Pod Insights All-In with Chamath, Jason, Sacks & Friedberg E106: SBF's media strategy, FTX culpability, ChatGPT, SaaS slowdown & more About this episode (0:00) Bestie hangover!
(1:05) Analyzing SBF's media tour: his angle, media coverage, and more
(21:09) FTX culpability: media, investors, regulators
(53:41) Challenging media coverage of other countries, China's current situation, Xi Jinping's standing
(1:10:04) What OpenAI's new ChatGPT tool means for the future
(1:26:30) David Sacks on the slowdown in SaaS, use case endgame for generative AI
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https://twitter.com/DavidSacks
https://twitter.com/friedberg
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Intro Music Credit:
https://rb.gy/tppkzl
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Intro Video Credit:
https://twitter.com/TheZachEffect
Referenced in the show:
https://www.youtube.com/watch?v=KMZckrBPw38
https://www.coindesk.com/layer2/2022/11/30/ftxs-collapse-was-a-crime-not-an-accident
https://www.wsj.com/articles/sequoia-capital-apologizes-to-limited-partners-for-ftx-investment-11669144914
https://www.nytimes.com/2022/11/27/opinion/ftx-sam-bankman-fried-fullenkamp.html
https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankman-fried-crypto-bankruptcy.html
https://twitter.com/lizrhoffman/status/1595193884438568960
https://taibbi.substack.com/p/be-it-resolved-dont-trust-mainstream
https://www.newcomer.co/p/taking-kid-gloves-to-all-in-my-reflections
https://chat.openai.com/chat
https://twitter.com/jdjkelly/status/1598021488795586561
https://twitter.com/pmarca/status/1598413401705021440
https://twitter.com/jdjkelly/status/1598021488795586561
https://twitter.com/DavidSacks/status/1598076726671642624
https://twitter.com/DavidSacks/status/1598363968547876864
Transcript 19,232 words · 4 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 David Friedberg? I'm now recording.
0:02 David Sacks? Jesus, you look terrible.
0:03 Jason Calacanis? What's going on? Did you sleep last night?
0:04 David Friedberg? Do I look tired?
0:05 Jason Calacanis? You do look a little tired.
0:06 David Sacks? You look unshaven.
0:07 Jason Calacanis? Yeah. What happened last night?
0:09 David Friedberg? I had a holiday party at my house last night for my office and...
0:12 David Sacks? You look destroyed.
0:13 Jason Calacanis? Yeah, what's going on? I mean, did you drink?
0:15 David Friedberg? I did drink, yeah.
0:16 Jason Calacanis? What does vodka and oat milk taste like?
0:19 David Friedberg? He had a white Russian.
0:22 David Friedberg? A white Russian, big old basket. With oat milk. He's like, I want a white Russian with oat milk. Oh my God.
0:28 Jason Calacanis? Actually, my white Russian is made with oatmeal. And please compliment that with a huge punch in the face.
0:34 David Friedberg? Give me five minutes. I'm gonna go, I'm gonna go shave and...
0:36 David Sacks? It's called the hair of the dog.
0:37 David Friedberg? Yeah.
0:38 David Sacks? You know, a little Bloody Mary.
0:40 David Friedberg? Banana bug.
0:42 David Friedberg? Should I go get a beer? I might get a beer just to beat this hangover.
0:45 Jason Calacanis? Go do it. Yeah, go get a beer.
0:46 David Friedberg? Hang on, I'll be right back.
1:05 Jason Calacanis? All right, listen, we have to start with scam, bank run, fraud. I mean, Sam Bankman-Fried.
1:12 Jason Calacanis? I get that wrong sometimes. He was interviewed by Andrew War Sorkin, the suit, at Dealbook, who gave him softball after softball. Then, the next day, he was on Good Morning America. You're being really passive aggressive right now. A little bit. You're throwing a little shade at our friend Andrew War Sorkin. Little chippy.
1:30 David Sacks? He's sticking the knife in. He's sticking the knife in, but J. Kyle's got a point. He's got a point. A little bit. A little bit.
1:36 Jason Calacanis? A little bit. Anyway, The New York Times continues to embarrass themselves by handling Sam Bankman-Fried with kid gloves. Wow. George Stephanopoulos, my Greek brother Stephanopoulos the Spartan, came in and absolutely fricassade and filleted Sam Bankman-Fried on Good Morning America.
1:55 Jason Calacanis? Very important to note that Good Morning America, the segment was between holiday cocktails and the cast of The White Lotus. And Andrew R. Storkin was at the Dealbook Finance Conference.
2:07 David Sacks? But you know, that Stephanopoulos interview was two hours, but they reduced it down to 10 minutes. So there were probably a lot of sort of cordial conversation, banter, and then softball questions. And then he does stick the knife in and does the frickasy, but he cuts out all the other stuff. So he just gets it down to the 10 minutes.
2:28 Jason Calacanis? What Stephanopoulos did to him was extraordinary in that he said over and over again, "In the FTX Terms of Service, you cannot touch the user accounts, but you at Alameda were taking them and you were loaning them out." I don't know who is advising Sam Bankman-Fried at this point, but why he is talking so much. He was also on a two-hour Twitter Spaces after all this. At this point, Sax, what do you think is going on here in the mind of Sam Bankman-Fried? And also, the media, which seems to have a very variable way of dealing with this obvious fraud and crime?
3:10 David Sacks? Right. Okay. Well, you know, I can speculate about SBF. I think if there is a strategy here, it is this. He is basically copying to criminal negligence in order to avoid the more serious charges of fraud. And I think, again, if there's a strategy here, it is he saw himself being defined as Bernie Madoff 2.0 in the press. And if that image, which may well be true, cemented around him, then prosecutors would never stop. They would never accept a plea that... Basically gave him anything less than a made off like sentence, which would be,
3:51 David Sacks? you know, decades in prison, maybe a life sentence. So he is out there doing what lawyers would tell you never to do, which is basically incriminate yourself, create more of a record, but he's doing it to change the public perception, maybe muddy up the public perception, get people thinking that, okay, he, you know, this, that he's admitting he did something wrong, but it wasn't deliberate, it wasn't fraudulent, it was just basically carelessness or sloppiness. And if he succeeds in muddying the waters enough, then maybe the prosecutors will give him a plea deal that allows him to have his life back at some point. I think that would be the crazy like a fox explanation of what's happening. Now, there is, you know, an alternative explanation
4:32 David Sacks? as well, which is I just think that these types of guys, you could call it, you know, a narcissistic fraudster, they think they can talk their way out of anything, you know?
4:43 Jason Calacanis? Because they have.
4:44 David Sacks? They have.
4:45 Jason Calacanis? Yes, they've talked their way into getting hundreds of millions of dollars of investment, billions, billions in some cases. And so they just feel, and they've been trained by employees, partners, investors, the press, that they can talk their way out of any of this stuff.
5:02 David Sacks? I think, yeah, the average person is not really used to dealing with one of these personality types who is, I mean, they clearly are smart and they're articulate, articulate, and they know what to say, and they're crafting their words. What they've learnt through their life is that if they use the precise magic words with a person, they can pretty much, you know, convince them of anything, get them to do anything. And in particular, I would say investors tend to fall for this, not because investors are dumb, but because investors are so clear about what they're looking for and what they want.
5:32 Jason Calacanis? They're predictable.
5:32 David Sacks? They're predictable, yeah, like we're, you know, VCs especially, we're looking for the 100x outcome or whatever. So it's easy for this type of personality to construct a story, to essentially stroke the erogenous zones of a VC.
5:45 Jason Calacanis? Whoa.
5:46 David Sacks? Yeah, and, and, and sort of trick them. And so there is probably a positive reinforcement loop that gets created in the minds of one of these people, and they start to think that they can basically talk their way out of any situation. So I think that would be part of what's going on here. And, you know, if you look at sort of the tactics that he's using to do this. You know, all of a sudden, he's trying to portray himself, you know, before this, he was portraying himself as a smart guy in the room. Now, all of a sudden, there's this babe in the woods impression where I didn't know it was my subordinates, I wasn't really in control. That was somebody else. Right. Each individual decision, he says, looked sensible to him. It's just it all added up to something he didn't anticipate. Like, really? You know,
6:30 David Sacks? loaning yourself a billion dollars of, of basically the, the company's money, which was basically customer money, that seemed reasonable to you. I don't know how you defend that individual decision. And there's many like that. But, but this is sort of the narrative that he's trying to construct. And let me stop there. But I think there's a lot more that can be said to dismantle the narrative he's trying to create. But I want to let other people get in here.
6:53 Chamath Palihapitiya? What's your take on this? And then Friedberg? Can I make a comparison to SBF and Trump through the lens of the media? So if you go back to 2016, you know, Donald Trump violated every single establishment bias that these left progressive journalist elites had. And so they basically just attacked, attacked, attacked, attacked. But then you went into the election, and there was a very clear data point that said, whatever you thought was at, was at best limited, and you missed the tone of the country. Because 50 plus percent of the country held a very
7:35 Chamath Palihapitiya? different view about this person. And instead of taking a step back, and then the left media, the mainstream media, re-underwriting, and learning, and then saying, you know what, mea culpa, I got this wrong, they just doubled down. And they said, no, it still doesn't meet our priors. And so we're just going to ring fence this problem. And we're going to just try to destroy this issue. Because, you know, we want to control the narrative, and, and, and by result, we want to control power. Now you look at SBF, it's the exact opposite. He went to the perfect elite private high school. Then he went to one of the most prestigious elite private universities. MIT.
8:17 Chamath Palihapitiya? His parents teach governance of all things at one of the most elite liberal institutions in America. Stanford. They are in the establishment of the progressive left.
8:30 Chamath Palihapitiya? And what happened was, he took customer funds and all of this money. He made tens of millions of dollars of political donations. He wrapped himself in this blanket of a progressive, left-leaning cause called Effective Altruism. And all of the mainstream media fell for it and embraced him, as well as some politicians, because it met everything that they themselves also bought into. Yes. And now you have this cataclysmic event. A multi-deck-a-billion-dollar fraud or bankruptcy. Millions of customer accounts who are frozen. You know, tens of millions to hundreds of millions to billions of dollars lost and stolen from them.
9:14 Chamath Palihapitiya? And they refuse to re-underwrite this kid. And the reason is because, in order to do so, it's like eating your own tail. And that's why they don't want to do it. And so this is why you have the media basically allowing him to do an apology tour. Now, this is his second time at manipulating them. The first time, he was able to manipulate them by basically being one of them. And now, he's allowing them and their desire to basically protect themselves so that he can create some kind of a defense for himself. And I just think the whole thing is gross because it misses the entire mood of the nation. This is an enormous financial fraud
9:56 Chamath Palihapitiya? that was perpetrated on tens of millions of people. And there's no accountability because, in order to do so, the media would effectively have to admit that they missed it and they got it wrong. And they refuse to do it. And I think that that is the really big problem that nobody is really speaking out about. It's like, well, if these folks are meant to be the last stop to make sure that there's truth and honesty and transparency in society, and you can't count on them, and in fact, they're just going to reflect their own narrative, what is one supposed to do to learn the truth?
10:28 Jason Calacanis? In a way, what you're saying, and then we'll go to you, Friedberg, is this fraud was encased in all the gilded facade that America hates right now.
10:38 David Friedberg? It reflects the institutional rot of America. It reflects every single aspect of institutional rot that every non-elite talks about all the time, but elites, when they have those labels, will refuse to give up.
10:51 David Sacks? And just to add to that, the thing that's missing, I'd say one of the big issues with the institutional rot in our country is the lack of accountability when somebody gets it wrong. We saw this with COVID, right? The health establishment is saying that they want amnesty.
11:07 Jason Calacanis? Yeah.
11:07 David Sacks? And Atlantic Magazine was willing to give it to them. So the point is that this, this class of people think that when they get it wrong, that they're the experts, but when they get it wrong, there should be no accountability. And so, Jamal, to your point, the media and these institutions are not willing to re-underwrite SBF when he's so clearly is a fraudster.
11:26 Jason Calacanis? Friedberg, what do you think the, of this theory? You had a large amount of donations to politicians. Obviously, you have coming from Stanford, MIT, et cetera. And then you have these investments, gifts, advertising, donations to ProPublica, Vox, this new publication Semaphore, The Intercept, that have all been uncovered now. Did he do this, paying off of all the elites, you know, splashy, cashy, giving money to everybody because he knew he was doing a fraud and that this is evidence of this is a premeditated fraud? Or do you think this is a deranged individual who just was seeking status?
12:08 David Friedberg? I don't know. The motivat-- there's a video you can watch of this guy. For some reason, FTX has left up all of their videos on YouTube from three years ago called "Quantitative Trading: 7,500 Sell Wall of Bitcoin on Binance." It's a 17 and 1/2 minute YouTube video of SBF trading arbitrage across markets. I think it provides probably the best, like, natural, non-scripted insight into this guy's behavior that you could see.
12:42 David Friedberg? You know, because it's not like him being interviewed, it's just him living in his world. And he's just, you know, a mouse trying to get a piece of cheese. Like, he's, you know, he's like out there, he's, you know, scrambling around in the markets, he's finding edges, he's finding advantages, and he's, and he's clearly just taking advantage of them all day, every day. That's who he is. Now, you put a person like that in an unregulated environment, and there was this clustering demand for an unregulated environment because of a lot of what you guys are saying, which is people have this disdain for the elitism and the institutional rot and all these things.
13:21 David Friedberg? So Bitcoin emerged as a solution out of 2008 to the, you know, the, what felt like institutional rot
13:31 David Friedberg? that governments have a key role in. But when you have no regulation and you have no trusted central authority involved, mice that are trying to find cheese will rule the day. And I think that's what happened here. If it wasn't this guy, it was someone else. It was gonna be someone else. And then all of a sudden, everyone's clamoring and saying, hey, we needed the government to protect us, no one protected us. Someone's gotta save us, we're the regulators, we're people that are supposed to keep an eye on this stuff. When the whole premise of so much of what was being sold was non-regulatory regimes, was openness, was peer-to-peer trust protocols. And it turns out that in that sort of an environment, the mouse that is hungriest for the cheese will get the cheese. And that's exactly what happened. And I don't, I don't know how much of it was
14:12 David Sacks? I don't agree with this.
14:13 David Friedberg? him saying, I'm creating intentional fraud, which certainly seems to be the case, versus him saying, I'm gonna pay these guys. I don't know how much of it was even that intelligent. But the guy was clearly like, trying to get a piece of cheese.
14:24 Jason Calacanis? Okay, so this cheese eater, this rat, is a League of Legends, uh, you know, expert playing on eight different monitors at a time, the cryptocurrency game, while hopped up on speed. I'm not saying that to be cruel, I'm saying that because they admitted it, they talked about it in their staff meetings, instructing their traders and team members of how to take speed.
14:49 David Friedberg? He admitted to it in an interview this week, he said that it was all All legal prescription drugs, but they were taking them. Yes.
14:54 Jason Calacanis? Yes. And literally in the same videos you're referencing, people see speed patches or I don't even understand this, but there are patches you can put on your body to deliver speed to you at some, you know, dose or whatever. Sax, you buy this theory?
15:08 David Sacks? No.
15:08 Jason Calacanis? Care that this isn't about the elite side of it. It's about the non-elite, the anarchy side of it.
15:14 David Sacks? No.
15:14 Jason Calacanis? And this cheese eating rat was just wanted to eat more cheese.
15:19 David Sacks? I don't buy this narrative because I see too much design intentionality behind what happened. So in other words, it wasn't just a series of individual decisions that didn't add up. Many of those individual decisions by themselves were totally unjustifiable. And moreover, there were too many, there's too much evidence of sophisticated behavior here. Again, he overnight went from portraying himself as the smartest guy in the room to the, to the babe in the woods. And so for example, when you look at the construction of all these entities and the corporate org chart, you know, of all the related entities, it's a very sophisticated attempt to obscure and construct certain, you know, protections.
16:03 David Sacks? When you look at the way that Alameda was exempted from the normal margin requirements in FTX, there was the so-called back doors. There was intentionality there. There was intentionality in terms of who was hired to staff these organizations. Again, they hired-
16:17 Jason Calacanis? Or wasn't hired, no board, no CFO.
16:20 David Sacks? Yeah, exactly. And the guy, the guy who was in charge of compliance, what like Chamath talked about in a previous episode, was the guy who was involved in the ultimate bet poker cheating scandal, you know?
16:31 Jason Calacanis? The super mode.
16:33 David Sacks? Yeah, exactly.
16:34 Jason Calacanis? Right.
16:34 David Sacks? Or look at this goofy goofball Caroline Ellison who was put in charge of Alameda, right?
16:39 Jason Calacanis? His girlfriend.
16:40 David Sacks? It's, it's being done for a reason, right? He's setting it up in a certain way. And, you know, the one time I interacted with him at this tech conference, he was sitting there holding court and he had all of his minions around him who were following his orders. This was a guy who was controlling his business. He was making the decisions at, I think, a task level. And he knew exactly what was going on here. So, look, I just don't buy, I do not buy this idea that, um, that he was like a blind mouse who's just stimulus response, you know, in the moment.
17:15 David Friedberg? By the way, that wasn't, that wasn't my point, Sax. My point was whether it was him or it was gonna be someone else, it was bound to happen.
17:23 David Sacks? No, I don't, I don't agree with that.
17:25 Jason Calacanis? Another criminal would have emerged.
17:26 David Friedberg? The idea that we want to have completely free, unregulated, Bahamian-based trading, you know, environments that we can supposedly trust because someone puts on a good face when there is no real regulatory body and regulatory authority overseeing it, at some point, it was gonna happen.
17:42 David Sacks? Well, no, hold on. It is, look, Coinbase is a fully regulated institution in the US.
17:47 David Friedberg? They're not set up in the Bahamas and they're not unregulated. He set up and he had no oversight. He had no board. There was no regulatory regime. There was nothing.
17:54 David Sacks? But how was he able, but, okay, so first of all, look, I don't think this had to happen. I think that, again, I think that excuses too much because it implies that if it wasn't SBF, it'd be somebody else. I actually think that this was a highly concerted effort. Listen, he courted regulators. He donated to politicians. He courted the media and donated to them.
18:12 David Friedberg? Yeah, he was really good at it.
18:13 David Sacks? He was really good at it. He was unusually good at it.
18:16 David Friedberg? No, and I totally agree on that. Yeah, super smart, super connected, really thoughtful design on how he committed this, on how he did this.
18:22 Chamath Palihapitiya? I only think an insider could have pulled off something at this scale.
18:25 Jason Calacanis? I think, I agree. See, this is where Chamath, you're exactly right. I think you needed to be an insider. The level of cynicism here is he knew the playbook and he admitted it. You pointed this out with the chats that were released where he said, hee hee.
18:36 David Sacks? Hee hee.
18:37 Chamath Palihapitiya? Yeah, look, I mean, just like.
18:38 Jason Calacanis? The hee hee chat.
18:39 Chamath Palihapitiya? Look how like convoluted and intertwined all these people are like, Gensler's intertwined with the parents.
18:45 David Friedberg? Yeah.
18:46 Chamath Palihapitiya? Parents apparently bundled a bunch of money to Elizabeth Warren. You know, he was dating the CEO of the business that he owned 90% in. There are all these other random shell companies that he owned 100% of where they were lending back and forth hundreds of millions to billions of dollars.
19:01 David Friedberg? Yeah.
19:02 Chamath Palihapitiya? To David's point, that is a sophisticated con that you have to architect. And the way that he was able to get away with it is that not a single reporter or regulator thought to dig in. And the reason, I think, is because he said all of the right things that wanted them to embrace him. And the reason is, he admitted it.
19:24 David Sacks? This is the dumb game that we woke Westerners have to play.
19:26 Chamath Palihapitiya? Like imagine.
19:26 David Sacks? Say the right shit, bless, and then everyone thinks we're a good person.
19:29 Chamath Palihapitiya? Exactly. Imagine.
19:30 David Friedberg? Pull that quote up on what he said, because it's actually a good quote.
19:32 David Sacks? It was what I just said.
19:33 David Friedberg? Is that exactly what he said?
19:34 David Sacks? Yes, he said, it's the game that we woke Westerners have to play. We say the right shit, bless, everyone likes us.
19:40 Chamath Palihapitiya? He actually said the most uncomfortable thing out loud, which is, look, by having gone to Crystal Springs High School, by having professors, my parents that went to Stanford, by having gone to MIT, I can pull this off. That's what he said, because he can go with those things, because I'm a champion of effective altruism, that I can justify any of these decisions, how amoral or immoral that they be, because I'm trying to help, you know, my brother stand up a multimillion dollar pandemic response business. I'm trying to do this, I'm trying to do that. And all of these regulators and all of these reporters said, okay, you get the hall pass. Now imagine if you replaced him with some random kid in some developing country,
20:23 Chamath Palihapitiya? or even from the United States, who went to public high school, who went to some random state school, do you think that they could have pulled any of this stuff off?
20:34 Jason Calacanis? No. You need the patina of the privileged class.
20:37 David Sacks? The New York Times.
20:38 Jason Calacanis? That's what he had, the patina of the privileged class.
20:41 David Sacks? Even after this fraud, the New York Times wrote more of a puff piece on him than the hit piece they wrote on Brian Armstrong last year, when Brian Armstrong wouldn't toe the line on allowing politics at work. Remember that?
20:53 David Friedberg? Yeah, unbelievable.
20:54 David Sacks? Yeah, so the big, I think what Chamath is kind of saying here is that the big enabler here is not crypto per se. It's all these institutional biases and elite biases that he was able to play into, partly because he was a big insider. I mean, in a way, he monetized his parents' life work.
21:09 Chamath Palihapitiya? The problem that I think this allows us to put a fine point on is the following. You know, in society, we've confused a lot of people to think that the opposite of liberal is conservative or Republican. And I think that's the cycle that drives the mind virus inside the mainstream media. The problem is, the opposite of liberal is illiberal, okay? And what illiberal means is to be narrow-minded and unenlightened. It means to be puritanical, it means to be fundamentalist. And this is really what it allows us to see now. We have now had six years of data. Case after case after case.
21:52 Chamath Palihapitiya? Where if you are woke, if you are a social justice warrior, if you have the right credentials that justify your upbringing, if you have institutional bona fides that come from your parents, you get to create the narrative and you get a hall pass. And everybody else basically is at the subject and the mercy of the mainstream media. And so if you don't kiss the ring and bow down to them, they will try to destroy you or run you out of town. But if you are one of them, they will give you a hall pass. And when it's time for them to change their mind in order to tell the truth, they won't do it. And so these types of grifts will continue, as Friedberg said, because there
22:37 Chamath Palihapitiya? is no check and balance without a healthy, independent media. There is no way for all of us to actually know what's really going on. Guys, some person in the media could have asked the question and dug in deeper around the connections between Alameda and FTX for the last 24 months. And so could have diligence at a venture firm. At no point could any person have asked these questions and found ex-employees and said, you know, are there any unseemly connections here between FTX and Alameda? There was no disgruntled employee. I mean, every company has disgruntled employee whistleblowers. But here where there was billions of dollars being made by tens of people, not a single person who felt on the outs said anything. Well, he was also giving millions of dollars to press outlets.
23:22 Chamath Palihapitiya? Hold on. It's because the questions weren't asked and then this kid paid hush money to the mainstream media.
23:28 David Friedberg? Let me ask you a question of you guys. Do you think that it's the media's responsibility in this context? Or do you think that there should have been a regulatory authority that had oversight of this business like there is for every bank and every trading operation in the United States? And every one of those businesses has a compliance officer and has regulators up the wazoo, making sure that customers are kept safe and protected? Or do we think that that should should offshore vehicles be allowed like this?
23:53 Chamath Palihapitiya? A lot of people to operate. It's a reasonable question, but there was a chicken and egg question. We were all standing around holding our hands while the CFTC and the SEC were fighting. That's not something that consumers can be expected to adjudicate. So, yes, we should have legislation that clearly defines all of this, but there were enough parameters that created regulatory frameworks where a bunch of good actors did operate in them and are continuing to do so, like Coinbase. So I don't think this is a regulatory issue. I think that if you believe there are people who are supposed to forensically examine things and get to the bottom of things and ask hard questions, those people did none of that here. And, and what's, what's even more worrisome is what they're showing is now with an
24:38 Chamath Palihapitiya? massive amount of data that shows that you could ask hard questions, they don't care to because it makes them look bad.
24:44 Jason Calacanis? I disagree with this, Chumap. I think regulators failed here because they have been reactive to crypto, they have not been proactive, and they have not been clear with the crypto community that what they were doing was illegal and they should have put the regulations in quicker and they're playing catch up, but all three groups failed. The media failed, the regulators failed, and VCs failed, capital allocators failed, I, apparently, to do diligence here and install proper governance. You cannot put a company like this, you know, in business with billions of dollars and have no board of directors.
25:15 Chamath Palihapitiya? No, no, I agree with you.
25:16 Jason Calacanis? Or he lied to them, which is possible.
25:18 Chamath Palihapitiya? My point is that while regulators are, are basically fighting a territorial turf war, okay, the media could have still done their job. They chose not to.
25:28 David Sacks? Guys, it was worse than that because not only, it's not just a case where the SEC failed to exercise any oversight of him or dig into any of these questions. He was in the room with them crafting the next set of regulations. He was working on the regulations that you're talking about that are supposedly needed.
25:44 Jason Calacanis? Breaking them.
25:45 David Sacks? They let the fox in the hen house.
25:47 Jason Calacanis? Yeah.
25:47 David Sacks? He was gonna craft. A a new type of regulatory license for these types of exchanges with the result that he was going to get one and some of his competitors weren't. This is one of the things that triggered CZ to basically, you know, do what he did, which is basically that SBF was trying to get Binance and competitors like that banned while SBF would be one of the sole people to get the license.
26:14 Chamath Palihapitiya? By the way, Jason, you just said something derogatory towards CZ. He rug pulled them. Did he do that or did he actually expose the fraud?
26:24 Jason Calacanis? That's what I mean by rug pulling. Yeah.
26:26 Chamath Palihapitiya? Well, that's not what rug pull means, Jason.
26:28 Jason Calacanis? Okay. Well, he was partners with him and then he realized he was weak and that he was doing some stuff that was shady and he decided he would eliminate a partner who was creating regulation, as SAC said. Whatever you want to say. He knifed him.
26:40 David Sacks? All he did was indicate a desire to liquidate his position in a token that was supposedly perfectly liquid. And that's basically, that caused everything to unravel.
26:50 Jason Calacanis? Yeah, but these were partners, right? I mean, these were deep business partners. And they were partners. They were collaborating on these tokens together. So they weren't competitors.
26:58 Chamath Palihapitiya? No, they were not, Jason. Like, part of the big loan that initiated all of this stuff like a year and a half ago was to buy FTX off the cap table. So, you know, this, all I'm saying is like you used words in your framing of a guy, you know, who's built a business is like he is this nefarious bad actor.
27:19 Jason Calacanis? Binance was FTX's first investor.
27:21 Chamath Palihapitiya? Hold on a second. But, but David's right. All the guy did, as far as we can tell right now, is tweet, "I'm selling this token because I don't believe in the capital structure of this entity." And he got those tokens by being bought out of the cap table.
27:34 Jason Calacanis? I know. He was partners with them. So if you, if you don't like rug pulled, how about backstab? These were business partners.
27:40 David Sacks? They're not partners.
27:41 Chamath Palihapitiya? You still don't understand, Jason.
27:43 Jason Calacanis? Of course I understand. They, he was the first investor. So to do this to a company you were.
27:49 Chamath Palihapitiya? And then he got bought out.
27:50 Jason Calacanis? No, no.
27:51 David Sacks? And part of the consideration, hold on, part of the consideration were these tokens, these FTT tokens.
27:56 Chamath Palihapitiya? Jason, when you, when Uber went public?
27:58 Jason Calacanis? Yes.
27:59 Chamath Palihapitiya? And you got distributed stock?
28:01 Jason Calacanis? Yep.
28:02 Chamath Palihapitiya? Did you distribute and sell Uber at any point?
28:05 Jason Calacanis? Previous to that, I had, I sold some to Mas.
28:07 Chamath Palihapitiya? No, no, no, no, no. I'm asking you a question. When Uber went public and you got distributed from Uber.
28:11 Jason Calacanis? I didn't, no.
28:12 Chamath Palihapitiya? Your stock. So you've never sold a single share of Uber.
28:15 Jason Calacanis? Not since it's public.
28:16 Chamath Palihapitiya? No, I sold it before in private markets.
28:18 David Sacks? Yeah, but I'm sorry, but that doesn't make Jason a partner of Uber. You're just a stockholder.
28:23 Chamath Palihapitiya? Yeah, this is slightly different, I think. But okay, fine. You guys, if you guys want to consider.
28:27 David Sacks? They were, listen, Jason.
28:28 Chamath Palihapitiya? He was the first investor in the company.
28:30 David Sacks? That might have been a stark situation, but their status at the time that CZ tweeted was that they were competitors.
28:36 Chamath Palihapitiya? Okay, fine. I mean, they became competitors. I agree.
28:39 David Sacks? And by the way, to Tomas' point about this rug pulling language, I think we're getting kind of down a rabbit hole here.
28:44 Chamath Palihapitiya? Yeah, we're getting out of the weeds here, but.
28:45 David Sacks? CZ, CZ did perform a service in this sense, okay? SBF claims that four billion more was about to come in. I personally don't believe that. It sounds like bullshit to me, but if it is true, that would have been a bad thing. The more money that came in to that operation, SBF proved that he was a very poor custodian of customer funds.
29:04 Chamath Palihapitiya? For sure, for sure.
29:05 David Sacks? They're being siphoned off for his own use.
29:06 Chamath Palihapitiya? But.
29:07 David Sacks? The longer this went on.
29:08 Chamath Palihapitiya? I'm just highlighting the language that you use is sort of like, again, part of that establishment elite narrative. And I'm just questioning, you should maybe steel man, take a second to just steel man.
29:19 Jason Calacanis? Yeah.
29:19 Chamath Palihapitiya? A more dispassionate view, which is here's a counterparty, okay?
29:23 Jason Calacanis? Yeah.
29:23 Chamath Palihapitiya? Who, when he left the cap table, was given half cash, half tokens.
29:29 Jason Calacanis? Okay.
29:30 Chamath Palihapitiya? And he decided to sell his tokens.
29:33 Jason Calacanis? Yeah, and tweeted publicly and caused a run on the bank. So.
29:37 David Sacks? It was not a run on the bank. There was no bank. Where's the bank? This run on the bank language, okay, is something, this was in the Semaphore coverage, okay?
29:46 Jason Calacanis? He did it publicly. That's my point. So I'll steel man it for you.
29:49 David Sacks? Okay, no, no, no.
29:49 Jason Calacanis? Hey, these tokens are worthless. I need to liquidate them as fast as possible. But why would you do that publicly? Why, why wouldn't you do it privately? Because you're about to move the market. He wanted to move the market to zero. Yes, he wanted to kill. He's letting people know why. But he wanted to kill his competitor, as Chamoff was just saying. CZ wanted to kill his competitor who was trying to kill him.
30:07 Chamath Palihapitiya? I didn't say he was trying to do that.
30:08 David Sacks? We got, we got to back up here because I think we've done a lot of like 30,000 foot like lessons and like takeaways from this. Thing, but we haven't really established what it is that SBF did wrong. So I think we need to sort of take a second to unmuddy the waters. Okay. And part of that, I think we should start with this idea of a run on the bank because the the press who've been writing puff pieces about SBF. I'd say mainly Semaphore, which he was a big donor to. They've been trying to frame it as a run on the bank. And then that implies that it's not really his fault. It could happen to anybody. Lots of banks have had this problem. Okay. First of all, they're not a bank. Banks actually have the legal right, under certain conditions, to take customer deposits and loan them out. Okay. Yes. They did not. Their terms of use did not allow that, as Stephanopoulos pointed out.
30:53 David Sacks? SBF's answer to that was, well, we had this like margin account program. There were other provisions and other terms of use, but most of the customers who lost money, the vast majority, did not opt into that program. They never agreed to that. So that's that's point number one. Point number two is, I think we need to to look at this language of margin account. Okay. SBF's explanation of how customer money was siphoned off for his own personal use, i.e. to Alameda, is that Alameda had a margin account. So I think we could perform a service here by explaining why it wasn't a margin account and, you know, and you guys understand this really well, the way that a margin account works is the following, okay, because I think some of us have them set up with investment banks.
31:38 David Sacks? You go to an investment bank, say Morgan Stanley, and you over, you post collateral, you actually over collateralize. So for example, you might take a hundred million dollars of stock, post it at the investment bank, and then they will let you loan a certain percentage, nowhere near 100%, maybe 50%.
31:57 Chamath Palihapitiya? So if you have a very, very liquid security, you may get 50% coverage, which means if you posted a hundred million dollars, you could get a $50 million loan.
32:08 Jason Calacanis? But you have a hundred million in Amazon stock, you're some Amazon VP, you can get 50 million loaned.
32:13 Chamath Palihapitiya? And if it's a private asset, it's anywhere as high as 30%, 35%, but typically it's about 25%. My expectation is in a liquid token like this would have basically gotten five or 10% coverage ratio at the best of it. And then what happens is you have these maintenance values. So if all of a sudden, the value of these entities multiplied by that percentage that you're allowed to loan falls below, you have to post money. That's how a margin account works. It's just, there is no free lunch in that.
32:43 David Sacks? Yes, exactly.
32:44 David Friedberg? Let me just say, say quite simply, very simply, what I, it appears this guy did. He took customer deposits in US dollars. He then converted those dollars into some other asset. And he had a mark on that asset. Let's call it a dollar a token. And then those dollars were moved to somewhere else.
33:05 David Sacks? No, this is
33:06 David Friedberg? Because someone transferred in some other token.
33:08 David Sacks? Listen, we need to finish the We need to finish the explainer around the margin account. Okay, because what SBF did is this. He took customer deposits, gave them to himself.
33:21 David Friedberg? Just be clear. And in, no, he gave, he took customer deposits in US dollars. They were wired in.
33:27 David Sacks? Correct.
33:28 David Friedberg? He took those dollars out and he put a fake token in. And he called that.
33:32 David Sacks? That's right.
33:33 David Friedberg? And therefore, he said, therefore, he said, the balance sheet is good. But the value of that token, it turns out, isn't a dollar. It's 10 cents.
33:41 David Sacks? That's right. It was his, it was his sort of, it was sort of his made up token that
33:45 David Friedberg? FTT is the name of that token.
33:46 David Sacks? That he tightly controlled the trading of and artificially propped at the price.
33:50 David Friedberg? And by the way, it wasn't just FTT.
33:51 David Sacks? But, yeah. Yeah, but, but, but here's the thing. It wasn't just the fact that his collateral was no good. It was also the fact that, and this is from the bankruptcy filing by the, the new, the Enron trustee guy. He specifically said that Alameda, unlike every other margin account on the platform, had the auto liquidation provisions turned off. So wait, we have to finish the thought around how margin works. So like Tomas said, you overpost collateral. And if the value of that collateral goes down, or the, the, the, the position, your trading account, the value of that goes down, you either have to post more collateral or they will actually liquidate your collateral to pay off the loan.
34:34 David Sacks? So Morgan Stanley will never lose money on a margin account. Never. And like, the whole point is because they don't make money on it. They loan you the money at like, you know, a few percent. It's like very cheap loan.
34:45 David Friedberg? LIBOR plus or whatever.
34:46 David Sacks? Yeah, exactly. That, that is not a risk account to them.
34:49 David Friedberg? And so again, In the example, let's use an example.
34:53 Jason Calacanis? In the case of the VP at Amazon, who's got 100 million in Amazon, they have a $50 million loan. If Amazon loses half its value, then that triggers the automatic selling of Amazon shares to get it back down to 50% coverage. So now you have to sell 25 million of Amazon shares, if the full 50 million was pulled down, to get back down to 50% leverage.
35:13 David Sacks? Yes, and they don't wait until like Amazon's stock is at the exact level where now the collateral equals 100% of the loan. They will keep that 50% loan to value.
35:23 Jason Calacanis? Yes.
35:23 David Sacks? And they will liquidate you, you know, and by the way, you can lose your entire amount, right?
35:27 Jason Calacanis? So, you know, this is why trading on margin is so risky, is that You can get wiped out completely.
35:33 David Sacks? You get wiped out very, very quickly with a small move down.
35:35 Jason Calacanis? Because they are the custodians of that Amazon stock. They are holding it for you now, and they have the right to sell it to cover your margin. You're saying that governor, that basic tenant, that basic safety control was turned off by Alameda, and it's even more sinister, Alameda controlled like 90 or 95% of these FTT tokens, and was owned by Sam Bankman-Fraud. So he owned that company, then he claims he had no operating position in it.
36:03 David Sacks? What should have happened is with that collateral is that as the value of their position was going down, and/or as the value of the collateral was going down, it should have been liquidated to pay off the margin loan. And that did not happen, and the reason it didn't happen is that Alameda got a special exception on the platform to turn off auto liquidation. Therefore, it was never a margin account. If, even if it was a margin account, okay? And, and FTX somehow misadministered the margin account. It should never have taken other customers' deposits and used them to pay back that money. What should have happened is if FTX was gonna lose money on a margin account, that would hit the FTX corporate treasury, okay?
36:45 David Sacks? And when the FTX corporate treasury ran out, the company files for bankruptcy then, and then all the other customers, hold on, their account is still there. Their money is there in segregated accounts, and in bankruptcy, they get their money back. The idea that a margin account could ever cause another customer to lose money, that like whatever that is, that's not a margin account.
37:06 Jason Calacanis? There's a great article, there's a great article. This one was a journalist that did his job properly. His name is David Z. Morris.
37:13 Chamath Palihapitiya? He wrote an article in CoinDesk that summed up, for anybody that's interested, all of the actual fraud and all of the crimes that were committed in excruciating detail. And what's so sad about all these interviews and this press tour is if anybody would just read this article, you can construct the right questions to ask this guy, just based on this one article. But the point I wanted to make is that one of the most interesting insights was these guys had lost an enormous amount of money already in calendar year 21. And so this is what's so crazy, Jason, about, you know, you using language like rug pulling and like, you know, nobody actually trying to like be clear. Like, you guys are giving this guy a hall pass.
37:58 Chamath Palihapitiya? I'm not giving him a pass. If any industrious reporter could have found an employee who said, wait a minute, we just blew a $3 billion hole in our balance sheet in calendar year 21, 20, and now we're sitting here at the end of 22. It's Chama.
38:12 Jason Calacanis? Hold on a second. Hold on. I need to respond. I am not giving him a pass. And for you to blame journalists who are reflecting the crime and not putting any light on VCs and the capital allocators who made this investment and who did no diligence and now put governance in it is the height of arrogance, Chama. This is not the press's fault.
38:32 Chamath Palihapitiya? They're not doing that either.
38:33 Jason Calacanis? This is the VCs' fault.
38:34 Chamath Palihapitiya? Where's that article?
38:34 Jason Calacanis? This is the capital allocator's fault. You're blaming the people who are telling the story after the crime is committed.
38:40 Chamath Palihapitiya? What story?
38:40 Jason Calacanis? They're covering the story up. You can't handle the truth.
38:43 Chamath Palihapitiya? Jason, they're covering the story up. They're not telling the truth.
38:46 David Sacks? Can I get in here? Can I get in here? All right, listen, Jason, I will defend you against Chama saying that somehow you're, you know, that you're letting SBF off the hook. I know you don't want to let SBF off the hook.
38:56 Jason Calacanis? I am not.
38:57 David Sacks? However, you are letting the press off the hook. And the reason why, hold on a second, the reason why you're using this inaccurate language like rug pulling and run on the bank when there was no run and there was no bank is because you've been infected by this language that the media has inserted into the discourse. The media, listen, and hold on a second, investors may have got it wrong last year. Investors may have got it wrong when they did that last round. But I think investors now understand what's happening. But the media is still covering for SBF by misexplaining what happened.
39:28 Jason Calacanis? Okay, give me a percentage, Axe, of who's to blame here. VCs who invested and didn't set up any governance, regulators who did not set rules around crypto, and then three, the media. What percentage out of 100% is the investors? The regulators and the press? Go. Three numbers.
39:47 David Sacks? I would say that before the fraud got exposed, one-third, one-third, one-third. One-third each before the fraud got exposed, but they were all jointly and severally liable. But after the fraud's been exposed, no investor is still defending SBF. But I think that the investors who were swindled by him, they feel bad about it.
40:06 Jason Calacanis? So 30, 30, 30 is absurd. The press had no way to know the fraud was going on, just like the VCs who put the money in.
40:13 David Sacks? What are you talking about?
40:14 Chamath Palihapitiya? Jason, are you stupid? Like, wasn't the journalist that exposed the fraud at Theranos? He's the guy that went and did all the work. John Kerry you should be celebrated. Hold on a second. John Kerry you went and found this thing. When everybody else was like, this is perfect. It meets all of our priors. Let me finish, please. It meets all of our priors. This is great. And John Kerry, hold on. And so John Kerry was like, this doesn't pass the smell test to me. Let me go do some work. And he pulled one little string and over the course of 18 months, he exposed the whole bloody thing. So hold on a second. So what is incredible to me is that it was possible to expose this thing before. Nobody did. I agree with David. It's about equal responsibility before, but afterwards, the bulk of the responsibilities now
40:58 Chamath Palihapitiya? sits with regulators to clean it up and journalists to tell the truth.
41:01 Jason Calacanis? Okay. And now may I respond to that, since you call me stupid? You are delusional. Number one, every one of those investors in Theranos could have taken a fucking blood test at two different places, like Jean-Louis Gassier did, and write a blog post and prove that Theranos didn't work. And they withheld disbelief. Investors putting in $100 million, including Rupert Murdoch, didn't even take a fucking blood test or tell one of their diligence teams to do it. The same thing happened here with the investors in FTX. They did zero diligence. They set up zero governance. This was a failure of the investors and the governance for 99% of the problem.
41:43 Jason Calacanis? And then regulators should have caught it and the regulators in fact did catch Theranos. So you're completely wrong, Chamath, again. The journalists come in after the fraud is happening. The investors and governance is responsible for stopping these things. FTX was a failure of governance and investors and so was Theranos. The end. You're completely wrong.
42:04 David Sacks? The question is post, post exposure.
42:07 Jason Calacanis? Why are you guys obsessed with post? How about avoiding these things? You guys are blaming journalists.
42:12 David Sacks? Because the story is ongoing.
42:14 Jason Calacanis? You are blaming journalists for something that is capital allocator's responsibility. It is our responsibility to do diligence. It is our responsibility to create a board of directors that checks on Elizabeth Holmes and Sam Bankman-Fried.
42:26 David Sacks? I didn't disagree.
42:26 Chamath Palihapitiya? Nobody's disagreeing with that.
42:28 Jason Calacanis? You just call me stupid. You just call me stupid for pointing out something that you refuse to accept.
42:33 Chamath Palihapitiya? What are you talking about?
42:34 Jason Calacanis? Accept the fact that capital allocators created this. I'm the older brother. No, you can make whatever joke you want. You guys are giving a pass to the investors and to governance.
42:46 David Sacks? You're doing a Fredo impression again.
42:46 Jason Calacanis? I'm not doing Fredo. I'm not doing Fredo. You guys are being absurd. This is why people say that we're delusional on this podcast.
42:53 David Sacks? Don't call him dumb.
42:55 Jason Calacanis? The reason people say we're delusional is that we won't take acceptance of this issue.
42:59 David Sacks? Remember in Fish Called Wanda, like the guy you can't call dumb?
43:01 Chamath Palihapitiya? Totally, he loses it.
43:02 David Sacks? He goes berserk.
43:03 Jason Calacanis? No, I'm not going berserk. You guys have a blind spot. Capital allocator's responsible.
43:08 Chamath Palihapitiya? He's like, don't, don't call me dumb. I'm not going to defend, I'm not going to defend any single one of those investors. I mean, I think that they did a horrible job too. It's a great episode. But the reality is. Her ratings just went up. But the, but the reality is, I think that if you think that you can, if you, it's your decision to, to defend the mainstream media. I think that that's fine.
43:27 Jason Calacanis? I'm not defending them.
43:28 Chamath Palihapitiya? No, you are. You said they have no responsibility.
43:30 Jason Calacanis? I'm blaming the VCs. It's different. The culpability is with the investor class that has not had proper governance and diligence.
43:38 Chamath Palihapitiya? Jason, how many articles have been written excoriating them?
43:42 Jason Calacanis? Uh, yeah, some.
43:43 Chamath Palihapitiya? Where?
43:44 David Sacks? A lot. They look like fools.
43:46 Jason Calacanis? Yeah, I mean, this been.
43:46 Chamath Palihapitiya? Show me, show me, no, just.
43:47 Jason Calacanis? Type in Sequoia Capital.
43:49 Chamath Palihapitiya? No, show me the Washington Post, New York Times, that's like digging in to that malfeasance or that lack of oversight and holding them accountable in a way that you feel exposes this problem to create change.
44:00 Jason Calacanis? Well, if we look at Theranos, those people who invested, including Draper and.
44:09 Chamath Palihapitiya? Just show me the examples.
44:10 Jason Calacanis? Rupert Murdoch, they, they really went after them for sure.
44:12 Chamath Palihapitiya? Yeah. What about here?
44:15 Jason Calacanis? Uh, Wall Street Journal, one day ago, Sequoia Capital apologizes to its fund investors for FTX loss. Venture capital firm tells fund investors that.
44:22 Chamath Palihapitiya? That's hard hitting.
44:22 Jason Calacanis? It will improve due diligence on future investments after.
44:24 Chamath Palihapitiya? They really got them. They really got them.
44:26 David Sacks? Let me, let me, let me read you.
44:27 Jason Calacanis? That's a cover story in the Wall Street Journal.
44:29 David Sacks? I'm gonna, I'm gonna read you, I'm gonna read you a sentence from the New York Times coverage of SBF. And Sam.
44:34 Jason Calacanis? Oh, I'm not defending that.
44:35 David Sacks? Hold on a second. Sam Bankman Fried is neither a visionary nor a criminal mastermind. He is a human who made the same poor choice that generations of money managers have made before him. Are you effing kidding me?
44:46 Jason Calacanis? No, I'm not defending them.
44:47 David Sacks? That was the New York Times coverage.
44:48 Jason Calacanis? Yes, you are.
44:48 David Sacks? They also said.
44:49 Jason Calacanis? I am not defending them.
44:50 David Sacks? His re- his re-succeeded his grasp.
44:52 Jason Calacanis? A suit.
44:53 David Sacks? And then Semaphore, who was on the take, who received millions of dollars of money.
44:57 Jason Calacanis? They're on the payroll. Yes, they're on the payroll.
44:58 David Sacks? Said it was a run on the bank. Okay.
44:59 Jason Calacanis? How much did they get? Five million?
45:00 David Sacks? Now, where is their apology? Hold on a second. Where is their apology? Sequoia has apologized. Where is their apology?
45:07 Jason Calacanis? Oh, it has to come. I'm not defending the press.
45:09 Chamath Palihapitiya? Yes, you are.
45:09 Jason Calacanis? I'm just saying.
45:10 David Sacks? Yes, you are.
45:10 Chamath Palihapitiya? You are, you are.
45:11 Jason Calacanis? No, I am not. I am literally telling you that the New York Times has been asleep at the wheel and throwing.
45:16 David Sacks? The press is always demanding an apology from everybody else.
45:19 Jason Calacanis? The press has done a shit job.
45:20 David Sacks? Hold on a second.
45:21 Chamath Palihapitiya? The press is so incompetent on this. The Twitter Spaces yesterday did a better job of trying to ask questions and getting to the truth than a single journalist has done or the collective body of all journalists.
45:31 Jason Calacanis? Absolutely. Literally randos on Twitter Spaces did a better job than Sorkin.
45:35 David Sacks? Let me tell you why the, why no one trusts the press, Jason. First of all, they have an agenda.
45:39 Jason Calacanis? I am in agreement.
45:40 David Sacks? When they make a mistake, they never admit it. When's the last time they did an apology or retraction? When's the last time they did what Sequoia did?
45:48 Jason Calacanis? I don't know. And they need to apologize about New York Times. I am in agreement with you on that. But I think we have to first say, and this is where you guys have a blind spot, is what is the responsibility of capital allocators and governance and regulators? I think it's one, two, three. Our industry is responsible for setting up proper governance. The regulators are responsible for making sure that scientific claims are backed up. And then press is a distant third.
46:14 David Sacks? You know who I think is responsible? SBF. One, two, and three. And then we can talk about four, five, and six.
46:20 Jason Calacanis? Okay, four, five, and six. Capital allocators, regulators, the press, a distant sixth. I agree. Let's go on to China. God, it's so spicy today in here. God, it's so hot.
46:31 Chamath Palihapitiya? I mean, I do think, I do think when we attack the mainstream media, Jason feels a little twin tinge of like insecurity and illegitimacy because he were a journalist. My personal perception is I think-
46:41 Jason Calacanis? That's bullshit.
46:42 Chamath Palihapitiya? I have, I think that you have a, an incredibly romantic view of the craft as you practiced it back then, which I think was full of integrity.
46:53 Jason Calacanis? Yes, I do.
46:53 Chamath Palihapitiya? And I think that you, I think that you, you don't adequately realize how massively the industry has changed in the last 20 years since you've become-
47:01 Jason Calacanis? I realize it more than you do. I fully realize that the media has absolutely become biased-
47:06 Chamath Palihapitiya? Are they corrupt?
47:06 Jason Calacanis? And have lost, in some cases, yes. I mean, if you're taking money from SBF and then giving him- They are corrupt if they're taking money from SBF and then giving him kid love coverage. Absolutely. That is the definition of corruption in my mind.
47:20 Chamath Palihapitiya? What is, what is it called when you don't take money necessarily like the New York Times and still treat them with kid gloves? What is that?
47:25 Jason Calacanis? It is extreme bias. And the New York Times became extremely biased.
47:28 Chamath Palihapitiya? Why do you think the bias, why do you think that bias exists?
47:31 Jason Calacanis? They were always left-leaning, but I can tell you why. They, when Trump came in, a generation of new journalists became activist journalists. They didn't want to tell stories and take it straight down the middle and let the facts tell the story and let the audience make their own decision. They felt an existential risk when Trump came into office. They got Trump derangement syndrome. They picked a side like MSNBC and Fox did. And the business model became, for the New York Times, pick a side and get the subscribers. It was a deliberate- Cynical choice on the New York Times part to go full MSNBC or full Fox, the two extremes in mainstream media in order to get the subs. And they literally rallied the troops there to do anti-tech, anti-Trump
48:16 Jason Calacanis? coverage and they became activists. And when journalists become activists, they are no longer journalists. They're activists or commentators. And that's the problem. It's being presented as journalism when in fact it's activism.
48:28 David Sacks? So you're right. So just shout out to Matt Taibbi, who just did a monk debate.
48:32 Jason Calacanis? That's well said.
48:34 David Sacks? Yeah, on this very topic. And he has a great, great Substack, basically saying what you're saying, Jason. And the, the, the best quote is, "The story is no longer the boss. Instead, we sell narrative." He's a lifelong journalist, whose father was a lifelong journalist. And he understands the way the business has changed. And it's like what you're saying.
48:51 Jason Calacanis? And, and this is why independent media, whether it's Substacks, whether it's call-in shows, whether it's all-in podcasts or other podcasts, Joe Rogan, Sam Harris, whoever it is, independent voices are now what consumers are seeking out because they can sense the bias. They know Rachel Maddow and Tucker have an axe to grind and they're left and right. They didn't expect the New York Times, Washington Post and Wall Street Journal to, you know, they, they knew they were leaning. They didn't expect them to pick a side.
49:19 Chamath Palihapitiya? Do you think we should cancel? If folks, do you think folks are better off keeping their New York Times subscription or replacing that New York Times subscription with a basket of Substacks?
49:31 Jason Calacanis? Yeah, you answered your own question. It's the latter. I, I think you're on your own as a consumer now. You're going to have to, and I think this podcast and the nuance we have, shout out to Friedberg for nuance. What we've done on this podcast is
49:44 David Sacks? Was that funny, Sax?
49:45 Jason Calacanis? To explain to people.
49:46 David Sacks? Friedberg's not the only one with nuance, J. K.
49:49 Jason Calacanis? Nobody would describe David Sacks with the word nuance.
49:51 David Sacks? He's a nuance department on this podcast? What am I?
49:53 Jason Calacanis? A hundred percent he is, but you would know that because you leave when science.
49:56 David Sacks? I'm the truth department, okay? Sometimes nuance.
49:59 Jason Calacanis? All right.
49:59 David Sacks? I'm the truth department.
50:00 Jason Calacanis? The point is, consumers need. Consumers need to become extremely literate and they have to do their own search for truth in today's age. They don't, they shouldn't trust New York Times, they shouldn't trust us, they should trust themselves. They shouldn't trust necessarily the CDC or, you know, the World Health Organization. They should trust themselves and come up with their own process for figuring out the truth in the middle of this mess.
50:24 David Friedberg? By the way, this is a good reflection on what's happened with the rest of media with respect to the creator class, where, right, it used to be the movie studios and, you know, a handful of kind of aggregated creators that made all of the content, the record labels, and now, you know, independent artists, independent producers, independent creators, and now independent journalists are going to become the bulk of volume that's going to be consumed. It's just a different consumption model. But we've already seen it happen with music, we saw it happen with movies, and we've seen this disruption happen across all of these other media classes. Journalism and what we call the press is very likely going to be kind of that next layer of disruption.
51:04 Jason Calacanis? I would trust having a conversation with you about science topics over reading a science article.
51:09 David Friedberg? Hundred percent.
51:10 Jason Calacanis? You know, in the New York Times or Wall Street Journal, if I'm being honest. I would much prefer to talk to you about it, and if it was markets, I'd rather talk to Chamath, than if it was SaaS, I would talk to Saks or operating a company. Speaking of operating a company.
51:22 David Sacks? Or politics.
51:27 Jason Calacanis? We'll see, we'll see.
51:30 David Friedberg? But I think, I think it's about having unique inside insight, right? Like, that wasn't the case. And what's interesting is that the people who are the professionals that have the knowledge and the touchpoints are also becoming journalists, in the sense that they're also becoming speakers of their truth, right? And I think Twitter is a good enabling platform for this. We see it on YouTube, where like scientists are putting out their own videos, or market actors, like people that are traders in the market go out and they put out their own videos, and they put out their own podcasts, and I think we're probably a good reflection of that.
52:00 David Sacks? Yeah.
52:01 David Friedberg? In the sense that like, we are the actors in the market, and we're not just the independent observer that has kind of a surface level view. We have the depth to be able to talk about the things that we choose to talk about. And I think that's where consumers find value, and will continue to find value, in terms of who the journalist or speaker is that they're going to start to trust for their information. I had.
52:22 David Sacks? Yeah, I saw I saw that interview you did with Newcomer.
52:25 David Friedberg? Oh, yeah.
52:26 David Sacks? Yeah.
52:26 David Friedberg? Thanks for that, Jake. That was good.
52:28 David Sacks? Yeah, I saw that that coverage. I mean,
52:30 David Friedberg? Yeah.
52:30 David Sacks? He speaks a lot about the this phenomenon of going direct. And of course, he's against it. Now, he interprets going to direct as an attempt by newsmakers to avoid answering tough questions or take tough questions. I think that's ridiculous because, for example, I go on CNBC all the time. I go on Emily Chang and Bloomberg all the time. I submit to like really tough questions. I actually like those sort of sparring sessions.
52:58 David Friedberg? Yeah, I did Hard Talk this week. Have you ever done that?
53:00 David Sacks? Exactly. So that's not what's going on here. I think what's going on is we have expertise. We want to communicate them. And we do feel like the media has become a very unreliable narrator. There is too much bias and sloppiness. Not all of it is agenda. Some of it's just pure sloppiness. And there's no reason why we shouldn't go direct. And people want to hear from us. The audience wants to hear from us.
53:23 David Friedberg? Same for look, look, look at Draymond. Look at Draymond and the success he's had with his pod. I mean, no basketball player has ever gone direct and created content like Draymond's created. And it's totally changed the game. And he was so clear. He's like, we are, I am the media now.
53:37 Chamath Palihapitiya? JJ Reddick, you know, Old Man and the Three, amazing, amazing podcast. I was going to tell you guys a story. So I was in the Middle East last week or this week, sorry. And I had this crazy experience where I was trying to understand what was going on in China. And so I started on CNN. And the whole thing was the propaganda machine around a democratic revolt, you know, pushing for democracy and trying to depose Xi. Then I moved to Al Arabia. So one channel up, I went from channel 10 to channel 11. And instead, what they were actually doing was interviewing people on the ground. And what they were talking about was literally how these PCR tests have become far too burdensome.
54:20 Chamath Palihapitiya? And they just wanted it to end and more reasonable restrictions to get in and out of quarantine. Then I went from there to BBC. And in BBC, they had a China scholar who was talking about how for decades, actually, the Communist Party supports local level protests and demonstrations because they've realized that it is a part of their political system to make sure that people feel like they have a say. And I was like, taking a step back and I'm like, if you listen to the US narrative and even Jason, like in our group chat, people fermenting for like revolution and this is Tiananmen 2.0. And I'm like, well, I'm reading two other channels that tell us a completely different set of things. And I just thought, man, people just really fit the data.
55:04 Jason Calacanis? Such a good point.
55:05 Chamath Palihapitiya? To fit their bias.
55:06 Jason Calacanis? Yeah, we are projecting. We want to see a revolution in China. The people in China want to have their lives back. Well, I would love to see more democracy in the world. Yes, guilty as charged. I would like to see people be more free in the world. Dictator.
55:21 David Friedberg? I think most people just want to improve their condition. And I don't think people are as tied up on the philosophy of the government as they are about improving their condition. And as long as their condition is improving, they're willing to put up with any form of government. And history shows that.
55:34 Jason Calacanis? By the way, the conditions in China have improved better than everybody's in the last.
55:38 David Friedberg? It's better than anyone in history.
55:40 Jason Calacanis? 500 million people out of abject poverty. And that's the great success of engagement. Isolationism would not have created that amazing outcome. 500 million people going out of abject.
55:53 David Sacks? You're referring to us throwing.
55:55 Jason Calacanis? To Apple building factories.
55:56 David Sacks? Hold on a second. You're saying.
55:57 Jason Calacanis? Apple building factories is what I'm referring to.
55:58 David Sacks? Oh, okay, fine. If they, if they want to build something over there, I guess that's better than us throwing open our markets and giving China MFN status to destroy American manufacturing and build up their economy so they can become a peer competitor to the United States.
56:13 Jason Calacanis? Yeah. I mean, this is the balance of engagement, isn't it?
56:15 David Friedberg? Sex, what?
56:16 Jason Calacanis? If you engage too much, you give everything up.
56:18 David Friedberg? Sex, which of the current Republican agenda do you disagree with most strongly? Just as an aside.
56:27 David Sacks? Well, most Republicans are in favor of our Ukraine policy, this sort of unlimited appropriation of weapons and aid to them.
56:35 Jason Calacanis? Don't you disagree with immigration policy of Republicans and Democrats?
56:38 David Sacks? Well, I have a more nuanced position on immigration, which is, I think we need to have a border. And it can't be just like an open border, which is the de facto policy we have now. But at the same time, I do think that we should have H1B visas and we want to, like Jamal said, we want to be an all-star team for the world. We want to have the best people want to come here. So there's a balance. It's a balance. And then, you know, look, I think that I was happy to see the marriage equality bill finally passed the Senate. Yes, they did get about a dozen.
57:04 Jason Calacanis? 12 Republicans voted for it. It's great.
57:06 David Sacks? So that's great.
57:07 David Friedberg? Yeah.
57:08 David Sacks? But that's not the majority, unfortunately. You know, look, on what I would categorize as the old social issues, you know, like gay marriage, like cannabis legalization, I was on the liberal side. Yeah, I don't think banning abortion entirely, a total abolition is going to work for this country. I think Republicans will lose elections if they insist on that, and I think they're getting that message. So, um, so, yeah, I mean, look, I, I think that, um, I've always considered myself to be pretty centrist.
57:39 Jason Calacanis? And so you're not a globalist. You don't believe in open global markets with the US?
57:45 David Sacks? In general, I understand the benefits of free trade, and I don't think we should be isolationist with respect to trade. I don't think that we can be a successful country if we are, we isolate our economy. So I do want to trade. However, with China in particular, I think we made a mistake in throwing open our markets to their products, giving them MFN status while-
58:08 Jason Calacanis? Most favorite nation.
58:09 David Sacks? Yes, enriching them to the point where they became a peer competitor of the United States. Now, look, I understand why we made that mistake 20 years ago because everybody thought, the theory was that if we helped China become rich, that China would inevitably become more democratic, and they'd be filled with gratitude towards the United States, and they'd actually become more, uh, more hostile towards us, more westernized. And I think that theory has just proven to be wrong. I mean, they have not-
58:36 Jason Calacanis? Or it's going very slowly, one or the other. Uh, let's own our clips here. Here is Chamath's prediction from episode 61, and we'll see you on the other side of this quick clip.
58:46 Chamath Palihapitiya? My worldwide, uh, biggest political winner for 2022 is Xi Jinping. I think this guy is, uh, he's firing on all cylinders and he is basically ascendant. So 2022 marks the first year where he's essentially really ruler for life. And so I don't think we really know what he's capable of and what he's going to do. And so that's just going to play out.
59:11 Jason Calacanis? You think he's the biggest political winner, really?
59:13 Chamath Palihapitiya? Oh, my God. I think, I think it's going to be a, he's going to run roughshod, not just domestically, but also internationally, because you have to remember, he controls so much of the critical supply chain that the Western world needs to be-
59:26 Jason Calacanis? I think you're completely wrong. I think you're completely wrong. I think he's losing his power. He's scared. That's why he took out all these CEOs. He's consolidating power because he fears that they're gonna- Win too big and then displace him and he has massive real estate problems over there that could blow up at any moment in time. He could face a civil war there. I think he's totally isolated himself. Civil war? They don't even have guns. Every major country is removing their factories and removing this dependency. They don't even have any guns there. What are you talking about? What are they gonna riot with? Did you not see Tiananmen Square? Did you not see the riots in Hong Kong? Are you not paying attention, Chamath? There's been many riots in China. They just happened to kill all the people. Zou's were crushed. I'm not saying they will be crushed, but he still will have massive amounts of, I believe,
1:00:11 Jason Calacanis? protests and yeah, he'll have to kill people.
1:00:13 David Sacks? I think the bigger risk is that China gets better for Xi Jinping, but worse for everybody else in China. It's already worse for all the billionaires over there. It's worse for the tech industry. You've now got Evergrande, that whole gigantic debt implosion. I think there could be contagion from China next year. I don't think Xi's gonna lose his grip in any way, but I'm not sure China's gonna have a good year next year.
1:00:39 Jason Calacanis? Wow. Nailed it. I think all three of us kinda got this right.
1:00:42 Chamath Palihapitiya? What are you talking about? You got none of it right.
1:00:44 Jason Calacanis? Well, I said there were gonna be riots and they're gonna have a recession. I mean, and you said that they would be squashed. That's exactly what happened. Both things happened.
1:00:53 Chamath Palihapitiya? I actually think I have a pretty decent ability to steel man, pretty concretely the details. I think that at best, when it comes to things like democracy and your belief in US exceptionalism and a specific political worldview, at best you straw man. And I think that you get very biased without seeing the forest from the trees. The reason I said that is not because I'm like, you know, some huge Xi supporter. I'm just trying to steel man what happens when one individual person gets anointed leader for life of 1.3 billion people that then controls 20% of the world's GDP. There is no other single human being as powerful as him as of this month.
1:01:36 David Sacks? Can I just say that this show, this show is going to become insufferable if every time you sort of said something in the past that was sort of correct, we're gonna have to replay it?
1:01:47 Jason Calacanis? I was actually playing that one for you, Sax. I think you nailed it. I was giving, that was a softball to you, actually, not me.
1:01:54 David Sacks? I nail it every week, J. Cal. This show is gonna slow down if we play every clip that I got right.
1:01:58 Jason Calacanis? You guys are asking to pull clips all the time. I just pulled one clip about China where you nailed it.
1:02:03 Chamath Palihapitiya? No, no, no, look, I think like, and also look what he did.
1:02:05 Jason Calacanis? Chomats, the king of pull a clip.
1:02:06 Chamath Palihapitiya? The, the Evergrande thing, look what he did this week. They said, okay, you know what? The real estate industry can now issue secondary stock sales, raise equity and equitize themselves. So they're gonna find a soft landing for the equity part of, for the real estate industry in China. And now they're reopening. So I don't know. I mean, like, I'm not sure what we're supposed to comment. What I, what I will stand by is what I said, which is, I don't think we have a very clear view about what's going on, what the substance of these protests are and what people actually want. If you're only consuming US media, and so if you find a way to get a diet from a bunch of different sources all around the world, you may get a better sense. I had an accidental window into that by being in a completely different part of the world this past week.
1:02:51 Jason Calacanis? Friedberg, any final thoughts on China and what's going on there before we move on to ChatGPT? Your favorite story.
1:02:58 David Friedberg? I think one of the things we often miss is that China, the CCP does have their hand on the throttle, like they throttle up and down. We always think that it's a linear line and that it's super dogmatic and fixed, but there's certainly responsiveness and the release of the lockdowns in Guangzhou and Beijing this week seems to have been a pretty good indication that when things do get, when, when things, when the tides do, do change, leadership there seems to respond, not always, but enough to kind of keep things going, so.
1:03:34 Jason Calacanis? Should they reopen? I think it's 60% of the population or so is vaccinated with obviously vaccines that maybe aren't as, um, don't have the same efficacy as the ones, uh, here in the United States. Do you think they should open up and just let it rip? Uh, or do you think they should still try to maintain this zero COVID policy? Cause that is the debate right now.
1:03:54 David Friedberg? From what point of view? What's, what's the objective?
1:03:57 Jason Calacanis? Cause that's what I'm asking you, yeah.
1:03:58 David Friedberg? Well, from the objective of economic growth, they need to open up and they need to keep their economy working and they need to keep their labor force engaged. Or else they're going to continue to suffer. So if economic growth is the objective, they need to open up, right? If the long-term health cost of the nation balanced against that is the calculus that they're kind of weighing, there's probably some more nuance to that. And certainly, my understanding is there may be a precedent setting, which is, hey, we've said that it's a zero COVID policy, therefore, we have to hold strict to it, toe the line, else it looks like we're weak.
1:04:39 David Friedberg? And so there's also this, you know, maintaining the authority of the CCP objective. So there's a lot of maybe competing objectives right now. Certainly don't have a sense of how they're weighing them all. But I think that once all those videos came out this week, you guys saw them, but people were screaming, there was an apartment on fire, where the doors were locked with steel beams on the base of the building. At least that's what the video said. I don't know how much truth there is to that, but that's what was said. And clearly, people are extremely distraught and unhappy with the conditions of the lockdown. At some point, enough people with enough loud voices, you know, something's going to change. I mean, let's just remember, like, the bargain that struck in that country, and with all
1:05:22 David Friedberg? countries, is that, you know, the citizenry, to some extent, are willing to tolerate their government, so long as their conditions continue to improve. And there's a bargain, there's some bargain that struck. And as soon as that bargain starts to go south for the citizenry, then that governing entity is at risk. And I think that that's what we sort of started to see this week, was the conditions are getting far, far worse and far less livable for so many people in that country, that the government had to shift.
1:05:57 Jason Calacanis? Do you think, Chamath, this COVID strategy, and then we'll move on, was basically Xi Jinping wanting to get to that Congress, his coronation, and now that that's over, maybe he can change gears? And then...
1:06:11 Chamath Palihapitiya? Like I said, my belief is that I have a very poor access to enough data to have a, to steel man what is actually going on there. But one explanation could actually be that, in the absence of enough hospital infrastructure, and ventilators, and a bunch of these other things, they had to take a pretty severe... Approach to this disease, I don't know what they know or didn't know. Maybe they understood,
1:06:41 Chamath Palihapitiya? you know, the virulence of it, maybe that they have slightly different aging characteristics of their population. Maybe they genetically responded to the SARS-CoV-2 virus. I don't know any of these things enough to tell you, Jason.
1:06:53 Jason Calacanis? Yeah.
1:06:53 Chamath Palihapitiya? But the reality is what Freebrooke says is right, which is that you cannot grow an economy if people are inside locked in their apartments. And it looks like they have decided that that's coming to an end and they're going to, you know, deconstruct all of these things. So, you know, the Chinese growth engine is coming back. And I think that that's going to be an important factor economically that we're going to have to figure out. Because it's going to have a huge implication to American growth and American inflation.
1:07:26 Jason Calacanis? Sax, if in fact, the China, if the lab league theory is correct, China might have some insights into this disease that maybe the West didn't. Maybe that plays into their policy a bit. Any final thoughts here?
1:07:40 David Sacks? Jake, I'm just surprised to hear that you have a problem with their lockdown policy over there. Because aren't they just implementing Democratic Party orthodoxy? I mean, isn't this the policy that Tony Fauci and Barbara Ferrer, that all the health experts?
1:07:56 Jason Calacanis? I was not in favor of lockdowns. What are you talking about? You're the one who had all your mask and had ventilators day one.
1:08:01 David Sacks? Isn't this the lockdown policy?
1:08:03 Jason Calacanis? Why am I getting a stray here? I'm just asking a question as the moderator.
1:08:08 David Sacks? Isn't this basically?
1:08:10 Jason Calacanis? Why am I getting a stray?
1:08:11 David Sacks? Isn't this what Gavin Newsom? Don't deflect, Jake. I'll answer the question. Yes.
1:08:15 Jason Calacanis? I'm not in favor of lockdowns. I was in favor of if people wanted to stay home, stay home. And then if people wanted to go out and take the risk, take the risk. I was always in personal choice.
1:08:25 David Sacks? Isn't this what Gretchen Whitmer in Michigan and Gavin Newsom in California subscribe to the idea that the way to fight COVID was through lockdowns? Now, yes, Newsom had 10 pages of exceptions for his political donors. And he didn't use the police to lock people in apartment buildings. He may have wanted to, but they didn't actually do that. But can you really tell me that this lockdown policy has been disavowed by people like Fauci or by the the health authorities like the Barbara Ferreres of this world? They still subscribe to this view?
1:08:56 Jason Calacanis? Do they really? Is anybody doing a lot?
1:08:58 David Sacks? Show me. Well, they're not able to do it.
1:09:01 Jason Calacanis? Ah, I see.
1:09:01 David Sacks? Because no one agrees anymore.
1:09:03 Jason Calacanis? Yeah.
1:09:03 David Sacks? But tell me, tell me where anybody, tell me where any of the health experts who said that lockdowns were the correct response have repented and disavowed that view.
1:09:12 Jason Calacanis? Yeah, I don't know. I haven't been, I haven't been tracking their mea culpa's.
1:09:16 David Sacks? And I haven't.
1:09:16 Jason Calacanis? You, you yourself were in favor of lockdowns for a period of time. Yes, you were.
1:09:20 David Sacks? No.
1:09:21 Jason Calacanis? You absolutely were. I'll pull the tape for the next episode.
1:09:22 David Sacks? I was in favor of a mask mandate. No, it's not true. I was in favor of a mask mandate. And I said the mask mandate was the alternative to lockdowns.
1:09:30 Jason Calacanis? Okay.
1:09:30 David Sacks? I was saying that by May of 2020.
1:09:32 Jason Calacanis? All right, listen, let's move on to the next thing. I, I don't represent, I'm an independent. I don't represent the Democratic Party. I don't represent Fauci.
1:09:40 Chamath Palihapitiya? No, you represent mainstream media.
1:09:42 Jason Calacanis? I do not represent mainstream media. You just said I was an old school journalist who's mortified with where it is today.
1:09:47 Chamath Palihapitiya? I'm giving you a hard time. I thought your, I thought your explanation was fabulous.
1:09:51 Jason Calacanis? Oh, thank you. Thank you.
1:09:52 David Sacks? Obviously, Jake, I'm giving you a hard time too. I, I know that you were not a big lockdown proponent, but you understand the point I was making, which is.
1:09:58 Jason Calacanis? I do understand your point.
1:09:59 David Sacks? There were a lot of proponents in the US.
1:10:00 Jason Calacanis? Let's stop making me the Democratic spokesperson here. I am not.
1:10:04 David Friedberg? I'm feeling a lot better after my beer. Let's talk about OpenAI. Come on.
1:10:09 Jason Calacanis? All right, let's go. All right. So listen.
1:10:10 David Friedberg? Let's talk about OpenAI.
1:10:12 Jason Calacanis? All right. OpenAI is a, a company that builds
1:10:18 Jason Calacanis? artificial intelligence, software and platforms. They have one platform called GPT. It is on its third version. As part of GPT-3, they created ChatGPT, which is a chat interface where you can ask questions to AI. The results are nothing short of stunning when they hit. Some of them are a little bit mixed, but Friedberg has spent the last 48 hours drinking White Russians with Oatly Milk and playing with ChatGPT, including his question to the ChatGPT, which was write a script of Chamath, Sacks and J Cal
1:10:56 Jason Calacanis? talking about the future of AI in the style of a Quentin Tarantino movie. And I have to say, it was pretty great, the result. Go ahead, Friedberg, tell us what you discovered.
1:11:07 David Friedberg? I think you guys should read this real quick. We can cut it out if it's stupid, but.
1:11:11 Jason Calacanis? You want us to actually read the script?
1:11:12 David Friedberg? Yeah.
1:11:12 David Sacks? I don't think I got the Quentin Tarantino part right. I mean, I think it was like impressive, but it, there's no F bombs. There's no like Tarantino-esque dialogue.
1:11:19 David Friedberg? And by the way, they excluded all of that from OpenAI. They took, they took out all cursing and violent, cussing and violence from OpenAI.
1:11:25 Jason Calacanis? That explains it because if this was a Tarantino script, there would be some choice language in here.
1:11:29 David Friedberg? Totally. But it's interesting. It's like the PG Tarantino script. Cause with no cussing, no violence, no setting.
1:11:35 Jason Calacanis? You do the narrative. Yeah, you do the narrative. Go ahead.
1:11:43 David Friedberg? The scene opens on Chamath Palihapitiya, David Sacks and Jason Calacena, sitting at a dimly lit table in a smoky bar. A bottle of whiskey sits in the center of the table, half-empty. Chamath leaning forward, his eyes intense.
1:11:55 Jason Calacanis? So, what do you guys think about this ChatGPT thing?
1:11:59 David Friedberg? David Sacks takes a sip of his drink.
1:12:01 David Sacks? It's impressive, no doubt about it. A large language model trained by OpenAI that can generate human-like text in a variety of styles and formats is a game changer.
1:12:09 David Friedberg? Jason nods.
1:12:10 Jason Calacanis? Definitely. It's one of the most advanced AI systems we've seen to date. It's gonna have a huge impact on the way we use and interact with AI.
1:12:19 David Friedberg? Chamath frowns.
1:12:21 Jason Calacanis? That's what I'm worried about. With a technology like this, the possibilities are endless, but so are the potential dangers.
1:12:27 David Friedberg? Sacks leans back in his chair.
1:12:29 David Sacks? Oh, come on Chamath, you're not still stuck on that whole AI is gonna kill us all thing, are you?
1:12:35 David Friedberg? Chamath leans forward again, his voice low and serious.
1:12:38 Chamath Palihapitiya? Look, I'm not saying that ChatGPT is going to turn into Skynet overnight, but we need to be careful about the way we develop and deploy AI. We need to make sure that we're using it for good and not just for our own gain.
1:12:54 David Friedberg? J Cal nods.
1:12:55 Jason Calacanis? I agree. We need to make sure that we're responsible in the way we use AI, and that includes making sure it's accessible and affordable to everyone, not just a select few.
1:13:05 David Friedberg? Chamath with a dirty smirk.
1:13:08 Jason Calacanis? And let's not forget about the importance of regulation. We need to make sure that we have the right laws in place to prevent the misuse of AI.
1:13:18 David Friedberg? The director's calling cut.
1:13:20 Jason Calacanis? Cut. That's it. Scene.
1:13:22 David Friedberg? Excellent scene. We're not gonna finish it.
1:13:24 Jason Calacanis? It's not that far off. I mean, it's 60% of the way there.
1:13:27 David Sacks? Actually, there, there was an even better one.
1:13:30 Jason Calacanis? Biden for Saks. If you blame Biden, it would have been perfect.
1:13:33 David Friedberg? Let me tell you guys something stunning about this, um, this platform. So this is GPT 3.5, which is an interim model to the, what people are saying is the long awaited GPT 4.0 model, um, which I think they announced in 2020, uh, and has been in development for some time. So the model, this GPT 3.5 model was trained in three steps. They do a great job explaining it on the OpenAI blog site where they collect some, some data. And then there's a supervised model, meaning that there are humans that are involved in tagging. And then the model kind of, you know, learns from, from that system. Then you ask the model questions, you get output, and then humans rank the output. And so the model learns through that ranking system.
1:14:15 David Friedberg? And then there's kind of this third optimization thing, and then it's fine tiered. So the, the model itself, um, has several steps of kind of human involvement and, you know, kind of it sources its own data and, and builds it. You know what's incredible about this model? The total size of the software, uh, package that runs the model is about 100 gigabytes. Isn't that amazing? Like, you could fit this model on probably what, 20%, of the storage space on your iPhone? And you could run this thing and you could probably just talk to it for the rest of your life. Um, and it, it's really kind of an incredible milestone. But I think what, what was so stunning to me about this, I, I know you guys are probably expecting something to be said like this, but you
1:14:57 David Friedberg? could see so many human knowledge worker roles and, and, and functions being replaced by this extraordinary interface. So kids can do homework. That's easy. Uh, software engineers can get their code optimized and can get their code written for them. There's great examples of how software code has been written, uh, by this interface. You could see real estate, insurance, salespeople.
1:15:22 David Friedberg? Being replaced by some sort of software like
1:15:24 Jason Calacanis? Copywriters?
1:15:25 David Friedberg? Copywriters, you know, make me 100 versions of a commercial or an ad that I can then use. Customer support completely replaced, right? If you guys remember, there were these automated customer support companies that started, you know, two decades ago.
1:15:40 Jason Calacanis? Never worked.
1:15:41 David Friedberg? There was this great flurry. All BPO businesses were all about lower cost human labor. Now the cost of human labor goes to zero. My prediction, which is, so everyone's got the obvious prediction, which is there's going to be a hundred thousand startups that are going to emerge. I mean, this is kind of like this moment where the internet came along and everyone's like, this changes everything. I do think everyone thinks and feels that. So the obvious next step is a bubble will form.
1:16:03 Jason Calacanis? Can I ask a technical question though, Friedberg? And then, Chamath, you're probably thinking the same thing here.
1:16:08 David Friedberg? Let me just finish my market prediction and then I'll do the, but I think because everyone's so hyped about this and we all know this.
1:16:14 Jason Calacanis? It'll be overfunded.
1:16:15 David Friedberg? All the VC attention, all the investor attention is shifting to this capability. And how do you apply this sort of capability across all of these different industries and all these different applications? And as a result, my guess is the next hype cycle, the next bubble cycle in Silicon Valley will absolutely be this generative AI business.
1:16:31 Jason Calacanis? Okay. This is a little technical, but how would it know the difference between like Y O U R and you are? When it is processing natural language, if you were to do like your anus or your anus? How would that, Friedberg? How would it know the difference between your anus and your space anus?
1:16:51 David Friedberg? It'll, it'll learn that, you know?
1:16:53 Jason Calacanis? It's a joke. It was a joke about your anus.
1:16:56 David Friedberg? Try again.
1:16:59 David Friedberg? Yeah, I probably would have made a better joke than that.
1:17:00 Jason Calacanis? Would have made a better joke for sure. So somebody did it in our group chat and said, do intros like J Cal, and they were terrible. So at least I have a job for another year.
1:17:08 David Sacks? Have I asked the AI to pretend you're the all in pod besties telling Uranus jokes?
1:17:13 David Friedberg? That would be pretty hilarious. Sorry, let me just say one more thing about this OpenAI thing. I do think that the biggest and most interesting thing to think about is how this will disrupt the search box. The search, you know, the way search works at Google, you know, and internet search is there are these kind of servers, these web crawlers that go out and gather data. Some are structured data feeds and some of them are just crawlers. And then that data is indexed or in the structured way, it's kind of made available for serving directly on the search page.
1:17:47 David Friedberg? And so much of that is indexing. So I search for a bunch of keywords, those keywords, and perhaps if some natural language context are matched to a result page and I click on that and it's linked out. Years ago, Google started a product called the One Box where they could take structured data, like what is the weather in San Francisco today?
1:18:05 Jason Calacanis? Yeah.
1:18:05 David Friedberg? And that top of the search result page just presented that data because it knows with high certainty the question you're asking and it knows with high certainty the answer it can give you.
1:18:13 Jason Calacanis? Yeah, clipped it from somebody's website, right.
1:18:15 David Friedberg? So if that starts to become everything, then that One Box interface, and it's not just Google's ability to access all this data and index it and serve it and store it, there could be a lot of competitors to the One Box and a lot of competitors ultimately to search. And ultimately, you know, Google's core product, their search engine, could be radically disrupted by an alternative set system or set of systems that have more of a natural language chat interface.
1:18:45 Jason Calacanis? Which, literally, which is literally why Google bought DeepMind and there were a collection of human-powered search engines, Mahalo included, Chacha, Answers.com, who are trying to do the human-based version of this. It's just in scale.
1:18:58 David Friedberg? We don't want to get ahead of ourselves because one of the things we don't know is how much is going on in DeepMind. They're not very open like OpenAI is. They talk about some of the advanced frontier stuff like AlphaFold and so on, and they've been public about that. But a lot of that is really to generate interest and hype and what's next. But my understanding is DeepMind's been applied to everything from
1:19:17 Jason Calacanis? Ads.
1:19:19 David Friedberg? Ad optimization, but also the ranking on YouTube videos to get people more engagement on YouTube, et cetera, et cetera. So there's all these ways that DeepMind's been applied within Google services.
1:19:28 Jason Calacanis? That we don't see.
1:19:29 David Friedberg? And certainly within search.
1:19:31 Jason Calacanis? Yeah.
1:19:31 David Friedberg? But the question is, is there an entirely new interface for search?
1:19:35 Jason Calacanis? Yes.
1:19:35 David Friedberg? That risks Google's core search business. And I think that there certainly will be a lot of money thrown at this. And if anyone has any interesting ideas, send me an email.
1:19:44 Jason Calacanis? Sax and then Chamath.
1:19:46 David Sacks? Yeah, that's a really interesting point. I saw a thread on this where somebody was asking
1:19:54 David Sacks? GPT, you know, a bunch of questions like there were like generally like coding questions and they were actually comparing the result in Google versus GPT. And Google would just give you a reference to like a link to some page. Whereas GPT three would actually construct the answer like a multi paragraph answer. That was far more detailed and in a way user friendly. Yeah. Whereas like the Google page would kick you over to a reference where it was like this. One, two, three, sort of maybe someone had created a checklist, but it just wasn't that detailed. It really is pretty interesting. I thought Andreessen tweeted a really interesting. Example as well, where he asked. GPT to create a scene from a play.
1:20:38 David Sacks? Starring a New York Times journalist and a Silicon Valley tech entrepreneur. They were arguing about free speech and each passing asserts the view associated with his profession and social circle. We don't need to read the whole thing, but I thought this was like spot on where I was actually like. Both sides are making their best arguments and it's like. To each other in a conversation that seems intelligible, like they're making their points at the right. Time in the conversation, it's like they're playing off each other. In other words, it actually reads like a conversation. I actually thought this one was more impressive. Than the one with the best impersonation because. I agree. I actually thought that the one about all in didn't really capture. Our personalities per se, but this one. Actually does a pretty good job capturing the arguments in this debate, so.
1:21:24 David Sacks? Chamath? Pretty impressive. Any thoughts here?
1:21:26 Chamath Palihapitiya? Yeah, lots. I mean, I've been spending a lot of time. Learning about this area. Six years ago, a team that I. Partnered with who was at Google that built TPU, we've been building silicon for this space. So we've been kind of going from the ground up for the last six years. Couple of things that I'll say. The first is that I think.
1:21:46 Chamath Palihapitiya? We're going to replace SaaS with what I call mass, which is models as a service. And so, you know, a lot of what software will be, particularly in the enterprise, will get replaced with a single-use model that allows you to solve a function. So these chat examples are one, and you can name a bunch of SaaS companies that were purveyors of SaaS that'll get replaced by essentially GPT-3 or some other language model. And then there'll be a whole bunch of other things like that. If it's a, you know, expense management company, they'll have a model that'll allow them to actually do expense management or blah, blah, blah, forecasting better. So I think SaaS will get replaced over time with these models incrementally. That's phase one.
1:22:31 Chamath Palihapitiya? But the problem with all of these models, in my opinion, is that they're still largely brittle. They are good at one thing. They are a single-mode way of interfacing with data.
1:22:44 Chamath Palihapitiya? The next big leap, and I think it will come from one of the big tech companies or from OpenAI, is, and we talked about this, I talked about this a few episodes ago, a multimodal model, which then allows you to actually bring together and join video, voice, data in a unique way to answer real substantive problems. So if I had to steel man the opposite-side reaction, so I think there's a lot of people gushing over the novelty of GPT-3. If I had to, or ChatGPT, if I had to, if I had to steel man the opposite, what I would say is, it's gonna get somewhere between 95 to 99% of all of these very simple questions right, because they're kind of cute and simple. There, there is no consequence of saying, "Write a play," because there is no wrong answer.
1:23:30 Chamath Palihapitiya? Right? You either kind of, it, it tickles your fancy or it doesn't. It kind of entertains you or it doesn't. When this stuff becomes very valuable is that when you really need a precise answer and you can guarantee that to be overwhelmingly right, that's the last one to two percent that is exceptionally hard. And I don't think that we're at a place yet where these models can do that. But when we get there, all of these models as a service will be very much commoditized. And I think the real value is finding non-obvious sources of data that feed it. So it's all about training. So meaning you can break down machine learning and AI into two simple things.
1:24:13 Chamath Palihapitiya? There's training, which is what you do asynchronously. And then there's inference, which is what you're doing in real time. So when you're typing something into chat API or chat GPT, that's an inference that's running and then you're generating an output. But the real key is where do you find proprietary sources of data that you can learn on top of? That's the real arms race. So one example would be, let's say you build a model to detect tumors. Right? There's a lot of people doing that. Well, the company that will win may be the company that actually then vertically integrates, buys a hospital system and get access to patient data that is completely proprietary to them
1:24:55 Chamath Palihapitiya? and covers the most number of women of all age groups and of all ethnic categories. Those are the kinds of moves in business that we will see in the next five to 10 years that I find much more exciting and trying to figure out how to play in that space. But I do think that chat GPT is a wonderful example to point us in that direction. But I'm sort of more of that case, which is it's a cute toy, but we haven't yet cracked the one to two percent of use cases that makes it super useful. But I think the first step, but just sorry, but the first step will be the transformation of SaaS to mass. And then from there, we think we can try to figure this out.
1:25:33 Jason Calacanis? It reminds me of in a way when you, when you give that description of like, hey, this is really interesting, but it's not complete. Is remember when GPS came out and like people are like doing turn by turn navigation. They drive off the road because they were trusting it too much. And then, you know, over 20 years of GPS, we're kind of like, yeah, it's pretty bulletproof, but keep your eyes on the road. Same thing that's happening. Uh, and, and these changes tend to be slow.
1:25:54 Chamath Palihapitiya? These last, these last hundred or 200 basis points literally takes decades.
1:25:58 Jason Calacanis? Exactly. So the last 15% of self-driving is like the decade long, you know, slog.
1:26:03 Chamath Palihapitiya? That may take a century. 15% may take a century, but the last 2% will take a few decades.
1:26:07 Jason Calacanis? It's like the change happens very slowly and then all at once. For people who don't know what a TPU is, that's a tensor processing unit. This is Google's, um, application specific circuits, right? And
1:26:17 Chamath Palihapitiya? Custom silicon that they invented for TensorFlow at the time.
1:26:20 Jason Calacanis? Yeah. So if you want to try to
1:26:21 Chamath Palihapitiya? Although now the modality of AI, we've changed that as well. So now we're totally in the world of transformers. So we're not even using,
1:26:28 Chamath Palihapitiya? you know, you're not letting the tensors flow the way they used to.
1:26:30 Jason Calacanis? All right, there's been a slowdown in SaaS. Sax, uh, what is happening in the software as a service world?
1:26:36 David Sacks? There was a good update by, uh, Jamon Ball, who works for Altimeter, our friend Brad Gersoner. He does these really great updates on what's happening in the SaaS world. The big thing this week is that Salesforce had its quarter and I, I would consider Salesforce to be the bellwether for the whole SaaS category. I think they're the largest pure SaaS company. They were the first multi-tenant SaaS like company at scale. And what they've shown is a huge slowdown. Um, basically their net new ARR that they just added in the previous quarter, dropped two thirds compared to the previous quarter. But because their sales and marketing spend was the same as the previous quarter, it exploded their CAC payback, which means the amount of time it takes to pay back
1:27:20 David Sacks? your customer acquisition costs for a given, uh, customer. So you see there 155 months it would take now to pay back the customer acquisition costs. That's over 10 years. That doesn't work. I mean, I think before this quarter, it was more like, Two and a half years, that's something that you can afford. A company can't, you know, if you're spending 10 years of, you know, gross profit on a customer to acquire them, the business doesn't make sense. So now, I'm not saying any of this to pick on Salesforce. It's an exceptionally run company, you know, one of the absolute best. Mark Banioff, fantastic CEO, founder, great human being. But I think the point here is that what you're seeing is the whole SaaS industry is really
1:28:05 David Sacks? slowing down here. In the first half of the year, you saw SaaS valuations correct. Now, we're actually seeing SaaS top line correct. And, you know, there's an interesting question here. If your CAC payback goes from two and a half years to 10 years, you have to bring your CAC down. How do you do that? You can either reduce marketing, or you can reduce sales. So in other words, you can reduce- You mean, cut the sales team? You can either cut people and headcount from your own team, or you can cut spending you do on advertising, or events, or money that you spend on other companies. Either way, there's going to be a big contraction in jobs, basically, around this industry.
1:28:46 David Sacks? And I think that what that could do is cause a vicious cycle where- Death spiral? We start seeing, I wouldn't say death spiral, I think this vicious cycle for the next year or so, where seat contraction becomes the norm instead of seat expansion. So if you go back over the last 10 years, a major tailwind at the backs of SaaS startups has been that every year, you start with 120%, 130, 150% of last year's revenue just from your existing customers. Why? Because they were hiring more and more people, and they needed to buy more and more seats. But now, headcount growth is frozen, and in fact, companies are doing major layoffs. So the baseline for next year could be seat contraction.
1:29:27 David Sacks? So instead of starting with 120% of last year's revenue, you might start with 80 or 90% because there's going to be so much churn. So I think that, you know, SaaS companies need to take this into account. This idea that, like, growth is on autopilot, that could start to go in reverse. I don't think permanently, but I think for the next year or so. This is why I also, I tweeted, you know- Two X is the new three X. If you can grow two X year over year in this environment, that is as good as or better than growing three X last year.
1:29:54 Jason Calacanis? Oh, it's better. Clearly.
1:29:55 David Sacks? Clearly better. Like, a lot of companies that weren't that great could grow three X last year because it was so, times were so frothy, everyone was buying everything. But now, it is going to be really hard to even double year over year. Companies need to take that into account into their financial planning. Uh, you need to restrain your burn because a lot of the revenue that you predict is going to be there, may not be there.
1:30:17 Jason Calacanis? All right. Uh, thanks so much to the Secretary of SaaS. I think you got a board meeting.
1:30:22 David Sacks? I do. I gotta run.
1:30:23 Jason Calacanis? One of the interesting things I saw in terms of use cases is somebody used the chat GPT to describe rooms. Then they took the descriptions of those rooms and then they put them into like Dolly or Stable Diffusion, one of those, and it created the visual. I'm curious if you think, you know, the self-driving APIs, uh, and machine learning that's going on. Then you got images, then you got chat, maybe you have proteins going on with the alpha fold stuff. When these things start talking to each other, is that going to be the emergent behavior that we see of general AI? And that's how we'll interpret it in our world is these hundred different vertical AIs, uh, hitting some level of reasonableness to Chamath's point on data sets.
1:31:07 Jason Calacanis? And then all of a sudden, the self-driving AI is talking to the one that's looking at cancer and tumor diagnosis and the chat and the image ones. It may be stable diffusion, the protein AI, and the one that's looking at cancer cells start talking to each other.
1:31:20 David Friedberg? Yeah, I'm not sure that's as likely as the, there's a lot of solutions that will emerge within verticals, and I think you can distinguish them. So I kind of gave this example a few months ago.
1:31:37 David Friedberg? If you remember Kai's Power Tools was a plugin for Adobe Photoshop.
1:31:40 Jason Calacanis? Yes.
1:31:41 David Friedberg? Came out in nineteen ninety-three, I believe.
1:31:43 Jason Calacanis? Of course.
1:31:43 David Friedberg? And Kai's Power Tools completely transformed the potential of Adobe Photoshop. Because Photoshop had all the basic brushing and editing capabilities within it. Kai's Power Tools was statistical models that basically took the
1:31:57 David Friedberg? Matrix of the pixels and you know created some evolution of them into some visual output like a blur and so you could blur, motion blur or something and you could change the parameters and now your photo looked like it was going through a motion blur. Ultimately Photoshop bought and implemented those tools but those were similar, there were statistical models that made some representation of the input which was the image and then created an output which was an adjusted image. I would argue that that is very similar although the models behind it are very different in terms of the contextual application of statistical models in software. And you could see stuff like for example a chatbot that replaces, help me figure out
1:32:40 David Friedberg? whether my credit card charges are correct or not instead of having a customer service agent, an offshore customer service agent helping you resolve that. Or help me return my item or there are very specific kind of verticalized applications that can plug in that ultimately replace what was manual and human driven before because humans used to manually make the motion blur in Photoshop and then it was automated with these software packages. And I think you can kind of think about it in that same way that these, these are known knowns, they don't require necessarily a human physical labor or some you know, human responsiveness that if 95% of the work can be handled, it will get handled by some verticalized solution.
1:33:22 David Friedberg? So I think the physical labor versus the non-physical labor is one way to think about the distinction, meaning is there some change in the physical world? Driving is absolutely a change in the physical world, you have to move physically through space. So that one is a very distinct class. All the stuff that's like communication, imagery, static imagery, audio and then visual, video, there's some stacking that happens there. And some of those will be kind of siloed and then some of them will merge and you'll have these kind of unique kind of combo models. And so, look, as they start to work together, I think we'll see them, you know, completely rewrite some of these verticals like movie production or music production,
1:34:02 David Friedberg? right, or advertising, or we're seeing it now with with video and creative arts with, you know, some of the the visual stuff on.
1:34:11 Jason Calacanis? And to be honest, a lot of journalism, a lot of creative arts have become the wisdom of the crowds over the last two decades where, you know, artists were looking at the collective works of the internet, interpreting it and then coming up with content, which is kind of what these AIs are doing. And then who legally owns the collective content is going to be a big question. Chamath, you talked about data sets and Microsoft is being sued right now and GitHub because they used open source to create tools in AI to help augment programmers like while they're programming, writing code, it gives them suggestions. And now the open source community is suing them for using their data set. So what do you think about the legality of data sets, Chamath?
1:34:52 Jason Calacanis? And should they get some kind of protection if you make a GPT-3 based on Quora or based on Wikipedia? Should you have to get approval to use that data?
1:35:02 Chamath Palihapitiya? I think it's the exact opposite. Yeah, it's it's the exact opposite. They say that this is actually your work. And I think that that's the right legal framework. But the the answer to your other question is, this is why I think the hunt for proprietary data actually becomes the hunt that matters. All of this other stuff, I think, is a lot less important because I think you have to assume that all of these models will eventually just get commoditized. So there'll be there'll be a, you know, like you see like Jasper AI and you see a bunch of these generative AI companies. It's really interesting. But the problem is when you sit it on top of the same substrate, you'll have a convergence. Right? Everybody's chat model will eventually look and sound and feel like the same thing unless you're giving it a few special ingredients that other people are not.
1:35:48 Chamath Palihapitiya? And so it's the hunt for those ingredients that will make this next generation of of models really valuable.
1:35:54 Jason Calacanis? So to give it an example, you'd have Wikipedia, which is creative commons, anybody can use. But Quora as a data set, not everybody can use that's owned by a company. So Quora would have an advantage.
1:36:04 Chamath Palihapitiya? Take an extreme example, if Quora didn't allow themselves to be crawled.
1:36:10 Jason Calacanis? Right.
1:36:11 Chamath Palihapitiya? Okay.
1:36:11 Jason Calacanis? Which they don't, yeah.
1:36:13 Chamath Palihapitiya? And but then and then they developed their own language model, which used the best of the Internet. So call it, you know, GPT and Quora.
1:36:23 Jason Calacanis? Hmm.
1:36:23 Chamath Palihapitiya? Maybe they are slightly better in certain domains than others.
1:36:26 Jason Calacanis? Right.
1:36:27 Chamath Palihapitiya? The the other extreme example is the one that I used in healthcare, which is, you know, if you have access to patient data that you will not license to anybody else. You know, it stands to reason that that model actually then has much better chances of uh highly effective clinical outcomes versus any other model.
1:36:45 Jason Calacanis? Apple Watch comes to mind, right? Apple has all that watch data. They could pair that with Epics.
1:36:51 Chamath Palihapitiya? It's another very good example.
1:36:52 Jason Calacanis? You know, like what could they do together? So this is going to be like this is the the new oil is going to be data.
1:36:58 Chamath Palihapitiya? And by the way, like to to to to talk about Apple for a second. The smart thing is they've gotten so methodically, they've never touted the AI. You know, they introduce one or two distinguishing features every year, right? So like the the the ECG, which was introduced many, many years ago, is has only gotten slightly more usable like five or six years later. But in the meantime, there's, you know, tens of millions of watches collecting this kind of data. So to your point, it's it's using these devices as Trojan horses to collect training data. That is the oil.
1:37:31 Jason Calacanis? Uber and Tesla have all this data of the data being collected by, you know, the
1:37:38 Chamath Palihapitiya? Well, hold on.
1:37:38 Jason Calacanis? Uh phones or the cameras in the cars.
1:37:41 Chamath Palihapitiya? The other difference, though, is that you have to be in a realm where you don't need regulators to go the last mile. So the problem with ADAS, I think, or Level Five Autonomy, is that eventually you get to a point where even if the model becomes quote unquote perfect, you still need regulatory approval. And what I'm saying is I think you have to focus on areas of the economy that are not subject to that or where the regulatory pathway is already defined. So for example, if you use a healthcare example, let's say that you had the largest corpus of breast cancer image data and you could actually build an AI that was a much better classifier for tumors versus other things. The FDA actually has a pathway to get that approved very quickly.
1:38:24 Chamath Palihapitiya? The problem with, you know, level five autonomy is that there is no clear pathway. It's not, again, we go back to almost a crypto example. We don't really know who will govern that decision and we don't know how that will be governed. So I think the, the thing that investors have to do and entrepreneurs, entrepreneurs have to pick their end market very carefully. And investors have to realize that this dynamic exists as well. If you're going to do this right and make any money.
1:38:46 Jason Calacanis? Imagine the Robin Hood trading, you know, trader data set, watching people sell in shares and then predicting markets with it, with AI. I mean, it could be crazy.
1:38:55 Chamath Palihapitiya? You have that or payment for order flow that's used by Citadel and the other big.
1:38:58 Jason Calacanis? But not AI, right. So then, well, who knows, maybe they are using AI on their side.
1:39:01 Chamath Palihapitiya? They are, I, I, I can tell you as somebody who sells. We sell a lot of machine learning hardware into this market. The biggest buyers are the US government and these ultra high frequency trading organizations.
1:39:14 Jason Calacanis? Friedberg, any final thoughts here? I'll give you the final word. Uh, how could this affect astronomy? How could this affect, you know, our search of the galaxies, you know, going out past Pluto, Saturn, breaching Uranus, any, any of those things? How could it impact? And I'm trying to get a Uranus joke to land. Help me out here, Trumon. You got no.
1:39:38 Chamath Palihapitiya? It's not the, I think you need to have more, uh, space related.
1:39:43 Jason Calacanis? Yeah, workshop this one with me.
1:39:44 Chamath Palihapitiya? Or gut, or gut biome related, you know?
1:39:47 Jason Calacanis? Gut biome, yeah. So how would this affect super gut? Use the promo code twist.
1:39:51 Chamath Palihapitiya? You have to trick Friedberg into thinking we're asking a serious question. Get him down the science path and then rug pull him.
1:39:57 Jason Calacanis? Now that's a good proper rug pull. Exactly. Okay, let's do it. Here we go. Let's workshop.
1:40:00 Chamath Palihapitiya? That's the rug.
1:40:01 Jason Calacanis? So, uh, tell us, you know, when you're doing like super gut, use promo code twist to get 25% off. When you're doing super gut, you're analyzing people's guts. How would you then have, uh, machine learning in this, you know, API, uh, this chat API and GPT three? How could that help with processing all of that, especially when it passes through Uranus?
1:40:23 Jason Calacanis? Freeberg. You okay up there Freeberg? You are hungover.
1:40:28 David Friedberg? I'm hungover, but I also had like a 7 a.m. board meeting, so I'm also just a little beat up.
1:40:33 Jason Calacanis? Were you grumpy on the board meeting? Did you get a little contangrous with your...
1:40:36 David Friedberg? No, no, it's fine, it was fine.
1:40:37 Jason Calacanis? You were fine? You kept the rage in control?
1:40:39 David Friedberg? I think I had my caffeine fuel and then I kind of cranked down afterwards.
1:40:44 Jason Calacanis? Alright, everybody, we will see you next time for the Secretary of SaaS, the dictator, and the Sultan of Hungover. We will see you next time. Bye-bye. Love you guys. Bye-bye.
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