SPEAKER_00: All right, everybody, welcome to another edition of the All In Podcast. We'll call this episode one. We did a test and over 100,000 of you listened to the test podcast that we did. In a few days. In a few days. In a few days. Chamath is already getting addicted to his statistics, a new podcaster. SPEAKER_03: I need to focus on something going up. Yes, exactly. SPEAKER_06: Our portfolios are getting crushed, but the podcast numbers are going up. A meaningless victory, to be sure. SPEAKER_00: But we got a lot of positive feedback, and we're all sitting at home in quarantine. As you can see, I set up my home office. I got a microphone here. And Chamath is in his bedroom. And Dave Freberg, I think, is in his wine room or something in his compound. Are you in the safe room? Is this the safe room? Dave Freberg is with us again. He got a lot of great feedback, and he's now on the Twitter. SPEAKER_07: You can follow him at Freberg. I don't know if he shut his Twitter down because he was getting harassed on Twitter. SPEAKER_08: Welcome to the club. SPEAKER_10: Are you in your safe room, David? Yeah, it's brutal on Twitter. I don't know how you guys do it. SPEAKER_13: You put something up, and everyone just goes after you. It's harsh out there in the Twitter world, the Twitterverse. SPEAKER_07: Basically, you have to mute and block anybody who is under 100 followers and being an absolute jerk because it's likely a Russian bot being run out of Manila or something like that. They've got all these sophisticated rings of people that they just hire for $10 a day to harass people online. I mean, I know it sounds like a crazy conspiracy theory, but it's actually true. This large groups of bots who go after people and try to create chaos. But hey, we're sitting here. It's today's Wednesday. We did our podcast on Saturday. The stock market has gone down another 20% since then, I guess, or so. And we are looking like this is going to be a 50% correction or something like that. We're now, you know, well past a 30 plus percent. SPEAKER_00: And on the good news front, it looks like testing is actually occurring and that work on a virus, work on treatments is occurring. I don't know if we can call them cures, but treatments is occurring. And a quarantine in place is being taken seriously. And I guess the biggest thing is that Trump has basically admitted that this is a crisis and he's taking it seriously. Freedberg, what is your assessment of where we are today versus when we taped on Saturday in terms of the resolution to this? Are we overreacting, reacting just enough or not reacting enough? SPEAKER_17: There's three things to consider. SPEAKER_19: The health, the policy, and then the markets. On the health front, it seems like we have done a lot in terms of containment and we're ramping up testing. We are still not doing broad general population testing, which is necessary for us to truly understand the dynamics of this disease and also to understand the contagion of this disease. And we need to fix that problem. There's a task force of 100 people out of D.C. being led by Jared Kushner and a number of people from the tech industry that are working on ramping up testing and doing broader general population testing. The policy decisions are what get quite scary, and that is all of the containment, shutting down travel, shutting down borders, shutting down bridges, and the economic ramifications of doing so are frightening. I think I mentioned the other day that 48% roughly of the U.S. workforce works in small businesses, another roughly 10% work in travel, another roughly 12% work in energy. And you kind of add this up, and you can quickly see why Steve Nuchin, the U.S. Treasury Secretary, was saying that we should expect 20% to 30% of the workforce to be unemployed by this summer if we keep this up. So that is a frustrating and staggering statistic and something worth debating, whether that policy decision is appropriate relative to the potential life and health and health system impact, you know, which one is worse. SPEAKER_10: And then the market question is just, I don't know how to address that, but things go from bad to worse, right? SPEAKER_21: I have eight things. I have eight things that I want to cover. Hold on, hold on. We take one thing at a time here. SPEAKER_10: I want to say one more thing, and it is, I think, the most important data to come out today. So the markets are fucked. We're all in trouble. SPEAKER_19: We're, you know, yada, yada. The most scary thing is Ford and GM just shut down their plants today. SPEAKER_10: And the reason they shut down their plants is because out of fear of coronavirus and autoworkers, and the UAW basically forced them to do it. The world lives on a 30-day food supply. So if you stopped food production today, there would only be 30 days of food for the whole world to eat based on our calorie consumption per day. SPEAKER_19: And especially with an isolated border, and we import a lot of food in the United States. If that means that we are then going to shut down other factories, the Ford GM shutdown, and we're going to shut down food production, processing, and distribution factories, then we have a food security crisis. SPEAKER_10: And this becomes a real societal problem. So the concern that I have with the factories being shut down today is the precedent it sets, and the potential follow-on from there in the food system. SPEAKER_19: And one thing we can't stop doing is making and distributing food to humans in the United States, or else we are going to have problems. SPEAKER_28: You're right, but before we go there, the good news is that these directives don't apply to national critical infrastructure, and the food supply is covered within that. SPEAKER_31: So unless something cataclysmic happens, those folks are still going to make sure that food supply is there. I do agree with you that the issue that we have to contend with is that there may not be as much, and in the 30th to 90th day, that becomes a real issue if this thing becomes a very protracted problem. This sort of brings us back, David, without being too alarmist about how we started and how you started really importantly at the beginning, which is there is a small but very credible body of evidence that is starting to show, and this is what you put out on Twitter and part of why you got, you know, attacked probably by the pharma lobby. But that shows that there is potentially an enormously large asymptomatic spreader dynamic in this disease. So can you describe that and what that may mean and why there's a lot of silver lining and good news in that if it's true? SPEAKER_10: There are several data points that are showing us that there may be an unexpectedly high number of people that get this disease and don't have any symptoms and show it. The historical data that we've gathered to date has been largely symptomatic patients, and in some places like in Korea, asymptomatic patients that had really close contact with symptomatic patients that were confirmed to be positive. And in Korea in particular, they found a large cohort, nearly 40% of the infected population were people between 20 and 29 years old that did not exhibit any symptoms or had very mild symptoms, had a runny nose and didn't even know that they were sick. On the Princess cruise ship, it turns out that up to 50% may have been asymptomatic. People were all tested on that cruise ship because there were so many people that were positive. And through that data set, that cohort, we found a very large asymptomatic population, 50% roughly. The NBA players have now been tested, and out of seven players on five teams, so out of seven players on those five teams that have tested positive, it seems like none of them are having any symptoms. There may be one person who's having a cough, but generally they seem, one of, I think it was Donovan Mitchell said, I could go play a seven-game series tomorrow. So this data is really important, and it hasn't been fully accounted for in the models and the predictions of the pandemic and the predictions of the fatality rate. We're assuming that, let's say, 2% of people that get this disease end up dying. And by the way, that's also based on an age histogram that may not be appropriate for our particular cohort in the United States. If you took that data and then you adjusted it based on the fact that a large percentage of people actually don't die, but they end up just being asymptomatic, it really changes the denominator and it skews the results. A paper published showed that in China, up to 86% of people did not realize that they were sick or they were unreported and they had mild symptoms. If you take that high level, you take that low level, call it somewhere between 25% and 86%, maybe even as high as 86% of patients are asymptomatic, which means that the actual fatality rate is much, much lower even in a large cohort that gets infected here. So we should be mindful of this new data that's emerging and we're still racing and acting from a policy basis as if 2% of people, 3% of people, 4% of people that get this are going to die. SPEAKER_19: And that may not actually be true based on what we're seeing in the last week. SPEAKER_31: I have a comment and a statement. The comment is people will say, David, you can't extrapolate from an NBA player who may just be in peak physical fitness. Although I think your answer is going to be, it's not clear that the disease is correlated necessarily with physical fitness for unphysical fitness at all. It just may be the strain in how your body processes it. But then the question is, doesn't this mean that we need to have broad-based, massive testing, not just of symptomatic population, so not just the PCR test that we've heard a lot about, but also these antibody tests so that we know that people have had it? SPEAKER_36: And what's the status of that, David? What's the status of it? SPEAKER_19: That's exactly right, Shumat. And by the way, on the healthy NBA player point, it's absolutely true. People that are between 20 and 30, the average age in the NBA is 26 years old. SPEAKER_10: People that are between 20 and 30 years old generally seem to have no to mild symptoms based on what we saw in Korea. The other data sets need to be taken into account. So the NBA is an interesting anecdote, sure. SPEAKER_19: And you could discredit it all you want and say that it's a highly correlated class and so on because everyone's together all the time. But we could look at the data that came out of China in a paper that was published in the journal Science and a paper that was published in the journal Nature from Korea that showed very large percentages, anywhere from 20 to 50 to 80% or 90% of people being completely asymptomatic across an age spectrum. Certainly very heavier weighted towards the younger age bracket from children all the way up to 30 or 40 years old, you can be completely asymptomatic. And so these are really interesting discoveries that have happened. And so to your point, we need more data and we need to confirm that hypothesis because that's how science works. So we have a hypothesis. Let's go test it. The problem is we're not testing it. And we should be as a priority right now because the policy decisions we're making are based upon a denominator that may be wrong. So the correct action should be to go get those antibody tests, go out into the population and start testing the asymptomatic general population and see what percentage of people in these high risk zones like Seattle and LA and New York and SF already have the antibodies to this virus, meaning they've been infected with this virus and have not or are not showing any symptoms. SPEAKER_10: And that gives us a better sense of A, how widespread this infection is, and B, the true dynamics of the fatality rate and the symptomology of this disease and how it may affect people. Those IgG tests are being made en masse in China today. SPEAKER_19: They're being shipped to countries like Italy where they are in fact being used on the front line. They involve a blood draw and then they have this lateral, they're called a lateral flow assay in terms of how they're kind of tested. The blood runs across a strip and you see a value and you have a pretty good sense at that point. Those kits cost a couple of pennies to make in China, we could probably get a couple million of them. I don't understand why we're not, I don't understand why someone in the federal government isn't begging China and apologizing and appeasing to them to send us those kits. There are a lot of people I know that have bought them on the internet, I have a bunch of them, people that I know have bought them, they have been shipped in through brokers, they are not FDA approved, they cannot be used for diagnostic purposes because of FDA guidelines and how the FDA regulates these things. They can be used for research purposes, but they may not be very sensitive and very specific and they don't have great testing on them. So we don't, they estimate the sensitivity and the specificity to be 90%, roughly 10% false positive, roughly 10% false negative. But for what we're trying to accomplish, that's good enough. We're not trying to give people a diagnosis of disease. We're trying to run an epidemiological study, and we should, on the general population to figure out how many people out there are asymptomatic and have been infected. SPEAKER_38: That is an important statistic that's missing. SPEAKER_31: And to your point, if we find out that there is a large population of people that have actually felt this disease pass through them, it's faster that we can sort of get people back to work out in the streets, which is now probably going to be the most important thing we can do to just prevent a complete economic calamity. SPEAKER_40: Yeah. Yeah. SPEAKER_28: There are, there are, Jason. SPEAKER_13: And by the way, and sorry, treatments, Chimaf, sorry to interrupt you, but treatments are the other thing, and I think you're going to talk about that. SPEAKER_31: Well, treatments are interesting. Let's talk about that right now, because to me, what's incredible is, again, now what is emerging, and it's small in scale relative to how amplified it may, may, should or should not be, is, you know, remdesivir is very different, but it just seems like prophylactically, even, there's some data that's showing out of France that chloroquine seems to be effective. These are, these are solutions that are pennies to make. And some of the, some of the feedback that I've heard is that part of why the FDA, the CDC, the federal apparatus is reluctant to embrace these things is in part because of pressure from those lobbies, but that seems to me unfathomable in a moment like this. So, why do you think the government hasn't put out, the CDC has zero directive right now on the management and efficacious management of this disease? Why is that? SPEAKER_10: Okay, what Feucci and others have said, and doctors around the country echo, is that these treatments have not been clinically tested through a blinded controlled study. And that is a very fair assertion, generally speaking, for doing good medicine. But we are in a crisis state. And in a crisis state, you have to triage. And you also have to triage policy. And we should be considering triaging policy and changing the way that we do policy under these extenuating circumstances. If doing treatment can reduce fatality rates by up to 4x, as Korean doctors have claimed, it is worth taking the risk, or perhaps it is worth letting the FDA say remdesivir, caletra, chloroquine, and others are being widely produced, widely distributed, the government is mandating it, and doctors and their patients can decide if and when they want to use it. SPEAKER_19: And let them take the risk without clinical trials and without data and the typical process of the FDA. SPEAKER_07: What's the downside of taking these drugs? Are they particularly dangerous? I mean, I've heard the coloquine, am I pronouncing correctly? Coloquine? Chloroquine. I've heard that this can be a little bit nasty in terms of side effects. So is there some major downside that, I mean, it's kind of like an off use of a drug, right? Like this is an off use of a drug as opposed to... SPEAKER_10: It's an off use of a drug, and some of the antivirals aren't even fully tested in humans. SPEAKER_19: So we don't yet know what the side effects may be. And also remember, side effects can change based upon your health condition. So someone that's in respiratory distress may have different side effects than someone who's taking it in a healthy, controlled clinical trial. So we're not really sure. That's the argument that doctors would make is, you know, our first mandate is to do no harm. And so they don't want to apply a medicine that might do harm. And so that is the standard protocol and practice and process. However, again, in a crisis state, China and Korea said, guys, we're trying this thing, and it's working, and we're adopting it. Let's go for it. And they race forward. It could be that this is a good time for the United States to consider an emergency policy action, where we make a lot of this stuff, make it available, and simply let doctors use their best judgment rather than have the FDA be the paternal state that makes a decision for the doctors or makes a recommendation to the doctors. SPEAKER_47: Well, what do we think the fatality rate actually is? SPEAKER_07: Like, David, if you were looking at this, and you had to place a bet and put 100% of your net worth on it, and be all in and have massive skin in the game, where do you think the fatality rate here in the United States winds up being overall? Because the data that came out of Wuhan has been markedly going down as they get the numbers corrected, who knows Chinese numbers, you know, censored by the government, and maybe perhaps massaged, it's going to be hard to tell. What do you think the real fatality rate is? SPEAKER_50: The first fatality rate I heard was 5.8% out of China. SPEAKER_19: The Wuhan data, based on the paper that came out in science over the weekend, the Wuhan data was estimated to be 1.4%, and Wuhan was the worst data out of China. The quote-unquote rest of China is still estimated at about 0.15% or 0.16% or 0.14%, something like that. SPEAKER_08: Where is that versus, like, the flu every year or something, or the normal flu? SPEAKER_19: 1.1%, roughly. And so, you know, if you're looking at somewhere between 0.2% and 1.5%, now in Italy, I think they're at over 7%. We talked about this on the last show, but Italy is a much older population, and their health system is completely overwhelmed. So there's some confounding data, there's confounding variables there that may be making Italy a very unique outlier on a distribution of what's going to happen here. The United States has a population that's a little bit older than China, but much younger than Italy. So our health system is, and our health system is generally more ICU beds per capita than Italy, so we should be in a better place. The thing we don't know that does concern me about the health system in the United States, SPEAKER_10: and the population in the United States, is it seems that there may be a high correlation with severity of disease and A1C levels. And as a result, the U.S. has one of the highest obesity rates of any country in the world and highest diabetes rates. And so we may have a population that has a very high percentage of people with a high A1C that may be at higher risk than, say, people in other countries. SPEAKER_19: I don't know that for sure, but those are two kind of confounding statistics that may kind of make things a little bit worse. If I were to put my money on this, look, I'm a betting guy. I would be a little bit nervous at this point, but I'd say it's probably somewhere between 0.15 and call it 1.8%. That's an order of magnitude, I know. But you could do the math. That's probably somewhere between 1 and 10 times as bad as the flu. And so that, again, leads to the big policy question about are the actions warranted? Is it okay to let the health system crash? SPEAKER_58: So that's a perfect then flip to you, Chamath. You've heard his, basically his line at, you know, 0.1 to 10 times the flu, 1.8 or something. SPEAKER_00: You know, if we split the difference of those two, it's 0.5, it's 0.6, 0.7 fatality rate. But is the reaction of sheltering in place and the economic turmoil it's causing worth it? SPEAKER_54: Yes or no? SPEAKER_62: Right now, you guys need to keep talking. I need to jump off for two seconds and I'm going to come right back. I'll be right back. SPEAKER_07: Okay, no problem. And so what do you think now if we were to look at your estimate, David? SPEAKER_00: Is it actually worth what's happening? Would we, if you and I were making the policy or you and I and Chamath were, you know, the cabinet members as it were making this decision, is this decision and the economy crashing and a potentiality of 10, 15, 20% unemployment and all the downstream effects, would it be better to do what the UK was originally doing, which is just, hey, let's get the herd mentality going and let's get the herd immunity going. I know this is like the most difficult question in the world, but we're here. So let's look. SPEAKER_19: There's a spectrum of options. It's not binary, right? It may not be lock everyone up and let everyone out the door. SPEAKER_10: It may be that you have a more nuanced policy where you say, let's keep people over 65 years old, give them the strong recommendation to stay home and make sure that you distribute chloroquine to doctors around the country. So as soon as elderly people start having symptoms, they maybe get some treatment. SPEAKER_19: But, you know, that's kind of an option. You keep 65 year olds at home. You do random general population antibody testing. And once you hit a certain percentage of the population having been exposed to this thing, it may be that at that point you say, okay, you know, the over 65 limit is lifted. Or it may be that, you know, you do something similar to that at different age brackets have different containment recommendations. You also do it with random gen pop screening. You also do it with medicine being distributed. So there's a nuanced answer to that where the policy should be a little bit more directed. It should be a little bit more involved in terms of treatment, testing, and containment SPEAKER_10: strategy. And it doesn't need to be so binary. Right. SPEAKER_15: It doesn't have to be everybody stay at home. SPEAKER_07: If we get to the point where a population has very few people have had it, then more people should stay home so it doesn't spread. And then if more people have it, so if 50% of young people in San Francisco have it already, we've got herd immunity, then maybe we can start saying, hey, if you're over 65, you SPEAKER_15: can go out, but just stay at a restaurant or something. Is that what you're saying? SPEAKER_43: Yeah. SPEAKER_10: Once you hit like 50 to 60% of the population having antibodies to a particular virus, you, you know, or like a flu, for example, you'll see that R-naught number drop well below one. And then basically- SPEAKER_68: Explain R-naught to everybody again, just so we- SPEAKER_10: Yeah, it's basically like the viral coefficient. Like for every one person that's infected, R-naught tells you how many other people will get infected after them. SPEAKER_19: And so if it's 2.5, which is what some estimates say it is for coronavirus right now, then for every one person that gets infected, roughly two and a half people get infected. And that number goes down as more people get infected, because as more people get infected, there's less people to infect. And the rate at which you can then infect other people also drops, so your R-naught collapses. And so at a certain point, you have this kind of basis for saying, hey guys, let's, okay, now I got to step off. Sorry, guys. You have no problem. Do you think? So Shemak, what David- This is incredible. SPEAKER_31: I mean, what you are seeing in real time as we're doing this is literally like, I've never seen this before. We should probably explain what is going on. So what is going on in the background is the markets are just completely torn. Now, why are the markets important? Many people aren't invested at all in the stock market. I get it. But it is where liquidity and capital markets function and derived out of those capital markets is the money that then hits startups. It hits the banks, which then lend to small businesses. It is the functional machine, the undergirding of the US and the world economy. And we are in a moment that I have really not seen since 08 where there are seizures in this market in extremely violent ways. And so when I had to jump off the phone, it was me trying to do my part to kind of help, but also trying to make sure that, you know, we maintain full liquidity in times like this. It's incredible. Now, Jason, on the assumption that, you know, Friedberg may or may not come back. SPEAKER_70: I mean, what dramatic podcasting we're dealing with. I know. SPEAKER_07: Well, you know, I mean, people also have their kids at home. So, you know, I might have to jump out and take care of the twins or my 10 year old. SPEAKER_00: So it is definitely having a psychological impact on everybody being home. You've been home for over two weeks. I've been home for a week. I went out once to do a podcast on my office with just one person there. SPEAKER_28: What I wanted to do was start at sort of the 10 foot level and I'd like to build up to the 100,000 foot level. SPEAKER_31: And I think that'll be a good way of talking about what we teased and talked about a little bit in episode zero, which is sort of these second and third order dynamics. SPEAKER_80: Before we go to that, let me just I want to wrap up what Dave was saying about what the change in policy should or could be. SPEAKER_00: So right now we have we're having, you know, this basically quarantine. In some cases, it's a hard quarantine. In some cases, a little bit softer. It's a recommendation. And, you know, people are being told to, you know, stay at home. Should this change? And if under what conditions do we start going back to normalcy? Because I think that's what people want to know is when is this going to end and under what circumstances? I'm just talking about, you know, staying home. SPEAKER_31: Well, look, if it were me, I think what we would do is adopt some of the mitigation strategies of China and Korea and Singapore. All of these countries have kind of showed us a way to deal with it. Now, we have to decide that a short term suspension of typical civil liberties is worth the tradeoff. SPEAKER_70: Now, it's not worth it under the normal course, under any, any, any imaginable way. SPEAKER_31: But if we had to trade off some of those civil liberties in the short course so that we could get back to normalcy, I think most of us at this point and definitely all of us after another week or two of home isolation will do it. And what I think it would entail is setting up zones that we would understand to be uninfected and what that means are people that don't have it or people that have antibodies. And eventually allowing those zones to reopen so that we can actually have some amount of economic activity. And what that will require is massive testing of the entire population. Testing, testing, testing. I mean, there should be lines and lines and lines. It should be, you know, how we would have. And we know, by the way, how to mobilize this. It is no different than when we would go to vote. Right. And, you know, we could all be told based on birth year, right? Everybody go based on birth year to your local voting facility. SPEAKER_70: There are phlebotomists there. They can run these LFIAs. They can and they can they can allow you to be in a safe zone or not a safe zone. If you're found to be an asymptomatic carrier, then you can self quarantine and socially distance. And we can really, you know, nip this thing in the bud in a, you know, four or five, six week time frame. SPEAKER_31: And because these tests are available at such large scale and because these tests are so insignificantly cheap. If it were up to me, I would mobilize the military and the National Guard. I would mobilize our voting infrastructure. SPEAKER_88: I mean, another way to do this would be why don't we just have the National Guard or doctors or whatever. SPEAKER_07: Just go to everybody's mailbox, put in the kits and then say, you know, we have your kit in here on this date and we'll go pick up the kits. SPEAKER_31: The problem with these LFIAs is that the amount of blood that you need, you cannot draw by yourself. It's not a thing. SPEAKER_88: What about the swab stuff? I mean, if we just did the swab testing, we just said, hey, we're coming by your house. SPEAKER_70: The swab is a PCR test that's looking for RNA. And the problem with that is that it's effective in a window. SPEAKER_31: It's uncomfortable to administer and it has to be done right away for those that are in the process of viral shedding. If you are not in the process of viral shedding, then that PCR test is effectively ineffective. SPEAKER_70: And what I'm advocating for is move past the PCR testing. That should be done in an acute situation if you come into a hospital where you're exhibiting symptoms. The more important thing right now is to find people that don't have it or people who are asymptomatically spreading or those people that are immune. Because if we can re-baseline the denominator, as Friedberg said, we may find some good news in that it's very much like the flu in terms of numerical distribution, in which case we can make some policy changes and reestablish economic activity. If it turns out that it's not, at least we know that too. But right now we're in the worst place, which is that we are in a situation of isolation and confinement in the absence of data. And this is, I think, what's so infuriating to folks is that we, you know, it's like Winston Churchill said, America will do the right thing. SPEAKER_31: It's just that they'll try everything else first. SPEAKER_70: And I think that we are clearly on that path to trying everything until we do the right thing. Everything okay, Friedberg? SPEAKER_31: And I think it's political poker as the reason why. SPEAKER_94: Friedberg, everything okay? SPEAKER_17: Just market trades. SPEAKER_07: Really? It's like literally you're trying to cover stuff and just... SPEAKER_17: I'll tell you, it's a great time to tax harvest losses, man. Yeah. SPEAKER_98: If you've got companies that you're really religious about that you would love to own for a long time and you're underwater on them, it's a great time to sell them, take the loss, harvest it, and then buy them back in the next 30 days. SPEAKER_31: So, David, I have a list of eight things. And what I told Jason is I wanted to start at the 10-foot level and end at the 100,000-foot level, okay? And so, I'm going to tee up the first question for both of you guys. And I have a view, but I'll save it to the end. So, question number one of these eight lists of interesting things to talk about, which may be relevant for the folks listening, what does this mean for startups? And what should you do if you are a unprofitable, well, I mean, by definition, these companies are default dead. What do you do if you're a startup CEO today? SPEAKER_100: Yeah, I think it's a great question. I'm dealing with it. SPEAKER_07: With about a dozen companies a day who are in this very acute situation, you have to figure out, you have to look at the instrument panel and then try to, like a pilot, I use the analogy, understand exactly how much altitude you have, where the nearest airport is, how much fuel you've got on board. So, I literally told folks, listen, if you can close this money, because a lot of people were in the middle of doing deals, close it immediately. So, that's number one. If you've got a deal on the table, take the money. And some people do, but most people don't. And I'm already seeing people retrading deal terms and backing out. So, I had one person back out of a deal on thesyndicate.com. An angel investor said, because of market conditions, I'm backing out. And they had made the commitment, they're backing out. So, you're going to see commitment's broken. So, assume that no money is going to get raised for the next three or six months at a minimum. And then you have to ask yourself, well, how do I keep this company alive? I have people who are founders taking 80% salary cuts and then giving their staff 50% salary cuts. And then that takes their six months of runway and makes it nine. So, that's number one. You have to just make the cuts. And if you've chosen to be the founder of the company, that's your job, is to get everybody to safety. And better to have four out of five or three out of five employees lose their job. And the company be alive to come back and maybe get some stimulus later than to have the company go out of business. Because you wouldn't make the cuts. So, you got to just take the medicine. And that's really with first-time entrepreneurs, they don't understand that. And if they have, you know, every business is different. We have some companies that are subscription-based business or delivery-based businesses. They're actually seeing an increase in utilization, increase of people trialing their software. So, I have one company that's a consumer subscription. They had more trials this week than ever because people have free time. SPEAKER_00: So, that company is going to be fine. But you got to make the cuts. David, I'm not sure what your advice is or what you're doing in your portfolio. SPEAKER_19: Yeah. I mean, look, I'm on 12 boards. Four companies have been or are in the middle of term sheet or closing a deal. SPEAKER_98: So, it's been an unfortunate timing for all this stuff. What happens to those four companies? SPEAKER_107: Do you think they close the term sheets? Yeah. SPEAKER_98: Yeah, very different things. I mean, we've got one that I hope we close on Friday. We signed on last Friday, the final docs and money's not in the bank account yet. I've got another one that's had a bunch of offers that got rescinded, but they weren't SPEAKER_38: like signed yet. It's just all over the place. SPEAKER_108: And I think, you know, one thing that's worth kind of paying attention to for every company is you've got to ask yourself firstly the hard question of going into this and coming out of this era that we're kind of now entering that is a very bleak and dark era economically. Where's your customer going to be? SPEAKER_38: And what is your customer going to be doing? The customer model is changing overnight. If you're a company that sold, you know, software into restaurants and restaurants are about to potentially go bankrupt or suffer absolutely loss of revenue and get, you know, debt payments restructured, they're not going to necessarily be rushing to spend more money each month unless you can help them immediately save money. If you're a company selling to consumers, and you're selling to consumers that are going to lose their jobs in the next three months, or lending to consumers, they're going to be losing their jobs in the next three months, you've got to be asking yourself the question, what can I be doing with my business? So you got to start with your strategy question. And you got to make sure that you're cut and you got to think about where your customer is going to be, and how you can adjust your strategy as a result. SPEAKER_98: The second thing I'd say is, and I sent out a note to my CEOs, and I was like, guys, you got to, you know, cut your burn, and then you got to cut your burn, and then you got to cut your burn. SPEAKER_38: If you've got burn, you got to do everything you can to give yourself the greatest chance of survival. And I think on the last All In podcast, Jason, you mentioned having a, you know, 36 months SPEAKER_19: of cash, that's ideal. But if you can get your cash back, your cash to get you to an 18 month runway. SPEAKER_109: Yeah, 18 is my average. SPEAKER_19: Yeah, I mean, you should be, you should be doing everything you can to number one, kind of give yourself that breathing room, even if that means trading milestones, trading features, trading revenue goals, trading all the things that you're expecting to do. SPEAKER_38: Survival matters more than growth right now. David Sinclair, who wrote the book Lifespan, and is a Harvard biochemist, has highlighted SPEAKER_19: that there's basically a gene, the SIRT genes, there's about seven of them in humans, and the SIRT genes get turned on or off. And it turns out every biological organism on planet Earth has a SIRT gene. The SIRT gene tells the organism or tells the cell to either grow or heal. And this is a time for everyone to activate their SIRT genes, and stop focusing on growth and focus on healing. It's really important to optimize your unit economics to make sure you know where your customer is, to really reduce the burn, to reduce the spend, to reduce the push for growth and expansion. And just make sure you've got a core business that you have a customer that you can make SPEAKER_38: money from that customer that you've really got unit economics right, and reduce your burn and give yourself that runway and extend your life. SPEAKER_98: So that's my, that's my kind of advice. SPEAKER_112: All right, well, I think we got question one out of the way. SPEAKER_28: Let me, let me give you my, my advice, which is building on the back of both of what you said, but I'm going to take it from a different perspective. So let's look inside of a VC firm. SPEAKER_31: VC firms have limited partners. And those limited partners are the most sophisticated financial institutions in the world, family offices of well-renowned individuals, foundations, university endowments, nonprofits, you name it. And all of them are allowed to invest in this asset class because they themselves can prove that they're sophisticated. And one way in which they do it is they, they have what's called portfolio allocation theory. They construct a portfolio of every hundred dollars they have. And they say, well, I'd like to have, you know, 70% of that in liquid instruments and that I'm going to have 60% in bonds and, you know, 40% in equities. And then that 30% they'll take and they'll say, you know, I want to have a mixture of all kinds of different stuff, some real estate, some hedge funds, some private equity. And eventually when all of those allocations are done, there's an allocation to venture. Now, in the last few years, what happened is all of these folks, you know, move the dial, they push the risk meter so that the allocation into venture was upwards of 7, 8, 9% of their overall portfolio. Now, just to remind you guys, you know, basic theory, monetary theory would tell you when you put money in, into an illiquid instrument, remember venture doesn't return money until 13 years after it's done and you can't get it out. It's not like a bond where you can go and instantaneously sell it in a second. You have to get returns that are much better than the market because you need to be rewarded, paid back for that illiquidity. Now, in the last month, what you've seen are portfolios get completely turned upside down. If your bonds and equities before were worth $60 or $70 of that $100, it's now worth $56. It could be worth $40. What that means is that that other $30 needs to be worth much, much less. SPEAKER_39: Otherwise, your portfolio model is completely upside down and all of these limited partners become forced sellers as well. So that can't happen. SPEAKER_54: So what is the, my understanding is the last time this happened in 2008, LPs kind of winked SPEAKER_07: to the GPs and said, listen, it would be good if there wasn't a capital call right now. And then GPs not wanting to piss off their LPs, the VC firms not wanting to piss off the endowments as an example, said, okay, we're just going to not make any capital calls right now while the market recovers so that your equities go up and the percentage of venture goes back down. Is that, is that the likely scenario is LPs? It's worse than that. SPEAKER_31: It's worse than that. Because right now, these foundations and sovereign wealth funds are trying to just stay above water. And as we get to the 10,000 and 100,000 foot view, I'll give you the picture of what's happening in their offices. And again, it's important because it is what makes sure we come out of this reasonably well, which is a properly functioning capital market. And right now, it is the most precarious that I have seen in 20 years. Chamath Palihapitiya: So basically, these LPs are going to have to portfolio rebalance, and they're going to have to force venture capitalists to mark down their books. SPEAKER_58: So wait, VCs are just going to make that decision to say, hey, my investment in Airbnb, Slack, or Uber is worth X now. I mean, when they were private companies. SPEAKER_03: Not Slack and not Uber because they're public. No, but previously private, yeah. SPEAKER_31: But Airbnb, can it be marked at 30 or $40 billion? The auditors will probably say no. The LPs will say that it's not. The GPs will want to because it'll allow them to maintain their IRRs, their rates of return. And so what you're going to have is when these markdowns are forced to happen, which will take another six months, venture capitalists' returns will look terrible. And so their propensity to be able to add bad dollars after good, quote unquote, to defend every company is going to go to zero. And as you said, Jason, there's going to be a pall on activity. So I don't think 18 months is sufficient. I think you need at least 36 months. SPEAKER_08: Double. You need to have three years of capital in the bank. SPEAKER_31: The worst thing that'll happen if you have 36 months is you think to yourself, wow, I was really conservative. The best thing that happens with 36 months is you survive. The distribution of outcomes would tell you there is zero point in taking the risk if you don't have to. And this is why, unfortunately, it's going to be a very difficult process of recalibrating all of this stuff. So for folks that are in these startups, we're going to have to go through an unfortunate period of pain. And, you know, as Buffett said, you know, rule number one of our business is to not go Chamath Palihapitiya: out of business. Rule number two is not to forget rule number one. SPEAKER_94: Yeah. All right. I think it's well said. SPEAKER_88: And is there any chance while we're sort of at this, you know, street level on the front lines, is there any chance that we contain this very quickly, let's say under 60 days, and that it looks like this virus mitigation through the various drugs we talked about actually starts to work. If that happens in the next 60 days, what will happen to the markets? SPEAKER_139: It's not what we're dealing with. But Trump says it's going to come, there's a chance it could come roaring back. What are the chances of a roar back? Chamath Palihapitiya: It cannot come roaring back. So let me explain to you what's happening right now in the capital market. So let's take a step back and first look at what the Fed has announced over the last couple of days. So, and here's why the Federal Reserve is important. SPEAKER_31: So the Fed basically acts as a market making and liquidity function in what's called the overnight repo market. Now, that's an obscure market for the average individual on Main Street, but let me roughly explain why it exists. And at the end of it, you're probably going to have the same reaction as me, which is what Chamath Palihapitiya: the fuck, fucking, what the fucking fuck, okay? But I'll explain it in English first. SPEAKER_31: So you're an LP, a limited partner, and you give a hedge fund a dollar and very much like Chamath Palihapitiya: last episode, how I explained why hedge funds run levered, the hedge fund says, well, if I SPEAKER_31: take this dollar, you know, the bank will give me some amount of leverage on it, but it would be much better if I was able to basically, you know, give them an instrument like a bond or some sort of short-term commercial paper. And then they'll give me more because they'll believe in the quality of the instrument, okay? So they go in the repo market and they basically do a transaction overnight where they basically, you know, buy some short-term commercial paper, they use it as collateral, and then they lever it up and then they go put it in the market. That entire dynamic works as long as the repo function works every day. Every night, you kind of go and you clean up your balance sheet, you look at how much leverage you have, you look at your leverage ratio, you make sure that you have enough money. And you go and you refinance your short-term paper that keeps, you know, JP Morgan, Goldman Sachs, Morgan Stanley lending to you. SPEAKER_117: But if that market seizes, when the repo market seizes, and there's no way for you to either buy or sell commercial paper, buy or sell short-term money market instruments. SPEAKER_31: And on the other side, the markets are whipsawing up and down. And so you're being margin-called, not being margin-called, being margin-called, not being margin-called. The markets start to really seize and capitulate and everybody is just losing enormous amounts of money. And what I mean by everybody, it's everybody. It's hedge funds, it's sovereign wealth funds, it's foundations, it's central banks, everybody is losing money. And if we don't figure out how to bring some calm into the financial markets, it will leave all of these limited partners and all of these other people with not just a lack of liquidity and a lot less money than they had before, but this psychological pain of remembering what they just went through. And that'll prolong what we have to deal with to get out of it, right? So, you know, this is why I think it's really important to understand that if we can nip the, you know, stage zero of this problem, which is the disease itself in the bud, SPEAKER_70: and I don't mean by curing it, and I don't mean with a vaccine, I mean by testing and data. If we can understand and bound it, then everybody's psychology can move to fixing the capital markets. And right now, we need it to be fixed. SPEAKER_58: How close do you think we are to having that mass testing done, and then I think we all think we're going to have a low mortality rate, and then go back to normalcy. Is that something that's happening in 10 days, 30 days, or 60 days, if you had to pick a number? The march back to normality, David? SPEAKER_108: I don't see any action to get the testing done that needs to get done right now. SPEAKER_58: My mom got tested yesterday. It seems like there are more tests out there this week than previously. Stanford opened up the testing. SPEAKER_38: There's definitely PCR testing available now, and you can probably get your results in three to four days on average, although some labs are super backed up. SPEAKER_161: Yeah, my mom said she's going to take three days or four days. SPEAKER_38: Three days, yeah. SPEAKER_108: But the stuff that we're talking about, which is the general population testing, I'll keep saying it. It's so critical that we do this to figure out how many people have already been infected and didn't know it. We don't have that data. That we don't even have a plan for, and it's not on the radar. The task force in D.C. is focused right now on increasing the throughput and the availability of PCR, or just in time, you know, PCR testing. SPEAKER_162: The blood testing. SPEAKER_108: Yeah, it's all blood testing. It's just a matter of like, let me explain. The PCR test involved, the RT-PCR test involved taking blood, and then there's basically six steps that you have to go through with it in a lab. SPEAKER_19: And it's done on like three different machines, and the actual cycle takes 30 to 60 minutes, or 30 to 45 minutes. SPEAKER_38: So by the time you have that backlog, and you can multiplex it, meaning you can do multiple at the same time, and you can kind of do different things. But generally, these machines are not highly automated. There are new machines that are allowing us to automate more of these steps and making them go a little bit faster and do more multiplexing. But it is still a multi-step cycle to take the blood and turn it into a test result SPEAKER_108: once you've amplified the viral RNA and tried to measure its content. SPEAKER_38: And so this takes some time. And so it's a chemistry lab that's doing this work. So until we have a point-of-care solution, which is like a test strip or something else, and these are technically possible, it's just that they're not FDA-approved, and so they're not getting made and distributed here, whereas China and Korea and Italy are using them, and they're made in factories in China, even though they're not tested and approved in the normal way. SPEAKER_88: Isn't the plan, though, to have these untested tests online this week? Isn't that what they're saying? SPEAKER_166: Yeah, a bunch of people are buying them. SPEAKER_07: Yeah, yeah. But so I guess the question is, when do you think we will have these, you know, SPEAKER_88: the general population taking tests, and we get like a large-scale testing like South Korea did? SPEAKER_142: If we all agree that's the part of the solution, when does that happen? SPEAKER_38: Unfortunately, we're not parallel pathing it. We've put all of our resources into increasing the availability and throughput of the RT-PCR tests for acute infection cases. And as a result, we have everyone focused on this. SPEAKER_19: There was some lab work and some research departments, I won't name them, that were working on doing this general population testing, SPEAKER_38: but they got yanked into getting the RT-PCR scaled up because, oh my God, we're behind the curve. We got to fix this thing. So we got to get over this first hump. I think once we get over this first hump, then you're going to see people distribute and work on this. And I think getting over the first hump is happening in the next, call it seven to 10 days. And so then it's probably another 30 to 45 days before we get these tests for general population testing more broadly distributed. So call it 45 days out. SPEAKER_170: Why can't we do this at the same time? I mean, why can't we parallel this? This makes no sense to me. We're the greatest country in the world. SPEAKER_19: Totally. And we have so many scientists and so many entrepreneurs in Silicon Valley that are banging their head on the wall, asking this question. I've done so many phone calls over the last few days of people being like, what can we do? How can we get these things made? Where can we go? And everyone's just like flustered. It's really frustrating. Um, anyway, we, we've got a lot of individuals SPEAKER_38: that we're trying to kind of collect together to do this work. Some folks are calling China today. We're trying to see if we can get big bulk orders out of China. We're just going to pay for it ourselves and then try and get some research labs to run the, you know, research, uh, universities around the country to run the experiments for us. Um, using these untested, unproven, you know, not FDA proof tests. SPEAKER_142: Have you run one of these on yourself yet? One of these unproven tests yet? SPEAKER_19: I haven't. I actually, um, a friend of ours, I did one with video on with him this morning. Um, and so, you know, a mutual friend of ours. A mutual friend of ours. Yeah. And so, um, and then I know lots of people that have them and have used them and I've seen them and I've gone through, like, you know, I bought a bunch of them. They arrive tomorrow. Um, and so I see, uh, you know, we see, we, we know how these things work. They're actually from a reliable source. You know, these are not, uh, we know, SPEAKER_38: no one's actually done the testing to prove the specificity and sensitivity. We're relying on a third party, you know, test. So we don't really know, but I keep hearing they're uncomfortable. SPEAKER_73: I keep hearing they're uncomfortable. What's uncomfortable about them? They stick it very far up your nose. Is that the, what people are referring to? SPEAKER_19: Or you're, you're referring to the RT-PCR test. So what you're trying to do there is you're trying to get a sample of living virus on a swab. And the best place to get that living virus for this particular virus is in your nose or in your, the back of your throat. So they're taking a long Q-tip and they're sticking it up your nose and they're sticking it back your throat. Then they put it in a little solution that will keep the viral RNA alive. And then that's what they're shipping to the lab. And that's what then gets. SPEAKER_88: So it's uncomfortable to have it that far up your nose is what they're saying. That's why people keep saying it's uncomfortable. SPEAKER_98: I've had more uncomfortable things up my nose. I'm sure it's fine. You know, it's just, you know, it's a, it's a Q-tip, it's a Q-tip in your nose. Yeah. SPEAKER_12: Yeah. It's a Q-tip way up in your nose. Way up in your nose. So we actually think that mass testing is a 30 to 60 day. SPEAKER_15: No, no, no. SPEAKER_31: I think mass testing, if in the worst cases, is 30 to 60 days, what I'm imploring anybody with any influence is we need to get this starting to happen in the next two to three weeks. It needs to start happening in the next two to three weeks. And, you know, this is where I would say there are a lot of other people Chamath Palihapitiya: other than David, myself, you, Jason, the people on our group chat buying tests for the mass population. You know, I just, I just want to say something here, which is, it is incredible to see guys like Jack Ma step up and, you know, SPEAKER_31: do what he can to send stuff here. But I would say that thus far, there's largely been an inverse correlation of contribution and wealth during all of this. And folks that are in a position to help, I think need to be more vocal. You know, we all can't just participate when the times are good. Take advantage of the bully pulpit when the times are good. And then when times are complicated, SPEAKER_70: disappear and become anonymous. It's part in why I think you and I decided to just do these as often as we can. Yeah. Because at least we can think through the problem so that at least people can hear our voices and understand that we are thinking through as much as possible what to do. I am literally calling folks in Wall Street all the time because what little I can do to assure them or be a market participant right now to maintain liquidity, I need to do because in the absence of that participation, we're going to just create more and more havoc. And I think it's important for other people who are in a position either monetarily or through influence or both to be out there right now doing something. You know, they should call Freedberg right now. SPEAKER_31: They should give Freedberg $100 million. We'll go to China. We'll get the test and we can do our own broad-based population study right now. SPEAKER_179: Yeah, I would jump on that. SPEAKER_58: Right now, looking at the statistics as of today, we obviously, 35,237 deaths. They had only 11 new deaths yesterday. And Italy, 35,000 total cases, 4,200 new cases, and they added 475 deaths yesterday with a total death count of 2,978. SPEAKER_08: So that is just stunning what's happening in Italy. And it seems, I don't know if the trend line is it's getting worse or not. But Italy is just overwhelmed. SPEAKER_108: It's a horrific and awful situation. They're completely out of beds. They're triaging elderly people and letting them die in the hall so that younger people who have a higher chance of surviving can actually get oxygen. It's just awful. SPEAKER_50: And they're having 3,500 new cases or they're at 3,500. Yeah, they're over 3,000 cases SPEAKER_58: but added yesterday. So there is really, it is flattening but who knows if that's because they're just overwhelmed and they can't do the testing. But the deaths are something that seems to have gone down the last three days. SPEAKER_19: We're looking at different time series. The number of people that died yesterday are in fact the number of people that died yesterday. The number of people that tested positive yesterday doesn't tell you as much because the test results may be four days delayed and they may be 10 days into their symptoms by the time they get tested and so on and so forth. China significantly lags the infected population count likely and may not represent much of anything, right? So it's very, and it's also hard to know what the average fatality timeline looks like. There are published reports now out of China and Korea that start to try and specify this a little bit but we are looking at different time series when we try and compare these things. And so everyone be cognizant of that SPEAKER_38: as you look at these numbers. It's not simple apples and apples. SPEAKER_187: Let's move to a slightly Chamath Palihapitiya: second and third order, Jason. I think if we stay in the disease it's just going to be a fucking mental quagmire we're going to jump out the window. Yeah. Okay. Let's talk about something that Mark Cuban said which I really agree with which is that if we're going to do bailouts they can't come SPEAKER_31: where we also do things like allowing these companies to do buybacks where a CEO pay isn't curtailed. It turns out that the airline industry which looks like is going to be first in line for bailout spent 96 cents of every single dollar of free cash flow they had on buying back stock which is only used to drive up earnings per share which is only relevant for CEO pay. So they have you know they don't have the cash buffer they don't have the 36 months SPEAKER_190: of operating you know window that you know everybody should have. They're not a very SPEAKER_12: They blew it on trying to hit they blew it on trying to have their earnings per share go up by reducing the number of shares in existence shares exactly just so people understand David Friedberg: if you can't if you can't earnings per share you know you take earnings you divide it by the number of shares SPEAKER_190: so if earnings can't go up just divide by the number of shares and earnings per share goes up lower the number of shares yeah SPEAKER_88: if you had a million dollars in earnings a million shares it was a dollar per you get rid of half the shares it now goes up SPEAKER_28: and so now you know you have CEO pay go through the roof but these companies are not any more resilient SPEAKER_31: than they were before and so now they're in line for a bailout and I think the large caucus of people across both aisles are very clear that these things need to be wipeouts of the equity versus bailouts where you know folks who SPEAKER_28: took advantage of the financial system here continue to get rewarded what do you guys think about that SPEAKER_196: totally agree SPEAKER_88: if you wipe out the equity though just pausing for a second and taking the other side of the argument I'm not saying this is the side I would take if you wipe out the equity would not some of the people who would hit that pain are shareholders from a retirement home or a retirement plan like Calpers maybe owns SPEAKER_200: pension funds yeah SPEAKER_88: pension funds etc so you know it does seem like if you wipe out the equity you could have some unintended consequences as equity holders but I think what the other side of the argument is we're gonna have to have there be repercussions for people running companies so close and recklessly to the cliff and there has to be some pain not reward for doing that and a bailout is a reward for operating SPEAKER_142: irresponsibly is that what you're saying Chamath SPEAKER_190: yeah I I think that actually you have to wipe out the equity and I think SPEAKER_31: the reason why wiping out the equity is important is that it overwhelmingly does not punish the you know retiree in their who owns you know Boeing stock in their 401k Boeing has not been held by retirees in their 401k for years as a cohort of impactful investors massive large institutional pools of money own these companies these are the balance sheets of governments these are the balance sheets of foundations these are the balance sheets of a very few very very wealthy people and the reality is that for the broad based population for the 350 odd million Americans in the United States how many of them do you think are really active market participants meaning for every dollar of value creation or destruction how much do they actually see I would guess it's less than 10% meaning 90 cents of every dollar are nameless faceless organizations in a financial infrastructure I think the lesson we have to we have to we have to tell compassionate capitalism which is that we have been so hell bent on the use of leverage on the use of these financial gimmicks on the use of accounting tricks to enrich a few at the sake of the many and this is the right time where you should nationalize some of these businesses and when they eventually do get taken back out and floated publicly all of those proceeds should go back to the United States Treasury who should then use it to reinforce social security and Medicare and everything else because we are going to run a multi multi trillion dollar budget deficit to get out of this SPEAKER_57: and to just give people some context here that the US national debt SPEAKER_58: is at 23 trillion dollars which is 72,000 per citizen and 189 thousand dollars for each citizen who pays taxes and we run our spending our budget deficit is a trillion dollars a year we're going to talk about here I think a two to three trillion dollar stimulus package which will increase the national debt load by only 10% so it does seem like we can manage SPEAKER_205: that but boy was this a strategic mistake for us to run up the debt during good times was it not SPEAKER_31: China and the United States as of today and the great thing about that is in a set of two there's only one instrument of safety which is the United States dollar thank God in that world the United States has exceptional leverage exceptional exceptional leverage it is and it has always been you know the beacon the light on the hill etc now in a moment like this the United States has the most ability to reset how we think about things it could run five trillion dollar deficits tomorrow it could run ten trillion dollar deficits because it is still the SPEAKER_70: backstop I'm not advocating for that but this is where I think you need bold decisive action and not piecemeal strategies I don't think a trillion dollars is enough I really think that if you think about what the Eurozone will have to do and what's going to happen to the US dollar we SPEAKER_31: 18 year old American man and woman should immediately get five thousand dollars forget one thousand two thousand SPEAKER_70: five thousand and next month if we're still out of business five thousand and all of that does is just it's a trillion dollars it's two trillion dollars over two months and then you add another trillion dollars and all this you know small business loans and all budgets and deficits SPEAKER_31: but it's not because everybody else is just as fucked if not more fucked well SPEAKER_209: let me give you another SPEAKER_38: perspective the GDP of the United States is 20 trillion dollars roughly every month let's assume the whole economy shuts down every month that we're shut down costs us 1.5 trillion dollars so if we're going to have the country shut down for say three months we're losing four economic growth and the economy SPEAKER_108: is actually a first order function right so the movement of cash drives the future economy and so if we were just needing to fill SPEAKER_38: that hole you would need to come up with a couple of trillion dollars and you would have the government going out and buying ice cream cones and paying hair salons and paying for dog walkers and paying for construction workers and paying for oil rig workers and basically employing and buying all of those goods and services for that functional equivalent of a $20 trillion GDP that's what it would take to just fill the hole well SPEAKER_58: that's if you're assuming no economic activity I mean we don't think there's going to be no economic activity maybe let's say SPEAKER_31: joke that's a lie okay because as David said companies are not you know self contained units very few are many of them and most of them operate in a very interconnected socially dependent way with other companies they're your customers you are their customers nobody is doing anything right now there's nobody there's nobody evaluating the SPEAKER_19: remember that a big chunk of the economy is levered meaning that there's SPEAKER_38: debt and debt payments that need to be paid and so those income streams are now going to be absent and so there's there's a multiplier effect when SPEAKER_19: revenue goes down the economic impact is actually multiplied and so you can't just fill the SPEAKER_98: hole so it becomes a very complicated nonlinear kind of system that you have to SPEAKER_58: no doubt that we all agree bottom up is the way to do this so if we have 330 million Americans if you just have the bottom half get a thousand dollars a month that's call it 160 billion dollars a month that's only over the year two trillion dollars so if we SPEAKER_31: somebody a thousand dollars when they're in their house on the sixth week of their home confinement I'm assuming SPEAKER_224: that we're in week 10 and we're SPEAKER_58: not in self confinement anymore we agreed in the first third of the program that we're going to get there in whatever it SPEAKER_31: from H&M are fucking perfect and I've complicated my life with all SPEAKER_70: kinds of bullshit that I've been buying because I thought it meant something and right now it means absolutely jack shit SPEAKER_07: yeah I'd agree SPEAKER_39: with that SPEAKER_229: perspective SPEAKER_07: that's what's really interesting when you see your entire portfolio collapse when you see this belt tightening it's happening even amongst SPEAKER_58: and we have you know listen all three of us are lucky enough to be at the you know in the top of our careers and top of our income at this point in our lives but we all came from humble beginnings as well and if the people at the SPEAKER_88: top are belt tightening and saying you know what I don't need to buy a $60 t-shirt I'm going to buy a $16 t-shirt boy does that have ramifications across the entire economy and this reminds me very much of the recession they said luxury goods would never rebound and sure SPEAKER_231: enough the last 10 years luxury rebound luxury has rebounded massively SPEAKER_31: because it was not SPEAKER_70: a psychological broad based impact to people's philosophy and framing of how they viewed the world SPEAKER_50: you think so I thought after the economic crisis last time people did say there would never be people specifically said there would never be luxury goods again and that it was the end of people buying that kind of shit SPEAKER_236: I'm not SPEAKER_31: talking about some prognosticating analyst you know the analyst is only as you know good as their own biases what I'm saying is the average person didn't really have to internalize SPEAKER_70: a broad based impact to their way in which they view what's important in their life this touches everybody and I think that there is an opportunity for us to really recalibrate what's important I think conspicuous consumption is unimportant you know helping each other is important taking you know unnecessary vacations because it drives your Instagram follower feed is fucking stupid making sure that we can contribute the incremental dollar we have so that other people could get tested and get back to work that seems like a better use of your money and time SPEAKER_239: yeah SPEAKER_70: so no go SPEAKER_240: ahead David get in there SPEAKER_98: I think that there yeah there's just great perspective setting that's happening and is going to happen broadly across the economy we've been fat and happy for a long time and at SPEAKER_108: least a sub segment of the population has been but we also have it SPEAKER_38: website it it is unbelievable and it is probably my favorite website on the internet and dollar street is a project of Ola Rosling's wife Ola's the son of Hans Rosling the great visual economist who told people stories with visuals on like the world and income and population and growth and so on and she went around and she photographed families all over the world and showed how much money they make each month and then showed all these common household activities and goods brushing your teeth the oven how do you what kind of clothes do you have what does your closet look like what do you sleep on and it's pretty striking that half of the people don't have a toothbrush a quarter of people use mud off the floor to brush their teeth most people don't have a bed on planet earth right only the top 1% have a kitchen right I mean there's like these amazing statistics with photos that really help kind of illustrate this point and I think that I'm not saying that the extreme demonstration of humanity and the distribution of wealth income and prosperity and humanity is as relevant here but in all these photos everyone's very happy and they live a happy life and there's a great reset happen that's happening that's underway happiness eventually finds itself when the delta goes from being negative to being positive again when the delta is flat or the delta is negative people are getting into a worse condition things are bad so we're gonna bottom out here SPEAKER_98: and then we're gonna you know no matter what state we find ourselves in we'll very quickly find ourselves back in a state of happiness and we'll all reset with respect to Chamath's point on hey maybe I don't need all these genes maybe I SPEAKER_108: don't need all this and this and this but there's certainly like critical you know needs that people have and it's going to be pretty apparent pretty quickly you know how the economy and people are going to adjust to this new world but there's gonna be an adjustment SPEAKER_177: the part of this that I think is actually constructive is I do SPEAKER_31: think that we're gonna swing the pendulum back towards nationalized economies and away from global Chamath Palihapitiya: economies because I think this is a way that politicians all around the world they'll characterize it in different SPEAKER_31: political language you know some people will call it you know sort of like American exceptionalism if you're on the right if you're on the left you'll describe it in much more social terms but they all lead to the same outcome which is that what we have seen is that in the push to globalization we have created too much brittle infrastructure that doesn't work and that we are not resilient enough men we are hyper efficient and we are just in time and all of that is great and everything is super cheap but when we really need infrastructure to work whether it's tests or whether it's the government or what have you it just doesn't and I think resiliency will force us to be more nationally attuned and I think it'll be the right thing it'll cause all governments to think about their own food supply differently to think about their own supply chains differently it'll demand companies to be less profitable if it means that they can withstand these kinds of shocks and it's one thing to say that we could never have modeled you know sort of like this two or three sigma event we're dealing with but after the fact it's no longer a two or three sigma SPEAKER_70: event and governments have to now internalize this and companies have to internalize it we are not going to act the same SPEAKER_187: borders will be different SPEAKER_00: look think about the iPhone and obviously medicine and SPEAKER_58: respirators we've been talking about these things over the last you know couple of weeks as this happens we if if we do have a breakdown in relations with China if we let's say we stop importing SPEAKER_50: stuff what would happen to Apple the most powerful and valuable company how would they ever be able to make iPhones again in the United States are they capable of making SPEAKER_70: them no it depends it depends on who you're answering it for on behalf of the SPEAKER_31: US customer Apple should probably be forced to bring a lot of their production capacity back into the United States they should find a diversified global supply chain so that you have multiple suppliers in many countries in the world but they should rely more on America it will be less profitable but it'll be okay and it's the right thing to do SPEAKER_58: what I read in the estimates was an iPhone would cost a hundred or a hundred SPEAKER_50: and change more to make in the United States but if they did they wouldn't have the supply chain issue they make five six hundred dollars per iPhone anyway SPEAKER_70: well by the way the real outcome is that you know and we were going to do this anyways after this which is I don't think people are lining up to buy you know kind of irrelevant products anymore in a way where we're just SPEAKER_31: slavish to things I mean I think it's important to ask ourselves like this is probably the most socially impactful world SPEAKER_70: event the globe has had to deal with since World War II and it's probably really important to talk to somebody you know and if you don't know you can document and you can easily find the documents of people who survived the Holocaust or lived through the bombings in London etc their mentality was different as a SPEAKER_31: result of it it changed their behavior in very positive ways right it was like the great advances in humanity happened after that it was SPEAKER_58: refocused yeah you're less focused on things that are not core or critically important and Freeberg what do you think about the what this is showing in the health care system in the holes in the health care system the fact that we couldn't mobilize to deal with this after we did scenario planning about this after SARS we've done scenario planning SPEAKER_88: we've had you know I sent to our group list the link of Bill Gates talking about this four or five years ago and how this would be an issue I sent a couple of links to people writing about closing the wet markets in China after the SARS outbreak I'm curious David what you think the holes in the health care system are that need to be fixed and what we can learn from this because I think we're now coming into the you know as we got through the virus we got through the economic second order effects let's talk about positively what we're going to learn because I think that's what Shemant's getting at is that there's a personal recalibrating of what matters maybe morality ethics focus in our lives David what can we learn from this on a health perspective what should we do when this ends SPEAKER_38: there's no easy answer to that right nationalized health care systems in some countries you SPEAKER_108: could say they're great my brother my family lives in London I was talking to my brother yesterday and you know they tried to go down and get tested for a tooth infection yesterday and like it's just brutal dealing with NHS in the UK you know people aren't telling great stories about NHS and they're not saying oh my god it's the best health system I SPEAKER_38: love it health care is hard people want personalized care they want a lot of attention there's only so many doctors there's only so much beds when you start giving people good care costs a lot SPEAKER_108: solving this stuff and and the R&D dollars required to enter markets is so you know so extraordinarily high you end up charging a lot for products and services on the back end it's a SPEAKER_38: very complicated system and there's no simple answer I do think that we're learning and realizing pretty quickly that the US and we're gonna we're gonna do some postmortems on this obviously as a world as a as a society one thing that's clear is the SPEAKER_108: Chinese response in part was driven by a lack of bureaucratic red tape and an ability to manifest action and an ability to produce and distribute drugs and produce and distribute tests without needing approvals I think that's something that's going to change in the United States it has to be regulatory burden on health care companies on pharmaceutical companies on testing and diagnostics companies is extraordinarily high but the objective in the United States has been do no harm which means don't let anyone die through the action but it may be that many people are dying through the inaction and I think we're gonna maybe see a big shift in policy and allow right-to-try laws that are gonna be federalized so you know states can make decisions about right-to-try laws and doctors and patients can try drugs on their own discretion without having a federal oversight body perhaps the same will happen with diagnostics and testing SPEAKER_38: and you know that with respect to what the what services the government provides and doesn't provide you know I'm not sure there's a lot of data on either side here that nationalized health care systems do and don't work so it's it's SPEAKER_108: very hard to say what the right solution is is here you know and and I don't think that you want to try and take R&D and put it in the government I think that's a terrible idea I think that there's a financial and a capitalistic motivation to find discover molecules get them tested and prove that they have a positive effect in human health and we need to move this towards personalized medicine which actually changes the construct and probably increases the cost of doing this about 10x we're already seeing this with stem cell therapies and CRISPR based gene therapies is there so much more expensive in order to get that stuff moving faster we need to remove the regulatory burden and allow companies the ability to move quickly and make this stuff more affordable the more we the more barriers we put in front of companies the harder it's going to be and if we try to do this with a top down approach with the government deciding what to do R&D on and what not to do R&D on we're SPEAKER_13: going to be in a fucking mess so those are some of SPEAKER_28: my points yeah I would say as well I think that there has to be you know after the great financial crisis we we smartened up about SPEAKER_31: what the banks were allowed to do unfortunately we didn't really smarten up about what other financial participants were allowed to do and a lot of what we're seeing here is our excesses around leverage and credit and I think we need to fix those we need to tell companies that you know you can't put out certain amounts of debt we need to be a little draconian actually to reset this properly we need to tell you know market participants that you can't run 10 or 13 times levered you can't take a hundred billion dollars and make it act like 1.3 trillion and then blow a 50% hole in it you just you're just not allowed to do that I'm just sorry but nobody should be allowed to do that okay so SPEAKER_54: if we look now onto politics which is the least fun to talk about in many SPEAKER_58: ways but just on international relations I think it's worth discussing there's been a bit of a debate about what we call this virus and the relationship between the United States and China China went on a little bit of a propaganda campaign the last couple days saying the US that the US created the virus Trump has now been trolling them actively talking about the Chinese virus I used the other day the Wuhan virus I didn't realize that that people consider that racist to say Wuhan virus because we called it the Spanish flu and we called it the German measles but I guess people are particularly sensitive to this topic now and I think there is a critical issue here that I don't understand why we're not SPEAKER_88: talking about this but wet markets specifically trade in exotic animals the these viruses are contained in certain animals like bats which are you know together in flocks of like thousands and the viruses and then these animals in wet markets for people don't know what that is you can you can google it if you've got if you're not squeamish but essentially in Chinese culture as I've read it in the Wall Street Journal and in the World Health Organization's advisements to cancel and to shut down wet markets and there's unanimous agreement on this from the health officials that these have to be shut down the Chinese culture says we don't want to see meat in a package because we believe it's counterfeited it's been frozen and it won't be as tasty and it won't have the same nutritional properties so you must slaughter the animal in front of us at least for some significant percentage of the population there it's a tradition and this is where these viruses have uniformly been generated from and now we have the president and China going at each other and we have to have this very delicate conversation I think David and I'm curious as to your position on this because it's now hitting like a racial and you know in a and a bias against a certain culture is how this is being framed by the left which is just maddening because it's actually a culture it is a cultural issue that has to end just like our cultural tradition of shaking hands obviously needs to ends or be deprecated in some severe way so David maybe you could talk a little bit about what you think the SPEAKER_256: outcome here is on a political basis in relation to those wet markets and China and US relationships SPEAKER_98: look I think China suffered heavily I'm sure they're good I've heard they're going to shut down the wet markets but all I know is what I've read SPEAKER_108: on the internet so you know I think they're fucking awful and stupid and they should be shut down cultural you know dependence aside there's another issue in China apparently there's a huge amount of the impoverished communities in China are encouraged to actually grow and harvest rats I don't know if you guys are aware of this but there's a bamboo rat business where you grow these rats inside of bamboo and then you kill them and you sell them and so the the poorest people in China make money growing and selling rats rat meat and the Chinese government just in the last week has told them to stop which actually is a huge effect on many millions of families who are growing these rats so there's an economic effect but it's obvious that it's a terrible health effect but I'm not sure that getting rid of the wet markets truly eliminates or eradicates the risk of a new viral outbreak right like I think I mentioned to you guys on our on our text stream the other day you know 40% of the bacteria in the oceans are killed every day by viruses this is a great stat that Jennifer Doudna uses in her book on the SPEAKER_38: discovery of CRISPR and there's 10 to the 28th bacteria in the oceans so half of that they all get killed every other day every two days by viruses there are viruses everywhere they are going to emerge they are going to hit us the issue isn't necessarily where the source of the virus is coming from it's just that we have to have better testing and diagnostics and preparedness and SPEAKER_108: treatment plans and an ability to motivate and mobilize ourselves to address pandemics like this in the future with respect to the relationship with China I'm not an economist I'm not a trade guy I don't really know the nature of the relationships so I'll leave that my Chamath Palihapitiya: my no my thought my thought on this is that this is not a question of you know wet markets or no wet markets I think this is a question of if you are a SPEAKER_31: an anchor participant of globalization in the global economy is there an expectation to have a common set of behaviors the lowest common denominator set of behaviors and hygienes that everybody signs up for to be a you know fully fledged global market participant now the the pros of that is that maybe everybody decides to be a participant and to have lax borders and you know free trade agreements that there can be no wet markets and a whole host of other things we all agree on you know whether we are okay with shaking hands or maybe it's namaste from now on or maybe it's bowing the problem with that on the other side is that all of a sudden you create a monoculture that strips away the individuality and the richness of every country and you know I I kind of think like like you know we could have attacked wet markets when HIV started to spread because it was you know as we understand it it was the emergence of the you know bush meat and raw bush meat and the killing of monkeys that had this virus that was then passed to humans et cetera et cetera that that that started the HIV epidemic so these things have happened before and it's not as if we shut down you know all of those markets in Africa they still exist in some form or fashion and as David said there are huge economic ramifications to to having these cultural edicts and it's very difficult I think for an American to demand China to do it when we're not willing to step up just like in other ways you know countries can demand us to lower our carbon emissions and we say we're not going to do it so there are implications and very difficult issues all over the place but I do think in general that if we move towards a more nationalistic economic dependency interdependency I think that it's probably the right thing to allow more resilience to exist and for cultural diversity to continue to compound because the world of just-in-time efficiency I think we're learning now was the wrong optimization for the world we need to optimize for resiliency and that means some amount of inefficiency it means more mom and pop shops I think that that's a good thing it doesn't mean everything is Amazon Prime now and Walmart I think that's okay it means that the iPhone is a little bit more expensive which means you upgrade every other year that's okay it means that companies like Google and Facebook and others are less profitable in the short term that's also okay all of these things are okay we just need to decide and now we need to move SPEAKER_58: forward when do we what's our best estimate of when people will be allowed to go to a restaurant I think it's you know again getting SPEAKER_256: back to what the people listening to this podcast probably care about most as we wrap up here in the in the second hour and thank you for tuning into the all-in podcast David Friedberg is with us from what's the name of your incubator again David the production board the production board previously metromyalclimate.com and Chamath Palihapiti of social capital partnership when do we suspect people will be allowed to go back to work in the Bay Area in New York when will people be able to go and have a meal in a restaurant do you think this is May June or July or August when will we be out of quarantine you I'm going crazy I'll give you my optimistic and I'll Chamath Palihapitiya: and then we can give the final word to David here's my optimistic view please I'm dying at the I think that the emerging evidence will soon be hard to ignore that SPEAKER_31: we have a denominator problem which means that we're not testing enough and that these IgG and IgM tests will come online at scale in the next two weeks and that we Chamath Palihapitiya: will establish demarked zones within cities and towns green zones if you will where people who are either negative or who have already gotten and have tested SPEAKER_28: positive for the antibodies will be allowed to interact so I am telling you that SPEAKER_80: it's within six weeks from now six weeks from now we'll be in restaurants and we SPEAKER_58: may have to show our papers to somebody to get in or have our foreheads tested SPEAKER_28: no no you just have to show your test result and have your passport or driver's SPEAKER_58: license yeah I mean I know this sounds crazy I would much rather go to a restaurant in the next six weeks where I had to show my papers a little bit draconian sounds a little dystopian I would much rather go back to Tai show couldn't have my goddamn ramen would show my papers and know everybody else did and then have everybody go through the you know very simple temperature test on their forehead like I give to my kids when they're sick David you taking the SPEAKER_50: over or the under at six weeks for when we'll all be at Tai show can have a SPEAKER_98: ramen I'm taking the under I'm taking April 7th or 8th April 7th or 8th and SPEAKER_58: we're recording this I think on the 17th or the 18th I think and so you're you're you're saying we're just gonna be whatever 20 days out I too am taking the under but barely I think it's I think we're four or five weeks David David SPEAKER_28: explain the under case just so and look we can end on that but what's the SPEAKER_38: under case because that's a great note to end on yeah yeah so as we see the number if you look at the UW virology website and I've shared this with people on my Twitter account which I started doing yesterday which is at SPEAKER_98: I'm not sure I'm gonna stick with it I don't know if I have the stomach for it like you guys do but basically they're showing you know steady caseloads of SPEAKER_38: positives per day which again is delayed and if you look at the ICU availability in the emergency room wait time data which I think are better leading indicators of where we are in the cycle New York is about two weeks behind us New York is gonna be fucked for a little while but I do think that the West Coast and with some travel restrictions is gonna be able to reopen for business probably around April 7th or 8th because we're gonna see a dramatic decline at that point and we're gonna see a lower fatality rate than everyone is predicting and we're gonna start to have measures around washing your hands and masks because you can't stay shut down for that long without literally never being able to open again so I'm kind of balancing the economic need against what I think the data is starting to show that hopefully we are seeing the second derivative turning negative now and so we start to see a slowdown in new cases and then we see a slow reduction in cases and I think that you know there's a huge distribution and what that model can tell you but I feel really good about kind of April 7th or 8th us getting enough SPEAKER_19: confidence that okay it's safe to go outside again and by the way if we don't open up for fucking business everyone's done forever all right so that's what SPEAKER_58: that's where I get the number and most importantly when do we feel comfortable playing cards again in person because I'm I'm starting to think that I want I know this sounds crazy but at this point if the three of us were positive and we'd gotten through it already I would like to know that I think the entire poker group needs to get tested and the best possible scenario is that we're all inoculated we're not carriers anymore we're blockers in the system and we can get back to playing cards because I am and I'm being a little facetious here but SPEAKER_00: the chances are we might all have it right I mean it's a possibility I am going SPEAKER_106: bonkers being at home I am not designed for social isolation I am going crazy Chamath Palihapitiya: Timoth do you like it yeah I mean I'm a pretty isolated person as a matter of course anyway so other than work and you know my doing this or TV I'm always at home yeah and but the the one thing that I cannot live without is Monday pokers and I'll really tell you why it's like in a moment like this here's here's what I've realized I've realized just how much extraneous stuff I have in my life how much I don't need it how much I've occupied my time with things that are just not important and it's really allowed me to clarify like you know working on the next deal not important thinking about my status in society not important thinking about what other people think of me not important my health important my family and their health important and my friends I love my friends yeah and we're very blessed I I mean I I love the both of you that group saved me in some really tough moments in my life yeah and I hate not seeing you guys and being able to you know just touch and feel you on on once a week it's that to me is brutal SPEAKER_06: when we when we define touching and feeling uh we're talking about it's fine we make man love we make man love over the poker table and that's how men commune is by just shifting large amounts of SPEAKER_31: money across the table I miss you guys too I'm going crazy I'm not gonna be I don't think like you're gonna see me after this said and done I can't take seriously buying things I just think it's like what the fuck is the point um yeah I really take seriously that we need to fix the social infrastructure of the United States and in part do our do what we can to help as many people as SPEAKER_134: possible all right they have the folks Chamath Friedberg 2024 uh hey Dave Friedberg you both thanks SPEAKER_58: a lot for doing this Chamath thanks a lot for doing this follow at Chamath follow at Friedberg if you want to help out the podcast uh well there's no ads to uh click on because Chamath wants me to go broke on this uh no ads but uh I will say if you write us a five-star review on iTunes I guess that means we'll get indexed and follow Friedberg follow at Chamath follow at Jason we'll see you all next time bye