:40David Sacks?

  250,000. Yeah, anyone willing to pay that is like, you know, totally an insecure, you know, surplus elite.

• 37:46David Friedberg?

  By the way, I just got back from Davos.

• 37:48David Sacks?

  Oh, you did? Okay. Well, congratulations. Looks good on you, though.

• 37:51David Friedberg?

  Right. Go ahead.

• 37:52David Sacks?

  Looks good on you.

• 37:53Chamath Palihapitiya?

  Did you spend your own money or your LP's money?

• 37:56David Friedberg?

  No, I didn't go to Davos.

• 37:57Speaker 01

  Oh, my Lord.

• 37:59David Friedberg?

  If I mean one person that went to Davos that spent their own money, it's like probably not.

• 38:03David Sacks?

  Right, exactly. So then there's the hangers-on who are spending $20,000 to feel important, but then there's the people who are invited who probably don't spend any money, who are basically speaking, right? And you got to say that the the group of people who are speaking at Davos individually and collectively are quite influential. They are the leaders of countries and and Fortune 500 companies.

• 38:25Chamath Palihapitiya?

  Sure, but you can agree that they literally don't say anything that's noteworthy because they're not allowed to.

• 38:30David Sacks?

  They're not saying anything that's that different of what they would say the previous week or the following week. So but it's

• 38:35David Friedberg?

  It's a forum. It's a platform for

• 38:36David Sacks?

  It's a, yeah, it's a

• 38:38David Friedberg?

  Getting amplification.

• 38:39David Sacks?

  Yeah, to get together. Look, in terms of the critique of it, Friedberg, you asked, how far back does this go? It's this is not like a new thing. The the term Davos man was coined back in 2004 by a Harvard professor named Sam Huntington, who wrote a book called Clash of Civilizations. He's the professor of international relations at Harvard. And he coined the term Davos man to refer to a globalist who, quote, "had little need for national loyalty, who viewed national boundaries as obstacles that are thankfully vanishing." That's how Huntington defined Davos man. And there's been a reaction to these Davos men that's been growing for a couple of decades.

• 39:22David Sacks?

  I mean, obviously, the election of Trump was a reaction to that. Brexit was a huge reaction to that. And I think that the resistance to the imposition of their, again, their globalist policies, which I guess you could define as believing in this like borderless world, you know, economically and politically, I think that's been receding in favor of more nationalist leaders who want to promote their own country's interests. And I think that that trend is going to continue.

• 39:51David Friedberg?

  Well, Chamath, let's let's transition this to the the broader question that I think we got into it a couple of episodes ago on how can we afford this transition? If there is this mounting Kind of trend against globalization, this mounting de-globalization movement and effort, particularly in the US. And again, as Sacks pointed out, global debt to GDP is something like 300 to 350%, depending on how you count. And we're running into a debt ceiling here in the US. I guess the question is, how do we afford to build the infrastructure redundancy and make the investments at home to replace global trade? Can we afford to do it? And how's this going to play out as we run into this,

• 40:36David Friedberg?

  you know, debt ceiling vote?

• 40:37Chamath Palihapitiya?

  I don't think that's the right question. I think it's the inverse of that question. How can we afford not to? With the amount of discontent and the amount of economic strain that people feel, if you want to really call populism, you're going to have to create economic vibrancy at home. When people are making money and they find purpose, they're less agitated. They're not storming the Capitol. They're not electing fringe candidates. They're not doing domestic terrorism. They're just going to work and building a life, right? We know that. So how can we afford not to? How can we afford not to, like, bring back jobs to the heartland of America? So the reality that I have, and I think a lot of

• 41:18Chamath Palihapitiya?

  people have, is that this debt to GDP thing is a bit of an intellectual red herring. And the reason is people talk about this thing constantly in these absolute terms with no historical precedent that relates well to our current moment. There is no magic number at which thing this experiment that's called America fails. So I think that you have to be a little bit more intellectually honest and say that, at best, it's a relative problem. And it's relative to the countries that have already established dominance, of which there are eight or nine, and then the emerging economies, and then thinking about what critical things will they bring to the table in 15 or 20 years from now?

• 42:01Chamath Palihapitiya?

  And in that context, I think that people will hem and haw, but ultimately, they'll capitulate, they will raise the debt ceiling, and they'll continue to fund this transition away from globalism. And I think that's the argument that will get the Republicans over the line, because it's going to bring a lot of spending and stimulus and jobs to frankly, a lot of red states that would otherwise kind of continue to wither and die on the vine.

• 42:26David Friedberg?

  I think here's my biggest concern. We're either trying to walk a tightrope, or there's no tightrope to walk. And if we make these investments, and they're not economically viable investments, it's a path to ruin. And what I mean by that is if we're building factories, manufacturing facilities, infrastructure that relies on yesteryear's technology and systems of production and kind of economic systems, and there are alternatives that are competing on a global stage that are better, more productive, more advanced, then we lose. And we've made an investment in a negative ROI way.

• 43:07Chamath Palihapitiya?

  But hold on a second. Can I ask you a question?

• 43:10David Friedberg?

  Yeah.

• 43:10Chamath Palihapitiya?

  See, when you say that, though, you're making a very basic assumption, which I think you can question, which is you are underpinning that on fundamental economics that can change if we choose to. For example, let's take like natural resources. Okay. Every time you do a plan, the industry, and I define the industry as every for-profit company and Wall Street and the debt markets, they refuse to underwrite this thing at a higher cost of capital. They use a whack of six or seven or eight, and they will fight tooth and nail to use the smallest discount rate possible, because it allows them to capture more of the profit dollars. But if you actually had a realistic whack of like 10% on a massive infrastructure project, guess what?

• 43:55Chamath Palihapitiya?

  You're actually pretty equivalent to a government. And in fact, in many cases, the government becomes cheaper. So I think the thing that is worth debating, and I'd like your reaction to this, it's not that what you're saying. It's we refuse to change the guardrails on our profit-making ability. And if you extended the window, if you changed the discount rate, if you said PEs can be different, you would have a very different economic justification for what you just said. It completely changes 100 basis points, changes everything you're saying by tens of years.

• 44:24David Friedberg?

  One way to describe that, yeah, is another way to reframe what you just said is that the useful lifespan of an investment isn't 40 years or 50 years, but it may be 12 years. And if you if you recast the investment decision as this has to be a 12 year return, instead of allowing it to be modeled as a 40 year return, then you start to really filter out a lot of the nonsense. And you can actually see real payback. It doesn't make sense to spend $100 billion on a train to take people from LA to Fresno, or whatever craziness the California High Speed Rail program has turned into. It was originally like a billion dollars to go from LA to San Francisco. There was economic justification.

• 45:07David Friedberg?

  To get payback on $100 billion, or whatever it's ballooned into, the whole system should be shut down. So I guess there's a, from a policy perspective, an accountability framing that's missing, but also bringing in the time horizon on which we need to get paid back for these things. My point was that in China, and I've made this point many times, but I just think it's a really important one that'll play out over the next couple of years. They're building 450 nuclear power plants. They're going to get the cost of industrial power below five cents or four cents a kilowatt hour. And they're electrifying all their factories. As they do that, it's no longer a unit of human labor that's needed to produce goods. It's a unit of electricity. And if they're driving down the cost of electricity, and all products can be made using electricity, you have a huge economic advantage.

• 45:52Chamath Palihapitiya?

  It's not the cure all that you think that is. Even if you have free energy, you have to think about the inputs. And the thing that China-

• 45:58David Friedberg?

  But no, I'm sorry, I'm not talking about energy. I'm just saying a general framing, like-

• 46:02Chamath Palihapitiya?

  No, I understand.

• 46:03David Friedberg?

  My point being, like, the investments we should be making are where is the puck headed? Not where has the puck been?

• 46:09Chamath Palihapitiya?

  No, no, so I just I just wanted to comment on where the puck is heading. Even if energy is zero in China, you have to think about inputs, meaning factories make things with inputs. And if you look, for example, in natural resources, the inputs by and large don't exist in China. And so all I'm saying is that all of these inputs, whether, again, you can take natural resources that proliferate massively in the United States. It turns out that India is- Utterly, utterly, utterly poorly addressed in a geographical survey perspective. And we're finding that India's raw resources are off the charts. Okay, there are certain places in Africa, tons of stuff in Indonesia and Australia. All of those things may not have to go to China because there are subsidies

• 46:54Chamath Palihapitiya?

  or there are equivalently cheaper decisions that governments can make so that they choose not to send it. And all of a sudden, all of that spending doesn't matter as much because the Australian government makes a trade off that says, you know what? I'd rather have these jobs here and I'm willing to have a longer payback cycle for these jobs to be here than instead of ship it to China. And they tell the Australian citizens, I'm sorry, guys, but you're going to have to replace your car every seven years as opposed to every five. I hope you're okay with that, but that'll mean full employment and it'll prevent fringe candidates and populism. And let's go forward.

• 47:30David Friedberg?

  Where do you invest?

• 47:33Chamath Palihapitiya?

  I am investing, I am investing a lot of money

• 47:39Chamath Palihapitiya?

  in those places that control the natural resources that are poorly understood. Meaning, there are places like India where our geological survey capacity is relatively naive. And it turns out that in critical parts of the energy supply chain or other places,

• 48:00Chamath Palihapitiya?

  they can play a huge role. And the Indian government's cost of capital has an element, they're sophisticated enough to add an element to the formula that accounts for full employment. If I build it in this state and if I try to get this many jobs created, the full circle feedback of that allows me to actually transfer price it into the Indian market at this price, which is cheaper than anything that China can do, even at zero energy. That's the kind of sophisticated decision making that is emerging because of this de-globalization trend. And it's happening everywhere. So the Indians are doing it, the Germans are doing it, and then the US is doing it. And then on top of that, what they're doing in terms of game theory,

• 48:45Chamath Palihapitiya?

  which I think is even more sophisticated is they're not letting China be alone, they're actually now slowing China down. Because China turns out actually needs inputs from these Western economies and they're like, "We're just not going to give them to you anymore, so do the best you can." For example, in semiconductors, the Dutch, the Germans, the Americans, we've now essentially embargoed all of our most sophisticated equipment from ever getting in there. That will increase, even with zero energy, the cost of what comes out of there. And that will balance the playing field so that the Germans, the Dutch, the Americans, can bring other partners in at a different cost of capital to make it economically neutral and at parity. And the reason they'll do it is to create jobs for Americans, or the Dutch, or for the Germans.

• 49:30Speaker 01

  Okay. I think the most...

• 49:32Chamath Palihapitiya?

  Yeah, go ahead, Dick.

• 49:33Speaker 01

  I just, I think the most important thing here isn't like energy. I don't think it's infrastructure. I don't think it's natural resources, at least for America. It's entrepreneurs. And that's what it's always been for this country. And it's immigration is the silver bullet here and inspiration. And the freedom that this country has for entrepreneurs and founders to pursue a vision, to start a company, that's why we've won so big historically, is the combination of immigration and the inspiration that these entrepreneurs do on a global basis. To get more entrepreneurs to come to this country, to go to Stanford, to start companies. And that's why China is now losing.

• 50:15Speaker 01

  They cribbed this incredible formula we had of letting Jack Ma do Alibaba and then they decided to, for whatever, you know, insecure or stupid reason or pragmatic reason, to consolidate power. And that's what will push the world forward and make our country thrive. We have to fix immigration. We have to keep letting entrepreneurs define the future because the government can do so much. They can underwrite a couple of chip factories here or there. Sure, we could put money into nuclear or fission or fusion, whatever the next technology is, but you need a singular person who wants to make it their life's mission, who wants to have...

• 50:56Speaker 01

  Their sense of pride and innovation pushed the world forward, and those people are rare. And we are in a competition globally that we are not focused on, that we need to get refocused on to recruit the greatest minds in the world who want to change the world to do it on American soil.

• 51:14David Friedberg?

  I do not disagree with you, J. Cal. I think, you know, to my earlier comment about how do we walk the tightrope of the debt burden, the deglobalization and populism movements, and the challenges and opportunities ahead, it has to come through innovation. I think that's how you, you have to invent a new tightrope, basically.

• 51:30Speaker 01

  I think the challenge, though, is, Friedberg, that it takes a recognition that there are singular individuals in the world, one in a million, one in 10 million, one in 100,000, whatever it is, who can just drive an entire economy forward, whether it's Gates with Microsoft or Steve Jobs with Apple. There are singular individuals who come to this country.

• 51:53Chamath Palihapitiya?

  Bam, Bam Brogan with the tunneling company.

• 51:59Speaker 01

  Nice, Paul. Nobody knows what you're talking about, except for me. There are people who will push these things forward and take risks, and we have to

• 52:08David Friedberg?

  Yeah.

• 52:08Speaker 01

  recognize that it's a small number of individuals backed by a large amount of capital that create massive jobs and great prosperity. It's an uncomfortable conversation for people to realize that it might just be a couple of dozen people a year immigrating to this country that change

• 52:25David Friedberg?

  To get a

• 52:26Speaker 01

  the fate of this country.

• 52:27David Sacks?

  Yeah. Why do you need to allow 3 million migrants to stream across the southern border every year?

• 52:32Speaker 01

  Because you don't know which one it's going to be. That's why.

• 52:35David Sacks?

  Really?

• 52:36Speaker 01

  You don't.

• 52:36David Sacks?

  That's, that's your immigration policy, is open border so that one in a million

• 52:40Speaker 01

  I said recruitment. That's the opposite of an open border.

• 52:43David Friedberg?

  So you're

• 52:44David Sacks?

  How are you recruiting?

• 52:45David Friedberg?

  Yeah, your immigration system.

• 52:46Speaker 01

  I can explain that. It's a great question, Sax. There are, there are two things to look at here. There is pragmatic.

• 52:51Chamath Palihapitiya?

  Jason, Jason.

• 52:51Speaker 01

  Hold on, let me finish my sentence.

• 52:52Chamath Palihapitiya?

  No, I was just going to ask you to just clarify, as you say, it's, you're, are you saying that the PhD student that starts Google is streaming across the border or actually applying for?

• 53:01Speaker 01

  No, absolutely not.

• 53:01David Sacks?

  Elon applied to go to college here.

• 53:05Speaker 01

  Let me parse it for you. There's immigration and then there's recruitment. And if we frame this process with those two different words. There are people who are, yes, immigrating, streaming across the border, however you want to frame it, Sacks. I don't look at it in a political way. And then there's recruiting the most elite talent in the world. We can do both of these things. One of them, you know, helps farmers have people to work the fields, to have people take entry level jobs to work in the service industry. We should bring in two or three million of those people per year. We should make it legal. And we should celebrate it because we have so many of those positions open that Americans don't want to take. We should then also, in

• 53:46Speaker 01

  parallel, and without confusing the issue for political reasons, recruit people to come to our universities, and when they graduate, have their citizenship stapled to that diploma, and not let them leave the company, country, and let them start companies here. Instead, what we do is, we make them fight to stay here. We should be recruiting the smartest, most talented people. That will be hundreds of thousands of people per year, well hundreds of thousands.

• 54:12David Friedberg?

  Okay, Sacks, response.

• 54:12Speaker 01

  Millions coming across the border.

• 54:14Chamath Palihapitiya?

  Sick J Cal is very reasonable, no?

• 54:16David Friedberg?

  Yeah.

• 54:16Chamath Palihapitiya?

  Sick J Cal is great.

• 54:17David Friedberg?

  Yeah.

• 54:18David Sacks?

  I think that...

• 54:19David Friedberg?

  He's so much better when he doesn't moderate.

• 54:20Chamath Palihapitiya?

  Yeah.

• 54:21David Friedberg?

  Yeah, go ahead, Sacks.

• 54:22David Sacks?

  You know, I'm an immigrant. You know, my dad came over, yeah, my dad came over in 1977 when I was five years old. Of course, he had an M.D. He was a doctor. He actually had like skills and wasn't immediately going to become a net government dependent. So, I think that it makes sense to allow immigrants who can actually add something into our economy and bring skills and all the rest of it. But the problem we have is that if you want to take that reasonable position, you're told that you basically have to accept a situation of de facto open borders, which is ridiculous.

• 54:57Speaker 01

  No, you don't. These are two separate things, and I'll just say, your party...

• 55:01David Sacks?

  They've become conflated.

• 55:02Speaker 01

  So, your party is the number one party that conflates these two issues. You know they're two separate issues.

• 55:08David Sacks?

  The Democratic Party has conflated these issues.

• 55:09Speaker 01

  Okay, both parties are conflating them. Here at the All In Podcast, can we agree that one group of people could recruit people for PhD programs while one group of people allows people across the border to take service jobs?

• 55:21David Sacks?

  Yes, obviously, the more nuanced policy... Is the way to go, but but look, let me tie this back to Davos man. What was the definition of Davos man? It was somebody who is pushing this ideology of free trade and open borders to such an extent that it creates a nationalist backlash or populist backlash.

• 55:38David Friedberg?

  Fair enough, yeah.

• 55:39David Sacks?

  That's exactly what's happened at our southern border is you have the people who believe in immigration push that ideology to such an extent that they won't create a rational sensible southern border and process at our southern border. It's chaos down there.

• 55:55David Friedberg?

  And the response is that the dream team.

• 55:57David Sacks?

  Yeah, I'm in favor of bringing in the dream team.

• 55:59David Friedberg?

  But the response of open borders is the creation of this nationalist movement, right? The nationalist movement only exists in the face of open borders. I think that's that's the point, right? Like the extreme

• 56:11David Friedberg?

  bears the extreme.

• 56:12Speaker 01

  I think the immigration system should be based on points, just like Canada.

• 56:16David Sacks?

  If the Davos men don't start taking in, start taking into account these national considerations around the defense of their borders and these issues around trade hollowing out the middle class, then there's going to be an intense backlash. And I don't think those elites have been managing the situation very well. It would have been, it would have been better for them to pursue the more nuanced policy you're talking about.

• 56:38Speaker 01

  Why are we conflating the issue then? Why do the Democrats and the Republicans, Saks, make this such a polarizing issue? Instead of stating it the way I did, recruitment and the southern border. It's so easy to separate them.

• 56:51David Friedberg?

  You know, when you, when you conflate them, you can incite an emotional response from your voting base. That's it. That's why all of these issues, that's why all of these issues get based out. They get based out to the point that then you can drive someone to vote for you because you've now framed the other side as this extreme side and that's it.

• 57:08David Sacks?

  You earlier said, hold on, before you got suddenly very reasonable, you said that we had to allow two to three.

• 57:14Speaker 01

  You haven't listened.

• 57:16David Sacks?

  I'm gonna quote something you just said a minute ago. You said that we had to allow two to three million, two to three million completely destitute, practically illiterate migrants to stream across our border because one in a million of them might be an Elon Musk.

• 57:29Speaker 01

  No, no, there could be. No, no, hold on. I was talking about the broader.

• 57:33David Friedberg?

  You can take it back, J Cal.

• 57:34Speaker 01

  No, no, I'm not. Immigration typically includes, when you say that word, the corpus of people coming in for education and the people coming across the southern border. So if you were to say immigration, most people would reasonably say that's both of those buckets. I separated them out here so we could have a reasonable discussion. Recruitment of higher education talented people with low education migrant workers. They are two different buckets and you have to be able to say, these are two different buckets and that we should have a point-based system. If, and this is the conversation that doesn't happen amongst politicians, but can happen here. Look at Canada, look at Australia, they have what's called a point-based immigration system. They give you points for everything that you bring to the country.

• 58:16Speaker 01

  If you bring money, if you speak the native language, if you have a degree, if you have a higher education degree, or you have skills that that country needs. Our country needs to move to a point-based system. If you're coming across the border and you don't speak the language and you don't have an education, you have zero points. If you have a master's degree and you speak the language, you have two or three points and you can let in buckets of people based on compassion, based on needing service workers and based on needing the next Elon Musk or the next David Sacks or Chomov Poliopetia.

• 58:46David Friedberg?

  I think the, the argument, J Cal, is that the compassion argument falls on deaf ears in a time where people feel we cannot afford it and it's a luxury to embrace that model of immigration right now. Just pick a number we can reasonably absorb. This is what Finland did.

• 59:00David Sacks?

  People look at the southern border and see chaos. Obviously, they want to get that under control before they're going to adopt your, you know, point-based system that they don't trust.

• 59:07Speaker 01

  We can do two things at once. We could do, no, the point-based system would solve the whole problem. Are you opposed to the point-based system?

• 59:13David Sacks?

  No, I like the idea of, I don't know if my points match your points, but in concept, I like the idea.

• 59:18David Friedberg?

  No, no, we don't need to.

• 59:19David Sacks?

  I like the idea of admitting immigrants based on skills the country actually needs. And a simple recognition that is better to bring in people who are immediately productive and could add to our economy as opposed to being net government recipients, dependents.

• 59:33David Friedberg?

  We're done, we're done.

• 59:34Speaker 01

  There are countries, I just want to make a point, there are countries, the Scandinavian countries specifically, that have said we can accept up to this many folks who are uneducated, who don't speak the language, because we have this many teachers and this many slots in school. And so, I think it was Finland and Sweden, they said we can accept 50,000 per year of this type of immigration based on compassion. That's the reasonable discussion that has to happen here.

• 59:58David Sacks?

  But Jake, did you say that we have to do these two things at the same time, meaning that until we impose an overhaul of our entire immigration system to be based on skills and points, that we can't enforce the southern border?

• 1:00:11Speaker 01

  No, I think you can enforce the southern border and do it.

• 1:00:13David Sacks?

  Okay, so we agree that that all should happen.

• 1:00:15Speaker 01

  It's not rocket science, Canada's doing it.

• 1:00:17David Sacks?

  Let me just tell you, there's gonna be no...

• 1:00:18David Friedberg?

  Guys, I gotta move us.

• 1:00:19Speaker 01

  Canada and Australia are already doing it.

• 1:00:21David Sacks?

  Let me just tell you, there's not gonna be a broad-based constituency in this country for the type of immigration reform you're talking about until you get the southern border under control, because people look at that on the news and see chaos. And there's no excuse for that.

• 1:00:32Speaker 01

  They should be thoughtful. They should be thoughtful. And they should just look at what Canada and Australia have done. Those countries have actually controlled this, and it's not a polarizing issue there. It's a pragmatic issue.

• 1:00:42David Friedberg?

  Okay, guys, I'm gonna move us forward to the banning of TikTok. So I wanna kinda change the tone a little bit. This story recently is that TikTok has been banned for use on the campus Wi-Fi networks.

• 1:01:00Speaker 01

  Let's go.

• 1:01:00David Friedberg?

  At a number of universities, including UT Austin, Auburn, Boise State, the University of Oklahoma. So college students can't access the app when they're on the campus network. This is following 19 states that recently banned TikTok and government devices. As everyone knows, TikTok is a product from ByteDance, which is a Chinese-based company. And there's been quite a lot of political and regulatory huffs and gruffs about ByteDance having this level of insight and access to users in the United States, with the assumption being that much of the data that they're pulling out of the app is available to the Chinese Communist Party, which creates a security threat to the United States. That's one argument.

• 1:01:46David Friedberg?

  I think there is also a significant tie-in to ByteDance. There's over $8 billion of capital invested in ByteDance by firms that we know well, like Sequoia Capital, Tiger Global, Co2, Susquehanna, and others. They're trying to find a way to monetize their investment in what is truly the most viral, fastest-growing, highest-revenue-growing, biggest startup in the world right now in ByteDance. So there is a restructuring proposal apparently underway that's being discussed in Washington, DC right now, to try and restructure the organization and the ownership structure and the oversight of TikTok and ByteDance such that US regulators and US companies can oversee the data, the use of the data, the algorithms underlying TikTok, and monitor them from within the United States.

• 1:02:31David Friedberg?

  Question for this group here on the McLaughlin Group of 2023 is, does that do enough for you, McLaughlin? Do you guys think that that's enough? First up is Chamath, who's been silenced for a bit.

• 1:02:44Chamath Palihapitiya?

  I think this is really bad news for ByteDance. Basically, what's happening is that, and TikTok, all the frustration that all these legislators and politicians have had over Facebook and Google and other sort of big tech companies is going to get focused on ByteDance because you have this common enemy that you can point to as a boogeyman of sorts. And I'm not saying that it's right, but I think that what you're starting to see is it's much easier to pick a fight with a Chinese company and win and get broad-based support than it is to pick a fight against an American company with a bunch of American employees, an American market cap, an American know-how, and American IP that gets impacted.

• 1:03:28Chamath Palihapitiya?

  So I don't think this is going to end well for TikTok. And I think the goal, if I were any of these people on the cap table, would be to sell it in secondary to somebody else and get out. I think the next big shoe to drop Is going to be advertisers who come under a lot of pressure. So for example, think of all the advertisers that have left Twitter. There is a point of efficiency where you can live with all of the mess that Twitter has. Because it comes with a lot less scrutiny and oversight and political pressure than advertising on TikTok. And that, I think, is the next kind of like big wave here. So I think it's very, very bad. I think the enterprise value of this company is quite challenged.

• 1:04:14Chamath Palihapitiya?

  And these guys should try to sell and get up. Who are the buyers in that secondary market, though? I mean, that's a lot of capital. The thing is, the cap tables haven't been segregated, so what you own is equity in ByteDance. Right. But the problem is the look-through ownership would will discount a lot of TikTok if they see a lot more of this stuff happening. You guys have to remember, this is the first three or four weeks of 2023. Wait till we're here in September and October and November. Wait till the election year starts. It's not good. So it's a discount on ByteDance that probably takes ByteDance down by 70 or 80 billion. So that's a 35, 40% discount to their last mark.

• 1:04:57Chamath Palihapitiya?

  So, you know, if somebody can sell in the high 100 billions of dollars, I think you should, I think they should probably, they should consider it. There's it's worth it, I think. Jake, how I know you got strong opinions.

• 1:05:05Speaker 01

  Well, no, I think you have to be incredibly pragmatic here. This is the same as the 5G issue. You cannot trust the Chinese government to not steal intellectual property or to put backdoors into the software. It is common business practice there. Huawei was banned. They basically stole the source code from Cisco. That was proven. And it was proven that they were spying on people. Canada, the UK, the United States, Vietnam, everybody has banned using 5G technology from China for a reason, because they will use it to spy on you. This is the nature of an authoritarian government. It is far too powerful to have a not only the surveillance capabilities that are built into owning TikTok in the hands of

• 1:05:49Speaker 01

  the Chinese Communist Party, to have the ability to very, in a very nuanced fashion.

• 1:05:57Speaker 01

  Trends, certain videos that would steer the United States in a certain direction.

• 1:06:01Chamath Palihapitiya?

  Into stupidity.

• 1:06:03Speaker 01

  Yeah. Towards stupidity is one, of course, right? They're letting their...

• 1:06:07Chamath Palihapitiya?

  That 60 Minutes, that 60 Minutes clip is incredible, right? It's like they show, they're showing science videos to the kids in China.

• 1:06:13Speaker 01

  Exactly.

• 1:06:14Chamath Palihapitiya?

  And they're showing stupid nonsense to the kids in America. What do you think over millions of videos?

• 1:06:18Speaker 01

  They're trying to do psy...

• 1:06:20Chamath Palihapitiya?

  Our children versus their children.

• 1:06:21Speaker 01

  You can be 100% certain they're doing psy-ops on our children as we speak. They are trying to make us dumb and distracted while they get smart and sharp.

• 1:06:29Chamath Palihapitiya?

  And by the way, if you're, if you're a zuck or a sundar...

• 1:06:32David Sacks?

  That's just not the choices of our kids. The algorithm just gives you more what you want.

• 1:06:36Speaker 01

  Exactly.

• 1:06:37Chamath Palihapitiya?

  Of course, but that's like saying if you gave kids a choice between broccoli and chocolate bars, of course they're gonna pick chocolate bars.

• 1:06:42Speaker 01

  If you put kids in the supermarket and say eat, they're gonna go right to the cereal aisle.

• 1:06:46Chamath Palihapitiya?

  The job of a parent's axe is number one, know their name, and then number two, differentiate.

• 1:06:50Speaker 01

  You need a pen and pad, Sacks.

• 1:06:52Chamath Palihapitiya?

  Good things and bad things.

• 1:06:53David Sacks?

  Let me ask you a question. I agree with Chamath that the future is not bright for TikTok here because it's gotten caught up in the geopolitical rivalry between China and the United States. And that's only gonna keep getting more and more intense. The US and China are headed for a big security competition and ByteDance is caught in the middle. So I agree with Chamath about the future. But you know, this claim is made that TikTok is spyware. And you know, it's listening to you, it's surveilling you, it's keeping track of you. Like, what is the evidence for that claim? I just want to understand that a little better. Like, has anyone ever proven that like TikTok is spyware? And if it is, why doesn't Apple stop it? Can you just explain that to me?

• 1:07:33Speaker 01

  Yeah, I think that... Apple has a complicated relationship with China, so...

• 1:07:36Chamath Palihapitiya?

  The claim...

• 1:07:38David Sacks?

  So Jake, your claim is, let me, I just wanna pin Jake out down on this for a second.

• 1:07:42Speaker 01

  Sure.

• 1:07:42David Sacks?

  Your claim is that 100% TikTok is spyware and Apple is letting it happen because of their relationship with the CCP.

• 1:07:51Speaker 01

  I do not have the evidence of specific instances of them spying, but I do know that this is what the Chinese government's aspiration is, is to be able to have backdoors to spy on all Americans. That's why they, you know, are trying to get Huawei into as many places as possible.

• 1:08:06David Sacks?

  Does iOS allow that to happen?

• 1:08:06Speaker 01

  Well, you don't even need to know that because you can just open your eyes and look at, and I mean that as an insult, but you can just look at what TikTok has the access to. It has access to your location, has access to your camera roll, and it knows...

• 1:08:21Speaker 01

  You know, everybody in your social circle because it has your address book. So by having your address book, having your location and having access to your photo roll, they have you compromised by default.

• 1:08:31Chamath Palihapitiya?

  The default settings when you install TikTok, it turns on local network, turns on microphone, turns on camera, turns on background app refresh and turns on cell data. So TikTok is no worse than anybody else in that because a lot of other apps are very aggressively trying to harvest all that data as well. Sax, like it's like Alexa is always listening to you, right? But you feel, but you feel safer with Alexa because it's a, it's an American company or the perception of safety is there. So I don't think there's a huge thing to prove other than yeah, there's a setting that allows you to turn on the microphone and it's a default and they do it.

• 1:09:09Speaker 01

  But they were caught. I just want to make sure you guys understand this. According to the New York Times, ByteDance, the Chinese parent company of TikTok, said on Thursday that an internal investigation found that employees had inappropriately obtained the data of US TikTok users, including that of two reporters. Over the summer, a few employees on a ByteDance team responsible for monitoring employee conduct tried to find the source of suspected leaks of internal conversation and business documents to journalists. In doing so, the employees gained access to the IP addresses and other data of two reporters and a small number of people connected with the reporters via the TikTok accounts. They were trying to determine if those individuals were within the proximity of ByteDance employees, according to the company. So there's an example of them using the technology to try to track down leaks.

• 1:09:49David Friedberg?

  Hold on a second. That's exactly what any app, a company can do. The photos, the screenshots we got from Twitter that were shared in all those files or whatever that happened a few weeks ago showed that many Twitter employees were able to log in and just view the direct messages between Twitter users and that there's no necessary logging or access privileges required to have access to that information. There are these holes in all of these social networking and consumer, digital consumer product companies that allow individuals to go in and do things with consumer data.

• 1:10:22Chamath Palihapitiya?

  No, it's not a hole, it's a feature.

• 1:10:24David Friedberg?

  It's a feature, sure, but it doesn't reference like some systematic utilization.

• 1:10:29Speaker 01

  Yeah, but those aren't controlled by a government agency.

• 1:10:30Chamath Palihapitiya?

  No, that's that's the key thing. What Jake L just said is a key thing. Everybody tries to get these things turned default on. Every app tries to get access to your camera roll, to your contacts, to turn on the microphone. The problem isn't that those settings exist because Apple created them and Apple created a privacy framework where you have to opt out of it. Okay? The issue is that that data, instead of going to an American company with American on with American data centers and American service, it's going to somebody in China. Or it's the perception that that's happening that I think is a death knell. And this is also excluding all of the work that every single big tech company must be doing to point the finger away from them. And this is something they can all agree on.

• 1:11:14Chamath Palihapitiya?

  If you got, if you got Andy Jassy and Zuck and Sundar and Satya Nadella in a room, what do you think they could all agree on? Hey, guys, are we better off pointing the fingers at each other? Or should we just point it over there to a company based in China?

• 1:11:28David Sacks?

  So do you think, do you think that TikTok in a way is being scapegoated here? Or do you think it's a real security threat?

• 1:11:34Chamath Palihapitiya?

  Both, both. Yeah, that's yes to both. And you know what? I think what we saw with the Twitter files, for me personally, the one that was most concerning was the fact that the FBI was being treated, they didn't have control of it, like the Chinese government has control over ByteDance at a wholesale level. But they were being given, you know, pretty close to They weren't given god privileges, but they had more influence than they should have, and they should have gotten subpoenas, right? So even in a democracy like the United States, you can see the FBI using techniques to get employees on their side to get information on specific users. Imagine if the FBI just had god mode for Twitter or Facebook.

• 1:12:19Chamath Palihapitiya?

  Like what would happen in, even in a democracy, we see it happen. We see abuse. The Chinese government is a communist party. They have no problem sucking the data down of every single person and using it however they want.

• 1:12:33Chamath Palihapitiya?

  I think the problematic thing is that when you look at the capital structure of these Chinese companies post now Xi being ruler for life is the Chinese government has typically a seat on all of these boards. They also typically have a golden vote. And so when you think about the governance, the governance of these companies has tilted far away from a normal cap table where it's one shareholder, one vote to you are allowed to exist on this cap table at the benevolence of the government. And so I think that you have to factor that in as well, Sak. So, you know, is it amplified? Probably. But is there also non-trivial risk that we would never give to

• 1:13:16Chamath Palihapitiya?

  any other company? Absolutely. Like, you know, take the opposite example. How would we react if the government had a golden vote and a board seat on Meta going into an election?

• 1:13:33Chamath Palihapitiya?

  I mean, one party would be crazy and the other party would stay mums the world.

• 1:13:37David Friedberg?

  Well, I mean, let's talk about, but let's, let's, let's be pragmatic. The news reports that came out this week indicate that they're talking about restructuring ByteDance. So let me propose this to you guys. If TikTok US were set up as TikTok US Inc., it's its own C corp, it's based in the US, and ByteDance owns passive, non-voting shares in TikTok US Inc. All the software, all the services, the algorithms are all run in the US. The data is only sitting on servers in the US. And the Chinese have an economic interest ultimately in what happens with that asset. But that asset is entirely managed, run, controlled in the US. And I think that's where this is going

• 1:14:16Chamath Palihapitiya?

  to end up. You trigger CFIUS, so you'd have to then make an exception.

• 1:14:21David Friedberg?

  That sounds like it's part of the discussion that's underway right now is how do we get past this regulatory hurdle? Because I don't know, I've said this in the past, I don't know how you turn off TikTok for 100 million people that are using it for two hours a day.

• 1:14:32Chamath Palihapitiya?

  Guys, we're, we're making, we're rejecting, we're rejecting deals left, right, and center at much, much smaller thresholds because of CFIUS because it's, we're not, and we're not even dealing with China.

• 1:14:44David Friedberg?

  Assume, assume you get past CFIUS, Chamath. Assume that there is no, that they figure out a way.

• 1:14:47Chamath Palihapitiya?

  It's a bad assumption.

• 1:14:49David Friedberg?

  Right. But like, that's obviously this $8 billion of capital, smart money that's in this, right?

• 1:14:54Chamath Palihapitiya?

  The minute that if you let the Chinese government Around and do an end around on CFIUS to own 30% passively, then everybody who's had a deal rejected for a much smaller threshold for a much more benign issue will sue.

• 1:15:08David Friedberg?

  Except that they started with this asset versus buying into it, right? That's the difference. And what they're doing is they're ceding, the difference here is they're ceding control of the asset to US investors and oversight by the US government versus the reverse, which is trying to come in and buy an economic interest in the US asset.

• 1:15:23Chamath Palihapitiya?

  That's not what CFIUS adjudicates. It doesn't adjudicate where was this originated? Adjudicates in this cap table, does this person exist? Should they exist? At what threshold? What do they know? And are we giving something that we shouldn't give?

• 1:15:34David Friedberg?

  Yeah, let me give you another way of framing it.

• 1:15:37Chamath Palihapitiya?

  I'm just saying if the pragmatic answer is you can't just make up a bunch of stuff that blows up a bunch of other stuff.

• 1:15:42David Friedberg?

  Let me frame it differently. What if ByteDance sold TikTok US to a US-owned private equity consortium, a US-run private equity consortium that effectively bought TikTok US and operated it here in the US?

• 1:15:54Chamath Palihapitiya?

  That's exactly what should happen. But my point is those people are smart enough to not pay full price. They'll say, you're fucked. That asset is worth zero. I will buy it for $10 billion. Take it or leave it. And you know what they'll have to do? They'll have to take it. So my point is the equity value is so impaired in this thing.

• 1:16:12David Friedberg?

  Would you buy that?

• 1:16:13Chamath Palihapitiya?

  For $10 billion? Of course I'm a buyer, but these guys are smart enough to drive a huge bargain, a hard bargain. So if you're existing on the cap table and you've marked it at 320, I would be fucking selling it.

• 1:16:24David Friedberg?

  Okay, well, look, something like this is gonna happen, so it'll be interesting to watch.

• 1:16:27Chamath Palihapitiya?

  And if any group of people got together and tried to actually buy it for what the fair market value is worth via a spreadsheet, is a horrible investor in this moment. You should hold a gun to their head and you should extract a massive pound of flesh that gives you a huge margin of safety and makes you money good.

• 1:16:45Speaker 01

  We know people who are shareholders, if they could have sold it at 320 or 120, they would have sold already.

• 1:16:50Chamath Palihapitiya?

  Well, no, there are, there are people that'll buy this thing in the hundreds. That's in size.

• 1:16:54Speaker 01

  Then sell everything you can and then put it into another company.

• 1:16:58Chamath Palihapitiya?

  Now, the problem is you have to show a markdown because you've already marked it at 320, so you gotta take a 65% discount.

• 1:17:03Speaker 01

  Yeah, if you're, if, if you're underwater, you're underwater. But for anybody who got into the sub 1 billion round.

• 1:17:09Chamath Palihapitiya?

  You can't eat IRR and you can't eat paper markups. You can only eat the distribution. So get the DPI and move on is what I said.

• 1:17:16Speaker 01

  Get the DPI and move on. It's another bet you could place. Why try to be greedy and get the last 3X out of this investment?

• 1:17:22David Friedberg?

  I want to move away from software meets leisure to software meets human health and productivity. A couple of weeks ago, we were going to talk about this last week. It was announced that BioNTech was buying InstaDeep. InstaDeep is a broad horizontal AI or machine learning tools company, services business. They partner with big businesses to help them build out ML-driven infrastructure to improve their products and their operations and their businesses.

• 1:17:49David Friedberg?

  One of their customers was BioNTech, the company that designed and owned the IP for the original Pfizer COVID vaccine, one of the originators of mRNA-based technology. BioNTech doesn't just focus on mRNA technology. They also focus on cell and gene therapies, the novel new kind of modalities that are emerging in therapeutics. And, you know, it was a really interesting acquisition. It was a 250, I think, person team that they bought the company for about $600 million, specifically to improve how AI can be used to accelerate drug discovery. I'll just make a comment on this and then Sax, I'd love to kind of hear your point of

• 1:18:33David Friedberg?

  view on these types of businesses broadly. The capabilities of machine learning, when applied to a particular vertical, are quite profound. You know, I've certainly been involved in this space in agriculture and increasingly doing more of this work in pharmaceuticals and biotech.

• 1:18:50David Friedberg?

  And, you know, when you can have large, unique data sets that you can then model using these tools and these capabilities and be predictive about what the next product iteration should be, it can really change the value and the trajectory of your business. One of the big trends in pharma right now is to move from in vitro testing, meaning you're running biochemical experiments in labs, in assays, iterating, testing, experimenting to see what molecules work or what protein does what and if it binds to the target, and doing more of this in silica, as it's being called, which is in software. And rather than just doing testing in software, you can actually use tools like AlphaFold that can be predictive of large molecules and how they can drive outcomes. To make decisions about what to put in your pipeline.

• 1:19:35David Friedberg?

  So if you take 99% of the junk out of the top of your pipeline, and you only focus on the 1% that the software predicts will be more successful, you much more quickly get drug discovery through the pipeline, and you have a much higher hit rate. So the ROI is extraordinary, particularly when you're talking about multi-billion dollar revenue streams coming out the other end of that pipeline. And so I think, you know, the way this reads, these guys raised $100 million in a round last year, sold the company for 600 million. It seems very similar to DeepMind being bought by Alphabet a few years ago, where the application of the team is pretty broad across a number of opportunities, but BioNTech bought them to focus on the kind of pharma space. So I guess, Sacks, you know, in the earlier stage, and, you know, I see a lot of teams now that are like, hey, we're AI for this, or ML for that.

• 1:20:19David Friedberg?

  A lot of pharma and biotech deals have to have the catchphrase ML or AI in their writing now because of the economic improvement of those businesses. Are you looking at enterprise software businesses that aren't necessarily about the typical subscription model, where you sell a seat license and people pay for that, but have this broad toolset and toolkit where these folks are earning revenue share or participating in the services revenue stream for enhancing the value of their partner in the AI or ML space? And what's the better business model? Because I think this is where so many new teams are starting out, is what's the business model? And what should we be focused on with our ML toolkit?

• 1:21:02David Sacks?

  I mean, the sure answer is no. We haven't done any deals like that. Well, I mean, we're not pharma investors, so I don't know how I would be able to evaluate, even if it is a software product, I don't know how I would evaluate its effect on pharma outcomes. So, I mean, we haven't done any deals like that.

• 1:21:18David Friedberg?

  But what about for other verticals? I mean, like, do you look at ML and AI companies that are more services or partner oriented versus just selling seat licenses to a software tool? I mean, is that a big trend you're seeing?

• 1:21:27David Sacks?

  I don't think we have enough data to tell you what the trend is. We did a deal called Pearl, which is creating an AI for dentistry. So what it'll do is it scans in all of the X-rays and dental records from dental practices and it gives a kind of a second opinion. It can spot things like cavities and things like that, or just changes in the condition. Where it's really powerful is over time, right? If it's got your last six sets of X-rays over whatever, six-year period, it can detect changes that are probably, you know, hard for a human to see. So they think they can get to like better than human sort of diagnosis by using computer vision.

• 1:22:10David Sacks?

  And then we invested in, sort of after that, where we realized, okay, this is kind of like a powerful application. So we invested in a company called Roboflow, which creates tools for computer vision. So Pearl created its own tools for taking a large number of, you know, X-rays and classifying them and then creating their own AI tools. Roboflow gives you that same tool set, but you can run it on any computer vision project. And they seem to be building a pretty big universe of software developers who are using their tools.

• 1:22:43David Friedberg?

  And in this case, this was a team that was bought. They bought a 250-person team for $600 million that just had this capability set, really, and a toolkit. Does that change your outlook for investing in ML AI companies when you see a $600 million exit for effectively a capability? They didn't have, you know, a core product that was in market. They were doing kind of these co-development deals. But, I mean, how much does this sort of M&A?

• 1:23:06David Sacks?

  Well, I mean, AI is already, AI is already the hot thing. Everyone's kind of looking at this now. I don't know. Like, you never want to base an investment decision on the fact that some acquirer might come in and buy you for a large amount of money when you have no revenue or business model. I just think like that's not really a sustainable approach.

• 1:23:27Speaker 01

  Although it does seem that AI engineers go for $2 million each, I think is kind of your point, Dave.

• 1:23:32David Friedberg?

  On an M&A basis?

• 1:23:33Speaker 01

  Yeah, I mean, DeepMind got bought for, what, 600 by Google? And I think they had 200 people.

• 1:23:38David Friedberg?

  I think it was like 400. Yeah, it was like 400.

• 1:23:40Speaker 01

  Was it 400? Yeah, so. It does seem like, and I think DeepMind did not have a business concept in mind when they were funded. They just wanted to do research, right? That was kind of the unique thing about that company.

• 1:23:51David Friedberg?

  It was platform capability, similar to InstaDeep. I mean, there's a lot of these, that's what I'm pointing out, is like, some of these platform capabilities end up just getting bought for, you know, huge sums.

• 1:24:01David Sacks?

  Yeah.

• 1:24:02Speaker 01

  It's a dangerous strategy, as Sax points out.

• 1:24:05Chamath Palihapitiya?

  The amount?

• 1:24:06David Sacks?

  You can't invest in a company hoping for an unreasonable acquisition, meaning, unreasonable meaning that...

• 1:24:11Speaker 01

  Unreasonable acqui-hire.

• 1:24:12David Sacks?

  Yeah, like, unreasonable meaning that your own metrics don't reflect that valuation as a business. You might be worth it as a strategic acquisition of somebody else. But you, you actually raise an interesting question, which is, is a seat model the right way for one of these companies to price their product? And you may be right, that that, the seat license model doesn't really work, because, like, how many seats do you really need to buy for these companies?

• 1:24:37David Friedberg?

  It's also, it's also, look, I mean, one of my, like, when I...

• 1:24:39Speaker 01

  One prompt engineer.

• 1:24:40David Friedberg?

  Yeah, when I worked at...

• 1:24:41David Sacks?

  No, no, it's true. Like, I mean, we've seen this, we've even seen, we've had these debates inside the companies I mentioned, where, like, you know, charging a $10, even $100 a month seat doesn't nearly reflect the value of the insights that are being created. And so, yeah, they're like, you know, there, I don't think this has been figured out yet.

• 1:25:00David Friedberg?

  But this is the big question in ML and AI. When I was at Monsanto, you know, we had all this IP licensing deals we do, or new products would come to market, and it was never cost-plus or simple pricing. It was always about value capture. If, in an enterprise setting, you know, because we sold to farmers, it's like, how much value are you delivering for the farmers? If it's $100 a profit an acre, you try and charge an incremental $30 an acre for that product. And it was always a one-third value capture model. And the same is true in biotech and pharma. The producer of the product, or the co-developer of the product, is often trying to value capture. And it's not a site seat license, and it's not a service fee. It's more, ultimately, we want to get a royalty on the outcome, on the improvement that we can deliver to you. And so, there's all these novel business models that are emerging, at least that I'm seeing in pharma and biotech,

• 1:25:43David Friedberg?

  to participate more meaningfully ultimately in the drug development outcome, versus just getting charged a fee for doing a service, or a fee for a license to a, to a software package.

• 1:25:52Chamath Palihapitiya?

  The value of these companies has gone down. I was a early investor, Series A investor in a company called Flatiron Health. We sold it for $1.9 billion to Roche. That's the biggest exit in this space for this machine learning-enabled stuff. It happened in 2018. And so what's really happened is the value of acquisition in M and A has gone down, even as a technology capability has gone way, way up. And why is that? It's because this stuff has yet to be proven to actually meaningfully improve the hit rate for these drug companies. So whether it's Biontech or Roche or anybody else, the biggest problem we still have is getting the design space guessing that better. And these machines are better at doing raw calculations, but they're not necessarily

• 1:26:35Chamath Palihapitiya?

  better at veering towards this design space over this design space. And so as a result, you're not improving the, either the slugging percentage or the batting average of these pharma companies. And that's why they're paying less and less. So everybody will have this capability as an adjunct. The thing that you have to do is sort of what,

• 1:26:58Chamath Palihapitiya?

  what you guys have said, which is if there's a company that can actually do better guessing at the top of the funnel, the thing that you should probably do is just give it away in return for a backend rev share and a royalty. And that business also exists. So, you know, the best performing company in pharma is a company called Royalty Pharma. It's a 22 and a half billion dollar company that has 90% EBITDA margins. It exists in Ireland. It's run in New York by this wonderful entrepreneur, Pablo Legareta. But that's what he does. He buys small pieces of royalties and his whole thing is like the Paul Graham thing at YC. I'll give you just that little amount of support and all you need is a little lift in valuation to justify giving me the 6%.

• 1:27:39Chamath Palihapitiya?

  And the tooling company, the AI company that does that could win. Who would go to Roche and Biontech or Lilly or somebody else and just say, look, use my tools and whatever drug you generate off of me, I just want a 3% royalty. And all you need to do is just show a 3% lift across a portfolio of assets. That would be a killer business model because if you look at what Pablo's done over a large number of successes, that's a ginormous company.

• 1:28:08David Friedberg?

  Jake, I mean, are you investing in the seed stage ML AI companies? And are there novel business models that you're seeing?

• 1:28:15Chamath Palihapitiya?

  We're not seeing too many yet, to be honest. We are seeing people play with chat GPT and kind of do, you know,

• 1:28:24Speaker 01

  Experiments, but you know, the more I've used ChatGPT, we've connected it to our Slack. So you can actually ask a question in our Slack in a channel called AI Testing, and it will give the answer and everybody can see people like playing with it. You know, it's kind of like a parlor trick. Now I'm in like that phase where I'm like, yeah, this is impressive, but it didn't actually solve my problem. And it's slightly faster than doing a Google search. So I am thinking there's going to be a really good business created in taking

• 1:29:04Speaker 01

  the open source projects and forking them and verticalizing them like, you know, Saks is one that's doing dental work, you know, like this makes sense to me.

• 1:29:14Chamath Palihapitiya?

  Somebody should do it in accounting. Somebody should learn all of GAAP accounting, which is pretty simple because it's published, FASB, all of this nonsensical accounting rules and give you 100% guarantee of no malfeasance. So for example, you guys saw this Brazilian company. You want AI accounting. That's your, that's your. Look at this company. Look at this company Americanas in Brazil, which just torched $20 billion of enterprise value. Why? Because these guys were using Excel to do a bunch of complicated capitalization and cost accounting, made two or three years of mistakes. It added up to two or three billion dollars and they're basically going to file bankruptcy in the next few days.

• 1:29:57Chamath Palihapitiya?

  That's completely avoidable human error that should never happen. And an AI would be perfect for that. Like this is not super controversial to just follow GAAP accounting, right? I mean, I don't know if you need AI for that. I think you just need software, like a database would be good, but. No, the problem is the database exists today. Like everybody sits on top of Oracle GL or Workday. It doesn't prevent these errors. So my point is you got to get humans out of the system and the AI should be the accountant. The AI knows the rules, generates the P and L and says, this is it. And by the way, that's way better risk management for the CEO and the CFO. Because as you guys know, if you're the CEO of a public company, you have to sign your signature that these things are legitimate.

• 1:30:40Speaker 01

  And how do you know?

• 1:30:41Chamath Palihapitiya?

  I would way better know that a computer did it. Like an open AI algorithm tells me, this P and L is perfect than some dude I don't know at Ernst & Young.

• 1:30:50Speaker 01

  Okay.

• 1:30:52Chamath Palihapitiya?

  I have a question for Sax. Saxi Poo, can you please explain to me why Alec Baldwin is gonna get charged with manslaughter for this Russ thing? That seems really crazy. Can you just explain what happens on a set with guns? And how the hell did this happen? Like, what the hell is going on?

• 1:31:07David Sacks?

  Well, I've produced two movies, but neither one of them involved, you know, guns or shootouts or anything like that. So I haven't had like firsthand experience with this.

• 1:31:15Speaker 01

  You're a gun owner. So you're an intersection of movie producer and gun owner. So it's a good...

• 1:31:19David Sacks?

  Yeah, I understand the rules of gun safety and that kind of stuff. Look, Alec Baldwin did not follow the rules of gun safety. The first thing I would do if I was ever handed a gun would be to clear it. I'd like check to see if it was loaded and clear it. When you never pointed at somebody, you always treat a gun as if it's loaded, even if you think it's not. But he was in a very specific situation, which is he's on a movie set. And the person who's handing him the gun is the armorer.

• 1:31:48Chamath Palihapitiya?

  And said cold gun.

• 1:31:51David Sacks?

  Yeah, exactly. It's somebody whose job it is to make sure that the gun is handled properly and unloaded and all that kind of stuff. And they're using it on a set. So I agree with you. I don't quite understand why Alec Baldwin is liable in that situation for the gun going off. The person who screwed up here, the person who screwed up is the armorer.

• 1:32:12Chamath Palihapitiya?

  He's the armorer.

• 1:32:13David Sacks?

  That's the person whose job it was to never allow live ammunition on the set to handle the guns properly.

• 1:32:19Chamath Palihapitiya?

  But he hired this person? I thought the whole point of guns in movies was that they were firing blanks.

• 1:32:24David Sacks?

  Yeah.

• 1:32:25Speaker 01

  They were firing blanks, but they had blanks and regular ones in their kit for whatever reason because they were shooting real ones as well. But this is involuntary manslaughter. And I think Baldwin is also the producer of the film. So I don't know if this has to do with his hiring of the armorer. You know what I'm saying?

• 1:32:44David Sacks?

  No, that I can, that I can speak to. Listen, you, you frequently give stars in an independent movie a producer title. He's not responsible for the physical production of the movie. I bet anything he's not. There's a guy called the line producer is responsible for the physical production. And my guess is he wasn't even responsible. Responsible for the business side of the production. They've got other producers for that. So it doesn't make sense to me if they're going to charge him for having some sort of overall liability as a producer to then not charge the other producers. That just doesn't make any sense. So I think this producer credit thing is probably a red herring. Like I said, I think the armorer is the person who is singularly responsible for this situation. They're the ones who screwed up. They're the ones

• 1:33:26David Sacks?

  who had a responsibility to make sure that the gun handed to an actor. I mean, Alec Baldwin's an actor. Yeah. Look, conservatives in social media are dragging the guy because they think he's a douchebag and he doesn't know how to handle guns, but that's not his job. He doesn't.

• 1:33:40Chamath Palihapitiya?

  Can I ask a question? In movies, why would you ever have live ammunition on a movie set?

• 1:33:46David Sacks?

  You shouldn't. They shouldn't too. You shouldn't. It's a mistake.

• 1:33:48Chamath Palihapitiya?

  So it's not as if like the scene is different if you have a real bullet versus a blank?

• 1:33:54David Sacks?

  No, as far as I know, it should only be blanks.

• 1:33:57David Friedberg?

  If I remember right, there was a story about how the gun armory people were taking members of the cast and crew and they were shooting guns for fun in the desert. And they were doing like, they were doing like targets and messing around and teaching people gun stuff and just playing around, but using live ammunition. And that that led into an accident, that there wasn't good kind of transition.

• 1:34:19David Sacks?

  That's really bad. That sounds like the kind of negligence that caused this, but unless there are facts we don't know about. I don't know why Alec Baldwin's responsible.

• 1:34:27Chamath Palihapitiya?

  Charged by the way with involuntary.

• 1:34:29David Sacks?

  Yes, Alec Baldwin's being charged along with the armor. That sounds totally legit to me.

• 1:34:33David Friedberg?

  So guys, listen, I need to run for another call. I was going to talk about this really fantastic paper on the one of the driving forces of aging as demonstrated by a team from Harvard in collaboration with many others on epigenetics and the loss of data integrity in epigenetics really being the core driver of aging in mammalian cells. It's an incredible paper. It speaks a lot to what we talked about last year, Yamanaka factors and partial epigenetic reprogramming of cells, how they can reverse aging. These guys have demonstrated it in a really powerful way. I'd love to spend some time on it. Maybe we pump that. Science Corner to next week. Wrap up for today. I think we've talked about all sorts of fun stuff.

• 1:35:16David Friedberg?

  It's been a real pleasure and an honor to be in the seat of the world's greatest moderator. We miss him today. We honor him. We look forward to having his return next week. It's been a pleasure chatting with you gentlemen. And on behalf of the All In Pod and my co-hosts, Chama, Polly, Hafatia, David Sacks, Jason Calacanis, thank you for listening. Bye bye. Love you boys. Bye bye.

• 1:35:43David Sacks?

  Rain Man David Sacks.

• 1:35:47David Sacks?

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

• 1:36:00David Sacks?

  Besties are gone.

• 1:36:03Speaker 01

  That's my dog taking a piss in your driveway.

• 1:36:08Speaker 01

  Oh, man.

• 1:36:11Chamath Palihapitiya?

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

• 1:36:19David Sacks?

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