SPEAKER_00: all right everybody welcome back to the number one podcast in the world it's episode 185 and you're going to be delighted by today's docket if you're into politics we move the taping back a day gentlemen because we knew there would be a presidential debate so with me to discuss all things presidential debate and the news finance markets maybe even a little science from our science boy david freeberg is the rain man david sacks yeah is frozen or he's staring everybody

SPEAKER_04: down how are you sir we're about to enter the end game jason oh the end game is here okay we're in

SPEAKER_00: the end game now and from a we work in the home office in pasadena is uh our friend the sultan of

SPEAKER_07: science he's back to work he's in his cube did you get the tps reports done how are you doing there

SPEAKER_08: prefer the humble headquarters of ohalo genetics beautiful lab downstairs i'll take you on a tour one day oh nice can't wait to hear my friends gloat and bloat themselves on the show today after the debate last night it's going to be insufferable i'm looking forward to it okay so

SPEAKER_11: you're building the next 10 billion dollar company and we don't get to invest but we do get a tour

SPEAKER_00: thank you it's good to note that we're better uh we brought this every week if you guys want to put

SPEAKER_16: money in i will open up the round again for you and you guys you said this three times when do we

SPEAKER_17: wet our beaks jacal's right about this actually that's how you know the winner the one he doesn't let

SPEAKER_01: us invest in is the winner uh it's the easiest way in his portfolio no he's like hey can i can i

SPEAKER_25: introduce you to a soda pop machine all right everybody let's get to the show here enough of the

SPEAKER_00: craziness last night was the first presidential debate and there's no easy way to put this it was an unmitigated disaster for the democrats and president biden uh gosh he looked confused uh lots of slips lots of gaffes if you are under a rock living in a cave without starlink and you missed it here's a couple clips everybody's talking about this one where biden lost his train of thought for

SPEAKER_07: i don't know close to 10 seconds play the clip making sure that we're able to make every single

SPEAKER_34: solitary person eligible for what i've been able to do with the uh with the covet excuse me with um dealing with everything we have to do with uh look if we finally beat medicare thank you president

SPEAKER_00: biden president trump gosh that was brutal and uh the reaction from uh cnn even msnbc's joy reed as far

SPEAKER_42: left as you can go was brutal and candid and here it is the knives are out from the democrats for

SPEAKER_43: president biden right now as we speak there is a deep a wide and a very aggressive panic in the

SPEAKER_44: democratic party it started minutes into the debate and it continues right now it involves party strategists it involves elected officials it involves fundraisers and they're having conversations about the president's performance which they think was dismal which they think will hurt other people down the party in the ticket and they're having conversations about what they should do about it some of those conversations include should we go to the white house and ask the president to step aside other of the conversations are about should prominent democrats go public with that call because they feel this debate was so terrible that was painful uh i love joe biden i

SPEAKER_46: work for joe biden he did not do well at all and i think there's a lot of people who are going to want to see him consider taking a different course now there is time for this party to figure out a different way forward if he will allow us to do that i too was on the phone throughout much of the

SPEAKER_48: debate my phone really never stopped uh buzzing throughout and the um universal reaction was somewhere approaching panic the people who were texting with me were very concerned about uh president biden seeming extremely feeble seeming extremely weak this has been quite frankly a car

SPEAKER_51: accident in slow motion that we've seen over and in building and questioning it and as has been pointed out joe biden sought this debate at this remarkably early time because he knew he was losing and he needed to change the narrative and he did change the narrative he sunk his campaign tonight all right

SPEAKER_40: gentlemen there is absolutely no way any of us could have predicted this oh wait nick for the clip

SPEAKER_54: read the room democrats you have put up a candidate that nobody wants his policies on the border and

SPEAKER_57: some other issues are not in sync with the majority of the country at some point the democrats just have to take a deep look in the mirror and say we feel that a bad candidate who's too old and people don't believe will stand up to scrutiny of like say being on the all-in pot for two hours or in the debates or with a hostile interview or any of those possibilities and so i think if that's the case we really need to have the democrats think deeply about maybe fielding a different candidate i believe that's what's going to happen in the next 30 to 60 days so i'm predicting there's gonna be a switcheroo

SPEAKER_59: a hundred percent i mean if you just look at the polls 100 there'll be a switcheroo who's the switcheroo i have no idea it could be gavin it could be anybody anything's possible i think trump's

SPEAKER_57: going to demolish him in the debate i think he'll sink to 30 in the in the polls and then the democrats will find a way to give him a graceful out and then they'll field somebody else i think the democrats as cynical as it sounds we're waiting to see what happens with this trump trials conviction what you call law fair what other people call fair use of the law and then they are going to see how he does in the debates that's why they moved the debate up in june and i think they know to pull the plug on this if it gets too far gone and they have the ability to do that because all he's got to say is you know what i i'm i'm feeling old and i want us to win and i'm going to slot somebody else in

SPEAKER_40: all right and to wrap this up prediction markets showing

SPEAKER_00: biden has plummeted to let's check the number oh yeah 33 in the the sharps as uh you've referred to them on the program uh are basically saying biden's going to drop out now 44 chance over on poly market will biden drop out of the presidential race and then predicted another one of these prediction markets where you can actually bet real dollars it's not a plug for them or commercial just those happen to be two of the bigger ones newsom sits at 14 percent now biden 33 trump at 58 percent uh at the start of the evening before the debate biden was at 47 post-debate chamath we see biden dropping 47 to 33 there's nothing like this has happened in modern

SPEAKER_61: politics your thoughts chamath polyhapitiya and then sacks will give you the the red meat let me

SPEAKER_68: just start by saying that president biden is a person that's given up his whole life to work on behalf of america in the best way that he thought was possible he's overcome a lot of tragedies i think he's worked very hard he's diligently tried to do what he thought was right on behalf of the people of delaware and then the united states my honest takeaway is that that person though is no longer really in charge and i think that that

SPEAKER_71: was very troubling for me and it actually makes the last sort of six months make a lot more sense

SPEAKER_68: so i thought the fact that we could not get a response from the white house to be i took it a little bit actually personally i was wondering why for someone that had been such an ardent supporter i couldn't even get an email back when i was consistently asking them to be on the pod

SPEAKER_71: and now i see that it wasn't just one single act it was part of a holistic strategy it was the same strategy that boxed rfk out of the democratic primary because could you imagine if this event had happened when he had to debate rfk in the democratic primaries it would have been exposed then it's probably partly to explain how the law has been used in new york state whether you want to call it lawfare or not but it was a very directed partisan action and so all of these things are now three data points that are really important you will not come on an open format show like ours to just speak openly none of us were going to attack him or try to corner him or box him in you prevented other people from actually challenging you and directly asking questions of you in the democratic primaries and then you try to put political pressure on your opponents all of that is systematically about a group of people that are unelected who are trying to control democracy and i think that that's the most troubling takeaway from this i don't think that you should take away from last night that joe biden had a bad debate i think what we should take away is that there is a person who should be allowed to transition into the sunset and be celebrated for what he's done and instead there are people that frankly at the at the margins are

SPEAKER_73: acting pretty unethically and at the limit is actually acting somewhat diabolically to prop this person

Chamath Palihapitiya: up so that they can keep power for example you've been in situations where you would expect the team that runs a company to be able to stand up and say the ceo is not in a position to run this company anymore that's what you would expect if there's good governance and honesty you know what was ron clane doing as an example when he was doing debate prep did he legitimately believe that joe biden was prepared for this or mentally capable of actually doing this and the fact that they are allowing his

SPEAKER_73: legacy to be destroyed after 50 years i think is really tragic yeah well said by the way jamoth sacks

SPEAKER_77: your thoughts on what we witnessed last night and the reaction to it well let me speak as a objective

David Sacks: and independent political observer okay just as independent as you jay cal yes let's do that let's

SPEAKER_85: be independent today's show yeah look anyone can have a bad night absolutely uh i think his campaign put

SPEAKER_87: out the word that he had a cold and uh maybe he just had a bad night i mean after all it was media

SPEAKER_89: people like joe scarsborough just saying a week ago that not only was biden cognitively fine but in fact he was the best joe biden he had ever seen just a week ago or two weeks ago reid hoffman was saying that he had a two-hour lunch with joe biden and biden was regaling him with details of ai and gaza and he was good and so we've heard from all these highly reputable people is that biden may not present that well in public but in private he's just fine you're saying they're lying and they lie

David Sacks: to the american people well i'm i'm actually taking them at their word because they seem like very trustworthy sources to me i see no reason to swap out this candidate i think that anyone could have a

SPEAKER_96: bad night and there's no reason and there's no reason whatsoever for the media satire socks

David Sacks: satire socks is into the chat well i mean look i just um i think that there's no reason for this

SPEAKER_89: kind of panic it's still going i believe in democracy and the democratic primary voters have spoken this is the candidate who they voted for okay and there is stand by your man you hear a message

SPEAKER_107: stand by stand by your man stop being a wimp just because your candidate had one bad night you don't stab him in the back like absolutely not free and even i think van jones said that republicans wouldn't do this if trump had a bad night you know he's like why why are we all

SPEAKER_89: stabbing biden in the back so look this is a candidate who you've been supporting for years this is a candidate who you rigged the primaries for you boxed out bobby kennedy who you know i thought was a fantastic candidate you basically boxed out dean phillips this is the candidate who

SPEAKER_107: you wanted just days ago you were saying was completely mentally fit in fact the best he'd

SPEAKER_116: ever been okay so you made your bed sleep in it you made your bed sleep stop betraying your candidate

SPEAKER_117: like this it's it's uh unseemly it's okay satire sex has some loyalty for god's sake okay

SPEAKER_118: you've heard from compassionate chamath you got to hear from satire sax now let's go to the morning

SPEAKER_121: friedberg what do you got this morning you get to hear from frank frank friedberg frank friedberg

SPEAKER_123: talk to it buddy go for it the big loser of last night's debate was the american public the big winner of last night's debate was probably russia china iran maybe the saudis licking their chops watching the utter dysfunction in the leadership of the party in the leadership of the country as it stands today a notable mention i will say was the debate format i absolutely love the fact that there were no interruptions that the mics went mute that there was no audience and the moderators didn't kind of challenge back and forth and try and make themselves the show that was very unique in in a presidential debate so i actually like the debate format they stopped interrupting me thanks for the interrupting uh that's the joke i think that as sachs points out the biggest issue is that this was front and center biden's decline in capacity and aptitude for quite some time i didn't tell you guys this before but last october a senior member of the democratic party reached out to me for a quote meeting i took the meeting in october and of course it turns out they were asking me for money little did they know i don't give any money to politics ever and never have never will so they're they're handlers are morons for bringing this person in to come and talk to me in the meeting i said you cannot put joe biden forward as your candidate what the hell are you guys thinking he's like no he is completely stable he is as sharp as he's ever been i sent him an uh an email and i'm going to read you what i said to him this was in the first second week of october i said joe biden does not appear equipped to be president of the united states i think the continued heralding of democratic party leadership of the president's performance and ability to continue to serve into the next term is mind-boggling his inability to conduct even a basic interview or give a clear and concise statement in a candid setting highlights a clear and obvious decline in function since he took office it is important for democratic leadership to find an alternative candidate and message this soon doing so i believe will buoy fundraising efforts across yada yada yada i said i would feel uncomfortable the democratic majority senate head and house giving a leader with declining aptitude nearly limitless effect so i sent this as my response to his follow-up request for for money this was the second week of october and i wanted to pull up the date on this because it was so apparent back then what was going on so what's so striking is how long mainstream media and leadership in the democratic party have tried to tell an alternative story that was so obviously revealed to be not true last night and that is the thing that i think makes me say america is losing because there are a few people that are in charge of controlling the narrative there are a few people in charge who decide who gets to be the candidate and those few people are keeping democracy from working effectively because the raw data the direct data imagery the video the media content that has come out of biden over quite some period of time made it so obvious that he was not in full capacity and so that was my biggest kind of takeaway is that there's something wrong with

SPEAKER_68: the way things are running in this country you're saying the media and the democratic party leadership

SPEAKER_123: are lying to america yeah and i think i but i because because if you of course the fact that we all had this information we've seen the videos we've seen the interviews and every time a video or an interview comes out it has been excused away as oh well he tripped or oh you know the it wasn't well edited and every time there's a story and then when it's fully exposed it becomes like well my god the fact that they all flipped so quickly is what's so shocking because this was there and you you know if you're on twitter you can see these clips being talked about by millions of people but then media and

SPEAKER_131: democratic leadership won't acknowledge them the subversion of democracy is really the real threat

SPEAKER_68: to democracy to your point you have the right to elect a person up or down none of us are choosing to elect a shadow cabinet of handlers to run america that's not what any of us are signing up for yeah and i think that's what we have the risk of having for another four years if this lie isn't

SPEAKER_71: exposed what i what i find unbelievably shocking is all of these data points now just make so much sense because the through line is as you said a coordinated effort to kind of obfuscate his decline like if you thought about this in a different way if you took a 29 year old and a 32 year old would you say that they're the same absolutely right if you took a 39 and a 42 year old they're the same a 49 and a 52 year old they're the same but the reality is a 79 and an 82 year old or a 78 and an 82

SPEAKER_73: year old are meaningfully different and the reason is that because there is significant decline every year every month every day and you're seeing the impact of every week day and month and year as a president of united states wear on an 82 year old body and i'm not sure any of us would do much better but the reality is that when you're at that age there's a level of transparency that's required and we have the opposite so take warren buffett as the counterfactual to this warren buffett is in his early 90s but what does he do every year he marches tens of thousands of people into omaha he sits them down he sits at the front of a dais with coca-cola and peanut brittle and speaks for six to eight hours and is sharp as a tack well the point is if you decide after those six to eight hours of fully transparent unedited interaction with warren buffett that you don't think he's capable of leading berkshire you can sell the stock what they don't do is hide him behind the shadows propping him out in package interviews and all of this other stuff that is un-american and undemocratic and you see why because the importance as friedberg said is so high you probably do have a lot of people outside the united states really questioning what is going on in the greatest country in the world right now that this can even happen and the people that you thought were so anti-trump right that they would do anything to make sure that donald trump was unelected well they're actually not that anti-trump they're just pro-power because the thing that they care more about than their hatred of donald trump

SPEAKER_00: is their desire to stay in power yeah i think these are all very well said frank freeberg nicely done i mean how is anyone at this point in time surprised like we have been talking about his cognitive ability for a couple of years here on this podcast everybody's been talking about it on twitter they've been talking about on social media everybody's been talking about it at every christmas every thanksgiving for a couple of years right now and um you know this long form discussion podcast test is the ultimate test and i think people need to take that to heart if you look at the long form podcast and i'm just saying this to toot our own horn here it could be joe rogan it could be tim ferris it could be whoever you want lex friedman when you saw rfk vivek trump chris christie dean phillips come on this podcast talk for in some cases two plus hours it was clear they were there and this is completely selfish on the part of biden's family the people around him to you know stay in power and the hot swap's coming i just i'm telling you right now he is not going to be in this race in the

SPEAKER_137: next 30 days the hot swap is going to create a free for all jason which is better better than

SPEAKER_00: running somebody who has a 30 chance of winning and i'm going to take this a step further this is 25th

SPEAKER_138: amendment territory this person is not fit to serve as president for the remaining of his term what we saw last night was incredibly troubling he was not there and i've been saying this until i'm blue in the face four months this is absolutely disgusting that they did this this is elder abuse i don't say that as a joke i say this sincerely i remember when my dad had to take the keys away from my grandfather god rest his soul my grandfather wanted to drive that car you know the streets of brooklyn his his his station wagon my dad at some point said this guy keeps clipping other people's mirrors we got to take

SPEAKER_00: the car away so you know what my dad did he went to my grandfather god rest his soul and he said listen the car was stolen and i'm sitting there as a seven-year-old next to my dad and i'm like the car wasn't stolen and my dad said you know what the car was stolen pop we can't afford a new car i'll lend you my car once in a while my dad then sold the car for 800 bucks and got out of it

SPEAKER_138: that's what we need to do you got to take the keys away from biden he's not fit to finish the rest of his term period full stop and i'm glad everybody else now sees what you know half of us saw for

SPEAKER_64: the last satire sacks hold on satire sacks has a rebuttal okay go ahead satire sacks well look who

David Sacks: are you going to believe the j cal's uninformed non-expert opinion or the expert medical opinion

David Friedberg: of dr jill biden with her uh doctor in education well i mean the bias is strong when you see that clip i mean play the clip of biden post these guys are so deranged these lunatics are so deranged they thought they won last night here's a clip of jill biden first lady macbeth telling biden he did good

SPEAKER_155: joe you did such a great job you answered every question you knew all that you're not running

SPEAKER_157: joe biden's not running you are not running this is a farce and now the veil is so happy he looks so

SPEAKER_87: happy in that moment getting that approval i mean give the man some milk and cookies i mean

David Friedberg: he i mean literally let the man retire to your point chamath compassionate chamath said it great

SPEAKER_00: like the guy had a lifetime of service let the guy retire let him spend time with his grandkids great grandkids whatever he's blessed with and let's let's do the hot swap now it's incredible that not a

SPEAKER_71: single staff member has resigned isn't that incredible like where they see this jason and they have the moral clarity to say hold on a second this is really wrong not a single one yeah that is really scary

SPEAKER_168: it's a really good point and actually i thought i thought one of trump's best moments in the debate a

SPEAKER_89: line that i hadn't heard him say before is that joe you never fired anyone you know and he was specifically talking about the afghanistan withdrawal but just more generally when have you ever fired anyone for getting anything wrong whereas i trump fired comey i fired other people and i paid a political price for that but at least i was willing to fire people who do a bad job you're not well

SPEAKER_107: now we know the reason for that is because there is no biden biden is just the staff so why would the staff ever fire themselves and this is why it's actually important to have a leader at the top to have a commander-in-chief as opposed to just a shadow government consisting of party apparatchiks

SPEAKER_116: and that's what we have is what the problem is when the staff gets something wrong there's no one there to fire them

SPEAKER_68: you know how like how does somebody who's worked for biden for 40 or 50 years who sat in camp david helping to do debate prep at no point have the compassion to say sir this is not working because

SPEAKER_172: that would be firing themselves jamoth no no no it's a rhetorical question i'm just saying

SPEAKER_174: actually there's a more sinister reason and i think sacks you're pointing it out there which is they

SPEAKER_176: consider trump such an existential threat and they want to maintain power that they'll they're willing to do

SPEAKER_00: anything to keep power you know and you know listen i don't want to get into trump here but he's got his own ways to stay in power himself uh this was an embarrassment for america this debate this the fact that these are the two candidates is a complete embarrassment well i think the real embarrassment

SPEAKER_89: for the media was the fact that they were exposed the fact of the matter is for months if not years they've been saying that this candidate is fine he is cognitively fit in fact he's the best he's ever been i've had two hour lunches with him he's wonderful that's what they've been telling us and the reason why their panic was so visceral last night and all these post-game wrap-up shows is they saw their credibility going down the drain they saw that they had been exposed it wasn't just the fact that biden was exposed they were exposed for putting out this north korea level propaganda for months and years and everybody should understand these people were part of the cover-up it wasn't just the biden team who wants to hold on to their jobs it was the media it was this entire democratic party apparatus they're all in on this giant con i wouldn't have a problem with this sex if it was

SPEAKER_138: like reagan where they were like oh god he's got 18 months left we're gonna ride this thing out and

SPEAKER_00: yeah maybe we let him have a quiet thing but to actually put him up for another four years is the issue here if they just said listen we can 25th amendment this guy or let him finish the last six months that's one thing but to say we want four more years of this i mean how much worse is it going to get hey what's going to happen right now i guarantee you is he's out we're going to have president kamala she's going to get her flowers for four months as she gets to be the first female

SPEAKER_138: president united states then she steps out of the way she decides she's not going to run because she's got things to do with her family and there will be two new people who will be moderates and then the

SPEAKER_68: real election starts in about 15 days i don't think you need to go into all of those mechanics to get the outcome of a new candidate all joe biden has to do is go into the democratic convention and release

SPEAKER_71: the delegates yes of course yes technically but the pro but the problem with releasing the delegates is i do think it creates a free-for-all unless the party then exposes this next facet of their plan which is that they are so in control that they only allow one candidate to go up there oh they've already got that yeah that's done and then i think what happens is depending on who that person is they'll either i think the democratic party is probably at risk of a pretty meaningful reset and i think that these tactics i think are very much seen and understood by the american people i think that people do not like this idea that you vote for person a but instead you get persons b through z i don't think that's what anybody thinks the election for the president of the united states should be there should be two people independently and then when you see one person that's not really in a position to run faithfully i actually think that you know donald trump last night showed tremendous restraint and compassion i think that is the right way to deal with this situation i think it's just acknowledging that president biden is not altogether there so without making claims of a cold or anything

Chamath Palihapitiya: else this is the security and the well-being and the economic prosperity of the most important

SPEAKER_89: country in the world why are we messing around let's just put it plainly the democratic party is a collection of interests who want to remain in power the democratic party is the party of government its goal is to allocate money and power from the government to the collection of interests who back the democratic party in other words it's basically a collection of of interests who want to loot the republic well obviously no one's going to vote for that so they have to make it about something else they choose a figurehead they talk about how this is about saving democracy they basically invent hoax after hoax lie after lie to basically maintain their power and i think what's happened is the mask has

SPEAKER_107: come off the whole thing the whole shell game has been revealed it's obvious that biden was always a puppet for these interests who are hiding behind him and now it's all being exposed this also goes all

SPEAKER_71: the way back to 2016 because if you remember and you look at the the real run-up into the 2016 primary you have to remember president obama sat joe biden down and said you cannot run and the reason was to direct the democratic party and establishment and energy towards hillary clinton who ultimately lost that election there's a very important question here which is if joe biden had actually run in 2016 you may have actually had him beat donald trump in 2016 and you he probably would have continued into 2020 this would be a totally different situation for the democrats so back to your point david all of these backroom shenanigans and negotiating and gerrymandering and politicking and power broking is not how democracy should work as messy as the republicans are i have to give you know i tip my hat to them they run very straightforward fair visible transparent face-offs between people and you may not like the candidates but the process is what it's supposed to be messy turbulent but you see all sides whereas this tends to be managed from the inside out and i think that that is as your point being exposed and i think that's what really has to stop within the democrats they need to open the floodgates a bobby kennedy should have had the chance to run dean phillips should have actually had the chance to run but they were not and they were prevented and by the way props to dean phillips who in a very respectful and compassionate way was telling the truth from day one and he was essentially censored he was not allowed to basically tell you yeah he he told

Chamath Palihapitiya: everybody what he observed in front of his face right and if people had listened a year ago to dean

SPEAKER_89: phillips then the voters in the democratic primary could have made a different choice they could have maybe replaced joe biden but the party elders and the powers that be did not let that happen and now they're in a panic a year later trying to do a hot swap because it's manifest to everyone to the american public that joe biden is not fit to serve yeah but the real time to hold on let me just speak to the hot swap for a second the time to do the hot swap was a year ago when democratic primary voters could have voted for someone new the problem you have now jacal i actually think that on balance the hot swap is not going to happen let me just tell you why i think you make a really good argument for it nonetheless the reason it's not going to happen is that joe biden and jill biden have come out this morning and said there's no way that he's stepping down it was just one bad night he's fit to serve there is no mechanism to replace a nominee who's already won all the necessary primary votes without their consent so if if the biden's are saying we're not stepping down there's no mechanism to force them to step down and that's the situation we're in right now it's a very simple

SPEAKER_197: mechanism he's going to he's going to capitulate and you're going to have obama's going to give

SPEAKER_200: him a call i guarantee obama's going to talk to him in the next 72 hours guarantee the hot swap happens

SPEAKER_168: i'm absolutely willing to make it right now on it let me finish my point yeah they can pressure him and that's what you're talking about is they're going to try and leverage him out but the truth of the matter is that if they can't find the right leverage points he does not have to step down the

SPEAKER_178: right leverage point is very simple he's not going to get any more donations last night the democrats who are donating all said no more money for joe biden so he's going to have no oxygen you need

SPEAKER_116: money to run these things but all right look just one other final problem with the hot swap theory

SPEAKER_89: is not only is there no mechanism to force biden to do it but i don't think there's a consensus right now on who the replacement would be the fact of the matter is that kamala harris is next in line and she pulls even worse numbers than biden does so there's every reason to believe that she would do worse than biden in the election and i think it's not going to be easy to basically shiv her and push her aside and so you can talk about newsom you can talk about michelle obama you can talk about hillary clinton the fact of the matter is that i think you're going to have a big kamala problem and because of that you know there's no mechanism and there's no clear replacement i think that although a lot of people are going to say what you said jacal about the hot swap being desirable i think at the end of the day on balance probably not going to happen although certainly i admit it could i'll bet you

SPEAKER_208: ten thousand dollars right now to whatever charity you want that biden will not be the nominee

SPEAKER_18: you could be right but okay ten dollars are we on they gotta work out those two problems they

SPEAKER_209: gotta work out those two problems i'm just i'm just offering you a ten thousand dollar bet and i and i'm not giving you any on straight money i would not bet a lot of money on this because i'm

SPEAKER_116: not sure i'm just raising some problems with the hot swap theory okay freeberg you have uh you've

SPEAKER_61: been a little bit silent here you want to wrap us out so we can get to the next time i'll wrap us

SPEAKER_12: out i think i'll read the final paragraph of the email i sent to the democratic party leader a few

SPEAKER_123: months ago as a coda to this conversation here goes the united states is facing a fiscal crisis the likes of which the world only sees every few hundred years as world-leading nation states overextend themselves take on unaddressable debt loads increase social programming and eventually collapse under these conditions the cost to service the interest alone on our federal debt is now greater than a trillion dollars per year this already exceeds the discretionary defense budget the debt service expense will only swell as interest rates are unlikely to decline back to zero percent and i do not subscribe to the easy to refute economic arguments of modern monetary theory simple arithmetic is all that's needed to discredit it furthermore i can identify dozens of federal programs sponsored by democrats that are not achieving their objectives yet we continue to fund them as if they were performing exactly as anticipated when originally conceived every federal program should be held to account for performance every year if not they should be defunded instead i see the party pushing new programs that create new expense burdens without first addressing programs that simply aren't working accountability is a critical first step in reducing our federal deficit below seven percent of gdp i believe our nation is facing financial and the social peril i urge the party to become the quote party of reason and results put forward leaders that can lead hold government programs that aren't working to account make sure that every dollar spent on social programming has a measurable impact and if they fail to deliver results cut them the opportunity to be the party of reason and results is wide open myself and many of my friends would scramble for the opportunity to support that party that's the end of my statement and i think did you get a response then a month later the handler said so and so has this on their docket they're going to call you

SPEAKER_95: never got a call of course yeah because you're not a donor they only care if you donate

SPEAKER_215: and you're not a dog because i donated i donated and i didn't get anything all i asked for was a

David Friedberg: chance to sit down and come on the podcast i mean he couldn't the debate format to your point friedberg was like the easiest debate format ever and the greatest thing i think dave port and i

SPEAKER_00: pointed this out on twitter like trump's best strategy was to just let biden talk like just get out of the way and let him talk and there was one moment where he's like i i'm sorry i mean trump was pretty graceful here which is a big statement he like at one point was like i'm sorry i don't understand what he just said like i don't know how to respond to something i don't understand if he what his point was hot swaps coming and i am an undecided voter i have a big announcement sax i have a big announcement about my undecided vote you want to hear it yeah let's hear it this is breaking news i am not voting for biden i've eliminated biden as possible i was waiting to see what happened last night so i knew that no i never was clear about that you've also eliminated

SPEAKER_224: trump you've also eliminated bobby kennedy so you have not eliminated trump or biden kevin

SPEAKER_226: i said i introduced you to jill stein maybe cornell west okay let's move forward let's move on

SPEAKER_225: who's left bring anybody out it can't be weekend at bernie's part two i mean the weekend at bernie's

SPEAKER_138: joke is real i mean it's cruel and it's real and my lord get it together all right there's a really

SPEAKER_176: interesting um trend going on that i wanted to get everybody's thoughts on ai and corporate

SPEAKER_00: efficiency killing tech jobs let's pull up this chart uh this uh somebody shared in our group that from fred these are software developer job postings on indeed from early 2020 that's pre-covered obviously to this year look at this the number of job postings for developers has absolutely come crashing down by 80 percent this is below pre-covered numbers in addition to this we talked about getting back to work penske and dell saying you have to be back in the office starting this fall four days a week or resignation accepted what are you seeing in your portfolios any thoughts on this trend of the

SPEAKER_176: major jobs the high paying elite jobs chamath maybe going away this is a trend we haven't seen

SPEAKER_235: in our lifetimes there's always room for elites at elite companies and now it seems maybe the demand's

SPEAKER_68: gone what's going on here i just think that company formation has changed after the end of zurb and so i think that that chart speaks more to a couple things one is that where typically people were hiring

SPEAKER_240: for software engineering roles which was a lot of sas businesses contracted a lot and the net new amount of sas startups also i don't think materially increased and so that was one big switch second is

SPEAKER_68: you went through a whole bunch of layoffs at the big cap tech companies as they re-establish profitability i think when you layered those two things that explains that chart more than the

SPEAKER_71: emergence of ai tools just practically what i see is all of these ai tools can add a 10 or 15 lift to an individual person if you are in a traditional organization i don't think these things are the panacea that they're marketed as being these are not creating 10x engineers at some point these tools will be good enough and at some point companies will get started from scratch that use those tools and create a level of productivity at one-tenth of the workforce but that hasn't happened yet so i think that that chart is more about layoffs and contraction in tech more than anything else yeah and just to

SPEAKER_00: explain this chart a little bit more in depth the 100 number back in uh 2020 uh then boosts up to two and a half times that amount and then comes back down to 60 of that amount so it's an index um we

SPEAKER_176: don't actually have the raw numbers here of the number of developer jobs open or close sacks your thoughts what are you seeing in company formation to chamath's point and overall what do you think

David Friedberg: this means for the american elite workforce people with you know really high-end degrees and really

SPEAKER_84: high-end salary expectations well i agree with chamath this is too soon for ai to be responsible for

David Sacks: this i mean the um ai productivity gains are just starting and we're not really seeing job elimination yet or job replacement i think this is just a symptom of economic weakness and the main reason for the

SPEAKER_89: economic weakness is the rate hike cycle remember we went from practically zero percent interest rates to five and a half percent in one year and a lot of people were expecting that to cause a recession that's normally what happens when you get a very very rapid rate hike cycle is it sucks liquidity out of the economy and it contracts economic activity and you get a recession i was one of the people who thought that and that didn't happen i think one of the reasons it didn't happen is there was a huge backlog of jobs of of sort of open job postings i think originally it started at 12 million open jobs well what's happened is the rising straits has created some economic weakness it's caused a reduction in liquidity and investment it's created more pressure on companies to be profitable and so all those things have cascaded through and what it's doing is it's burning off this job backlog so we haven't necessarily seen unemployment yet but we're seeing a reduction in the the job postings and i i think that's what's going on and i would just say that the economy may not be in recession yet but i just think it's weak and um and this is just one metric showing that freeberg you're you know running a

SPEAKER_176: company now you're doing hiring qualitatively what you're seeing in terms of hiring from when you were running production board you had many companies people were fighting it out in the

SPEAKER_00: peak zerp era you know and giving people incredible incredible you know compensation packets and packages and then you also had like sort of people trying to take talent and maybe talent hoarding was going on it seems to have dramatically switched we've been putting job postings out and

SPEAKER_176: seeing hundreds of people apply for jobs that we would get dozens previously what are you seeing

SPEAKER_08: what's the game on the field in terms of hiring i'm not really i don't really have a great perspective on this where we hire very specialized people at ohalo and in the special specialty field we're in we're the best in the world so everyone wants to work here got it uh any i'll answer your question

SPEAKER_89: jacal i mean what i see from our portfolio companies is hiring's got easier it is way higher much easier to hire devs right now software developers than two years ago no question about it yeah and i think

SPEAKER_208: globalization also having a big impact here i i honestly my theory on this is that because there's

SPEAKER_00: not three competing offer sacks from big tech when you're a startup you know trying to land somebody and you're like we have to beat uber or airbnb or coinbase you know like a mid-market company or the google offer the apple offer the amazon offer typically like a developer would have those three sets of offers here's a startup that's willing to give you one percent of the equity here's a mid-market company an uber and airbnb a coinbase that's offering you 300k and then here's the like incredible 500 000 offer from amazon or google those offers just aren't there so then it makes for the ability for startups to hire great talent this is the best time possible to be a startup the talent on the field is incredible opening eye it's considering a for-profit profit conversion and that means possibly an ipo soon according to port sam altman recently discussed this with major shareholders like maybe microsoft and it's possible open ai will become a for-profit benefit corporation similar to anthropic or xai if you don't know what a for-profit benefit corporation is a benefit corporation or b corp in the industry means you have a stated mission that the board is responsible for going after you know save the whales provide ai software for all of humanity whatever it is in addition to the standard acting in the interest of all shareholders and so this of course means open ai which was valued at 86 billion

SPEAKER_176: could ipo at some point what are your thoughts on this we saw the revenue numbers are crushing it any thoughts chamath on open ai ipo is that a possibility in your mind i mean it makes so much sense for

SPEAKER_68: them so i think they should do it as quickly as possible we are in the first inning of what should probably be an enormous tectonic shift in technology and i think if anything whoever wins in the first inning usually isn't the one that's winning by the ninth inning and so i would encourage anybody that's winning right now to monetize get secondaries take money off the table as fast as possible because

SPEAKER_71: the future is unknown and the more disruptive the technology is the more entropy there is which means that there's going to be more changes not less and again i would just look at search as an example i would look at social networking as an example when you look 20 years later the people who captured all the value were not the ones at the beginning who everybody thought was going to win and so i think if it plays out similarly it's important for the people that are in the lead today to

SPEAKER_68: recognize it's too early and they should monetize their perceived success as quickly as they can to

SPEAKER_265: the largest magnitude possible in other words you might be opening up you might be you might be

SPEAKER_266: my space yeah grab the bag you can grab the bag but what is it called secure the bag sorry secure

SPEAKER_271: the bag yes what are your thoughts secure the sacks on a potential ipo by sam and the team at open ai and the impact that might have on the wider space well for a long time on this show i've been saying that

David Sacks: you need to clean up that you know convoluted byzantine corporate structure with all the line

SPEAKER_89: charts everywhere uh that that structure is what created all the problems with this non-profit board that they had you've got a for-profit entity reporting to a non-profit board it created a culture clash and as we've said before on the show it's not a good idea for starps to innovate on structure using a tried and true c-corp is the way to go you're ready for ipo if you ever get that far you don't need to like restructure the company it was always funky and weird that open ai had this nonprofit structure and really they should have fixed it years ago and and like i said given elon his equity given sam his ceo package and they didn't do either one of those things and so now they're left with this crazy org chart that's a mess and i'm not even sure i mean i think it's i think you would want to clean it up as soon as you can because i think my sense is that the longer you wait on these

SPEAKER_116: things the harder it actually gets but yeah more calcified these things get yeah i'm not sure how

SPEAKER_89: easy it is to actually fix this thing but yes they should fix it they should make it a standard c-corp they should make things right with elon because he provided the first million of steam capital they should make it right with sam he should get his ceo comp and then they should ipo so that the public actually has the ability to invest in this ai wave and ride this wave as you know the same way they did with the whole dot-com boom in the late 90s i mean a lot of those dot-com companies didn't work out but some of them did amazon google and so on and the public had the opportunity to participate in that huge in a wave of innovation and i think we go to something like that we still need more public

SPEAKER_235: companies right yeah freyberg you got a thought here before we go into super intelligence and ilia's

SPEAKER_255: new company i don't care if opening eyes for profit or non-profit affects a few people that put money in and the employees doesn't affect anyone else so well no it'll affect the public if they can buy shares

SPEAKER_277: and they get to participate you can say that about any business right like yeah

SPEAKER_279: open ai is one of the leading companies of the ai wave it is the company it's the leading company

SPEAKER_12: they apparently raise money in an 80 billion valuation so one could also argue that a company

SPEAKER_08: doing 3 billion in revenue getting an ipo done at 120 billion market cap maybe the public already

David Sacks: missed the big wave well no i don't think so i mean we saw a lot of these companies that you could have said that about nvidia and it yeah it could go up it could go down but anyway there's a bunch of

SPEAKER_255: there's a bunch of people who put money in who are going to make a lot of money if this thing

SPEAKER_284: gets to be for the trend line is it's doubling revenue right year every year so yeah my argument

David Sacks: is that it'd be good for open ai to clean up its byzantine cap table and structure and it would be

SPEAKER_89: good for the public to be able to have the opportunity to invest so it's a win-win i'm not saying they have to do it this minute i mean i think that it does take time to get your reporting to the level of maturity necessary to be a public company and you don't want your your earnings or your revenue you don't want your numbers to be volatile if you were an employee freeberg

SPEAKER_288: and it went out at 120 billion would you clear your position if you could would you sell half

SPEAKER_290: your position i don't know enough i don't know enough i'm assuming most of those trim off anybody

SPEAKER_08: anybody want to play along here and well i've heard that they've had quite a bit of turnover because there's been pretty good secondary market activity which means a lot of the employees have cashed out and they've made so much money just like what's happening at nvidia now there's very little upside relative to how much money you've already made so at that point a lot of the early people start to leave yeah so they're trying to hire more people it sounds like i heard 70

SPEAKER_288: percent of employees at nvidia are millionaires now that's a crazy number go ahead sec well i was

SPEAKER_185: going to say you know that question that you asked is is really a highly personal question because you

SPEAKER_89: could think that open ai is a great company that's going to be worth a trillion dollars in the future

SPEAKER_87: sure but it still makes sense for you to take chips off the table because 100 of your net worth

SPEAKER_176: is in that one company so well let me ask it that way you got 90 of your net worth in nvidia i'm

SPEAKER_00: sorry 90 of your net worth you're a person at uh open eye sitting on 10 million dollars in shares do you sell half all what would you do personally sex i would take some chips off the table i don't

SPEAKER_299: if you were first if you're like this is 90 your net worth 99 you know well i mean you're an insider

SPEAKER_89: so maybe you have a lot of information if you were really bullish on the future of the company maybe you take 10 or 20 of your chips off the table if you're less bullish maybe it is 50 yeah so i don't know i'd be influenced by my perspective on that but i think that you could think it's the greatest company in the world and still it would make sense for you to take some chips off the table because you don't want all your eggs in one basket that's a personal diversification decision and if it was

SPEAKER_61: 120 billion dollar valuation with 3 million in revenue chamoff and you're trading a 40x or whatever it is times next year's revenue let's assume they do 5 billion next year you're still looking at

SPEAKER_66: 30x revenue you would clear i think these multiples are not really what's going to drive their

SPEAKER_68: behavior i think open ai is running a very strategic game plan to become part of the tech establishment as quickly as they can so that they are in the inside looking out as opposed to the outside looking in they were able to add the former head of the nsa to their board of directors yeah what was your take

SPEAKER_240: on that by the way that was interesting people got pretty well it's how it's how you become part of the establishment do you do you think the former head of the nsa no longer has a security clearance or knows people in the nsa no of course not and i think that there is a group of people that want to make sure that these kinds of technologies and capabilities are firmly within the hands of the united states

SPEAKER_71: apparatus and not anybody else and so i think that that pulls them closer to the kinds of folks that could otherwise give them a hard time right or regulate them or etc etc so now what happens is when you have senate hearings about this stuff it's more likely that it's confidential behind closed doors it's under the purview of national security all these things are beneficial to open ai and then secondly they were able to get elon to drop his lawsuit conveniently i think it was like on the same day that the head of the nsa was added to the board of the former head of the nsa so the next logical step is now to create capital markets distribution which is really about syndicating ownership of the company to all the big deep pools of money so that they are also rowing in the same direction in support of open ai and so that's what a lot of people don't get it's not about valuations or this and that this is about creating a high level game theory of how to create an international apparatus that supports your corporate objectives there are a few companies that have done this well and they are now one of them the only thing left is to get shares into the hands of the black rocks the t-rose the all the big mutual fund apparatuses of the world that then syndicate to all the individual investors of the world and you have everything you have government connections you have no real legal overhang then the likelihood that an irs agent all of a sudden decides to audit open

SPEAKER_00: ai is basically zero okay so to summarize bit cynical but you're building an ally base that then makes it harder to investigate the company criticize the company or anything like that

SPEAKER_307: right that's that's essentially i don't think it's i don't think it's cynical it's like a smart

SPEAKER_283: business strategy strategy what's your take on that sex well yeah they're borrowing their way into

David Sacks: the deep state okay i mean they're they're the quid pro quo is we will be your vessel we will be an

SPEAKER_89: arm of the intelligence community of the deep state we'll give you access to whatever it is you're looking for and in exchange you're gonna basically protect us and allow us to get rich and frankly that's the deal that all the big tech companies have made they are all in bed with the intelligence community and we saw this in the twitter files where you know every week for the year before the 2020 election there were meetings between the trust and safety people the censorship division of of twitter and the intelligence community so these people are working arm in arm and basically the big tech companies have given themselves over in a way to this powerful apparatus this you know the the deep state in exchange for you know they're willing to basically give up power in exchange to be left unfettered to make their money i think it's a horrible development for the civil liberties of the

SPEAKER_198: ordinary american but i think that is the reality of what has transpired yeah and the

SPEAKER_61: number of cia former cia former fbi justice department people working at the googles facebook's metas apples of the world is like a very large number i have family as many of you know in law enforcement and in the deep state i guess i should call it sex and they are constantly asking me about

SPEAKER_00: job offers they have from these companies and should which one should they go to this is after they've done tours in afghanistan and you know speaking many different foreign languages and then all of a sudden they secure this incredible you know 3x salary bump by working in big tech so there is something to all of this ilia announced his new startup finally it's called safe super intelligence inc or ssi he uh was obviously an open ai co-founder formerly their chief scientist and co-head of super alignment last month he announced he was resigning from open ai after a decade with the company and you remember he was on the board that helped orchestrate sam waltman's firing um and then he reversed course a few days after and expressed regretting it everybody was asking where's ilia during all of this on twitter the co-founders in ssi include daniel gross a yc partner and pioneer labs co-founder and open ai engineer daniel levy company's goal right now is in the title develop

SPEAKER_176: a safe super intelligence here's what ilia told bloomberg the company is special in that its first product will be the safe super intelligence and it will not do anything else until then friedberg is this super intelligence making safe super intelligence a great business model or is this

SPEAKER_00: something else it's a little bit confusing to come into the market and compete with a throttle or a

SPEAKER_208: governor i guess on your startup at least that's what some people are discussing so what are your

SPEAKER_08: other i have no idea i don't know what these guys are doing have you guys looked at this company i haven't seen anything well i mean we're just basing it on the fourth question yeah okay

SPEAKER_254: okay quick bounce pass to sax sax yeah give us your opinion the uh caveat what i'm about to say

David Sacks: by by by saying that i have not heard the pitch directly for this company i've only read what you've read in in the press that what they're trying to do is the safe super intelligence

SPEAKER_89: and i'm not bullish about that pitch because i think it it makes the company a little bit schizophrenic it's working at cross purposes with itself on the one hand you're a new company which means you're behind you've got to catch up with open ai or google these other companies that now have been creating you know models for years so you've got to move very fast on the other hand you're saying you're going to basically make this very safe well to be frank safety concerns are a brake pedal they don't help you move faster they make you move slower yes it's a governor yeah and in fact i think that this is the main reason why sam altman either kicked these people out of the company or or starve their resources until they left remember that when a bunch of these people people left open ai they said that hey we were originally promised 30 of the computing resources by sam and then he reneged on that promise didn't give us what we needed so they all left well i think that was that wasn't by accident i mean i think that sam wants to win he wants to develop ai as quickly as possible specifically agi and he had this group inside the company that frankly

SPEAKER_323: was a lobby for moving slower so now they have their own startup he's on that group that he kicked

SPEAKER_107: out right and so i don't but i don't think that's the recipe for winning because no you're the guys

SPEAKER_325: who want to move slower it would be like taking the dei group from twitter and having them start a

SPEAKER_107: new twitter well i think that's a little bit harsh because i do think that by all accounts

SPEAKER_89: karpathy is like a top top notch technologist and he's one of the leaders in the space yeah of course i do think that he's going to be hamstrung by his own concerns about safety and i think this is maybe

SPEAKER_107: that the tragic situation is we're going to have this competition by all these different companies to advance ai and the companies that care about safety more than others are going to lose and so you have this darwinian effect going on where there's going to be a race to agi and i think that is

SPEAKER_89: genuinely a little bit scary for where this this all leads us but i tend to think that it's not going to be solved by trying to impose the the safety governor as you said i think maybe the best you can do is impose a truth governor so you know elon says that we're going to make sure that our model at xai the grok model is scrupulously honest it's not going to lie to you and i think maybe that's the

SPEAKER_116: best you can do is is advance ai to be truthful but when you start injecting these other safety concerns i just think it slows you down and hamstrings you i think the best way to hit truth

SPEAKER_328: is to cite your sources i have been putting into and i don't know if you have you played with 4o yet

SPEAKER_00: or claude's new sonnet jamoth yeah have you yeah i mean it is unbelievably good if you put cite your sources it's really starting to understand what you're asking for i don't know if you've seen this but

SPEAKER_176: i was asking it like i'm hiring some positions give me the high low average of this position give me five sources of information put it in a table and then average the high low and median and it came back to me sax with an incredible thread jamoth of this position and then sourced glass

David Friedberg: door you know indeed salary.com whatever it was and uh i was like holy cow this is an hour or two

SPEAKER_68: of researcher work done instantly there's an important insight here that i think people are missing which is that foundational models are quickly becoming a consumer surplus every model is roughly the same they keep getting better and better but they're also approaching these asymptotic returns and what do you do when something approaches an asymptotic return you need to change a key

SPEAKER_71: underlying variable that you use to build these models and it looks like one of those variables that people are looking at is how you basically take the internet not as raw data but then you actually kind of refine it and refine it some more and then use that as the basis of learning and what that does is it drives up model costs to a degree that are probably untenable for most companies except but for a few so i think it was dario amaday the ceo of anthropic who said the cost of a good functional model today is in the billions but you know by 2027 it could easily approach a hundred billion dollars the problem that that represents for ilia's company and i wish him the best of luck but the reality is there isn't a hundred billion dollars for him to have google will find it microsoft will find it facebook will find it amazon is coming out open ai will probably find it amazon will find it but i suspect that these other startups there just isn't that much money going into ai because the returns don't justify it so i think the bigger problem that you have is that it's becoming an arms race it's not dissimilar actually to ride sharing when people saw uber's success they thought well this is simple and it was but you had to subsidize losses for decades before that company was profitable but meanwhile you had to starve all of these other companies that were funded to compete with uber until they ran out of money and died i think that you could make a claim that the ai foundational model market will look similar to that one startup can probably win but there will be a bunch of open source alternatives they're all asymptotically similar and so it's an arms race on cost and compute and i just don't see vcs having the temperament and the wherewithal to fund hundreds of billions of dollars into multiple companies to do them freeberg any thoughts on the

SPEAKER_00: latest models have you played with them i'm curious um i have been having tremendous results there seems like there is i don't know i don't want to say a step function but man it's a lot better right now have you used any of these models and are you applying any of them inside of your company

SPEAKER_08: we're using a lot more models and we're seeing them be very practically applied at the edge so you don't need to have large models running on a large compute cloud to get practical value and this is definitely a big a big point in the industry is that you're getting highly functional application specific models that can be run in a more local environment on the edge so they're not running the cloud on big compute clusters and there's incredible applications in things like machine vision and

SPEAKER_123: control systems you're going to ultimately see this being i don't know if you guys saw that chinese

SPEAKER_08: dog we never talked about this china basically ripped off boston dynamics or at least that's what it looks like and they created this military dog nick can you pull up the clip and then they put machine guns on the back of the dog's back the models are running locally in these devices in fact i think we're going to have a few demonstrations of this at the um at the all-in summit so the robotic applications are pretty powerful machine vision applications are very powerful and when you see this insane video from china by the way this is a totally different topic you guys seen this i have seen

SPEAKER_12: this it's so this thing goes autonomously into a building and it can then find its target and eliminate its target with the machine gun on the back incredible and you can see this becoming like let's say they build a assembly line and they put out 10 million 50 million of these things and these things can now go run autonomously in the field this is the dark side of small highly performative

SPEAKER_08: application specific models running in an embedded way imagine those are amphibious and they could

SPEAKER_176: travel against they could travel across water and wind up in another destination i don't know where

SPEAKER_138: would a beach invasion occur anyway that was a very funky tangential aside all right uh we've talked about microsoft and the bundling issues a number of times here sanks you had a spicy uh take on this

SPEAKER_176: well the eu just charged microsoft with antitrust violations over how it bundles teams their quote

SPEAKER_00: unquote slack killer into office here's a quick chart microsoft teams obviously was bundled everybody has it automatically with office you don't get a choice and they rocketed to 75 million members

SPEAKER_208: in 2020 to slacks 12 million you've obviously got a lot of uh thoughts here i'm sure too as well

SPEAKER_176: jamon since you were the early investor in this looks like salesforce uh just got a big win benioff gave some commentary on x microsoft excels with bundling it's not it's their not so secret

SPEAKER_00: weapon for dominating new markets we know the playbook office plus teams windows plus explorer azure plus visual studio 365 plus onedrive and x plus plus game xbox plus game pass here's a clip of sax

David Sacks: discussing this on episode 113 of your all in podcast if microsoft can basically clone the sort of the the breakthrough innovative product you know let's say they do one every year and then they put a crappy version of that in their bundle yeah 10 20 or 50 worse but they give it away effectively for free as part of the bundle and then they basically pull the legs out from under that other company so it can't be a vibrant competitor and then the next year they'll just raise the price of the bundle right and they've done that with slack they've done that with okta they've done that with zoom can we

SPEAKER_116: have a vibrant tech ecosystem at least in b2b software if microsoft can just keep doing that

SPEAKER_334: indefinitely all right sax you heard your quote there i'm guessing you're not shocked by this action

David Sacks: well i think the eu made the right decision here they basically sided with salesforce who made the complaint and said that microsoft was engaged in illegal bundling by combining microsoft office and

SPEAKER_89: teams and the reality is microsoft office is a product that every company has to have every certainly every enterprise has to have and by bundling it means that that enterprise receives the team's product for free until of course the price of the bundle goes up the next year which it has just about every single year so what that does is when that enterprise is evaluating the choice of do we use teams or do we use slack or for example glue or some other tool teams on the margin appears to be free whereas slack is something you have to pay for seats and i think that is that is a legal bundling you know when you have a monopoly in one product and you systematically use it to keep adding new products that again on the margins appear to be free because you've bundled them and i think the eu has done the right thing here which is push to end the bundling every single product needs to have its own a la carte pricing and when you add together the a la carte prices it should equal the price of the bundle so in other words you don't get anything on the margin for free the customer needs to have the discretion to choose what it wants if we don't do that i do think that microsoft will use the power of the bundle to systematically dominate enterprise software and they won't take on everybody at once but like i said they'll every year they'll add a new product to the bundle what's the uh what's the middle ground

SPEAKER_176: here between the interest of consumers which is hey i'm getting free a free version of slack

SPEAKER_107: it's not free it appears to be free on the margins because it's now part of the bundle but then they

SPEAKER_352: raise the price of the bundle the next year correct they boil the frog so so once they killed once they

SPEAKER_89: pulled the legs out pull the rug out from under their competition and that competitor is no longer

SPEAKER_116: viable now they can raise the price of the bundle okay and so it's kind of like dumping in a way i mean this is a very old antitrust argument when you would dump product in the market to kill a

SPEAKER_351: competitor or you would price under your cost to kill a competitor right yeah you dump to basically

David Sacks: drive a competitor out of business because there's large cost of entry there's large capex required

SPEAKER_89: to create a new competitor and um and this is this is basically what they're doing is they appear to give you they appear to give you the the slack clone or whatever for free but then once they uh pull the

SPEAKER_176: the rug out they'll increase the price of the bundle what's the balance here between say

SPEAKER_00: i don't know apple giving away a free note pay note taking app or a free journaling app to consumers and hey consumers get this benefit of free product uh versus the bundling concept here with hey we'll give us you for free but eventually we're gonna boil the frog what's your thought of how to adjudicate this or to execute on it uh microsoft in the best interest of consumers microsoft has been bundling to

SPEAKER_68: bundling products to kill competitors for 40 years the the 10 years that they didn't do it was the 10 years when steve balmer was in charge during which there was a legal document between microsoft and the justice department a consent decree that prevented them from doing it that consent decree came to be because of this exact strategy and the most famous example that was the tail end of that process was when they used internet explorer and they bundled it with uh microsoft windows and they killed netscape right so there there's umpteen examples of this so i think that they've gone back to their old playbook it's a playbook that you have to remember the executives that run microsoft have been there for 30 and 40 years they know this play and they know that it works and they've been rewarded incredibly handsomely by the public markets so they're going to keep doing it would slack have sold to salesforce now look i'm not complaining it was a 27 billion dollar acquisition but the question is if it

SPEAKER_71: were allowed to compete feature for feature could it have beat teams possibly would the board have made and i was on the board of slack a decision to have tried possibly but none of those options were on the table because when you see a product it doesn't matter how inferior it is get bundled in it's kind of doa and then you know you're on a melting iceberg and so you have to make a very quick decision to preserve enterprise value so i think what this comes down to is the the fdc and the doj need to dust off that old consent decree read it and figure out whether this makes sense again

SPEAKER_131: it seems like folks in the eu have more recently read that consent decree than american regulators have

SPEAKER_89: look what we've said all along is that the right approach to antitrust is to stop anti-competitive tactics bundling is at the top of the list instead what they've stopped is all mna which is actually bad for the ecosystem because you you deny risk capital or reward and you need that reward in order to induce the next stage of risk taking so again i think this was a good decision by the eu regulators and the competition authorities in the us should actually be looking to this again it's a better

SPEAKER_176: approach than stifling mna you are so right on this we're so aligned if you look at i've been talking to a lot of lps and in talking to them they're looking at corporate credit and p e deals because they can get a return on those and then they're looking at venture and they're saying hey why is there no m a occurring where's our dpi can you guys sell some of these companies it's like yeah we can't sell them because lena khan's gonna scuttle this m a and what that means is in a very real way we have dollars being taken out of innovation in early stage and being put into you know privatizing

SPEAKER_138: sas companies whatever real estate deals and this is really dangerous for america we really need

SPEAKER_290: more of this okay i'll make one last wrap on this topic i'll take the other side of bundling

SPEAKER_08: oh here we go i think ultimately if bundling benefits the consumer or the customer from improved prices i don't buy the antitrust arguments on a lot of these cases i don't think that you're keeping competitive solutions in the market if the benefit if the benefit of the lower cost product is actually there for the consumer the customer supermarkets for example do this right so there's a lot of products in the supermarket like peanut butter milk eggs that have historically been big loss

SPEAKER_295: leaders because they get people in the store once they get in the store they're not monopolies they're effectively peanut butter is not a monopoly monopoly monopoly it's fine to bundle

SPEAKER_107: commodities but when when a product is a monopoly and every enterprise have finite shelf lives

SPEAKER_12: right so you're talking about one week and teams is not a monopoly right when you install it in

SPEAKER_372: microsoft offices and 365 is versus you can't rip it out you can't rip it out there are other options you have options there's plenty of options and the whole benefit of sass is that you can

SPEAKER_12: switch all the time market power of course they do i can switch to google docs and save money but in the enterprise i don't have to buy it i don't have to buy enterprise seat licenses for office i can buy google docs s and b's think that way but enterprises enterprises enterprises don't think that way yeah i mean you have every option to google's competing effectively in the office space against microsoft office you have to look as the duo zoom is competing effectively against teams

SPEAKER_384: like none of these businesses have a monopoly yeah zoom i would i would argue is getting

SPEAKER_224: look once they put teams in the bundle slack stopped growing what's the monopolistic lock-in

SPEAKER_372: the amazing thing about sass is that there's no switching cost there's no switching cost what

SPEAKER_68: i don't think we're debating that i think what we're debating is the sales practice where microsoft says well you need office you need windows and you need 365 or sorry active directory well if you'd

SPEAKER_71: like all of these things we're going to give you this product for free as well and they're going to be tightly integrated then when you go to slack you have to pay more and then you think to yourself well how do i go back to my cfo and say i need an extra 1.2 million dollars a year for this enterprise license to slack and then people say well that's my point you're saving money if you stick with microsoft

SPEAKER_389: they're giving you a discount because once they kill slack they'll just raise the price of the bundle

SPEAKER_372: that's the point that's a theory and if that's true that should be prosecuted i don't think that

SPEAKER_132: the is under the microsoft internet action yeah but that's the violating action that's my point

SPEAKER_392: why can't you just make microsoft the idea of having a bundle should not be a violating action

SPEAKER_107: no all microsoft has to do is they've got a price of the bundle allocate that price across all the components of the bundle so people can buy each product a la carte that's all they can still they can

SPEAKER_12: a bundled offering if at the end of the day that sum is cheaper than you buying the alternative a la carte from third-party vendors that is a great deal for you as a customer it can be cheaper yeah

SPEAKER_372: but what we're talking about here is proactively keeping competition and that and i think that

SPEAKER_397: creates a good competitive dynamic but you know maybe i'm thinking two first principles on this i

SPEAKER_71: think you're missing something here freeberg which is like what happens then when let's just say slack there wasn't a suitor for slack okay let's take the internet browser example because i think it's better if you didn't have a multi-hundred billion dollar company prop up a product because they just felt like it i.e chrome and google you would have had microsoft run away with the core interface for the internet we don't know how that would have turned out so by luck we've had some modicum of consumer choice but it's not as if firefox did well firefox went to basically irrelevancy netscape went to zero so there are examples where when microsoft has done this they can starve the market of choice over long periods of time and i think if you hold on hold on a second so if you're if you're

SPEAKER_169: if your whole point is well let's just bet on the largesse of other large companies that's a bad bet

SPEAKER_12: but i will show you multiple counter examples google meat does not dominate market share again you're

SPEAKER_131: talking about the largest you're talking about the largest of companies you're talking

SPEAKER_71: not about competitive practices find me venture funded people risk-taking people who need a return on investment google is the worst example they have the most indiscriminate forms of spending i'm not saying that they shouldn't be allowed to i'm sorry they're just trying counter example to the point

SPEAKER_12: about bundling no that's not a counter example because when you have google wave or any of these other nonsense products that didn't work i think i'm not calling google me the point of a healthy product

SPEAKER_71: environment and market is not that one incumbent and another incumbent can create their own crappy

Chamath Palihapitiya: versions it's that you could theoretically have an open market where somebody can be funded with nominal

SPEAKER_71: amounts of capital and compete effectively that isn't possible in many markets in software because

SPEAKER_169: of these kinds of strategies so what you're reduced to are these huge companies with this product sprawl i don't think those are good products and i think we're lying to ourselves to say that they are google meet is a terrible product okay so whatever they're competing with is a terrible alternative

SPEAKER_407: that's my point and and they've lost market share they have not won market share by bundling

SPEAKER_73: and if you try to find a real competitor to build an alternative to it they're not able to get funded because the venture investor says no i can't and that's the market power that stifles competition

SPEAKER_12: that's what this is about and if you as an entrepreneur come up with a much better product than google meet a vc will say wow we can go and blow up the side of the hull of that ship i totally disagree with you i don't think there's a single person microsoft bought skype how many

SPEAKER_132: years ago for eight and a half billion dollars and then zoom unchecked if left unchecked microsoft

SPEAKER_126: will i mean zoom is a standalone unbundled product and they totally dominated the market

SPEAKER_00: while everyone else has been doing bundling the bottom line is if left unchecked you will see people abuse this it is not a big ass to have a la carte pricing and that will make the playing field yeah and

SPEAKER_71: also the zoom example is a terror the zoom example is a terrible one and and the reason is that pnl would have a hole blown on the side of it if they did not have 90 of their r d and opex in china so but for the grace of god and eric strategic thinking they were able to survive but that is a perfect example of a company that would absolutely not have existed had they not had a labor arbitrage

SPEAKER_73: that is not the basis of a competitive and fair market and you cannot expect people going off to all far corners of the world and trying to do all these gymnastics to viably compete against the

SPEAKER_12: microsoft and a google i would argue adobe adobe has a bundling solution they if you guys have ever tried to sign up for adobe or end your subscription it's nearly impossible yeah they just had action taken against them for that they've got these insane practices they make you buy everything to get access

SPEAKER_405: to one thing well look what they did comes along and sigma sigma kills the market they come in and they're like we're a better product better markets do win even with bundling that's my right i think the

SPEAKER_71: interesting thing with adobe is that they have a product suite that's used in a narrow field i think what sax is saying is adobe is about a sort of vertical system of record i think what the thing about microsoft and you could probably say about google is but less so but definitely for microsoft is they are these very horizontal broad amorphous systems of record that you cannot easily replace there aren't people running around building nine of the 19 things that microsoft gives you in the bundle

David Sacks: that's the problem okay well the debate continues i mean on this very show we are arguing that the figma acquisition should go through because it created a new market for web designers whereas

SPEAKER_08: photoshop was basically for graphic designers it doesn't compete with photoshop it competes with some of their other design programs but that's anyway all right we're not going to settle it here and

SPEAKER_89: there's a difference between a bundle and a suite suites are okay bundling when you already have a

SPEAKER_70: monopoly in the relevant part of the bundling is when you take a wrench and a can of peanut butter

SPEAKER_169: and put them together here you're going to take them both you're like well i only need the wrench well you're going to take the peanut butter and they're like well i already have peanut butter so i

SPEAKER_00: don't need to buy new peanut butter i mean we saw this in the cable providers and direct tv as well you know just you can only works if you're a monopoly for espn and if you don't like sports all right listen another amazing episode four compassionate chamath satire sax and the frank satire sax wants to say one more thing i just have a perfect wrap up okay satire sax go ahead what's your

SPEAKER_87: here we go satire no let's put this uh tweet by joe biden president biden oh god is he elder abuse no i want to i want to compliment joe biden on continuing to fight you keep fighting joe do not

SPEAKER_89: let the media get you down one bad night is not a reason to get out of the race

SPEAKER_87: all these people stabbing you in the back they're basically ingrates and backstabbers

SPEAKER_176: you're doing just fine all right and from candidates and from candid calacanis to the democratic party disgrace your disgrace what you did to the american people with this rope and dope is ridiculous

David Friedberg: 25th amendment get this guy out of office president kamala hot swap it dean phillips

SPEAKER_454: let's go we'll see you all next time on the all in podcast love you boys

SPEAKER_457: we'll let your winners run brain man david sacks we open source it to the fans

SPEAKER_466: love you