SPEAKER_01: what the f what are you wearing jason what oh uber had a big week so this is the uber montclair crossover hat oh look at that and i also bought a montclair shirt you bought that or i sent it to

SPEAKER_03: you oh what you got the watch and the mug oh you don't know about the apple montclair watch

SPEAKER_05: or the commemorative mug or the new tack you don't know about the new neck tats that are

SPEAKER_13: coming from montclair oh my god oh so good let's just say somebody got their beak wet i'm not saying

SPEAKER_04: that i got a hundred thousand dollar sponsorship but we don't have a rule in the agreement about

SPEAKER_18: logo placement do we listen jacal if anyone was willing to sponsor you every square inch your clothing would be covered in ads like a race car driver it is look you'd be like wearing a jumpsuit

SPEAKER_10: every day these you know montclair sponsorships are great this is five five dollars plus 17

SPEAKER_23: dollars of shipping from france on its etsy i'm ready to go how was everyone's week what did you

SPEAKER_35: guys do this week uh just busy working um trying to be helpful where i can uh and that'll be the

SPEAKER_39: extent of my comments today how is market street this time of year look there's all sorts of wild

SPEAKER_42: report i've gotten all sorts of inbound from people asking me if i'm like leaving craft ventures to do something at twitter no it's not true we're just jason and i are just pitching in and helping out

SPEAKER_46: while elon establishes his permanent team at that company elon's the ceo he's running it he's the decider he's making the decisions and that some of us are just kind of helping out in any way we can and that's really the extent of it it's a you know very much part-time thing we're just helping a

SPEAKER_47: friend uh but it's been like blown up by the media into something much more than it actually is

SPEAKER_50: it is a hundred percent accurate i am still doing my day job podcasting investing in 100 companies a year just helping out on the margins that's it the end i do want to try talking about one issue that's

SPEAKER_46: already public because it's already been tweeted so elon had a tweet this morning about how there's now like an advertiser boycott going on and this falls on the heels of a bunch of reports that came out over the last couple of days that supposedly there's been a big influx of like racist tweets and jason i actually saw what was really going on which was it's all not true i mean what happened is that within hours of elon taking over the company on friday there was a 4chan attack where basically people from this message board created bots to post hundreds of thousands of spam messages that contained racist words and epithets and within hours this has been detected and yoel who runs the the trust and safety implementation he met with me and jason and elon directed him to shut it down and he yoel actually posted a tweet somewhere about it that's the only reason i feel comfortable talking about it is because you already posted the tweet storm but maybe people don't haven't seen it or they haven't connected all the dots here but what's really i think unfair about this is that as you have you seen it's not like your feed was all of a sudden filled with racist things these were spam accounts or bot accounts that were posting to zero followers they generally have zero followers or if they do have followers it's other bot accounts right so they're posting racist tweets into the ether so to speak it's not degrading anyone's experience it was shut down promptly but then what happens is these activist groups they're monitoring the fire hose right and so they publish a report saying that racist tweets have gone up 500 since elon took over twitter the truth is elon hasn't even had a chance to change anything about the content moderation policies he's posted that like guys i haven't even i haven't changed anything about content moderation whatever the rules are they're the same rules that existed prior to him taking over and this is just an organized operation by people who want to create that report so then these activist groups basically publish this report they feed it to news outlets and then somebody then takes those reports and then feeds them to advertisers and you get a boycott but i think the point here is that elon didn't do this this is being manufactured by people who are not operating in good faith they are trying to manufacture

David Sacks: an incident that they can then use to hurt the company yeah and it was thwarted immediately and fixed

SPEAKER_58: have you guys seen episode 333 of the lex friedman podcast he um he interviews andre carpathy who

SPEAKER_59: is really i mean one of the great minds of our of our time particularly around ai and ml and the question

SPEAKER_60: that lex asked which andre expounded on which i think is really interesting is what is the next

SPEAKER_59: generation of bots look like and i think where the problem gets very hard for all platforms so this is

SPEAKER_62: not a twitter twitter specific discussion is that you can now generate such real lifelike human images that

SPEAKER_60: are unique and you can also generate high quality text to things like gpt3 that's also you know that can essentially push the boundaries of you know a low level turing test i think the real problem over time for bots for spam for coordinated attacks on any platform is that when you use these tools you're going to have to become very sophisticated in how you try to detect them and then to block them it's

SPEAKER_68: a really interesting discussion between you know two pretty meaningfully smart people kropathy was

SPEAKER_69: the head of uh autopilot at tesla right autopilot vision yeah so he's really smart yeah i have no doubt

SPEAKER_42: that elon is going to do a much better job stopping bots on twitter once he has a chance to do it because he's got this amazing team of ai engineers and and he's just gonna be more focused on it you

SPEAKER_73: know what i like the most about about what i heard this week is the idea that you can do either micro

SPEAKER_74: payments or subscription to third-party content providers because i think so much of my news feed is delivered to me through the twitter app and then i click on a on an article and then it's like a paywall or it's some sort of difficulty in kind of accessing the content having some integration there or some ability to kind of make a micro purchase to read an article is going to be i think a super feature the

SPEAKER_75: other thing that i would love twitter to experiment with is if you have a micropayments model to

SPEAKER_62: publishers it would be great if you could publish content without a byline allow the economist and see

SPEAKER_60: what that does to uh information quality right you know if you if you if you do not get any credit to your individual name for writing stuff but instead it goes to the masthead publication whatever it is the times the post i think you could have a really important behavior change in how

SPEAKER_62: journalists cover the news it's worth experimenting with at least and if you're paying them enough money i think that you could probably demand that facebook could probably demand that today

SPEAKER_44: you know strip the byline away and just it just says new york times just like today it just says

SPEAKER_82: the economist yeah it is a um the economist is a very polarizing gig in journalism for that reason

SPEAKER_84: there are going to be actually a lot of journalists who would prefer to have their byline taken off one of the problems with journalism today is even if you're doing reporting in good faith jamoth and you put your byline on there harassment you know threats etc can become very acute if you're just covering certain topics and so i actually think a lot of you know writers and journalists would opt into this

SPEAKER_86: they might prefer it i think they should because i think the two ends of the spectrum are better than

SPEAKER_62: this you know gross middle that we have the end of this one end of the spectrum is you have the new york times the washington post and the economist with no byline and no attribution to reporters the other end is if you want to build a brand that's based on your name go start a substack and i think that there's a very good balance there and the new york times could syndicate that as

SPEAKER_60: well but if you separate the two all of a sudden the news becomes more likely to be truthful news versus you know well disguised opinion the the other issue is you know for readers if you do choose to

SPEAKER_84: do a no byline publication you're really going to need time to build trust and for people to understand what you're doing because they will think you're taking the byline off in order to pursue a certain agenda right so that is the the that is the suspicion that can build up the economist has been able to do this over decades with trusted reporting yeah and substack proves that you can have no reputation

SPEAKER_62: whatsoever and if you're publishing great content you can build a great business from scratch so you know you don't need to you don't need to pay your dues quote unquote by getting a byline at the new york times to be a clever writer you can start that business today and get paid so i think the new york times should just focus on being the new york times and substack should focus on individual

SPEAKER_60: people and i think if you could clean up the middle that would be much better for all of us anyways i'm excited for you guys to help out and pitch in i hope you guys do some good with it i'd love to

SPEAKER_94: come back and use twitter more often can we talk about the reporting that happened with the two guys

SPEAKER_74: that trolled the journalists and pretended to be fired employees because i actually thought that was such an interesting moment this week that all the journalists immediately parroted it because it fed their narrative but there was no checking done there was no reporting done and then several of them including i think deirdre bosa from cnbc came out and publicly apologized for that report and if folks uh listening aren't familiar with what happened these two guys came out they pretended to be fired twitter employees on monday walked out with a box oh what's funnier and they were like hey we just got fired it's terrible life is awful no it's even worse husband and wife you know the guy's

SPEAKER_60: name was one guy's name was rahul ligma and the other guy's name was like mike johnson so the whole thing was ligma johnson so i now here's what's so funny about due diligence hold on i read this story without giving away that punch line to my kids all my kids immediately started howling they're like

SPEAKER_100: dad if you say these two names are ligma johnson and i was like oh my god and so you know when when like you know pre-teens can figure this out but the journalism industry could not it's kind of a

SPEAKER_104: very telling sign freeberg made the key observation which is they didn't figure it out because they didn't want to because it fit their narrative so they don't they don't fact check things that

SPEAKER_105: fit their narrative this was my point about journalism i it just it was so poignant to me

SPEAKER_74: this week when this happened particularly as it relates to twitter and the importance of call it open journalism or citizen journalism and the integrity of kind of you know of the voices that we all kind of trust as our kind of journalistic authorities that these guys came out and they were conned right outside twitter's offices into telling a story that fit their sensational narrative and

SPEAKER_46: it was really a kind of poignant moment for me would you remember that story i think it was originally in rolling stone and then rachel maddow amplified it where it was in oklahoma city where supposedly all these mega republicans were eating horse paste because trump told him to and they were and this is basically they thought it was like a covet therapy and then they were going to the emergency rooms of all the hospitals and then they were turning away heart attack victims because there are so many of these these people going to the emergency room anyway it all turned out to be like a made-up story like a hoax but the media reported it because the story was too good

SPEAKER_106: right it just it fit too many of their preconceptions too many there's also one there's another vector sex

SPEAKER_84: which is live coverage is um you know you really have to be careful because when doing live people will call in and say oh they're at the scene of an accident and then they will do a baba buoy or whatever you know kind of charades and so without fact checking and without saying hey we haven't confirmed this yet but these two employees are claiming this people want to get real-time coverage it's fine to do real-time coverage i think everybody in the audience has to understand so

SPEAKER_60: much credit what about the editor there was a picture and it said ligma johnson

SPEAKER_114: that was the worst one no that is so lazy why are you covering for these people i'm not covering i'm

SPEAKER_112: just trying to explain it no you're missing you let me unpack the whole point let me unpack the whole

SPEAKER_20: point there's also you interrupted me well here's the thing there there is a different standard for live news coverage and then there we've ripped out fact checking from a lot of these publications and basic fact checking and a little bit of time i'm explaining why they make this mistake i'm not protecting them you want to know the reason they make it that that's part of it but they've also ripped out fact checking and then they are in such a race to get the clicks on social media no no here's

SPEAKER_106: what's going on if the story fits their priors they run with it immediately and they don't do any fact checking because they don't want to know that it's not true that's what's going on there is an element of that yes a story if it's a narrative they don't like because they're gonna make they're

SPEAKER_125: gonna try and make sure it's not true yeah that's true of both sides and they'll use this thing

SPEAKER_00: there's only one mainstream media this is the mainstream media who's the alternative what's the

SPEAKER_126: alternative sub-stack fox is uh the the number one network the alternative to the mainstream media

SPEAKER_129: is by the way you think sub-stack journalists do this tell me the writer tell me the writer on

SPEAKER_130: sub-stack well there's a lot of different ones there so who got fooled what sub-stack writer got

SPEAKER_133: fooled by ligma johnson okay no seriously glenn greenwald i'm not defending it i'm not defending

SPEAKER_135: it i'm explaining matt taibbi get fooled by ligma johnson i don't think so i'm not defending it don't

SPEAKER_139: make me defend ligma i'm not defending you're both sizing it i'm not both sizing it i'm telling you what

SPEAKER_84: is happening in journalism today they have ripped out fact checking and they are in a race to beat each other because the first person to get the story up gets clicks that's a dysfunctional thing they tried to

SPEAKER_143: create a story when there was no story there they agree with that as well they went and camped out

SPEAKER_74: outside of an office mid-market street yes and they said hey there's this sensational thing happening and there was no sensational thing happening correct and so the little drop that fell into their laps the little thing that fell into their laps became the story because that's the story they wanted to see created there was no story beforehand that then that there were all these people being fired walking out with boxes and then they said let's go send live tv producers down there they sent the live tv producers down there they they did the same thing manifest they they did the same thing in new

SPEAKER_116: york at bear stearns story to cover and when they had other major layoffs at bear stearns and stuff

SPEAKER_84: like that during the financial crisis of course they sent people to do live coverage they're not

SPEAKER_20: defending it i'm just explaining to you what's going on in the background as well with live tv and and and the gutting of newsrooms and having no fact checking a lot of these stories go out but what about

SPEAKER_153: the 20 years ago they used to have cocky check my 11 year olds and 10 year old the copy editors are better copy editors than these adults at these it's crazy incredible publications my kids started howling they

SPEAKER_59: were like dad do you understand what you just said it'll lick my job i mean also i mean come on this

SPEAKER_156: is like prepubescent humor that these people fell for it's it's ridiculous it's embarrassing it's

SPEAKER_46: certainly embarrassing yeah it is embarrassing and this connects with the 4chan board it's the same problem this is a grievance industrial complex right they're manufacturing grievances it's funny in the case of ligma johnson it's not funny in the case of the 4chan board but these are people who are

SPEAKER_129: inventing stories because there's a certain manipulate media yeah to manipulate media because

SPEAKER_103: they know it's so easy to manipulate the media right anyways big shout out to rahul ligma that was a

SPEAKER_164: great stunt also happens to be a huge fan of the all-in podcast apparently sir he's welcome on as a

SPEAKER_35: bestie gusty anytime he wants oh no well definitely not please well played all right we should talk about

SPEAKER_84: layoffs and tech lift 13 percent riff 700 employees like our yesterday stripe 14 percent riff a thousand employees open door chime dapper labs all hundreds of employees open door the most significant there are

SPEAKER_169: 550 18 percent dapper 22 percent uh and twitter we'll see what the riff winds up being but that's occurring

SPEAKER_60: as we're taping here so and then jason apple did a pause amazon did a pause right and google and facebook

SPEAKER_84: hiring have yeah maybe trying maybe signaling a pause but haven't they've been hiring like in absolutely

SPEAKER_69: uh and in crazy crazy pace and we'll pull up the chart here actually it's instructive to look at facebook and google because they have not slowed down by any stretch of the imagination just by the raw numbers uh this all started to peak in june and now is starting up again so there's a website uh layoffs.fyi that's been tracking all these layoffs you can see the number of layoffs these are kind of major layoffs and the number of employees impacted been pretty consistent in the third quarter it started to die down in september from the peak in may and june and now this is going to be picking up right yeah it feels like

SPEAKER_43: this is the double dip we were talking about i think this is the beginning this is not even unpack

SPEAKER_60: it well i think that we had if you take a very balanced view of what happened this week you have to start i think with the federal reserve and really what they said is rates will probably be higher than all of you think and they'll be higher for longer than all of you want and again without debating whether you know that's going to come to pass or not the thing that you can

SPEAKER_62: do is you can build a little sensitivity model to understand the mathematical implication of it and basically what it means is that the dollar that's right in front of you is now meaningfully more important than the dollar that's far far away from you so let's just assume

SPEAKER_60: that you know the fed funds rate goes to five and a half percent or so even five let's let's let's go to the optimists and say it's only going to go to five tech companies have to achieve 500 basis points above that minimum so we all have to generate 10 to 11 percent returns for us to be on a risk

SPEAKER_62: adjusted basis better than a government bond the problem with that is all of a sudden you know if you're trying to generate cash even three or four years from now it's not worth that much you need to generate dollars today and so you know they are really reprioritizing the value of short-term profits and that's going to affect how companies get money the cost of capital so how much dilution you have to take so i think this is what companies are now bearing down for they're realizing oh man i need to get my cost structure way in line it is way better now just to put think about this contrast it's way better to grow at 20 and be profitable than it is to grow at 100 and burn money because it's not clear where that second company is going to get the incremental dollars they need for growth and that's just the mathematical realization when rates are five percent risk-free rates are five percent so i think this

SPEAKER_73: is this is that moment where you see that pivot from pivot growth to profit yeah yep you know we can

SPEAKER_74: talk we've been talking about it for six months but this is this is this is how it is manifest in silicon valley companies is of scale is through layoffs and cost reductions and cost savings so the investments in future growth are reduced and the timeline to drive greater profits is improved i think what if what elon is going to do at twitter or what is reported so this is nothing to do with anything anyone told me just what i've read in the reporting is accurate that he's going to cut so deep he's going to cut 30 40 50 potentially of the employee base it really sets a new standard for how profitable a tech company can get and again i'll give credit to a twitter poster named post market who i didn't give credit to a few weeks ago when i read this tweet which i think was a good one which was that elon's really going to show everyone just how profitable these tech companies can be just how lean they can be run and you know when you're doing a 10 riff or a 13 riff you may or may not even be getting to profitability with that riff when you cut 30 40 50 deep and you can actually turn a real profit on a business an enterprise scale business like a twitter or like many other enterprise software companies that are out there right now it really kind of sets a new standard that a lot of folks might then end up saying you know what maybe we should go deeper and there could be the case that private equity firms take a look at this and there's a lot of these distressed mid cap and small cap software companies out there that private equity firms now realize wow you don't actually need 50 of the workforce in order to keep the product running and to drive to profitability and you could see a bit of a flurry of buyout activity as more folks come in and maybe try and mimic the elon playbook so you know that's one kind of prediction i think may arise if elon is successful in making twitter a much more profitable enterprise it could set a new model that catalyzes a lot of other m a activity a lot of other buyout activity of these distressed small and mid-cap companies uh by uh by other actors

SPEAKER_60: can i build on what you're saying nick could you please just throw up that tweet that i sent just for all of these guys to look at because i think it's incredible so to your point this is an incredible slide this is an incredible slide and essentially what it shows for those folks that are not watching this on youtube is it essentially shows the private software universe and then the public software universe at different levels of valuation so as an example right now there are 15 companies private companies that are valued greater than 10 billion dollars and there are 40 public ones that are valued greater than 10 billion there are 50 companies between you know more than 5 billion but only 60

SPEAKER_62: that are public that are valued more than five and here's what's crazy there are 400 companies who have an average valuation of 3 billion and then there are already 70 companies in the public markets where they have a billion dollars of next 12 months of revenue and it just goes to show you to your point freeberg if these folks have to generate an 11 percent hurdle rate their cost of capital is 11

SPEAKER_60: the companies on the left will have to go through a lot of very difficult cost cutting potentially head

SPEAKER_62: count reductions you know repricing of the product all kinds of things and many of them have yeah no not none of them have oh of these many of these are on the left tracker yeah on the left right 400 and there there's almost 500 companies here that have to do an enormous amount of work so that they have a chance to be on the right hand side of this chart the the point is that you didn't have to do this when rates

SPEAKER_59: were zero there was just an abundance of free money and risk seeking and duration that is now out of the

SPEAKER_74: market jimoth i think there's also a story that of the 200 companies that are software public software companies that you see on the right some number of them will need to go private in order to do the restructuring that the market is demanding that they do in order to get rightly valued and to your

SPEAKER_100: point it will happen at meaningfully lower valuations than where they probably went public or their last

SPEAKER_74: private round which will put you guys as you guys look at these 200 companies yeah as you guys look at these 200 companies on the right how many of them do you think go private over the next 18 months

SPEAKER_62: to get restructured all uh what ilan is showing everyone is possible twitter 18 is 18 months is hard to predict but to your point freeberg i think if you look at the number of them that are unprofitable at least half of them will have difficulty and about so i think about two-thirds of these companies really have no line of sight to profitability in the next two to three years and again if you if you layer in this cost of capital argument all of those companies david will have to raise money at very

SPEAKER_60: egregious terms in order to keep themselves going as a public business in which case their alternative is to go private in a pe transaction so it's probably at least half these businesses i mean it's a lot

SPEAKER_197: you think there's a hundred pe deals to be done yeah 100 buy out wow sex what do you think because you

SPEAKER_74: know these businesses and the models i mean some of them it's hard to get profitable if you're a scaling sas business right like you have to get to a certain scale before it's possible well i i don't

SPEAKER_200: i don't that's like a very specific question of like how many of them are going to get acquired by pe

SPEAKER_46: firms versus going public or going private after being public that's that's like a very specific question i think the larger point is just that it feels to me like the economy's headed off a cliff right now i mean i can tell you within our larger portfolio of companies like i can see the trajectory so after q1 board meetings i would say about two-thirds of portfolio companies were hitting their numbers and one-third were missing and it still appeared to be like problems related to those specific companies not a macro trend i would say after q2 board meetings two-thirds were missing and one-third were hitting their numbers and you could start to feel okay maybe there's like a macro trend here and i would say after q3 board meetings like now the entire portfolio is is re-forecasting um maybe there's like a handful of companies here or there that aren't if you're one of those congratulations but like even the best companies our portfolio now are seeing major headwinds and this is just i think an economy-wide slowdown do you think there's

SPEAKER_201: restructuring possible i mean can these companies they're gonna have yeah because let me just ask in

SPEAKER_74: the public markets do you think those public companies can get restructured as public companies

SPEAKER_60: in order to yeah yes yes well yes of course it's extremely expensive well it's expensive i don't even think it's will i think it's just expensive yeah like look at coinbase as an example like look take coinbase versus carvana right these are both businesses that issued

SPEAKER_62: convertible debt sort of right before things got very very hard and if you look at where their convertible debt trades it's trading basically at an implied yield of about 12 or 13 percent both companies now one is probably you know a legitimate bankruptcy risk which is carvana that's what the market would think whereas the other one you know i think it has a very fortified balance sheet and could weather the storm coinbase but unfortunately in a moment where you know rates are again the risk-free rate goes to five five and a half our cost of capital to do business goes to 10 or 11 these guys have to pay 12 or 13 percent my gosh it's really really dilutive to be in business right now so it just goes to show you that you can stay public but if you want to get incremental money to cover your burn the only way you can do it without really you know blowing up your cap table and doing a massive recap will be through convertible debt but it has a huge overhang and you risk turning the keys over to the debt holders of the company so the alternative for that business is to go into the hands of private equity and get out of the spotlight of these public markets but public

SPEAKER_60: private equity is very smart and the thing that's happened to them is they can't raise debt right so what do you think they do they just have to pay 50 percent less than what they would be willing to pay before because they have to write you know 100 equity check so right there is no free lunch

SPEAKER_62: anymore i think is the big is the big point to to point out anywhere in the market right now i think

SPEAKER_74: one of the things i'm most concerned about or would be is i was talking with a friend who works at a private you know unicorn software company and he we talked about the the numbers of the business and i was like oh that company's probably worth x and i gave them a number and then i asked him how much money they've raised and they've raised more than x so i was like dude your options are worthless like you know this is a real problem i think that's probably going to become very systemic for scaled unicorn software companies what happens to these businesses sacks in the market you know as they kind of need another round but the value of the company is now less than the total cash that they've raised that all is sitting as preferred stock listen it's it's survival

SPEAKER_42: of the quickest those who are most willing to adapt the most quickly are going to survive and the ones

SPEAKER_46: that are stubborn and refuse to accept the new regime the market regime are going to die we showed that chart remember that chart from sequoia months ago on this podcast remember that where it basically showed what happens if you're a company that doesn't cut burn until the very end then you're still gonna run out money and die but if you make the cut right away quickly you have enough runway to weather the storm and i think that what we've seen is you know at my firm craft yeah this is exactly it yeah we showed this months ago we've been begging our founders to embrace this we did a portfolio a review with our entire um set of founders of our portfolio companies we did one in february when we felt the markets were changing and we did another one in may and we showed the slide and this is the most important thing for founders to internalize is you have to make the changes quickly you know one way for them to think about it is let's say you're a unicorn company okay and you raised at the peak let's say second half of 2021 you raise 100 million dollars at a billion dollar valuation and let's say you've got 50 million left in the bank right so you've burned 50 million a lot of these founders are thinking that 50 million they've got left is only five percent dilution but that's what it was historically if you

SPEAKER_215: were to raise a new round today you might only be valued at 250 so that 50 million you have left is actually 20 percent dilution and that's if you could even raise which might be very very hard the most important thing founders can do is forget about the historical terms on which you raise that money forget about how much money you were burning in the past just think about how much money you have in the bank today impute a valuation to it so you really internalize how much dilution that money

SPEAKER_106: represents and then create a new plan moving forward to preserve that cash as long as possible can i say

SPEAKER_75: something else quickly on top of this that's i think that's really good advice the thing that again

SPEAKER_62: people should do is you should just build a little spreadsheet for yourself to understand what the alternative financing options are for people who are in the business of investing so david to your point the current three-month t-bill rate is four percent you know you can buy munis now between four and five percent that are that that are triple tax advantaged right you can buy uh high quality corporate bonds

SPEAKER_220: that are six seven eight percent and so you can buy stocks that have a dividend yield of five percent of growth growing market leading growing and so all of a sudden dividend yield exactly and so all of a sudden

SPEAKER_62: like turning around and giving it to a company where there is no end in sight in terms of it doesn't get you to profitability is a really really hard thing to do i was talking to an entrepreneur david soloff just

SPEAKER_60: yesterday and he said it really well he's like listen you know i'm not a macro economist i'm not

SPEAKER_62: trying to forecast but he's like what i understood yesterday this is david talking about the fed as an entrepreneur the angle of attack has changed the fed has said this is not going to be some triangle sawtooth it's not going to go up sharply and then come back down sharply which is what we would all want if we wanted things to get back to normal sooner the angle of attack is now a little bit slower which means it's going to take longer to get where we need to be and then we're going to stay there for a lot longer than we want and when you roll those two things together a lot of companies may run out of money and so if you can't get to default alive you have to look at your cost structure and figure out how to right size this thing because the cost of capital is just going to be really

SPEAKER_84: really expensive and this was the fed's goal right they they wanted to take away this free capital they want to slow the economy down and it seems like they're making progress they did the 75 basis point

SPEAKER_50: hike this week but we're adding jobs to the economy we have more job openings and we had 2.6 percent

SPEAKER_84: gdp growth so i guess my question to the to everybody here is what is the fed going to have to do or can they stop this consumer and this growth it's very strange right powell powell said he'd rather over

SPEAKER_62: correct and break things because he has a toolbox to fix the broken bones but he doesn't have a toolbox to fix if they under correct and they have rampant inflation i mean not more explicit you can't

SPEAKER_60: get jason so he's going to take rates until demand is destroyed and enough demand is destroyed such that

SPEAKER_62: inflation is tamed but that has huge implications to all of us because we all have to do our job trying to build a company trying to raise money trying to invest money it's just getting much much much harder than i even thought so like you know for me i'm like wow i thought that we could get through the worst of this by mid 23 but now you have to plan for the worst which means okay now i'm thinking

SPEAKER_60: that man rates could be higher for much longer which means you know we could be in this market until early 25 and you may say hey that's way too conservative yeah but you have to plan for

SPEAKER_62: conservatism in this point so how do i invest money right now honestly i'm like hmm i should just

SPEAKER_60: put more into t bills isn't that crazy if a company's like h moth can have another 10 15 20 million bucks i'm like wow i mean i don't think that that gets you anywhere and oh by the way that 10 or 20 million dollars i can generate four percent what a what a tough trade-off right for well for somebody who has

SPEAKER_84: access to private markets which should be high growth companies to take the guaranteed four over the 50x 25x 10x whatever we're trying to bet on here yeah well it's not it's not just the

SPEAKER_46: guaranteed four but if you want to take tech risk then you could go buy the corporate bonds of some high quality companies for the 10 or 11 so you take moderate risk so you're also competing with that

SPEAKER_124: not to zero risk can you explain that for the listeners what that corporate debt is and why it

SPEAKER_46: you know pays more sure there are there are you know high quality public companies tech companies that have bonds and that's corporate debt and they obviously have to pay a higher rate than what the treasury pays because the treasury is is risk-free and corporations could default so there is some risk to it it's not zero risk but you know it's like if you're willing to take tech risk then why wouldn't you buy a bond at 10 meaning the equity always has to beat that threshold return

SPEAKER_104: but but hey can we just go back to the jobs report for a second i mean the u.s government could

SPEAKER_220: default but it's considered the least likely to default of all issuers of debt in the world

SPEAKER_74: and that's why yeah that's why people call it the risk-free rate because it is the least risky

SPEAKER_46: the u.s can always repay its debt because the debt is denominated in dollars and the treasury can always at the end of the day print more money that would just be monetizing the debt other countries that owe money and dollars and obviously don't control the u.s mint they can't do that so they could actually default but since we're the world's reserve currency we're never going to default however the dollars that you get paid back by the u.s government might be worth a lot less in the future because of inflation and that's the real risk you have to think about but there's no default risk right whereas with corporate debt there is but let's just go back to this the the jobs picture for a second jason you asked about this so there is news this morning that we added 261 000 jobs in october and obviously given that there's an election in a few days then you know the administration is eager to point to this but if you dig a little deeper in the report i just posted the link there you see in the raw numbers that there's actually 328 000 fewer employed americans and the number of unemployed americans actually increased 36 000. so and the labor force participation rate declined for the third consecutive month to 62.2 percent so like i don't really understand like how all these numbers add up but the point is like the data is very mixed starting to end it and there's very definitely negativity in there and this feels to me like the last gasp of the bull market where there's like this residual job creation but you look at like just what's happened in the last week where it's stripe cutting i mean stripe is probably the single highest quality i think it's probably the most valuable private companies now spacex oh well spacex okay but but like software pure software company they had a 14 cut you're starting to see now the riffs really start to pile up so i think we're at the

David Sacks: beginning now of a long cycle of the unemployment rate going up i mean it just feels like the economy is slowing so fast the markets are you know they've been puking now for six months it just feels like

SPEAKER_241: this is the beginning of a like really serious recession yet we had gdp growth yet we had job uh

David Sacks: openings remember we had two quarters we had two quarters of net negative gdp growth this is when

SPEAKER_46: we had the debate about what a recession is it was true that if you looked at growth in nominal terms it appeared to be strong and then it was net negative once you subtracted the inflation rate you know we said several months ago my prediction was a double-dip recession where you had this shallow technical recession then it bounced back in q3 but now i think we're headed into the second part of it which is the real recession a recession characterized by joblessness and you're starting to see economists say we're going to go from three point something percent unemployment rate

David Sacks: to say five or six percent unemployment next year so i think we're just beginning to see the the job

SPEAKER_75: cuts start to add up this is i think this is what pal met which is you know he'll take it as far as it

SPEAKER_44: takes and then he can fix it on the back end by reintroducing you know quantitative easing and

SPEAKER_79: reintroducing lower interest rates to stimulate demand but there's what are the odds

SPEAKER_46: he gets this right it seems to me that the fed has a habit of reacting too slowly they were too slow to react to inflation my guess is that they'll be too slow to react to the recession so we'll end up with a period of rates being higher than they should too long and then they will correct they'll drop

SPEAKER_00: rates but that could be two years from now and meanwhile we could be in a pretty deep recession

SPEAKER_84: i think you're probably two charts for you to look at the gdp uh by quarter and then after that the labor participation rate so there's your gdp q1 q2 being negative q3 bouncing back we'll see what

SPEAKER_169: happens in q4 here's your fed force participation rate for labor as we discussed the thing with the

SPEAKER_60: labor participation rate that we're still not sort of like truly factoring in is like you know we had

SPEAKER_62: a million americans die because of covid and you know starting in that trump presidency we lost like seven or eight million immigrants so those eight million people have a huge effect on this number

SPEAKER_227: yeah right and it's not properly really factored in because if if if you see that at the start of the trump presidency it's just it's it just fell off a cliff basically and you also have people

SPEAKER_84: who retired early that was a big trend and this all peaked in 2000 labor participation hitting that like 67 68 i think is the peak and just slowly going down as boomers retire early because they made so much on their 401ks and homes and then you're right chamath we've had negative we've really cut

SPEAKER_257: immigration the last whatever five six years i think there's an element in here that's missing on how much people individually are finding other ways to earn income that doesn't qualify and show up

SPEAKER_74: in the labor force numbers people have set up etsy stores shopify stores have tripled since covid people are making more money on youtube on instagram on tick tock than ever before there's a whole new class of work that revolves around the individual creating their own business creating their own income stream that's simply taken off and has taken off it was it was kind of a trend pre-covid but it really took off during covid and there's an element of this that's really more about the transition of how people work and how they earn that isn't reflected in these numbers i don't think that the idea that everyone should go be an employee at a company is necessarily the right way to think about labor going forward the amount of money that individuals are earning is probably the better way to frame this up going forward and as really thinking about the earning power and the economic health of this country

SPEAKER_84: this is something important you're bringing up here gig workers are about nine percent of the workforce and uh uber and dara had um they grew over 70 this year but i think the big number that i watched for was drivers are making 36 an hour in the united states working for uber so you're exactly right people are finding other options whether story dash uber and that doesn't qualify in labor force right because they're no it does independent contractors are counted yeah they are counted i that's based on my preliminary research uh if somebody wants to fact check us that'd be great

SPEAKER_50: but my understanding is independent contractors which is what gig workers are classified under are counted in labor participation i don't know how they're counted so uh we'll we'll look that up and

SPEAKER_42: figure that out there was a story in bbc that the bank of england has now warned that the uk is facing

SPEAKER_46: its longest recession since uh records began some of this is getting to be fear porn yeah but look here's what i think is scary about going into a recession is number one you don't really know how long it's going to take to get out we know the average recession lasts about 18 months but the truth is once it starts you just don't know and the second thing is you don't really know who's been stressed tested people claim that they can weather the storm but the truth is that there's no there's no way to simulate truly simulate a stress test they claim they can but the only way is to really subject you know an institution to that pressure and that stress and then you see if they come out the other side so that's the issue is you just going into this it's there's there's all there's a lot of unknown unknowns and and this is why i would just urge founders to be cautious is because if the recession ends up being shallow and shorter than people expect great you'll be surprised to the upside but if the recession ends up being deeper and and longer than expected you don't want to go out of business you want to be protected against that so again you know we've been saying this since february and may but again i just reiterate i think it really makes sense for founders to be conservative prioritize your survival above all else you know this recession probably will last about two years you want to make sure you survive it and to chamas point if you survive it with lower growth that's fine you can keep growing on the other end of this thing but if you go out of

SPEAKER_215: business because you grew too fast then you're not going to get the chance to fix that problem when the

SPEAKER_44: recession is over i just don't see anybody rewarding hyper growth that is burning a ton of cash where you have to be back in market every year because it's it's just very hard to feel comfortable

SPEAKER_60: that the conditions on the field aren't going to be drastically different a year from now right it's not like we know that it's going to be better or worse and i think that that uncertainty is actually really bad for companies so to your point it's just like a lot of folks have tried to shy away david from actually revisiting their valuations they've done these complicated converts and they've they've tried to basically you know it's i think it's sort of like managing their ego or the board's

SPEAKER_62: ego and i think like the next shoe to drop has to be these founders and these boards just saying okay let's just take the hard medicine what's the real you know market clearing price and valuation let's get a third party to price it and let's get new fresh equity and then move forward because if you don't

SPEAKER_60: do that and you wait until everybody's trying to do it then it's going to be a really tough scenario so better to your point you know this is why like stripe it's so smart better to cut now again it's

SPEAKER_62: always hard to let people go but it's better to do that now than 18 months from now because you just have no idea how much more expensive or hard it's going to be then and who's going to even be in the business of lending money or investing money in 18 months and you know that that sounds pretty

SPEAKER_60: crazy but it's it's like i think that that's that's the moment that we're in to your point uh

SPEAKER_84: friedberg i did a little research here and according to the fed of st louis if you counted uh casual workers informal workers over doing over 20 hours a week of informal work aka gig work you would increase labor participation between a half point and a point if you counted all of them maybe even uh slightly more than two percentage points higher so probably about a point uh seems like a realistic way to look at labor participation and of the eight points or maybe now the six or seven points to ten percent it would then account for ten to twenty percent of the ten percent drop

SPEAKER_220: in labor participation it's just alarming statistics because if most people have most of their

SPEAKER_74: personal net worth tied up in their home asset and their home values are declining or going to decline and we're seeing this dramatic spike in consumer credit in the u.s it paints a really ugly picture

SPEAKER_46: for the next two years wow guys i'm just looking at i'm just looking at the markets today get labs down fifteen percent snowflakes down thirteen percent monday's down fourteen percent atlas down thirty percent in one day yelp is down seventeen percent these are open door is down sixteen percent so it's just a horror oh my gosh the cloud computing index uh wcld has hit a new low for the year it's down to 23 bucks i think the previous low was 25 is down almost eight percent today and this is on a day in which the nasdaq is down less than one percent so the point is people are rotating out of growth

SPEAKER_250: stocks yeah it's just brutal and so listen if you're a startup founder you got to realize these are like

SPEAKER_283: some of the highest quality public so he was down 40 percent today twilio is down 37 in a day today

SPEAKER_60: whoa but guys this is this is just math you know it's not a judgment on any of these companies it's

SPEAKER_59: just pure math this is why i think you have to be utterly unemotional in this moment and if you're if you're a ceo running a company particularly a sas business you have to really figure out how to

SPEAKER_77: how to right size your cost basis and make this money last profitable industrial companies are up

SPEAKER_46: bill gurley had a tweet a tweet about this a few months ago about how the biggest mistake people make in riffs is they just do like a tepid riff like a ten percent ish riff and they have to come back

SPEAKER_146: and they do it again and they do it again this is what i think the the elon action this week really

SPEAKER_74: sets a standard he shows the entirety of silicon valley that you can cut deep and you can turn a profit and you can do it fast and it could set a new standard for how folks are managing this jack welch used to in his management principles recommend dropping the bottom 10 of people every year and so you know the 10 13 cuts don't really pass muster as a public market investor kind of looks at the the management across these different companies to turn a profit they're going to say the folks that are making the deepest cuts the fastest are the ones that are going to get valued it's unfortunate and it's a difficult circumstance for everyone in silicon valley to deal with from the employees to the investors to the public and private shareholders it's really brutal one quick

SPEAKER_108: question for you guys it's really just this kind of market motivation that's underway right now

SPEAKER_84: here's the chart uh and my question for you is when do google and facebook stop this i mean if you look at the number of employees being added it is truly extraordinary here's the chart and this includes the latest quarter so they are not turning off hiring yet what do you think hold on didn't they announce a hiring freeze they announced that they were at google they announced that they were going to hold people accountable to better performance and they were going to go do more with less and then they added more people facebook said they would do a hiring three percent today yeah facebook said it

SPEAKER_42: would do a hiring freeze apple well whatever they added jobs last quarter yeah well you're right they

SPEAKER_46: just announced a hiring freeze you look at apple apple just announced in non-r d functions a hiring freeze this is apple like the most valuable most profitable company in the world so if apple basically is putting the brakes on non-engineering hiring that tells you something about how fast the economy is slowing down i think that was a huge signal yeah the point freeber makes is so correct which is if you're doing a riff obviously there's a reason why but i think we we're seeing too many riffs where the details of the riff and the magnitude of the riff don't match up with what the objective of the riff is the objective of the riff for a lot of these companies should be to get them cash flow positive or at least to put them on a runway or a trajectory where they can get cash flow positive with their existing cash on the balance sheet right they won't need to raise money again and we're seeing a lot of companies where they don't achieve that and they have to come back again and again and hit it again and that creates more more turmoil for the company and it's more unfair for the employees by the way

SPEAKER_74: sex to that point i'll just say how deep these companies are cutting and how quickly management is expressing to their shareholders how they're going to turn a profit becomes a signal for those shareholders on whether or not they want to stay in that stock and the companies that are doing it fast and are doing it deep the investors and the shareholders say you do actually have a path that

SPEAKER_77: makes sense here i'm going to stay in the stock cash today versus cash in the future trough let me ask

SPEAKER_84: you a question in terms of strategy for one of these companies let's say the facebook corporation or perhaps even google or apple even if they were to cut their expenses which might take obviously a riff

SPEAKER_50: and then because their stock prices are so depressed right now maybe even a a mid-cap one like a twilio or an uber or an airbnb if they were cut costs and then start buying back their shares which some companies have been doing what would that do in terms of the market's appreciation of those stocks or

SPEAKER_60: management teams i think it's hard to tell i think that the if you have not lost investor trust i think it would be really well rewarded if you have become unreliable and undisciplined even those cuts i think would be met with some amount of excitement but but probably not a broad-based support so you know it then it just goes to narrative meaning if google did it i think that people really trust sundar and ruth and i think the stock would go bonkers they would they would probably move very quickly into the

SPEAKER_44: echelon of apple and apple is sort of a first among equals like they're just they're just in a different class unto themselves facebook i think is a little bit harder because i think folks have gotten burned and you know they would have to make some really really deep cuts but then you know where do you

SPEAKER_59: do it you can't capitulate on this meta strategy but then the other part is where you make all the

SPEAKER_44: money and so you have this huge morale issue that you have to manage so it's just a really hard game

SPEAKER_46: to play just one more thought on on um on the rift stuff i think one thought experiment for founders is to think about what was your plan at the end of 2019 why do i say that because 2020 and 2021 were two of the most distorted years ever in the history of financial markets and the economy because we had covet and then we had the reaction to covet right and so you saw there was this um you know zooms market cap hit 100 billion all the e-commerce companies were doing extremely well you you know you had all this money printing you know you had zero interest rates and so on you had sas companies hitting all-time highs at the end of 2021 so we lived through this incredibly distorted time so as a thought experiment go look at what your plan for 2020 was supposed to be when you created it at

SPEAKER_215: the end of 2019 because that was the last time that you were thinking without any distortions you know that were then created and i think if you were to go back and look at your 2020 plan again created it at the end of 2019 you'd probably see that you could get by with half the head count you have now because probably you doubled your head count during the last two years during these heady heady times and yet i think founders start thinking oh i can't go back to operating you know i can't operate at half the level of head count but you were you were operating with half the level of head count by definition at some earlier point i also think sometimes i think what founders say

SPEAKER_44: is what will people think if i cut 50 meaning all of a sudden the perceived success of my business would be different and i think that this is where you have to realize no like there's a lot of ego

SPEAKER_62: tied up in these things which slows people down from doing the thing that they need to do

SPEAKER_69: yeah it's a really it's a really hard to do i mean look at airbnb as an example i mean they did this

SPEAKER_84: ginormous riff during covid because they had no choice i mean their their revenue went essentially to zero and now the business is incredibly strong it's throwing off massive amounts of free cash flow and stock market seems to really love what airbnb has done uh and a similar story over at uber in

SPEAKER_50: terms of having done significant riffs and probably could do significant yeah but let's just be

SPEAKER_46: clear airbnb is still down almost 75 off its high right so when you say the stock market love it so they're they're up today three percent so meaning they're not down 30 in one day but they have gone

SPEAKER_82: down with the rest of the market they have gone down with the rest of the market but it feels like the business i'm talking about the business fundamentals when you're throwing off almost a billion

SPEAKER_84: dollars yeah now you're going to start people are going to perceive that business maybe as uh of this cohort the flight to safety right or same thing with uber throwing off free cash flow now i think a lot of these names are going to i don't own airbnb right now but i do own uber i think the

SPEAKER_50: people throwing off the free cash flow are going to look pretty attractive and be able to buy their

SPEAKER_316: stock back maybe all right let's talk about the midterms a lot of big uh senate races and obviously

SPEAKER_69: governors uh pennsylvania georgia arizona this continent ohio all really important races sacks

SPEAKER_46: what do you think well it looks to me like there's gonna be a republican wave there was an interesting article actually on cnn where they it's called five scary numbers for democrats and what they point to is that biden right now has a 42 percent approval rating 61 of the american people say he hasn't focused on the key problems so this is called the out of touch index 51 say the economy is no one issue compared to only 15 for abortion and then 78 say we're on the wrong track i don't think i've seen a right track wrong track index that was so negative and 75 of the country says we're in a recession so you know when you look at polling numbers like that it must translate i think into a republican wave and you have now real clear politics currently has the gop gaining four senate seats so winning in arizona nevada georgia new hampshire that's a big change from just a couple weeks ago and winning 31 house seats so this is this is kind of what it's looking like right now but look the the the margin is still within the within the margin of error on the polling so nate silvers pointed out that within one standard deviation you could either have a republican wave or you could have basically the republicans

SPEAKER_250: fizzle out so it's going to be very close but ultimately i think this breaks republican yeah the

SPEAKER_60: to me the way that i've i'm looking at it right now is that it seems like most scenarios the republicans will have the majority in the house and the real question is what happens in the senate it's really really kind of a coin flip and that's going to be really interesting to see so you know things where

SPEAKER_62: i thought would break republican in the senate like pennsylvania are now back to almost the you know a

SPEAKER_60: statistical dead heat so it's a really interesting moment actually it's uh but most scenarios david i think you'd agree is that the republicans win the house and then there's a non there's a plurality of scenarios

SPEAKER_46: where they also win the senate the house will almost certainly go republican but i think the senate now the the official percentages are 55 likely to tip republican but i i just think that in a wave year like this where the wrong track sentiment is so high i think all these races that are a dead heat they're more likely to break in one direction as opposed to like a random distribution which is why i think you could just as easily end up with and you know instead of it being a 51 49 senate it could be 55 45 because all these things could break the same way so right now so i i would slightly disagree in pennsylvania i think oz has improved as a candidate fetterman did that debate and since he suffered that

SPEAKER_50: stroke he kind of came across as somebody how do we feel about that that i i i had very very hard to

SPEAKER_46: watch that happen and yeah i mean the guy the guy has suffered a stroke and is sad but he you know he doesn't present as someone who can be a senator right now i think what does the science say about

SPEAKER_327: that like a re as a society is this a good idea to have somebody post-stroke be in office i'm not

SPEAKER_69: picking any political side here i'm just talking about the the medical issue oz is actually doing

SPEAKER_106: the right thing right now which is he's not actually focusing on that issue because it's so obvious he doesn't want to be seen as beating up on fetterman and instead of course he's focusing on the issues and actually a fetterman's issues are very unpopular in a state like pennsylvania

SPEAKER_46: so i actually think for both reasons oz is going to win that i think fetterman's manifestly unqualified but also i think his positions are fairly unpopular so i think pennsylvania will will will almost certainly tip so let me pull up the chart here just so people can see ohio is going

SPEAKER_106: republican and then arizona i think is really the interesting one where blake masters is now tied

SPEAKER_215: after being behind mark kelly throughout this campaign he is now tied in new polling at 47.

SPEAKER_333: oh god he's so unpopular your guy is really unpopular and now he's tied it's he was never

SPEAKER_334: that popular jay cow that was your interpretation it's the peter he was he was doing really poorly i

SPEAKER_106: think because i think listen i think that i think that arizona is probably gonna be the closest race in the country i think it's gonna be a nail biter but i think blake's gonna pull that out sacks what

SPEAKER_74: do you think are the biggest policy shifts that take place in this country host this predicted red wave is there anything that changes so just you know talk to folks about what's on the docket from

SPEAKER_76: a legislative point of view going into the next congress with all these new candidates the reality

SPEAKER_46: is we have a separation of powers in this country and you're going to have divided government the republicans will will control congress the democrats will control the presidency and so as a result you're going to be largely in a gridlock situation but gridlock may be a lot better than what we've had over the last couple of years so you know you've had basically this orgy of spending and money printing and i think that's going to stop obviously the other thing that's going to happen is republicans may not be able to pass much legislation but they're gonna be able to do investigations and there's a lot of questions that need to be answered i think about still about covid you know these lockdown policies that we had that started at the top at nih why did they happen we need to start having accountability for some of these horrible decisions that were made during covet and there's been no willingness in washington to hold anyone accountable at a minimum they need to have some congressional investigations and find out why we pursued such bad policies over the last couple

SPEAKER_44: of years by the way did you see did you see what happened uh this week where the cdc you know after this entire opioid epidemic and all of these um lawsuits the cdc came out and actually said hey listen we need to really make sure that we're getting access putting opioids in the hands of americans who are really suffering with pain management and whatnot and i didn't read the article to really understand the details but i just thought it was an incredible headline where it's like

SPEAKER_64: it's just it's so counter to the narrative of what we've been told is happening which is like you

SPEAKER_84: know over prescription and misprescription if we learned anything during covet is to question every organization everybody and to really collect your own information while you know looking at these organizations we trusted over time i know i look at the world differently now that you couldn't say covid was possibly a lab leak without having your podcast taken down or being banned on youtube and now pro publica has done an investigation and they're saying along with vanity fair and they're going to win a pulitzer for this i bet that this conspiracy theory from two years ago is probably actually the leading theory and that the the wuhan lab lab was showing if you didn't see it reporting an incident in late november of last year before covet broke 2019. it's really it's really

SPEAKER_46: incredible there was an article in the atlantic that came out over the past week called let's declare a pandemic amnesty no yeah let's do a pandemic investigation right so basically everything yes all the experts who told us jason that we weren't allowed to have an opinion because we weren't expert enough that if we raise any questions about the origin of the virus that it might have come from a lab that that basically needs to be censored the people who said we had to do lockdowns and implemented all these authoritarian tactics now they're saying that they need an amnesty and what that really means no one's looking no one's looking to criminally prosecute them what we're looking to

SPEAKER_215: do is have some accountability around the public policy what they want is they want to pull the expert card to say that they're the only ones who get to have an opinion and make a decision but then

SPEAKER_106: when it all goes horribly awry they basically want to be completely insulated and unaccountable no way no way we're not going to give you full investigation we're in alignment on this

SPEAKER_351: i just want to say sex we're in alignment on this for a rare moment of peace on this podcast

SPEAKER_20: the same thing after 9 11 shouldn't all americans understand what happened after 9 11 and what the failures were in our intelligence just so we can get better i i'm not picking a political horse here but it's kind of crazy that you could people said to our podcast and other people who were questioning it forget about what political party you're in just want to understand how the world works what are the chances that this breaks out in the one or two places where they're studying the coronavirus that you have a lab leak it was so obvious to everybody the other reason why

SPEAKER_60: you need to have accountability for this is that there is still a long tail especially around the damage that we did to our kids educationally yes and now and now the over prescription of stimulants

SPEAKER_44: and so if you don't depression answers you can't go after these problems like there is a there is

SPEAKER_60: like stimulant prescription is now the single biggest epidemic in children it is now twice as prescribed as contraceptives and asthma drugs and why chamath why are we doing this to get them to score higher on a test to be more attentive in school well it's it's actually this negative feedback loop where

SPEAKER_62: these children were miseducated during covet it had huge psychological and academic damage to them our test scores have fallen off of a cliff relative to how we used to do relative to other countries i think the teachers unions have found a way to try to explain it to basically shield themselves from any sort of critique and so the loop and then part of that loop is then to look at a bunch of kids that are underperforming in school and instead of saying

SPEAKER_60: well maybe these lockdowns and masking and all of these things that we implemented actually had a huge impact they say uh you know you're misbehaving so let's put you on a stimulant yeah it's crazy we're in that loop right now just so you guys know the data is outrageous twice as many prescriptions for stimulants as the sum of contraceptives and asthma drugs for all american kids yeah it's not that suddenly

SPEAKER_357: everybody's got adhd so we failed them we failed our children and and we're going to use stimulants to have them catch up we should be doing summer schools after school programs weekends whatever

Chamath Palihapitiya: we failed them because of our response to covet that is why we need answers to all that stuff because you need to link these things together to have some real accountability absolutely here is the uh

SPEAKER_84: just so we have the people see the numbers here's the 538 poll of uh how joe biden's popularity has switched this is uh 654 days into his presidency started out really strong 54 and now a little rebound since the summer obviously that uh dip started uh with the economy it's the economy stupid and if we go down a little bit on the same page and you zoom in on the left there you can

SPEAKER_50: see compared to donald trump uh he started out much more popular than donald trump day by day and now he's just as unpopular as donald trump was at this point in his presidency well look i mean look the setup is

SPEAKER_62: really interesting for 2024 because it's probably going to be the case that we're in the middle of a recession going into that election cycle maybe we'll be sort of like getting ourselves out of it but there'll be a lot of economic damage high unemployment and you know typically folks in power

SPEAKER_60: will have to sort of be held accountable for that it's a really interesting setup that both gavin newson

SPEAKER_59: and uh ron de santis have to figure out now and navigate if they're going to get the nomination on

SPEAKER_84: each side and breaking news today sax would love to get your thoughts on this axio says uh and we'll go to science corner next that trump's going to announce on november 14th that he is running for

SPEAKER_42: president look i i kind of have the joe rogan philosophy on this which is why give it oxygen let's just wait and see there's certainly no need to talk about it before it happens

SPEAKER_46: you know we're not even past this election yet but but hey i want to go back to the the the biden popularity because i think part of the issue here is what are the arguments that biden is making to the country about why people should vote democratic and he gave another speech on wednesday night where he basically claimed that if you vote for a different party that that is a threat to democracy in other words the perpetuation of single-party rule is what you must do if you care about democracy that is a sales pitch that's not going to appeal to anybody outside of the viewers of msnbc it's just not he's not talking about the issues that really matter to the country you know what the country wants to know is that he's focused on the economy he's focused on inflation he's focused on crime he's focused on the schools and fixing this learning loss that jamal was just talking about he's not doing those things instead he's basically saying that the democrats

SPEAKER_215: should be kept in power forever because there was a riot at the capitol on january 6th and look that was a stain on the country okay it was terrible that that happened but that is not a

SPEAKER_46: reason hold on a second that is not a reason to keep democrats in power forever and actually there's a um a liberal guy a liberal democrat named josh barrow who wrote a pretty good blog about this and what he said is the message is that there's only one party contesting this election that is committed to democracy the democrats and therefore only one real choice available if voters reject democrats agenda or their record on issues including inflation crime and immigration they have no recourse to the ballot box they simply must vote for democrats anyway and that argument is just not flying and actually he's a a democrat who is pointing this out but i don't think that democrats are getting the message on this but i think they will after this election and they're gonna have to find a new

SPEAKER_124: sales pitch to the country well you know and he does have a good sales pitch doesn't each month with

SPEAKER_84: these major bipartisan uh wins he had the infrastructure deal got done the technology bill and the chips

SPEAKER_68: you got gas prices going down you got gdp growth you got job growth the problem is that those things

SPEAKER_60: happened frankly too early in his presidency and things are getting materially worse so i just sent you a link can you just throw this up here for a second you know jason you mentioned this cheaper gas thing yeah but the reality is um if you look at this we have now depleted our strategic oil reserve by almost 50 percent yeah so we are running out of oil that we can introduce into the market at effectively zero cost to bring the price down and because we've lost our relationships with folks like saudi arabia there's no way to influence them in order to produce more in fact they're going to cut supply so that they can control the prices that they have which that they can sell into the market and so now what

SPEAKER_62: are we left with well the only three places where you can have incremental supply of energy which the country still needs is from russia iran and venezuela and so you know all of these things jason i think come back and really put biden in a tough place because as a sack says he does have to answer to all of these

SPEAKER_60: things because these are his decisions look i still believe in the democrats you know i i'm hoping i gave a million bucks uh to the senate pack trying to sort of tip the senate i really think it's important that we have a split government because i've kind of i gave up on the house i think it's clear that the republicans are going to win but the senate is still is still up for grabs and the reason is because i think

SPEAKER_62: that we need to sort of have stasis so that nothing bad happens between now and 2024 because i think the economic conditions on the ground are going to be bad in and of themselves and then just the

SPEAKER_60: one last thing i'll say is the instructive thing that i think we should look at is what happened in

SPEAKER_62: germany because what happened in germany is really interesting when the economy turns and inflation is out of control and energy is out of control what they basically did was they sidelined the european central bank they stepped in with their own balance sheet and said you know what we're going to

SPEAKER_60: nationalize assets and i know that this sounds crazy to say but if it can happen in a place like germany i know most people would say it'll never happen in america but i'm not so sure and i think that you want to make sure that there's a split government so that these things are never possible and so hopefully there's some you know common ground in a democratic senate and a republican house

SPEAKER_44: and we just kind of get through 24 and see where the chips land and i still think it's going to be

SPEAKER_373: uh desantis versus uh newsome free break any final thoughts here on politics my first um observation

SPEAKER_374: is that i think it's funny that chamoff and sacks are funding opposite uh sides of the uh

SPEAKER_141: yeah why don't you just guys just give the money to me and friedberg to get a plane each other's money

SPEAKER_379: yeah i can think of other ways for you guys to use that money but david and i may have canceled each

SPEAKER_68: other out you're right i mean yeah so far peter teal made the better trade he's it looks like the teal wave

SPEAKER_74: in the senate so look i would say my very broad statement is democracies evolve in a cyclical nature over time right you you often see swings from one political party to the other and um it's just the nature that once someone's been in office they form the new establishment and then folks on the next election cycle want to vote against that establishment because there are things that they want that they aren't being given today and therefore the democracy forces a change from what is the current establishment back to the other side and generally political parties seem to kind of adopt whatever the other side is and that's how the cyclical evolution of democracy seems to play out the recent trend that has been more alarming which i think we can kind of take pause to notice is the the rise of populism where populism is this really kind of vehement die hard opposition to elitism and it's the establishments that everyone feels kept down by and everyone feels taken advantage of by and um the the rise of trump the rise of bolsonaro the rise of boris johnson and i would argue even the rise of aoc bernie sanders and elizabeth warren all similarly speak to the the crying voice of the the democratic populations that they want to see these establishments taken apart they don't feel like they're fair they don't feel like they're just they don't feel like the institutions that oversee us and are meant to service us are servicing us and so there was this big rise the problem is like a normal pendulum would swing back and forth between one side and the other with the rise of populism you get such a strong push of that pendulum it can knock through a wall and i think we saw that on january 6 and i think it gave a lot of people pause we saw the the the motion of brexit knocking through a wall and we saw these kind of very radical outcomes and then the cost of those outcomes blow up in our face and as a result i think we're seeing a bit of a receding of the tides right now away from populism during this current electoral cycle where folks are saying you know what maybe we just need to have some sort of an establishment so i can feel safe and secure less than the volatile volatility that i've experienced of late look i think you look at the

SPEAKER_46: economic mess we're in okay populist did not cause that okay populist did not cause 10 trillion dollars of money printing it was modern monetary theory and the experts of the fed who did that it wasn't populist who created the great financial crisis of 2008 that caused the zerp and we're still living with all the downstream effects of that it was the experts on wall street who said they could manage all these

SPEAKER_106: derivatives and the collateralized mortgage obligations and all that stuff that they lost control over i would argue and hold on and on covid it wasn't the cdc are the experts yeah the cdc and it wasn't and it was and on covid it was not populist who caused the horrible handling of that

SPEAKER_215: pandemic even though they were blamed for remember we were told it was a pandemic of the unvaccinated then it turns out the vaccine doesn't stop it it was not populist who caused the reaction to the pandemic it was the experts the cdc and fauci and people like that who shut down our economy who caused the learning loss it was those experts so freeberg listen you may not like this populist wave that we have in the country and i get that but it's in reaction to something real which is the failure of this expert class and if you want to stop having this populist wave rise up we need to start having experts in position of power who actually know what they're doing well i'm sorry jacal

SPEAKER_74: hang on one second i don't have any opposition to the populist wave i'm making the observation that the uh the effects of some of the populist movements have started to become too volatile for people to feel like they should continue forward with that electoral path that was my observation okay i'm not kind of criticizing the populist movement i'm just saying that events like january 6th and the conditions in the uk for example are making people say wait a second maybe i need to take pause

SPEAKER_46: on the extreme the bond market basically fired liz truss i mean she's not a populist and you know in bolson bolsonaro in brazil he actually just lost and there was this big narrative that somehow he was gonna not relinquish power and he just announced that he will relinquish power right so you know some of the stuff that is about how populist pose this great danger i think is threat inflation and that the threat is magnified by elites who want to stay in power and the truth of the matter is we need

SPEAKER_215: accountability for the people in power and when they set the wrong policies and decisions they need to be replaced no more no more unaccountability yeah i mean i i 100 just just to my personal

SPEAKER_105: belief 100 agree accountability is what's lacking most across all of these institutions 100 agree

SPEAKER_141: accountability maybe competence and also transparency and accountability like i think that's what the

SPEAKER_390: public wants i mean competence will ultimately be measured by through you want to hear but there's

SPEAKER_84: no modern second hold on there's no way to perfectly react to the pandemic but in your mistakes owning them and explaining them would be much better than trying to obscurify it and asking for amnesty chamath

SPEAKER_59: you're not um if you want to hear an incredibly interesting interview because it's very thought-provoking of a modern progressive uh but with a very different mindset

SPEAKER_60: or sorry you know maybe you don't want to call him a progressive but is the

SPEAKER_62: uh president of el salvador naib bukele and he did this incredible interview with tucker carlson on fox news i encourage everybody to watch it on both sides of the political spectrum

SPEAKER_394: that man is impressive did we just get an admission that chamath watches tucker i watched

David Friedberg: i watched that interview you watched the tucker oh my lord jason's head's exploding you know because

SPEAKER_62: i i i try not to be a complete ignorance it's an entertainer i like to watch things on both sides but that interview is incredible he is unbelievably impressive and it's a it double clicks into you know the skepticism that smart people like him the outsider class has with the insider expert class in a

SPEAKER_60: nutshell if you want to see it i would encourage you to watch this interview because it's it's

SPEAKER_106: incredible incredible really really jason the peasants with pitchforks are rising up against this

SPEAKER_46: elite class who've put themselves up they've set themselves up as lords they want exclusive control over their blue checks and we're about to overturn this establishment because it is corrupt and it is

SPEAKER_84: incompetent it would be great if the people who work for us and we're confident and owned and we're transparent you know i think that's why people are opting out of this is they don't feel that there's a level of competence in these institutions nor ownership and transparency and it really is frustrating whether it's education or it's health or you know any of these topics we've talked about

SPEAKER_50: here on the show let's go to science corner and we can wrap what do you got free berk for us to mock

SPEAKER_74: i think we were going to cover the facebook meta announcement that their ai research team had generated the physical structure of 617 million proteins from these metagenomic data sets and so remember alpha fold made this big announcement that they had highly um accurate predictions of protein structure the three-dimensional shape of proteins and remember proteins are kind of the machines of biology that do everything from catalysis to enzymes where they break stuff down and they're like you know they have all this structure that allows them to do specific physical things and proteins are coded in dna every three letters of dna codes for an amino acid a string of amino acids makes a protein and so you know we have about a million species where we've sequenced the entire genome of those species only about 3 000 animals by the way including humans half a million from bacterial species and then a bunch of viruses and other stuff but but call it about a million species that we've sequenced and so you know earlier this year google's alpha fold project published the 3d structure of 200 million proteins that they had derived from the whole genome databases that existed where we've gone through and figured out what's the full dna sequence of all these different species now when you look at the dna in the environment around us you were just to take the dna out it turns out that we have seen very little of that dna the vast majority of dna that you would find in a teaspoon of soil for example we've never classified it's not part of a species that we've actually built the whole genome around we may not even know what species that dna is from and so when you take a teaspoon of soil you'll get about 100 billion microorganisms in that soil from about a million unique species but you don't see those species because the way dna sequencing or shotgun sequencing works is dna is chopped up into little 250 base pair of lights little 250 strands and those 250 letters are read at a time and then statistically bioinformatics puts together all of that little dna segments and tries to create long strands of dna to figure out what the genes are or what the whole genome is and so shotgun sequencing gives us kind of a snapshot of the dna but until we've done the hard work of figuring out the whole genome we don't know what species that dna comes from so when you take a sample of soil or you take a sample of human poop and you sequence it or even a teaspoon of ocean you just sequence the dna in it you get all of these little segments of dna that we've never seen before and you can string them together statistically because you get lots and lots of copies of them and you can figure out the overlap and then you can create these genes and a gene is a segment of dna that codes for a protein and those genes make up the meta genome or the combination of all the genes that we find in a in a piece of of the environment and that meta genome comes from millions of species that we've never seen before so what alpha what they did at meta is they took all of those genes that we pull out of the soil or we pull out of the ocean and they picked a bunch of random samples and they then predicted the physical structure of the proteins from just those genes without knowing what organism they came from and this gives us a whole new universe of proteins that we've never classified before or never seen before now i will just kind of speak a little bit critically about it number one they didn't do what alpha fold did what alpha fold did is they took 3d structures from typically x-ray crystallography then they took the the dna code and they built machine learn models to figure out the 3d structure from the dna code what these guys did at meta is they took the 3d structures and the code and they basically did a fill in the blank they found all the meta genome data out of these samples and a lot of it was missing and they filled in the missing blanks using kind of common protein structure that existed out there in the wild that we already knew from the alpha fold data and so they kind of did a fill in the blank and as a result it allowed them to very quickly build these 3d models versus doing the hard and rigorous work that alpha fold had to do so they claimed that it was 60 times faster but it's actually an entirely different technique and the second thing is that they represent that only about a third of it is high quality meaning only about a third of the proteins that they've created structure for are really useful or or that could be kind of applied uh in terms of this is the real representation now why is this interesting and important proteins can form the basis of new medicines so you know we can find proteins in the soil genomes in the soil and proteins in the soil that can kill certain fungal pathogens that can kill bacteria and those can be turned into fungicides they can be turned into antibiotics we can find proteins that bind to specific things we can find proteins that fix nitrogen from the atmosphere and those proteins can be turned into new types of fertilizer so you know searching through this universe of proteins that exist in the metagenome will allow us to find new molecules to do new and interesting things with in the applied engineering world and i will say like this is

SPEAKER_87: what would the output of these be is what everybody's going to be thinking antibiotics fertilizers i mean

SPEAKER_74: the idea of the metagenome is rather than start with the species and then take the genes out of it just go get the genes the genes are already there they're in this they're in the ocean they're in the soil and there's millions of genes hundreds of millions billions of genes that we've never seen before therefore there's billions of proteins now we could randomly create proteins but the number of proteins that could exist is more than the number of atoms in the universe because remember there's 20 amino acids so 20 to the 200th power or 20 to the 300th power or 20 to the thousandth power meaning how many different combinations of amino acids can you make that's more than there are atoms in the universe so the best place to start is what evolution has already given us all the proteins that exist in the environment so let's go find those proteins in the environment and then let's figure out what do we think they can be used for can they be used in industrial applications in medicine can they be doing them in material science you're saying material science and so you know a lot of drug discovery mines proteins it tries to find proteins and figure out what can these proteins be used for and now we have all these new data sets of proteins that are being generated from these metagenomes and so it's amazing i mean you know look at the world around you look everywhere up and down on the walls on the ground below you there are billions of species of organisms that we've never classified before that are making billions of unique proteins that we've never classified before and any one of them could unlock an amazing commercial opportunity for industry so and for medicine and for human health

SPEAKER_381: so that's what's really exciting about this ability to kind of mine the metagenome silly question for

SPEAKER_69: you uh or maybe not silly uh we have gotten the precursors to dna for meteorites uh if i understand correctly what do they call them nucleobases nucleic acids yeah yeah um i mean etc like things that exist in dna that are precursors we've never had dna from space obviously but we could at some point start to find dna out there in space and this could have an even crazier impact on what we built here is that the next card to

SPEAKER_74: turn over after we human genome what's here no i wouldn't say so i like i think look if there's dna that's coming to us from meteorites call it a couple hundred genes you could pick up a piece a piece of uh soil and find over a billion genes in that teaspoon of soil right so uh we have far more to mine here on earth and the low cost of dna sequencing and shotgun sequencing coupled with bioinformatics where we take all that so just to give you guys a sense when you take a teaspoon of soil and you get the dna out and you um read the dna out of it sequence the dna that's potentially tens of gigabytes of data and then you could do that millions of times over and then you statistically can find genes and then statistically estimate what they physically look like what those proteins look like and then you can start to build models around which ones do we want to try and use for drug applications which ones do we want so there's so much work to do it just in terms of what we have here on earth and the tools are getting so cheap and so available there are labs that are all over the world starting to kind of spring up to do this work it's super exciting draft any thoughts it's kind of

SPEAKER_44: you know just to put two ideas together i've said before like the two big investable themes

SPEAKER_60: that i'm orienting my organization around is this one is that the marginal cost of energy goes to zero and the second is that the marginal cost of compute goes to zero and the second one is really about shifting compute to more parallelism on gpus and asics and fpgas but that's why all of this stuff is

SPEAKER_44: possible the fact that you know meta can do this and google can do uh alpha fold is largely because the cost of all of this stuff is you know trivial for these kinds of companies so it's really exciting

SPEAKER_60: it's going to move science in my opinion out of this in vivo in vitro experimentation model into silica

SPEAKER_62: and so those who can actually build learning machines will solve some of the most important biological problems so i i'm a real believer in this stuff i think it's super exciting when do you think

SPEAKER_84: this stuff actually hits friedberg our life that's always when people talk about these discoveries

SPEAKER_74: yeah a lot of people don't realize it but so many um molecules that that are used in agriculture like fungicides to to kill fungus in the fields those are derived from this sort of work a lot of antibiotics a lot of medicines are already derived from mining genomes finding new proteins and seeing what those proteins can do because these proteins didn't evolve in the environment randomly they evolved to do something and in many cases we can take that thing that they do and then harness it into a product and that's what's so exciting and this this affects everything material science you know agriculture human health it's uh it's a food it's it's really profound

SPEAKER_431: awesome all right everybody there you have it that's another all in podcast in the can by the way so

SPEAKER_44: many so many of freeberg stands were afraid jacal that you and i were going to make some joke and

SPEAKER_58: we didn't no we didn't and so for all these stands i just i hope you guys can exhale

SPEAKER_68: take a deep breath man have some you know eggless mayo and uh enjoy your weekend uh enjoy your week

SPEAKER_443: bye bye everybody see you next time love you besties love you guys love you besties